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STOCKHOLDERS EQUITY

9 Months Ended

Jun. 30, 2021

STOCKHOLDERS EQUITY

C. 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.

In March 2020, the Company sold 630,500 shares of common stock at a public offering price of $12.22 per share and received aggregate net proceeds of approximately $7.1 million. Under the terms of the Underwriting Agreement the Company granted the Underwriters a 45-day option to purchase up to an additional 94,575 shares of common stock solely to cover over-allotments. The underwriter fully exercised this option in May 2020 resulting in additional net proceeds to the Company of approximately $1.1 million.

In December 2019, the Company sold 606,395 shares of common stock at a public offering price of $9.07 per share and received aggregate net proceeds of approximately $5.0 million. In January 2020, the underwriters of that offering fully exercised the option to purchase 90,959 additional shares of common stock at the public offering price of $9.07 per share for aggregate net proceeds to the Company of approximately $0.8 million.

Equity Compensation

Underlying share information for equity compensation plans as of June 30, 2021 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				76,829				N/A				213
Non-Qualified Stock Option Plans			11,787,200				11,001,880				N/A				404,826
Stock Bonus Plans			783,760				N/A				358,118				425,609
Stock Compensation Plans			634,000				N/A				150,695				464,895
Incentive Stock Bonus Plan			640,000				N/A				614,500				25,500

Stock option activity:

		Nine Months Ended June 30,
		2021				2020
Options granted			2,603,500				2,561,200
Options exercised			126,954				94,199
Options forfeited			42,166				1,000
Options expired			9,374				1,180

		Three Months Ended June 30,
		2021				2020
Options granted			2,595,500				2,559,000
Options exercised			72,809				73,719
Options forfeited			-				16
Options expired			9,307				-

During the quarter ended June 30, 2021, the Company adopted the 2021 Non-Qualified Stock Option Plan, which provides for the issuance of up to 1,800,000 options to purchase shares of common stock. On May 14, 2021, the Company granted 1,800,000 performance-based stock options from the 2021 Non-Qualified Stock Option Plan and 72,000 performance-based stock options from the 2020 Non-Qualified Stock Option Plan to officers and directors. Each option entitles the holder to purchase one share of the Company’s common stock at a price of $20.61 per share, the fair value on the date of issuance. The stock options will vest 100% upon the achievement of the following performance goal: (a) the filing of the first marketing application for any pharmaceutical based upon the Company’s Multikine technology, in the US, Canada, UK, Germany, France, Italy, Spain, Japan, or Australia or (b) the closing price of the Company’s common stock exceeds $42.00. None of the options will be exercisable before May 13, 2022. All options which have not vested as of May 13, 2031, will be canceled and will no longer be exercisable. The options were recorded in permanent equity in accordance with ASC 718, Compensation – Stock Compensation. On the grant date, the options were valued using a Monte Carlo Simulation approach. Monte Carlo Simulation is a statistical technique that is used to model probabilistic systems and establish the probabilities for a variety of outcomes. That valuation resulted in a per share fair value of $0.34 and an aggregate value of $636,480 on the grant date. The aggregate value will be expensed over the requisite service period of the options, which was determined to be 1.3 years. This resulted in compensation expense of approximately $64,000 recorded during the nine and three months ended June 30, 2021.

Stock-Based Compensation Expense

		Nine months Ended June 30,
		2021				2020
Employees		$	10,090,410			$	6,690,331
Non-employees		$	955,900			$	623,146

		Three months Ended June 30,
		2021				2020
Employees		$	3,511,359			$	3,109,127
Non-employees		$	403,236			$	275,919

Employee compensation expense includes the expense related to options and restricted stock expensed over their vesting period. 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, 2021:

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			8/18/2022			2
Series UU		6/11/2018			93,603			$	2.80			6/30/2022			2
Series X		1/13/2016			120,000			$	9.25			7/13/2022			2
Series Y		2/15/2016			26,000			$	12.00			8/15/2022			2
Series BB		8/26/2016			16,000			$	13.75			8/22/2021			*
Series Z		5/23/2016			184,800			$	13.75			11/23/2021			*
Series CC		12/8/2016			41,345			$	5.00			12/8/2021			1
Series HH		2/23/2017			200			$	3.13			2/16/2022			*
Series AA		8/26/2016			100,000			$	13.75			2/22/2022			*
Series MM		6/22/2017			333,432			$	1.86			6/22/2022			2
Series NN		7/24/2017			217,838			$	2.52			7/24/2022			2
Series RR		10/30/2017			251,761			$	1.65			10/30/2022			2
Series SS		12/19/2017			220,800			$	2.09			12/18/2022			*
Series TT		2/5/2018			100,868			$	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:

		June 30, 2021				September 30, 2020
Series W warrants		$	-			$	73,570
Series Z warrants			429,996				1,207,902
Series ZZ warrants			-				75,044
Series AA warrants			263,818				1,082,212
Series BB warrants			16,696				65,173
Series CC warrants			206,978				1,259,712
Series HH warrants			1,216				2,000
Total warrant liabilities		$	918,704			$	3,765,613

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

		2021				2020
Series V warrants		$	-			$	185,652
Series W warrants			73,570				(614,696	)
Series Z warrants			(113,094	)			(742,495	)
Series ZZ warrants			(98,692	)			(38,319	)
Series AA warrants			(306,606	)			(547,454	)
Series BB warrants			48,477				(44,620	)
Series CC warrants			(596,001	)			(1,245,627	)
Series FF warrants			-				(319,706	)
Series HH warrants			784				(35,024	)
Series JJ warrants			-				(64,992	)
Series LL warrants			-				(98,066	)
Net loss on warrant liabilities		$	(991,562	)		$	(3,565,347	)

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

		2021				2020
Series V warrants		$	-			$	107,191
Series W warrants			-				(247,327	)
Series Z warrants			583,404				(430,619	)
Series ZZ warrants			(87,162	)			(33,734	)
Series AA warrants			355,215				(220,831	)
Series BB warrants			64,678				(37,592	)
Series CC warrants			199,256				(419,350	)
Series HH warrants			1,228				(567	)
Net (gain) loss on warrant liabilities		$	1,116,619			$	(1,282,829	)

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 June 25, 2020, 135,963 Series V warrants, with an exercise price of $13.75 expired. The warrants were valued at approximately $211,000 on the date of expiration.

On May 26, 2020, the Company lowered the exercise price of 810,127 Series V warrants from $19.75 to $13.75 per share and extended the expiration date of the Series V warrants from May 28, 2020 to June 25, 2020. The incremental cost of this modification combined with the mark-to-market gain recorded upon exercise of certain warrants and the expiration of the remaining warrants, resulted in a net gain of approximately $107,000 for the nine and three months ended June 30, 2020.

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

Exercise of Warrant Liabilities

The following warrants recorded as liabilities were exercised during the periods ended June 30, 2021.

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

The following warrants recorded as liabilities were exercised during the periods ended June 30, 2020.

		Three Months												Nine Months
Warrants		Warrants Exercised				Exercise Price				Proceeds				Warrants Exercised				Exercise Price				Proceeds
Series V			674,164			$	13.75			$	9,269,755				674,164			$	13.75			$	9,269,755
Series CC			-				-				-				123,820			$	5.00				619,100
Series FF			-				-				-				68,048			$	3.91				265,812
Series HH			-				-				-				6,300			$	3.13				19,687
Series JJ			-				-				-				9,450			$	3.13				29,531
Series LL			-				-				-				26,398			$	3.59				94,867
			674,164							$	9,269,755				908,180							$	10,298,752

2. Equity Warrants

Changes in Equity Warrants

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 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 $351,000and $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, of which the Company’s CEO, Geert Kersten, is a beneficiary. The incremental cost of the Series Y warrants 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, and totaled approximately $24,000for the nine and three months ended June 30,2021. The Series UU warrants are held by Geert Kersten, Patricia Prichep (current Officers of the Company) and the de Clara Trust.

On May 26, 2020, the Company provided that for each Series V warrant exercised by an accredited investor on or before June 10, 2020 the former holder of the Series V warrant received one Series XX warrant. Every Series XX warrant will allow the holder to purchase one share of the Company’s common stock at a price of $18.00 per share at any time on or before September 10, 2020. For every two Series V warrant exercised by an accredited investor after June 10, 2020 but on or before June 25, 2020 the former holder of the Series V warrant received one Series YY warrant. Every Series YY warrants will allow the holder to purchase one share of the Company’s common stock at a price of $20.00 per share at any time on or before September 25, 2020. In June 2020, 461,953 Series XX warrants and 101,839 Series YY warrants were issued to the former holders of the Series V warrants. The Company recognized an inducement expense equal to the fair value of the Series XX and Series YY warrants issued as of the date the inducement offers were accepted. The fair values of the Series XX and Series YY warrants were calculated to be approximately $629,000 and $177,000, respectively, and are included as inducement expense in the statements of operations for the nine and three months ended June 30, 2020. The Series XX and YY warrants qualify for equity treatment in accordance with ASC 815.

On May 8, 2020, the expiration date of 93,593 Series UU warrants were extended by six months. The incremental cost of this extension was approximately $6,000 and was recorded as interest expense for the nine and three months ended June 30, 2020. As noted above, the Series UU warrants are held by current officers of the Company and the de Clara Trust.

On January 23, 2020, the expiration date of the Series N warrants was extended by six months. The incremental cost of this extension was approximately $22,000 and was recorded as a deemed dividend in the financial statements for the nine and three months ended June 30, 2020. The Series N warrants are held by the de Clara Trust, of which the Company’s CEO, Geert Kersten, is a beneficiary.

Exercise of Equity Warrants

The following warrants recorded as equity were exercised during the periods ended June 30, 2021.

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

The following warrants recorded as equity were exercised during the periods ended June 30, 2020.

		Three Months												Nine Months
Warrants		Warrants Exercised				Exercise Price				Proceeds				Warrants Exercised				Exercise Price				Proceeds
Series NN			-				-			$	-				98,253			$	2.52			$	247,598
Series OO			10,000			$	2.52				25,200				50,000			$	2.52				126,000
Series SS			39,474			$	2.09				82,500				156,580			$	2.09				327,252
Series TT			10,000			$	2.24				22,400				188,125			$	2.24				421,400
Series UU			61,207			$	2.80				171,380				61,207			$	2.80				171,380
Series VV			55,000			$	1.75				96,250				82,500			$	1.75				144,375
			175,681							$	397,730				636,665							$	1,438,005

3. Options and Shares Issued to Consultants

During the nine months ended June 30, 2021 and 2020, the Company issued 41,714 and 47,750 shares, respectively, of restricted common stock to consultants for services. The weighted average grant date fair value of the shares issued to consultants was $19.47 and $11.60 during the nine months ended June 30, 2021 and 2020, respectively. During the three months ended June 30, 2021 and 2020, the Company issued 13,184 and 14,811 shares, respectively, of restricted common stock to consultants for services. The weighted average grant date fair value of the shares issued to consultants was $23.39 and $16.41, respectively, during the three months ended June 30, 2021 and 2020. 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.

Additionally, during the nine months ended June 30, 2021, the Company issued to a consultant 5,000 options to purchase common stock with an exercise price of $11.61. The options were 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 June 30, 2021. No options were issued to consultants during the nine months ended June 30, 2020.

As of June 30, 2021 and September 30, 2020, respectively, 15,000 and 10,000 options issued to consultants remained outstanding, 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 nine months ended June 30, 2021 and 2020, the Company recorded total expense of approximately $956,000 and $623,000, respectively, relating to these consulting agreements. At June 30, 2021 and September 30, 2020, consulting fees of approximately $293,000 and $395,000, respectively, are included in prepaid expenses.

4. Securities Purchase Agreement

The Company entered into 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 reduces 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. No shares were issued during the periods presented. The following amounts were realized through the resale of shares and are included in Other non-operating gains for the periods noted.

		Nine Months Ended								Three Months Ended
		June 30, 2021				June 30, 2020				June 30, 2021				June 30, 2020
Realized through the resale of shares		$	1,436,473			$	2,539,245			$	761,237			$	818,565
Fair value of shares upon issuance			-				1,769,500				-				1,769,500
Other non-operating gain (loss)		$	1,436,473			$	769,745			$	761,237			$	(950,935	)

As of June 30, 2021, Ergomed held 27,021 shares for resale.