STOCKHOLDERS EQUITY

6 Months Ended

Mar. 31, 2023

STOCKHOLDERS EQUITY

STOCKHOLDERS' EQUITY

C. STOCKHOLDERS’ EQUITY

Equity Compensation

Underlying share information for equity compensation plans as of March 31, 2023 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:

	Six Months Ended March 31,
	2023		2022
Options granted		4,500		252,500
Options exercised		-		6,500
Options forfeited		122,332		20,166
Options expired		45,404		-

	Three Months Ended March 31,
	2023		2022
Options granted		2,000		1,500
Options exercised		-		-
Options forfeited		25,500		7,166
Options expired		4		-

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 March 31, 2023.  Management will re-assess the probability of achieving the performance condition at each reporting date.   

Stock-Based Compensation Expense

	Six months Ended March 31,
	2023		2022
Employees	$	3,436,119	$	6,655,002
Non-employees	$	285,722	$	402,270

	Three months Ended March 31,
	2023		2022
Employees	$	1,743,288	$	3,392,706
Non-employees	$	136,864	$	183,952

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 March 31, 2023:

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	*
Series TT	2/5/2018	-	$2.24	2/5/2023	2
Consultant Options	7/28/2017	10,000	$2.18	7/27/2027	*

* No current period changes for these warrants

1. Derivative Liabilities

The table below presents the gains on the warrant liabilities for the six months ended March 31:

	2023		2022
Series Z warrants	$	-	$	64,787
Series AA warrants		-		274,635
Series CC warrants		-		24,372
Series HH warrants		-		1,597
Net gain on warrant liabilities	$	-	$	366,791

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

	2023		2022
Series AA warrants	$	-	$	1,400
Series HH warrants		-		795
Net gain on warrant liabilities	$	-	$	2,195

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

As of March 31, 2023, no warrant liabilities were outstanding.

During the six months ended March 31, 2022, 15,205 Series CC warrants were exercised at an exercise price of $5.00 for gross proceeds of $76,025.  No Series CC warrants were exercised during the three months ended March 31, 2022.

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.

2. Equity Warrants

Changes in Equity Warrants

On February 5, 2023, 600 Series TT warrants, with an exercise price of $2.24, expired.

During the six months ended March 31, 2023, 17,752 Series RR warrants at an exercise price of $1.65 and 200,000 Series SS warrants at an exercise price of $2.09 were exercised for gross proceeds of $447,291. No series RR or SS warrants were exercised during the three months ended March 31, 2023.

During the six months ended March 31, 2022, 10,000 Series NN warrants were exercised at an exercise price of $2.52 for gross proceeds of $25,200. During the three months ended March 31, 2022, 5,500 Series NN warrants were exercised at an exercise price of $2.52 for gross proceeds of $13,860.

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. 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 six months ended March 31, 2023 and 2022, the Company issued 78,798 and 43,495 shares, respectively, of restricted common stock to consultants for services. The weighted average grant date fair value of the shares issued to consultants was $2.47 and $7.05 during the six months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023 and 2022, the Company issued 38,562 and 25,475 shares, respectively, of restricted common stock to consultants for services. The weighted average grant date fair value of the shares issued to consultants was $2.42 and $5.00, respectively, during the three months ended March 31, 2023 and 2022. 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 months ended March 31, 2023, 5,000 options with an exercise price of $11.61 issued to a consultant expired. 

As of March 31, 2023, 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 March 31, 2023.

During the six months ended March 31, 2023 and 2022, the Company recorded total expense of approximately $285,000 and $402,000, respectively, relating to the share-based compensation under these consulting agreements. On March 31, 2023 and September 30, 2022, consulting fees of approximately $311,000 and $295,000, respectively, are included in prepaid expenses and will be amortized over the remaining service periods.