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STOCKHOLDERS EQUITY
 3 Months Ended
Dec. 31, 2022
STOCKHOLDERS EQUITY  
STOCKHOLDERS' EQUITY

C. STOCKHOLDERS’ EQUITY

 

Equity Compensation

 

Underlying share information for equity compensation plans as of December 31, 2022 is as follows:

 

Name of Plan

 

Total Shares

Reserved Under

Plans

 

 

 

 

 

Incentive Stock Option Plans

 

 

138,400

 

Non-Qualified Stock Option Plans

 

 

13,787,200

 

Stock Bonus Plans

 

 

783,760

 

Stock Compensation Plans

 

 

634,000

 

Incentive Stock Bonus Plan

 

 

640,000

 

 

 Stock option activity:

 

 

 

Three Months Ended

December 31,

 

 

 

 2022

 

 

 2021

 

 

 

 

 

 

 

 

Options granted

 

 

2,500

 

 

 

251,000

 

Options exercised

 

 

-

 

 

 

6,500

 

Options forfeited

 

 

96,832

 

 

 

13,000

 

Options expired

 

 

45,400

 

 

 

-

 

During the quarter ended December 31, 2021, 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 any of the USA, Canada, UK, Germany, France, Italy, Spain, Japan, or Australia.  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 was recognized relating to these options as of December 31, 2022.  Management will re-assess the probability of achieving the performance condition at each reporting date. 

 

Stock-Based Compensation Expense

 

 

 

Three months Ended December 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Employees

 

$1,692,831

 

 

$3,262,296

 

Non-employees

 

$148,858

 

 

$218,318

 

 

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

 

The following chart represents the warrants and non-employee options outstanding at December 31, 2022:

 

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

 

 

8/18/2024 

 

*

 

Series UU

 

6/11/2018

 

 

93,603

 

 

$2.80

 

 

6/30/2024

 

*

 

Series X

 

1/13/2016

 

 

120,000

 

 

$9.25

 

 

7/13/2024

 

*

 

Series Y

 

2/15/2016

 

 

26,000

 

 

$12.00

 

 

8/15/2024

 

*

 

Series MM

 

6/22/2017

 

 

333,432

 

 

$1.86

 

 

6/22/2024

 

*

 

Series NN

 

7/24/2017

 

 

200,087

 

 

$2.52

 

 

7/24/2024

 

 *

 

Series RR

 

10/30/2017

 

 

234,009

 

 

$1.65

 

 

10/30/2024

 

2

 

Series SS

 

12/19/2017

 

 

-

 

 

$2.09

 

 

12/18/2022

 

2

 

Series TT

 

2/5/2018

 

 

600

 

 

$2.24

 

 

2/5/2023

 

*

 

Consultant Options

 

7/28/2017

 

 

10,000

 

 

$2.18

 

 

7/27/2027

 

3

 

 

* No current period changes for these warrants

 

1. Derivative Liabilities

 

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

 

 

 

2022

 

 

2021

 

Series Z warrants 

 

$-

 

 

$64,787

 

Series AA warrants 

 

 

-

 

 

 

274,635

 

Series CC warrants 

 

 

-

 

 

 

24,372

 

Series HH warrants

 

 

-

 

 

 

802

 

Net gain on warrant liabilities

 

$-

 

 

$364,596

 

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

 

During the three months ended December 31, 2022, no warrant liabilities were outstanding.

 

During the three months ended December 31, 2021, 15,205 Series CC warrants were exercised at an exercise price of $5.00 for gross proceeds of $76,000.

 

On December 8, 2021, 640 Series CC warrants, with an exercise price of $5.00, expired. On November 23, 2021, 184,800 Series Z warrants, with an exercise price of $13.75, expired.

 

2. Equity Warrants

 

Changes in Equity Warrants

 

The following warrants recorded as equity were exercised during the three months ended December 31, 2022.

 

Warrants

 

Warrants Exercised

 

 

Exercise Price

 

 

Proceeds

 

Series RR

 

 

17,752

 

 

$1.65

 

 

$29,291

 

Series SS

 

 

200,000

 

 

$2.09

 

 

 

418,000

 

 

 

 

217,752

 

 

 

 

 

 

$447,291

 

 

The following warrants recorded as equity were exercised during the three months ended December 31, 2021.

 

Warrants

 

Warrants Exercised

 

 

Exercise Price

 

 

Proceeds

 

Series NN

 

 

4,500

 

 

$2.52

 

 

$11,340

 

Series TT

 

 

10,000

 

 

$2.24

 

 

 

22,400

 

 

 

 

14,500

 

 

 

 

 

 

$33,740

 

 

On October 28, 2022, the expiration date of the Series RR warrants was extended two years from October 30, 2022 to October 30, 2024.  The incremental cost of this extension was approximately $172,000, which was recorded as a deemed dividend in the financial statements for the three months ended December 31, 2022. The Series RR 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.

 

3. Options and Shares Issued to Consultants

 

During the three months ended December 31, 2022 and 2021, the Company issued 40,236 and 18,020 shares of restricted common stock, respectively, to consultants for services. The weighted average grant date fair value of the shares issued to consultants was $2.53 and $9.93 per share, respectively, during the three months ended December 31, 2022 and 2021.

During the three months ended December 31, 2022, 5,000 options with an exercise price of $11.61 issued to a consultant expired.

 

As of December 31, 2022, 10,000 options issued to consultants remained outstanding, all of which were issued from the Non-Qualified Stock Option plans. All 10,000 options are vested as of December 31, 2022.

 

During the three months ended December 31, 2022 and 2021, the Company recorded total expense of approximately $149,000 and $218,000, respectively, relating to the share based compensation under these consulting agreements. At December 31, 2022 and September 30, 2022, approximately $183,000 and $295,000, respectively, are included in prepaid expenses and will be amortized over the remaining service periods.