XML 25 R13.htm IDEA: XBRL DOCUMENT

Common Stock, Stock Options and Warrants

9 Months Ended

Jun. 30, 2024

Common Stock, Stock Options and Warrants [Abstract]

COMMON STOCK, STOCK OPTIONS AND WARRANTS

5. COMMON STOCK, STOCK OPTIONS AND WARRANTS

Common Stock Issued for Services

On October 10, 2023, the Company issued 108,778 shares of common stock for media, and public and investor relations services and expensed the $76,146 fair value of the common stock issued.

On January 17, 2024, the Company issued 128,205 shares of common stock for general and business development advisory services and expensed the $98,079 fair value of the common stock issued.

On April 25, 2024, the Company issued 150,000 shares of common stock for financial, general and business development advisory services and expensed the $109,950 fair value of the common stock issued.

Common Stock Offerings

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.

On April 30, 2024, the Company closed a registered direct offering of 21,428,574 common shares and warrants to purchase up to 21,428,574 common shares, at a purchase price of $0.70 per share and accompanying warrant for gross proceeds of $15,000,002. The warrants have an exercise price of $0.75 per share, are exercisable six months from the date of issuance, and expire on October 30, 2029. The estimated fair value of the warrants issued to the investors was approximately $11,206,000.

Net proceeds were $13,718,951 after deducting the placement agent fee of $1,050,000, placement agent expenses of $135,000, legal fees of $80,101, and other offering expenses of $15,950. The Company also issued 1,500,000 warrants to the placement agent at an exercise price of $0.875 per share, that are exercisable six months from the date of issuance, and expire on April 25, 2029. The estimated fair value of the warrants issued to the placement agent was approximately $756,000.

Stock Option Plans

Pursuant to our 2014 Stock Incentive Plan, we reserved 866,667 shares of common stock. As of June 30, 2024, there were options to purchase 705,441 shares outstanding, options to purchase 57,943 shares were exercised, options to purchase 103,283 shares expired or were forfeited, and no shares were available for future grants.

Pursuant to our 2018 Omnibus Stock Incentive Plan, we reserved 2,000,000 shares of common stock. As of June 30, 2024, there were options to purchase 1,720,000 shares outstanding, options to purchase 116,667 shares were exercised, options to purchase 53,333 shares expired or were forfeited, and the remaining 110,000 shares were transferred to the 2020 Omnibus Stock Incentive Plan (“2020 Plan”).

Pursuant to our 2020 Plan, we reserved 3,110,000 shares of common stock. As of June 30, 2024, there were options to purchase 1,735,000 shares outstanding, options to purchase 135,000 shares expired or were forfeited and the remaining 1,240,000 shares were transferred to the 2021 Omnibus Stock Incentive Plan (“2021 Stock Plan”).

Pursuant to our 2021 Stock Plan, we reserved 8,740,000 shares of common stock. As of June 30, 2024, options to purchase 8,398,333 shares were outstanding, options to purchase 306,667 shares expired or were forfeited and the remaining 35,000 shares were transferred to the 2023 Omnibus Stock Incentive Plan (“2023 Stock Plan”).

In November 2022, our Board approved the 2023 Stock Plan, subject to stockholder approval, which was received on February 7, 2023. The 2023 Stock Plan reserved 12,035,000 shares of common stock for issuance. As of June 30, 2024, options to purchase 4,360,000 shares were outstanding, options to purchase 100,000 shares expired or were forfeited and 7,575,000 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 and Citius Oncology Stock Plans) is presented below:

		Option Shares				Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at September 30, 2023			13,305,171			$	1.79			7.41 years		$	56,203
Granted			4,160,000				0.70
Exercised			(53,114	)			0.02
Forfeited or expired			(493,283	)			1.59
Outstanding at June 30, 2024			16,918,774			$	1.54			7.32 years		$	750

Exercisable at June 30, 2024			9,192,107			$	1.91			6.21 years		$	750

On October 10, 2023, the Board of Directors granted options to purchase 3,725,000 shares to employees, 300,000 shares to directors and 60,000 shares to consultants at $0.70 per share. On March 14, 2024, the Board of Directors granted options to purchase 75,000 shares to a director at $0.69 per share. The weighted average grant date fair value of the options granted during the nine months ended June 30, 2024 was estimated at $0.53 per share. These options vest over terms of 12 to 36 months and have a term of 10 years.

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.

Stock-based compensation expense for the three months ended June 30, 2024 and 2023 was $3,061,763 (including $13,858 for the NoveCite plan and $1,957,000 for the Citius Oncology Plan) and $1,174,111 (including $31,858 for the NoveCite Stock Plan), respectively. Stock-based compensation expense for the nine months ended June 30, 2024 and 2023 was $9,198,340 (including $47,574 for the NoveCite plan and $5,831,000 for the Citius Oncology Plan) and $3,540,787 (including $98,524 for the NoveCite Stock Plan), respectively.

At June 30, 2024, unrecognized total compensation cost related to unvested awards under the Citius Pharma stock plans of $3,651,795 is expected to be recognized over a weighted average period of 1.49 years.

NoveCite Stock Plan - Under the NoveCite Stock Plan, adopted November 5, 2020, 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, 2024, NoveCite has options outstanding to purchase 1,911,500 common shares of NoveCite, all of which are exercisable, and 88,500 shares available for future grants. All of the options were issued during the year ended September 30, 2021. These options vested 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 6.64 years and the weighted average exercise price is $0.24 per share. At June 30, 2024, there is no unrecognized compensation cost related to these awards.

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.

During the year ended September 30, 2023, Citius Oncology granted options to purchase 12,750,000 common shares at a weighted average exercise price of $2.15 per share, of which options to purchase 150,000 common shares were forfeited. The weighted average grant date fair value of the options granted during the year ended September 30, 2023 was estimated at $1.65 per share. These options vest over periods from 12 to 36 months and have a term of 10 years.

At June 30, 2024, Citius Oncology has options outstanding to purchase 12,600,000 shares, of which 3,605,556 common shares are exercisable, and 2,400,000 shares available for future grants. The weighted average remaining contractual term of options outstanding under the Citius Oncology Stock Plan is 9.02 years. At June 30, 2024, unrecognized total compensation cost related to unvested awards under the Citius Oncology Stock Plan of $13,011,500 is expected to be recognized over a weighted average period of 2.0 years.

Warrants

As of June 30, 2024, we have reserved shares of common stock for the exercise of outstanding warrants as follows:

		Exercise price				Number				Expiration Date
August 2018 Offering Investors		$	1.15				3,921,569			August 14, 2024
August 2018 Offering Agent			1.59				189,412			August 8, 2024
April 2019 Registered Direct/Private Placement Investors			1.42				1,294,498			April 5, 2025
April 2019 Registered Direct/Private Placement Agent			1.93				240,130			April 5, 2025
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
April 2024 Registered Direct Offering Investors			0.75				21,428,574			October 30, 2029
April 2024 Registered Direct Offering Agent			0.88				1,500,000			April 25, 2029
							73,633,421

On April 3, 2024, the Board of Directors approved a one-year extension to April 5, 2025 for warrants to purchase 1,294,498 shares of common stock with an exercise price of $1.42 per share. The warrants are held by Leonard Mazur, the Company’s Chief Executive Officer and Chairman of the Board of Directors, and Myron Holubiak, the Company’s Executive Vice President and member of the Board of Directors, and were originally issued in April 2019 in a registered direct offering of common stock. Additionally, 240,130 warrants with an exercise price of $1.9313 per share issued in connection with the registered direct offering were extended by one-year to April 5, 2025. These warrants are held by certain representatives of the registered direct offering placement agent. The terms of the warrants were previously extended in April 2021 to April 5, 2024. If these warrants are fully exercised, the Company would receive approximately $2.3 million in cash proceeds. We recorded a deemed dividend of $321,559 based on the excess of the fair value of the modified warrants over the fair value of the warrants before the modification, the effect of which was an increase in the net loss attributable to common shareholders in the statement of operations for the three and nine months ended June 30, 2024.

At June 30, 2024, the weighted average remaining life of the outstanding warrants is 3.0 years, all warrants are exercisable except for the April 2024 registered direct offering warrants for 22,928,574 shares which are exercisable commencing October 30, 2024, and there was no aggregate intrinsic value of the warrants outstanding.

Common Stock Reserved

A summary of common stock reserved for future issuances as of June 30, 2024 is as follows:

Stock plan options outstanding			16,918,774
Stock plan shares available for future grants			7,575,000
Warrants outstanding			73,633,421
Total			98,127,195