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Common Stock, Stock Options and Warrants

9 Months Ended

Jun. 30, 2025

Common Stock, Stock Options and Warrants [Abstract]

COMMON STOCK, STOCK OPTIONS AND WARRANTS

7. 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.

Series A Preferred Stock and Authorized Common Stock

On April 17, 2025, the Company entered into an agreement with Leonard Mazur (Chairman and Chief Executive Officer of the Company), pursuant to which the Company sold one share of Series A Preferred Stock, par value $0.001 per share for $100 to Mr. Mazur. The Series A Preferred Stock was sold in connection with the June 9, 2025 special meeting of the stockholders for the purpose of approving an amendment to the Company’s Articles of Incorporation, as amended, to increase the number of shares of the Company’s authorized common stock from 16,000,000 to 250,000,000. The Company’s stockholders approved the authorized share increase on June 9, 2025.

On April 17, 2025, the Company filed a certificate of designation with the Nevada Secretary of State, designating the powers, rights, privileges and restrictions of the Series A Preferred Stock. The certificate provides that each share of Series A Preferred Stock will have 1,000,000,000 votes and will vote together with the outstanding shares of Common Stock as a single class, exclusively with respect to the authorized share increase proposal and shall not be entitled to vote on any other matter. The Series A Preferred Stock will be voted on the authorized share increase in the same proportion as the aggregate votes cast by holders of common stock “for” and “against” the proposal. The Series A Preferred Stock otherwise has no other voting rights, including in respect of any other proposal. The voting power attributable to the Series A Preferred Stock will be disregarded for purposes of determining whether a quorum is present at the special meeting, and the establishment of a quorum at the special meeting will be determined only with reference to the common stock.

Pursuant to its terms, on June 9, 2025, the outstanding share of Series A Preferred Stock was redeemed automatically for $100 after the Company published the final results of the stockholder vote on the authorized stock increase.

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 common stock and warrants to purchase 480,000 shares of common stock. Gross proceeds 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 common stock and warrants to purchase 743,496 shares of common stock. Gross proceeds were approximately $3,000,000 and net proceeds were $2,657,167 after deducting fees and expenses. The shares and warrants were sold at a combined offering price of $4.035. The immediately exercisable warrants have an exercise price of $3.91 per share and 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 of 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.

On April 1, 2025, the Company sold 465,000 shares of common stock, and pre-funded warrants to purchase 1,274,131 shares of common stock at an offering price of $1.15 and $1.1499. Gross proceeds were $1,999,873 and net proceeds were $1,743,757 after deducting fees and expenses. The immediately exercisable pre-funded warrants have an exercise price of $0.0001 per share and do not expire. All 1,274,131 of the pre-funded warrants were exercised during the three months ended June 30, 2025.

The Company paid the placement agent 7% of the gross proceeds and granted the placement agent warrants to purchase 121,739 shares of common stock at $1.4375 per share which are exercisable commencing on October 2, 2025 and expire on April 1, 2030. The estimated fair value of the warrants issued to the placement agent was approximately $100,000.

On June 11, 2025, the Company sold 540,000 shares of common stock, and pre-funded warrants to purchase 4,380,000 shares of common stock at offering prices of $1.22 and $1.2199, respectively, along with immediately exercisable two-year warrants to purchase 9,840,000 shares of common stock at $1.00 per share. On the expiration date, any warrants outstanding will be exercised via cashless exercise. Gross proceeds were $6,001,962 and net proceeds of the offering were $5,430,836 after deducting fees and expenses. The pre-funded warrants are exercisable immediately at $0.0001 per share and do not expire. A holder may not exercise, if they would beneficially own in excess of 4.99% of the common stock; provided that upon 61 days’ notice, the holder may increase the beneficial ownership limitation to 9.99%. 1,250,000 of the pre-funded warrants were exercised during the three months ended June 30, 2025. The estimated fair value of the 9,840,000 warrants issued to the investors was approximately $4,867,000.

The Company paid the placement agent a fee of $420,168 and other fees and expenses were $150,958. In addition, the Company granted placement agent warrants to purchase 344,400 shares of common stock at an exercise price equal to $1.525 per share. The warrants are exercisable six months after issuance and expire after five years. On the expiration date, any warrants outstanding will be exercised via cashless exercise. The estimated fair value of the warrants issued to the placement agent was approximately $222,000.

At the Market Offering Agreement

On August 12, 2024, the Company entered into a sales agreement, 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.

During the three months ended June 30, 2025, the Company sold 2,185,249 shares for gross proceeds of $3,471,866. Net proceeds after deducting broker fees and other offering expenses were $3,294,446.

Stock Option Plans

Pursuant to our 2014 Stock Incentive Plan, we reserved 34,667 shares of common stock. As of June 30, 2025, there were options to purchase 16,910 shares outstanding, options to purchase 2,318 shares were exercised, options to purchase 15,439 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 June 30, 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 June 30, 2025, there were options to purchase 66,000 shares outstanding, options to purchase 8,800 shares expired or were forfeited and the remaining 49,600 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 June 30, 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 June 30, 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			(1,574	)			242.80
Outstanding at June 30, 2025			839,510			$	30.09				7.15 years			$	0.00
Exercisable at June 30, 2025			512,009			$	39.73				6.13 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 nine months ended June 30, 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 June 30, 2025, unrecognized total compensation cost related to unvested awards under the Citius Pharma stock plans of $2,077,242 is expected to be recognized over a weighted average period of 1.54 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, 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 5.64 years and the weighted average exercise price is $0.24 per share. At June 30, 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			(333,333	)			1.74
Outstanding at June 30, 2025			18,166,667			$	1.82				8.43 years			$	46,051,667
Exercisable at June 30, 2025			5,554,167			$	1.99				8.13 years			$	13,098,333

The weighted average grant date fair value of the Citius Oncology options granted during the nine months ended June 30, 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 June 30, 2025, unrecognized total compensation cost related to unvested awards under the Citius Oncology stock plans of $9,909,073 is expected to be recognized over a weighted average period of 1.41 years.

Stock-based compensation expense for the three months ended June 30, 2025 and 2024 was $2,719,674 (including $2,125,237 for the Citius Oncology stock plans) and $3,061,763 (including $13,858 for the NoveCite plan and $1,957,000 for the Citius Oncology stock plans). Stock-based compensation expense for the nine months ended June 30, 2025 and 2024 was $7,946,529 (including $6,022,287 for the Citius Oncology stock plans) and $9,198,340 (including $47,574 for the NoveCite plan and $5,831,000 for the Citius Oncology stock plans).

Warrants

The Company has reserved 17,623,006 shares of common stock for the exercise of outstanding warrants. The following table summarizes the warrants outstanding at June 30, 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
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
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
April 2025 Offering Agent			1.4375				121,739			April 1, 2030
June 2025 Offering Investor			0.0001				3,130,000			No Expiration
June 2025 Offering Investor			1.000				9,840,000			June 11, 2027
June 2025 Offering Agent			1.525				344,400			June 11, 2027
							17,623,006

On April 3, 2024, the Board of Directors approved a one-year extension for warrants to purchase 51,780 shares of common stock with an exercise price of $35.50 per share. The warrants were held by Leonard Mazur, Chief Executive Officer and Chairman of the Board of Directors, and Myron Holubiak, Executive Vice President and Director, and were originally issued in April 2019 in a registered direct offering of common stock. Additionally, 9,605 warrants with an exercise price of $48.28 per share issued in connection with the registered direct offering were extended by one-year. These warrants were held by the registered direct offering placement agent. 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, 2025, the weighted average remaining life of the outstanding warrants is 1.88 years, all warrants are exercisable except for the April 2025 Offering Agent warrants which become exercisable on October 2, 2025, and the aggregate intrinsic value of the warrants outstanding was $10,822,938.

Common Stock Reserved

A summary of common stock reserved for future issuances by the Company excluding all subsidiaries as of June 30, 2025 is as follows:

Stock plan options outstanding			839,510
Stock plan shares available for future grants			118,000
Warrants outstanding			17,623,006
Total			18,580,516