Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2016 | Jan. 31, 2017 | |
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 | Dec. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 74,558,992 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2016 | Sep. 30, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 46,764 | $ 294,351 |
Prepaid expenses | 443,526 | 598,484 |
Total Current Assets | 490,290 | 892,835 |
Property and Equipment, Net of Accumulated Depreciation of $5,452 and $4,780 | 3,070 | 3,742 |
Other Assets | ||
Deposits | 2,167 | 2,167 |
Deferred offering costs | 64,801 | |
In-process research and development | 19,400,000 | 19,400,000 |
Goodwill | 1,586,796 | 1,586,796 |
Total Other Assets | 20,988,963 | 21,053,764 |
Total Assets | 21,482,323 | 21,950,341 |
Current liabilities: | ||
Accounts payable | 985,865 | 909,156 |
Accrued expenses | 1,847,062 | 958,101 |
Accrued compensation | 1,010,500 | 903,250 |
Accrued interest | 44,099 | 30,871 |
Notes payable - related parties | 1,492,970 | 672,970 |
Derivative warrant liability | 910,578 | 1,681,973 |
Due to related party | 27,637 | 27,637 |
Total Current Liabilities | 6,318,711 | 5,183,958 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Preferred stock - $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding | ||
Common stock - $0.001 par value; 200,000,000 shares authorized; 74,113,060 and 73,138,060 shares issued and outstanding at December 31, 2016 and September 30, 2016, | 74,113 | 73,138 |
Additional paid-in capital | 34,601,644 | 34,029,492 |
Accumulated deficit | (19,512,145) | (17,336,247) |
Total Stockholders' Equity | 15,163,612 | 16,766,383 |
Total Liabilities and Stockholders' Equity | $ 21,482,323 | $ 21,950,341 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2016 | Sep. 30, 2016 |
ASSETS | ||
Property and Equipment, Net of Accumulated Depreciation | $ 5,452 | $ 4,780 |
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 | 200,000,000 | 200,000,000 |
Common Stock Shares Issued | 74,113,060 | 73,138,060 |
Common Stock Shares Outstanding | 74,113,060 | 73,138,060 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Consolidated Statements Of Operations | ||
Revenues | ||
Operating Expenses | ||
Research and development | 1,411,159 | 829,156 |
General and administrative | 1,132,183 | 294,221 |
Stock-based compensation - general and administrative | 241,514 | 121,299 |
Total Operating Expenses | 2,784,856 | 1,244,676 |
Operating Loss | (2,784,856) | (1,244,676) |
Other Income (Expense), Net: | ||
Interest income | 15 | |
Gain on revaluation of derivative warrant liability | 622,186 | 23,940 |
Interest expense | (13,228) | |
Total Other Income (Expense), Net | 608,958 | 23,955 |
Loss before Income Taxes | (2,175,898) | (1,220,721) |
Income tax benefit | ||
Net Loss | $ (2,175,898) | $ (1,220,721) |
Net Loss Per Share - Basic and Diluted | $ (0.03) | $ (0.04) |
Weighted Average Common Shares Outstanding Basic and diluted | 73,551,375 | 34,414,988 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) - 3 months ended Dec. 31, 2016 - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, Amount at Sep. 30, 2016 | $ 73,138 | $ 34,029,492 | $ (17,336,247) | $ 16,766,383 | |
Beginning balance, Shares at Sep. 30, 2016 | 73,138,060 | ||||
Issuance of common stock in private placement, net of costs, Amount | $ 975 | 181,429 | 182,404 | ||
Issuance of common stock in private placement, net of costs, Shares | 975,000 | ||||
Reclassification of derivative warrant liability to additional paid-in capital | 149,209 | 149,209 | |||
Stock-based compensation | 241,514 | 241,514 | |||
Net loss | (2,175,898) | (2,175,898) | |||
Ending balance, Amount at Dec. 31, 2016 | $ 74,113 | $ 34,601,644 | $ (19,512,145) | $ 15,163,612 | |
Ending balance, Shares at Dec. 31, 2016 | 74,113,060 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (2,175,898) | $ (1,220,721) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Gain on revaluation of derivative warrant liability | (622,186) | (23,940) |
Stock-based compensation expense | 241,514 | 121,299 |
Depreciation | 672 | |
Changes in operating assets and liabilities | ||
Prepaid expenses | 154,958 | |
Accounts payable | 76,709 | (100,464) |
Accrued expenses | 888,961 | 526,740 |
Accrued compensation | 107,250 | |
Accrued interest | 13,228 | |
Net Cash Used In Operating Activities | (1,314,792) | (697,086) |
Cash Flows From Financing Activities: | ||
Proceeds from notes payable - related parties | 820,000 | |
Net proceeds from private placement | 247,205 | 302,438 |
Net Cash Provided by Financing Activities | 1,067,205 | 302,438 |
Net Change in Cash and Cash Equivalents | (247,587) | (394,648) |
Cash and Cash Equivalents - Beginning of Period | 294,351 | 676,137 |
Cash and Cash Equivalents - End of Period | 46,764 | 281,489 |
Supplemental Disclosures of Cash Flow Information and Non-cash Transactions: | ||
Interest paid | ||
Income taxes paid | ||
Fair value of private placement warrants recorded as derivative warrant liability | 157,984 | |
Reclassification of derivative warrant liability to additional paid-in capital | $ 149,209 |
NATURE OF OPERATIONS, BASIS OF
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Dec. 31, 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 the development and commercialization of critical care products targeting unmet needs with a focus on anti-infectives, cancer care and unique prescription 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 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. On March 30, 2016, Citius acquired Leonard-Meron Biosciences, Inc. (LMB) as a wholly-owned subsidiary (see Acquisition of Leonard-Meron Biosciences, Inc. below). The Company had 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. 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 Companys ability to obtain additional financing and the Companys compliance with governmental and other regulations. 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 LMBs net assets acquired on the date of the acquisition, based on managements analysis of the fair value of the 29,136,839 shares of the Companys common stock issued for LMBs outstanding stock, the 3,645,297 Company common stock warrants issued for LMBs outstanding common stock warrants, and the vested portion of the 1,158,770 Company common stock options issued for LMBs 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 LMBs leading drug candidate which is an antibiotic solution used to treat catheter-related bloodstream infections (Mino-Lok) and is expected to be amortized on a straight-line basis over a period of eight years commencing upon revenue generation. Goodwill represents the value of LMBs industry relationships and its assembled workforce. Goodwill will not be amortized but will be tested at least annually for impairment. Unaudited pro forma operating results for the three months ended December 31, 2015, assuming the acquisition of LMB had been made as of October 1, 2015, are as follows: 2015 Revenues $ Net loss $ (1,640,688 ) Net loss per share basic and diluted $ (0.03 ) Basis of Presentation and Summary of Significant Accounting Policies Basis of Preparation 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 three months ended December 31, 2016 are not necessarily indicative of the results that may be expected for the year ending September 30, 2017. 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, 2016 filed with the Securities and Exchange Commission. Use of Estimates Basic and Diluted Net Loss per Common Share Recently Issued Accounting Standards In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business In January 2017, the FASB issued ASU No. 2017-04, Intangibles Goodwill and Other (Topic 350). |
GOING CONCERN UNCERTAINTY AND M
GOING CONCERN UNCERTAINTY AND MANAGEMENT'S PLAN | 3 Months Ended |
Dec. 31, 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 $1,314,792 and $697,086 for the three months ended December 31, 2016 and 2015, respectively. At December 31, 2016, the Company had a working capital deficit of $5,828,421. The Company has no revenue and has relied on proceeds from equity transactions and debt to finance its operations. At December 31, 2016, the Company had limited capital to fund its operations. This raises substantial doubt about the Companys 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 and continued borrowings under related party debt agreements. 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 | 3 Months Ended |
Dec. 31, 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 Companys 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). 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 except for the reimbursement of certain 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 products 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 Profit Share Payments. 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. Since May 2014, LMB has paid 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 RELATED PARTIES
NOTES PAYABLE RELATED PARTIES | 3 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
NOTE 4. 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 the prime rate plus 1.0% per annum and notes with a principal balance of $68,970 accrue interest at 12% per annum. In April 2016, $600,000 of the prime rate plus 1.0% demand notes payable and accrued interest of $1,985 was repaid to Leonard Mazur. The Board of Directors has authorized revolving demand promissory notes with Leonard Mazur in an aggregate principal amount of up to $2,500,000, of which $1,320,000 is outstanding at December 31, 2016. On September 7, 2016, the Company issued a $500,000 demand promissory note to our Chairman, Leonard Mazur which matures on demand by the lender. The Company then issued $820,000 of additional demand promissory notes to Leonard Mazur during the three months ended December 31, 2016 which mature on the earlier of December 31, 2017 or demand by the lender. These notes accrue interest at the prime rate plus 1%. Interest expense on notes payable related parties was $13,228 for the three months ended December 31, 2016. |
DERIVATIVE WARRANT LIABILITY
DERIVATIVE WARRANT LIABILITY | 3 Months Ended |
Dec. 31, 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 December 31, 2016 and September 30, 2016, the Company had outstanding warrants to purchase 4,033,334 shares and 4,616,668 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. The Black-Scholes option pricing model requires input of assumptions including the risk-free interest rates, volatility, expected life and dividends. Selection of these inputs involves managements judgment and may impact net loss. 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 December 31, 2016 was 76%. We used a risk-free interest rate of 1.93%, estimated lives of 4.02 to 4.32 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, 2016 was 73%. We used a risk-free interest rate of 1.14%, estimated lives of 4.10 to 4.57 years, which are the remaining contractual lives of the warrants subject to down round provisions, and no dividends to our common stock. During the three months ended December 31, 2016, anti-dilution rights related to warrants to purchase 583,334 shares of common stock expired which resulted in a reclassification from derivative warrant liability to additional paid-in capital of $149,209. 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: Three Months Ended December 31, 2016 Three Months Ended December 31, 2015 Derivative warrant liability, beginning of period $ 1,681,973 $ 738,955 Fair value of warrants issued 157,984 Total realized/unrealized gains included in net loss (622,186 ) (23,940 ) Reclassification of liability to additional paid-in capital (149,209 ) Derivative warrant liability, end of period $ 910,578 $ 872,999 |
COMMON STOCK, STOCK OPTIONS AND
COMMON STOCK, STOCK OPTIONS AND WARRANTS | 3 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
NOTE 6. COMMON STOCK, STOCK OPTIONS AND WARRANTS | Common Stock On September 15, 2016, the stockholders approved an increase in the number of shares of authorized common stock from 90,000,000 shares to 200,000,000 shares. In addition, the stockholders granted the Board of Directors the authority to affect a reverse stock split of our common stock by a ratio of not less than 1-for-8 and not more than 1-for-20 at any time prior to September 15, 2017. Private Offerings 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 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 Company issued 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. 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). In connection with the Private Offering, the Company entered into a Registration Rights Agreement pursuant to which the Company filed a 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 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). During the year ended September 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). On May 12, 2016, the Company announced that it had completed the final phase of the Private Offering. 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. In October 2016, the Company commenced an offering (the 2016 Offering) of up to 15,000,000 Units at a price of $0.40 per Unit (the 2016 Offering Units), each 2016 Offering Unit consists of (i) one share of common stock and (ii) a warrant to purchase one share of common stock (the 2016 Offering Warrants) for gross proceeds of up to $6,000,000 with an over-subscription allotment of up to $2,000,000. Each 2016 Offering Warrant has an exercise price of $0.55 and is exercisable for five years from the date of issuance. The Placement Agent will receive a 10% cash commission on the gross proceeds of each sale of the 2016 Offering Units. In addition, on each closing the Placement Agent will also receive (i) an expense allowance equal to 3% of the proceeds of the sale, and (ii) warrants to purchase a number of shares of common stock equal to 10% of the 2016 Offering Units sold at an exercise price of $0.55 per share. On November 23, 2016, the Company sold 975,000 2016 Offering Units for gross proceeds of $390,000. The estimated fair value of the warrants included in the 2016 Offering Units sold to the investors was $234,505. Additionally, a warrant to purchase 97,500 shares of common stock was granted to the Placement Agent pursuant to the above pricing terms. The estimated fair value of the warrant granted to the Placement Agent was $23,451. The Placement agent was paid commissions and an expense allowance of $50,700. Other costs of the placement were $156,896. 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 December 31, 2016, there were options to purchase an aggregate of 8,732,770 shares of common stock outstanding under the 2014 Plan and 4,267,230 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 December 31, 2016 and the changes during the three months then ended is presented below: Options Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at October 1, 2016 8,732,770 $ 0.54 8.59 years $ 1,355,924 Granted Exercised Forfeited or expired Outstanding at December 31, 2016 8,732,770 $ 0.54 8.34 years $ 468,958 Exercisable at December 31, 2016 5,286,654 $ 0.45 7.91 years $ 336,484 Stock-based compensation expense for the three months ended December 31, 2016 and 2015 was $241,514 and $121,299, respectively. At December 31, 2016, unrecognized total compensation cost related to unvested awards of $1,145,334 is expected to be recognized over a weighted average period of 1.58 years. Warrants The Company has reserved 19,131,595 shares of common stock for the exercise of outstanding warrants. The following table summarizes the warrants outstanding at December 31, 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 July 2, 2020 September 14, 2020 Investor Warrants 0.60 583,334 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 Financial Advisor Warrants 0.20 1,000,000 August 15, 2021 2016 Offering Warrants 0.55 975,000 November 23, 2021 2016 Offering Placement Agent Warrants 0.55 97,500 November 23, 2021 19,131,595 __________ (1) Fair value of these warrants are included in the derivative warrant liability On November 23, 2016, the Company sold 975,000 2016 Offering Units, at a price of $0.40 per Unit, consisting of (i) one share of common stock and (ii) a warrant to purchase one share of common stock. Each 2016 Offering Warrant has an exercise price of $0.55 and is exercisable for five years from the date of issuance. Additionally, a warrant to purchase 97,500 shares of common stock was granted to the Placement Agent pursuant to the above pricing terms. At December 31, 2016, the weighted average remaining life of all of the outstanding warrants is 3.59 years, all warrants are exercisable, and the aggregate intrinsic value for the warrants outstanding was $280,568. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
NOTE 7. RELATED PARTY TRANSACTIONS | As of December 31, 2016 and September 30, 2016, the Company owed $27,637 to a company affiliated through common ownership for the expenses the related party paid on the Companys 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, were 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. The Company has outstanding debt due to Leonard Mazur and Myron Holubiak (see Note 4). General and administrative expense for each of the three months ended December 31, 2016 and 2015 includes $12,000 paid to a financial consultant who is a stockholder of the Company. |
OPERATING LEASE
OPERATING LEASE | 3 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
NOTE 8. OPERATING LEASE | LMB leases office space from Akrimax (see Note 7) in Cranford, New Jersey at a monthly rental rate of $2,167 pursuant to an agreement which currently expires on October 31, 2017. Rent expense for the three months ended December 31, 2016 was $6,501. There was no rent expense for the three months ended December 31, 2015. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
NOTE 9. SUBSEQUENT EVENTS | During January 2017, the Company issued additional demand notes to its Chairman in the aggregate amount of $260,000 under the same terms as the notes issued during the three months ending December 31, 2016. During January 2017, the Company issued 445,932 shares of its common stock for investor relations services. During February 2017, the Company sold an additional 399,750 Offering Units for gross proceeds of $159,900. Additionally, a warrant to purchase 39,975 shares of common stock was granted to the Placement Agent pursuant to the 2016 Offering pricing terms. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Dec. 31, 2016 | |
Summary Of Significant Accounting Policies Policies | |
Basis of Preparation | The accompanying consolidated financial statements include the operations of Citius Pharmaceuticals, Inc., and its wholly-owned subsidiaries, Citius Pharmaceuticals, LLC, and LMB since the March 30, 2016 acquisition. All significant inter-company balances and transactions have been eliminated in consolidation. 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 three months ended December 31, 2016 are not necessarily indicative of the results that may be expected for the year ending September 30, 2017. 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, 2016 filed with the Securities and Exchange Commission. |
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 assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. 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 and changes in estimates may occur. |
Basic and Diluted Net Loss per Common Share | Basic and diluted net loss per common share is computed by dividing net loss in each period by the weighted average number of shares of common stock outstanding during such period. For the periods presented, common stock equivalents, consisting of options, warrants and convertible securities were not included in the calculation of the diluted loss per share because they were anti-dilutive. |
Recently Issued Accounting Standards | In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business In January 2017, the FASB issued ASU No. 2017-04, Intangibles Goodwill and Other (Topic 350). |
NATURE OF OPERATIONS, BASIS O17
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Nature Of Operations Basis Of Presentation And Summary Of Significant Accounting Policies Tables | |
Acquisition Pro forma information | 2015 Revenues $ Net loss $ (1,640,688 ) Net loss per share basic and diluted $ (0.03 ) |
DERIVATIVE WARRANT LIABILITY (T
DERIVATIVE WARRANT LIABILITY (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Derivative Warrant Liability Tables | |
Schedule of derivative warrant liabilities | Three Months Ended December 31, 2016 Three Months Ended December 31, 2015 Derivative warrant liability, beginning of period $ 1,681,973 $ 738,955 Fair value of warrants issued 157,984 Total realized/unrealized gains included in net loss (622,186 ) (23,940 ) Reclassification of liability to additional paid-in capital (149,209 ) Derivative warrant liability, end of period $ 910,578 $ 872,999 |
COMMON STOCK, STOCK OPTIONS A19
COMMON STOCK, STOCK OPTIONS AND WARRANTS (Tables) | 3 Months Ended |
Dec. 31, 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, 2016 8,732,770 $ 0.54 8.59 years $ 1,355,924 Granted Exercised Forfeited or expired Outstanding at December 31, 2016 8,732,770 $ 0.54 8.34 years $ 468,958 Exercisable at December 31, 2016 5,286,654 $ 0.45 7.91 years $ 336,484 |
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 July 2, 2020 September 14, 2020 Investor Warrants 0.60 583,334 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 Financial Advisor Warrants 0.20 1,000,000 August 15, 2021 2016 Offering Warrants 0.55 975,000 November 23, 2021 2016 Offering Placement Agent Warrants 0.55 97,500 November 23, 2021 19,131,595 |
NATURE OF OPERATIONS, BASIS O20
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended |
Dec. 31, 2015USD ($)$ / shares | |
Nature Of Operations Basis Of Presentation And Summary Of Significant Accounting Policies Details | |
Revenues | |
Net loss | $ (1,640,688) |
Net loss per share – basic and diluted | $ / shares | $ (0.03) |
NATURE OF OPERATIONS, BASIS O21
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | Mar. 30, 2016 | |
Common stock shares issued | 74,113,060 | 73,138,060 | ||
Common stock warrants outstanding | 74,113,060 | 73,138,060 | ||
Prepaid expenses | $ 443,526 | $ 598,484 | ||
Accounts payable | 985,865 | 909,156 | ||
Accrued expenses | 1,847,062 | 958,101 | ||
Accrued interest | 44,099 | 30,871 | ||
Notes payable | 1,492,970 | 672,970 | ||
Common stock options value outstanding | 74,113 | 73,138 | ||
Estimated fair value warrant issued | $ 157,984 | |||
Goodwill | 1,586,796 | $ 1,586,796 | ||
Leonard-Meron Biosciences [Member] | ||||
Common stock shares issued | 29,136,839 | |||
Issued and outstanding common stock | 41.00% | |||
Common stock warrants outstanding | 3,645,297 | |||
Common stock options outstanding | 1,158,770 | |||
Tangible assets consisting of cash | 255,748 | |||
Prepaid expenses | 20,544 | |||
Property and equipment | 5,085 | |||
Deposits | 2,167 | |||
Intangible assets | 19,400,000 | |||
Accounts payable | 244,776 | |||
Accrued expenses | 598,659 | |||
Accrued compensation | 615,000 | |||
Accrued interest | 23,862 | |||
Notes payable | $ 772,970 | |||
Fair value of common stock shares issued | 29,136,839 | |||
Fair value of common stock warrants issued | 3,645,297 | |||
Vested portion of common stock options issued | 1,158,770 | |||
Common stock options value outstanding | $ 19,015,073 | |||
Estimated fair value | 17,482,093 | |||
Estimated fair value warrant issued | 1,071,172 | |||
Estimated vested options of fair value | 461,808 | |||
Goodwill | 1,586,796 | |||
Purchase price | 19,015,073 | |||
Assets acquired | $ 17,428,277 |
GOING CONCERN UNCERTAINTY AND22
GOING CONCERN UNCERTAINTY AND MANAGEMENT'S PLAN (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Going Concern Uncertainty And Managements Plan Details Narrative | ||
Cash flows from operations | $ (1,314,792) | $ (697,086) |
Working capital deficit | $ 5,828,421 |
BUSINESS AGREEMENTS (Details Na
BUSINESS AGREEMENTS (Details Narrative) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Business Agreements Details Narrative | |
Reimbursement | $ 292,575 |
License annual maintenance fee | 30,000 |
Increase in annual maintenance fee | 90,000 |
Payable amount to NAT | $ 1,050,000 |
NOTES PAYABLE RELATED PARTIES (
NOTES PAYABLE RELATED PARTIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Apr. 30, 2016 | Mar. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 07, 2016 | |
Notes assumed | $ 772,970 | ||||
Principal amount | $ 2,500,000 | ||||
Outstanding amount | $ 1,320,000 | ||||
Percentage of accrued interest above prime rate | 1.00% | ||||
Interest expense | $ 13,228 | ||||
Additional notes payable | $ 820,000 | ||||
Chairman [Member] | |||||
Percentage of accrued interest above prime rate | 1.00% | ||||
Repayment of principal amount | $ 600,000 | ||||
Repayment of accured interest | $ 1,985 | ||||
Notes Payable One [Member] | |||||
Principal amount | $ 68,970 | ||||
Interest rate | 12.00% | ||||
Notes Payable [Member] | |||||
Principal amount | $ 704,000 | ||||
Percentage of accrued interest above prime rate | 1.00% | ||||
Chairman [Member] | |||||
Principal amount | $ 760,470 | ||||
Notes payable | $ 500,000 | ||||
Chief Executive Officer [Member] | |||||
Principal amount | $ 12,500 |
DERIVATIVE WARRANT LIABILITY (D
DERIVATIVE WARRANT LIABILITY (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Derivative Warrant Liability Details | ||
Derivative warrant liability, beginning of period | $ 1,681,973 | $ 738,955 |
Fair value of warrants issued | 157,984 | |
Total realized/unrealized losses included in net loss | (622,186) | (23,940) |
Reclassification of liability to additional paid-in capital | (149,209) | |
Derivative warrant liability, end of period | $ 910,578 | $ 872,999 |
DERIVATIVE WARRANT LIABILITY 26
DERIVATIVE WARRANT LIABILITY (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Sep. 30, 2015 | |
Outstanding warrants to purchase common stock | 4,033,334 | 4,616,668 |
Exercise price of warrant | $ 0.60 | |
Volatility rate | 76.00% | 73.00% |
Risk-free interest rate | 1.93% | 1.14% |
Anti dilution warrants expired | 583,334 | |
Reclassification from derivative warrant liability to additional paid-in capital | $ 149,209 | |
Minimum [Member] | ||
Estimated life | 4 years 7 days | 4 years 1 month 6 days |
Maximum [Member] | ||
Estimated life | 4 years 3 months 26 days | 4 years 6 months 26 days |
COMMON STOCK, STOCK OPTIONS A27
COMMON STOCK, STOCK OPTIONS AND WARRANTS (Details) - Stock Options [Member] | 3 Months Ended |
Dec. 31, 2016USD ($)$ / sharesshares | |
Stock Options | |
Outstanding, beginning balance | shares | 8,732,770 |
Granted | shares | |
Assumed in acquisition | $ | |
Exercised | shares | |
Forfeited or expired | shares | |
Outstanding, ending balance | shares | 8,732,770 |
Exercisable, ending balance | shares | 5,286,654 |
Weighted Average Exercise Price | |
Outstanding, beginning balance | $ 0.54 |
Granted | |
Assumed in acquisition | |
Exercised | |
Forfeited or expired | |
Outstanding, ending balance | 0.54 |
Exercisable, ending balance | $ 0.45 |
Weighted Average Remaining Contractual Life (years) | |
Weighted Average Remaining Contractual Life (years), Beginning | 8 years 7 months 2 days |
Weighted Average Remaining Contractual Life (years), Ending | 8 years 4 months 2 days |
Exercisable Remaining Contractual Life (years) | 7 years 10 months 28 days |
Aggregate Intrinsic value | |
Outstanding beginning balance | $ | $ 1,355,924 |
Outstanding ending balance | $ | 468,958 |
Exercisable ending balance | $ | $ 336,484 |
COMMON STOCK, STOCK OPTIONS A28
COMMON STOCK, STOCK OPTIONS AND WARRANTS (Details 1) | 3 Months Ended | |
Dec. 31, 2016$ / sharesshares | ||
Investor Warrants [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | shares | 3,400,067 | |
Expiration Date | September 12, 2019 | |
Placement Agent Unit Warrants [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | shares | 680,013 | |
Expiration Date | September 12, 2019 | |
Warrants underlying Placement Agent Unit Warrants [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | shares | 680,013 | |
Expiration Date | September 12, 2019 | |
Placement Agent Share Warrants [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | shares | 1,000,000 | |
Expiration Date | September 12, 2019 | |
Investor Warrants One [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | shares | 2,145,371 | |
Expiration Date | March 19, 2020 - June 26, 2020 | |
Investor Warrants Two [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | shares | 891,666 | |
Expiration Date | July 2, 2020 - September 14, 2020 | |
Investor Warrants Three [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | shares | 583,334 | |
Expiration Date | November 5, 2020 - November 20, 2020 | |
Investor Warrants Four [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | shares | 2,133,334 | [1] |
Expiration Date | January 7, 2021 - March 21, 2021 | |
Investor Warrants Five [Member] | ||
Exercise price | $ / shares | $ 0.60 | |
Number | shares | 1,900,000 | [1] |
Expiration Date | April 15, 2021 - April 25, 2021 | |
LMB Warrants One [Member] | ||
Exercise price | $ / shares | $ 0.41 | |
Number | shares | 1,352,266 | |
Expiration Date | June 12, 2019 - March 2, 2021 | |
LMB Warrants Two [Member] | ||
Exercise price | $ / shares | $ 0.66 | |
Number | shares | 122,319 | |
Expiration Date | September 30, 2019 - January 8, 2020 | |
LMB Warrants Three [Member] | ||
Exercise price | $ / shares | $ 1.38 | |
Number | shares | 265,814 | |
Expiration Date | November 3, 2019 - March 6, 2020 | |
LMB Warrants Four [Member] | ||
Exercise price | $ / shares | $ 0.50 | |
Number | shares | 1,108,249 | |
Expiration Date | August 18, 2020 - March 14, 2021 | |
LMB Warrants Five [Member] | ||
Exercise price | $ / shares | $ 0.91 | |
Number | shares | 796,649 | |
Expiration Date | March 24, 2022 - April 29, 2022 | |
Financial Advisor Warrants [Member] | ||
Exercise price | $ / shares | $ 0.20 | |
Number | shares | 1,000,000 | |
Expiration Date | August 15, 2021 | |
Offering Warrants 2016 [Member] | ||
Exercise price | $ / shares | $ 0.55 | |
Number | shares | 975,000 | |
Expiration Date | November 23, 2021 | |
Offering Placement Agent Warrants 2016 [Member] | ||
Exercise price | $ / shares | $ 0.55 | |
Number | shares | 97,500 | |
Expiration Date | November 23, 2021 | |
[1] | Fair value of these warrants are included in the derivative warrant liability |
COMMON STOCK, STOCK OPTIONS A29
COMMON STOCK, STOCK OPTIONS AND WARRANTS (Details Narrative) | Sep. 12, 2014USD ($)Unit$ / sharesshares | Nov. 23, 2016USD ($)Unit$ / sharesshares | Sep. 15, 2016 | Dec. 31, 2016USD ($)Unit$ / sharesshares | Dec. 31, 2015USD ($) | Sep. 30, 2016USD ($)Unit$ / sharesshares | Sep. 30, 2015USD ($)Unit$ / sharesshares | Mar. 22, 2016USD ($)$ / sharesshares |
Description of increase in authorized shares of common stock | Stockholders approved an increase in the number of shares of authorized common stock from 90,000,000 shares to 200,000,000 shares. | |||||||
Description of reverse stock split | Reverse stock split of our common stock by a ratio of not less than 1-for-8 and not more than 1-for-20 at any time prior to September 15, 2017. | |||||||
Stock-based compensation expense | $ | $ 241,514 | $ 121,299 | ||||||
Additional warrant purchase | 97,500 | |||||||
Options to purchase of common stock | 4,033,334 | 4,616,668 | ||||||
Stock Options [Member] | Board of Directors [Member] | ||||||||
Common stock reserved for employees | 13,000,000 | |||||||
Private Offering [Member] | ||||||||
Common stock exercise price per share | $ / shares | $ 0.001 | |||||||
Description of warrant redeemable | 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. | |||||||
Number of additional units sold | Unit | 1,000,000 | 266,667 | 200,000 | |||||
Number of additional units sold, per unit | $ / shares | $ 0.60 | $ 0.60 | $ 0.60 | |||||
Number of units sold | Unit | 3,400,067 | 4,350,001 | 2,837,037 | |||||
Number of units sold, per unit | $ / shares | $ 0.60 | $ 0.54 | $ 0.54 | |||||
Number of units sold for gross proceeds | $ | $ 2,040,040 | $ 2,509,000 | $ 1,652,000 | |||||
Stock sold | 5,000,000 | |||||||
Stock sold per share price | $ / shares | $ 0.60 | |||||||
Stock sold for gross proceeds | $ | $ 3,000,000 | |||||||
Offering Warrants 2016 [Member] | ||||||||
Common stock exercise price per share | $ / shares | $ 0.55 | |||||||
Common stock outstanding | 975,000 | |||||||
Weighted average remaining life | 3 years 7 months 2 days | |||||||
Number of units sold | Unit | 975,000 | |||||||
Number of units sold, per unit | $ / shares | $ 0.40 | |||||||
Number of unit offering | Unit | 15,000,000 | |||||||
Number of unit offering per share price | $ / shares | $ 0.40 | |||||||
Number of units offering for gross proceeds | $ | $ 6,000,000 | |||||||
Percentage of cash commission on gross proceeds | 0.10 | |||||||
Additional warrant purchase | 97,500 | |||||||
Common stock reserved for employees | 19,131,595 | |||||||
Warrant offering description | On November 23, 2016, the Company sold 975,000 2016 Offering Units, at a price of $0.40 per Unit, consisting of (i) one share of common stock and (ii) a warrant to purchase one share of common stock. Each 2016 Offering Warrant has an exercise price of $0.55 and is exercisable for five years from the date of issuance. | |||||||
Warrants outstanding | 280,568 | |||||||
Stock Options [Member] | ||||||||
Common stock outstanding | 8,732,770 | 8,732,770 | ||||||
Shares available for future grants | 6,341,230 | |||||||
Unrecognized total compensation cost related to unvested awards | $ | $ 831,020 | |||||||
Weighted average remaining life | 1 year 15 days | |||||||
Average contractual term | P8Y4M2D | |||||||
Stock Options [Member] | 2014 Plan [Member] | ||||||||
Shares available for future grants | 4,267,230 | |||||||
Stock-based compensation expense | $ | $ 241,514 | $ 121,299 | ||||||
Unrecognized total compensation cost related to unvested awards | $ | $ 1,145,334 | |||||||
Weighted average remaining life | 1 year 6 months 29 days | |||||||
Options to purchase of common stock | 8,732,770 | |||||||
Average contractual term | generally 10 years | |||||||
Warrant [Member] | ||||||||
Estimated fair value | $ | $ 234,505 | |||||||
Placement Agent Unit Warrants [Member] | ||||||||
Common stock exercise price per share | $ / shares | $ 0.60 | |||||||
Common stock outstanding | 680,013 | |||||||
Number of units sold | Unit | 975,000 | |||||||
Number of units sold for gross proceeds | $ | $ 390,000 | |||||||
Estimated fair value | $ | 23,451 | |||||||
Expense allowance | $ | 50,700 | |||||||
Other cost | $ | $ 156,896 | |||||||
Options to purchase of common stock | 1,000,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | |
General and administrative expense | $ 1,132,183 | $ 294,221 | |
Expenses paid by related party | $ 27,637 | $ 27,637 | |
Chairman [Member] | |||
Additional stock purchased | 5,000,000 | ||
Financial Consultant [Member] | |||
General and administrative expense | $ 12,000 | $ 12,000 |
OPERATING LEASE (Details Narrat
OPERATING LEASE (Details Narrative) | 3 Months Ended |
Dec. 31, 2016USD ($) | |
Operating Lease Details Narrative | |
Operating lease rent | $ 2,167 |
Lease agreement expire date | Oct. 31, 2017 |
Rent expense | $ 6,501 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | |
Feb. 28, 2017 | Jan. 30, 2017 | |
Investor Relations Services [Member] | ||
Common stock issued | 445,932 | |
Subsequent Event [Member] | ||
Additional offering units | 399,750 | |
Number Of Units Sold For Gross Proceeds | $ 159,900 | |
Subsequent Event [Member] | Chairman [Member] | ||
Additional demand notes | $ 260,000 | |
Placement Agent [Member] | ||
Warrant to purchase common stock | 39,975 |