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Common Stock, Stock Options and Warrants
 3 Months Ended
Dec. 31, 2021
Stockholders' Equity Note [Abstract]  
COMMON STOCK, STOCK OPTIONS AND WARRANTS

5. COMMON STOCK, STOCK OPTIONS AND WARRANTS

 

Authorized Common Stock

 

On June 21, 2021, our stockholders approved an amendment to our Articles of Incorporation to increase the authorized number of shares of capital stock from 210,000,000 to 410,000,000 and the authorized number of common shares from 200,000,000 to 400,000,000.

 

Common Stock Offerings

 

On January 27, 2021, the Company closed a private placement for 15,455,960 common shares and warrants to purchase 7,727,980 common shares, at a purchase price of $1.294 per common share and accompanying warrant, for gross proceeds of $20,000,012. The 7,727,980 warrants are immediately exercisable at $1.231 per common share for a term of five and one-half years. The Company paid the placement agent a fee of 7% of the gross proceeds totaling $1,400,001 and issued the placement agent 1,081,917 immediately exercisable warrants at $1.6175 per common share for a term of five and one-half years. The Company also reimbursed the placement agent for $85,000 in expenses and incurred $64,601 in other expenses. Net proceeds from the offering were $18,450,410. The estimated fair value of the 7,727,980 warrants issued to the investors was approximately $7,582,000 and the estimated fair value of the 1,081,917 warrants issued to the placement agent was approximately $1,025,000.

 

On February 19, 2021, the Company closed a registered direct offering for 50,830,566 common shares and warrants to purchase up to 25,415,283 common shares, at a purchase price of $1.505 per share of common stock and accompanying warrant, for gross proceeds of $76,500,002. The 25,415,283 warrants are immediately exercisable at $1.70 per common share for a term of five years. The Company paid the placement agent a fee of 7% of the gross proceeds totaling $5,355,000 and issued the placement agent 3,558,140 immediately exercisable warrants at $1.881 per common share for a term of five years. The Company also reimbursed the placement agent for $85,000 in expenses and incurred $80,160 in other expenses. Net proceeds from the offering were $70,979,842. The estimated fair value of the 25,415,283 warrants issued to the investors was approximately $42,322,000 and the estimated fair value of the 3,558,140 warrants issued to the placement agent was approximately $5,850,000.

 

Common Stock Issued for Services

 

On November 2, 2021, the Company issued 50,201 shares of common stock for investor relations services and expensed the $95,884 fair value of the common stock issued.

 

Stock Option Plans

 

Pursuant to our 2014 Stock Incentive Plan, we reserved 866,667 common shares for issuance to employees, directors and consultants. As of December 31, 2021, options to purchase 855,171 shares were outstanding and no shares remain available for future grants.

 

On February 7, 2018, our stockholders approved the 2018 Omnibus Stock Incentive Plan and we reserved 2,000,000 common shares for issuance to employees, directors and consultants. As of December 31, 2021, options to purchase 1,820,000 shares were outstanding.

 

On February 10, 2020, our stockholders approved the 2020 Stock Plan and we reserved 3,110,000 common shares for issuance thereunder. The 2020 Stock Plan provides incentives to employees, directors, and consultants through options, SARs, dividend equivalent rights, restricted stock, restricted stock units, or other rights. As of December 31, 2021, options to purchase 1,870,000 shares were outstanding and the remaining 1,240,000 shares were transferred to the 2021 Omnibus Stock Incentive Plan (“2021 Stock Plan”).

 

On May 24, 2021, our stockholders approved the 2021 Stock Plan and we reserved 8,740,000 shares for issuance thereunder. The 2021 Stock Plan provides incentives to employees, directors, and consultants through options, SARs, dividend equivalent rights, restricted stock, restricted stock units, or other rights. As of December 31, 2021, options to purchase 4,475,000 shares were outstanding and there were 4,265,000 shares available for future grants.

 

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption. The expected term of stock options granted, all of which qualify as “plain vanilla,” is based on the average of the contractual term (generally 10 years) and the vesting period. For non-employee options, the expected term is the contractual term.

 

A summary of option activity under our stock option plans (excluding the NoveCite Stock Plan) is presented below:

 

   Option
Shares		   Weighted-
Average
Exercise
Price		   Weighted-
Average
Remaining
Contractual
Term		  Aggregate
Intrinsic
Value		 
Outstanding at October 1, 2021   5,755,171   $2.13   8.02 years  $3,589,392 
Granted   3,265,000    2.03         
Exercised   
—
    
—
         
Forfeited or expired   
—
    
—
         
Outstanding at December 31, 2021   9,020,171   $2.09   8.49 years  $1,799,433 
                   
Exercisable at December 31, 2021   3,365,325   $2.55   6.87 years  $1,163,643 

 

On October 11, 2021, the Board of Directors granted options to purchase 2,515,000 shares to employees, 375,000 shares to directors and 175,000 shares to consultants at $2.04 per share. On November 1, 2021, the Board of Directors granted options to purchase 200,000 shares to an employee at $1.87 per share. The weighted average grant date fair value of the options granted during the three months ended December 31, 2021 was estimated at $1.72 per share. All of these options vest over terms of 12 to 36 months and have a term of 10 years.

 

On October 6, 2020, the Board of Directors granted stock options to purchase a total of 800,000 shares to employees, 175,000 shares to directors and 125,000 shares to consultants with an exercise price of $1.01 per share. The weighted average grant date fair value of the options granted during the three months ended December 31, 2020 was estimated at $0.87 per share. All of these options vest over terms of 12 to 36 months and have a term of 10 years.

 

Stock-based compensation expense for the three months ended December 31, 2021 and 2020 was $904,604 (including $33,333 for the NoveCite Stock Plan) and $276,582 (including $12,556 for the NoveCite Stock Plan), respectively.

 

At December 31, 2021, unrecognized total compensation cost related to unvested awards under the Citius stock plans of $7,755,214 is expected to be recognized over a weighted average period of 2.4 years.

 

On November 5, 2020, the stockholders of NoveCite, approved NoveCite’s Stock Plan and we reserved 2,000,000 common shares of NoveCite for issuance thereunder. The NoveCite Stock Plan provides incentives to employees, directors, and consultants through grants of options, SARs, dividend equivalent rights, restricted stock, restricted stock units, or other rights. As of December 31, 2021, there were options outstanding to purchase 2,000,000 common shares of NoveCite and no shares available for future grants.

 

As of December 31, 2021, NoveCite has options outstanding to purchase 2,000,000 common shares at a weighted average exercise price of $0.24 per share, of which 376,665 are exercisable as of December 31, 2021. All of these options vest over 36 months and have a term of 10 years. The weighted average remaining contractual term of options outstanding under the NoveCite Stock Plan is 9.14 years. At December 31, 2021, unrecognized total compensation cost related to unvested awards under the NoveCite Stock Plan of $283,111 is expected to be recognized over a weighted average period of 2.17 years.

Warrants

 

As of December 31, 2021, we have reserved shares of common stock for the exercise of outstanding warrants as follows:

 

   Exercise
price		   Number   Expiration Dates
LMB Warrants  $7.50    53,110   March 24 – April 29, 2022
2016 Offering Warrants   4.13    69,316   February 10 – 27, 2022
2017 Public Offering Investors   4.13    1,622,989   August 2, 2022
2017 Public Offering Underwriter   4.54    65,940   February 2, 2023
December 2017 Registered Direct/Private Placement Offering Investors   4.63    640,180   June 19, 2023
December 2017 Registered Direct/Private Placement Offering Placement Agent   5.87    89,625   December 19, 2022
March 2018 Registered Direct/Private Placement Offering Investors   2.86    218,972   October 2, 2023
March 2018 Registered Direct/Private Placement Offering Placement Agent   3.73    46,866   March 28, 2023
August 2018 Offering Investors   1.15    3,921,569   August 14, 2023
August 2018 Offering Agent   1.59    189,412   August 8, 2023
April 2019 Registered Direct/Private Placement Offering Investors   1.42    1,294,498   April 5, 2024
April 2019 Registered Direct/Private Placement Offering Placement Agent   1.93    240,130   April 5, 2024
September 2019 Offering Investors   0.77    2,793,297   September 27, 2024
September 2019 Offering Underwriter   1.12    194,358   September 27, 2024
February 2020 Exercise Agreement Placement Agent   1.28    138,886   August 19, 2025
May 2020 Registered Direct Offering Investors   1.00    1,670,588   November 18, 2025
May 2020 Registered Direct Offering Placement Agent   1.33    155,647   May 14, 2025
August 2020 Underwriter   1.31    201,967   August 10, 2025
January 2021 Private Placement Offering Investors   1.23    3,091,192   July 27, 2026
January 2021 Private Placement Offering Agent   1.62    351,623   July 27, 2026
February 2021 Registered Direct Offering Investors   1.70    20,580,283   February 19, 2026
February 2021 Registered Direct Offering Agent   1.88    2,506,396   February 19, 2026
         40,136,844    

 

At December 31, 2021, the weighted average remaining life of the outstanding warrants is 3.5 years, all warrants are exercisable, and the aggregate intrinsic value of the warrants outstanding was $5,890,469.

 

Common Stock Reserved

 

A summary of common stock reserved for future issuances as of December 31, 2021 is as follows:

 

Stock plan options outstanding   9,020,171
Stock plan shares available for future grants   4,265,000
Warrants outstanding   40,136,844
Total   53,422,015