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Common Stock, Stock Options and Warrants

3 Months Ended

Dec. 31, 2024

Common Stock, Stock Options and Warrants [Abstract]

COMMON STOCK, STOCK OPTIONS AND WARRANTS

6. COMMON STOCK, STOCK OPTIONS AND WARRANTS

Authorized Common Stock

The Company filed a Certificate of Change with the Secretary of State of the State of Nevada to (i) effect a 1-for-25 reverse stock split of the Company’s issued and outstanding shares of common stock, and (ii) decrease the number of total authorized shares of common stock from 400,000,000 shares to 16,000,000 shares. The reverse stock split was intended for the Company to regain compliance with the minimum bid price requirement of $1.00 per share of common stock for continued listing on the Nasdaq Capital Market. The reverse stock split became effective on November 25, 2024, and the Company’s Common Stock began trading on a reverse stock split-adjusted basis on the Nasdaq Capital Market on November 26, 2024.

Common Stock Issued for Services

On October 10, 2023, the Company issued 4,351 shares of common stock for media, and public and investor relations services and expensed the $76,146 fair value of the common stock issued.

Common Stock Offering

On November 15, 2024, the Company entered into an agreement with certain institutional investors for the issuance and sale, in a registered direct offering of 480,000 shares of the Company’s common stock and warrants to purchase 480,000 shares of common stock. Gross proceeds received were $3,000,000 and net proceeds were $2,574,051 after deducting fees and expenses. The shares and warrants were sold at a combined offering price of $6.25. The immediately exercisable warrants have an exercise price of $6.25 per share and expire on November 19, 2029. The estimated fair value of the warrants issued to the investors was approximately $1,575,000.

The Company paid the placement agent 7% of the gross proceeds and granted the placement agent immediately exercisable warrants to purchase 33,600 shares of common stock at an exercise price is $7.8125 per share which expire on November 15, 2029. The estimated fair value of the warrants issued to the placement agent was approximately $104,000.

Stock Option Plans

Pursuant to our 2014 Stock Incentive Plan, we reserved 34,667 shares of common stock. As of December 31, 2024, there were options to purchase 18,484 shares outstanding, options to purchase 2,318 shares were exercised, options to purchase 13,865 shares expired or were forfeited, and no shares were available for future grants.

Pursuant to our 2018 Omnibus Stock Incentive Plan, we reserved 80,000 shares of common stock. As of December 31, 2024, there were options to purchase 67,200 shares outstanding, options to purchase 4,667 shares were exercised, options to purchase 3,733 shares expired or were forfeited, and the remaining 4,400 shares were transferred to the 2020 Omnibus Stock Incentive Plan (“2020 Plan”).

Pursuant to our 2020 Plan, we reserved 124,400 shares of common stock. As of December 31, 2024, there were options to purchase 66,000 shares outstanding, options to purchase 18,200 shares expired or were forfeited and the remaining 1,400 shares were transferred to the 2021 Omnibus Stock Incentive Plan (“2021 Stock Plan”).

Pursuant to our 2021 Stock Plan, we reserved 349,600 shares of common stock. As of December 31, 2024, options to purchase 330,000 shares were outstanding, options to purchase 18,200 shares expired or were forfeited and the remaining 1,400 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 481,400 shares of common stock for issuance. As of December 31, 2024, options to purchase 359,400 shares were outstanding, options to purchase 4,000 shares expired or were forfeited and 118,000 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. Volatility is estimated using the trading activity of our common stock. 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, 2024			656,084			$	36.41			7.26 years		$	0.00
Granted			185,000				9.50
Exercised			-				-
Forfeited or expired			-				-
Outstanding at December 31, 2024			841,084			$	30.49			7.63 years		$	0.00

Exercisable at December 31, 2024			502,184			$	40.62			6.57 years		$	0.00

On November 7, 2024, the Board of Directors granted options to purchase 158,000 shares to employees, 25,000 shares to directors and 2,000 shares to a consultant at $9.50 per share. The weighted average grant date fair value of the options granted during the three months ended December 31, 2024 was estimated at $7.15 per share. These options vest over terms of 12 to 36 months and have a term of 10 years.

At December 31, 2024, unrecognized total compensation cost related to unvested awards under the Citius Pharma stock plans of $3,285,139 is expected to be recognized over a weighted average period of 1.79 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 December 31, 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 6.14 years and the weighted average exercise price is $0.24 per share. At December 31, 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. On August 2, 2024 we reserved an additional 15,000,000 common shares of Citius Oncology for issuance under the 2024 Omnibus Stock Incentive Plan, (the “2024 Plan”). 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.

Volatility is estimated using the trading activity of Citius Pharmaceuticals common stock. until such time as Citius Oncology has sufficient history. 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 to employees and directors, 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 the Citius Oncology plan is presented below:

		Shares				Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at September 30, 2024			12,750,000			$	2.15			8.78 years		$	0.00
Granted			5,750,000				1.07
Forfeited			—
Outstanding at December 31, 2024			18,500,000			$	1.81			8.97 years		$	470,000
Exercisable at December 31, 2024			4,750,000			$	2.15			8.52 years		$	0.00

The weighted average grant date fair value of the Citius Oncology options granted during the three months ended December 31, 2024 was estimated at $0.80 per share. All these options vest over terms of 12 to 36 months and have a term of 10 years. At December 31, 2024, unrecognized total compensation cost related to unvested awards under the Citius Oncology stock plan of $14,393,428 is expected to be recognized over a weighted average period of 1.87 years.

Stock-based compensation expense for the three months ended December 31, 2024 and 2023 was $2,524,824, (including $0 for the NoveCite plan and $1,808,479 for the Citius Oncology Plan) and $3,058,185 (including $19,858 for the NoveCite Stock Plan and $1,917,000 for the Citius Oncology Plan), respectively.

Warrants

The Company has reserved 3,458,937 shares of common stock for the exercise of outstanding warrants. The following table summarizes the warrants outstanding at December 31, 2024:

		Exercise price				Number				Expiration Dates
August 2018 Offering Investors			28.75				156,863			August 14, 2025
August 2018 Offering Agent			39.84				7,576			August 8, 2025
April 2019 Registered Direct/Private Placement Investors			35.50				51,780			April 5, 2025
April 2019 Registered Direct/Private Placement Agent			48.28				9,605			April 5, 2025
September 2019 Offering Investors			19.25				111,732			September 27, 2025
September 2019 Offering Underwriter			27.97				7,774			September 27, 2025
February 2020 Exercise Agreement Placement Agent			31.88				5,555			August 19, 2025
May 2020 Registered Direct Offering Investors			25.00				66,824			November 18, 2025
May 2020 Registered Direct Offering Placement Agent			33.20				6,226			May 14, 2025
August 2020 Underwriter			32.81				8,079			August 10, 2025
January 2021 Registered Direct Offering Investors			30.78				123,648			July 27, 2026
January 2021 Registered Direct Offering Agent			40.44				14,065			July 27, 2026
February 2021 Offering Investors			42.50				823,211			February 19, 2026
February 2021 Offering Agent			47.03				100,256			February 19, 2026
May 2023 Registered Direct Offering Investors			37.50				500,000			May 8, 2028
May 2023 Registered Direct Offering Agent			37.50				35,000			May 3, 2028
April 2024 Registered Direct Offering Investors			18.75				857,143			October 30, 2029
April 2024 Registered Direct Offering Agent			21.875				60,000			April 25, 2029
November 2024 Offering Investors			6.25				480,000			November 18, 2029
November 2024 Offering Agent			7.8125				33,600			November 15, 2029
							3,458,937

At December 31, 2024, the weighted average remaining life of the outstanding warrants is 2.96 years, all warrants are exercisable, and there was no aggregate intrinsic value for the warrants outstanding.

Common Stock Reserved

A summary of common stock reserved for future issuances by the Company excluding all subsidiaries as of December 31, 2024 is as follows:

Stock plan options outstanding			841,084
Stock plan shares available for future grants			118,000
Warrants outstanding			3,458,937
Total			4,418,021