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Commitments and Contingencies
 12 Months Ended
Sep. 30, 2024
Commitments and Contingencies [Abstract]  
COMMITMENTS AND CONTINGENCIES

8. COMMITMENTS AND CONTINGENCIES

 

Operating Lease

 

Effective July 1, 2019, we entered into a 76-month lease for office space in Cranford, NJ. We pay our proportionate share of real estate taxes and operating expenses in excess of the base year expenses. These costs are variable lease payments and are not included in the determination of the lease’s right-of-use asset or lease liability.

 

We identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:

 

  ● As the Cranford lease does not provide an implicit rate, the Company estimated the incremental borrowing rate in calculating the present value of the lease payments. The Company has estimated its incremental borrowing rate based on the remaining lease term as of the adoption date.

 

  ● Since the Company elected to account for each lease component and its associated non-lease components as a single combined component, all contract consideration was allocated to the combined lease component.
     
  ● The expected lease terms include noncancelable lease periods.

 

The elements of lease expense are as follows:  

 

Lease cost   Year Ended
September 30,
2024		   Year Ended
September 30,
2023		 
Operating lease cost  $238,823   $238,824 
Variable lease cost   25,809    4,771 
Total lease cost  $264,632   $243,595 
           
Other information          
Weighted-average remaining lease term - operating leases   1.1 Years    2.1 Years 
Weighted-average discount rate - operating leases   8.0%   8.0%

 

Maturities of lease liabilities due under the Company’s non-cancellable leases are as follows:

 

Year Ending September 30,    
     
2025  $253,883 
2026   21,460 
Total lease payments   275,343 
Less: interest   (12,478)
Present value of lease liabilities  $262,865 

 

Leases  Classification  September 30,
2024		   September 30,
2023		 
Assets             
Lease asset  Operating  $246,247   $454,426 
Total lease assets     $246,247   $454,426 
              
Liabilities             
Current  Operating  $241,547   $218,380 
Non-current  Operating   21,318    262,865 
Total lease liabilities     $262,865   $481,245 

 

Interest expense on the lease liability was $30,644 and $47,176 for the years ended September 30, 2024 and 2023, respectively. This amount is classified within general & administrative expense.

 

Commercial Manufacturing Contracts

 

The Company has entered into an agreement with a Contract Manufacturing Organization for the manufacture and supply of drug substance. The agreement runs through calendar 2026, with an automatic renewal for a subsequent 4-year term. Under this agreement, the Company is obligated to purchase minimum annual quantities of batches at a set price per batch, subject to annual increases. Additionally, the Company is required to pay an annual service fee of $250,000. The agreement also includes provisions for potential price increases based on increases in the manufacturer’s operating expenses or industry indices, as well as significant termination fees and obligations. As of September 30, 2024, the total minimum purchase commitment under this agreement was approximately $17.3 million consisting of payments of $11.9 million and $5.4 million for 2025 and 2026 respectively.

 

As of September 30, 2024, the Company also has commercial supply agreements with two other vendors for the completion and packaging of finished drug products. Minimum purchase commitments under these two agreements amount to approximately $4.5 million consisting of purchase commitment obligations of $2.9 million in 2025 and $1.6 million in 2026.

 

Legal Proceedings

 

The Company is not involved in any litigation that it believes could have a material adverse effect on its financial position or results of operations. There is no action, suit, proceeding, inquiry, or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company’s executive officers, threatened against or affecting the Company or its officers or directors in their capacities as such.