Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jun. 30, 2016 | Aug. 10, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | Citius Pharmaceuticals, Inc. | |
Entity Central Index Key | 1,506,251 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | Yes | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 73,038,060 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2016 | Sep. 30, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 1,626,140 | $ 676,137 |
Prepaid expenses | 394,428 | 60,000 |
Total Current Assets | 2,020,568 | 736,137 |
Property and Equipment, Net of Accumulated Depreciation of $4,108 | 4,414 | |
Other Assets | ||
Trademarks | 5,401 | |
Deposits | 2,167 | |
In-process research and development | 19,400,000 | |
Goodwill | 1,586,796 | |
Total Other Assets | 20,988,963 | 5,401 |
Total Assets | 23,013,945 | 741,538 |
Current liabilities: | ||
Accounts payable | 309,174 | 559,150 |
Accrued expenses | 585,028 | 8,260 |
Accrued compensation | 775,000 | |
Accrued interest | 26,322 | |
Notes payable | 172,970 | |
Derivative warrant liability | 2,947,601 | 738,955 |
Due to related party | 37,637 | 70,386 |
Total Current Liabilities | 4,853,732 | 1,376,751 |
Commitments and contingencies | ||
Stockholders' Equity (Deficit) | ||
Preferred stock $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding | ||
Common stock - $0.001 par value; 90,000,000 shares authorized; 73,038,060 and 34,117,886 shares issued and outstanding at June 30, 2016 and September 30, 2015, respectively | 73,038 | 34,118 |
Additional paid-in capital | 32,833,828 | 8,371,218 |
Accumulated deficit | (14,746,653) | (9,040,549) |
Total Stockholders' Equity (Deficit) | 18,160,213 | (635,213) |
Total Liabilities and Stockholders' Equity (Deficit) | $ 23,013,945 | $ 741,538 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2016 | Sep. 30, 2015 |
ASSETS | ||
Property and Equipment, Net of Accumulated Depreciation | $ 4,108 | |
Stockholders' Equity (Deficit) | ||
Preferred Stock Par Value | $ 0.001 | $ 0.001 |
Preferred Stock Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock Shares Issued | 0 | 0 |
Preferred Stock Shares Outstanding | 0 | 0 |
Common Stock Par Value | $ 0.001 | $ 0.001 |
Common Stock Shares Authorized | 90,000,000 | 90,000,000 |
Common Stock Shares Issued | 73,038,060 | 34,117,886 |
Common Stock Shares Outstanding | 73,038,060 | 34,117,886 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Condensed Consolidated Statements Of Operations | ||||
Revenues | ||||
Operating Expenses | ||||
Research and development | 381,119 | 415,531 | 1,009,975 | 1,174,892 |
General and administrative | 1,464,551 | 194,651 | 2,515,069 | 705,580 |
Stock-based compensation - general and administrative | 280,764 | 163,547 | 517,677 | 381,076 |
Total Operating Expenses | 2,126,434 | 773,729 | 4,042,721 | 2,261,548 |
Operating Loss | (2,126,434) | (773,729) | (4,042,721) | (2,261,548) |
Other Income (Expense), Net: | ||||
Interest income | 782 | 298 | 800 | 2,953 |
Gain (loss) on revaluation of derivative warrant liability | (1,485,832) | (51,541) | (1,659,738) | 272,147 |
Interest expense | (4,445) | (4,445) | (7,500) | |
Total Other Income (Expense), Net | (1,489,495) | (51,243) | (1,663,383) | 267,600 |
Loss before Income Taxes | (3,615,929) | (824,972) | (5,706,104) | (1,993,948) |
Income tax benefit | ||||
Net Loss | $ (3,615,929) | $ (824,972) | $ (5,706,104) | $ (1,993,948) |
Net Loss Per Share - Basic and Diluted | $ (0.05) | $ (0.03) | $ (0.12) | $ (0.06) |
Weighted Average Common Shares Outstanding Basic and diluted | 72,663,518 | 32,312,729 | 48,057,337 | 31,161,596 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) - 9 months ended Jun. 30, 2016 - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, Amount at Sep. 30, 2015 | $ 34,118 | $ 8,371,218 | $ (9,040,549) | $ (635,213) | |
Beginning balance, Shares at Sep. 30, 2015 | 34,117,886 | ||||
Issuance of common stock in private placement, net of costs, Amount | $ 9,616 | 4,219,508 | 4,229,124 | ||
Issuance of common stock in private placement, net of costs, Shares | 9,616,668 | ||||
Issuance of common stock for services, Amount | $ 167 | 89,833 | 90,000 | ||
Issuance of common stock for services, Shares | 166,667 | ||||
Issuance of common stock, warrants and stock options for acquisition, Amount | $ 29,137 | 18,985,936 | 19,015,073 | ||
Issuance of common stock, warrants and stock options for acquisition, Shares | 29,136,839 | ||||
Reclassification of derivative warrant liability to additional paid-in capital | 649,656 | 649,656 | |||
Stock-based compensation | 517,677 | 517,677 | |||
Net loss | (5,706,104) | (5,706,104) | |||
Ending balance, Amount at Jun. 30, 2016 | $ 73,038 | $ 32,833,828 | $ (14,746,653) | $ 18,160,213 | |
Ending balance, Shares at Jun. 30, 2016 | 73,038,060 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (5,706,104) | $ (1,993,948) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
(Gain) loss on revaluation of derivative warrant liability | 1,659,738 | (272,147) |
Stock-based compensation expense | 517,677 | 381,076 |
Stock issued for services | 90,000 | |
Depreciation | 671 | |
Write-off of abandoned trademarks | 5,401 | |
Changes in operating assets and liabilities, net of effect of acquired business: | ||
Prepaid expenses | (313,884) | (5,918) |
Accounts payable | (494,752) | 228,168 |
Accrued expenses | (21,891) | (33,797) |
Accrued compensation | 160,000 | |
Accrued interest | 2,460 | 7,500 |
Due to related party | (32,749) | 8,950 |
Net Cash Used In Operating Activities | (4,133,433) | (1,680,116) |
Cash Flows From Investing Activities: | ||
Cash acquired in acquisition | 255,748 | |
Net Cash Provided By Investing Activities | 255,748 | |
Cash Flows From Financing Activities: | ||
Repayment of notes payable | (600,000) | |
Net proceeds from private placement | 5,427,688 | 1,079,053 |
Net Cash Provided by Financing Activities | 4,827,688 | 1,079,053 |
Net Change in Cash and Cash Equivalents | 950,003 | (601,063) |
Cash and Cash Equivalents - Beginning of Period | 676,137 | 1,552,060 |
Cash and Cash Equivalents - End of Period | 1,626,140 | 950,997 |
Supplemental Disclosures of Cash Flow Information and Non-cash Transactions: | ||
Interest paid | 1,985 | |
Income taxes paid | ||
Fair value of private placement warrants recorded as derivative warrant liability | 1,198,564 | 538,051 |
Reclassification of derivative warrant liability to additional paid-in capital | 649,656 | |
Conversion of promissory notes and accrued interest into common stock | $ 633,333 |
NATURE OF OPERATIONS, BASIS OF
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Business Citius Pharmaceuticals, Inc. ("Citius" or the "Company") is a specialty pharmaceutical company dedicated to acquiring, developing and commercializing cancer care and critical care drug products. The Company was founded as Citius Pharmaceuticals, LLC, a Massachusetts limited liability company, on January 23, 2007. On September 12, 2014, Citius Pharmaceuticals, LLC entered into a Share Exchange and Reorganization Agreement (the "Exchange Agreement"), with Citius Pharmaceuticals, Inc. (formerly Trail One, Inc.), a publicly traded company incorporated under the laws of the State of Nevada. Citius Pharmaceuticals, LLC became a wholly-owned subsidiary of Citius (see "Reverse Acquisition" below). On March 30, 2016, Citius acquired Leonard-Meron Biosciences, Inc. ("LMB") as a wholly-owned subsidiary. LMB is a pharmaceutical company focused on the development and commercialization of critical care products with a concentration on anti-infectives (see "Acquisition of Leonard-Meron Biosciences, Inc." below). The Company has one approved product, Suprenza (phentermine hydrochloride), which it licensed out for promotion in the United States, Canada and Mexico. On July 1, 2016, the Company announced that it was discontinuing Suprenza and was focusing on the Phase 3 development of Mino-Lok, an antibiotic lock solution used to treat patients with catheter-related bloodstream infections, and the Phase 2b development of Hydro-Lido for hemorrhoids. Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and raising capital. Citius is subject to a number of risks common to companies in the pharmaceutical industry including, but not limited to, risks related to the development by Citius or its competitors of research and development stage products, market acceptance of its products, competition from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners, the Company's ability to obtain additional financing and the Company's compliance with governmental and other regulations. Reverse Acquisition On September 12, 2014, Citius completed a reverse acquisition transaction with Citius Pharmaceuticals, LLC, which became a wholly-owned subsidiary of Citius. As part of the reverse acquisition, the former members of Citius Pharmaceuticals, LLC received 21,625,219 shares of the Company's common stock in exchange for their interest in Citius Pharmaceuticals, LLC and, immediately after the transaction, owned 72% of the outstanding common stock. Immediately prior to the transaction, Citius had 5,000,000 shares of common stock outstanding. In connection with the Exchange Agreement, the Company completed the first closing of a Private Offering. Following the acquisition, Citius Pharmaceuticals, LLC began operating as a wholly-owned subsidiary of Citius Pharmaceuticals, Inc. Accounting principles generally accepted in the United States generally require that a company whose security holders retain the majority voting interest in the combined business be treated as the acquirer for financial reporting purposes. The acquisition was accounted for as a reverse acquisition whereby Citius Pharmaceuticals, LLC was deemed to be the accounting acquirer. Accordingly, the historical consolidated financial statements are those of Citius Pharmaceuticals, LLC as the accounting acquirer. The post-merger combination of Citius Pharmaceuticals, Inc. and Citius Pharmaceuticals, LLC is referred to throughout these notes to consolidated financial statements as the "Company." As the accounting acquirer, Citius Pharmaceuticals, LLC did not acquire any tangible assets from Citius and did not assume any liabilities of Citius. This transaction is not considered a business combination because Citius, the non-operating public corporation, did not meet the definition of a business. Instead, this transaction is considered to be a capital transaction of Citius Pharmaceuticals, LLC and is equivalent to the issuance of shares by Citius Pharmaceuticals, LLC for the net assets of Citius accompanied by a recapitalization. In connection with the reverse acquisition, Citius Pharmaceuticals, LLC adopted the fiscal year end of Citius, thereby changing our fiscal year end from December 31 to September 30. Acquisition of Leonard-Meron Biosciences, Inc. On March 30, 2016, the Company acquired all of the outstanding stock of Leonard-Meron Biosciences, Inc. ("LMB") by issuing 29,136,839 shares of its common stock. As of March 30, 2016, the stockholders of LMB received approximately 41% of the issued and outstanding common stock of the Company. In addition, the Company converted the outstanding common stock warrants of LMB into 3,645,297 common stock warrants of the Company and converted the outstanding common stock options of LMB into 1,158,770 common stock options of the Company. The Company acquired tangible assets consisting of cash of $255,748, prepaid expenses of $20,544, property and equipment of $5,085, deposits of $2,167, and identifiable intangible assets of $19,400,000 related to in-process research and development. The Company assumed accounts payable of $244,776, accrued expenses of $598,659, accrued compensation of $615,000, accrued interest of $23,862, and notes payable of $772,970. Accordingly, the net assets acquired amounted to $17,428,277. The fair value of LMB's net assets acquired on the date of the acquisition, based on management's analysis of the fair value of the 29,136,839 shares of the Company's common stock issued for LMB's outstanding stock, the 3,645,297 Company common stock warrants issued for LMB's outstanding common stock warrants, and the vested portion of the 1,158,770 Company common stock options issued for LMB's outstanding common stock options was $19,015,073. The fair value of the common stock issued was estimated at $17,482,093, the fair value of the warrants issued was estimated at $1,071,172 and the fair value of the vested options was estimated at $461,808. The Company recorded goodwill of $1,586,796 for the excess of the purchase price of $19,015,073 over the net assets acquired of $17,428,277. In-process research and development represents the value of LMB's leading drug candidate which is an antibiotic solution used to treat catheter-related bloodstream infections (Mino-Lok). Goodwill represents the value of LMB's industry relationships and its assembled workforce. In-process research and development and goodwill will not be amortized but will be tested at least annually for impairment. The purchase price allocation is preliminary and is subject to adjustment for future events. Unaudited pro forma operating results, assuming the acquisition of LMB had been made as of October 1, 2014, are as follows: Nine Months Ended June 30, 2016 2015 Revenues $ $ Net loss $ (8,959,053 ) $ (4,659,479 ) Net loss per share basic and diluted $ (0.13 ) $ (0.08 ) Basis of Presentation and Summary of Significant Accounting Policies Basis of Preparation All share and per share amounts presented in these consolidated financial statements reflect the one-for-one exchange ratio of Citius Pharmaceuticals, LLC member interests to common shares in the reverse acquisition. The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, without being audited, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments considered necessary to make the financial statements not misleading have been included. Operating results for the nine months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending September 30, 2016. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2015 filed with the Securities and Exchange Commission, and the Company's Form 8-K for the March 30, 2016 acquisition of Leonard-Meron Biosciences, Inc. filed with the Securities and Exchange Commission. There have been no recently issued accounting pronouncements that have had or are expected to have a material impact on the Company's consolidated financial statements. Use of Estimates Net Loss per Common Share |
GOING CONCERN UNCERTAINTY AND M
GOING CONCERN UNCERTAINTY AND MANAGEMENT'S PLAN | 9 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 2. GOING CONCERN UNCERTAINTY AND MANAGEMENT'S PLAN | The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company experienced negative cash flows from operations of $4,133,433 and $1,680,116 for the nine months ended June 30, 2016 and 2015, respectively. At June 30, 2016, the Company had a working capital deficit of $2,833,164. The Company has no revenue and has relied on proceeds from equity transactions and debt to finance its operations. At June 30, 2016, the Company had limited capital to fund its operations. This raises substantial doubt about the Company's ability to continue as a going concern. The Company plans to raise capital through equity financings from outside investors as well as raise additional funds from existing investors. There is no assurance, however, that the Company will be successful in raising the needed capital and, if funding is available, that it will be available on terms acceptable to the Company. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of the above uncertainty. |
BUSINESS AGREEMENTS
BUSINESS AGREEMENTS | 9 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 3. BUSINESS AGREEMENTS | Alpex Pharma S.A. On June 12, 2008, the Company entered into a collaboration and license agreement (the "Alpex Agreement") with Alpex Pharma S.A. ("Alpex"), in which Alpex granted the Company an exclusive right and license to use certain Alpex intellectual property in order to develop and commercialize orally disintegrating tablet formulations of pharmaceutical products in United States, Canada and Mexico. In addition, Alpex manufactures Suprenza, the Company's commercialized pharmaceutical product, on a contract basis. The agreement was amended on November 15, 2011 as part of an Amendment and Coordination Agreement (see the "Three-Party Agreement" below). Under the terms of the Alpex Agreement, as amended by the Three-Party Agreement dated November 15, 2011 (see below), Alpex is entitled to a payment per tablet manufactured and a percentage of all milestone, royalty and other payments received by the Company from Prenzamax, LLC, pursuant to a sublicense agreement (see below). A milestone is generally understood as a completion of specific defined task towards the completion of a project or performance of a contract. For example, pursuant to the Company's agreement with Alpex, the Company is required to pay Alpex for the completion of certain tasks including, but not limited to, the development of the analytical methods, formulations and filings of the NDA. In addition, under the terms of the Alpex Agreement, Alpex retained the right to use the clinical data generated by the Company to file for regulatory approval and market Suprenza in the rest of the world. In the event that Alpex has such sales, Alpex will pay the Company a percentage royalty on net sales, as defined ("Alpex Revenue"). No milestone, royalty or other payments were earned or received by the Company through June 30, 2016 except for the reimbursement of regulatory fees under the Three-Party Agreement. On July 1, 2016, the Company announced that it notified the Food and Drug Administration ("FDA") and Alpex that it was discontinuing Suprenza. Prenzamax, LLC On November 15, 2011, the Company entered into an exclusive license agreement (the "Sublicense Agreement") with Prenzamax, LLC ("Prenzamax"), in which the Company granted Prenzamax and its affiliates the exclusive right to commercialize Suprenza in the United States. Prenzamax is an affiliate of Akrimax, a related party (see Note 7) and was formed for the specific purpose of managing the Sublicense Agreement. Under the terms of the Sublicense Agreement, Prenzamax is to pay the Company a percentage of the product's EBITDA, as defined ("Profit Share Payments"). In addition, Prenzamax is to reimburse the Company directly for certain development costs. These payments are to commence once Prenzamax has achieved profitability, as defined in the Sublicense Agreement. Further, under the terms of the Sublicense Agreement, Prenzamax is required to share in the royalty payment due to Alpex under the Alpex Agreement. In addition, Prenzamax is entitled to a percentage of the Alpex Revenue received by the Company. The Company has not been reimbursed for any development costs nor has it earned any royalty payments through June 30, 2016. On July 1, 2016, the Company announced that it notified Prenzamax that it was discontinuing Suprenza. Three-Party Agreement On November 15, 2011, the Company, Alpex and Prenzamax entered into the Three-Party Agreement wherein the terms of the Alpex Agreement were modified and Prenzamax and the Company agreed to each pay a portion of certain regulatory filing fees for as long as Prenzamax is purchasing Suprenza from Alpex pursuant to the Three-Party Agreement. During the three months ended March 31, 2016, the Company received $292,575 from Alpex as reimbursement for regulatory filing fees that were previously expensed during the three months ended December 31, 2015. The reimbursement was recorded as a reduction of research and development expenses. On July 1, 2016, the Company announced that it notified Alpex and Prenzamax that it was discontinuing Suprenza. Patent and Technology License Agreement LMB has a patent and technology license agreement with Novel Anti-Infective Therapeutics, Inc., ("NAT") to develop and commercialize Mino-Lok on an exclusive, worldwide (except for South America), sub licensable basis. LMB expensed a one-time license fee of $350,000 during the year ended May 31, 2014. LMB will pay an annual maintenance fee of $30,000 that increases over five years to $90,000, until commercial sales of a product subject to the license. LMB will also pay annual royalties on net sales of licensed products, with royalties ranging from the mid-single digits to the low double digits. In limited circumstances in which the licensed product is not subject to a valid patent claim and a competitor is selling a competing product, the royalty rate is in the low-single digits. After a commercial sale is obtained, LMB must pay minimum aggregate annual royalties that increase in subsequent years. LMB must also pay NAT up to $1,050,000 upon achieving specified regulatory and sales milestones. Finally, LMB must pay NAT a specified percentage of payments received from any sub licensees. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 4. NOTES PAYABLE | Promissory Notes In November 2013, the Company issued two promissory notes (the "Promissory Notes") to two existing investors in aggregate total principal amount of $600,000. The Promissory Notes accrued interest at 5.00% per annum and were due at the earliest of (1) December 19, 2014, (2) the occurrence of an event of default as defined in the Promissory Notes, (3) an initial installment of $100,000 principal amount, to each investor, upon the receipt by the Company of a minimum $6,500,000 in aggregate proceeds under any financing transaction, (4) a second installment of $100,000 principal amount, to each investor, upon the receipt by the Company of a minimum $8,500,000 in aggregate proceeds under any financing transaction, and (5) a third installment of $100,000 principal amount, to each investor, upon the receipt by the Company of a minimum $10,000,000 in aggregate proceeds under any financing transaction. On December 31, 2014, the note holders requested conversion of the outstanding $600,000 Promissory Notes and accrued interest of $33,333 into 1,055,554 shares of common stock at a conversion price of $0.60 per share. Notes Payable Related Parties On March 30, 2016, the Company assumed $772,970 of demand notes payable in the acquisition of LMB. The principal balance of the notes payable to our Chairman, Leonard Mazur, was $760,470 and the principal balance of the notes payable to our Chief Executive Officer, Myron Holubiak, was $12,500. Notes with a principal balance of $704,000 accrue interest at 4.0% per annum and notes with a principal balance of $68,970 accrue interest at 12% per annum. In April 2016, $600,000 of 4.0% demand notes payable and accrued interest of $1,985 was repaid to Leonard Mazur. Interest Expense Interest expense on notes payable was $4,445 for the three and nine months ended June 30, 2016, and related to the demand notes payable assumed in the acquisition of LMB. Interest expense notes payable for the three and nine months ended June 30, 2015 was $0 and $7,500, respectively, and related to the promissory notes issued to two existing investors. |
DERIVATIVE WARRANT LIABILITY
DERIVATIVE WARRANT LIABILITY | 9 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 5. DERIVATIVE WARRANT LIABILITY | Derivative financial instruments are recognized as a liability on the consolidated balance sheet and measured at fair value. At June 30, 2016 and September 30, 2015, the Company had outstanding warrants to purchase 5,508,334 shares and 3,037,037 shares, respectively, of its common stock that are considered to be derivative instruments since the agreements contain "down round" provisions whereby the exercise price of the warrants is subject to adjustment in the event that the Company issues common stock for less than $0.60 per share within one-year of the original issuance of the warrants (see Note 6). The Company performs valuations of the warrants using the Black-Scholes option pricing model which value was also compared to a Binomial Option Pricing Model for reasonableness. This model requires input of assumptions including the risk-free interest rates, volatility, expected life and dividend rates and has also considered the likelihood of "down round" financings. Selection of these inputs involves management's judgment and may impact net income. Due to our limited operating history and limited number of sales of our common stock, we estimate our volatility based on a number of factors including the volatility of comparable publicly traded pharmaceutical companies. The volatility factor used in the Black-Scholes option pricing model has a significant effect on the resulting valuation of the derivative liabilities on our balance sheet. The volatility calculated at June 30, 2016 was 62%. We used a risk-free interest rate of 1.01%, estimated lives of 4.00 to 4.82 years, which are the remaining contractual lives of the warrants subject to "down round" provisions, and no dividends to our common stock. The volatility calculated at September 30, 2015 was 57%. We used a risk-free interest rate of 1.37%, estimated lives of 4.47 to 4.96 years, which are the remaining contractual lives of the warrants subject to "down round" provisions, and no dividends to our common stock. On March 20, 2016, anti-dilution rights related to warrants to purchase 500,000 shares of common stock expired which resulted in a reclassification from derivative warrant liability to additional paid-in capital of $114,308. During the three months ended June 30, 2016, anti-dilution rights related to warrants to purchase 1,645,371 shares of common stock expired which resulted in a reclassification from derivative warrant liability to additional paid-in capital of $535,348. The table below presents the changes in the derivative warrant liability, which is measured at fair value on a recurring basis and classified as Level 3 in the fair value hierarchy: Nine Months Ended June 30, 2016 Nine Months Ended June 30, 2015 Derivative warrant liability, beginning of period $ 738,955 $ 1,450,943 Fair value of warrants issued 1,198,564 538,051 Total realized/unrealized losses (gains) included in net loss (1) 1,659,738 (272,147 ) Reclassification of liability to additional paid-in capital (649,656 ) Derivative warrant liability, end of period $ 2,947,601 $ 1,716,847 ____________ (1) Included in gain (loss) on revaluation of derivative warrant liability in the Condensed Consolidated Statement of Operations. None of the warrants issued to purchase 3,645,297 shares of common stock in connection with the acquisition of LMB contain "down round" provisions. |
COMMON STOCK, STOCK OPTIONS AND
COMMON STOCK, STOCK OPTIONS AND WARRANTS | 9 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 6. COMMON STOCK, STOCK OPTIONS AND WARRANTS | Private Offering In 2014, the Company entered into an investment banking agreement to raise up to $5.1 million and issue up to 8,500,000 Units described below. The agreement contemplated a Reverse Acquisition with a public company. As of December 31, 2013, the Company capitalized as deferred offering costs a $25,000 retainer for legal costs associated with this offering. The $25,000 retainer was charged to additional paid-in capital on completion of the first closing of the offering. On September 12, 2014, the Company sold 3,400,067 Units for a purchase price of $0.60 per Unit for gross proceeds of $2,040,040. Each Unit consists of one share of common stock and one five-year warrant (the "Investor Warrants") to purchase one share of common stock at an exercise price of $0.60, (the "Private Offering"). The exercise price of the Investor Warrants was subject to adjustment, for up to one year, if the Company issues common stock at a price lower than the exercise price, subject to certain exceptions. The Investor Warrants will be redeemable by the Company at a price of $0.001 per Investor Warrant at any time subject to the conditions that (i) the common stock has traded for twenty (20) consecutive trading days with a closing price of at least $1.50 per share with an average trading volume of 50,000 shares per day and (ii) the Company provides 20 trading days prior notice of the redemption and the closing price of the common stock is not less than $1.17 for more than any 3 days during such notice period and (iii) the underlying shares of common stock are registered. The Placement Agent was paid a commission of ten percent (10%) and a non-accountable expense allowance of three percent (3%) of the funds raised in the Private Offering. As a result of the foregoing arrangement, the Placement Agent was paid commissions and expenses of $265,206. In addition, the Company issued to the Placement Agent and their designees five-year warrants (the "Placement Agent Unit Warrants") to purchase 680,013 Units at an exercise price of $0.60 per Unit. The Placement Agent Unit Warrants are exercisable on a cash or cashless basis with respect to purchase of the Units, and will be exercisable only for cash with respect to warrants received as part of the Units. The exercise price of the warrants underlying the Placement Agent Unit Warrants was subject to weighted-average adjustment, for up to one year, if the Company issues common stock at a price lower than the exercise price, subject to certain exceptions. In addition, the Placement Agent was issued warrants to purchase 1,000,000 shares of common stock exercisable for cash at $0.60 per share for investment banking services provided in connection with the transaction (the "Placement Agent Share Warrants"). Other cash expenses related to the private placement totaled $169,000. The Placement Agent may, while the Placement Agent Unit Warrants are outstanding, appoint one person to the Board of Directors, and designate one person who may attend meetings of the Board of Directors as an observer. On November 2, 2015, the Placement Agent waived its right to appoint a person to the Board of Directors. In connection with the Private Offering, the Company entered into a Registration Rights Agreement pursuant to which the Company is required to file a registration statement (the "Registration Statement"), registering for resale all shares of common stock (i) included in the Units; and (ii) issuable upon exercise of the Investor Warrants. The Company has agreed to use its reasonable efforts to cause the Registration Statement to be filed no later than 60 days after the completion of the Private Offering (the "Filing Deadline"), and to have the Registration Statement declared effective within 180 days of the Filing Deadline. On May 12, 2016, the Company announced that it had completed the final phase of the Private Offering. Any holders of the shares of common stock removed from the Registration Statement as a result of a Section 415 comment from the SEC shall be included in a subsequent registration statement the Company will file no later than six months after the prior registration statement (or such other period as permitted by SEC rules). The Company filed the Registration Statement on September 11, 2015 and it was declared effective on January 21, 2016. During the year ended September 30, 2015, the Company sold an additional 2,837,037 Units for a purchase price of $0.54 per Unit and 200,000 Units for a purchase price of $0.60 per Unit for gross proceeds of $1,652,000. Each Unit consists of one share of common stock and one Investor Warrant (see description above). There was no placement agent for the 2015 private placements and other cash expenses related to the placements were $142,507. In connection with these placements, the Company credited $741,058 to stockholders' equity (deficit) and $768,435 to derivative warrant liability. During the nine months ended June 30, 2016, the Company sold an additional 4,350,001 Units for a purchase price of $0.54 per Unit and 266,667 Units for a purchase price of $0.60 per Unit for gross proceeds of $2,509,000. Each Unit consists of one share of common stock and one Investor Warrant (see description above). There was no placement agent for these private placements and other cash expenses related to the placements were $81,312. In connection with these placements, the Company credited $1,229,124 to stockholders' equity (deficit) and $1,198,564 to derivative warrant liability. On March 22, 2016, the Company sold 5,000,000 shares of common stock at $0.60 per share to its Chairman of the Board, Leonard Mazur, for gross proceeds of $3,000,000. There were no expenses related to this placement. Stock Options On September 12, 2014, the Board of Directors adopted the 2014 Stock Incentive Plan (the "2014 Plan") and reserved 13,000,000 shares of common stock for issuance to employees, directors and consultants. On September 12, 2014, the stockholders approved the plan. Pursuant to the 2014 Plan, the Board of Directors (or committees and/or executive officers delegated by the Board of Directors) may grant stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and cash-based awards. As of June 30, 2016, there were options to purchase an aggregate of 6,658,770 shares of common stock outstanding under the 2014 Plan and 6,341,230 shares 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. Due to its limited operating history and limited number of sales of its Common Stock, the Company estimated its volatility in consideration of a number of factors including the volatility of comparable public companies. The Company uses historical data, as well as subsequent events occurring prior to the issuance of the consolidated financial statements, to estimate option exercises and employee terminations within the valuation 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 the 2014 Plan as of June 30, 2016 and the changes during the nine months then ended is presented below: Options Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at October 1, 2015 3,900,000 $ 0.47 8.94 years $ 297,000 Granted 1,600,000 $ 0.67 Assumed in acquisition 1,158,770 $ 0.07 Exercised Forfeited or expired Outstanding at June 30, 2016 6,658,770 $ 0.45 8.46 years $ 2,927,666 Exercisable at June 30, 2016 3,886,125 $ 0.40 8.21 years $ 1,898,119 On September 12, 2014, the Board of Directors granted stock options to purchase 3,300,000 shares of common stock at an exercise price of $0.45 per share. The weighted average grant-date fair value of the options was estimated at $0.34 per share. These options vest over three years and have a term of 10 years. On April 1, 2015, the Board of Directors granted stock options to purchase 100,000 shares of common stock at an exercise price of $0.60 per share. The weighted average grant-date fair value of the options was estimated at $0.16 per share. These options vested immediately and have a term of 5 years. On June 1, 2015, the Board of Directors granted stock options to purchase 500,000 shares of common stock at an exercise price of $0.60 per share. The weighted average grant-date fair value of the options was estimated at $0.27 per share. These options vest over three years and have a term of 10 years. In October 2015, the Company appointed two new directors. Each director received an option to purchase 400,000 shares of the Company's common stock at an exercise price of $0.54 per share in consideration for their services as members of the Company's Board of Directors. The weighted average grant-date fair value of the options was estimated at $0.28 per share. These options vest over 14 months and have a term of 10 years. On March 30, 2016, the Company assumed stock options to purchase 1,158,770 shares of common stock in connection with the acquisition of LMB. The LMB option holders received stock options to purchase 1,068,241 shares at an exercise price of $0.001 per share and 90,529 shares at an exercise price of $0.91 per share. Pursuant to the original grants, options to purchase 72,423 shares were immediately vested and options to purchase 1,086,347 shares vest over three years. The March 30, 2016 estimated fair value of the stock options was $670,242. The fair value of the vested options was estimated at $461,808 and has been included in the purchase price of LMB. The March 30, 2016 fair value of the unvested options was estimated at $208,434 per share and will be expensed over the remaining vesting period of the options. These options all had original terms of 10 years. On June 23, 2016, the Board of Directors granted stock options to four directors. Each director received an option to purchase 200,000 shares of the Company's common stock at an exercise price of $0.80 per share in consideration for their services as members of the Company's Board of Directors. The weighted average grant-date fair value of the options was estimated at $0.44 per share. These options vest in full on June 23, 2017 and have a term of 10 years. Stock-based compensation expense for the three months ended June 30, 2016 and 2015 was $280,764 and $163,547, respectively. Stock-based compensation expense for the nine months ended June 30, 2016 and 2015 was $517,677 and $381,076, respectively. At June 30, 2016, unrecognized total compensation cost related to unvested awards of $831,020 is expected to be recognized over a weighted average period of 1.04 years. Warrants The Company has reserved 17,059,095 shares of common stock for the exercise of outstanding warrants. Because the Company does not have sufficient authorized shares to cover all share-settleable instruments, the Company evaluated the potential for additional derivative liability accounting and the impact was not considered material. The following table summarizes the warrants outstanding at June 30, 2016: Exercise price Number Expiration Dates Investor Warrants $ 0.60 3,400,067 September 12, 2019 Placement Agent Unit Warrants 0.60 680,013 September 12, 2019 Warrants underlying Placement Agent Unit Warrants 0.60 680,013 September 12, 2019 Placement Agent Share Warrants 0.60 1,000,000 September 12, 2019 Investor Warrants 0.60 2,145,371 March 19, 2020 June 26, 2020 Investor Warrants 0.60 891,666 (1) July 2, 2020 September 14, 2020 Investor Warrants 0.60 583,334 (1) November 5, 2020 November 20, 2020 Investor Warrants 0.60 2,133,334 (1) January 7, 2021 March 21, 2021 Investor Warrants 0.60 1,900,000 (1) April 15, 2021 April 25, 2021 LMB Warrants 0.41 1,352,266 June 12, 2019 - March 2, 2021 LMB Warrants 0.66 122,319 September 30, 2019 - January 8, 2020 LMB Warrants 1.38 265,814 November 3, 2019 - March 6, 2020 LMB Warrants 0.50 1,108,249 August 18, 2020 March 14, 2021 LMB Warrants 0.91 796,649 March 24, 2022 April 29, 2022 17,059,095 ________________ (1) Fair value of these warrants are included in the derivative warrant liability On March 30, 2016, the Company granted warrants to purchase 3,645,297 shares of common stock in connection with the acquisition of LMB. The warrants have exercise prices between $0.41 and $1.38 per share. All warrants were vested at March 30, 2016. The fair value of the warrants was estimated at $1,071,172 and has been included in the purchase price of LMB. The warrants have remaining terms between 2.95 and 5.83 years. At June 30, 2016, the weighted average remaining life of all of the outstanding warrants is 3.96 years, all warrants are exercisable, and the aggregate intrinsic value for the warrants outstanding was $4,999,440. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 7. RELATED PARTY TRANSACTIONS | The Company's headquarters were previously located in Maynard, MA in the office space of a company affiliated through common ownership. In connection with the March 30, 2016 acquisition of LMB, the Company changed its principal executive offices to Cranford, New Jersey. The Company did not record any revenue or expense related to the use of the Maynard, MA office space as management has determined the usage to be immaterial and the affiliate has not charged for the usage. As of June 30, 2016 and September 30, 2015, the Company owed $37,637 and $70,386, respectively, to a company affiliated through common ownership for the expenses the related party paid on the Company's behalf and services performed by the related party. Our Chairman of the Board, Leonard Mazur, is the cofounder and Vice Chairman of Akrimax Pharmaceuticals, LLC ("Akrimax"), a privately held pharmaceutical company specializing in producing cardiovascular and general pharmaceutical products (see Note 3). Our Chairman of the Board, Leonard Mazur, and our Chief Executive Officer, Myron Holubiak, are co-founders and significant shareholders in LMB. In connection with the acquisition of LMB, our Chairman purchased an additional 5,000,000 shares of the Company. |
EMPLOYMENT AND CONSULTING AGREE
EMPLOYMENT AND CONSULTING AGREEMENTS | 9 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 8. EMPLOYMENT AND CONSULTING AGREEMENTS | Employment Agreements The Company entered into a three year employment agreement with its Chief Executive Officer, Leonard Mazur, effective September 12, 2014. Upon expiration, the agreement automatically renews for successive periods of one-year. The agreement requires the Company to pay base compensation plus incentives over the employment term plus severance benefits upon the occurrence of certain events as described in the agreement. Under the agreement, Leonard Mazur was granted options to purchase 3,300,000 shares of common stock. On March 30, 2016, in connection with the acquisition of LMB, Leonard Mazur resigned as Chief Executive Officer but will continue to serve as Chairman of the Board under the current employment agreement. On March 30, 2016, in connection with the acquisition of LMB, the Company entered into a three year employment agreement with Myron Holubiak to serve as Chief Executive Officer. Upon expiration, the agreement automatically renews for successive periods of one-year. The agreement requires the Company to pay base compensation plus incentives over the employment term plus severance benefits upon the occurrence of certain events as described in the agreement. The Company has employment agreements with certain other employees that require the Company to pay base compensation plus incentives over the employment term plus severance benefits upon the occurrence of certain events as described in the agreement. Consulting Agreements Effective September 1, 2014, the Company entered into three consulting agreements. Two of the agreements are for financial consulting services including accounting, preparation of financial statements and filings with the SEC. The third agreement is for financing activities, product development strategies and corporate development. The agreements may be terminated by the Company or the consultant with 90 days written notice. Consulting expense under the agreements for the three months ended June 30, 2016 and 2015 was $93,000 and $87,000, respectively. Consulting expense under the agreements for the nine months ended June 30, 2016 and 2015 was $367,000 and $261,000, respectively. Consulting expense for each of the three months ended June 30, 2016 and 2015 includes $12,000 paid to a financial consultant who is a stockholder of the Company. Consulting expense for each of the nine months ended June 30, 2016 and 2015 includes $36,000 paid to a financial consultant who is a stockholder of the Company. In addition, one financial consulting services agreement provides for the grant of options to purchase 500,000 shares of common stock contingent upon approval by the Board of Directors. The options were granted on June 1, 2015. |
OPERATING LEASE
OPERATING LEASE | 9 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 9. OPERATING LEASE | LMB leases office space in Cranford, New Jersey at a monthly rental rate of $2,167 pursuant to an agreement which currently expires on July 31, 2016. LMB is in the process of extending the agreement. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 10. SUBSEQUENT EVENTS | The Company plans to hold its Annual Meeting of Stockholders on September 15, 2016. At the meeting the stockholders will be asked to (1) elect seven directors to serve until the 2017 Annual Meeting of Stockholders, (2) ratify the selection of our independent registered public accounting firm, (3) approve an increase in the number of shares of authorized common stock from 90,000,000 shares to 200,000,000 shares, (4) grant the Board of Directors the authority to effect a reverse stock split of the common stock by a ratio of not less than 1-for-8 and not more than 1-for-20 during the next year, and (5) approve a change in the state of incorporation of the Company to Delaware from Nevada. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Jun. 30, 2016 | |
Summary Of Significant Accounting Policies Policies | |
Basis of Preparation | As a result of the reverse acquisition, the accompanying consolidated financial statements include the operations of Citius Pharmaceuticals, LLC (the accounting acquirer). The accompanying consolidated financial statements also include the operations of Citius Pharmaceuticals, Inc. (formerly Trail One, Inc.) since the September 12, 2014 reverse acquisition and the operations of Leonard-Meron Biosciences, Inc. ("LMB") since the March 30, 2016 acquisition. All significant inter-company balances and transactions have been eliminated in consolidation. All share and per share amounts presented in these consolidated financial statements reflect the one-for-one exchange ratio of Citius Pharmaceuticals, LLC member interests to common shares in the reverse acquisition. The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, without being audited, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments considered necessary to make the financial statements not misleading have been included. Operating results for the nine months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending September 30, 2016. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2015 filed with the Securities and Exchange Commission, and the Company's Form 8-K for the March 30, 2016 acquisition of Leonard-Meron Biosciences, Inc. filed with the Securities and Exchange Commission. There have been no recently issued accounting pronouncements that have had or are expected to have a material impact on the Company's consolidated financial statements. |
Use of Estimates | Our accounting principles require our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting periods. Estimates having relatively higher significance include the accounting for acquisitions, stock-based compensation, valuation of warrants, and income taxes. Actual results could differ from those estimates. |
Net Loss per Common Share | Basic net loss per share of common stock has been computed by dividing net loss by the weighted average number of shares outstanding during the period. Diluted net loss per share of common stock has been computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during such period. In a net loss period, options, warrants and convertible securities are anti-dilutive and therefore excluded from diluted loss per share calculations. |
NATURE OF OPERATIONS, BASIS O18
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Nature Of Operations Basis Of Presentation And Summary Of Significant Accounting Policies Tables | |
Acquisition Pro forma information | Nine Months Ended June 30, 2016 2015 Revenues $ $ Net loss $ (8,959,053 ) $ (4,659,479 ) Net loss per share basic and diluted $ (0.13 ) $ (0.08 ) |
DERIVATIVE WARRANT LIABILITY (T
DERIVATIVE WARRANT LIABILITY (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Derivative Warrant Liability Tables | |
Schedule of derivative warrant liabilities | Nine Months Ended June 30, 2016 Nine Months Ended June 30, 2015 Derivative warrant liability, beginning of period $ 738,955 $ 1,450,943 Fair value of warrants issued 1,198,564 538,051 Total realized/unrealized losses (gains) included in net loss (1) 1,659,738 (272,147 ) Reclassification of liability to additional paid-in capital (649,656 ) Derivative warrant liability, end of period $ 2,947,601 $ 1,716,847 |
COMMON STOCK, STOCK OPTIONS A20
COMMON STOCK, STOCK OPTIONS AND WARRANTS (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Common Stock Stock Options And Warrants Tables | |
Schedule of stock option activity | Options Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at October 1, 2015 3,900,000 $ 0.47 8.94 years $ 297,000 Granted 1,600,000 $ 0.67 Assumed in acquisition 1,158,770 $ 0.07 Exercised Forfeited or expired Outstanding at June 30, 2016 6,658,770 $ 0.45 8.46 years $ 2,927,666 Exercisable at June 30, 2016 3,886,125 $ 0.40 8.21 years $ 1,898,119 |
Schedule of Warrants | Exercise price Number Expiration Dates Investor Warrants $ 0.60 3,400,067 September 12, 2019 Placement Agent Unit Warrants 0.60 680,013 September 12, 2019 Warrants underlying Placement Agent Unit Warrants 0.60 680,013 September 12, 2019 Placement Agent Share Warrants 0.60 1,000,000 September 12, 2019 Investor Warrants 0.60 2,145,371 March 19, 2020 June 26, 2020 Investor Warrants 0.60 891,666 (1) July 2, 2020 September 14, 2020 Investor Warrants 0.60 583,334 (1) November 5, 2020 November 20, 2020 Investor Warrants 0.60 2,133,334 (1) January 7, 2021 March 21, 2021 Investor Warrants 0.60 1,900,000 (1) April 15, 2021 April 25, 2021 LMB Warrants 0.41 1,352,266 June 12, 2019 - March 2, 2021 LMB Warrants 0.66 122,319 September 30, 2019 - January 8, 2020 LMB Warrants 1.38 265,814 November 3, 2019 - March 6, 2020 LMB Warrants 0.50 1,108,249 August 18, 2020 March 14, 2021 LMB Warrants 0.91 796,649 March 24, 2022 April 29, 2022 17,059,095 |
NATURE OF OPERATIONS, BASIS O21
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 9 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Nature Of Operations Basis Of Presentation And Summary Of Significant Accounting Policies Details | ||
Revenues | ||
Net loss | $ (8,959,053) | $ (4,659,479) |
Net loss per share – basic and diluted | $ (0.13) | $ (0.08) |
GOING CONCERN UNCERTAINTY AND22
GOING CONCERN UNCERTAINTY AND MANAGEMENT'S PLAN (Details Narrative) - USD ($) | 9 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Going Concern Uncertainty And Managements Plan Details Narrative | ||
Cash flows from operations | $ (4,133,433) | $ (1,680,116) |
Working capital deficit | $ 2,833,164 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Notes Payable Details Narrative | ||||
Interest expense | $ 4,445 | $ 4,445 | $ 7,500 |
DERIVATIVE WARRANT LIABILITY (D
DERIVATIVE WARRANT LIABILITY (Details) - USD ($) | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | ||
Derivative Warrant Liability Details | |||
Derivative warrant liability, beginning of period | $ 738,955 | $ 1,450,943 | |
Fair value of warrants issued | 1,198,564 | 538,051 | |
Total realized/unrealized losses included in net loss | [1] | 1,659,738 | (272,147) |
Reclassification of liability to additional paid-in capital | (649,656) | ||
Derivative warrant liability, end of period | $ 2,947,601 | $ 1,716,847 | |
[1] | Included in gain (loss) on revaluation of derivative warrant liability in the Condensed Consolidated Statement of Operations. |
DERIVATIVE WARRANT LIABILITY 25
DERIVATIVE WARRANT LIABILITY (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2015 | |
Outstanding warrants to purchase of its common stock | 5,508,334 | 5,508,334 | 3,037,037 |
Volatility rate | 62.00% | 57.00% | |
Risk-free interest rate | 1.01% | 1.37% | |
Anti dilution warrants expired | 1,645,371 | ||
Reclassification from derivative warrant liability to additional paid-in capital | $ 535,348 | ||
Minimum [Member] | |||
Estimated life | 4 years | 4 years 5 months 19 days | |
Maximum [Member] | |||
Estimated life | 4 years 9 months 26 days | 4 years 11 months 16 days |
COMMON STOCK, STOCK OPTIONS A26
COMMON STOCK, STOCK OPTIONS AND WARRANTS (Details) - Stock Options [Member] | 9 Months Ended |
Jun. 30, 2016USD ($)$ / sharesshares | |
Stock Options | |
Outstanding, beginning balance | shares | 3,900,000 |
Granted | shares | 1,600,000 |
Assumed in acquisition | $ | $ 1,158,770 |
Exercised | shares | |
Forfeited or expired | shares | |
Outstanding, ending balance | shares | 6,658,770 |
Exercisable, ending balance | shares | 3,886,125 |
Weighted Average Exercise Price | |
Outstanding, beginning balance | $ 0.47 |
Granted | 0.67 |
Assumed in acquisition | 0.07 |
Exercised | |
Forfeited or expired | |
Outstanding, ending balance | 0.45 |
Exercisable, ending balance | $ 0.40 |
Weighted Average Remaining Contractual Life (years) | |
Weighted Average Remaining Contractual Life (years), Beginning | 8 years 11 months 9 days |
Weighted Average Remaining Contractual Life (years), Ending | 8 years 5 months 16 days |
Exercisable Remaining Contractual Life (years) | 8 years 2 months 16 days |
Aggregate Intrinsic value | |
Outstanding beginning balance | $ | $ 297,000 |
Outstanding ending balance | $ | 2,927,666 |
Exercisable ending balance | $ | $ 1,898,119 |
COMMON STOCK, STOCK OPTIONS A27
COMMON STOCK, STOCK OPTIONS AND WARRANTS (Details 1) | 9 Months Ended | |
Jun. 30, 2016$ / sharesshares | ||
Investor Warrants [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | 3,400,067 | |
Expiration Date | September 12, 2019 | |
Placement Agent Unit Warrants [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | 680,013 | |
Expiration Date | September 12, 2019 | |
Warrants underlying Placement Agent Unit Warrants [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | 680,013 | |
Expiration Date | September 12, 2019 | |
Placement Agent Share Warrants [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | 1,000,000 | |
Expiration Date | September 12, 2019 | |
Investor Warrants One [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | 2,145,371 | [1] |
Expiration Date | March 19, 2020 - June 26, 2020 | |
Investor Warrants Two [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | 891,666 | [1] |
Expiration Date | July 2, 2020 - September 14, 2020 | |
Investor Warrants Three [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | 583,334 | [1] |
Expiration Date | November 5, 2020 - November 20, 2020 | |
Investor Warrants Four [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | 2,133,334 | [1] |
Expiration Date | January 7, 2021 - March 21, 2021 | |
Investor Warrants Five [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | 1,900,000 | [1] |
Expiration Date | April 15, 2021 - April 25, 2021 | |
LMB Warrants One [Member] | ||
Exercise price | $ / shares | $ 0.41 | |
Number | 1,352,266 | |
Expiration Date | June 12, 2019 - March 2, 2021 | |
LMB Warrants Two [Member] | ||
Exercise price | $ / shares | $ 0.66 | |
Number | 122,319 | |
Expiration Date | September 30, 2019 - January 8, 2020 | |
LMB Warrants Three [Member] | ||
Exercise price | $ / shares | $ 1.38 | |
Number | 265,814 | |
Expiration Date | November 3, 2019 - March 6, 2020 | |
LMB Warrants Four [Member] | ||
Exercise price | $ / shares | $ 0.50 | |
Number | 1,108,249 | |
Expiration Date | August 18, 2020 - March 14, 2021 | |
LMB Warrants Five [Member] | ||
Exercise price | $ / shares | $ 0.91 | |
Number | 796,649 | |
Expiration Date | March 24, 2022 - April 29, 2022 | |
Warrant [Member] | ||
Number | 17,059,095 | |
[1] | Fair value of these warrants are included in the derivative warrant liability |
COMMON STOCK, STOCK OPTIONS A28
COMMON STOCK, STOCK OPTIONS AND WARRANTS (Details Narrative) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2016USD ($)shares | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)Unit$ / sharesshares | Jun. 30, 2015USD ($) | Sep. 30, 2015shares | |
Stock-based compensation expense | $ | $ 280,764 | $ 163,547 | $ 517,677 | $ 381,076 | |
Private Offering [Member] | |||||
Number of additional units sold | Unit | 4,350,001 | ||||
Number of additional units sold, per unit | $ / shares | $ 0.54 | ||||
Number of units sold | Unit | 266,667 | ||||
Number of units sold, per unit | $ / shares | $ 0.60 | ||||
Number of units sold for gross proceeds | $ | $ 2,509,000 | ||||
Warrant [Member] | |||||
Common stock outstanding | shares | 17,059,095 | 17,059,095 | |||
Stock Options [Member] | |||||
Common stock outstanding | shares | 6,658,770 | 6,658,770 | 3,900,000 | ||
Shares available for future grants | shares | 6,341,230 | 6,341,230 | |||
Unrecognized total compensation cost related to unvested awards | $ | $ 831,020 | $ 831,020 | |||
Weighted average remaining life | 1 year 15 days |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Jun. 30, 2016 | Sep. 30, 2015 |
Related Party Transactions Details Narrative | ||
Company owes to related party | $ 37,637 | $ 70,386 |
EMPLOYMENT AND CONSULTING AGR30
EMPLOYMENT AND CONSULTING AGREEMENTS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Employment And Consulting Agreements Details Narrative | ||||
Consulting expense under the agreements | $ 93,000 | $ 87,000 | $ 367,000 | $ 261,000 |
Consulting expense | $ 12,000 | $ 12,000 | $ 36,000 | $ 36,000 |