XML 22 R12.htm IDEA: XBRL DOCUMENT v3.25.1
Common Stock, Stock Options and Warrants
 6 Months Ended
Mar. 31, 2025
Common Stock, Stock Options and Warrants [Abstract]  
COMMON STOCK, STOCK OPTIONS AND WARRANTS

6. COMMON STOCK, STOCK OPTIONS AND WARRANTS

 

Authorized Common Stock and Reverse Stock Split

 

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. All share amounts have been retroactively adjusted to reflect the split.

 

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 Offerings

 

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.

 

On January 7, 2025, the Company entered into an agreement with certain institutional investors for the issuance and sale, in a registered direct offering of 743,496 shares of the Company’s common stock and warrants to purchase 743,496 shares of common stock. Gross proceeds received were approximately $3,000,000 and net proceeds were $2,657,167 after deducting for fees and expenses. The shares and warrants were sold at a combined offering price of $4.035. The Offering closed on January 8, 2025.

The Warrants have an exercise price equal to $3.91 per share, are exercisable immediately upon issuance and will expire on January 8, 2030. The estimated fair value of the warrants issued to the investors was approximately $2,091,000.

 

The Company paid the placement agent 7% of the gross proceeds and granted the placement agent immediately exercisable warrants, to purchase 52,045 shares common stock at $5.0438 per share which expire on January 7, 2030. The estimated fair value of the warrants issued to the placement agent was approximately $138,000.

 

At the Market Offering Agreement

 

On August 12, 2024, the Company entered into a sales agreement with HC Wainwright, to sell, from time to time during the term of the agreement the Company’s common shares. During the three months ended March 31, 2025, the Company sold 289,910 shares for gross proceeds of $839,468. Net proceeds after deducting broker fees and other offering expenses were $808,640.

 

Stock Option Plans

 

Pursuant to our 2014 Stock Incentive Plan, we reserved 34,667 shares of common stock. As of March 31, 2025, 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 March 31, 2025, 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 March 31, 2025, 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 March 31, 2025, 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 March 31, 2025, 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 March 31, 2025   841,084   $30.49   7.39 years  $0.00 
Exercisable at March 31, 2025   511,018   $40.41   6.36 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 six months ended March 31, 2025 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 March 31, 2025, unrecognized total compensation cost related to unvested awards under the Citius Pharma stock plans of $2,671,679 is expected to be recognized over a weighted average period of 1.64 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 March 31, 2025, 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 5.89 years and the weighted average exercise price is $0.24 per share. At March 31, 2025, there is no unrecognized compensation cost related to these awards.

 

Citius Oncology Stock Plan - Under the 2023 Citius Oncology Omnibus Stock Incentive Plan, adopted on April 29, 2023, Citius Oncology reserved 15,000,000 common shares of Citius Oncology for issuance. On August 2, 2024 Citius Oncology reserved an additional 15,000,000 common shares of Citius Oncology for issuance under the 2024 Citius Oncology Omnibus Stock Incentive Plan. The Citius Oncology stock plans provide 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 stock plans 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 March 31, 2025   18,500,000   $1.81   8.72 years  $
—
 
Exercisable at March 31, 2025   5,135,417   $2.06   8.39 years  $
—
 

The weighted average grant date fair value of the Citius Oncology options granted during the six months ended March 31, 2025 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 March 31, 2025, unrecognized total compensation cost related to unvested awards under the Citius Oncology stock plans of $12,304,857 is expected to be recognized over a weighted average period of 1.64 years.

 

Stock-based compensation expense for the three months ended March 31, 2025 and 2024 was $2,702,031 (including $2,088,572 for the Citius Oncology stock plans) and $3,078,392 (including $13,858 for the NoveCite plan and $1,957,000 for the Citius Oncology stock plans). Stock-based compensation expense for the six months ended March 31, 2025 and 2024 was $5,226,855 (including $3,897,050 for the Citius Oncology stock plans) and $6,136,577 (including $33,716 for the NoveCite plan and $3,874,000 for the Citius Oncology stock plans).

  

Warrants

 

The Company has reserved 4,254,478 shares of common stock for the exercise of outstanding warrants. The following table summarizes the warrants outstanding at March 31, 2025:

 

   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 Offering Investors   35.50    51,780   April 5, 2025
April 2019 Offering 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 Agent   31.88    5,555   August 19, 2025
May 2020 Offering Investors   25.00    66,824   November 18, 2025
May 2020 Placement Agent   33.20    6,226   May 14, 2025
August 2020 Underwriter   32.81    8,079   August 10, 2025
January 2021 Offering Investors   30.78    123,648   July 27, 2026
January 2021 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 Offering Investors   37.50    500,000   May 8, 2028
May 2023 Offering Agent   37.50    35,000   May 3, 2028
April 2024 Offering Investors   18.75    857,143   October 30, 2029
April 2024 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
January 2025 Offering Investors   3.91    743,496   January 8, 2030
January 2025 Offering Agent   5.0438    52,045   January 7, 2030
         4,254,478    

  

At March 31, 2025, the weighted average remaining life of the outstanding warrants is 3.10 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 March 31, 2025 is as follows:

 

Stock plan options outstanding   841,084 
Stock plan shares available for future grants   118,000 
Warrants outstanding   4,254,478 
Total   5,213,562