0001437749-22-020219 | 10-Q | XBRL Viewer | Diffusion Pharmaceuticals INC

Note 3 - Basis of Presentation and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Significant Accounting Policies [Text Block]

3.	Basis of Presentation and Summary of Significant Accounting Policies

The Summary of Significant Accounting Policies included in the Company's Annual Report for the year ended December 31, 2021 have not materially changed.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial information as found in the ASC and ASUs of the FASB, and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the SEC. In the opinion of management, the accompanying unaudited interim consolidated financial statements of the Company include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the unaudited interim consolidated financial statements) considered necessary to present fairly the Company’s financial position as of June 30, 2022, and its results of operations for the three and six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021. Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The unaudited interim consolidated financial statements presented herein do not contain the required disclosures under GAAP for annual financial statements. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended December 31, 2021 filed with the SEC as part of the Company's Annual Report.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

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

Fair Value of Financial Instruments

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

Concentration of Credit Risk

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

Cash and Cash Equivalents

The Company considers any highly-liquid investments, such as money market funds and commercial paper with an original maturity of three months or less to be cash and cash equivalents.

Marketable Securities

The Company classifies its marketable securities as available-for-sale, which include commercial paper and U.S. government debt securities with original maturities of greater than three months from date of purchase. The Company considers its marketable securities as available for use in current operations, and therefore classify these securities as current assets on the consolidated balance sheet. These securities are carried at fair value, with unrealized gains and losses reported in comprehensive loss and accumulated other comprehensive loss within stockholders’ equity. Gains or losses on marketable securities sold will be based on the specific identification method.

Reverse Stock Split

On April 18, 2022, the Company filed a Certificate of Amendment to its Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to implement the Reverse Stock Split at a ratio of 1-to-50. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise would have been entitled to receive fractional shares of common stock became entitled to receive an amount in cash (without interest or deduction) equal to the fraction of one share to which such stockholder would otherwise be entitled multiplied by $12.93, representing the split-adjusted average closing price of the Company’s common stock on the Nasdaq Capital Market for the five consecutive trading days immediately preceding the effective date of the Reverse Stock Split. Proportional adjustments were made to the Company’s outstanding warrants, stock options, and other equity securities, as well as to the reserve of shares available for future issuance under the 2015 Equity Plan, to reflect the Reverse Stock Split, in each case, in accordance with the respective terms thereof.

Net Loss Per Common Share

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted net loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible debt, convertible preferred stock, common stock warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive.

The following potentially dilutive securities outstanding as of June 30, 2022 and 2021 have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive:

As of June 30,

2022

2021

Common stock warrants
111,891 129,989

Stock options
122,882 61,058

Unvested restricted stock awards
4,672 3,060

239,445 194,107

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses, Measurement of Credit Losses on Financial Instruments (Topic 326). The standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction in carrying value of the asset. Entities will no longer be permitted to consider the length of time that fair value has been less than amortized cost when evaluating when credit losses should be recognized. This new guidance is effective for the Company as of January 1, 2023. The Company is currently evaluating the impact of this ASU but does not expect that adoption of this standard will have a material impact on the consolidated financial statements and related disclosures.

Note 3 - Basis of Presentation and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	As of June 30,
	2022		2021
Common stock warrants		111,891		129,989
Stock options		122,882		61,058
Unvested restricted stock awards		4,672		3,060
		239,445		194,107

Note 2 - Liquidity (Details Textual) $ in Millions	Jun. 30, 2022 USD ($)
BTIG, LLC [Member]
Common Stock, Value, Subscriptions	$ 20

Note 4 - Cash, Cash Equivalents and Marketable Securities - Marketable Securities (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Amortized cost	$ 22,661,264
Commercial paper	25
Commercial paper	(86,608)
Fair Value	22,574,681	$ 0
Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Amortized cost	17,658,057
Commercial paper	25
Commercial paper	(57,001)
Fair Value	17,601,081
US Treasury Securities [Member]
Amortized cost	5,003,207
Commercial paper	0
Commercial paper	(29,607)
Fair Value	$ 4,973,600

Note 2 - Liquidity

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Liquidity Disclosure [Text Block]

2.	Liquidity

The Company has not generated any revenues from product sales and has funded operations primarily from the proceeds of public and private offerings of equity, convertible debt and convertible preferred stock. Substantial additional financing will be required by the Company to continue to fund its research and development activities. No assurance can be given that any such financing will be available when needed, or at all, or that the Company’s research and development efforts will be successful.

The Company regularly explores alternative means of financing its operations and seeks funding through various sources, including public and private securities offerings, collaborative arrangements with third parties and other strategic alliances and business transactions. The Company does not have any commitments to obtain additional funds and may be unable to obtain sufficient funding in the future on acceptable terms, if at all. If the Company cannot obtain the necessary funding, it will need to delay, scale back or eliminate some or all of its research and development programs or enter into collaborations with third parties to commercialize potential products or technologies that it might otherwise seek to develop or commercialize independently; consider other various strategic alternatives, including a merger or sale of the Company; or cease operations. If the Company engages in collaborations, it may receive lower consideration upon commercialization of such products than if it had not entered such arrangements or if it entered into such arrangements at later stages in the product development process.

In July 2022, the Company entered into an at-the-market sales agreement (the "2022 Sales Agreement") with BTIG, LLC, ("BTIG") as agent, pursuant to which the Company may sell up to an aggregate of $20.0 million in shares of the Company’s common stock, from time to time through BTIG, by any method permitted that is deemed an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended.

Operations of the Company are subject to certain risks and uncertainties including various internal and external factors that will affect whether and when the Company’s product candidates become approved drugs and how significant their market share will be, some of which are outside of the Company’s control. The length of time and cost of developing and commercializing these product candidates and/or failure of them at any stage of the drug approval process will materially affect the Company’s financial condition and future operations. The Company currently expects that its existing cash, cash equivalents and marketable securities as of June 30, 2022 will enable it to fund its operating expenses and capital expenditure requirements into the first quarter of 2024, without giving effect to any business development activities we may undertake.

Note 3 - Basis of Presentation and Summary of Significant Accounting Policies (Details Textual) shares in Thousands	Apr. 18, 2022 $ / shares shares
Stock Issued During Period, Fractional Shares, Reverse Stock Split (in shares) \| shares	0
Reverse Stock Split, Fractional Shares, Cash, Multiple (in dollars per share) \| $ / shares	$ 12.93
Reverse Stock Split [Member ]
Stockholders' Equity Note, Stock Split, Conversion Ratio	50

Note 5 - Fair Value of Financial Instruments - Assets Measured at Fair Value on Recurring Basis (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Fair Value	$ 22,574,681	$ 0
Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Fair Value	17,601,081
US Treasury Securities [Member]
Fair Value	4,973,600
Fair Value, Inputs, Level 1 [Member] \| Fair Value, Recurring [Member]
Cash and cash equivalents	3,886,704
Fair Value	0
Total financial assets	3,886,704
Fair Value, Inputs, Level 1 [Member] \| Fair Value, Recurring [Member] \| Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Fair Value	0
Fair Value, Inputs, Level 1 [Member] \| Fair Value, Recurring [Member] \| US Treasury Securities [Member]
Fair Value	0
Fair Value, Inputs, Level 2 [Member] \| Fair Value, Recurring [Member]
Cash and cash equivalents	994,427
Fair Value	22,574,681
Total financial assets	23,569,108
Fair Value, Inputs, Level 2 [Member] \| Fair Value, Recurring [Member] \| Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Fair Value	17,601,081
Fair Value, Inputs, Level 2 [Member] \| Fair Value, Recurring [Member] \| US Treasury Securities [Member]
Fair Value	4,973,600
Fair Value, Inputs, Level 3 [Member] \| Fair Value, Recurring [Member]
Cash and cash equivalents	0
Fair Value	0
Total financial assets	0
Fair Value, Inputs, Level 3 [Member] \| Fair Value, Recurring [Member] \| Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Fair Value	0
Fair Value, Inputs, Level 3 [Member] \| Fair Value, Recurring [Member] \| US Treasury Securities [Member]
Fair Value	0
Money Market Funds [Member] \| Fair Value, Inputs, Level 1 [Member] \| Fair Value, Recurring [Member]
Cash and cash equivalents	3,886,704
Money Market Funds [Member] \| Fair Value, Inputs, Level 2 [Member] \| Fair Value, Recurring [Member]
Cash and cash equivalents	0
Money Market Funds [Member] \| Fair Value, Inputs, Level 3 [Member] \| Fair Value, Recurring [Member]
Cash and cash equivalents	0
Commercial Paper [Member] \| Fair Value, Inputs, Level 1 [Member] \| Fair Value, Recurring [Member]
Cash and cash equivalents	0
Commercial Paper [Member] \| Fair Value, Inputs, Level 2 [Member] \| Fair Value, Recurring [Member]
Cash and cash equivalents	994,427
Commercial Paper [Member] \| Fair Value, Inputs, Level 3 [Member] \| Fair Value, Recurring [Member]
Cash and cash equivalents	$ 0

Note 8 - Stock-based Compensation (Details Textual) - USD ($)		3 Months Ended		6 Months Ended
	Jan. 01, 2022	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)				$ 10.35
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested in Period, Fair Value		$ 300,000	$ 100,000	$ 500,000	$ 300,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in shares)				0
Share-Based Payment Arrangement, Expense		278,130	297,280	$ 556,261	478,560
Share-Based Payment Arrangement, Option [Member]
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total		1,100,000		$ 1,100,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)				1 year 11 months 4 days
Restricted Stock Units (RSUs) [Member]
Share-Based Payment Arrangement, Shares Withheld for Tax Withholding Obligation (in shares)				308
Restricted Stock Units (RSUs) [Member] \| Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Month)				18 months
Restricted Stock [Member]
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total		96,000		$ 96,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)				1 year 8 months 8 days
Share-Based Payment Arrangement, Expense		$ 16,000	$ 5,000	$ 32,000	$ 10,000
Equity Incentive Plan 2015 [Member]
Percentage of Total Shares Eligible for Plan Reserve, On an Annual Basis				4.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Additional Shares Authorized (in shares)	81,531
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant (in shares)		42,461		42,461

Note 8 - Stock-based Compensation - Fair Value Assumptions (Details) - Share-Based Payment Arrangement, Option [Member]	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Expected term (Year)	5 years 8 months 26 days	10 years
Minimum [Member]
Risk-free interest rate	1.90%	1.50%
Expected volatility	135.00%	124.50%

Note 3 - Basis of Presentation and Summary of Significant Accounting Policies - Outstanding Dilutive Securities (Details) - shares	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Anti-dilutive securities (in shares)	239,445	194,107
Warrant [Member]
Anti-dilutive securities (in shares)	111,891	129,989
Share-Based Payment Arrangement, Option [Member]
Anti-dilutive securities (in shares)	122,882	61,058
Restricted Stock [Member]
Anti-dilutive securities (in shares)	4,672	3,060

Note 1 - Organization and Description of Business (Details Textual)	Apr. 18, 2022
Reverse Stock Split [Member ]
Stockholders' Equity Note, Stock Split, Conversion Ratio	50

Note 9 - Commitments and Contingencies (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Operating Lease, Payments	$ 2,000	$ 29,000	$ 11,000	$ 60,000
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent			90.00%
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay			4.00%
Defined Contribution Plan, Employer Discretionary Contribution Amount	$ 26,000	$ 24,000	$ 53,000	$ 40,000

Note 7 - Stockholders' Equity and Common Stock Warrants - Warrants Outstanding to Acquire Shares of Its Common Stock (Details)	Jun. 30, 2022 $ / shares shares
Common stock warrants, outstanding (in shares) \| shares	111,891
Warrants Issued in Connection with the January 2018 Offering [Member]
Common stock warrants, outstanding (in shares) \| shares	23,639
Warrants Issued in Connection with the January 2018 Offering [Member] \| Minimum [Member]
Range of exercise price (in dollars per share)	$ 599.71
Warrants Issued in Connection with the January 2018 Offering [Member] \| Maximum [Member]
Range of exercise price (in dollars per share)	$ 749.76
Warrants Issued in Connection with May 2019 Public Offering [Member]
Common stock warrants, outstanding (in shares) \| shares	27,648
Warrants Issued in Connection with May 2019 Public Offering [Member] \| Minimum [Member]
Range of exercise price (in dollars per share)	$ 250.09
Warrants Issued in Connection with May 2019 Public Offering [Member] \| Maximum [Member]
Range of exercise price (in dollars per share)	$ 306.04
Warrants Issued in Connection with the November 2019 Offering [Member]
Common stock warrants, outstanding (in shares) \| shares	4,269
Range of exercise price (in dollars per share)	$ 17.51
Warrants Issued in Connection with the December 2019 Offering [Member]
Common stock warrants, outstanding (in shares) \| shares	6,264
Warrants Issued in Connection with the December 2019 Offering [Member] \| Minimum [Member]
Range of exercise price (in dollars per share)	$ 21.68
Warrants Issued in Connection with the December 2019 Offering [Member] \| Maximum [Member]
Range of exercise price (in dollars per share)	$ 34.92
Common Stock Warrants Issued Related to May 2020 Common Stock Offering [Member]
Common stock warrants, outstanding (in shares) \| shares	11,424
Range of exercise price (in dollars per share)	$ 65.65
The May 2020 Investor Warrant Exercise [Member]
Common stock warrants, outstanding (in shares) \| shares	4,998
Range of exercise price (in dollars per share)	$ 29.7
Common Stock Warrants Issued Related to February 2021 Common Stock Offering [Member]
Common stock warrants, outstanding (in shares) \| shares	33,649
Range of exercise price (in dollars per share)	$ 64.08

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Operating activities:
Net loss	$ (8,717,142)	$ (8,421,892)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	0	48,202
Stock-based compensation expense	556,261	478,560
Amortization of premium and discount on marketable securities	(45,439)	0
Changes in operating assets and liabilities:
Prepaid expenses, deposits and other assets	(118,025)	(291,068)
Accounts payable, accrued expenses and other liabilities	(412,662)	(317,576)
Net cash used in operating activities	(8,737,007)	(8,503,774)
Cash flows provided by investing activities:
Purchase of marketable securities	(31,615,825)	0
Maturities of marketable securities	9,000,000	0
Net cash used in investing activities	(22,615,825)	0
Proceeds from the sale of preferred stock	5,000	0
Proceeds from the exercise of common stock warrants	0	2,201,450
Proceeds from the sale of common stock	0	31,094,302
Net cash provided by financing activities	5,000	33,295,752
Net (decrease) increase in cash and cash equivalents	(31,347,832)	24,791,978
Cash and cash equivalents at beginning of period	37,313,558	18,515,595
Cash and cash equivalents at end of period	5,965,726	43,307,573
Supplemental disclosure of non-cash activities:
Unrealized loss on marketable securities	$ 86,583	$ 0

Note 7 - Stockholders' Equity and Common Stock Warrants (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

	Outstanding		Range of exercise price per share		Expiration dates
Common stock warrants issued in 2018 related to the January 2018 Offering		23,639	599.711749.7676			January 2023
Common stock warrants issued related to the May 2019 Offering		27,648	250.099306.0404		May and December 2024
Common stock warrants issued related to the November 2019 Offering		4,269		$17.51	November 2024
Common stock warrants issued related to the December 2019 Offering		6,264	21.68834.9292		December 2024 and June 2025
Common stock warrants issued related to the May 2020 Offering		11,424		$65.65	March 2025
Common stock warrants issued related to May 2020 Investor Warrant Exercise		4,998		$29.7	November 2025
Common stock warrants issued related to the February 2021 Offering		33,649		$64.08	February 2026
		111,891

Note 5 - Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	Fair value measurement at reporting date
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
June 30, 2022:
Cash equivalents:
Money market funds	$	3,886,704	$	—	$	—
Commercial paper		—		994,427		—
Total cash equivalents	$	3,886,704	$	994,427	$	—

Marketable securities
Commercial paper	$	—	$	17,601,081	$	—
US treasury		—		4,973,600		—
Total marketable securities	$	—	$	22,574,681	$	—

Total financial assets	$	3,886,704	$	23,569,108	$	—

Note 1 - Organization and Description of Business

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Nature of Operations [Text Block]

1.	Organization and Description of Business

Diffusion Pharmaceuticals Inc., a Delaware corporation, is a biopharmaceutical company developing novel therapies to enhance the body’s ability to deliver oxygen to areas where it is needed most. The Company’s lead product candidate, TSC, is being investigated to enhance the diffusion of oxygen to tissues with low oxygen levels, also known as hypoxia, a serious complication of many of medicine’s most intractable and difficult-to-treat conditions, including hypoxic solid tumors.

On April 18, 2022, the Company effected a 1-for-50 reverse split of its common stock. Any references in the unaudited condensed consolidated financial statements and related notes to share or per share amounts give retroactive effect to this reverse stock split.

Note 6 - Accrued Expenses and Other Current Liabilities

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block]

6.	Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of the dates indicated below:

	June 30, 2022		December 31, 2021
Accrued payroll and payroll related expenses	$	661,061	$	879,971
Accrued professional fees		163,269		247,704
Accrued clinical studies expenses		766,916		786,579
Other accrued expenses		77,744		65,935
Total	$	1,668,990	$	1,980,189

Note 4 - Cash, Cash Equivalents and Marketable Securities

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Cash, Cash Equivalents, and Marketable Securities [Text Block]

4.	Cash, cash equivalents and marketable securities

The following is a summary of the Company's cash and cash equivalents as of the dates indicated:

	June 30, 2022		December 31, 2021
Cash in banking institutions	$	1,084,595	$	30,308,075
Money market funds		3,886,704		7,005,483
Commercial paper		994,427		—
Total	$	5,965,726	$	37,313,558

The following is a summary of the Company's marketable securities as of June 30, 2022:

	Amortized cost		Unrealized gains		Unrealized losses			Fair Value
Commercial paper	$	17,658,057	$	25	$	(57,001	)	$	17,601,081
U.S. treasury bonds		5,003,207		—		(29,607	)		4,973,600
Total	$	22,661,264	$	25	$	(86,608	)	$	22,574,681

The Company did not have any marketable securities as of December 31, 2021. The Company's marketable securities generally have contractual maturity dates between 3 and 12 months. Most of the Company’s marketable securities are in an unrealized loss position at June 30, 2022. Unrealized losses on marketable securities as of June 30, 2022 were not significant and were primarily due to changes in interest rates, and not due to increased credit risks associated with specific securities. Accordingly, no other-than-temporary impairment was recorded for the six months ended June 30, 2022 and there were no realized gains or losses recorded during the six months ended June 30, 2021.

Note 4 - Cash, Cash Equivalents and Marketable Securities (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Cash and Cash Equivalents [Table Text Block]

	June 30, 2022		December 31, 2021
Cash in banking institutions	$	1,084,595	$	30,308,075
Money market funds		3,886,704		7,005,483
Commercial paper		994,427		—
Total	$	5,965,726	$	37,313,558

Debt Securities, Available-for-Sale [Table Text Block]

	Amortized cost		Unrealized gains		Unrealized losses			Fair Value
Commercial paper	$	17,658,057	$	25	$	(57,001	)	$	17,601,081
U.S. treasury bonds		5,003,207		—		(29,607	)		4,973,600
Total	$	22,661,264	$	25	$	(86,608	)	$	22,574,681

Note 7 - Stockholders' Equity and Common Stock Warrants (Details Textual)			6 Months Ended
	Apr. 18, 2022 shares	Mar. 18, 2022 USD ($) $ / shares shares	Jun. 30, 2022 shares
Class of Warrant or Rights, Expired (in shares)			18,077
Conversion of Series C Preferred Stock into Common Stock [Member]
Conversion of Stock, Shares Converted (in shares)	10,000
Conversion of Stock, Shares Issued (in shares)	200
Series C Preferred Stock [Member]
Preferred Stock, Convertible, Conversion Ratio		0.02
Preferred Stock, Convertible, Conversion Price (in dollars per share) \| $ / shares		$ 25.00
Series C Preferred Stock [Member] \| President [Member]
Stock Issued During Period, Shares, New Issues (in shares)		10,000
Sale of Stock, Price Per Share (in dollars per share) \| $ / shares		$ 0.50
Proceeds from Issuance of Convertible Preferred Stock \| $		$ 5,000

Note 6 - Accrued Expenses and Other Current Liabilities - Summary of Accrued Expenses (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Accrued payroll and payroll related expenses	$ 661,061	$ 879,971
Accrued professional fees	163,269	247,704
Accrued clinical studies expenses	766,916	786,579
Other accrued expenses	77,744	65,935
Total	$ 1,668,990	$ 1,980,189

Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Operating expenses:
Research and development	$ 2,108,553	$ 1,972,673	$ 4,534,451	$ 4,889,051
General and administrative	2,137,326	1,836,773	4,265,878	3,580,283
Depreciation	0	23,755	0	48,202
Loss from operations	4,245,879	3,833,201	8,800,329	8,517,536
Interest income	(55,378)	(55,228)	(83,187)	(95,644)
Net loss	$ (4,190,501)	$ (3,777,973)	$ (8,717,142)	$ (8,421,892)
Per share information:
Net loss per share of common stock, basic and diluted (in dollars per share)	$ (2.06)	$ (1.85)	$ (4.28)	$ (4.54)
Weighted average shares outstanding, basic and diluted (in shares)	2,038,727	2,037,978	2,038,529	1,854,161
Comprehensive loss:
Net loss	$ (4,190,501)	$ (3,777,973)	$ (8,717,142)	$ (8,421,892)
Unrealized loss on marketable securities	(36,925)	0	(86,583)	0
Comprehensive loss:	$ (4,227,426)	$ (3,777,973)	$ (8,803,725)	$ (8,421,892)

Note 4 - Cash, Cash Equivalents and Marketable Securities - Cash and Cah Equivalents (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Cash and cash equivalents	$ 5,965,726	$ 37,313,558
Bank Time Deposits [Member]
Cash and cash equivalents	1,084,595	30,308,075
Money Market Funds [Member]
Cash and cash equivalents	3,886,704	7,005,483
Commercial Paper [Member]
Cash and cash equivalents	$ 994,427	$ 0

Note 4 - Cash, Cash Equivalents and Marketable Securities (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Debt Securities, Available-for-Sale, Total	$ 22,574,681	$ 0
Marketable Securities, Other-than-temporary Impairment Loss	0
Marketable Securities, Realized Gain (Loss), Excluding Other-than-temporary Impairment Loss	$ 0
Minimum [Member]
Marketable Securities Contractual Maturity (Month)	3 months
Maximum [Member]
Marketable Securities Contractual Maturity (Month)	12 months

Note 8 - Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Research and development	$	58,892	$	59,567	$	117,785	$	92,567
General and administrative		219,238		237,713		438,476		385,993
Total stock-based compensation expense	$	278,130	$	297,280	$	556,261	$	478,560

Share-Based Payment Arrangement, Option, Activity [Table Text Block]

	Number of Options			Weighted average exercise price per share		Weighted average remaining contractual life (in years)		Aggregate intrinsic value
Balance at January 1, 2021		72,454		$	265.85
Granted		56,300			11.40
Forfeited		(5,612	)		188.18
Expired		(260	)		1,575
Outstanding at June 30, 2022		122,882		$	149.96		8.8	$	—
Exercisable at June 30, 2022		60,688		$	283.73		8.1	$	—
Vested and expected to vest at June 30, 2022		122,882		$	149.96		8.8	$	—

Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	2022			2021
Expected term (in years)		5.74			10
Risk-free interest rate		1.9	%		1.5	%
Expected volatility		135.0	%		124.5	%
Dividend yield		—	%		—	%

Share-Based Payment Arrangement, Restricted Stock Unit, Activity [Table Text Block]

	Number of Units			Weighted average grant date fair value
Balance at January 1, 2022		5,509		$	34.78
Vested (1)		(837	)		29.87
Outstanding at June 30, 2022		4,672		$	35.66

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)	2,038,914	2,038,185
Common stock, shares outstanding (in shares)	2,038,914	2,038,185

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial information as found in the ASC and ASUs of the FASB, and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the SEC. In the opinion of management, the accompanying unaudited interim consolidated financial statements of the Company include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the unaudited interim consolidated financial statements) considered necessary to present fairly the Company’s financial position as of June 30, 2022, and its results of operations for the three and six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021. Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The unaudited interim consolidated financial statements presented herein do not contain the required disclosures under GAAP for annual financial statements. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended December 31, 2021 filed with the SEC as part of the Company's Annual Report.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

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

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

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

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk

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

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

The Company considers any highly-liquid investments, such as money market funds and commercial paper with an original maturity of three months or less to be cash and cash equivalents.

Marketable Securities, Policy [Policy Text Block]

Marketable Securities

The Company classifies its marketable securities as available-for-sale, which include commercial paper and U.S. government debt securities with original maturities of greater than three months from date of purchase. The Company considers its marketable securities as available for use in current operations, and therefore classify these securities as current assets on the consolidated balance sheet. These securities are carried at fair value, with unrealized gains and losses reported in comprehensive loss and accumulated other comprehensive loss within stockholders’ equity. Gains or losses on marketable securities sold will be based on the specific identification method.

Stockholders' Equity, Policy [Policy Text Block]

Reverse Stock Split

On April 18, 2022, the Company filed a Certificate of Amendment to its Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to implement the Reverse Stock Split at a ratio of 1-to-50. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise would have been entitled to receive fractional shares of common stock became entitled to receive an amount in cash (without interest or deduction) equal to the fraction of one share to which such stockholder would otherwise be entitled multiplied by $12.93, representing the split-adjusted average closing price of the Company’s common stock on the Nasdaq Capital Market for the five consecutive trading days immediately preceding the effective date of the Reverse Stock Split. Proportional adjustments were made to the Company’s outstanding warrants, stock options, and other equity securities, as well as to the reserve of shares available for future issuance under the 2015 Equity Plan, to reflect the Reverse Stock Split, in each case, in accordance with the respective terms thereof.

Earnings Per Share, Policy [Policy Text Block]

Net Loss Per Common Share

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted net loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible debt, convertible preferred stock, common stock warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive.

The following potentially dilutive securities outstanding as of June 30, 2022 and 2021 have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive:

	As of June 30,
	2022		2021
Common stock warrants		111,891		129,989
Stock options		122,882		61,058
Unvested restricted stock awards		4,672		3,060
		239,445		194,107

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses, Measurement of Credit Losses on Financial Instruments (Topic 326). The standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction in carrying value of the asset. Entities will no longer be permitted to consider the length of time that fair value has been less than amortized cost when evaluating when credit losses should be recognized. This new guidance is effective for the Company as of January 1, 2023. The Company is currently evaluating the impact of this ASU but does not expect that adoption of this standard will have a material impact on the consolidated financial statements and related disclosures.

Note 7 - Stockholders' Equity and Common Stock Warrants

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

7.	Stockholders' Equity and Common Stock Warrants

Private Placement of Series C Preferred Stock

On March 18, 2022, the Company issued and sold to Robert J. Cobuzzi, Jr., Ph.D., its President & Chief Executive Officer, and William R. Elder, its General Counsel & Corporate Secretary, an aggregate of 10,000 shares of Series C Preferred Stock at an offering price of $0.50 per share, representing 100% of the stated value per share of the Series C Preferred Stock, for aggregate gross proceeds of $5,000.

The Series C Certificate provides that, among other things, (i) each share of Series C Preferred Stock is convertible into 0.02 shares of the Company's common stock, representing a conversion price of $25.00 per share, subject to certain conditions, (ii) each share of Series C Preferred Stock outstanding is counted on an as converted basis, together with the Company’s common stock as a single class, for purposes of determining the presence of a quorum at any meeting at which holders are asked to vote on matters related to the Reverse Stock Split (subject to any applicable exchange listing rules), (iii) each share of Series C Preferred Stock outstanding has the right to cast 1,600 votes per share of Series C Preferred Stock on the Reverse Stock Split on a “mirrored” basis — this means that the holders of the Series C Preferred Stock are required to vote their shares in a manner that “mirrors” the proportions of “For” and “Against” votes cast by the holders of the Company’s common stock are voted on the Amendment (excluding, for the avoidance of doubt, any shares of common stock that are not voted), and (iv) the holders of outstanding shares of Series C Preferred Stock are entitled to dividends, on an as converted basis, equal to dividends actually paid, if any, on shares of common stock and participate in any liquidation of the Company on an as converted basis.

On April 18, 2022, following approval of the Reverse Stock Split by the Company's stockholders, all 10,000 shares of Series C Preferred Stock were converted into an aggregate of 200 shares of the Company's common stock in accordance with the terms of the Series C Certificate.

Common Stock Warrants

During its evaluation of equity classification for the Company's common stock warrants issued in previous periods, the Company considered the conditions as prescribed within ASC 815-40, Derivatives and Hedging, Contracts in an Entity’s own Equity. The conditions within ASC 815-40 are not subject to a probability assessment. The warrants do not fall under the liability criteria within ASC 480 Distinguishing Liabilities from Equity as they are not puttable and do not represent an instrument that has a redeemable underlying security. The warrants do meet the definition of a derivative instrument under ASC 815, but are eligible for the scope exception as they are indexed to the Company’s own stock and would be classified in permanent equity if freestanding.

As of June 30, 2022, the Company had the following warrants outstanding to acquire shares of its common stock:

	Outstanding		Range of exercise price per share		Expiration dates
Common stock warrants issued in 2018 related to the January 2018 Offering		23,639	599.711749.7676			January 2023
Common stock warrants issued related to the May 2019 Offering		27,648	250.099306.0404		May and December 2024
Common stock warrants issued related to the November 2019 Offering		4,269		$17.51	November 2024
Common stock warrants issued related to the December 2019 Offering		6,264	21.68834.9292		December 2024 and June 2025
Common stock warrants issued related to the May 2020 Offering		11,424		$65.65	March 2025
Common stock warrants issued related to May 2020 Investor Warrant Exercise		4,998		$29.7	November 2025
Common stock warrants issued related to the February 2021 Offering		33,649		$64.08	February 2026
		111,891

During the six months ended June 30, 2022, 18,077 warrants expired.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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-Name Accounting Standards Codification
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-Name Accounting Standards Codification
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-Paragraph 13
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+ Details

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2022	Aug. 10, 2022
Document Information [Line Items]
Entity Central Index Key	0001053691
Entity Registrant Name	Diffusion Pharmaceuticals Inc.
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2022
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	000-24477
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	30-0645032
Entity Address, Address Line One	300 East Main Street, Suite 201
Entity Address, City or Town	Charlottesville
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	22902
City Area Code	434
Local Phone Number	220-0718
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	DFFN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		2,039,120

Note 8 - Stock-based Compensation - Stock-based Compensation Expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Stock-based compensation expense	$ 278,130	$ 297,280	$ 556,261	$ 478,560
Research and Development Expense [Member]
Stock-based compensation expense	58,892	59,567	117,785	92,567
General and Administrative Expense [Member]
Stock-based compensation expense	$ 219,238	$ 237,713	$ 438,476	$ 385,993

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Total	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]
Balance (in shares) at Dec. 31, 2020			1,280,207
Unrealized loss on marketable securities	$ 0
Net loss	(8,421,892)		$ 0	$ 0		$ (8,421,892)
Balance (in shares) at Jun. 30, 2021			2,037,978
Balance at Dec. 31, 2020	24,814,182		$ 1,280	130,722,286		(105,909,384)
Sale of common stock and warrants, net of issuance costs (in shares)			673,171
Sale of common stock and warrants, net of issuance costs	31,094,302		$ 673	31,093,629		0
Issuance of common stock upon exercise of warrants (in shares)			84,600
Issuance of common stock upon exercise of warrants	2,201,450		$ 85	2,201,365		0
Stock-based compensation expense	478,560		0	478,560		0
Balance at Jun. 30, 2021	50,166,602		$ 2,038	164,495,840		(114,331,276)
Balance (in shares) at Mar. 31, 2021			2,037,978
Unrealized loss on marketable securities	0
Net loss	(3,777,973)		$ 0	0		(3,777,973)
Balance (in shares) at Jun. 30, 2021			2,037,978
Balance at Mar. 31, 2021	53,647,295		$ 2,038	164,198,560		(110,553,303)
Sale of common stock and warrants, net of issuance costs (in shares)			0
Sale of common stock and warrants, net of issuance costs	0		$ 0	0		0
Issuance of common stock upon exercise of warrants (in shares)			0
Issuance of common stock upon exercise of warrants	0		$ 0	0		0
Stock-based compensation expense	297,280		0	297,280		0
Balance at Jun. 30, 2021	50,166,602		$ 2,038	164,495,840		(114,331,276)
Balance (in shares) at Dec. 31, 2021		0	2,038,185
Balance at Dec. 31, 2021	34,911,467	$ 0	$ 2,038	164,914,540	$ 0	(130,005,111)
Conversion of Series C preferred stock to common stock (in shares)		(10,000)
Conversion of Series C preferred stock to common stock		$ (5,000)
Conversion of Series C preferred stock to common stock (in shares)			200
Stock-based compensation expense and vesting of restricted stock units (in shares)		0	529
Stock-based compensation expense and vesting of restricted stock units	556,261	$ 0	$ 0	556,261	0	0
Unrealized loss on marketable securities	(86,583)	0	0	0	(86,583)	0
Net loss	(8,717,142)	$ 0	$ 0	0	0	(8,717,142)
Balance (in shares) at Jun. 30, 2022		0	2,038,914
Balance at Jun. 30, 2022	26,669,003	$ 0	$ 2,038	165,475,801	(86,583)	(138,722,253)
Sale of Series C preferred stock to related parties (in shares)		10,000	0
Sale of Series C preferred stock to related parties	5,000	$ 5,000	$ 0	0	0	0
Balance (in shares) at Mar. 31, 2022		10,000	2,038,392
Balance at Mar. 31, 2022	30,618,299	$ 5,000	$ 2,038	165,192,671	(49,658)	(134,531,752)
Conversion of Series C preferred stock to common stock (in shares)		(10,000)
Conversion of Series C preferred stock to common stock		$ (5,000)
Conversion of Series C preferred stock to common stock (in shares)			200
Stock-based compensation expense and vesting of restricted stock units (in shares)		0	322
Stock-based compensation expense and vesting of restricted stock units	278,130	$ 0	$ 0	278,130	0	0
Unrealized loss on marketable securities	(36,925)	0	0	0	(36,925)	0
Net loss	(4,190,501)	$ 0	$ 0	0	0	(4,190,501)
Balance (in shares) at Jun. 30, 2022		0	2,038,914
Balance at Jun. 30, 2022	$ 26,669,003	$ 0	$ 2,038	165,475,801	$ (86,583)	$ (138,722,253)
Conversion of Series C preferred stock to common stock				$ 5,000

Note 5 - Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Fair Value Disclosures [Text Block]

5.	Fair Value of Financial Instruments

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including prepaid expense and accounts payable are shown at cost, which approximates fair value due to the short-term nature of these instruments. The Company follows the provisions of FASB ASC Topic 820, Fair Value Measurement, for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:

•

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

•

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities.

•

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following table presents the Company’s assets that are measured at fair value on a recurring basis (amounts in thousands):

Fair value measurement at reporting date

Quoted prices in

active markets for

identical assets

(Level 1)

Significant other

observable inputs

(Level 2)

Significant

unobservable

inputs (Level 3)

June 30, 2022:

Cash equivalents:

Money market funds
$ 3,886,704 $ — $ —

Commercial paper
— 994,427 —

Total cash equivalents
$ 3,886,704 $ 994,427 $ —

Marketable securities

Commercial paper
$ —
$
17,601,081 $ —

US treasury
— 4,973,600 —

Total marketable securities
$ — $ 22,574,681 $ —

Total financial assets
$ 3,886,704 $ 23,569,108 $ —

The fair values of the Company’s Level 2 marketable securities are estimated primarily based on benchmark yields, reported trades, market-based quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications, which represent a market approach. In general, a market approach is utilized if there is readily available and relevant market activity for an individual security. This valuation technique may change from period to period, based on the relevance and availability of market data.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Note 8 - Stock-based Compensation

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

8.	Stock-Based Compensation

2015 Equity Plan

The 2015 Equity Plan provides for increases to the number of shares reserved for issuance thereunder each January 1 equal to 4.0% of the total shares of the Company’s common stock outstanding as of the immediately preceding December 31, unless a lesser amount is stipulated by the Compensation Committee of the Company's board of directors. Accordingly, 81,531 shares were added to the reserve as of January 1, 2022, which shares may be issued in connection with the grant of stock-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other types of awards as deemed appropriate, in each case, in accordance with the terms of the 2015 Equity Plan. As of June 30, 2022, there were 42,461 shares available for future issuance under the 2015 Equity Plan.

The Company recorded stock-based compensation expense in the following expense categories of its unaudited interim consolidated statements of operations for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Research and development	$	58,892	$	59,567	$	117,785	$	92,567
General and administrative		219,238		237,713		438,476		385,993
Total stock-based compensation expense	$	278,130	$	297,280	$	556,261	$	478,560

The following table summarizes the activity related to all stock option grants for the six months ended June 30, 2022:

	Number of Options			Weighted average exercise price per share		Weighted average remaining contractual life (in years)		Aggregate intrinsic value
Balance at January 1, 2021		72,454		$	265.85
Granted		56,300			11.40
Forfeited		(5,612	)		188.18
Expired		(260	)		1,575
Outstanding at June 30, 2022		122,882		$	149.96		8.8	$	—
Exercisable at June 30, 2022		60,688		$	283.73		8.1	$	—
Vested and expected to vest at June 30, 2022		122,882		$	149.96		8.8	$	—

The weighted average grant date fair value of stock option awards granted during the six months ended June 30, 2022 was $10.35. The total fair value of options vested during the three months ended June 30, 2022 and 2021 was $0.3 million and $0.1 million, respectively. The total fair value of options vested during the six months June 30, 2022 and 2021 was $0.5 million and $0.3 million, respectively. No options were exercised during any of the periods presented. At June 30, 2022, there was $1.1 million of unrecognized compensation expense that will be recognized over a weighted-average period of 1.93 years.

Options granted were valued using the Black-Scholes option-pricing model and the weighted average assumptions used to value the options granted during the six months ended June 30, 2022 and 2021 were as follows:

2022

2021

Expected term (in years)
5.74 10

Risk-free interest rate
1.9 % 1.5 %

Expected volatility
135.0 % 124.5 %

Dividend yield
— % — %

Restricted Stock Unit Awards

The Company issues restricted stock units ("RSU") to newly elected, non-executive members of the board of directors that vest in six, tri-monthly installments beginning 18 months after the respective grant date. The fair value of a RSU is equal to the fair market value price of the Company’s common stock on the date of grant. RSU expense is recorded on a straight-line basis over the service period.

The following table summarizes activity related to RSU awards during the period indicated:

Number of

Units

Weighted

average

grant date fair

value

Balance at January 1, 2022
5,509 $ 34.78

Vested (1)
(837 ) 29.87

Outstanding at June 30, 2022
4,672 $ 35.66

(1) The RSUs vested during the six months ended June 30, 2022 were settled on a hybrid basis. The Company withheld 308 shares of common stock and, in lieu of delivering such shares, paid the RSU holder an amount in cash equal to the fair market value of such shares on vesting date, representing the holder's approximate tax liability associated with such vesting amount in cash equal to the fair market value of such shares on vesting date, representing the holder's approximate tax liability associated with such vesting.

The Company recognized approximately $16,000 and $5,000 in expense related to these awards during the three months ended June 30, 2022 and 2021, respectively. The Company recognized approximately $32,000 and $10,000 in expense related to these awards during the six months ended June 30, 2022 and 2021, respectively. At June 30, 2022, there was approximately $96,000 of unrecognized compensation cost that will be recognized over a weighted average period of 1.69 years.

Note 9 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

9.	Commitments and Contingencies

Office Space Lease Commitment

The Company has short term agreements to utilize membership-based co-working space in both Charlottesville, Virginia and Philadelphia, Pennsylvania. Rent expense related to the Company's short-term agreements for the three months ended June 30, 2022 and 2021 was approximately $2,000 and $29,000, respectively. Rent expense related to the Company's short-term agreements was approximately $11,000 and $60,000 for the six months ended June 30, 2022 and 2021, respectively.

Research and Development Arrangements

In the course of normal business operations, the Company enters into agreements with universities and CROs to assist in the performance of research and development activities and contract manufacturers to assist with chemistry, manufacturing, and controls related expenses. Expenditures to CROs represent a significant cost in clinical development for the Company. The Company could also enter into additional collaborative research, contract research, manufacturing, and supplier agreements in the future, which may require upfront payments and long-term commitments of cash.

Defined Contribution Retirement Plan

The Company has established its 401(k) Plan, which covers all employees who qualify under the terms of the plan. Eligible employees may elect to contribute to the 401(k) Plan up to 90% of their compensation, limited by the IRS-imposed maximum. The Company provides a safe harbor match with a maximum amount of 4% of the participant’s compensation. The Company made matching contributions under the 401(k) Plan of approximately $26,000 and $24,000 for the three months ended and matched contributions under the 401(k) Plan of approximately $53,000 and $40,000 for the six months ended June 30, 2022 and 2021, respectively.

Legal Proceedings

On August 7, 2014, a complaint was filed in the Superior Court of Los Angeles County, California by Paul Feller, the former Chief Executive Officer of the Company’s legal predecessor under the caption Paul Feller v. RestorGenex Corporation, Pro Sports & Entertainment, Inc., ProElite, Inc. and Stratus Media Group, GmbH (Case No. BC553996). The complaint asserts various causes of action, including, among other things, promissory fraud, negligent misrepresentation, breach of contract, breach of employment agreement, breach of the covenant of good faith and fair dealing, violations of the California Labor Code and common counts. The plaintiff is seeking, among other things, compensatory damages in an undetermined amount, punitive damages, accrued interest and an award of attorneys’ fees and costs. On December 30, 2014, the Company filed a petition to compel arbitration and a motion to stay the action. On April 1, 2015, the plaintiff filed a petition in opposition to the Company’s petition to compel arbitration and a motion to stay the action. After a related hearing on April 14, 2015, the court granted the Company’s petition to compel arbitration and a motion to stay the action. On January 8, 2016, the plaintiff filed an arbitration demand with the American Arbitration Association. On November 19, 2018 at an Order to Show Cause Re Dismissal Hearing, the court found sufficient grounds not to dismiss the case and an arbitration hearing was scheduled, originally for November 2020 but later postponed due to the COVID-19 pandemic and related restrictions on gatherings in the State of California. In addition, following the November 2018 hearing, an automatic stay was placed on the arbitration in connection with the plaintiff filing for personal bankruptcy protection. On October 22, 2021, following a determination by the bankruptcy trustee not to pursue the claims and release them back to the plaintiff, the parties entered into a stipulation to abandon arbitration and return the matter to state court. A case management conference was held on February 23, 2022 at which a trial date of May 24, 2023 was set, and the parties have agreed to stipulate to mediation in advance of the trial.

The Company believes the claims in this matter are without merit and intends to defend itself vigorously. However, at this stage, the Company is unable to predict the outcome and possible loss or range of loss, if any, associated with its resolution or any potential effect the matter may have on the Company’s financial position. Depending on the outcome or resolution of this matter, it could have a material effect on the Company’s financial position, results of operations and cash flows.

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 5,965,726	$ 37,313,558
Marketable securities	22,574,681	0
Prepaid expenses, deposits and other current assets	643,618	510,015
Total current assets	29,184,025	37,823,573
Other assets	0	15,578
Total assets	29,184,025	37,839,151
Current liabilities:
Accounts payable	846,032	947,495
Accrued expenses and other current liabilities	1,668,990	1,980,189
Total current liabilities	2,515,022	2,927,684
Commitments and Contingencies (Note 9)
Stockholders’ Equity:
Common stock, $0.001 par value: 1,000,000,000 shares authorized: 2,038,914 and 2,038,185 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	2,038	2,038
Additional paid-in capital	165,475,801	164,914,540
Accumulated other comprehensive loss	(86,583)	0
Accumulated deficit	(138,722,253)	(130,005,111)
Total stockholders' equity	26,669,003	34,911,467
Total liabilities and stockholders' equity	$ 29,184,025	$ 37,839,151

Note 8 - Stock-based Compensation - RSU Stock-based Payment Awards (Details) - Restricted Stock Units (RSUs) [Member]

6 Months Ended

Jun. 30, 2022

$ / shares

Unvested, shares (in shares) | shares

5,509

Unvested, Weighted-average grant date fair value (in dollars per share) | $ / shares

$ 34.78

Vested, shars (in shares) | shares

(837)

^[1]

Vested, Weighted-average grant date fair value (in dollars per share) | $ / shares

$ 29.87

Unvested, shares (in shares) | shares

4,672

Unvested, Weighted-average grant date fair value (in dollars per share) | $ / shares

$ 35.66

[1]

The RSUs vested during the three months ended March 31, 2022 were settled on a hybrid basis. The Company withheld 120 shares of common stock and, in lieu of delivering such shares, paid the RSU holder an amount in cash equal to the fair market value of such shares on vesting date, representing the holder's approximate tax liability associated with such vesting amount in cash equal to the fair market value of such shares on vesting date, representing the holder's approximate tax liability associated with such vesting.

Note 6 - Accrued Expenses and Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Other Current Liabilities [Table Text Block]

	June 30, 2022		December 31, 2021
Accrued payroll and payroll related expenses	$	661,061	$	879,971
Accrued professional fees		163,269		247,704
Accrued clinical studies expenses		766,916		786,579
Other accrued expenses		77,744		65,935
Total	$	1,668,990	$	1,980,189

Note 8 - Stock-based Compensation - Stock Option Activity (Details)	6 Months Ended
	Jun. 30, 2022 USD ($) $ / shares shares
Balance at January 1, 2021 (in shares) \| shares	72,454
Balance at January 1, 2021 (in dollars per share) \| $ / shares	$ 265.85
Granted (in shares) \| shares	56,300
Granted, weighted-average exercise price (in dollars per share) \| $ / shares	$ 11.40
Forfeited (in shares) \| shares	(5,612)
Forfeited (in dollars per share) \| $ / shares	$ 188.18
Expired (in shares) \| shares	(260)
Expired (in dollars per share) \| $ / shares	$ 1,575
Options outstanding, number (in shares) \| shares	122,882
Options outstanding, weighted-average exercise price (in dollars per share) \| $ / shares	$ 149.96
Options outstanding, weighted-average remaining contractual life (Year)	8 years 9 months 18 days
Options outstanding, aggregate intrinsic value \| $	$ 0
Exercisable (in shares) \| shares	60,688
Exercisable, weighted-average exercise price (in dollars per share) \| $ / shares	$ 283.73
Exercisable, weighted-average remaining contractual life (Year)	8 years 1 month 6 days
Exercisable, aggregate intrinsic value \| $	$ 0
Vested and expected to vest (in shares) \| shares	122,882
Vested and expected to vest, weighted-average exercise price (in dollars per share) \| $ / shares	$ 149.96
Vested and expected to vest, weighted-average remaining contractual life (Year)	8 years 9 months 18 days
Vested and expected to vest, aggregate intrinsic value \| $	$ 0