Summary of Significant Accounting Policies
|6 Months Ended|
Jun. 30, 2020
|Accounting Policies [Abstract]|
|Summary of Significant Accounting Policies||
Note 3. Summary of Significant Accounting Policies
Use of Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The significant areas of estimation include determining deferred tax asset valuation allowance and the inputs in determining the fair value of equity-based awards and warrants issued. Actual results could differ from those estimates.
Risks and Uncertainties
The Company operates in an industry that is subject to intense competition, government regulation and rapid technological change. Operations are subject to significant risk and uncertainties including financial, operational, technological, regulatory, and other risks, including the potential risk of business failure.
The extent of the impact and effects of the recent outbreak of the coronavirus (COVID-19) on the operation and financial performance of the Company's business will depend on future developments, including the duration and spread of the outbreak, related travel advisories and restrictions, the recovery time of disrupted research services, the consequential staff shortages, and research and development delays, or the uncertainty with respect to the accessibility of additional liquidity or capital markets, all of which are highly uncertain and cannot be predicted. If the Company's operations are impacted by this outbreak for an extended period, the Company's results of operations or liquidity may be materially adversely affected.
Deferred Offering Costs
In conjunction with the Company's IPO, costs incurred related to the IPO were capitalized as deferred equity issuance costs in other non-current assets until the time of completion of the IPO. Upon completion of the IPO, these costs have been offset against proceeds received. Offering costs include direct and incremental costs related to the offering such as legal fees and related costs associated with the IPO.
During the six months ended June 30, 2020, the Company classified deferred offering costs of $456,437 as a reduction to additional paid-in capital upon completion of the Company's IPO on June 15, 2020. As of December 31, 2019, the Company recorded deferred offering costs of $191,000 and as of June 30, 2020, there were no deferred offering costs recorded on the Company's condensed consolidated balance sheets.
Research and Development
Research and development costs are expensed as incurred. These expenses primarily consist of payroll, contractor expenses, supplies, and technical infrastructure on the cloud for the purposes of developing the Company's RADR platform and identifying, developing, and testing drug candidates. Development costs incurred by third parties are expensed as the work is performed. Costs to acquire technologies, including licenses, that are utilized in research and development and that have no alternative future use are expensed when incurred.
Prepaid expense as of June 30, 2020 totaled approximately $71,000 and included approximately $9,000 of upfront contractor fees, $55,000 of licensing and other fees to AF Chemicals, LLC, and approximately $7,000 of annual insurance fees.
Loan Pursuant to Paycheck Protection Program
The Company received $108,500 in aggregate loan proceeds (the "PPP Loan") from JPMorgan Chase Bank (the "Lender") pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP Loan is evidenced by a loan application and payment agreement (the "PPP Loan Agreement") by and between the Company and the Lender. This amount is recorded as a loan payable on the Company's condensed consolidated balance sheet at June 30, 2020.
The entire disclosure for all significant accounting policies of the reporting entity.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef