STOCKHOLDERS’ EQUITY

3 Months Ended

Sep. 30, 2022

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 8 — STOCKHOLDERS’ EQUITY

Preferred Stock —The Company has 10,000,000 authorized shares of Preferred Stock, par value $0.0001 per share. At September 30, 2022, and June 30, 2022, there were zero shares issued and outstanding.

Common Stock —The Company has 100,000,000 authorized shares of Common Stock, par value $0.0001 per share. At September 30, 2022, and June 30, 2022, there were 55,507,082 and 53,007,082 shares issued and outstanding, respectively.

Voting — Holders of Common Stock are entitled to one vote for each share held of record on each matter submitted to a vote of stockholders, including the election of directors, and do not have any right to cumulate votes in the election of directors.

Dividends — Holders of Common Stock are entitled to receive ratably such dividends as the Board from time to time may declare out of funds legally available.

Liquidation Rights — In the event of any liquidation, dissolution or winding up of affairs of the Company, after payment of all debts and liabilities, the holders of Common Stock will be entitled to share ratably in the distribution of any of the remaining assets.

Purchase Agreement with Lincoln Park Capital

On July 8, 2020, we entered into a purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which the Company may sell and issue to Lincoln Park, and Lincoln Park is obligated to purchase, up to $20,000,000 of shares of our Common Stock from time to time through August 1, 2023.

In consideration for entering into the Purchase Agreement, we issued 139,567 shares of Common Stock to Lincoln Park as a commitment fee on July 21, 2020.

During the three months ended September 30, 2022 and 2021, we did not sell any shares of Common Stock to Lincoln Park under the Purchase Agreement. At September 30, 2022, an amount of $14,102,251 remained available under the Purchase Agreement. As of October 17, 2022, we no longer have access to this Purchase Agreement as we are no longer able to use the registration statement on Form S-3 that registered the shares issuable to Lincoln Park under the Purchase Agreement.

Common Stock Issuances

On July 14, 2022, certain of our warrant holders exercised warrants to purchase 1,250,000 shares of Common Stock for total proceeds to the Company of $1,625,000, with corresponding earn-out distribution of the same number of shares in connection with the acquisition of Enochian BioPharma, Inc., based on the share price on that date of $2.21. This non-cash earn-out distribution impacted stockholders’ equity in the amount of $2,762,500 based on the share price on July 14, 2022 of $2.21. In the three months ended September 30, 2022 and 2021 there were 2,500,000 and zero shares of Common Stock issued, respectively. For the period ending September 30, 2022, the Company recorded a loss on extinguishment of contingent consideration liability of $419,182 which reflects the difference between the fair value of the shares and the contingent consideration liability at the time of issuance. As of September 30, 2022, all outstanding warrants have been exercised and there is no further contingent consideration liability balance remaining as of the end of this period.

Acquisition of Enochian Biopharma Inc. / Contingently issuable shares — On February 16, 2018, the acquisition of Enochian Biopharma was completed. As part of the acquisition, the stockholders of Enochian Biopharma received (i) 18,081,962 shares of Common Stock, and (ii) the right to receive Contingent Shares of Common Stock pro rata upon the exercise or conversion of warrants, which were outstanding at closing. As of September 30, 2022, no further Contingent Shares are issuable.

Acquisition of Enochian Denmark — At September 30, 2022, and June 30, 2022, the Company maintained a reserve of 17,414 shares of Common Stock of the Registrant held in escrow according to Danish law (the “Escrow Shares”), all of which are reflected as issued and outstanding in the accompanying financial statements. The Escrow Shares are reserved to acquire the shares of Enochian Denmark held by non-consenting shareholders of Enochian Denmark on both September 30, 2022, and June 30, 2022, in accordance with Section 70 of the Danish Companies Act and the Articles of Association of DanDrit Denmark. There have been 167,639 shares of Common Stock issued to non-consenting shareholders of Enochian Denmark as of September 30, 2022. During the three months ended September 30, 2022, the Company issued zero shares of Common Stock to such non-consenting shareholders of Enochian Denmark. There is no impact on outstanding shares as these shares are reflected as issued and outstanding.

Stock-based Compensation

The Company recognizes compensation costs for stock option awards to employees and directors based on their grant-date fair value. The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted-average assumptions used to estimate the fair values of the stock options granted using the Black-Scholes option-pricing model are as follows in the three months ended September 30, 2022:

	Enochian Biosciences Inc.
Expected term (in years)		5.25 – 5.5
Volatility		86.78% – 88.48%
Risk free interest rate		2.70% – 3.05%
Dividend yield		0%

The Company recognized stock-based compensation expense related to the options of $1,026,008 and $2,727,975 for the three months ended September 30, 2022 and 2021, respectively. At September 30, 2022, the Company had approximately $5,485,468 of unrecognized compensation cost related to non-vested options.

Plan Options

On February 6, 2014, the Board adopted the Company’s 2014 Equity Incentive Plan (the “2014 Plan”), and the Company had reserved 1,206,000 shares of Common Stock for issuance in accordance with the terms of the 2014 Plan.

 On October 30, 2019, the Board approved and on October 31, 2019, the Company’s stockholders adopted Enochian’s 2019 Equity Incentive Plan (the “2019 Plan”), which replaced the 2014 Plan. The 2019 Plan authorized options to be awarded to not exceed the sum of (1) 6,000,000 new shares, and (2) the number of shares available for the grant of awards as of the effective date under the 2014 Plan plus any options related to awards that expire, are terminated, surrendered, or forfeited for any reason without issuance of shares under the 2014 Plan after the effective date of the 2019 Plan.

Pursuant to the 2019 Plan, the Company granted options to purchase zero and 3,009,300 shares of Common Stock to employees with a three-year vesting period during the three months ended September 30, 2022 and 2021, respectively.

During the three months ended September 30, 2022, the Company granted options to purchase 184,800 shares of Common stock to employees with a six-month vesting period. For the three months ended September 30, 2021, the Company did not grant options to purchase shares of Common Stock to employees with a six-month vesting period.

During the three months ended September 30, 2022, the Company granted options to purchase 73,200 shares of Common stock to employees with a one-year vesting period. For the three months ended September 30, 2021, the Company did not grant options to purchase shares of Common Stock to employees with a one-year vesting period.

During the three months ended September 30, 2022, the Company granted options to purchase 50,958 shares of Common Stock, to the Board of Directors and Scientific Advisory Board Members with a one-year vesting period. For the three months ended September 30, 2021, the Company granted options to purchase 26,735 shares of Common Stock to members of the Board of Directors and Scientific Advisory Board with a one-year vesting period.

During the three months ended September 30, 2022, the Company did not grant options to purchase shares of Common stock for consulting services with immediate vesting. For the three months ended September 30, 2021, the Company granted options to purchase 21,979 shares of Common Stock to consultants with immediate vesting.

During the three months ended September 30, 2022, the Company did not grant options to purchase shares of Common stock for consulting services with a one-year vesting period. For the three months ended September 30, 2021, the Company granted options to purchase 24,500 shares of Common Stock to for consulting services with a one-year vesting period.

All of the above options are exercisable at the market price of the Company’s Common Stock on the date of the grant.

To date the Company has granted options under the 2014 Plan and 2019 Plan (“Plan Options”) to purchase 5,106,000 shares of Common Stock. At September 30, 2022, the Company has 2,679,848 options available to be issued under the Plan.

A summary of the status of the Plan Options outstanding at September 30, 2022, is presented below: 

Options Outstanding										Options Exercisable
		Exercise Price Ranges		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price
		$	2.00–4.50		522,315		8.64	$	2.80		217,065		7.08	$	3.21
		$	4.51–6.50		3,169,769		8.46	$	4.83		1,153,876		7.84	$	5.26
		$	6.51–12.00		803,393		7.95	$	8.02		543,067		7.31	$	7.92
	Total				4,495,477		8.39	$	5.16		1,914,007		7.60	$	5.78

A summary of the status of the Plan Options at September 30, 2022, and changes since July 1, 2022, are presented below:

	Shares			Weighted Average Exercise Price		Average Remaining Life		Weighted Average Intrinsic Value
Outstanding at beginning of period		4,307,820		$	5.37		8.55	$	—
Granted		308,958		$	2.36			$
Exercised		—		$				$
Forfeited		—		$				$
Expired/Canceled		(121,300	)	$	5.30			$
Outstanding at end of period		4,495,477		$	5.16		8.39	$	—
Exercisable at end of period		1,914,007		$	5.78		7.60	$	—

At September 30, 2022, the Company had 1,914,007 exercisable Plan Options outstanding. The total intrinsic value of options exercisable at September 30, 2022, was zero . Intrinsic value is measured using the fair market value at the date of exercise (for shares exercised) and at September 30, 2022 (for outstanding options), less the applicable exercise price.

Common Stock Purchase Warrants

A summary of the warrants outstanding at September 30, 2022, and changes since July 1, 2022, are presented below:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Life
Outstanding at beginning of period		1,250,000		$	1.30		1.02
Granted		—		$	—		—
Exercised		(1,250,000	)	$	1.30		—
Cancelled/Expired		—		$	—		—
Outstanding and exercisable at end of period		—		$	—		—

Restricted Stock Units (RSUs)

The Company recognized stock-based compensation expense related to RSUs of zero and $2,991 for the three months ended September 30, 2022 and 2021, respectively.

The Company had zero Restricted Stock Units outstanding at September 30, 2022.