• Filing Date: 2021-04-16
  • Form Type: 10-K/A
  • Description: Annual report (Amendment)
v3.21.1
Document and Entity Information - USD ($)
12 Months Ended
Dec. 31, 2020
Mar. 25, 2021
Jun. 30, 2020
Cover [Abstract]      
Entity Registrant Name TENAX THERAPEUTICS, INC.    
Entity Central Index Key 0000034956    
Document Type 10-K/A    
Document Period End Date Dec. 31, 2020    
Amendment Flag true    
Amendment Description This Amendment No. 1 (this “Amendment”) to the Annual Report on Form 10-K filed on March 31, 2021 (the “Original Annual Report”) of Tenax Therapeutics, Inc. (the “Company”) is being filed solely for the purpose of correcting certain inadvertent errors in the net loss per share and weighted average number of shares items of the Consolidated Statements of Operations and Comprehensive Loss presented under the Caption “Financial Statements and Supplementary Data” on page 37 of the Original Annual Report by amending and restating only the Consolidated Statements of Operations and Comprehensive Loss appearing in Part II, Item 8. “Financial Statements Supplementary Data” in the Original Annual Report. Except as described above, no other changes have been made to the Original Annual Report. We have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Annual Report. The Company has included as exhibits to this Amendment updated certifications from the Company’s Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes Oxley Act.    
Current Fiscal Year End Date --12-31    
Is Entity a Well-known Seasoned Issuer? No    
Is Entity a Voluntary Filer? No    
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 Interactive Data Current Yes    
Entity Incorporation, State or Country Code DE    
Entity File Number 001-34600    
Entity Public Float     $ 9,099,973
Entity Common Stock, Shares Outstanding   14,969,312  
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2020    
v3.21.1
CONSOLIDATED BALANCE SHEETS - USD ($)
Dec. 31, 2020
Dec. 31, 2019
Current assets    
Cash and cash equivalents $ 6,250,241 $ 4,905,993
Marketable securities 462,687 493,884
Prepaid expenses 82,578 780,952
Total current assets 6,795,506 6,180,829
Right of use asset 58,778 169,448
Property and equipment, net 5,972 6,559
Other assets 8,435 8,435
Total assets 6,868,691 6,365,271
Current liabilities    
Accounts payable 757,856 1,661,054
Accrued liabilities 1,240,616 871,341
Notes payable 120,491 0
Total current liabilities 2,118,963 2,532,395
Long term liabilities    
Lease liability 0 60,379
Note payable 124,166 0
Total long term liabilities 124,166 60,379
Total liabilities 2,243,129 2,592,774
Commitments and contingencies; see Note F
Stockholders' equity    
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 250,644,197 239,939,797
Accumulated other comprehensive (loss) gain (70) 458
Accumulated deficit (246,019,827) (236,168,436)
Total stockholders' equity 4,625,562 3,772,497
Total liabilities and stockholders' equity 6,868,691 6,365,271
Series A Preferred Stock    
Stockholders' equity    
Preferred stock $ 0 $ 4
v3.21.1
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Dec. 31, 2020
Dec. 31, 2019
Stockholders' equity    
Preferred stock, authorized 4,818,654 4,818,654
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 $ 0.0001 $ 0.0001
Preferred stock, issued 5,181,346 5,181,346
Preferred stock, outstanding 210 38,606
v3.21.1
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Operating expenses    
General and administrative $ 5,307,206 $ 5,084,111
Research and development 4,560,724 3,471,153
Total operating expenses 9,867,930 8,555,264
Net operating loss 9,867,930 8,555,264
Interest expense 1,627 0
Other income, net (18,166) (160,901)
Net loss 9,851,391 8,394,363
Unrealized loss on marketable securities 528 58
Total comprehensive loss $ 9,851,919 $ 8,394,421
Net loss per share, basic and diluted $ (.95) $ (1.35)
Weighted average number of common shares outstanding, basic and diluted 10,365,826 6,195,444
v3.21.1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
Preferred Stock
Common Stock
Additional Paid-In Capital
Accumulated Other Comprehensive Gain (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 stocks issued, shares   12,195        
Compensation on options and restricted stocks issued, amount   $ 1 171,215     171,216
Common stock issued for services rendered, shares   71,429        
Common stock issued for services rendered, amount   $ 7 99,993     100,000
Common stock issued for convertible preferred stock, shares (2,815,987) 2,815,987        
Common stock issued for convertible preferred stock, amount $ (281) $ 282       1
Exercise of warrants, shares   50,000        
Exercise of warrants, amount   $ 5 96,495     96,500
Adoption of ASC Topic 842: Leases         27,670 27,670
Unrealized loss on marketable securities       (58)   (58)
Net loss (8,394,363) (8,394,363)
Ending balance, shares at Dec. 31, 2019 38,606 6,741,860        
Ending 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   32,736,611        
Common stock and pre-funded warrants sold, net of offering costs, amount   $ 327 8,658,850     8,659,177
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 pre-funded warrants, shares   1,610,313        
Exercise of pre-funded warrants, amount   $ 161       161
Exercise of warrants, shares   877,202        
Exercise of warrants, amount   $ 88 1,692,912     1,693,000
Compensation on options issued     252,646     252,646
Unrealized loss on marketable securities       (528)   (528)
Net loss (9,851,391) (9,851,391)
Ending balance, shares at Dec. 31, 2020 210 12,619,369        
Ending balance, amount at Dec. 31, 2020 $ 0 $ 1,262 $ 250,644,197 $ (70) $ (246,019,827) $ 4,625,562
v3.21.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss $ (9,851,391) $ (8,394,363)
Adjustments to reconcile net loss to net cash used in operating activities    
Depreciation and amortization 4,077 5,017
Interest on debt instrument 1,627 0
Amortization of right of use asset 110,671 102,262
Loss on disposal of property and equipment 0 522
Issuance and vesting of compensatory stock options and warrants 252,646 171,216
Issuance of common stock for services rendered 100,000 100,000
Amortization of premium on marketable securities 7,069 (1,230)
Changes in operating assets and liabilities    
Accounts receivable, prepaid expenses and other assets 698,374 (322,666)
Accounts payable and accrued liabilities (535,550) 883,042
Long term portion of lease liability (60,379) (99,977)
Net cash used in operating activities (9,272,856) (7,556,177)
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of marketable securities (596,524) (618,100)
Sale of marketable securities 620,123 620,023
Purchase of property and equipment (3,490) (3,574)
Net cash provided by (used in) investing activities 20,109 (1,651)
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from issuance of common stock and pre-funded warrants, net of issuance costs 8,659,177 0
Proceeds from the exercise of warrants 1,693,161 96,500
Proceeds from the issuance of notes payable 244,657 0
Net cash provided by financing activities 10,596,995 96,500
Net change in cash and cash equivalents 1,344,248 (7,461,328)
Cash and cash equivalents, beginning of period 4,905,993 12,367,321
Cash and cash equivalents, end of period $ 6,250,241 $ 4,905,993
v3.21.1
A. DESCRIPTION OF BUSINESS
12 Months Ended
Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
DESCRIPTION OF BUSINESS

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 (the “Plan of Merger”), 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”). 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, sublicensable 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.

 

On October 9, 2020, the Company entered into an Amendment (the “Amendment”) to the License between the Company and Orion Corporation, a global healthcare company incorporated under the laws of Finland (“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. The Company intends to conduct an upcoming Phase 3 study in pulmonary hypertension patients utilizing one of these oral formulations.

 

On January 15, 2021, the Company, Life Newco II, Inc., a Delaware corporation and a wholly-owned, direct subsidiary of the Company (“Life Newco II”), PHPrecisionMed Inc., a Delaware corporation (“PHPM,”) and Dr. Stuart Rich, solely in his capacity as holders’ representative (in such capacity, the “Representative”), entered into an Agreement and Plan of Merger, dated January 15, 2021 (the “Merger Agreement”), pursuant to which, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, the Company would acquire 100% of the equity of PHPM. Under the terms of the Merger Agreement, Life Newco II would merge with and into PHPM, with PHPM surviving as a wholly owned subsidiary of the Company (the “Merger”). On January 15, 2021, the Company completed the acquisition contemplated by the Merger Agreement (the “Acquisition”). As a result of the Acquisition the Company intends to develop pharmaceutical products containing imatinib for the treatment of pulmonary arterial hypertension in the United States and the rest of the world.

 

Going Concern

 

Management believes the accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern. The Company has an accumulated deficit of $246,019,827 and $236,168,436 on December 31, 2020 and 2019, respectively, and used cash in operations of $9,272,856 and $7,556,177 during the years ended December 31, 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 December 31, 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 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.

 

v3.21.1
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

 

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

 

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 consolidated financial statements include the accounts and transactions of Tenax Therapeutics, Inc. and Life Newco, Inc. All material intercompany transactions and balances have been eliminated in consolidation.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid instruments with a maturity date of three months or less, when acquired, to be cash equivalents.

 

Cash Concentration Risk

 

The Federal Deposit Insurance Corporation (the “FDIC”) insurance limits are $250,000 per depositor per insured bank. The Company had cash balances of $5,870,477 and $4,533,976 uninsured by the FDIC as of December 31, 2020 and 2019, respectively.

 

Liquidity and Capital Resources

 

The Company has financed its operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. The Company had total current assets of $6,795,506 and $6,180,829 and working capital of $4,676,543 and $3,648,434 as of December 31, 2020 and 2019, respectively.

 

Cash resources, including the fair value of the Company’s available for sale marketable securities as of December 31, 2020 were approximately $6.7 million, compared to approximately $5.4 million as of 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 on December 31, 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 provide assurance 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.

 

The continued spread of COVID-19 globally could adversely affect the Company’s clinical trial operations, including its ability to recruit and retain patients, 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 patients may be unable to comply with clinical trial protocols if quarantines or travel restrictions impede patient movement or interrupt healthcare services, or if the patients 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.

 

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

 

Deferred financing costs

 

Deferred financing costs represent legal, due diligence and other direct costs incurred to raise capital or obtain debt. Direct costs include only “out-of-pocket” or incremental costs directly related to the effort, such as a finder’s fee and accounting and legal fees. These costs will be capitalized if the efforts are successful or expensed when unsuccessful. Indirect costs are expensed as incurred. Deferred financing costs related to debt are amortized over the life of the debt. Deferred financing costs related to issuing equity are charged to Additional Paid-in Capital.

 

Derivative financial instruments

 

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible promissory note instruments and other convertible equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”) to be accounted for separately from the host contract and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results.

 

Freestanding warrants issued by the Company in connection with the issuance or sale of debt and equity instruments are considered to be derivative instruments and are evaluated and accounted for in accordance with the provisions of ASC 815.

 

Preclinical Study and Clinical Accruals

 

The Company estimates its preclinical study and clinical trial expenses based on the services received pursuant to contracts with several research institutions and contract research organizations (“CROs”) that conduct and manage preclinical and clinical trials on its behalf. The financial terms of the agreements vary from contract to contract and may result in uneven expenses and payment flows. Preclinical study and clinical trial expenses include the following:

 

-

 

fees paid to CROs in connection with clinical trials,

 

-

 

fees paid to research institutions in conjunction with preclinical research studies, and

 

-

 

fees paid to contract manufacturers and service providers in connection with the production and testing of active pharmaceutical ingredients and drug materials for use in preclinical studies and clinical trials.

 

Property and Equipment, Net

 

Property and equipment are stated at cost, subject to adjustments for impairment, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives:

 

Laboratory equipment

 

3 – 5 years

 

Office equipment

 

5 years

 

Office furniture and fixtures

 

7 years

 

Computer equipment and software

 

3 years

 

Leasehold improvements 

Shorter of useful life or remaining lease term 

 

Maintenance and repairs are charged to expense as incurred, and improvements to leased facilities and equipment are capitalized.

 

Research and Development Costs

 

Research and development costs include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct our clinical trials; (ii) the cost of supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) depreciation and other allocated expenses, which include direct and allocated expenses for equipment, laboratory and other supplies. All research and development expenses are expensed as incurred.

 

Income Taxes

 

Deferred tax assets and liabilities are recorded for differences between the financial statement and tax bases of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period.

 

Stock-Based Compensation

 

The Company accounts for stock-based awards to employees in accordance with ASC 718, Compensation — Stock Compensation, which provides for the use of the fair value-based method to determine compensation for all arrangements where shares of stock or equity instruments are issued for compensation. Fair values of equity securities are determined by management based predominantly on the trading price of the Company’s common stock. The values of these awards are based upon their grant-date fair value. That cost is recognized over the period during which the employee is required to provide service in exchange for the reward.

 

The Company accounts for equity instruments issued to non-employees in accordance with ASC 505-50, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services. Equity instruments issued to non-employees are recorded at their fair value on the measurement date and are subject to periodic adjustment as the underlying equity instruments vest.

 

Loss Per Share

 

Basic 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 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, restricted stock and warrants.

 

The following outstanding options, restricted stock grants, 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.

 

    Year ended December 31,  
    2020     2019  
             
Warrants to purchase common stock     21,859,084       10,519,945  
Options to purchase common stock     451,148       244,206  
Convertible preferred shares outstanding     210       38,606  

 

Operating 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 consolidated balance sheet as of December 31, 2020. 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.

 

Prior period amounts continue to be reported in accordance with the Company’s historic accounting under previous lease guidance, see “Recent Accounting Pronouncements” below, for more information about the impact of the adoption of the new lease standard.

 

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.

 

In February 2016, the FASB issued an accounting standard intended to improve financial reporting regarding leasing transactions. The standard requires the Company to recognize on its balance sheet the assets and liabilities for the rights and obligations created by all leased assets. The standard also requires it to provide enhanced disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from all leases, operating and capital, with lease terms greater than 12 months. The standard was effective for financial statements beginning after December 15, 2018, and interim periods within those annual periods. Early adoption was permitted.

 

The Company adopted this standard on January 1, 2019, using the required modified-retrospective approach as of the effective date. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows it to carryforward the historical lease classification. The Company made an accounting policy election to account for leases with an initial term of 12 months or less similar to previous guidance for operating leases, under which the Company recognizes those lease payments in the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term. Results for the year ended December 31, 2019 continue to be reported in accordance with historical accounting under previous lease guidance, ASC Topic 840, Leases.

 

The Company recorded a net reduction of $27,670 to opening accumulated deficit as of January 1, 2019, due to the cumulative impact of adopting the new leasing standard, with the impact relating to a change in the classification of the Company’s office space. The adoption of the lease standard did not have a material impact on the Company’s condensed consolidated balance sheets. The table below summarizes the impact of adopting the new standard on its condensed consolidated balance sheet as of January 1, 2019.

 

    As Previously Reported     New Lease Standard Adjustment     As Adjusted  
Operating lease right-of-use asset   $ -     $ 271,710     $ 271,710  
Operating lease liabilities   $ -     $ 271,710     $ 271,710  
Deferred lease liabilities   $ 27,670     $ (27,670 )   $ -  

 

Fair Value

 

The Company determines the fair value of its financial assets and liabilities in accordance with the 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 and short-term notes payable 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 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 (expense) in the Consolidated Statements of Operations and Comprehensive Loss and are determined using the specific identification method with transactions recorded on a settlement date basis.

 

The Company recognized a gain of $28 and $66 for the years ended December 31, 2020 and 2019, respectively.

 

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. On December 31, 2020, the Company believes that the costs of its investments are recoverable in all material respects.

 

The following tables summarize 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:

 

    December 31, 2020  
    Amortized Cost     Accrued Interest     Gross Unrealized Gains     Gross Unrealized losses     Estimated Fair Value  
Corporate debt securities   $ 459,210     $ 3,551     $ 128     $ (202 )   $ 462,687  
Total investments   $ 459,210     $ 3,551     $ 128     $ (202 )   $ 462,687  

 

The following table summarizes the scheduled maturity for the Company’s investments on December 31, 2020 and 2019, respectively:

 

    December 31, 2020     December 31, 2019  
Maturing in one year or less   $ 462,687     $ 493,884  
Maturing after one year through three years     -       -  
Total investments   $ 462,687     $ 493,884  

 

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

 

           Fair Value Measurements at Reporting Date Using  
     Balance as of December 31, 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   $ 6,250,241     $ 6,250,241     $ -     $ -  
Marketable securities   $ 462,687     $ -     $ 462,687     $ -  

 

           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 during the year ended December 31, 2020.

 

v3.21.1
C. BALANCE SHEET COMPONENTS
12 Months Ended
Dec. 31, 2020
Balance Sheet Related Disclosures [Abstract]  
BALANCE SHEET COMPONENTS

Property and equipment, net

 

Property and equipment consist of the following:

 

    December 31, 2020     December 31, 2019  
Office furniture and fixtures   $ 43,033     $ 130,192  
Computer equipment and software     23,307       80,669  
      66,340       210,861  
Less: Accumulated depreciation     (60,368 )     (204,302 )
    $ 5,972     $ 6,559  

 

Depreciation and amortization expense were $4,077 and $5,017 for the years ended December 31, 2020 and 2019, respectively.

 

Accrued liabilities

 

Accrued liabilities consist of the following:

 

    December 31, 2020     December 31, 2019  
Operating costs   $ 319,608     $ 426,115  
Lease liability     60,379       111,353  
Employee related     860,629       333,873  
    $ 1,240,616     $ 871,341  

 

v3.21.1
D. NOTE PAYABLE
12 Months Ended
Dec. 31, 2020
Notes Payable [Abstract]  
NOTE 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 the Company (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 December 31, 2020, the current and long-term portions of the PPP Loan were $120,491 and $124,166, respectively.

 

v3.21.1
E. STOCKHOLDERS' EQUITY
12 Months Ended
Dec. 31, 2020
Equity [Abstract]  
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 (a) one share of the Company’s Series A convertible preferred stock, par value $0.0001 per share (the “Series A Stock”), (b) a two-year warrant to purchase one share of common stock at an exercise price of $1.93 (the “Series 1 Warrants”), and (c) 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 of 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. 

 

During the years ended December 31, 2020 and 2019, 38,396 and 2,815,987 shares of Series A Stock were converted into 38,396 and 2,815,987 shares of common stock, respectively.

 

As of December 31, 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 December 31, 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 year ended December 31, 2020, the Company issued 1,610,313 shares of common stock upon the exercise of pre-funded warrants. As of December 31, 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.

 

As of December 31, 2020, there were 2,360,313 March 2020 Warrants outstanding.

 

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.

 

As of December 31, 2020, there were 7,783,616 July 2020 Warrants outstanding.

 

Series 1 Warrants

 

As part of the offering of Series A Stock, the Company issued 5,181,346 Series 1 Warrants at an exercise price of $1.93 per share and contractual term of two years. In accordance with ASC 480, these warrants are classified as equity and their relative fair-value of $2,621,809 was recognized as a deemed dividend on the Series A Stock during the year ended December 31, 2019. 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.

 

During the year ended December 31, 2019, the Company received $96,500 and issued 50,000 shares upon the exercise of outstanding Series 1 Warrants.

 

During the year ended December 31, 2020, the Company received $1,500,000 and issued 777,202 shares upon the exercise of outstanding Series 1 Warrants.

 

As of December 31, 2020, all of the remaining 4,354,144 Series 1 Warrants expired unexercised.

 

Series 2 Warrants

 

As part of the offering of Series A Stock, the Company issued 5,181,346 Series 2 Warrants at an exercise price of $1.93 per share and contractual term of five years. In accordance with ASC 480, these warrants are classified as equity and their relative fair-value of $2,908,778 was recognized as a deemed dividend on the Series A Stock during the year ended December 31, 2019. 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.

 

During the year ended December 31, 2020, the Company received $193,000 and issued 100,000 shares upon the exercise of outstanding Series 2 Warrants.

 

As of December 31, 2020, 5,081,346 Series 2 Warrants remain outstanding.

 

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.

 

Series D Warrant

 

On August 22, 2013, the Company closed its private placement of an aggregate of $4.6 million shares of the Company’s Series D Stock to OXBT Fund.  In connection with the purchase of shares of Series D Stock, OXBT Fund received the Series D Warrant to purchase 117,949 shares of common stock at an exercise price equal to $52.00 and contractual term of six years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $1,531,167 was recognized as a deemed dividend on the Series D Stock during the prior fiscal year ended April 30, 2014. 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.  

 

The Series D Warrant was exercisable beginning on the date of issuance and expired on August 22, 2019.  The exercise price and the number of shares issuable upon exercise of Series D Warrant was subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock, and also upon any distributions of assets, including cash, stock or other property to the Company’s stockholders.  In addition, if stockholder approval for the transaction was obtained, the Series D Warrant would be subject to anti-dilution provisions until such time that for 25 trading days during any 30 consecutive trading day period, the volume weighted average price of the Company’s common stock exceeded $130.00 and the daily dollar trading volume exceeds $350,000 per trading day.

 

The Series D Warrant was issued and sold without registration under the Securities Act in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws.  Accordingly, OXBT Fund could exercise the Series D Warrant and sell the Series D Stock and underlying shares only pursuant to an effective registration statement under the Securities Act covering the resale of those securities, an exemption under Rule 144 under the Securities Act or another applicable exemption under the Securities Act.

 

During the year ended December 31, 2019, all of the 107,488 previously outstanding Series D Warrants expired unexercised.

 

Series C Warrants

 

On July 23, 2013, as part of the offering of Series C Stock, the Company issued 137,668 Series C Warrants at an exercise price of $52.00 per share and contractual term of six years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $1,867,991 was recognized as a deemed dividend on the Series C Stock during the prior fiscal year ended April 30, 2014. 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.

 

During the year ended December 31, 2019, all of the 12,035 previously outstanding Series C Warrants expired unexercised.

  

The following table summarizes the Company’s warrant activity for the years ended December 31, 2020 and December 31, 2019:

 

    Warrants     Weighted Average Exercise Price  
Outstanding at December 31, 2018     10,690,718     $ 2.45  
Exercised     (50,000 )     1.93  
Expired     (120,773 )     47.30  
Outstanding at December 31, 2019     10,519,945     $ 1.94  
Issued     11,310,480       0.98  
Exercised     (877,202 )     1.93  
Expired     (4,354,144 )     1.93  
Outstanding at December 31, 2020     16,599,079     $ 1.29  

 

Stock Options

 

The following table summarizes all options outstanding as of December 31, 2020:

 

        Options Outstanding at December 31, 2020     Options Exercisable and Vested at December 31, 2020  
  Exercise Price     Number of Options     Weighted Average Remaining Contractual Life (Years)     Number of Options     Weighted Average Exercise Price  
  $ 0.66 to $6.23       396,500       8.2       30,500     $ 5.75  
  $ 10.60 to $41.40       32,500       6.1       32,500     $ 29.26  
  $ 54.40 to $96.40       20,751       4.5       20,751     $ 70.13  
  $ 113.00 to $1,188.00       1,397       3.0       1,397     $ 178.14  
             451,148        7.9        85,148      33.24  

 

The following table summarizes options outstanding that have vested and are expected to vest based on options outstanding as of December 31, 2020:

 

    Number of Option Shares     Weighted Average Exercise Price     Aggregate Intrinsic Value (1)     Weighted Average Remaining Contractual Life (Years)  
Vested     85,148     $ 33.24     $ 350       6.1  
Vested and expected to vest     410,888     $ 8.09     $ 207,747       7.8  

 

(1)

 

Amount represents the difference between the exercise price and $1.86, the closing price of Tenax Therapeutics’ stock on December 31, 2020, as reported on the Nasdaq Capital Market, for all in-the-money options outstanding.

 

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 Plan for the years ended December 31, 2020 and 2019:

 

    Shares Available for Grant  
Balances, at December 31, 2018     100,000  
Additional shares reserved     600,000  
Options granted     (2,500 )
Balances, at December 31, 2019     697,500  
Options granted     (341,000 )
Balances, at December 31, 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 years ended December 31, 2020 and 2019:

 

    Outstanding Options        
    Number of Shares     Weighted Average Exercise Price     Aggregate Intrinsic Value  
Balances at December 31, 2018     50,000     $ 6.10        
Options granted     2,500     $ 1.72          
Balances at December 31, 2019     52,500     $ 5.89          
Options granted     341,000     $ 1.18          
Balances at December 31, 2020     393,500     $ 1.81     $ 233,380 (1)

 

(1)

 

Amount represents the difference between the exercise price and $1.86, the closing price of Tenax Therapeutics’ stock on December 31, 2020, as reported on the Nasdaq Capital Market, for all in-the-money options outstanding.

 

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 used the following assumptions to estimate the fair value of options granted under the 2016 Plan for the years ended December 31, 2020 and 2019:

 

    For the year ended December 31,  
    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

 

As stock-based compensation expense recognized in the statement of operations for the years ended December 31, 2020 and 2019 is based on awards ultimately expected to vest, 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. 

 

The weighted-average grant-date fair value of options granted during the years ended December 31, 2020 and 2019 was $0.95 and $1.47, respectively.

 

The Company recorded compensation expense for these stock options grants of $218,148 and $92,919 for the years ended December 31, 2020 and 2019, respectively.

 

As of December 31, 2020, there were unrecognized compensation costs of approximately $152,000 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 1.13 years.

 

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 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 three years.

 

The following table summarizes the outstanding stock options under the 1999 Plan for the years ended December 31, 2020 and 2019:

 

    Outstanding Options        
    Number of Shares     Weighted Average Exercise Price     Aggregate Intrinsic Value  
Balances at December 31, 2018     191,735     $ 93.72          
Options cancelled     (29 )   $ 2,203.00          
Balances at December 31, 2019     191,706     $ 93.40          
Options cancelled     (134,058 )   $ 113.64          
Balances at December 31, 2020     57,648     $ 46.34     $ - (1)

 

(1)

 

Amount represents the difference between the exercise price and $1.86, the closing price of Tenax Therapeutics’ stock on December 31, 2020, as reported on the Nasdaq Capital Market, for all in-the-money options outstanding.

 

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 used the following assumptions to estimate the fair value of options granted under the 1999 Plan for the year ended December 31, 2019:

 

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 historical experience that the Company has had 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 do not anticipate paying any dividends in the near future.

 

Forfeitures

 

As stock-based compensation expense recognized in the statement of operations for the years ended December 31, 2020 and 2019 is based on awards ultimately expected to vest, 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.

 

The Company recorded compensation expense for these stock options grants of $34,498 and $78,297 for the years ended December 31, 2020 and 2019, respectively.

 

As of December 31, 2020, there were unrecognized compensation costs of approximately $1,500 related to non-vested stock option awards that will be recognized on a straight-line basis over the weighted average remaining vesting period of 0.25 years.

 

Restricted Stock Grants

 

The following table summarizes the outstanding restricted stock under the 1999 Plan for the year ended December 31, 2019:

 

    Outstanding Restricted Stock Grants  
    Number of Shares     Weighted Average Grant Date Fair Value  
Balances, at December 31, 2018     19,914     $ 6.29  
Restricted stock vested     (12,195 )   $ 6.28  
Restricted stock cancelled     (7,719 )   $ 6.27  
Balances at December 31, 2019     -     $ -  

 

The Company recorded no compensation expense for these restricted stock grants for the year ended December 31, 2020 and 2019.

 

As of December 31, 2020, there were no unrecognized compensation costs related to the non-vested restricted stock grants.

 

v3.21.1
F. COMMITMENTS AND CONTINGENCIES
12 Months Ended
Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

Operating Leases

 

As described above in “NOTE B- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES”, the Company adopted ASC 842 as of January 1, 2019. Prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 840.

 

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 September 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 36 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 60 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:

 

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

 

As of December 31, 2020, the maturities of our operating lease liabilities were as follows:

 

Year ending December 31,      
2021     61,803  
         
Total lease payments   $ 61,803  
Less: Imputed interest     (1,424 )
Operating lease liability   $ 60,379  

 

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, and that certain Side Letter, dated October 15, 2013 by and between Phyxius and Orion. The License grants the Company an exclusive, sublicensable 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-year term, provided, however, that the License will continue after the end of the 15-year term in each country in the Territory until the expiration of Orion’s patent rights in the Product in such country.  

 

On October 9, 2020, the Company entered into the Amendment 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.

 

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 28 days after the occurrence of the applicable milestone event: (i) $2.0 million upon the grant of FDA approval, including all registrations, licenses, authorizations and necessary approvals, to develop and/or commercialize the Product in the United States; and (ii) $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 December 31, 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.

 

Litigation

 

The Company is subject to litigation in the normal course of business, none of which management believes will have a material adverse effect on the Company’s consolidated financial statements.

 

v3.21.1
G. 401(k) BENEFIT PLAN
12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
401(k) BENEFIT PLAN

The Company sponsors a 401(k) Retirement Savings Plan (the “401(k) Plan”) for all eligible employees. Full-time employees over the age of 18 are eligible to participate in the 401(k) Plan after 90 days of continuous employment. Participants may elect to defer earnings into the 401(k) Plan up to the annual IRS limits and the Company provides a matching contribution up to 5% of the participants’ annual salary in accordance with the 401(k) Plan documents. The 401(k) Plan is managed by a third-party trustee.

 

For the years ended December 31, 2020 and 2019, the Company recorded $69,793 and $68,587 for matching contributions expense, respectively.

 

v3.21.1
H. INCOME TAXES
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
INCOME TAXES

The Company has not recorded any income tax expense (benefit) for the period ended December 31, 2020 due to its history of net operating losses.

 

The reconciliation of income tax expense (benefit) at the statutory federal income tax rate of 21% for the periods ended December 31, 2020 and December 31, 2019 is as follows:

 

    December 31,  
    2020     2019  
U.S. federal tax benefit at statutory rate   $ (2,068,792 )   $ (1,762,816 )
State income tax benefit, net of federal benefit     (194,565 )     (165,789 )
Stock compensation     57,611       37,761  
Other nondeductible, including goodwill impairment     576       1,373  
Change in state tax rate     -       27,945  
Federal and state net operating loss adjustments     1,605,223       234,659  
Other, including effect of tax rate brackets     (56,640 )      (17,043 )
Change in valuation allowance     656,587       1,643,910  
    $ -     $ -  

 

The tax effects of temporary differences and carry forwards that give rise to significant portions of the deferred tax assets are as follows:

 

    December 31,  
Deferred Tax Assets   2020     2019  
Net operating loss carryforwards   $ 35,540,911     $ 34,933,500  
Accruals and other     545,225       498,572  
Capital loss carryforwards     11,003       16,908  
Valuation allowance     (36,096,792 )     (35,440,205 )
Net deferred tax assets     347       8,775  
Deferred Tax Liabilities                
Other liabilities     (347 )     (8,775 )
Net Deferred Tax Liabilities   $ -     $ -  

 

The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred tax assets. At such time that it is determined that it is more likely than not that deferred tax assets will be realizable, the valuation allowance will be reduced. The net increase in the valuation allowance during 2020 was approximately $0.7 million.

 

As of December 31, 2020, the Company had Federal and State net operating loss carryforwards of approximately $153.0 million and $109.3 million available to offset future federal and state taxable income, respectively. Federal net operating losses of $128.7 million begin to expire in 2021, while the remaining $24.3 million carryforward indefinitely. State net operating losses begin to expire in 2024.

 

Utilization of the net operating loss carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the expiration of the net operating losses before utilization.

 

Management has evaluated all other tax positions that could have a significant effect on the financial statements and determined the Company had no uncertain income tax positions on December 31, 2020.

 

The Company files U.S. and state income tax returns with varying statutes of limitations. The tax years 2002 and forward remain open to examination due to the carryover of unused net operating losses or tax credit.

 

v3.21.1
I. SUBSEQUENT EVENTS
12 Months Ended
Dec. 31, 2020
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

On January 15, 2021, the Company, Life Newco II, PHPM, and Dr. Stuart Rich, solely in his capacity as holders’ representative (in such capacity, the “Representative”), entered into the Merger Agreement, pursuant to which, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, the Company would acquire 100% of the equity of PHPM. Under the terms of the Merger Agreement, Life Newco II would merge with and into PHPM, with PHPM surviving as a wholly owned subsidiary of the Company. On January 15, 2021, the Company completed the Acquisition.

 

As consideration for the Merger, the stockholders of PHPM received (i) 1,892,905 shares of the Company’s common stock (“Common Stock”), and (ii) 10,232 shares of the Company’s Series B convertible preferred stock, which are convertible into up to an aggregate of 10,232,000 shares of Common Stock (“Preferred Stock”) (collectively, the “Merger Consideration”). The issuance of 1,212,492 shares of Common Stock issuable upon conversion of the Preferred Stock, representing approximately 10% of the Merger Consideration, will be delayed as security for closing adjustments and post-closing indemnification obligations of PHPM and the stockholders of PHPM. Each share of Preferred Stock will automatically convert into (i) 881.5 shares of Common Stock following receipt of the approval of the stockholders of the Company for the Conversion (as defined herein), and (ii) 118.5 shares of Common Stock 24 months after the date of issuance of the Preferred Stock, subject to reduction for indemnification claims. The number of shares of Common Stock into which the Preferred Stock converts is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. The Preferred Stock does not carry dividends or a liquidation preference. The Preferred Stock carries voting rights aggregating 4.99% of the Company’s Common Stock voting power immediately prior to the closing of the Merger. The rights, preferences and privileges of the Preferred Stock are set forth in the Certificate of Designation of Series B Convertible Preferred Stock that the Company filed with the Secretary of State of the State of Delaware on January 15, 2021 (the “Certificate of Designation”).

 

Pursuant to the Merger Agreement, the Company must, no later than July 31, 2021, take all action necessary to call, convene and hold a meeting of the Company’s stockholders to vote upon the conversion of the Preferred Stock pursuant to the Certificate of Designation (the “Conversion”). If stockholder approval is not obtained at such meeting, the Company must call a meeting every 90 days thereafter to seek stockholder approval for the Conversion until the earlier of the date stockholder approval for the Conversion is obtained or the Preferred Stock is no longer outstanding.

 

The terms of the Merger Agreement also require the board of directors of the Company (the “Board”) to, subject to the Board’s fiduciary duties under applicable law, (i) recommend to the Company’s stockholders that they approve the Conversion at any meeting of the Company’s stockholders called for the approval of the Conversion, and (ii) use reasonable best efforts to solicit from the Company’s stockholders, the affirmative vote of the holders of shares representing a majority of the shares of the Company’s capital stock voting in person or by proxy at any such meeting. A vote on the Conversion is expected to take place at the Company’s next annual meeting of stockholders. In addition, (i) at the Company’s first regularly scheduled Board meeting following the closing of the Merger, the Board must appoint one director designated by the Representative to serve on the Board, and (ii) as promptly as practicable after the Company has obtained stockholder approval for the Conversion, the Board must appoint two additional directors designated by the Representative to serve on the Board. Dr. Stuart Rich, the co-founder and Chief Executive Officer, and a stockholder of PHPM, and Dr. Michael Davidson and Dr. Declan Doogan, the two other designees of the Representative, were appointed to the Board on February 25, 2021. In connection with the closing of the Merger, Dr. Stuart Rich was also appointed Chief Medical Officer of the Company.

 

v3.21.1
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

 

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 consolidated financial statements include the accounts and transactions of Tenax Therapeutics, Inc. and Life Newco, Inc. All material intercompany transactions and balances have been eliminated in consolidation.

 

Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity date of three months or less, when acquired, to be cash equivalents.

 

Cash Concentration Risk

The Federal Deposit Insurance Corporation (the “FDIC”) insurance limits are $250,000 per depositor per insured bank. The Company had cash balances of $5,870,477 and $4,533,976 uninsured by the FDIC as of December 31, 2020 and 2019, respectively.

 

Liquidity and Capital Resources

The Company has financed its operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. The Company had total current assets of $6,795,506 and $6,180,829 and working capital of $4,676,543 and $3,648,434 as of December 31, 2020 and 2019, respectively.

 

Cash resources, including the fair value of the Company’s available for sale marketable securities as of December 31, 2020 were approximately $6.7 million, compared to approximately $5.4 million as of 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 on December 31, 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 provide assurance 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.

 

The continued spread of COVID-19 globally could adversely affect the Company’s clinical trial operations, including its ability to recruit and retain patients, 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 patients may be unable to comply with clinical trial protocols if quarantines or travel restrictions impede patient movement or interrupt healthcare services, or if the patients 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.

 

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

 

Deferred Financing Costs

Deferred financing costs represent legal, due diligence and other direct costs incurred to raise capital or obtain debt. Direct costs include only “out-of-pocket” or incremental costs directly related to the effort, such as a finder’s fee and accounting and legal fees. These costs will be capitalized if the efforts are successful or expensed when unsuccessful. Indirect costs are expensed as incurred. Deferred financing costs related to debt are amortized over the life of the debt. Deferred financing costs related to issuing equity are charged to Additional Paid-in Capital.

 

Derivative Financial Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible promissory note instruments and other convertible equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”) to be accounted for separately from the host contract and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results.

 

Freestanding warrants issued by the Company in connection with the issuance or sale of debt and equity instruments are considered to be derivative instruments and are evaluated and accounted for in accordance with the provisions of ASC 815.

 

Preclinical Study and Clinical Accruals

The Company estimates its preclinical study and clinical trial expenses based on the services received pursuant to contracts with several research institutions and contract research organizations (“CROs”) that conduct and manage preclinical and clinical trials on its behalf. The financial terms of the agreements vary from contract to contract and may result in uneven expenses and payment flows. Preclinical study and clinical trial expenses include the following:

 

-

 

fees paid to CROs in connection with clinical trials,

 

-

 

fees paid to research institutions in conjunction with preclinical research studies, and

 

-

 

fees paid to contract manufacturers and service providers in connection with the production and testing of active pharmaceutical ingredients and drug materials for use in preclinical studies and clinical trials.

 

Property and Equipment, Net

Property and equipment are stated at cost, subject to adjustments for impairment, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives:

 

Laboratory equipment

 

3 – 5 years

 

Office equipment

 

5 years

 

Office furniture and fixtures

 

7 years

 

Computer equipment and software

 

3 years

 

Leasehold improvements 

Shorter of useful life or remaining lease term 

 

Maintenance and repairs are charged to expense as incurred, and improvements to leased facilities and equipment are capitalized.

 

Research and Development Costs

Research and development costs include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct our clinical trials; (ii) the cost of supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) depreciation and other allocated expenses, which include direct and allocated expenses for equipment, laboratory and other supplies. All research and development expenses are expensed as incurred.

 

Income Taxes

Deferred tax assets and liabilities are recorded for differences between the financial statement and tax bases of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period.

 

Stock-Based Compensation

The Company accounts for stock-based awards to employees in accordance with ASC 718, Compensation — Stock Compensation, which provides for the use of the fair value-based method to determine compensation for all arrangements where shares of stock or equity instruments are issued for compensation. Fair values of equity securities are determined by management based predominantly on the trading price of the Company’s common stock. The values of these awards are based upon their grant-date fair value. That cost is recognized over the period during which the employee is required to provide service in exchange for the reward.

 

The Company accounts for equity instruments issued to non-employees in accordance with ASC 505-50, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services. Equity instruments issued to non-employees are recorded at their fair value on the measurement date and are subject to periodic adjustment as the underlying equity instruments vest.

 

Loss Per Share

Basic 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 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, restricted stock and warrants.

 

The following outstanding options, restricted stock grants, 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.

 

    Year ended December 31,  
    2020     2019  
             
Warrants to purchase common stock     21,859,084       10,519,945  
Options to purchase common stock     451,148       244,206  
Convertible preferred shares outstanding     210       38,606  

 

Operating 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 consolidated balance sheet as of December 31, 2020. 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.

 

Prior period amounts continue to be reported in accordance with the Company’s historic accounting under previous lease guidance, see “Recent Accounting Pronouncements” below, for more information about the impact of the adoption of the new lease standard.

 

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.

 

In February 2016, the FASB issued an accounting standard intended to improve financial reporting regarding leasing transactions. The standard requires the Company to recognize on its balance sheet the assets and liabilities for the rights and obligations created by all leased assets. The standard also requires it to provide enhanced disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from all leases, operating and capital, with lease terms greater than 12 months. The standard was effective for financial statements beginning after December 15, 2018, and interim periods within those annual periods. Early adoption was permitted.

 

The Company adopted this standard on January 1, 2019, using the required modified-retrospective approach as of the effective date. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows it to carryforward the historical lease classification. The Company made an accounting policy election to account for leases with an initial term of 12 months or less similar to previous guidance for operating leases, under which the Company recognizes those lease payments in the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term. Results for the year ended December 31, 2019 continue to be reported in accordance with historical accounting under previous lease guidance, ASC Topic 840, Leases.

 

The Company recorded a net reduction of $27,670 to opening accumulated deficit as of January 1, 2019, due to the cumulative impact of adopting the new leasing standard, with the impact relating to a change in the classification of the Company’s office space. The adoption of the lease standard did not have a material impact on the Company’s condensed consolidated balance sheets. The table below summarizes the impact of adopting the new standard on its condensed consolidated balance sheet as of January 1, 2019.

 

    As Previously Reported     New Lease Standard Adjustment     As Adjusted  
Operating lease right-of-use asset   $ -     $ 271,710     $ 271,710  
Operating lease liabilities   $ -     $ 271,710     $ 271,710  
Deferred lease liabilities   $ 27,670     $ (27,670 )   $ -  

 

Fair Value

The Company determines the fair value of its financial assets and liabilities in accordance with the 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 and short-term notes payable 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 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 (expense) in the Consolidated Statements of Operations and Comprehensive Loss and are determined using the specific identification method with transactions recorded on a settlement date basis.

 

The Company recognized a gain of $28 and $66 for the years ended December 31, 2020 and 2019, respectively.

 

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. On December 31, 2020, the Company believes that the costs of its investments are recoverable in all material respects.

 

The following tables summarize 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:

 

    December 31, 2020  
    Amortized Cost     Accrued Interest     Gross Unrealized Gains     Gross Unrealized losses     Estimated Fair Value  
Corporate debt securities   $ 459,210     $ 3,551     $ 128     $ (202 )   $ 462,687  
Total investments   $ 459,210     $ 3,551     $ 128     $ (202 )   $ 462,687  

 

The following table summarizes the scheduled maturity for the Company’s investments on December 31, 2020 and 2019, respectively:

 

    December 31, 2020     December 31, 2019  
Maturing in one year or less   $ 462,687     $ 493,884  
Maturing after one year through three years     -       -  
Total investments   $ 462,687     $ 493,884  

 

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

 

           Fair Value Measurements at Reporting Date Using  
     Balance as of December 31, 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   $ 6,250,241     $ 6,250,241     $ -     $ -  
Marketable securities   $ 462,687     $ -     $ 462,687     $ -  

 

           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 during the year ended December 31, 2020.

 

v3.21.1
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Property and equipment estimated useful life

Laboratory equipment

 

3 – 5 years

 

Office equipment

 

5 years

 

Office furniture and fixtures

 

7 years

 

Computer equipment and software

 

3 years

 

Leasehold improvements

 

Shorter of useful life or remaining lease term

 

Anti-dilutive securities
    Year ended December 31,  
    2020     2019  
             
Warrants to purchase common stock     21,859,084       10,519,945  
Options to purchase common stock     451,148       244,206  
Convertible preferred shares outstanding     210       38,606  
Impact of new accounting standard
    As Previously Reported     New Lease Standard Adjustment     As Adjusted  
Operating lease right-of-use asset   $ -     $ 271,710     $ 271,710  
Operating lease liabilities   $ -     $ 271,710     $ 271,710  
Deferred lease liabilities   $ 27,670     $ (27,670 )   $ -  
Fair values of investments by type
    December 31, 2020  
    Amortized Cost     Accrued Interest     Gross Unrealized Gains     Gross Unrealized losses     Estimated Fair Value  
Corporate debt securities   $ 459,210     $ 3,551     $ 128     $ (202 )   $ 462,687  
Total investments   $ 459,210     $ 3,551     $ 128     $ (202 )   $ 462,687  
Scheduled investments maturity
    December 31, 2020     December 31, 2019  
Maturing in one year or less   $ 462,687     $ 493,884  
Maturing after one year through three years     -       -  
Total investments   $ 462,687     $ 493,884  
Fair value measurements
           Fair Value Measurements at Reporting Date Using  
     Balance as of December 31, 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   $ 6,250,241     $ 6,250,241     $ -     $ -  
Marketable securities   $ 462,687     $ -     $ 462,687     $ -  

 

           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     $ -  

v3.21.1
C. BALANCE SHEET COMPONENTS (Tables)
12 Months Ended
Dec. 31, 2020
Balance Sheet Related Disclosures [Abstract]  
Property, plant and equipment
    December 31, 2020     December 31, 2019  
Office furniture and fixtures   $ 43,033     $ 130,192  
Computer equipment and software     23,307       80,669  
      66,340       210,861  
Less: Accumulated depreciation     (60,368 )     (204,302 )
    $ 5,972     $ 6,559  
Accrued liabilities
    December 31, 2020     December 31, 2019  
Operating costs   $ 319,608     $ 426,115  
Lease liability     60,379       111,353  
Employee related     860,629       333,873  
    $ 1,240,616     $ 871,341  
v3.21.1
E. STOCKHOLDERS' EQUITY (Tables)
12 Months Ended
Dec. 31, 2020
Equity [Abstract]  
Warrant activity
    Warrants     Weighted Average Exercise Price  
Outstanding at December 31, 2018     10,690,718     $ 2.45  
Exercised     (50,000 )     1.93  
Expired     (120,773 )     47.30  
Outstanding at December 31, 2019     10,519,945     $ 1.94  
Issued     11,310,480       0.98  
Exercised     (877,202 )     1.93  
Expired     (4,354,144 )     1.93  
Outstanding at December 31, 2020     16,599,079     $ 1.29  
Outstanding stock options
        Options Outstanding at December 31, 2020     Options Exercisable and Vested at December 31, 2020  
  Exercise Price     Number of Options     Weighted Average Remaining Contractual Life (Years)     Number of Options     Weighted Average Exercise Price  
  $ 0.66 to $6.23       396,500       8.2       30,500     $ 5.75  
  $ 10.60 to $41.40       32,500       6.1       32,500     $ 29.26  
  $ 54.40 to $96.40       20,751       4.5       20,751     $ 70.13  
  $ 113.00 to $1,188.00       1,397       3.0       1,397     $ 178.14  
             451,148        7.9        85,148      33.24  
Options vested and expected to vest
    Number of Option Shares     Weighted Average Exercise Price     Aggregate Intrinsic Value (1)     Weighted Average Remaining Contractual Life (Years)  
Vested     85,148     $ 33.24     $ 350       6.1  
Vested and expected to vest     410,888     $ 8.09     $ 207,747       7.8  

 

(1)

 

Amount represents the difference between the exercise price and $1.86, the closing price of Tenax Therapeutics’ stock on December 31, 2020, as reported on the Nasdaq Capital Market, for all in-the-money options outstanding.

 

Shares available for grant under the Plan
    Shares Available for Grant  
Balances, at December 31, 2018     100,000  
Additional shares reserved     600,000  
Options granted     (2,500 )
Balances, at December 31, 2019     697,500  
Options granted     (341,000 )
Balances, at December 31, 2020     356,500  
Stock options activity
    Outstanding Options        
    Number of Shares     Weighted Average Exercise Price     Aggregate Intrinsic Value  
Balances at December 31, 2018     50,000     $ 6.10        
Options granted     2,500     $ 1.72          
Balances at December 31, 2019     52,500     $ 5.89          
Options granted     341,000     $ 1.18          
Balances at December 31, 2020     393,500     $ 1.81     $ 233,380 (1)
Fair value assumptions
    For the year ended December 31,  
    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     Aggregate Intrinsic Value  
Balances at December 31, 2018     191,735     $ 93.72          
Options cancelled     (29 )   $ 2,203.00          
Balances at December 31, 2019     191,706     $ 93.40          
Options cancelled     (134,058 )   $ 113.64          
Balances at December 31, 2020     57,648     $ 46.34     $ - (1)

 

(1)

 

Amount represents the difference between the exercise price and $1.86, the closing price of Tenax Therapeutics’ stock on December 31, 2020, as reported on the Nasdaq Capital Market, for all in-the-money options outstanding.

 

Restricted stock grants
    Outstanding Restricted Stock Grants  
    Number of Shares     Weighted Average Grant Date Fair Value  
Balances, at December 31, 2018     19,914     $ 6.29  
Restricted stock vested     (12,195 )   $ 6.28  
Restricted stock cancelled     (7,719 )   $ 6.27  
Balances at December 31, 2019     -     $ -  
v3.21.1
F. COMMITMENTS AND CONTINGENCIES (Tables)
12 Months Ended
Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract]  
Lease liability
    December 31, 2020     December 31, 2019  
Current portion included in accrued liabilities   $ 60,379     $ 111,353  
Long term lease liability     -       60,379  
    $ 60,379     $ 171,732  
Operating lease liability maturity
Year ending December 31,      
2021     61,803  
         
Total lease payments   $ 61,803  
Less: Imputed interest     (1,424 )
Operating lease liability   $ 60,379  
v3.21.1
H. INCOME TAXES (Tables)
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Reconciliation of income tax expense (benefit)
    December 31,  
    2020     2019  
U.S. federal tax benefit at statutory rate   $ (2,068,792 )   $ (1,762,816 )
State income tax benefit, net of federal benefit     (194,565 )     (165,789 )
Stock compensation     57,611       37,761  
Other nondeductible, including goodwill impairment     576       1,373  
Change in state tax rate     -       27,945  
Federal and state net operating loss adjustments     1,605,223       234,659  
Other, including effect of tax rate brackets     (56,640 )      (17,043 )
Change in valuation allowance     656,587       1,643,910  
    $ -     $ -  
Deferred tax assets and liabilities
    December 31,  
Deferred Tax Assets   2020     2019  
Net operating loss carryforwards   $ 35,540,911     $ 34,933,500  
Accruals and other     545,225       498,572  
Capital loss carryforwards     11,003       16,908  
Valuation allowance     (36,096,792 )     (35,440,205 )
Net deferred tax assets     347       8,775  
Deferred Tax Liabilities                
Other liabilities     (347 )     (8,775 )
Net Deferred Tax Liabilities   $ -     $ -  
v3.21.1
A. DESCRIPTION OF BUSINESS (Details Narrative) - USD ($)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Accumulated deficit $ (246,019,827) $ (236,168,436)
Net cash used in operating activities $ (9,272,856) $ (7,556,177)
v3.21.1
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)
12 Months Ended
Dec. 31, 2020
Laboratory Equipment  
Estimated useful life 3 - 5 years
Office Equipment  
Estimated useful life 5 years
Office Furniture and Fixtures  
Estimated useful life 7 years
Computer Equipment and Software  
Estimated useful life 3 years
Leasehold Improvements  
Estimated useful life Shorter of useful life or remaining lease term
v3.21.1
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - shares
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Warrants    
Anti-dilutive securities 21,859,084 10,519,945
Options    
Anti-dilutive securities 451,148 244,206
Convertible Preferred Shares    
Anti-dilutive securities 210 38,606
v3.21.1
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($)
Dec. 31, 2020
Dec. 31, 2019
Operating lease right-of-use asset $ 58,778 $ 169,448
Operating lease liabilities $ 60,379 171,732
As Previously Reported    
Operating lease right-of-use asset   0
Operating lease liabilities   0
Deferred lease liabilities   27,670
New Lease Standard Adjustment    
Operating lease right-of-use asset   271,710
Operating lease liabilities   271,710
Deferred lease liabilities   (27,670)
As Adjusted    
Operating lease right-of-use asset   271,710
Operating lease liabilities   271,710
Deferred lease liabilities   $ 0
v3.21.1
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3)
12 Months Ended
Dec. 31, 2020
USD ($)
Amortized cost $ 459,210
Accrued interest 3,551
Gross unrealized gains 128
Gross unrealized losses (202)
Estimated fair value 462,687
Corporate Debt Securities  
Amortized cost 459,210
Accrued interest 3,551
Gross unrealized gains 128
Gross unrealized losses (202)
Estimated fair value $ 462,687
v3.21.1
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($)
Dec. 31, 2020
Dec. 31, 2019
Accounting Policies [Abstract]    
Maturing in one year or less $ 462,687 $ 493,884
Maturing after one year through three years 0 0
Total investments $ 462,687 $ 493,884
v3.21.1
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) - USD ($)
Dec. 31, 2020
Dec. 31, 2019
Current Assets    
Cash and cash equivalents $ 6,250,241 $ 4,905,993
Marketable securities 462,687 493,884
Level 1    
Current Assets    
Cash and cash equivalents 6,250,241 4,905,993
Marketable securities 0 0
Level 2    
Current Assets    
Cash and cash equivalents 0 0
Marketable securities 462,687 493,884
Level 3    
Current Assets    
Cash and cash equivalents 0 0
Marketable securities $ 0 $ 0
v3.21.1
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Accounting Policies [Abstract]    
Uninsured FDIC $ 5,870,477 $ 4,533,976
Current assets 6,795,506 6,180,829
Working capital 4,676,543 3,648,434
Cash 6,700,000 5,400,000
Gain in marketable securities recognized $ 28 $ 66
v3.21.1
C. BALANCE SHEET COMPONENTS (Details) - USD ($)
Dec. 31, 2020
Dec. 31, 2019
Balance Sheet Related Disclosures [Abstract]    
Office furniture and fixtures $ 43,033 $ 130,192
Computer equipment and software 23,307 80,669
Property and equipment, gross 66,340 210,861
Less: accumulated depreciation (60,368) (204,302)
Property and equipment, net $ 5,972 $ 6,559
v3.21.1
C. BALANCE SHEET COMPONENTS (Details 1) - USD ($)
Dec. 31, 2020
Dec. 31, 2019
Balance Sheet Related Disclosures [Abstract]    
Operating costs $ 319,608 $ 426,115
Lease liability 60,379 111,353
Employee related 860,629 333,873
Total $ 1,240,616 $ 871,341
v3.21.1
C. BALANCE SHEET COMPONENTS (Details Narrative) - USD ($)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Balance Sheet Related Disclosures [Abstract]    
Depreciation and amortization expense $ 4,077 $ 5,017
v3.21.1
D. NOTE PAYABLE (Details Narrative) - USD ($)
Dec. 31, 2020
Dec. 31, 2019
Notes Payable [Abstract]    
Note payable, current $ 120,491 $ 0
Note payable, long-term $ 124,166 $ 0
v3.21.1
E. STOCKHOLDERS' EQUITY (Details) - $ / shares
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Equity [Abstract]    
Number of warrants outstanding, beginning 10,519,945 10,690,718
Number of warrants, issued 11,310,480  
Number of warrants, exercised (877,202) (50,000)
Number of warrants, expired (4,354,144) (120,773)
Number of warrants outstanding, ending 16,599,079 10,519,945
Weighted average exercise price outstanding, beginning $ 1.94 $ 2.45
Weighted average exercise price, issued .98  
Weighted average exercise price, exercised 1.93 1.93
Weighted average exercise price, expired 1.93 47.30
Weighted average exercise price outstanding, ending $ 1.29 $ 1.94
v3.21.1
E. STOCKHOLDERS' EQUITY (Details 1)
12 Months Ended
Dec. 31, 2020
$ / shares
shares
Number of options outstanding 451,148
Weighted average remaining contractual life 7 years 10 months 24 days
Number of options exercisable and vested 85,148
Options exercisable and vested weighted average exercise price | $ / shares $ 33.24
$0.66 to $6.23  
Number of options outstanding 396,500
Weighted average remaining contractual life 8 years 2 months 12 days
Number of options exercisable and vested 30,500
Options exercisable and vested weighted average exercise price | $ / shares $ 5.75
$10.60 to $41.40  
Number of options outstanding 32,500
Weighted average remaining contractual life 6 years 1 month 6 days
Number of options exercisable and vested 32,500
Options exercisable and vested weighted average exercise price | $ / shares $ 29.26
$54.40 to $96.40  
Number of options outstanding 20,751
Weighted average remaining contractual life 4 years 6 months
Number of options exercisable and vested 20,751
Options exercisable and vested weighted average exercise price | $ / shares $ 70.13
$113.00 to $1188.00  
Number of options outstanding 1,397
Weighted average remaining contractual life 3 years
Number of options exercisable and vested 1,397
Options exercisable and vested weighted average exercise price | $ / shares $ 178.14
v3.21.1
E. STOCKHOLDERS' EQUITY (Details 2)
12 Months Ended
Dec. 31, 2020
USD ($)
$ / shares
shares
Equity [Abstract]  
Number of option shares vested | shares 85,148
Weighted average exercise price vested | $ / shares $ 33.24
Aggregate intrinsic value vested | $ $ 350 [1]
Weighted average remaining contractual life vested 6 years 1 month 6 days
Number of option shares vested and expected to vest | shares 410,888
Weighted average exercise price vested and expected to vest | $ / shares $ 8.09
Aggregate intrinsic value vested and expected to vest | $ $ 207,747 [1]
Weighted average remaining contractual life vested and expected to vest 7 years 9 months 18 days
[1] Amount represents the difference between the exercise price and $1.86, the closing price of Tenax Therapeutics' stock on December 31, 2020, as reported on the Nasdaq Capital Market, for all in-the-money options outstanding.
v3.21.1
E. STOCKHOLDERS' EQUITY (Details 3) - 2016 Stock Incentive Plan - shares
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Shares available for grant, beginning 697,500 100,000
Shares available for grant, additional shares reserved   600,000
Shares available for grant, options granted (341,000) (2,500)
Shares available for grant, ending 356,500 697,500
v3.21.1
E. STOCKHOLDERS' EQUITY (Details 4) - USD ($)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Number of options outstanding, ending 451,148  
2016 Stock Incentive Plan    
Number of options outstanding, beginning 52,500 50,000
Number of options granted 341,000 2,500
Number of options outstanding, ending 393,500 52,500
Weighted average exercise price outstanding, beginning $ 5.89 $ 6.10
Weighted average exercise price granted 1.18 1.72
Weighted average exercise price outstanding, ending $ 1.81 $ 5.89
Aggregate intrinsic value [1] $ 233,380  
1999 Amended Stock Plan    
Number of options outstanding, beginning 191,706 191,735
Number of options cancelled (134,058) (29)
Number of options outstanding, ending 57,648 191,706
Weighted average exercise price outstanding, beginning $ 93.40 $ 93.72
Weighted average exercise price cancelled 113.64 2,203.00
Weighted average exercise price outstanding, ending $ 46.34 $ 93.40
Aggregate intrinsic value [1] $ 0  
[1] Amount represents the difference between the exercise price and $1.86, the closing price of Tenax Therapeutics' stock on December 31, 2020, as reported on the Nasdaq Capital Market, for all in-the-money options outstanding.
v3.21.1
E. STOCKHOLDERS' EQUITY (Details 5) - 2016 Stock Incentive Plan
12 Months Ended
Dec. 31, 2020
Dec. 31, 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%
v3.21.1
E. STOCKHOLDERS' EQUITY (Details 6)
12 Months Ended
Dec. 31, 2019
$ / shares
shares
Equity [Abstract]  
Number of restricted stock grants, beginning | shares 19,914
Number of restricted stock grants, vested | shares (12,195)
Number of restricted stock grants, cancelled | shares (7,719)
Number of restricted stock grants, ending | shares 0
Weighted average drant date fair value, beginning | $ / shares $ 6.29
Weighted average drant date fair value, vested | $ / shares 6.28
Weighted average drant date fair value, cancelled | $ / shares 6.27
Weighted average drant date fair value, ending | $ / shares $ 0.00
v3.21.1
E. STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Preferred stock, authorized 4,818,654 4,818,654
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
Restricted stock expense $ 0 $ 0
Unrecognized compensation costs, restricted stock $ 0  
2016 Stock Incentive Plan    
Weighted-average grant-date fair value of options granted $ .95 $ 1.47
Stock option expense $ 218,148 $ 92,919
Unrecognized compensation costs, stock options $ 152,000  
Unrecognized compensation costs period for recognition 1 year 1 month 17 days  
1999 Amended Stock Plan    
Stock option expense $ 34,498 $ 78,297
Unrecognized compensation costs, stock options $ 1,500  
Unrecognized compensation costs period for recognition 3 months  
March 2020 Warrants    
Warrants outstanding 2,360,313  
July 2020 Warrants    
Warrants outstanding 7,783,616  
Series 2 Warrants    
Warrants outstanding 5,081,346  
Series A Preferred Stock    
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, issued 5,181,346 5,181,346
Preferred stock, outstanding 210 38,606