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Common Stock, Stock Options and Warrants
 9 Months Ended
Jun. 30, 2023
Common Stock, Stock Options and Warrants [Abstract]  
COMMON STOCK, STOCK OPTIONS AND WARRANTS

4. COMMON STOCK, STOCK OPTIONS AND WARRANTS

 

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.

 

On March 21, 2022, the Company issued 100,000 shares of common stock for media, public and investor relations services and expensed the $178,000 fair value of the common stock issued.

 

On September 13, 2022, the Company issued 81,500 shares of common stock for media, public and investor relations services and expensed the $104,320 fair value of the common stock issued.

 

On March 27, 2023, the Company issued 100,000 shares of common stock for media, public and investor relations services and expensed the $102,000 fair value of the common stock issued.

 

Common Stock Offering

 

On May 8, 2023, the Company closed a registered direct offering of 12,500,001 common shares and warrants to purchase up to 12,500,001 common shares, at a purchase price of $1.20 per share and accompanying warrant for gross proceeds of $15,000,001. The warrants have an exercise price of $1.50 per share, are exercisable six months from the date of issuance, and expire five years from the date of issuance. The estimated fair value of the warrants issued to the investors was approximately $11,000,000.

 

Net proceeds were $13,798,870 after deducting the placement agent fee of $1,050,000, placement agent expenses of $85,000, legal fees of $50,181, and other offering expenses of $15,950. The Company also issued 875,000 warrants to the placement agent at an exercise price of $1.50 per share, that are exercisable six months from the date of issuance, and expire five years from the date of issuance. The estimated fair value of the warrants issued to the placement agent was approximately $771,000.

 

Stock Option Plans

 

Under our 2014 Stock Incentive Plan, we reserved 866,667 common shares for issuance to employees, directors, and consultants. As of June 30, 2023, options to purchase 795,171 shares were outstanding and no shares remain available for future grants.

 

Under our 2018 Omnibus Stock Incentive Plan, we reserved 2,000,000 common shares for issuance to employees, directors, and consultants. As of June 30, 2023, options to purchase 1,760,000 shares were outstanding and no shares remain available for future grants.

 

Under our 2020 Omnibus Stock Incentive Plan, we reserved 3,110,000 common shares for issuance to employees, directors, and consultants. As of June 30, 2023, options to purchase 1,820,000 shares were outstanding, options to purchase 50,000 shares were forfeited, and the remaining 1,240,000 shares were transferred to the 2021 Omnibus Stock Incentive Plan (“2021 Stock Plan”).

 

Under our 2021 Omnibus Stock Incentive Plan, we reserved 8,740,000 shares for issuance to employees, directors, and consultants through options, SARs, dividend equivalent rights, restricted stock, restricted stock units, or other rights. As of June 30, 2023, options to purchase 8,705,000 shares were outstanding and the remaining 35,000 shares were transferred to the 2023 Omnibus Stock Incentive Plan (the “2023 Stock Plan”).

 

In November 2022, our Board approved the Citius Pharmaceuticals, Inc. 2023 Stock Plan, subject to stockholder approval, which was received on February 7, 2023. The 2023 Stock Plan has reserved for issuance 12,035,000 shares of our common stock. As of June 30, 2023, options to purchase 300,000 shares were outstanding under the 2023 Stock Plan and 11,735,000 shares remain 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 2020 Omnibus Stock Incentive Plan) is presented below:

 

   Option
Shares		   Weighted-
Average
Exercise
Price		   Weighted-
Average
Remaining
Contractual
Term		  Aggregate
Intrinsic
Value		 
Outstanding at October 1, 2022   9,400,171   $2.07   7.81 years  $869,509 
Granted   4,150,000    1.26         
Exercised   (46,667)   0.67       34,067 
Forfeited or expired   (123,333)   5.52         
Outstanding at June 30, 2023   13,380,171   $1.79   7.78 years  $815,287 
                   
Exercisable at June 30, 2023   6,200,170   $2.09   6.57 years  $747,453 

 

On October 4, 2022, the Board of Directors granted options to purchase 3,375,000 shares to employees, 375,000 shares to directors and 50,000 shares to a consultant at $1.25 per share. On November 8, 2022, the Board of Directors granted options to purchase 50,000 shares to a consultant at $1.04 per share. On February 7, 2023, the Board of Directors granted options to purchase 150,000 shares to an employee and 75,000 shares to a director at $1.42 per share. On April 10, 2023, the Board of Directors granted options to purchase 75,000 shares to an employee at $1.46 per share. The weighted average grant date fair value of the options granted during the nine months ended June 30, 2023 was estimated at $0.98 per share. These options vest over terms of 12 to 36 months and have a term of 10 years.

 

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. During January and February 2022, options to purchase 300,000 shares were granted to three new employees at exercise prices ranging from $1.44 to $1.49 per share. In April and June 2022, options to purchase 80,000 shares were granted to two new employees at exercise prices ranging from $0.90 to $1.47 per share. The weighted average grant date fair value of the options granted during the nine months ended June 30, 2022 was estimated at $1.67 per share. 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 June 30, 2023 and 2022 was $1,174,111 (including $31,858 for the NoveCite Stock Plan) and $1,003,677 (including $33,333 for the NoveCite Stock Plan), respectively. Stock-based compensation expense for the nine months ended June 30, 2023 and 2022 was $3,540,787 (including $98,524 for the NoveCite Stock Plan) and $2,929,279 (including $99,999 for the NoveCite Stock Plan), respectively.

 

At June 30, 2023, unrecognized total compensation cost related to unvested awards under the Citius stock plans of $5,925,203 is expected to be recognized over a weighted average period of 1.7 years.

 

NoveCite Stock Plan - Under the NoveCite Stock Plan, we reserved 2,000,000 common shares of NoveCite for issuance. 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 June 30, 2023, there were options outstanding to purchase 1,911,500 common shares of NoveCite and 88,500 shares available for future grants.

 

As of June 30, 2023, NoveCite has options outstanding to purchase 1,911,500 common shares at a weighted average exercise price of $0.24 per share, of which 1,514,333 are exercisable. 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 7.65 years. At June 30, 2023, unrecognized total compensation cost related to unvested awards under the NoveCite Stock Plan of $79,433 is expected to be recognized over a weighted average period of 0.8 years.

 

Citius Oncology Stock Plan - Under the Citius Oncology Stock Plan, adopted on April 29, 2023, we reserved 15,000,000 common shares of Citius Oncology for issuance. The Citius Oncology 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. On July 5, 2023, Citius Oncology granted options to purchase 12,550,000 common shares at an exercise price of $2.15 per share. These options vest over periods from 12 to 36 months and have a term of 10 years.

 

On July 25, 2023, Citius Oncology granted options to purchase an additional 200,000 common shares at an exercise price of $2.15 per share. These options vest over a period of 12 months and have a term of 10 years.

 

Warrants

 

As of June 30, 2023, we have reserved shares of common stock for the exercise of outstanding warrants as follows:

 

   Exercise
price		   Number   Expiration Date
March 2018 Registered Direct/Private Placement Investors  $2.86    218,972   October 2, 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 Investors   1.42    1,294,498   April 5, 2024
April 2019 Registered Direct/Private 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 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 Agent   1.33    155,647   May 14, 2025
August 2020 Underwriter   1.31    201,967   August 10, 2025
January 2021 Private Placement Investors   1.23    3,091,192   July 27, 2026
January 2021 Private Placement Agent   1.62    351,623   July 27, 2026
February 2021 Offering Investors   1.70    20,580,283   February 19, 2026
February 2021 Offering Agent   1.88    2,506,396   February 19, 2026
May 2023 Registered Direct Offering Investors   1.50    12,500,001   May 8, 2028
May 2023 Registered Direct Offering Agent   1.50    875,000   May 3, 2028
         50,923,819    

 

At June 30, 2023, the weighted average remaining life of the outstanding warrants is 2.9 years, all warrants are exercisable except for the 13,375,001 warrants issued in the May 2023 Registered Direct Offering which become exercisable on November 8, 2023, and the aggregate intrinsic value of the warrants outstanding was $1,747,081.

 

Common Stock Reserved

 

A summary of common stock reserved for future issuances as of June 30, 2023 is as follows:

 

Stock plan options outstanding   13,380,171 
Stock plan shares available for future grants   11,735,000 
Warrants outstanding   50,923,819 
Total   76,038,990