Colorado
|
|
84-0916344
|
State
or other jurisdiction incorporation
|
|
(IRS)
Employer Identification
Number
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☒
|
Non-accelerated
filer
|
☐
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
☐
|
|
|
Emerging
growth company
|
☐
|
Class of
Stock
|
|
No Shares
Outstanding
|
|
Date
|
Common
|
|
229,827,331
|
|
May 8, 2017
|
Item
1.
|
|
Page
|
|
|
|
|
Condensed Balance Sheets at March 31, 2017 and September 30, 2016
(unaudited)
|
3
|
|
|
|
|
Condensed Statements of Operations for the six months Ended March
31, 2017 and 2016 (unaudited)
|
4
|
|
|
|
|
Condensed Statements of Operations for the three months Ended March
31, 2017 and 2016 (unaudited)
|
5
|
|
|
|
|
Condensed Statements of Cash Flows for the six months Ended March
31, 2017 and 2016 (unaudited)
|
6
|
|
|
|
|
Notes to Condensed Financial Statements (unaudited)
|
8
|
|
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and
Results of Operations
|
25
|
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market
Risks
|
32
|
|
|
|
Item 4.
|
Controls and Procedures
|
32
|
|
|
|
PART II
|
|
|
|
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of
Proceeds
|
33
|
|
|
|
Item 6.
|
Exhibits
|
33
|
|
|
|
|
Signatures
|
34
|
|
MARCH 31,
|
SEPTEMBER 30,
|
ASSETS
|
2017
|
2016
|
|
(UNAUDITED)
|
|
CURRENT
ASSETS:
|
|
|
Cash
and cash equivalents
|
$1,529,802
|
$2,917,996
|
Receivables
|
4,252
|
394,515
|
Prepaid
expenses
|
720,466
|
981,677
|
Deposits
- current portion
|
150,000
|
154,995
|
Inventory
used for R&D and manufacturing
|
678,664
|
1,008,642
|
Deferred
rent - current portion
|
400,039
|
429,821
|
|
|
|
Total
current assets
|
3,483,223
|
5,887,646
|
|
|
|
RESEARCH
AND OFFICE EQUIPMENT, net
|
219,337
|
226,216
|
|
|
|
PATENT
COSTS, net
|
239,214
|
256,547
|
DEFERRED
RENT - net of current portion
|
3,113,148
|
3,406,921
|
|
|
|
DEPOSITS
|
1,670,917
|
1,820,917
|
|
|
|
TOTAL
ASSETS
|
$8,725,839
|
$11,598,247
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
Accounts
payable
|
$7,074,898
|
$3,091,512
|
Accrued
expenses
|
509,841
|
378,672
|
Due
to employees
|
607,289
|
538,278
|
Derivative
instruments, current portion
|
208,493
|
-
|
Other
current liabilities
|
7,792
|
3,310
|
|
|
|
Total
current liabilities
|
8,408,313
|
4,011,772
|
|
|
|
Derivative
instruments - net of current portion
|
3,228,252
|
8,394,934
|
Deferred
revenue
|
125,000
|
125,000
|
Other
liabilities
|
40,478
|
22,609
|
|
|
|
Total
liabilities
|
11,802,043
|
12,554,315
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT
|
|
|
Preferred
stock, $.01 par value-200,000 shares authorized;
|
|
|
-0-
shares issued and outstanding
|
-
|
-
|
Common
stock, $.01 par value - 600,000,000 shares authorized;
|
|
|
216,478,331
and 155,962,079 shares issued and outstanding
|
|
|
at
March 31, 2017 and September 30, 2016, respectively
|
2,164,784
|
1,559,621
|
Additional
paid-in capital
|
285,299,676
|
283,152,288
|
Accumulated
deficit
|
(290,540,664)
|
(285,667,977)
|
|
|
|
Total
stockholders' deficit
|
(3,076,204)
|
(956,068)
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$8,725,839
|
$11,598,247
|
|
2017
|
2016
|
|
|
|
GRANT
INCOME AND OTHER
|
$34,433
|
$53,751
|
|
|
|
OPERATING
EXPENSES:
|
|
|
Research
and development
|
11,080,073
|
9,798,089
|
General
& administrative
|
2,752,123
|
2,312,397
|
|
|
|
Total
operating expenses
|
13,832,196
|
12,110,486
|
|
|
|
OPERATING
LOSS
|
(13,797,763)
|
(12,056,735)
|
|
|
|
GAIN
ON DERIVATIVE INSTRUMENTS
|
8,879,612
|
5,529,230
|
|
|
|
INTEREST
INCOME, NET
|
45,464
|
24,463
|
|
|
|
NET
LOSS AVAILABLE TO COMMON SHAREHOLDERS
|
$(4,872,687)
|
$(6,503,042)
|
|
|
|
|
|
|
NET
LOSS PER COMMON SHARE
|
|
|
BASIC
|
$(0.03)
|
$(0.06)
|
DILUTED
|
$(0.03)
|
$(0.06)
|
|
|
|
WEIGHTED
AVERAGE COMMON SHARES
|
|
|
OUTSTANDING
|
|
|
BASIC
|
166,245,352
|
114,070,776
|
DILUTED
|
167,064,795
|
114,070,776
|
|
2017
|
2016
|
|
|
|
OTHER
INCOME
|
$17,175
|
$32,775
|
|
|
|
OPERATING
EXPENSES:
|
|
|
Research
and development
|
7,055,217
|
4,628,582
|
General
& administrative
|
1,345,114
|
1,677,796
|
|
|
|
Total
operating expenses
|
8,400,331
|
6,306,378
|
|
|
|
OPERATING
LOSS
|
(8,383,156)
|
(6,273,603)
|
|
|
|
LOSS
ON DERIVATIVE INSTRUMENTS
|
(48,700)
|
(2,593,730)
|
|
|
|
INTEREST
INCOME, NET
|
22,367
|
22,478
|
|
|
|
NET
LOSS AVAILABLE TO COMMON SHAREHOLDERS
|
$(8,409,489)
|
$(8,844,855)
|
|
|
|
|
|
|
NET
LOSS PER COMMON SHARE
|
|
|
BASIC
AND DILUTED
|
$(0.05)
|
$(0.07)
|
|
|
|
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING
|
|
|
BASIC
AND DILUTED
|
182,994,027
|
118,420,327
|
|
2017
|
2016
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
Net
loss
|
$(4,872,687)
|
$(6,503,042)
|
Adjustments
to reconcile net loss to
|
|
|
net
cash used in operating activities:
|
|
|
Depreciation
and amortization
|
61,485
|
80,784
|
Share-based
payments for services
|
112,778
|
472,061
|
Equity
based compensation
|
677,755
|
845,100
|
Common
stock contributed to 401(k) plan
|
76,426
|
82,146
|
Loss
on retired equipment
|
1,187
|
115
|
Gain
on derivative instruments
|
(8,879,612)
|
(5,529,230)
|
(Increase)/decrease
in assets:
|
|
|
Receivables
|
84,922
|
62,080
|
Deferred
rent
|
323,555
|
349,335
|
Prepaid
expenses
|
219,543
|
211,360
|
Inventory
used for R&D and manufacturing
|
329,978
|
106,531
|
Deposits
|
154,995
|
150,000
|
Increase/(decrease)
in liabilities:
|
|
|
Accounts
payable
|
4,214,678
|
(1,659,395)
|
Accrued
expenses
|
131,169
|
559,944
|
Deferred
revenue
|
-
|
(138)
|
Due
to employees
|
140,511
|
(34,582)
|
Deferred
rent liability
|
(1,748)
|
4,176
|
|
|
|
Net
cash used in operating activities
|
(7,225,065)
|
(10,802,755)
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
Purchases
of equipment
|
(10,525)
|
(21,644)
|
|
|
|
Net
cash used in investing activities
|
(10,525)
|
(21,644)
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
Proceeds
from issuance of common stock and warrants
|
5,849,444
|
12,258,287
|
Payments
on related party loan
|
-
|
(1,104,057)
|
Payments
on obligations under capital lease
|
(2,048)
|
(4,423)
|
|
|
|
Net
cash provided by financing activities
|
5,847,396
|
11,149,807
|
|
|
|
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(1,388,194)
|
325,408
|
|
|
|
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
2,917,996
|
5,726,682
|
|
|
|
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
$1,529,802
|
$6,052,090
|
|
2017
|
2016
|
Decrease
in receivable due under the litigation funding arrangement
offset
|
|
|
by
the same amount payable to the legal firm providing the
services
|
$305,341
|
$298,693
|
Capitalizable
patent costs included in accounts payable
|
8,644
|
6,813
|
Capital
lease obligation included in accounts payable
|
1,500
|
750
|
Property
and equip acquired through capital lease
|
26,104
|
-
|
Fair
value of warrants issued in connection with public
offering
|
3,921,423
|
5,060,771
|
Financing
costs included in accounts payable
|
118,866
|
1,910
|
Prepaid
consulting services paid with issuance of common stock
|
(41,668)
|
54,693
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest expense
|
$12
|
$43,576
|
Name of Plan
|
Total Shares Reserved Under Plans
|
Shares Reserved for Outstanding
Options
|
Shares Issued
|
Remaining Options/Shares Under
Plans
|
|
|
|
|
|
Incentive Stock
Options Plans
|
3,460,000
|
1,648,966
|
N/A
|
1,511,334
|
Non-Qualified Stock
Option Plans
|
9,680,000
|
6,531,752
|
N/A
|
2,420,630
|
Stock Bonus
Plans
|
5,594,000
|
N/A
|
4,448,479
|
1,144,694
|
Stock Compensation
Plan
|
3,350,000
|
N/A
|
2,189,749
|
1,127,200
|
Incentive Stock
Bonus Plan
|
16,000,000
|
N/A
|
15,600,000
|
400,000
|
Name of
Plan
|
Total Shares Reserved Under Plans
|
Shares Reserved for Outstanding
Options
|
Shares Issued
|
Remaining Options/Shares Under
Plans
|
|
|
|
|
|
Incentive Stock
Option Plans
|
3,460,000
|
1,648,966
|
N/A
|
1,511,334
|
Non-Qualified Stock
Option Plans
|
9,680,000
|
6,940,321
|
N/A
|
2,059,261
|
Bonus
Plans
|
5,594,000
|
N/A
|
3,161,211
|
2,431,962
|
Stock Compensation
Plan
|
3,350,000
|
N/A
|
1,985,037
|
1,331,912
|
Incentive Stock
Bonus Plan
|
16,000,000
|
N/A
|
15,600,000
|
400,000
|
|
Six Months Ended March 31,
|
|
|
2017
|
2016
|
Granted
|
-
|
210,000
|
Expired
|
382,037
|
-
|
Forfeited
|
26,532
|
50,998
|
|
Three Months Ended March 31,
|
|
|
2017
|
2016
|
Granted
|
-
|
60,000
|
Expired
|
5,000
|
-
|
Forfeited
|
26,532
|
28,032
|
|
Six Months Ended March 31,
|
|
|
2017
|
2016
|
Employees
|
$677,755
|
$845,100
|
Non-employees
|
$112,778
|
$472,061
|
|
Three Months Ended March 31,
|
|
|
2017
|
2016
|
Employees
|
$365,380
|
$417,190
|
Non-employees
|
$34,225
|
$142,866
|
Warrant
|
Issue
Date
|
Shares Issuable upon Exercise of
Warrant
|
Exercise Price
|
Expiration
Date
|
Reference
|
|
|
|
|
|
|
Series
DD
|
12/8/16
|
34,024,000
|
$0.18
|
6/8/17
|
1
|
Series
N
|
8/18/08
|
2,844,627
|
$0.53
|
8/18/17
|
|
Series
EE
|
12/8/16
|
34,024,000
|
$0.18
|
9/8/17
|
1
|
Series
U
|
4/17/14
|
445,514
|
$1.75
|
10/17/17
|
1
|
Series
S
|
10/11/13-
10/24/14
|
25,928,010
|
$1.25
|
10/11/18
|
1
|
Series
V
|
5/28/15
|
20,253,164
|
$0.79
|
5/28/20
|
1
|
Series
W
|
10/28/15
|
17,223,248
|
$0.67
|
10/28/20
|
1
|
Series
X
|
1/13/16
|
3,000,000
|
$0.37
|
1/13/21
|
|
Series
Y
|
2/15/16
|
650,000
|
$0.48
|
2/15/21
|
|
Series
ZZ
|
5/23/16
|
500,000
|
$0.55
|
5/18/21
|
1
|
Series
BB
|
8/26/16
|
400,000
|
$0.55
|
8/22/21
|
1
|
Series
Z
|
5/23/16
|
6,600,000
|
$0.55
|
11/23/21
|
1
|
Series
FF
|
12/8/16
|
1,701,200
|
$0.16
|
12/1/21
|
1
|
Series
CC
|
12/8/16
|
17,012,000
|
$0.20
|
12/8/21
|
1
|
Series
HH
|
2/23/17
|
500,000
|
$0.13
|
2/16/22
|
1
|
Series
AA
|
8/26/16
|
5,000,000
|
$0.55
|
2/22/22
|
1
|
Series
JJ
|
3/14/17
|
750,000
|
$0.13
|
3/8/22
|
1
|
Series
GG
|
2/23/17
|
10,000,000
|
$0.12
|
8/23/22
|
1
|
Series
II
|
3/14/17
|
15,000,000
|
$0.12
|
9/14/22
|
1
|
Consultants
|
12/28/12-
7/1/16
|
570,000
|
$0.37- $2.80
|
4/24/17-
6/30/19
|
2
|
|
March 31,
2017 |
September 30,
2016 |
Series S
warrants
|
$531,525
|
$3,111,361
|
Series U
warrants
|
-
|
-
|
Series V
warrants
|
202,532
|
1,620,253
|
Series W
warrants
|
190,443
|
1,799,858
|
Series Z
warrants
|
142,341
|
970,604
|
Series ZZ
warrants
|
9,414
|
70,609
|
Series AA
warrants
|
116,996
|
763,661
|
Series BB
warrants
|
8,250
|
58,588
|
Series CC
warrants
|
630,554
|
-
|
Series DD
warrants
|
29,324
|
-
|
Series EE
warrants
|
179,169
|
-
|
Series FF
warrants
|
73,816
|
-
|
Series GG
warrants
|
506,426
|
-
|
Series HH
warrants
|
24,290
|
-
|
Series II
warrants
|
755,040
|
-
|
Series JJ
warrants
|
36,625
|
-
|
|
|
|
Total warrant
liabilities
|
$3,436,745
|
$8,394,934
|
|
2017
|
2016
|
Series S
warrants
|
$2,579,836
|
$3,147,660
|
Series U
warrants
|
-
|
26,731
|
Series V
warrants
|
1,417,721
|
1,822,785
|
Series W
warrants
|
1,609,415
|
532,054
|
Series Z
warrants
|
828,263
|
-
|
Series ZZ
warrants
|
61,195
|
-
|
Series AA
warrants
|
646,665
|
-
|
Series BB
warrants
|
50,338
|
-
|
Series CC
warrants
|
429,869
|
-
|
Series DD
warrants
|
413,948
|
-
|
Series EE
warrants
|
512,238
|
-
|
Series FF
warrants
|
47,166
|
-
|
Series GG
warrants
|
108,211
|
-
|
Series HH
warrants
|
5,340
|
-
|
Series II
warrants
|
161,419
|
-
|
Series JJ
warrants
|
7,988
|
-
|
|
|
|
Net gain on warrant
liabilities
|
$8,879,612
|
$5,529,230
|
|
2017
|
2016
|
Series S
warrants
|
$(41,485)
|
$321,507
|
Series U
warrants
|
-
|
(4,455)
|
Series V
warrants
|
-
|
(1,417,721)
|
Series W
warrants
|
(58,189)
|
(1,493,061)
|
Series Z
warrants
|
(40,524)
|
-
|
Series ZZ
warrants
|
(2,689)
|
-
|
Series AA
warrants
|
(32,904)
|
-
|
Series BB
warrants
|
(2,334)
|
-
|
Series CC
warrants
|
(174,623)
|
-
|
Series DD
warrants
|
43,029
|
-
|
Series EE
warrants
|
(2,365)
|
-
|
Series FF
warrants
|
(19,574)
|
-
|
Series GG
warrants
|
108,211
|
-
|
Series HH
warrants
|
5,340
|
-
|
Series II
warrants
|
161,419
|
-
|
Series JJ
warrants
|
7,988
|
-
|
|
|
|
Net loss on warrant
liabilities
|
$(48,700)
|
$(2,593,730)
|
|
Quoted Prices in Active Markets for Identical Assets
or Liabilities (Level 1)
|
Significant Other Observable Inputs (Level
2)
|
Significant Unobservable Inputs (Level
3)
|
Total
|
|
|
|
|
|
Derivative
instruments
|
$531,525
|
$-
|
$2,905,220
|
$3,436,745
|
|
Quoted Prices in Active Markets for Identical Assets
or Liabilities (Level 1)
|
Significant Other Observable Inputs (Level
2)
|
Significant Unobservable Inputs (Level
3)
|
Total
|
|
|
|
|
|
Derivative
instruments
|
$3,111,361
|
$-
|
$5,283,573
|
$8,394,934
|
|
(Six Months Ended)
|
(Year Ended)
|
|
March 31, 2017
|
September 30, 2016
|
|
|
|
Beginning
balance
|
$5,283,573
|
$6,323,032
|
Issuances
|
3,921,423
|
8,722,073
|
Realized and
unrealized gains
|
(6,299,776)
|
(9,761,532)
|
Ending
balance
|
$2,905,220
|
$5,283,573
|
Six months ending
September 30, 2017
|
$18,308
|
Year ending
September 30,
|
|
2018
|
36,487
|
2019
|
34,784
|
2020
|
31,590
|
2021
|
28,290
|
2022
|
24,488
|
Thereafter
|
65,267
|
Total
|
$239,214
|
|
Six Months Ended March 31, 2017
|
||
|
Net Loss
|
Weighted Average Shares
|
LPS
|
|
|
|
|
Basic loss per
share
|
$(4,872,687)
|
166,245,352
|
$(0.03)
|
Gain on derivatives
(1)
|
(330,124)
|
819,443
|
|
|
|
|
|
Dilutive earnings
per share
|
$(5,202,811)
|
167,064,794
|
$(0.03)
|
|
Three Months Ended March 31, 2017
|
||
|
Net Loss
|
Weighted Average Shares
|
LPS
|
|
|
|
|
Basic and dilutive
loss per share
|
$(8,409,489)
|
182,994,027
|
$(0.05)
|
|
Six Months Ended March 31, 2016
|
||
|
Net Loss
|
Weighted Average Shares
|
LPS
|
|
|
|
|
Basic and dilutive
loss per share
|
$(6,503,042)
|
114,070,776
|
$(0.06)
|
|
Three Months Ended March 31, 2016
|
||
|
Net Loss
|
Weighted Average Shares
|
LPS
|
|
|
|
|
Basic and dilutive
loss per share
|
$(8,844,855)
|
118,420,327
|
$(0.07)
|
|
2017
|
2016
|
|
|
|
Options and
Warrants
|
200,944,966
|
78,710,846
|
Unvested Restricted
Stock
|
15,100,000
|
15,100,000
|
Total
|
216,044,966
|
93,810,846
|
|
Six months ended March 31,
|
Three months ended March 31,
|
||
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
MULTIKINE
|
$10,903,871
|
$9,601,627
|
$6,964,266
|
$4,527,201
|
LEAPS
|
176,202
|
196,462
|
90,951
|
101,381
|
|
|
|
|
|
TOTAL
|
$11,080,073
|
$9,798,089
|
$7,055,217
|
$4,628,582
|
Number
|
|
Exhibit
|
|
|
|
31
|
|
Rule 13a-14(a)
Certifications
|
|
|
|
32
|
|
Section 1350
Certifications
|
|
CEL-SCI
CORPORATION
|
|
|
|
|
|
|
Date: May 10, 2017 |
By:
|
/s/
Geert
Kersten
|
|
|
|
Geert Kersten |
|
|
|
Geert Kersten, Principal Executive Officer* |
|
|
|
|
|
|
|
/s/
Geert
Kersten
|
|
|
|
Geert Kersten |
|
|
|
Principal
ExecutiveOfficer
|
|
|
|
|
|
|
|
/s/
Geert
Kersten
|
|
|
|
Geert Kersten |
|
|
|
Principal Financial
Officer
|
|
|
|
|
|
|
|
/s/
Geert
Kersten
|
|
|
|
Geert Kersten |
|
|
|
Principal
Executive and Principal Financial
Officer
|
|
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 08, 2017 |
|
Document And Entity Information | ||
Entity Registrant Name | CEL SCI CORP | |
Entity Central Index Key | 0000725363 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 229,827,331 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2017 |
BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2017 |
Sep. 30, 2016 |
---|---|---|
Stockholders Equity | ||
Preferred Stock Shares Par Value | $ 0.01 | $ 0.01 |
Preferred Stock Shares Authorized | 200,000 | 200,000 |
Preferred Stock Shares Issued | 0 | 0 |
Preferred Stock Shares Outstanding | 0 | 0 |
Common Stock Shares Par Value | $ 0.01 | $ 0.01 |
Common Stock Shares Authorized | 600,000,000 | 600,000,000 |
Common Stock Shares Issued | 216,478,331 | 155,962,079 |
Common Stock Shares Outstanding | 216,478,331 | 155,962,079 |
STATEMENTS OF OPERATIONS - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Income Statement [Abstract] | ||||
GRANT INCOME AND OTHER | $ 34,433 | $ 53,751 | ||
OTHER INCOME | $ 17,175 | $ 32,775 | ||
OPERATING EXPENSES: | ||||
Research and development | 7,055,217 | 4,628,582 | 11,080,073 | 9,798,089 |
General & administrative | 1,345,114 | 1,677,796 | 2,752,123 | 2,312,397 |
Total operating expenses | 8,400,331 | 6,306,378 | 13,832,196 | 12,110,486 |
OPERATING LOSS | (8,383,156) | (6,273,603) | (13,797,763) | (12,056,735) |
(LOSS) GAIN ON DERIVATIVE INSTRUMENTS | (48,700) | (2,593,730) | 8,879,612 | 5,529,230 |
INTEREST INCOME, NET | 22,367 | 22,478 | 45,464 | 24,463 |
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS | $ (8,409,489) | $ (8,844,855) | $ (4,872,687) | $ (6,503,042) |
NET LOSS PER COMMON SHARE | ||||
BASIC | $ (0.03) | $ (0.06) | ||
DILUTED | $ (0.03) | (0.06) | ||
BASIC and DILUTED | $ (0.05) | $ (0.07) | $ (.06) | |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||
BASIC | 166,245,352 | 114,070,776 | ||
DILUTED | 167,064,795 | 114,070,776 | ||
BASIC AND DILUTED | 182,994,027 | 118,420,327 | 114,070,776 |
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended |
---|---|
Mar. 31, 2017 | |
Notes to Financial Statements | |
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation
The accompanying condensed financial statements of CEL-SCI Corporation (the Company) are unaudited and certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission. While management of the Company believes that the disclosures presented are adequate to make the information presented not misleading, these interim condensed financial statements should be read in conjunction with the financial statements and notes included in the Company’s annual report on Form 10-K for the year ended September 30, 2016.
In the opinion of management, the accompanying unaudited condensed financial statements contain all accruals and adjustments (each of which is of a normal recurring nature) necessary for a fair presentation of the Company’s financial position as of March 31, 2017 and the results of its operations for the six months then ended. The condensed balance sheet as of September 30, 2016 is derived from the September 30, 2016 audited financial statements. Significant accounting policies have been consistently applied in the interim financial statements and the annual financial statements. The results of operations for the three and six months ended March 31, 2017 and 2016 are not necessarily indicative of the results to be expected for the entire year.
The financial statements have been prepared assuming that the Company will continue as a going concern, but due to recurring losses from operations and future liquidity needs, there is substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Refer to discussion in Note B.
Summary of Significant Accounting Policies:
Research and Office Equipment and Leasehold Improvements - Research and office equipment is recorded at cost and depreciated using the straight-line method over estimated useful lives of five to seven years. Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Repairs and maintenance which do not extend the life of the asset are expensed when incurred. The fixed assets are reviewed on a quarterly basis to determine if any of the assets are impaired.
Patents - Patent expenditures are capitalized and amortized using the straight-line method over the shorter of the expected useful life or the legal life of the patent (17 years). In the event changes in technology or other circumstances impair the value or life of the patent, appropriate adjustment in the asset value and period of amortization is made. An impairment loss is recognized when estimated future undiscounted cash flows expected to result from the use of the asset, and from its disposition, is less than the carrying value of the asset. The amount of the impairment loss would be the difference between the estimated fair value of the asset and its carrying value.
Research and Development Costs - Research and development costs are expensed as incurred.
Income Taxes - The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating and tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be recognized. A full valuation allowance was recorded against the deferred tax assets as of March 31, 2017 and September 30, 2016.
Derivative Instruments – The Company has entered into financing arrangements that consist of freestanding derivative instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification (ASC) 815, “Accounting for Derivative Instruments and Hedging Activities.” In accordance with accounting principles generally accepted in the United States (U.S. GAAP), derivative instruments and hybrid instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair value with gains or losses recognized in earnings or other comprehensive income depending on the nature of the derivative or hybrid instruments. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument. The derivative liabilities are remeasured at fair value at the end of each interim period as long as they are outstanding.
Deferred Rent (Asset) –Consideration paid, including deposits, related to operating leases is recorded as a deferred rent asset and amortized as rent expense over the lease term. Interest on the deferred rent is calculated at 3% on the funds deposited on the manufacturing facility and is included in deferred rent. This interest income will be used to offset future rent.
Stock-Based Compensation – Compensation cost for all stock-based awards is measured at fair value as of the grant date in accordance with the provisions of ASC 718 “Compensation – Stock Compensation.” The fair value of stock options is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires various judgmental assumptions including volatility and expected option life. The stock-based compensation cost is recognized on the straight line allocation method as expense over the requisite service or vesting period.
Equity instruments issued to non-employees are accounted for in accordance with ASC 505-50, “Equity-Based Payments to Non Employees.” Accordingly, compensation is recognized when goods or services are received and is measured using the Black-Scholes valuation model. The Black-Scholes model requires various judgmental assumptions regarding the fair value of the equity instruments at the measurement date and the expected life of the options.
The Company has Incentive Stock Option Plans, Non-Qualified Stock Option Plans, a Stock Compensation Plan, Stock Bonus Plans and an Incentive Stock Bonus Plan. In some cases, these Plans are collectively referred to as the "Plans". All Plans have been approved by the stockholders.
The Company’s stock options are not transferable, and the actual value of the stock options that an employee may realize, if any, will depend on the excess of the market price on the date of exercise over the exercise price. The Company has based its assumption for stock price volatility on the variance of daily closing prices of the Company’s stock. The risk-free interest rate assumption was based on the U.S. Treasury rate at date of the grant with term equal to the expected life of the option. Historical data was used to estimate option exercise and employee termination within the valuation model. The expected term of options represents the period of time that options granted are expected to be outstanding and has been determined based on an analysis of historical exercise behavior. If any of the assumptions used in the Black-Scholes model change significantly, stock-based compensation expense for new awards may differ materially in the future from that recorded in the current period.
Vesting of restricted stock granted under the Incentive Stock Bonus Plan is subject to service, performance and market conditions and meets the classification of equity awards. These awards were measured at market value on the grant-dates for issuances where the attainment of performance criteria is likely and at fair value on the grant-dates, using a Monte Carlo simulation for issuances where the attainment of performance criteria is uncertain. The total compensation cost will be expensed over the estimated requisite service period.
New Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02, Leases, which will require most leases (with the exception of leases with terms of less than one year) to be recognized on the balance sheet as an asset and a lease liability. Leases will be classified as an operating lease or a financing lease. Operating leases are expensed using the straight-line method whereas financing leases will be treated similarly to a capital lease under the current standard. The new standard will be effective for annual and interim periods, within those fiscal years, beginning after December 15, 2018, but early adoption is permitted. The new standard must be presented using the modified retrospective method beginning with the earliest comparative period presented. The Company is currently evaluating the effect of the new standard on its financial statements and related disclosures.
No other recently issued guidance is expected to have a material impact on the Company’s financial statements.
|
B. OPERATIONS AND FINANCING |
6 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2016 | |||||
Notes to Financial Statements | |||||
B. OPERATIONS AND FINANCING | The Company has incurred significant costs since its inception in connection with the acquisition of certain patented and unpatented proprietary technology and know-how relating to the human immunological defense system, patent applications, research and development, administrative costs, construction of laboratory facilities, and clinical trials. The Company has funded such costs with proceeds from loans and the public and private sale of its common stock. The Company will be required to raise additional capital or find additional long-term financing in order to continue with its research efforts. Currently, the partial clinical hold has had a significant impact on the Company’s market capital, and as such, may impact the Company’s ability to attract new capital. To date, the Company has not generated any revenue from product sales. The ability of the Company to complete the necessary clinical trials and obtain US Food & Drug Administration (FDA) approval for the sale of products to be developed on a commercial basis is uncertain. Ultimately, the Company must complete the development of its products, obtain the appropriate regulatory approvals and obtain sufficient revenues to support its cost structure.
The Company is currently running a large multi-national Phase 3 clinical trial for head and neck cancer with its partners TEVA Pharmaceuticals and Orient Europharma. During the six months ended March 31, 2017, the Company raised approximately $5.8 million net proceeds from multiple financings. To finance the study beyond the next twelve months, the Company plans to raise additional capital in the form of corporate partnerships, debt and/or equity financings. The Company believes that it will be able to obtain additional financing because it has done so consistently in the past and because Multikine is a product in the Phase 3 clinical trial stage. However, there can be no assurance that the Company will be successful in raising additional funds on a timely basis or that the funds will be available to the Company on acceptable terms or at all. If the Company does not raise the necessary amounts of money, it will either have to slow or delay the Phase 3 clinical trial or even significantly curtail its operations until such time as it is able to raise the required funding. The Phase 3 study is currently on partial clinical hold by the FDA. The financial statements have been prepared assuming that the Company will continue as a going concern, but due to recurring losses from operations and future liquidity needs, there is substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Since the Company launched its Phase 3 clinical trial for Multikine, the Company has spent approximately $36.6 million as of March 31, 2017 on direct costs for the Phase 3 clinical trial. The total remaining cash cost of the clinical trial is estimated to be approximately $12.9 million. It should be noted that this estimate is based only on the information currently available in the Company’s contracts with the Clinical Research Organizations responsible for managing the Phase 3 clinical trial and does not include other related costs, e.g. the manufacturing of the drug. This number can be affected by the speed of enrollment, foreign currency exchange rates and many other factors, some of which cannot be foreseen. In the summer of 2016, the Company filed an amendment to the original Phase 3 protocol for it head and neck cancer study with the FDA to allow for this expansion in patient enrollment.
In April 2017 CEL-SCI announced that in light of new information the Company decided to withdraw the study protocol amendment for additional patients that was submitted to the FDA in the summer of 2016. It is now possible that we may not need to add more patients to the study or that only a smaller number of patients need to be added to the study to complete it in a reasonable period of time. Should additional patients be needed, we will submit a future study amendment to the FDA to seek their clearance to proceed.
We are diligently continuing to work with the FDA to have the partial clinical hold lifted. We have been in a continuing dialogue with them to try to resolve their questions and to supply them with supplemental information. On February 8, 2017 we had a Type A meeting with the FDA. The Action Items for CEL-SCI to pursue per the minutes from the FDA meeting were the following:
We have supplied our response to those Action Items to the FDA. In accordance with the partial clinical hold, we are continuing to follow the 928 patients enrolled in the study, and this includes following patients until the targeted 298 deaths between the 2 comparison groups is observed. This number of deaths is required to evaluate if the study’s primary endpoint is achieved.
If the partial clinical hold is not lifted, the Phase 3 study will not be able to be completed to its prespecified endpoints in a timely manner, if at all, and, if the Phase 3 study cannot be completed to its prespecified endpoints, the study would not be able to be used as the pivotal study supporting a marketing application in the United States, and at least one entirely new Phase 3 pivotal study would need to be conducted to provide the pivotal study supporting a marketing application in the United States. Even if the partial clinical hold is lifted, if it is not lifted in a timely fashion, the nature and duration of the partial clinical hold could irreparably harm the data from the Phase 3 study such that it may no longer be able to be used as the pivotal study supporting a marketing application in the United States. Even if the partial clinical hold is lifted in a timely fashion, it remains possible that the regulatory authorities could determine that the Phase 3 study is not sufficient to be used as a single pivotal study supporting a marketing application in the United States. |
C. STOCKHOLDERS EQUITY |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C. STOCKHOLDERS' EQUITY | Stock options, stock bonuses and compensation granted by the Company as of March 31, 2017 are as follows:
Stock options, stock bonuses and compensation granted by the Company as of September 30, 2016 are as follows:
Stock option activity:
No shares of restricted stock were forfeited from the Incentive Stock Bonus Plan during the six and three months ended March 31, 2017 and 2016.
Stock-Based Compensation Expense
Employee compensation expense includes the expense related to options issued or vested and restricted stock. Non-employee expense includes the expense related to options and stock issued to consultants expensed over the period of their service contracts.
Warrants and Non-employee Options
The following chart presents the outstanding warrants and non-employee options, listed by expiration date at March 31, 2017:
The table below presents the warrant liabilities and their respective balances at the balance sheet dates:
The table below presents the gains on the warrant liabilities for the six months ended March 31:
The table below presents the gains and (losses) on the warrant liabilities for the three months ended March 31:
The Company reviews all outstanding warrants in accordance with the requirements of ASC 815. This topic provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. The warrant agreements provide for adjustments to the exercise price for certain dilutive events. Under the provisions of ASC 815, the warrants are not considered indexed to the Company’s stock because future equity offerings or sales of the Company’s stock are not an input to the fair value of a “fixed-for-fixed” option on equity shares, and equity classification is therefore precluded.
In accordance with ASC 815, derivative liabilities must be measured at fair value upon issuance and re-valued at the end of each reporting period through expiration. Any change in fair value between the respective reporting dates is recognized as a gain or loss.
Issuance of additional Warrants
On March 14, 2017, the Company sold 15,000,000 registered shares of common stock and 15,000,000 Series II warrants to purchase 15,000,000 unregistered shares of common stock at combined offering price of $0.10 per share. The Series II warrants have an exercise price of $0.12 per share, are exercisable on September 14, 2017, and expire September 14, 2022. In addition, the Company issued 750,000 Series JJ warrants to purchase 750,000 shares of unregistered common stock to the placement agent. The Series JJ warrants have an exercise price $0.13, are exercisable on September 14, 2017 and expire on March 8, 2022. The net proceeds from this offering were approximately $1.3 million. The fair value of the Series II and JJ warrants of approximately $1.0 million on the date of issuance was recorded as a warrant liability.
On February 23, 2017, the Company sold 10,000,000 registered shares of common stock and 10,000,000 Series GG warrants to purchase 10,000,000 unregistered shares of common stock at a combined price of $0.10 per share. The Series GG warrants have an exercise price of $0.12 per share, are exercisable on August 23, 2017, and expire August 23, 2022. In addition, the Company issued 500,000 Series HH warrants to purchase 500,000 shares of unregistered common stock to the placement agent. The Series HH warrants have an exercise price $0.13, are exercisable on August 23, 2017 and expire on February 16, 2022. The net proceeds from this offering were approximately $0.8 million. The fair value of the Series GG and HH warrants of approximately $0.6 million on the date of issuance was recorded as a warrant liability.
On December 8, 2016, the Company sold 34,024,000 shares of common stock and warrants to purchase common stock at a price of $0.125 in a public offering. The warrants consist of 17,012,000 Series CC warrants to purchase 17,012,000 shares of common stock, 34,024,000 Series DD warrants to purchase 34,024,000 shares of common stock and 34,024,000 Series EE warrants to purchase 34,024,000 shares of common stock. The Series CC warrants are immediately exercisable, expire in five-years from the offering date and have an exercise price of $0.20 per share. The Series DD warrants are immediately exercisable, expire in six-months from the offering date and have an exercise price of $0.18 per share. The Series EE warrants are immediately exercisable, expire in nine-months from the offering date and have an exercise price of $0.18 per share. In addition, the Company issued 1,701,200 Series FF warrants to purchase 1,701,200 shares of common stock to the placement agent. The FF warrants are exercisable at any time on or after June 8, 2017 and expire on December 1, 2021 and have an exercise price $0.15625. The net proceeds from this offering was approximately $3.7 million. The fair value of the Series CC, DD, EE and FF warrants of approximately $2.3 million on the date of issuance was recorded as a warrant liability.
Expiration of Warrants
On March 16, 2017, 590,001 Series P warrants, with an exercise price of $4.50, expired. The fair value of the Series P warrants was $0 on the date of expiration.
On December 6, 2016, 2,625,000 Series R warrants, with an exercise price of $4.00, expired. The fair value of the Series R warrants was $0 on the date of expiration.
On December 22, 2015, 1,200,000 Series Q warrants, with an exercise price of $5.00, expired. The fair value of the Series Q warrants was $0 on the date of expiration.
The Company typically enters into consulting arrangements in exchange for common stock or stock options. During the six and three months ended March 31, 2017, the Company issued 474,984 and 102,492 shares of common stock, respectively, of which 270,000 and 0 were restricted shares. The common stock was issued with stock prices ranging between $0.09 and $0.29 per share. During the six and three months ended March 31, 2016, the Company issued 803,778 and 361,286 shares of common stock, of which 580,000 and 240,000 were restricted shares. The common stock was issued with stock prices ranging between $0.37 and $0.71 per share. Additionally, during the six and three months ended March 31, 2016, the Company issued a consultant 210,000 and 60,000 options, respectively, to purchase common stock at prices between $0.37 and $0.60 per share with fair values ranging between $0.19 and $0.30 per share. These options are fully vested. The aggregate values of the issuances of restricted common stock and common stock options are recorded as prepaid expenses and are charged to general and administrative expenses over the periods of service.
During the six and three months ended March 31, 2017, the Company recorded total expense of approximately $113,000 and $34,000, respectively, relating to these consulting agreements. During the six and three months ended March 31, 2016, the Company recorded total expense of approximately $472,000 and $143,000, respectively, relating to these consulting agreements. At March 31, 2017 and September 30, 2016, approximately $7,000 and $48,000, respectively, are included in prepaid expenses. As of March 31, 2017, 570,000 options were outstanding, which were issued to consultants as payment for services. Of these 570,000 outstanding options, 470,000 were vested, all of which were issued from the Non-Qualified Stock Option plans.
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D. FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D. FAIR VALUE MEASUREMENTS | In accordance with ASC 820-10, “Fair Value Measurements,” the Company determines fair value 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 Company generally applies the income approach to determine fair value. This method uses valuation techniques to convert future amounts to a single present amount. The measurement is based on the value indicated by current market expectations with respect to those future amounts.
ASC 820-10 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to active markets for identical assets and liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The Company classifies fair value balances based on the observability of those inputs. The three levels of the fair value hierarchy are as follows:
For disclosure purposes, assets and liabilities are classified in their entirety in the fair value hierarchy level based on the lowest level of input that is significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy levels.
The table below sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the condensed balance sheet at March 31, 2017:
The table below sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the condensed balance sheet at September 30, 2016:
The following sets forth the reconciliation of beginning and ending balances related to fair value measurements using significant unobservable inputs (Level 3) for the six months ended March 31, 2017 and the year ended September 30, 2016:
The fair values of the Company’s derivative instruments disclosed above under Level 3 are primarily derived from valuation models where significant inputs such as historical price and volatility of the Company’s stock, as well as U.S. Treasury Bill rates, are observable in active markets.
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E. RELATED PARTY TRANSACTIONS |
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Mar. 31, 2017 | |
Notes to Financial Statements | |
E. RELATED PARTY TRANSACTIONS | Effective August 31, 2016, Maximilian de Clara, the Company’s then President and a director, resigned for health reasons. In payment for past services, the Company agreed to issue Mr. de Clara 650,000 shares of restricted stock; 325,000 shares upon his resignation and 325,000 on August 31, 2017. At March 31, 2017 and September 30, 2016, the fair value accrued for unissued shares was approximately $29,000 and $101,000, respectively.
On January 13, 2016, the de Clara Trust demanded payment on a note payable, of which the balance, including accrued and unpaid interest, was approximately $1.1 million. The de Clara Trust was established by Maximilian de Clara, the Company’s former President and a director. The Company’s Chief Executive Officer, Geert Kersten, is a beneficiary of the de Clara Trust. When the de Clara Trust demanded payment on the note, the Company sold 3,000,000 shares of its common stock and 3,000,000 Series X warrants to the de Clara Trust for approximately $1.1 million. Each warrant allows the de Clara Trust to purchase one share of the Company's common stock at a price of $0.37 per share at any time on or before January 13, 2021.
No interest payments were made to Mr. de Clara during the six and three months ended March 31, 2017. During the six and three months ended March 31, 2016, the Company paid approximately $43,000 and $10,000, respectively, in interest expense to Mr. de Clara.
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F. COMMITMENTS AND CONTINGENCIES |
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Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
F. COMMITMENTS AND CONTINGENCIES | Clinical Research Agreements
In March 2013, the Company entered into an agreement with Aptiv Solutions, Inc. (which was subsequently acquired by ICON Inc.) to provide certain clinical research services in accordance with a master service agreement. The Company will reimburse ICON for costs incurred. The agreement required the Company to make $600,000 in advance payments which are being credited against future invoices in $150,000 annual increments through December 2017. As of March 31, 2017, the total balance advanced is $150,000, which is classified as a current asset.
In April 2013, the Company entered into a co-development and revenue sharing agreement with Ergomed. Under the agreement, Ergomed will contribute up to $10 million towards the study in the form of offering discounted clinical services in exchange for a single digit percentage of milestone and royalty payments, up to a specific maximum amount. In October 2015, the Company entered into a second co-development and revenue sharing agreement with Ergomed for an additional $2 million, for a total of $12 million. The Company accounted for the co-development and revenue sharing agreement in accordance with ASC 808 “Collaborative Arrangements”. The Company determined the payments to Ergomed are within the scope of ASC 730 “Research and Development.” Therefore, the Company records the discount on the clinical services as a credit to research and development expense on its Statements of Operations. Since the Company entered into the co-development and revenue sharing agreement with Ergomed, it has incurred research and development expenses of approximately $23.2 million related to Ergomed’s services. This amount is net of Ergomed’s co-development contribution of approximately $7.7 million. During the six and three months ended March 31, 2017, the Company recorded, net of Ergomed’s co-development contribution, approximately $4.1 million and $2.8 million, respectively, as research and development expense related to Ergomed’s services. During the six and three months ended March 31, 2016, the Company recorded, net of Ergomed’s co-development contribution, approximately $3.8 million and $1.8 million, respectively, as research and development expense related to Ergomed’s services.
In October 2013, the Company entered into two co-development and profit sharing agreements with Ergomed. One agreement supports the Phase 1 study being conducted at the University of California, San Francisco, or UCSF, for the development of Multikine as a potential treatment for peri-anal warts in HIV/HPV co-infected men and women. The Phase 1 study originally started after the Company signed a cooperative research and development agreement with the U.S. Naval Medical Center, San Diego. In August 2016, the U.S. Navy discontinued this Phase 1 study because of difficulties in enrolling patients. The other agreement focuses on the development of Multikine as a potential treatment for cervical dysplasia in HIV/HPV co-infected women. Ergomed will assume up to $3 million in clinical and regulatory costs for each study.
The Company is currently involved in a pending arbitration proceeding, CEL-SCI Corporation v. inVentiv Health Clinical, LLC (f/k/a PharmaNet LLC) and PharmaNet GmbH (f/k/a PharmaNet AG). The Company initiated the proceedings against inVentiv Health Clinical, LLC, or inVentiv, the former third-party CRO, and are seeking payment for damages related to inVentiv’s prior involvement in the Phase 3 clinical trial of Multikine. The arbitration claim, initiated under the Commercial Rules of the American Arbitration Association, alleges (i) breach of contract, (ii) fraud in the inducement, and (iii) common law fraud. Currently, the Company is seeking at least $50 million in damages in its amended statement of claim.
In an amended statement of claim, the Company asserted the claims set forth above as well as an additional claim for professional malpractice. The arbitrator subsequently granted inVentiv’s motion to dismiss the professional malpractice claim based on the “economic loss doctrine” which, under New Jersey law, is a legal doctrine that, under certain circumstances, prohibits bringing a negligence-based claim alongside a claim for breach of contract. The arbitrator denied the remainder of inVentiv’s motion, which had sought to dismiss certain other aspects of the amended statement of claim. In particular, the arbitrator rejected inVentiv’s argument that several aspects of the amended statement of claim were beyond the arbitrator’s jurisdiction.
In connection with the pending arbitration proceedings, inVentiv has asserted counterclaims against the Company for (i) breach of contract, seeking at least $2 million in damages for services allegedly performed by inVentiv; (ii) breach of contract, seeking at least $1 million in damages for the alleged use of inVentiv’s name in connection with publications and promotions in violation of the parties’ contract; (iii) opportunistic breach, restitution and unjust enrichment, seeking at least $20 million in disgorgement of alleged unjust profits allegedly made by the Company as a result of the purported breaches referenced in subsection (ii); and (iv) defamation, seeking at least $1 million in damages for allegedly defamatory statements made about inVentiv. The Company believes inVentiv’s counterclaims are meritless and intends to vigorously defend against them. However, if such defense is unsuccessful, and inVentiv successfully asserts any of its counterclaims, such an adverse determination could have a material adverse effect on the Company’s business, results, financial condition and liquidity.
In October 2015 the Company signed an arbitration funding agreement with a company established by Lake Whillans Litigation Finance, LLC, a firm specializing in funding litigation expenses. Pursuant to the agreement, an affiliate of Lake Whillans provides the Company with up to $5 million in funding for litigation expenses to support its arbitration claims against inVentiv. The funding is available to the Company to fund the expenses of the ongoing arbitration and will only be repaid if the Company receives proceeds from the arbitration. During the three months ended December 31, 2015, the Company recognized a gain of approximately $1.1 million on the derecognition of legal fees to record the transfer of the liability that existed prior to the execution of the financing agreement from the Company to Lake Whillans. The gain on derecognition of legal fees is recorded as a reduction of general and administration expenses on the Statement of Operations. All related legal fees are directly billed to and paid by Lake Whillans. As part of the agreement with Lake Whillans, the law firm agreed to cap its fees and expenses for the arbitration at $5 million.
The arbitration has been going on longer than expected, but it is finally nearing its end. The hearing (the “trial”) started on September 26, 2016 and was originally scheduled to end in November/December of 2016. Instead it is still ongoing, but we expect it to end during the second quarter of 2017.
Lease Agreements
The Company leases a building near Baltimore, Maryland. The building was remodeled in accordance with the Company’s specifications so that it can be used by the Company to manufacture Multikine for the Company’s Phase 3 clinical trial and sales of the drug if approved by the FDA. The lease is for a term of twenty years and requires annual base rent to escalate each year at 3%. The Company is required to pay all real estate and personal property taxes, insurance premiums, maintenance expenses, repair costs and utilities. The lease allows the Company, at its election, to extend the lease for two ten-year periods or to purchase the building at the end of the 20-year lease.
The Company was required to deposit the equivalent of one year of base rent in accordance with the lease. When the Company meets the minimum cash balance required by the lease, the deposit will be returned to the Company. The approximate $1.7 million deposit is included in non-current assets at March 31, 2017 and September 30, 2016.
The Company subleases a portion of its rental space on a month-to-month term lease, which requires a 30 day notice for termination. The Company receives approximately $6,000 per month in rent for the sub-leased space.
The Company leases its research and development laboratory under a 60 month lease which expires February 28, 2022. The operating lease includes escalating rental payments. The Company is recognizing the related rent expense on a straight line basis over the full 60 month term of the lease at the rate of approximately $13,000 per month. As of March 31, 2017 and September 30, 2016, the Company has recorded a deferred rent liability of approximately $1,000 and $2,000, respectively.
The Company leases its office headquarters under a 60 month lease which expires June 30, 2020. The operating lease includes escalating rental payments. The Company is recognizing the related rent expense on a straight line basis over the full 60 month term of the lease at the rate approximately $8,000 per month. As of March 31, 2017 and September 30, 2016, the Company has recorded a deferred rent liability of approximately $18,000.
The Company leases office equipment under a capital lease arrangement. The term of the capital lease is 60 months and expires on October 31, 2021. The monthly lease payment is $505. The lease bears interest at approximately 6.25% per annum. The Company’s previous equipment lease expired on September 30, 2016.
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G. PATENTS |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
G. PATENTS | During the six and three months ended March 31, 2017 and 2016, no patent impairment charges were recorded. For the six and three months ended March 31, 2017, amortization of patent costs totaled approximately $19,000 and $10,000, respectively. For the six and three months ended March 31, 2016, amortization of patent costs totaled approximately $18,000 and $9,000, respectively. The total estimated future amortization expense is approximately as follows:
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H. LOSS PER COMMON SHARE |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
H. LOSS PER COMMON SHARE | The following tables provide the details of the basic and diluted loss per-share (LPS) computations:
The gain on derivatives priced lower than the average market price during the period is excluded from the numerator and the related shares are excluded from the denominator in calculating diluted loss per share.
In accordance with the contingently issuable shares guidance of FASB ASC Topic 260, Earnings Per Share, the calculation of diluted net earnings (loss) per share excludes the following securities because their inclusion would have been anti-dilutive as of March 31:
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I. SUBSEQUENT EVENTS |
6 Months Ended |
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Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
I. SUBSEQUENT EVENTS | On April 30, 2017, the Company entered into a securities purchase agreement with an institutional investor whereby it sold 13,199,000 shares of its common stock for aggregate gross proceeds of approximately $1.51 million, or $0.115 per share, in a registered direct offering. In a concurrent private placement, the Company also issued to the purchaser of the Company’s common stock, Series KK warrants to purchase 9,899,250 shares of common stock. The warrants can be exercised at a price of $0.1214 per share, commencing six months after the date of issuance and ending five and a half years after the date of issuance. In addition, the Company agreed to issue 659,950 Series LL warrants to the Placement Agent as part of its compensation. The Series LL warrants are subject to a 180-day lock-up and may be exercised at any time on or after October 30, 2017 and on or before April 30, 2022 at a price of $0.14375 per share. |
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (POLICIES) |
6 Months Ended |
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Mar. 31, 2017 | |
A. Summary Of Significant Accounting Policies Policies | |
Basis of Presentation | The accompanying condensed financial statements of CEL-SCI Corporation (the Company) are unaudited and certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission. While management of the Company believes that the disclosures presented are adequate to make the information presented not misleading, these interim condensed financial statements should be read in conjunction with the financial statements and notes included in the Company’s annual report on Form 10-K for the year ended September 30, 2016.
In the opinion of management, the accompanying unaudited condensed financial statements contain all accruals and adjustments (each of which is of a normal recurring nature) necessary for a fair presentation of the Company’s financial position as of March 31, 2017 and the results of its operations for the six months then ended. The condensed balance sheet as of September 30, 2016 is derived from the September 30, 2016 audited financial statements. Significant accounting policies have been consistently applied in the interim financial statements and the annual financial statements. The results of operations for the three and six months ended March 31, 2017 and 2016 are not necessarily indicative of the results to be expected for the entire year.
The financial statements have been prepared assuming that the Company will continue as a going concern, but due to recurring losses from operations and future liquidity needs, there is substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Refer to discussion in Note B. |
Research and Office Equipment and Leasehold Improvements | Research and Office Equipment and Leasehold Improvements - Research and office equipment is recorded at cost and depreciated using the straight-line method over estimated useful lives of five to seven years. Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Repairs and maintenance which do not extend the life of the asset are expensed when incurred. The fixed assets are reviewed on a quarterly basis to determine if any of the assets are impaired. |
Patents | Patents - Patent expenditures are capitalized and amortized using the straight-line method over the shorter of the expected useful life or the legal life of the patent (17 years). In the event changes in technology or other circumstances impair the value or life of the patent, appropriate adjustment in the asset value and period of amortization is made. An impairment loss is recognized when estimated future undiscounted cash flows expected to result from the use of the asset, and from its disposition, is less than the carrying value of the asset. The amount of the impairment loss would be the difference between the estimated fair value of the asset and its carrying value. |
Research and Development Costs |
Research and Development Costs - Research and development costs are expensed as incurred. |
Income Taxes | Income Taxes - The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating and tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be recognized. A full valuation allowance was recorded against the deferred tax assets as of March 31, 2017 and September 30, 2016. |
Derivative Instruments | Derivative Instruments – The Company has entered into financing arrangements that consist of freestanding derivative instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification (ASC) 815, “Accounting for Derivative Instruments and Hedging Activities.” In accordance with accounting principles generally accepted in the United States (U.S. GAAP), derivative instruments and hybrid instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair value with gains or losses recognized in earnings or other comprehensive income depending on the nature of the derivative or hybrid instruments. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument. The derivative liabilities are remeasured at fair value at the end of each interim period as long as they are outstanding. |
Deferred Rent (Asset) | Deferred Rent (Asset) –Consideration paid, including deposits, related to operating leases is recorded as a deferred rent asset and amortized as rent expense over the lease term. Interest on the deferred rent is calculated at 3% on the funds deposited on the manufacturing facility and is included in deferred rent. This interest income will be used to offset future rent. |
Stock-Based Compensation | Stock-Based Compensation – Compensation cost for all stock-based awards is measured at fair value as of the grant date in accordance with the provisions of ASC 718 “Compensation – Stock Compensation.” The fair value of stock options is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires various judgmental assumptions including volatility and expected option life. The stock-based compensation cost is recognized on the straight line allocation method as expense over the requisite service or vesting period.
Equity instruments issued to non-employees are accounted for in accordance with ASC 505-50, “Equity-Based Payments to Non Employees.” Accordingly, compensation is recognized when goods or services are received and is measured using the Black-Scholes valuation model. The Black-Scholes model requires various judgmental assumptions regarding the fair value of the equity instruments at the measurement date and the expected life of the options.
The Company has Incentive Stock Option Plans, Non-Qualified Stock Option Plans, a Stock Compensation Plan, Stock Bonus Plans and an Incentive Stock Bonus Plan. In some cases, these Plans are collectively referred to as the "Plans". All Plans have been approved by the stockholders.
The Company’s stock options are not transferable, and the actual value of the stock options that an employee may realize, if any, will depend on the excess of the market price on the date of exercise over the exercise price. The Company has based its assumption for stock price volatility on the variance of daily closing prices of the Company’s stock. The risk-free interest rate assumption was based on the U.S. Treasury rate at date of the grant with term equal to the expected life of the option. Historical data was used to estimate option exercise and employee termination within the valuation model. The expected term of options represents the period of time that options granted are expected to be outstanding and has been determined based on an analysis of historical exercise behavior. If any of the assumptions used in the Black-Scholes model change significantly, stock-based compensation expense for new awards may differ materially in the future from that recorded in the current period.
Vesting of restricted stock granted under the Incentive Stock Bonus Plan is subject to service, performance and market conditions and meets the classification of equity awards. These awards were measured at market value on the grant-dates for issuances where the attainment of performance criteria is likely and at fair value on the grant-dates, using a Monte Carlo simulation for issuances where the attainment of performance criteria is uncertain. The total compensation cost will be expensed over the estimated requisite service period. |
New Accounting Pronouncements | In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02, Leases, which will require most leases (with the exception of leases with terms of less than one year) to be recognized on the balance sheet as an asset and a lease liability. Leases will be classified as an operating lease or a financing lease. Operating leases are expensed using the straight-line method whereas financing leases will be treated similarly to a capital lease under the current standard. The new standard will be effective for annual and interim periods, within those fiscal years, beginning after December 15, 2018, but early adoption is permitted. The new standard must be presented using the modified retrospective method beginning with the earliest comparative period presented. The Company is currently evaluating the effect of the new standard on its financial statements and related disclosures.
No other recently issued guidance is expected to have a material impact on the Company’s financial statements. |
C. STOCKHOLDERS EQUITY (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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C. Stockholders Equity Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock options, stock bonuses and compensation granted by the Company | Stock options, stock bonuses and compensation granted by the Company as of March 31, 2017 are as follows:
Stock options, stock bonuses and compensation granted by the Company as of September 30, 2016 are as follows:
Stock option activity:
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Schedule of employees and non-employees stock compensation | Stock-Based Compensation Expense
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Derivative Liabilities, Warrants and Other Options | The following chart presents the outstanding warrants and non-employee options, listed by expiration date at March 31, 2017:
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Tabular disclosure of derivative liabilities at fair value | The table below presents the warrant liabilities and their respective balances at the balance sheet dates:
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Schedule Of Gains and (Losses) on Derivative Liabilities | The table below presents the gains on the warrant liabilities for the six months ended March 31:
The table below presents the gains and (losses) on the warrant liabilities for the three months ended March 31:
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D. FAIR VALUE MEASUREMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D. Fair Value Measurements Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Measured at fair value on a recurring basis | The table below sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the condensed balance sheet at March 31, 2017:
The table below sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the condensed balance sheet at September 30, 2016:
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Reconciliation of beginning and ending balances related to fair value measurements using significant unobservable inputs (Level 3) | The following sets forth the reconciliation of beginning and ending balances related to fair value measurements using significant unobservable inputs (Level 3) for the six months ended March 31, 2017 and the year ended September 30, 2016:
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G. PATENTS (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
G. Patents Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of total estimated future amortization |
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H. LOSS PER COMMON SHARE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
H. Loss Per Common Share Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of dilutive net loss per share | The following tables provide the details of the basic and diluted loss per-share (LPS) computations:
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Antidilutive securities | In accordance with the contingently issuable shares guidance of FASB ASC Topic 260, Earnings Per Share, the calculation of diluted net earnings (loss) per share excludes the following securities because their inclusion would have been anti-dilutive as of March 31:
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C. STOCKHOLDERS EQUITY (Details 1) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
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C. Stockholders Equity Details 1 | ||||
Granted | 0 | 60,000 | 0 | 210,000 |
Expired | 5,000 | 0 | 382,037 | 0 |
Forfeited | 26,532 | 28,032 | 26,532 | 50,998 |
C. STOCKHOLDERS EQUITY (Details 2) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
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C. Stockholders Equity Details 2 | ||||
Employees | $ 365,380 | $ 417,190 | $ 677,755 | $ 845,100 |
Non-employees | $ 34,225 | $ 142,866 | $ 112,778 | $ 472,061 |
C. STOCKHOLDERS EQUITY (Details 4) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Sep. 30, 2016 |
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C. Stockholders Equity Details 4 | |||||
Series S warrants | $ 531,525 | $ 531,525 | $ 3,111,361 | ||
Series U warrants | 0 | 0 | 0 | ||
Series V warrants | 202,532 | 202,532 | 1,620,253 | ||
Series W warrants | 190,443 | 190,443 | 1,799,858 | ||
Series Z warrants | 142,341 | 142,341 | 970,604 | ||
Series ZZ warrants | 9,414 | 9,414 | 70,609 | ||
Series AA warrants | 116,996 | 116,996 | 763,661 | ||
Series BB warrants | 8,250 | 8,250 | 58,588 | ||
Series CC warrants | 630,554 | 630,554 | 0 | ||
Series DD warrants | 29,324 | 29,324 | 0 | ||
Series EE warrants | 179,169 | 179,169 | 0 | ||
Series FF warrants | 73,816 | 73,816 | 0 | ||
Series GG warrants | 506,426 | 506,426 | 0 | ||
Series HH warrants | 24,290 | 24,290 | 0 | ||
Series II warrants | 755,040 | 755,040 | 0 | ||
Series JJ warrants | 36,625 | 36,625 | 0 | ||
Total warrant liabilities | 3,436,745 | 3,436,745 | $ 8,394,934 | ||
Series S warrants | 2,579,836 | $ 3,147,660 | (41,485) | $ 321,507 | |
Series U warrants | 0 | 26,731 | 0 | (4,455) | |
Series V warrants | 1,417,721 | 1,822,785 | 0 | (1,417,721) | |
Series W warrants | 1,609,415 | 532,054 | (58,189) | (1,493,061) | |
Series Z warrants | 828,263 | 0 | (40,524) | 0 | |
Series ZZ warrants | 61,195 | 0 | (2,689) | 0 | |
Series AA warrants | 646,665 | 0 | (32,904) | 0 | |
Series BB warrants | 50,338 | 0 | (2,334) | 0 | |
Series CC warrants | 429,869 | 0 | (174,623) | 0 | |
Series DD warrants | 413,948 | 0 | 43,029 | 0 | |
Series EE warrants | 512,238 | 0 | (2,365) | 0 | |
Series FF warrants | 47,166 | 0 | (19,574) | 0 | |
Series GG warrants | 108,211 | 0 | 108,211 | 0 | |
Series HH warrants | 5,340 | 0 | 5,340 | 0 | |
Series II warrants | 161,419 | 0 | 161,419 | 0 | |
Series JJ warrants | 7,988 | 0 | 7,988 | 0 | |
Net gain on warrant liabilities | $ 8,879,612 | $ 5,529,230 | $ (48,700) | $ (2,593,730) |
D. FAIR VALUE MEASUREMENTS (Details) - USD ($) |
Mar. 31, 2017 |
Sep. 30, 2016 |
---|---|---|
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | ||
Derivative instruments | $ 531,525 | $ 3,111,361 |
Significant Other Observable Inputs (Level 2) | ||
Derivative instruments | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Derivative instruments | 2,905,220 | 5,283,573 |
Total | ||
Derivative instruments | $ 3,436,745 | $ 8,394,934 |
D. FAIR VALUE MEASUREMENTS (Details 1) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Sep. 30, 2016 |
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D. Fair Value Measurements Details 1 | ||
Beginning balance | $ 5,283,573 | $ 6,323,032 |
Issuances | 3,921,423 | 8,722,073 |
Realized and unrealized gains | (6,299,776) | (9,761,532) |
Ending balance | $ 2,905,220 | $ 5,283,573 |
E. RELATED PARTY LOAN (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
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E. Related Party Loan Details Narrative | ||||
Interest expense paid to Mr. de Clara | $ 0 | $ 10,000 | $ 0 | $ 43,000 |
G. PATENTS (Details) - USD ($) |
Mar. 31, 2017 |
Sep. 30, 2016 |
---|---|---|
G. Patents Details | ||
Six months ending September 30, 2017 | $ 18,308 | |
Year ending September 30, 2018 | 36,487 | |
Year ending September 30, 2019 | 34,784 | |
Year ending September 30, 2020 | 31,590 | |
Year ending September 30, 2021 | 28,290 | |
Year ending September 30, 2022 | 24,488 | |
Thereafter | 65,267 | |
Total | $ 239,214 | $ 256,547 |
G. PATENTS (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
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G. Patents Details Narrative | ||||
Patent impairment charges | $ 0 | $ 0 | $ 0 | $ 0 |
Amortization of patent costs | $ 10,000 | $ 9,000 | $ 19,000 | $ 18,000 |
H. LOSS PER COMMON SHARE (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
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H. Loss Per Common Share Details | |||||||
Net Loss | $ (8,409,489) | $ (8,844,855) | $ (4,872,687) | $ (6,503,042) | |||
Gain on derivatives | [1] | (330,124) | |||||
Net Loss, Diluted | $ (5,202,811) | ||||||
Weighted Average Shares - Basic | 166,245,352 | 114,070,776 | |||||
Gain on derivatives, shares | [1] | 819,443 | |||||
Weighted Average Shares - Diluted | 167,064,795 | 114,070,776 | |||||
Weighted Average Shares - Basic and Diluted | 182,994,027 | 118,420,327 | 114,070,776 | ||||
Basic earnings per share | $ (0.03) | $ (0.06) | |||||
Dilutive earnings per share | $ (0.03) | (0.06) | |||||
Basic and dilutive loss per share | $ (0.05) | $ (0.07) | $ (.06) | ||||
|
H. LOSS PER COMMON SHARE (Details 1) - shares |
6 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
H. Loss Per Common Share Details 1 | ||
Options and Warrants | 200,944,966 | 78,710,846 |
Unvested Restricted Stock | 15,100,000 | 15,100,000 |
Total | 216,044,966 | 93,810,846 |
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