STOCKHOLDERS EQUITY

9 Months Ended

Jun. 30, 2022

STOCKHOLDERS EQUITY

Stockholders' Equity

C. STOCKHOLDERS’ EQUITY

Proceeds from the Sale of Common Stock

In June 2021, the Company sold 1,400,000 shares of common stock at a public offering price of $22.62 per share and received aggregate net proceeds of approximately $29.4 million. The Company also granted the underwriters a 30-day option to purchase up to 210,000 additional shares of common stock to cover over-allotments. The underwriters fully exercised this option in June 2021, resulting in additional net proceeds to the Company of approximately $4.4 million.

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.

Equity Compensation

Underlying share information for equity compensation plans as of June 30, 2022 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		75,329		N/A		213
Non-Qualified Stock Option Plans		13,787,200		12,909,350		N/A		455,508
Stock Bonus Plans		783,760		N/A		397,945		385,782
Stock Compensation Plans		634,000		N/A		153,195		462,395
Incentive Stock Bonus Plan		640,000		N/A		614,500		25,500

Stock option activity:

	Nine Months Ended June 30,
	2022		2021
Options granted		1,975,250		2,603,500
Options exercised		6,500		126,954
Options forfeited		20,166		42,166
Options expired		13,614		9,374

	Three Months Ended June 30,
	2022		2021
Options granted		1,722,750		2,595,500
Options exercised		-		72,809
Options forfeited		-		-
Options expired		13,614		9,307

During the three months ended June 30, 2022, the Company adopted the 2022 Non-Qualified Stock Option Plan, which provides for the issuance of up to 2,000,000 options to purchase shares of common stock.

During the nine months ended June 30, 2022, the Company granted 250,000 performance-based stock options from the 2020 Non-Qualified Stock Option Plan to officers. Each option entitles the holder to purchase one share of the Company’s common stock at a price of $10.48 per share, the fair value on the date of issuance. The stock options will vest 100% upon approval of the first marketing application for any pharmaceutical based upon the Company’s Multikine technology in the USA, Canada, UK, Germany, France, Italy, Spain, Japan, or Australia. None of the options will be exercisable before November 19, 2022. All options which have not vested as of November 18, 2031 will be canceled. On the grant date, the options were valued using a Monte Carlo Simulation approach. A Monte Carlo Simulation is a statistical technique that is used to model probabilistic systems and establish the probabilities for a variety of outcomes. However, because attainment of the performance condition cannot be considered probable, no compensation cost is recognized relating to these options as of June 30, 2022. Management re-assesses the probability of achieving the performance condition at each reporting date.

Stock-Based Compensation Expense

	Nine months Ended June 30,
	2022		2021
Employees	$	9,102,774	$	10,090,410
Non-employees	$	603,147	$	955,900

	Three months Ended June 30,
	2022		2021
Employees	$	2,447,772	$	3,511,359
Non-employees	$	200,877	$	403,236

Employee compensation expense includes the expense related to options and restricted stock that is expensed over the 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

Warrant/Options	Issue Date	Underlying Shares		Exercise Price		Expiration Date	Reference
Series N	8/18/2008		85,339	$	3.00	8/18/2024		2
Series UU	6/11/2018		93,603	$	2.80	6/30/2024		2
Series X	1/13/2016		120,000	$	9.25	7/13/2024		2
Series Y	2/15/2016		26,000	$	12.00	8/15/2024		2
Series MM	6/22/2017		333,432	$	1.86	6/22/2024		2
Series NN	7/24/2017		200,087	$	2.52	7/24/2024		2
Series RR	10/30/2017		251,761	$	1.65	10/30/2022	*
Series SS	12/19/2017		200,000	$	2.09	12/18/2022	*
Series TT	2/5/2018		600	$	2.24	2/5/2023	*
Consultants	7/28/2017 – 11/18/2020		15,000	$2.18 -$11.61		11/17/2022 - 7/27/2027	*

*	No current period changes to these warrants
1.	Warrant Liabilities

The table below presents the fair value of the warrant liabilities as of:

	June 30, 2022		September 30, 2021
Series Z warrants	$	-	$	64,787
Series AA warrants		-		276,035
Series CC warrants		-		94,961
Series HH warrants		-		1,597
Total warrant liabilities	$	-	$	437,380

The table below presents the net gains (losses) on the warrant liabilities for the nine months ended June 30:

	2022		2021
Series W warrants	$	-	$	73,570
Series Z warrants		64,787		(113,094	)
Series ZZ warrants		-		(98,692	)
Series AA warrants		276,035		(306,606	)
Series BB warrants		-		48,477
Series CC warrants		24,372		(596,001	)
Series HH warrants		1,597		784
Net gain (loss) on warrant liabilities	$	366,791	$	(991,562	)

The table below presents the net gains (losses) on the warrant liabilities for the three months ended June 30:

	2022		2021
Series Z warrants	$	-	$	583,404
Series ZZ warrants		-		(87,162	)
Series AA warrants		-		355,215
Series BB warrants		-		64,678
Series CC warrants		-		199,256
Series HH warrants		-		1,228
Net gain loss on warrant liabilities	$	-	$	1,116,619

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.

During the nine months ended June 30, 2022, 15,205 Series CC warrants were exercised at an exercise price of $5.00 for gross proceeds of $76,025. No warrants were exercised during the three months ended June 30, 2022.

The following warrants recorded as liabilities were exercised during the following periods:

	Nine Months Ended June 30, 2021						Three Months Ended June 30, 2021
Warrants	Warrants Exercised		Exercise Price		Proceeds		Warrants Exercised		Exercise Price		Proceeds
Series Z		79,200	$	13.75	$	1,089,000		-		-	$	-
Series ZZ		20,000	$	13.75		275,000		19,200	$	13.75		264,000
Series AA		100,000	$	13.75		1,375,000		-		-		-
Series CC		107,298	$	5.00		536,490		5,000	$	5.00		25,000
		306,498			$	3,275,490		24,200			$	289,000

In February 2022, 100,000 Series AA warrants with an exercise price of $13.75 and 200 Series HH warrants with an exercise price of $3.13, expired. In December 2021, 640 Series CC warrants, with an exercise price of $5.00, expired. In November 2021, 184,800 Series Z warrants, with an exercise price of $13.75, expired.

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

2. Equity Warrants

During the nine months ended June 30, 2022, 10,000 Series NN warrants were exercised at an exercise price of $2.52 for gross proceeds of $25,200. No warrants were exercised during the three months ended June 30, 2022.

The following warrants recorded as equity were exercised during the following periods:

	Nine Months Ended June 30, 2021						Three Months Ended June 30, 2021
Warrants	Warrants Exercised		Exercise Price		Proceeds		Warrants Exercised		Exercise Price		Proceeds
Series MM		464,201	$	1.86	$	863,414		147,929	$	1.86	$	275,148
Series NN		131,004	$	2.52		330,130		109,170	$	2.52		275,108
Series RR		165,888	$	1.65		273,715		95,799	$	1.65		158,068
Series SS		105,264	$	2.09		220,002		-	$	2.09		-
Series TT		270,696	$	2.24		606,359		60,214	$	2.24		134,879
		1,137,053			$	2,293,620		413,112			$	843,204

On June 13, 2022, the expiration dates of the Series N, Series X, Series Y, Series UU, Series MM and Series NN warrants were extended two years. The incremental costs of the warrant extensions were recorded consistent with the accounting for the initial warrant issuances. The incremental costs of the Series N, Series X and Series Y warrant extensions were recorded as a deemed dividend and totaled approximately $294,000 for the nine and three months ended June 30, 2022. The Series N and Series X warrants are held by the de Clara Trust, of which the Company’s CEO, Geert Kersten, is a trustee and beneficiary. The incremental cost of the Series MM, Series NN and Series UU warrant extensions were recorded as interest expense, because these warrants were originally issued with convertible notes payable and totaled approximately $635,000 for the nine and three months ended June 30, 2022. The Series UU warrants and a portion of the Series MM and Series NN warrants are held by Geert Kersten, Patricia Prichep (current officers of the Company) and the de Clara Trust.

On June 28, 2021, the expiration dates of the Series N, Series X, Series Y and Series UU warrants were extended one year. On December 7, 2020, the expiration dates of the Series N, Series X, Series Y and Series UU warrants were extended six months. The incremental costs of the warrant extensions were recorded consistent with the accounting for the initial warrant issuances. The incremental costs of the Series N and Series X warrant extensions were recorded as a deemed dividend and totaled approximately $351,000 and $265,000 for the nine and three months ended June 30, 2021, respectively. The Series N and Series X warrants are held by the de Clara Trust. The incremental cost of the Series Y warrant extension was recorded as additional paid in capital and totaled approximately $103,000 and $62,000 for the nine and three months ended June 30, 2021. The incremental cost of the Series UU warrant extension was recorded as interest expense because these warrants were initially issued as an inducement to convert notes payable into common stock. The Series UU warrants are held by Geert Kersten, Patricia Prichep and the de Clara Trust.

3. Options and Shares Issued to Consultants

During the nine months ended June 30, 2022 and 2021, the Company issued 81,782 and 41,714 shares, respectively, of restricted common stock to consultants for services. The weighted average grant date fair value of the shares issued to consultants was $5.40 and $19.47 during the nine months ended June 30, 2022 and 2021, respectively. During the three months ended June 30, 2022 and 2021, the Company issued 38,287 and 13,184 shares, respectively, of restricted common stock to consultants for services. The weighted average grant date fair value of the shares issued to consultants was $3.52 and $23.39, respectively, during the three months ended June 30, 2022 and 2021. 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.

No options were issued to consultants during the nine and three months ended June 30, 2022. During the nine months ended June 30, 2021, the Company issued a consultant 5,000 options to purchase common stock with an exercise price of $11.61, at an aggregate fair value of approximately $28,000 and an expiration date of November 17, 2022. As of June 30, 2022 and September 30, 2021, 15,000 options issued to consultants were outstanding, all of which were issued from the Non-Qualified Stock Option plans and all of which are vested as of the balance sheet dates.

During the nine months ended June 30, 2022 and 2021, the Company recorded total expense of approximately $603,000 and $956,000, respectively, relating to the share-based compensation under these consulting agreements. During the three months ended June 30, 2022 and 2021, the Company recorded total expense of approximately $201,000 and $403,000, respectively, relating to the share-based compensation under these consulting agreements. On June 30, 2022 and September 30, 2021, consulting fees of approximately $221,000 and $364,000, respectively, are included in prepaid expenses.

4. Securities Purchase Agreement

In prior years, the Company was party to a Securities Purchase Agreement (SPA) with Ergomed plc (Ergomed), 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 and the net proceeds from the sales of those shares reduced outstanding amounts due Ergomed. Upon issuance, the Company expensed the full value of the shares as other non-operating gain/loss and subsequently offset the gain or loss as amounts were realized through the sale of shares by Ergomed and reduced accounts payable to Ergomed. Ergomed resold the final balance of shares issued in the quarter ended September 30, 2021. No shares were issued during the periods presented. No sales were made by Ergomed during the nine and three months ended June 30, 2022. During the nine and three months ended June 30, 2021, respectively, the Company realized approximately $1.4 million and $0.8 million through the sale by Ergomed of 111,500 and 36,000 shares of common stock and the Company reduced the payable to Ergomed and credited other operating gain by those amounts.