STOCKHOLDERS' EQUITY | NOTE 9 – STOCKHOLDERS' EQUITY Common Stock During the nine months ended March 31, 2019, the Company closed on private placements of securities pursuant to Unit Purchase Agreements and Subscription Agreements, each dated as shown below. The price per unit (comprising one common stock and a warrant to purchase 0.65 common stock) was $0.90. The Company issued an aggregate of 7,288,225 shares of common stock to investors in these closings, for net proceeds of $5,941,547. Date of closing Common Stock Issued Warrants issued Unit Price Net proceeds October 12, 2018 2,004,106 1,302,669 $ 0.90 $ 1,630,991 October 18, 2018 1,640,334 1,066,218 $ 0.90 $ 1,287,007 November 2, 2018 1,499,456 974,645 $ 0.90 $ 1,215,242 December 5, 2018 1,338,775 870,200 $ 0.90 $ 1,083,307 February 12, 2019 805,554 523,610 $ 0.90 $ 725,000 Total 7,288,225 4,737,342 $ 5,941,547 The exercise price of each warrant issued to investors was $1.50 with a 5-year term. Approximately $40,000 of legal costs were incurred that were not allocated to the individual closings. In addition to the above, on March 27, 2019, the Company closed on a private placement of securities pursuant to Unit Purchase Agreements and Subscription Agreements dated March 27, 2019. The price per unit of the March 27, 2019 Units (comprising one common stock and a warrant to purchase 0.50 common stock) was $1.40. The Company issued an aggregate of 714,285 shares of common stock and 357,142 warrants to investors in these closings, for net proceeds of $1,000,000. The exercise price of the March 27, 2019 warrants was $2.25. The October 12, 2018 and October 18, 2018 financings represented an Equity Financing as defined in the Convertible Promissory Note agreement. As a result of the , the Company's outstanding 7% Convertible Promissory Notes and accumulated interest converted into 10,731,669 shares of common stock. Placement Agent Warrants During the nine months ended March 31, 2019, the Company additionally issued an aggregate of 854,334 warrants to the placement agent in connection with the closings. The agent warrants have an exercise price of $0.99, are non-cancellable, vest upon issuance and expire on the fifth anniversary of the warrant date of issuance. Options In December 2014, the Board of Directors adopted and the shareholders approved Relmada's 2014 Stock Option and Equity Incentive Plan, as amended (the "Plan"), which allows for the granting of common stock awards, stock appreciation rights, and incentive and nonqualified stock options to purchase shares of the Company's common stock to designated employees, non-employee directors, and consultants and advisors. The Plan allowed for the granting of 1,611,769 options or stock awards. In August 2015, the board approved an amendment to the Plan. Among other things, the Plan Amendment updates the definition of "change of control" and provides for accelerated vesting of all awards granted under the plan in the event of a change of control of the Company. In January 2017, the stockholders approved an increase of 2,500,000 shares authorized to be issued under the Plan, raising the total shares allowed under the Plan to 4,111,768. In December 2017 the board approved, and in February 2018 the shareholders approved, an amendment to the Plan that increased the number of shares of common stock authorized for issuance under the Plan by an additional 2,500,000 shares from 4,111,768 to 6,611,768. In December 2018 the Board of Directors approved an amendment to the Plan to increase the number of shares of common stock authorized for issuance under the Plan by an additional 4,000,000 shares from 6,611,768 to 10,611,768. Stock options are exercisable generally for a period of 10 years from the date of grant and generally vest over four years. As of March 31, 2019, 4,868,528 shares were available for future grants under the Plan. As of March 31, 2019, no stock appreciation rights have been issued. The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock options and warrants. The price of common stock prior to the Company being public was determined from a third party valuation. The risk-free interest rate assumptions were based upon the observed interest rates appropriate for the expected term of the equity instruments. The expected dividend yield was assumed to be zero as the Company has not paid any dividends since its inception and does not anticipate paying dividends in the foreseeable future. The expected volatility was based on historical volatility. The Company routinely reviews its calculation of volatility changes in future volatility, the Company's life cycle, its peer group, and other factors. The Company uses the simplified method for share-based compensation to estimate the expected term for employee option awards for share-based compensation in its option-pricing model. Prior to the adoption of ASU 2018-07 on October 1, 2018, the Company used the contractual term for non-employee options to estimate the expected term, for share-based compensation in its option-pricing model. On February 13, 2017, Mr. Michael Becker, the Company's Chief Financial Officer, resigned and entered into a consulting agreement with the Company to provide financial, investor, digital media, and public relations services for the Company. As a result of Mr. Becker's change from an employee to a consultant, his options and shares of restricted stock outstanding on such date continued to vest pursuant to the awards' original terms and were reclassified as non-employee awards. On December 15, 2017 Mr. Becker's consulting agreement expired and all unvested options were cancelled. On December 20, 2018, the Company awarded a total of 2,700,000 options to its chief executive officer, chief medical officer and board members with exercise price of $1.15 and a 10-year term vesting over 4-year period. The options have an aggregate fair value of $2.5 million calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 2.69% (2) expected life of 6.25 years, (3) expected volatility of 102.3%, and (4) zero expected dividends. At March 31, 2019, the Company has unrecognized stock-based compensation expense of approximately $3,448,900 related to unvested stock options over the weighted average remaining service period of 3.35 years. Options A summary of the changes in options during the nine months ended March 31, 2019 is as follows: Number Weighted Average Exercise Price For Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Outstanding and expected to vest at June 30, 2018 3,068,865 $ 1.45 8.8 $ 511,000 Forfeited (25,625 ) $ 7.59 - $ - Issued 2,700,000 $ 1.15 9.7 $ 1,674,000 Outstanding and expected to vest at March 31, 2019 5,743,240 $ 1.28 8.9 $ 4,199,110 Options exercisable at March 31, 2019 1,278,687 $ 2.22 7.6 $ 799,763 Warrants A summary of the changes in outstanding warrants during the nine months ended March 31, 2019 is as follows: Number of Shares Weighted Average Exercise Price Per Share Outstanding and vested at June 30, 2018 9,815,025 $ 3.96 Forfeited (7,500 ) 4.00 Issued 6,240,247 1.46 Outstanding and vested at March 31, 2019 16,047,772 $ 2.15 Included in the warrants outstanding at June 30, 2018, and March 31, 2019 are 2,574,570 warrants with an exercise price that is subject to downward adjustment on the sale of equity at prices below their original exercise price. The issuance of common stock in the three months ended March 31, 2019 resulted in a reduction of the exercise price of these warrants. This reduction had a di minimis effect on the financial statements. On December 20, 2018, the Company granted 100,000 warrants to a contractor with exercise price of $1.15, a 10-year term and immediate vesting. The warrants have an aggregated fair value of $93,762 that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 2.69% (2) expected life of 6.25 years, (3) expected volatility of 102.3%, and (4) zero expected dividends. On January 1, 2019, the Company granted 120,000 warrants to a contractor with exercise price of $1.15, a 10-year term and quarterly vesting over four years vesting. The warrants have an aggregated fair value of $112,183 that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 2.49% (2) expected life of 6.25 years, (3) expected volatility of 102.0%, and (4) zero expected dividends. On March 9, 2019, the Company granted 71,429 warrants to a consultant with exercise price of $1.75, a 5-year term and immediate vesting. The warrants have an aggregated fair value of $95,131 that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 2.42% (2) expected life of 5 years, (3) expected volatility of 102.0%, and (4) zero expected dividends. At March 31, 2019 and June 30, 2018, the aggregate intrinsic value of warrants vested and outstanding was approximately $4,057,000 and $215,000, respectively. The following summarizes the components of stock-based compensation expense which includes stock options in the consolidated statements of operations for the nine months ended March 31, 2019 and 2018 (rounded to nearest $00): Nine months ended March 31, Nine months ended March 31, Research and development $ 65,700 $ 44,500 General and administrative 744,800 320,700 Total $ 810,500 $ 365,200 |