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STOCKHOLDERS EQUITY
 3 Months Ended
Dec. 31, 2024
STOCKHOLDERS EQUITY  
STOCKHOLDERS' EQUITY

C. STOCKHOLDERS’ EQUITY

 

Proceeds from the Sale of Common Stock

 

In December 2024, the Company sold 7,552,500 shares of common stock at a public offering price of $0.31 per share and pre-funded warrants to purchase up to 8,577,500 shares of common stock, at an offering price of $0.3099 per pre-funded warrant, for proceeds of approximately $4.4 million, net of issuance costs of approximately $0.6 million. As of December 31, 2024, none of the pre-funded warrants in connection with the December 2024 offering have been exercised.

 

The Company determined that the pre-funded warrants sold in the December 2024 offering are freestanding financial instruments because they are both legally detachable and separately exercisable from the common stock sold in the offering. As such, the Company evaluated the pre-funded warrants to determine whether they represent instruments that require liability classification pursuant to the guidance in ASC 480. However, the Company concluded that the pre-funded warrants are not a liability within the scope of ASC 480 due to their characteristics. Further, the Company determined that the pre-funded warrants do not meet the definition of a derivative under ASC 815. Accordingly, the Company assessed the pre-funded warrants relative to the guidance in ASC No. 815-40, Contracts in Entity’s Own Equity, to determine the appropriate treatment. The Company concluded that the pre-funded warrants are both indexed to its own stock and meet all other conditions for equity classification. Accordingly, the Company has classified the pre-funded warrants as permanent equity and recorded them as a component of additional paid-in capital upon the closing of the transaction in December 2024.

 

In November 2023, the Company sold 2,490,000 shares of common stock at a public offering price of $2.00 per share and received proceeds of approximately $4.5 million, net of issuance costs of approximately $0.5 million.

 

Other Equity Transactions

 

In October 2024, the Company entered into a Securities Purchase Agreement with Ergomed Group Limited (“Ergomed”) pursuant to which the Company issued 1,000,000 shares of common stock in exchange for services. The shares are legally issued and outstanding.  The Company determined the issuance of shares to a non-employee for services rendered or to be rendered is within the scope of ASC 718. In accordance with ASC 718, the shares are not issued and outstanding for accounting purposes as they are unvested and forfeitable. The shares will be recognized on the settlement date and measured at fair value when the shares are settled for services rendered by Ergomed. The Company incurred share issuance costs of approximately $61,000 to issue the shares from this agreement which were immediately expensed.

Equity Compensation

 

Underlying share information for equity compensation plans as of December 31, 2024 is as follows:

 

Name of Plan

 

Total Shares Reserved

Under Plans

 

Incentive Stock Option Plans

 

 

138,400

 

Non-Qualified Stock Option Plans

 

 

17,787,200

 

Stock Bonus Plans

 

 

1,283,760

 

Stock Compensation Plans

 

 

634,000

 

Incentive Stock Bonus Plan

 

 

640,000

 

 

Stock Option Activity:

 

 

 

Three Months Ended

December 31,

 

 

 

 2024

 

 

 2023

 

Options granted

 

 

502,500

 

 

 

-

 

Options exercised

 

 

-

 

 

 

-

 

Options forfeited

 

 

15,833

 

 

 

11,000

 

Options expired

 

 

40

 

 

 

-

 

 

Share-Based Compensation Expense:

 

 

 

Three Months Ended

December 31,

 

 

 

2024

 

 

2023

 

Employees

 

$711,381

 

 

$1,383,909

 

Non-employees

 

$396,839

 

 

$218,386

 

 

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, 2024:

 

Warrant/

Options

 

Issue Date

 

Shares Issuable upon Exercise

of Warrants/ Options

 

 

Exercise Price

 

 

Expiration Date

 

Series N

 

8/18/2008

 

 

85,339

 

 

$3.00

 

 

8/18/2026 

 

Series UU

 

6/11/2018

 

 

93,603

 

 

$2.80

 

 

6/30/2026

 

Series X

 

1/13/2016

 

 

120,000

 

 

$9.25

 

 

7/13/2026

 

Series Y

 

2/15/2016

 

 

26,000

 

 

$12.00

 

 

8/15/2026

 

Series MM

 

6/22/2017

 

 

333,432

 

 

$1.86

 

 

6/22/2026

 

Series NN

 

7/24/2017

 

 

200,087

 

 

$2.52

 

 

7/24/2026

 

Series RR

 

10/30/2017

 

 

234,009

 

 

$1.65

 

 

10/30/2026

 

Pre-Funded

 

12/31/2024

 

 

8,577,500

 

 

$0.0001

 

 

 

N/A

 

Consultant Options

 

7/28/2017 – 11/19/2024

 

 

610,000

 

 

$

0.70 - $2.18

 

 

7/27/2027 - 11/1/2034

 

1. Equity Warrants

 

Changes in Equity Warrants

 

During the three months ended December 31, 2024, 8,577,500 pre-funded warrants at an offering price of $0.3099 were issued.  No pre-funded warrants or warrants recorded as equity were issued during the three months ended December 31, 2023. 

 

During the three months ended December 31, 2024, 1,450,000 pre-funded warrants were exercised.  No pre-funded warrants or warrants recorded as equity were exercised during the three months ended December 31, 2023. 

 

No warrants recorded as equity expired or were extended during the three months ended December 31, 2024 and 2023.

 

2. Options and Shares Issued to Consultants

 

During the three months ended December 31, 2024 and 2023, the Company issued 154,615 and 88,573 shares, respectively, of restricted common stock to consultants for services. The weighted average grant date fair value of the shares issued to consultants was $0.85 and $1.56 during the three months ended December 31, 2024 and 2023, respectively.

 

During the three months ended December 31, 2024, 500,000 options with an exercise price of $0.70 were issued to a consultant.  The options vest immediately and will expire on November 1, 2034.  No options were issued to a consultant during the three months ended December 31, 2023.   

 

During the three months ended December 31, 2024 and 2023, the Company recorded total expense of approximately $397,000 and $218,000, respectively, relating to the share-based compensation under various consulting agreements. On December 31, 2024 and September 30, 2024, consulting fees of approximately $51,000 and $52,000, respectively, are included in current assets as prepaid expenses and will be amortized over the remaining service periods.