STOCKHOLDERS EQUITY

9 Months Ended

Jun. 30, 2023

STOCKHOLDERS EQUITY

STOCKHOLDERS' EQUITY

C. STOCKHOLDERS’ EQUITY

Proceeds from the Sale of Common Stock

In April 2023, the Company sold 794,117 shares of common stock at a public offering price of $1.70 per share and received aggregate proceeds of approximately $1.2 million. The Company granted the underwriters a 30-day option to purchase up to 119,117 additional shares of common stock to cover over-allotments. The underwriter fully exercised this option in May 2023, resulting in additional aggregate proceeds to the Company of approximately $190,000.

Equity Compensation

Underlying share information for equity compensation plans as of June 30, 2023 is as follows:

Name of Plan	Total Shares Reserved Under Plans
Incentive Stock Option Plans		138,400
Non-Qualified Stock Option Plans		15,787,200
Stock Bonus Plans		1,283,760
Stock Compensation Plans		634,000
Incentive Stock Bonus Plan		640,000

 Stock option activity:

	Nine Months Ended June 30,
	2023		2022
Options granted		6,500		1,975,250
Options exercised		-		6,500
Options forfeited		179,832		20,166
Options expired		58,787		13,614

	Three Months Ended June 30,
	2023		2022
Options granted		2,000		1,722,750
Options exercised		-		-
Options forfeited		57,500		-
Options expired		13,383		13,614

On November 18, 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 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 June 30, 2023.  Management will re-assess the probability of achieving the performance condition at each reporting date.  

Stock-Based Compensation Expense

	Nine Months Ended June 30,
	2023		2022
Employees	$	4,976,338	$	9,102,774
Non-employees	$	473,723	$	603,147

	Three months Ended June 30,
	2023		2022
Employees	$	1,540,219	$	2,447,772
Non-employees	$	188,001	$	200,877

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 June 30, 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	*
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 nine months ended June 30:

	2023		2022
Series Z warrants	$	-	$	64,787
Series AA warrants		-		276,035
Series CC warrants		-		24,372
Series HH warrants		-		1,597
Net gain on warrant liabilities	$	-	$	366,791

There were no gains or losses on warrant liabilities during the three months ended June 30, 2023 and 2022.

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 June 30, 2023, no warrant liabilities were outstanding.

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 Series CC warrants were exercised during the three months ended June 30, 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

During the nine months ended June 30, 2023, 600 Series TT warrants, with an exercise price of $2.24, expired. No warrants expired during the three months ended June 30, 2023.

During the nine months ended June 30, 2023, 17,752 Series RR warrants with an exercise price of $1.65 and 200,000 Series SS warrants with 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 June 30, 2023.

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.

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.

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 Series N, Series X and Series Y warrant extensions were recorded as a deemed dividend and totaled approximately $294,000 for the three and nine months ended June 30, 2022. The Series N and Series X warrants are held by the de Clara Trust. The incremental cost of the Series MM, Series NN and Series UU warrant extensions of approximately $635,000 was recorded as interest expense for the three and nine 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.

3. Options and Shares Issued to Consultants

During the nine months ended June 30, 2023 and 2022, the Company issued 115,321 and 81,782 shares, respectively, of restricted common stock to consultants for services. The weighted average grant date fair value of the shares issued to consultants was $2.45 and $5.40 during the nine months ended June 30, 2023 and 2022, respectively. During the three months ended June 30, 2023 and 2022, the Company issued 36,523 and 38,287 shares, respectively, of restricted common stock to consultants for services. The weighted average grant date fair value of the shares issued to consultants was $2.41 and $3.52, respectively, during the three months ended June 30, 2023 and 2022, respectively. 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 nine months ended June 30, 2023, 5,000 options with an exercise price of $11.61 issued to a consultant expired. 

As of June 30, 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 June 30, 2023.

During the nine months ended June 30, 2023 and 2022, the Company recorded total expense of approximately $474,000 and $603,000, respectively, relating to the share-based compensation under these consulting agreements. During the three months ended June 30, 2023 and 2022, the Company recorded total expense of approximately $188,000 and $201,000, respectively, relating to the share-based compensation under these consulting agreements. On June 30, 2023 and September 30, 2022, consulting fees of approximately $204,000 and $295,000, respectively, are included in current assets as prepaid expenses and will be amortized over the remaining service periods.