STOCKHOLDERS EQUITY

3 Months Ended

Dec. 31, 2020

STOCKHOLDERS EQUITY

C. STOCKHOLDERS' EQUITY

C. STOCKHOLDERS’ EQUITY

Proceeds from the Sale of Common Stock

In December 2020, the Company sold 1,000,000 shares of common stock at a public offering price of $14.65 per share and received aggregate proceeds of approximately $13.6 million. Under the terms of the Underwriting Agreement the Company granted the Underwriters a 30-day option to purchase up to an additional 150,000 shares of common stock at the public offering price to cover over-allotments.

Equity Compensation

Underlying share information for equity compensation plans as of December 31, 2020 is as follows:

Name of Plan	Total Shares Reserved Under Plans		Shares Reserved for Outstanding Options		Shares Issued		Remaining Options/Shares Under Plans
Incentive Stock Options Plans		138,400		85,895		N/A		213
Non-Qualified Stock Option Plans		9,987,200		8,527,787		N/A		1,201,832
Stock Bonus Plans		783,760		N/A		348,660		435,067
Stock Compensation Plans		634,000		N/A		150,695		464,895
Incentive Stock Bonus Plan		640,000		N/A		614,500		25,500

Underlying share information for equity compensation plans as of September 30, 2020 is as follows:

Name of Plan	Total Shares Reserved Under Plans		Shares Reserved for Outstanding Options		Shares Issued		Remaining Options/Shares Under Plans
Incentive Stock Option Plans		138,400		85,895		N/A		213
Non-Qualified Stock Option Plans		9,987,200		8,567,808		N/A		1,167,166
Stock Bonus Plans		783,760		N/A		345,096		438,631
Stock Compensation Plans		634,000		N/A		150,695		464,895
Incentive Stock Bonus Plan		640,000		N/A		616,500		23,500

Stock option activity:

	Three Months Ended December 31,
	2020		2019
Options granted		7,500		1,000
Options exercised		5,300		-
Options forfeited		42,166		-
Options expired		55		36

Stock-Based Compensation Expense

	Three months Ended December 31,
	2020		2019
Employees	$	3,296,309	$	1,800,225
Non-employees	$	248,660	$	155,740

Employee compensation expense includes the expense related to options and restricted stock granted expensed over their vesting periods.  Non-employee expense includes the expense related to options and stock issued to consultants expensed over the period of the related service contracts.

Warrants and Non-Employee Options

The following chart represents the warrants and non-employee options outstanding at December 31, 2020: 

Warrant/Options	Issue Date	Shares Issuable upon Exercise of Warrants/ Options		Exercise Price		Expiration Date	Reference
Series N	8/18/2008		85,339	$	3.00	8/18/2021		2
Series UU	6/11/2018		93,603	$	2.80	6/30/2021		2
Series X	1/13/2016		120,000	$	9.25	7/13/2021		2
Series Y	2/15/2016		26,000	$	12.00	8/15/2021		2
Series ZZ	5/23/2016		20,000	$	13.75	5/18/2021	*
Series BB	8/26/2016		16,000	$	13.75	8/22/2021	*
Series Z	5/23/2016		264,000	$	13.75	11/23/2021	*
Series FF	12/8/2016		68,048	$	3.91	12/1/2021	*
Series CC	12/8/2016		143,643	$	5.00	12/8/2021		1
Series HH	2/23/2017		200	$	3.13	2/16/2022	*
Series AA	8/26/2016		200,000	$	13.75	2/22/2022	*
Series MM	6/22/2017		797,633	$	1.86	6/22/2022	*
Series NN	7/24/2017		348,842	$	2.52	7/24/2022	*
Series RR	10/30/2017		417,649	$	1.65	10/30/2022	*
Series SS	12/19/2017		326,064	$	2.09	12/18/2022	*
Series TT	2/5/2018		361,564	$	2.24	2/5/2023		2
Consultants	7/28/2017 - 11/18/2020		15,000	$	2.18-11.61	11/17/2022 - 7/27/2027		3

* No current period changes to these warrants

1. Derivative Liabilities

The table below presents the fair value of the warrant liabilities at the balance sheet dates:

	December 31, 2020		September 30, 2020
Series W warrants	$	-	$	73,570
Series Z warrants		929,539		1,207,902
Series ZZ warrants		23,177		75,044
Series AA warrants		748,404		1,082,212
Series BB warrants		34,541		65,173
Series CC warrants		1,053,517		1,259,712
Series HH warrants		1,749		2,000
Total warrant liabilities	$	2,790,927	$	3,765,613

The table below presents the gains and (losses) on the warrant liabilities for the three months ended December 31:

	2020		2019
Series V warrants	$	-	$	555,031
Series W warrants		73,570		151,374
Series Z warrants		278,363		10,549
Series ZZ warrants		51,867		14,847
Series AA warrants		333,808		64,978
Series BB warrants		30,632		(431	)
Series CC warrants		164,345		(22,681	)
Series FF warrants		-		(7,189	)
Series HH warrants		251		(82	)
Series JJ warrants		-		(130	)
Series LL warrants		-		243
Net gain on warrant liabilities	$	932,836	$	766,509

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.

Changes in Warrant Liabilities

On October 28, 2020, 688,930 Series W warrants, with an exercise price of $16.75 expired. 

During the three months ended December 31, 2020, 5,000 Series CC warrants were exercised at an exercise price of $5.00 for gross proceeds of $25,000.

No warrants recorded as liabilities were exercised during the three months ended December 31, 2019.

2. Equity Warrants

Changes in Equity Warrants

On December 7, 2020, the expiration date of the Series N warrants was extended six months from February 18, 2021 to August 18, 2021. The incremental cost of this extension was approximately $1,000, which was recorded as a deemed dividend in the financial statements for the three months ended December 31, 2020. The Series N warrants are held by the de Clara Trust, of which the Company’s CEO, Geert Kersten, is a beneficiary.

On December 7, 2020, the expiration date of the Series X warrants was extended six months from January 13, 2021 to July 13, 2021. The incremental cost of this extension was approximately $85,000, which was recorded as a deemed dividend in the financial statements for the three months ended December 31, 2020. The Series X warrants are held by the de Clara Trust, of which the Company’s CEO, Geert Kersten, is a beneficiary.

On December 7, 2020, the expiration date of the Series Y warrants, which were issued in connection with a financing, was extended six months from February 15, 2021 to August 15, 2021. The incremental cost of this extension was approximately $41,000 and was recorded as additional paid-in capital.

On December 7, 2020, the expiration date of Series UU warrants were extended six months from December 31, 2020 to June 30, 2021. These warrants were previously issued as an inducement to convert notes payable into shares of common stock. The incremental cost of this extension was $192 and was recorded as interest expense for the three months ended December 31, 2020. The Series UU warrants are held by Geert Kersten, Patricia Prichep (current Officers of the Company) and the de Clara Trust, of which the Company’s CEO, Geert Kersten, is a beneficiary.

Exercise of Equity Warrants

During the three months ended December 31, 2020, 10,000 Series TT warrants were exercised at an exercise price of $2.24 for gross proceeds of $22,400.

The following warrants recorded as equity were exercised during the three months ended December 31, 2019. 

Warrants	Warrants Exercised		Exercise Price		Proceeds
Series OO		10,000	$	2.52	$	25,200
Series SS		22,632	$	2.09		47,301
Series TT		100,628	$	2.24		224,600
		132,900			$	297,101

3. Options and Shares Issued to Consultants

During the three months ended December 31, 2020 and 2019, the Company issued 15,044 and 15,819 shares of restricted common stock, respectively, to consultants for services.  The weighted average grant date fair value of the shares issued to consultants was $12.45 and $7.18, respectively, during the three months ended December 31, 2020 and 2019. 

Additionally, during the three months ended December 31, 2020, the Company issued to a consultant 5,000 options to purchase common stock with an exercise price of $11.61.  The options are exercisable beginning May 18, 2021 and expire on November 17, 2022.  The options are being expensed on a straight-line basis over the six month vesting period at a fair value of approximately $28,000 or $5.65 per option. No options were issued to consultants during the three months ended December 31, 2019.

As of December 31, 2020 and September 30, 2020, 15,000 and 10,000 options issued to consultants remained outstanding, respectively, all of which were issued from the Non-Qualified Stock Option plans and of which 10,000 are vested as of the balance sheet dates.

During the three months ended December 31, 2020 and 2019, the Company recorded total expense of approximately $249,000 and $156,000, respectively, relating to these consulting agreements. At December 31, 2020 and September 30, 2020, approximately $244,000 and $395,000, respectively, are included in prepaid expenses.

4. Securities Purchase Agreement

The Company entered into a Securities Purchase Agreement with Ergomed plc, one of the Company’s Clinical Research Organizations responsible for managing the Company’s Phase 3 clinical trial, to facilitate payment of amounts due to Ergomed.  Under the Agreement, the Company issued Ergomed shares of common stock that the net proceeds from the sales of those shares would reduce outstanding amounts due Ergomed.  Upon issuance, the Company expenses the full value of the shares as Other non-operating gain/loss and subsequently offsets the expense as amounts are realized through the sale by Ergomed and reduces accounts payable to Ergomed.    

During the three months ended December 31, 2020 and 2019, the Company realized approximately $0.1 million and $0.8 million, respectively, through the sale by Ergomed of 9,000 and 98,350 shares of the Company’s common stock and the Company reduced the payables to Ergomed, and credited Other Operating Gain by those amounts.  No shares were issued to Ergomed during the quarters ended December 31, 2020 and 2019.

As of December 31, 2020, Ergomed held 93,521 shares for resale.