Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 11, 2014 | Mar. 31, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | CEL SCI CORP | ||
Entity Central Index Key | 725363 | ||
Document Type | 10-K | ||
Document Period End Date | 30-Sep-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -21 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 91,345,536 | ||
Entity Public Float | $86,967,791 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
BALANCE_SHEETS
BALANCE SHEETS (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
ASSETS | ||
Cash and cash equivalents | $8,513,620 | $41,612 |
Receivables | 81,820 | 74,263 |
Prepaid expenses | 907,526 | 780,523 |
Deposits - current portion | 150,000 | 0 |
Inventory used for R&D and manufacturing | 1,452,020 | 1,016,628 |
Deferred rent - current portion | 544,074 | 598,717 |
Total current assets | 11,649,060 | 2,511,743 |
RESEARCH AND OFFICE EQUIPMENT, net | 403,004 | 489,336 |
PATENT COSTS, net | 323,588 | 318,195 |
DEFERRED RENT - net of current portion | 4,733,865 | 5,448,381 |
DEPOSITS | 2,120,917 | 2,070,917 |
TOTAL ASSETS | 19,230,434 | 10,838,572 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Accounts payable | 1,160,783 | 1,924,482 |
Accrued expenses | 547,208 | 113,496 |
Due to employees | 307,961 | 386,337 |
Related party loan | 1,104,057 | 1,104,057 |
Deferred rent - current portion | 6,375 | 8,529 |
Lease obligation - current portion | 8,495 | 8,212 |
Derivative instruments - current portion | 18,105 | 0 |
Total current liabilities | 3,152,984 | 3,545,113 |
Derivative instruments - net of current portion | 5,487,141 | 433,024 |
Deferred revenue | 126,591 | 126,545 |
Deferred rent - net of current portion | 6,290 | 7,875 |
Lease obligation - net of current portion | 9,028 | 20,925 |
Deposits held | 5,000 | 5,000 |
Total liabilities | 8,787,034 | 4,138,482 |
COMMITMENTS AND CONTINGENCIES | 0 | 0 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $.01 par value-200,000 shares authorized; -0- shares issued and outstanding | 0 | 0 |
Common stock, $.01 par value - 600,000,000 shares authorized; 81,902,471 and 31,025,019 shares issued and outstanding at September 30, 2014 and 2013, respectively | 819,025 | 310,250 |
Additional paid-in capital | 249,151,208 | 218,550,408 |
Accumulated deficit | -239,526,833 | -212,160,568 |
Total stockholders' equity | 10,443,400 | 6,700,090 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $19,230,434 | $10,838,572 |
BALANCE_SHEETS_Parenthetical
BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Stockholders Equity | ||
Preferred Stock Shares Par Value | $0.01 | $0.01 |
Preferred Stock Shares Authorized | 200,000 | 200,000 |
Preferred Stock Shares Issued | 0 | 0 |
Preferred Stock Shares Outstanding | 0 | 0 |
Common Stock Shares Par Value | $0.01 | $0.01 |
Common Stock Shares Authorized | 600,000,000 | 600,000,000 |
Common Stock Shares Issued | 81,902,471 | 31,025,019 |
Common Stock Shares Outstanding | 81,902,471 | 31,025,019 |
STATEMENTS_OF_OPERATIONS
STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Income Statement [Abstract] | |||
GRANT INCOME AND OTHER | $264,033 | $159,583 | $254,610 |
OPERATING EXPENSES: | |||
Research and development (excluding R&D depreciation of $172,442, $253,072 and $445,710 respectively, included below) | 17,000,145 | 12,681,049 | 10,368,695 |
Depreciation and amortization | 231,752 | 364,124 | 533,468 |
General & administrative | 10,606,248 | 6,982,686 | 6,595,287 |
Total operating expenses | 27,838,145 | 20,027,859 | 17,497,450 |
OPERATING LOSS | -27,574,112 | -19,868,276 | -17,242,840 |
GAIN ON DERIVATIVE INSTRUMENTS | 248,767 | 10,750,666 | 1,911,683 |
INTEREST INCOME | 122,854 | 117,086 | 116,061 |
INTEREST EXPENSE | -163,774 | -170,423 | -262,214 |
NET LOSS | -27,366,265 | -9,170,947 | -15,477,310 |
ISSUANCE OF ADDITIONAL SHARES DUE TO RESET PROVISIONS | -1,117,447 | 0 | -250,000 |
MODIFICATIONS OF WARRANTS | 0 | -59,531 | -325,620 |
INDUCEMENT WARRANTS | 0 | 0 | -1,593,000 |
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS | ($28,483,712) | ($9,230,478) | ($17,645,930) |
NET LOSS PER COMMON SHARE | |||
BASIC | ($0.48) | ($0.30) | ($0.70) |
DILUTED | ($0.49) | ($0.66) | ($0.78) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||
BASIC and DILUTED | 58,804,622 | 30,279,442 | 25,183,654 |
STATEMENTS_OF_OPERATIONS_Paren
STATEMENTS OF OPERATIONS (Parenthetical) (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Expenses | |||
Depreciation | $172,442 | $253,072 | $445,710 |
STATEMENTS_OF_STOCKHOLDERS_EQU
STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
BALANCE at Sep. 30, 2011 | $214,735 | $196,376,400 | ($187,512,311) | $9,078,824 |
BALANCE, Shares at Sep. 30, 2011 | 21,473,461 | |||
Sale of stock | 46,167 | 14,243,351 | 0 | 14,289,518 |
Sale of stock, Shares | 4,616,667 | |||
Issuance of warrants in connection with sale of common stock | 0 | -6,706,667 | 0 | -6,706,667 |
401(k) contributions paid in common stock | 426 | 154,090 | 0 | 154,516 |
401(k) contributions paid in common stock, Shares | 42,627 | |||
Exercise of warrants and stock options | 10,191 | 2,654,348 | 0 | 2,664,539 |
Exercise of warrants and stock options, Shares | 1,019,119 | |||
Stock issued to nonemployees for service | 1,606 | 556,686 | 0 | 558,292 |
Stock issued to nonemployees for service, Shares | 160,618 | |||
Exercise of derivative liabilities | 0 | 122,367 | 0 | 122,367 |
Modification of options issued to consultants | 54,789 | 0 | 54,789 | |
Modification of options issued to employees | 36,990 | 0 | 36,990 | |
Equity based compensation - employees | 2,229,326 | 0 | 2,229,326 | |
Equity based compensation - non-employees | 22,248 | 0 | 22,248 | |
Net loss | 0 | -15,477,310 | -15,477,310 | |
BALANCE at Sep. 30, 2012 | 273,125 | 209,743,928 | -202,989,621 | 7,027,432 |
BALANCE, Shares at Sep. 30, 2012 | 27,312,492 | |||
Sale of stock | 35,000 | 9,753,769 | 0 | 9,788,769 |
Sale of stock, Shares | 3,500,000 | |||
Issuance of warrants in connection with sale of common stock | -4,200,000 | 0 | -4,200,000 | |
401(k) contributions paid in common stock | 742 | 158,114 | 0 | 158,856 |
401(k) contributions paid in common stock, Shares | 74,230 | |||
Stock issued to nonemployees for service | 1,383 | 359,542 | 0 | 360,925 |
Stock issued to nonemployees for service, Shares | 138,297 | |||
Modification of options issued to consultants | 0 | |||
Equity based compensation - employees | 0 | 2,636,905 | 0 | 2,636,905 |
Equity based compensation - non-employees | 0 | 98,150 | 0 | 98,150 |
Net loss | 0 | 0 | -9,170,947 | -9,170,947 |
BALANCE at Sep. 30, 2013 | 310,250 | 218,550,408 | -212,160,568 | 6,700,090 |
BALANCE, Shares at Sep. 30, 2013 | 31,025,019 | |||
Sale of stock | 317,555 | 28,129,691 | 0 | 28,447,246 |
Sale of stock, Shares | 31,755,494 | |||
Issuance of warrants in connection with sale of common stock | -7,791,448 | 0 | -7,791,448 | |
401(k) contributions paid in common stock | 1,647 | 153,787 | 0 | 155,434 |
401(k) contributions paid in common stock, Shares | 164,787 | |||
Exercise of warrants | 26,686 | 4,253,632 | 0 | 4,280,318 |
Exercise of warrants, Shares | 2,668,508 | |||
Conversion of warrant liability to equity | 1,308,528 | 1,308,528 | ||
Stock issued to nonemployees for service | 5,800 | 621,318 | 0 | 627,118 |
Stock issued to nonemployees for service, Shares | 579,968 | 3,118,387 | ||
Stock issued for patents | 87 | 9,912 | 0 | 9,999 |
Stock issued for patents, Shares | 8,695 | |||
Modification of options issued to consultants | 76,991 | 0 | 76,991 | |
Issuance of restricted stock | 157,000 | -157,000 | 0 | 0 |
Issuance of restricted stock, Shares | 15,700,000 | |||
Equity based compensation - employees | 3,958,637 | 0 | 3,958,637 | |
Equity based compensation - non-employees | 36,752 | 0 | 36,752 | |
Net loss | 0 | -27,366,265 | -27,366,265 | |
BALANCE at Sep. 30, 2014 | $819,025 | $249,151,208 | ($239,526,833) | $10,443,400 |
BALANCE, Shares at Sep. 30, 2014 | 81,902,471 |
STATEMENTS_OF_CASH_FLOWS
STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net loss | ($27,366,265) | ($9,170,947) | ($15,477,310) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 231,752 | 364,124 | 533,468 |
Issuance of common stock, warrants and options for services | 694,955 | 454,855 | 527,207 |
Modification of warrants issued to consultants | 76,991 | 0 | 54,789 |
Modification of stock options issued to employees | 0 | 0 | 36,990 |
Equity based compensation | 3,958,637 | 2,636,905 | 2,229,326 |
Common stock contributed to 401(k) plan | 155,434 | 158,856 | 154,516 |
Impairment loss on abandonment of patents | 1,182 | 22,628 | 44,921 |
Loss on retired equipment | 268 | 4,350 | 9,399 |
Gain on derivative instruments | -248,767 | -10,750,666 | -1,911,683 |
(Increase)/decrease in assets: | |||
Receivables | -7,557 | 84,351 | 298,723 |
Deferred rent | 769,159 | 544,028 | 598,714 |
Prepaid expenses | -158,088 | 529,738 | 775,823 |
Inventory used for R&D and manufacturing | -435,392 | 367,856 | 186,698 |
Deposits | -200,000 | -400,000 | 0 |
Increase/(decrease) in liabilities: | |||
Accounts payable | -751,971 | 1,316,964 | -168,463 |
Accrued expenses | 433,712 | 101,995 | -99,006 |
Deferred revenue | 46 | 45 | 1,500 |
Due to employees | -78,376 | 186,446 | -2,611 |
Deferred rent liability | -3,739 | -108 | 11,986 |
Deposits held | 0 | 0 | 5,000 |
Net cash used in operating activities | -22,928,019 | -13,548,580 | -12,190,013 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of equipment | -103,977 | -102,033 | -54,637 |
Expenditures for patent costs | -34,887 | -30,728 | -78,959 |
Net cash used in investing activities | -138,864 | -132,761 | -133,596 |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from issuance of common stock and warrants | 28,428,641 | 9,788,769 | 14,289,518 |
Proceeds from exercise of warrants and stock options | 3,118,387 | 0 | 2,664,539 |
Payments on convertible debt | 0 | 0 | -4,950,000 |
Payments on obligations under capital lease | -8,137 | -6,858 | 0 |
Net cash provided by financing activities | 31,538,891 | 9,781,911 | 12,004,057 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 8,472,008 | -3,899,430 | -319,552 |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 41,612 | 3,941,042 | 4,260,594 |
CASH AND CASH EQUIVALENTS, END OF YEAR | 8,513,620 | 41,612 | 3,941,042 |
ISSUANCE OF WARRANTS: | |||
Increase in derivative liabilities | -7,791,448 | -4,200,000 | -6,706,667 |
Decrease in additional paid-in capital | 7,791,448 | 4,200,000 | 6,706,667 |
Total | 0 | 0 | 0 |
ISSUANCE OF ADDITIONAL SHARES: | |||
Increase in common stock | -15,631 | 0 | -8,333 |
Increase in additional paid-in capital | -1,101,816 | 0 | -241,667 |
Decrease in additional paid-in capital | 1,117,447 | 0 | 250,000 |
Total | 0 | 0 | 0 |
EXERCISE OF WARRANTS | |||
Increase in common stock | -657 | 0 | 0 |
Increase in additional paid-in capital | -1,161,274 | 0 | -122,367 |
Decrease in derivative liabilities | 1,161,931 | 0 | 122,367 |
Total | 0 | 0 | 0 |
INDUCEMENT WARRANTS | |||
Increase in additional paid-in capital | 0 | 0 | -1,593,000 |
Decrease in additional paid-in capital | 0 | 0 | 1,593,000 |
Total | 0 | 0 | 0 |
RECLASSIFICATION/MODIFICATION OF WARRANTS: | |||
Increase in additional paid-in capital | -1,308,528 | 0 | -325,620 |
Decrease in additional paid-in capital | 325,620 | ||
Decrease in derivative liabilities | 1,308,528 | 0 | 0 |
Total | 0 | 0 | 0 |
ISSUANCE OF COMMON STOCK FOR PREPAID SERVICES | |||
Increase in additional paid-in capital | -31,085 | -57,553 | -53,333 |
Increase in prepaid expenses | 31,085 | 57,553 | 53,333 |
Total | 0 | 0 | 0 |
ISSUANCE OF COMMON STOCK FOR PATENT COSTS | |||
Increase in common stock | -87 | 0 | 0 |
Increase in additional paid in capital | -9,912 | 0 | 0 |
Increase in patent costs | 9,999 | 0 | 0 |
Total | 0 | 0 | 0 |
PATENT COSTS INCLUDED IN ACCOUNTS PAYABLE | |||
Increase in patent costs | 4,474 | 14,024 | 22,379 |
Increase in accounts payable | -4,474 | -14,024 | -22,379 |
Total | 0 | 0 | 0 |
NON-CASH EQUIPMENT CHANGES | |||
Increase (decrease) in research and office equipment | -1,074 | 36,622 | 0 |
Increase in accounts payable | -2,345 | 0 | 0 |
Decrease (increase) in capital lease obligation | 3,419 | -36,622 | 0 |
Total | 0 | 0 | 0 |
CAPITAL LEASE PAYMENTS INCLUDED IN ACCOUNTS PAYABLE: | |||
Decrease in capital lease obligation | 58 | 627 | 0 |
Increase in accounts payable | -58 | -627 | 0 |
Total | 0 | 0 | 0 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | |||
Cash expenditure for interest expense | $180,654 | $156,225 | $377,715 |
1_ORGANIZATION_AND_SUMMARY_OF_
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | |
A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
CEL-SCI Corporation (the Company) was incorporated on March 22, 1983, in the state of Colorado, to finance research and development in biomedical science and ultimately to engage in marketing and selling products. | |
CEL-SCI’s work is focused on finding the best way to activate the immune system to fight cancer and infectious diseases. The Company’s lead investigational therapy, Multikine (Leukocyte Interleukin, Injection), is currently being tested in a Phase III clinical trial as a potential therapeutic agent directed at using the immune system to produce an anti-tumor immune response for advanced primary head and neck cancer. Data from Phase I and Phase II clinical trials suggest Multikine has the potential to directly affect tumor cells. These data also indicate that it appears to activate the patient’s own anti-tumor immune response. Multikine (Leukocyte Interleukin, Injection) is the full name of this investigational therapy, which, for simplicity, is referred to in the remainder of this document as Multikine. Multikine is the trademark that the Company has registered for this investigational therapy, and this proprietary name is subject to FDA review in connection with the Company’s future anticipated regulatory submission for approval. Multikine has not been licensed or approved by the FDA or any other regulatory agency. Neither has its safety or efficacy been established for any use. | |
Multikine has been cleared by the regulators in seventeen countries around the world, including the U.S. FDA, for a global Phase III clinical trial in advanced primary (not yet treated) head and neck cancer patients. Multikine is also being used in a Phase I study at the Naval Medical Center, San Diego under a Cooperative Research and Development Agreement (CRADA) in HIV/HPV co-infected men and women with peri-anal warts. | |
On June 25, 2013, CEL-SCI’s shareholders approved a reverse split of the Company’s common stock. The reverse split became effective on the NYSE MKT on September 25, 2013. On that date, every ten issued and outstanding shares of the Company’s common stock automatically converted into one outstanding share. As a result of the reverse stock split, the number of the Company’s outstanding shares of common stock decreased from 310,005,272 (pre-split) shares to 31,001,686 (post-split) shares. In addition, by reducing the number of CEL-SCI’s outstanding shares, CEL-SCI’s loss per share in all prior periods will increase by a factor of ten. The reverse stock split affected all stockholders of the Company’s common stock uniformly, and did not affect any stockholder’s percentage of ownership interest. The par value of the Company’s stock remained unchanged at $0.01 per share and the number of authorized shares of common stock remained the same after the reverse stock split. | |
As the par value per share of the Company’s common stock remained unchanged at $0.01 per share, a total of $2,790,036 was reclassified from common stock to additional paid-in capital. In connection with this reverse stock split, the number of shares of common stock reserved for issuance under the Company’s incentive and non-qualified stock option plans (Note 7) as well as the shares of common stock underlying outstanding stock options, and warrants were also proportionately reduced while the exercise prices of such stock options and warrants were proportionately increased. All references to shares of common stock and per share data for all periods presented in the accompanying financial statements and notes thereto have been adjusted to reflect the reverse stock split on a retroactive basis. | |
Summary of Significant accounting policies: | |
Cash and Cash Equivalents – For purposes of the statements of cash flows, cash and cash equivalents consist principally of unrestricted cash on deposit and short-term money market funds. The Company considers all highly liquid investments with a maturity when purchased of less than three months as cash and cash equivalents. | |
Prepaid Expenses and Inventory – Prepaid expenses are payments for future services to be rendered and are expensed over the time period for which the service is rendered. Prepaid expenses may also include payment for goods to be received within one year of the payment date. Inventory consists of manufacturing production advances and bulk purchases of laboratory supplies to be consumed in the manufacturing of the Company’s product for clinical studies. Inventories are stated at the lower of cost or market, where cost is determined using the first-in, first out method applied on a consistent basis. | |
Deposits – The deposits are required by the lease agreement for the manufacturing facility and by the clinical research organization (CRO) agreements. | |
Research and Office Equipment and Leasehold Improvements – Research and office equipment is recorded at cost and depreciated using the straight-line method over estimated useful lives of five to seven years. Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Repairs and maintenance which do not extend the life of the asset are expensed when incurred. The fixed assets are reviewed on a quarterly basis to assess impairment, if any. | |
Patents – Patent expenditures are capitalized and amortized using the straight-line method over the shorter of the expected useful life or the legal life of the patent (17 years). In the event changes in technology or other circumstances impair the value or life of the patent, appropriate adjustment to the asset value and period of amortization is made. An impairment loss is recognized when estimated future undiscounted cash flows expected to result from the use of the asset, and from disposition, is less than the carrying value of the asset. The amount of the impairment loss would be the difference between the estimated fair value of the asset and its carrying value. | |
Deferred Rent (Asset) – Consideration paid, including deposits, related to operating leases is recorded as a deferred rent asset and amortized as rent expense over the lease term. Interest on the deferred rent is calculated at 3% on the funds deposited on the manufacturing facility and is included in deferred rent. This interest income will be used to offset future rent. | |
Deferred Rent (Liability) – Certain of the Company’s operating leases provide for minimum annual payments that adjust over the life of the lease. The aggregate minimum annual payments are expensed on a straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for rent escalations when the amount of straight-line rent exceeds the lease payments, and reduces the deferred rent liability when the lease payments exceed the straight-line rent expense. For tenant improvement allowances and rent holidays, the Company records a deferred rent liability and amortizes the deferred rent over the lease term as a reduction to rent expense. | |
Derivative Instruments - The Company has entered into financing arrangements that consist of freestanding derivative instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification (ASC) 815, “Accounting for Derivative Instruments and Hedging Activities”. In accordance with accounting principles generally accepted in the United States (U.S.GAAP), derivative instruments and hybrid instruments are recognized as either assets or liabilities on the balance sheet and are measured at fair value with gains or losses recognized in earnings or other comprehensive income depending on the nature of the derivative or hybrid instruments. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument. The derivative liabilities are remeasured at fair value at the end of each reporting period as long as they are outstanding. | |
Research and Development Grant Revenues – The Company's grant arrangements are handled on a reimbursement basis. Grant revenues under the arrangements are recognized when costs are incurred. | |
Research and Development Costs – Research and development expenditures are expensed as incurred. | |
Net Loss Per Common Share – The Company calculates net loss per common share in accordance with ASC 260 “Earnings Per Share” (ASC 260). Basic and diluted net loss per common share was determined by dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding during the period. The Company’s potentially dilutive shares, which include outstanding common stock options, restricted stock units, convertible preferred stock and common stock warrants, have not been included in the computation of diluted net loss per share for all periods as the result would be anti-dilutive. | |
Concentration of Credit Risk – Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents. The Company maintains its cash and cash equivalents with high quality financial institutions. At times, these accounts may exceed federally insured limits. The Company has not experienced any losses in such bank accounts. The Company believes it is not exposed to significant credit risk related to cash and cash equivalents. All non-interest bearing cash balances were fully insured up to $250,000 at September 30, 2014. | |
Income Taxes – The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating and tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be recognized. | |
Use of Estimates – The preparation of financial statements in conformity U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, inventory obsolescence, accruals, stock options, useful lives for depreciation and amortization of long-lived assets, deferred tax assets and the valuation of derivative liabilities. Actual results could differ from estimates, although management does not generally believe such differences would materially affect the financial statements in any given year. However, in regard to the valuation of derivative liabilities determined using various valuation techniques including the Black-Scholes and binomial pricing methodologies, significant fluctuations may materially affect the financial statements in a given year. The Company considers such valuations to be significant estimates. | |
Fair Value Measurements – The Company evaluates financial assets and liabilities subject to fair value measurements in accordance with a fair value hierarchy to prioritize the inputs used to measure fair value. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement, where Level 1 is the highest and Level 3 is the lowest. See Note 12 for the definition of levels and the classification of assets and liabilities in those levels. | |
Stock-Based Compensation – Compensation cost for all stock-based awards is measured at fair value as of the grant date in accordance with the provisions of ASC 718, “Compensation – Stock Compensation.” The fair value of stock options is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires various judgmental assumptions including volatility and expected option life. The stock-based compensation cost is recognized on the straight line allocation method as expense over the requisite service or vesting period. | |
Equity instruments issued to non-employees are accounted for in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees.” Accordingly, compensation is recognized when goods or services are received and is measured using the Black-Scholes valuation model. The Black-Scholes model requires various judgmental assumptions regarding the fair value of the equity instruments at the measurement date and the expected life of the options. | |
The Company has Incentive Stock Option Plans, Non-Qualified Stock Options Plans, a Stock Compensation Plan, Stock Bonus Plans and an Incentive Stock Bonus Plan. In some cases, these Plans are collectively referred to as the “Plans.” All Plans have been approved by the stockholders. | |
The Company’s stock options are not transferable, and the actual value of the stock options that an employee may realize, if any, will depend on the excess of the market price on the date of exercise over the exercise price. The Company has based its assumption for stock price volatility on the variance of daily closing prices of the Company’s stock. The risk-free interest rate assumption was based on the U.S. Treasury rate at date of the grant with term equal to the expected life of the option. Historical data was used to estimate option exercise and employee termination within the valuation model. The expected term of options represents the period of time that options granted are expected to be outstanding and has been determined based on an analysis of historical exercise behavior. If any of the assumptions used in the Black-Scholes model change significantly, stock-based compensation expense for new awards may differ materially in the future from that recorded in the current period. | |
Vesting of restricted stock granted under the Incentive Stock Bonus Plan is subject to service, performance or market conditions and meets the classification of equity awards. These awards were measured at market value on the grant-dates for issuances where the attainment of performance criteria is probable and at fair value on the grant-dates, using a Monte Carlo simulation for issuances where the attainment of performance criteria is uncertain. The total compensation cost will be expensed over the estimated requisite service period. | |
Recent Accounting Pronouncements – In November 2014, the FASB issued guidance codified in ASC 815, Derivatives and Hedging: Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2017. The Company is currently evaluating the impact of the provisions of the update. | |
The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements. |
2_DERIVATIVES_LIABILITIES_WARR
2. DERIVATIVES LIABILITIES, WARRANTS AND OTHER OPTIONS | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||
2. DERIVATIVES LIABILITIES, WARRANTS AND OTHER OPTIONS | 2. DERIVATIVES LIABILITIES, WARRANTS AND OTHER OPTIONS | ||||||||
Below is a chart presenting the derivative liabilities, warrants and other options outstanding at September 30, 2014: | |||||||||
Warrants | Issue Date | Shares | Exercise | Expiration | Refer-ence | ||||
Issuable upon Exercise of | Price | Date | |||||||
Warrants | |||||||||
Series N | 8/18/08 | 2,844,627 | 0.53 | 8/18/15 | 1 | ||||
Series A | 6/24/09 | 130,347 | 5 | 12/24/14 | 1 | ||||
Schleuning (Series A) | 7/8/09 | 16,750 | 5 | 1/8/15 | 1 | ||||
Series B | 9/4/09 | - | 6.8 | 9/4/14 | 1 | ||||
Series C | 8/20/09 – 8/26/09 | 463,487 | 5.5 | 2/20/15 | 1 | ||||
Series E | 9/21/09 | - | 17.5 | 8/12/14 | 1 | ||||
Series F | 10/6/11 | 1,200,000 | 4 | 10/6/14 | 1 | ||||
Series G | 10/6/11 | - | 4 | 8/12/14 | 1 | ||||
Series H | 1/26/12 | 1,200,000 | 5 | 8/1/15 | 1 | ||||
Series Q | 6/21/12 | 1,200,000 | 5 | 12/22/15 | 1 | ||||
Series R | 12/6/12 | 2,625,000 | 4 | 12/6/16 | 1 | ||||
Series S | 10/11/13-12/24/13 | 23,624,326 | 1.25 | 10/11/18 | 1 | ||||
Series T | 4/17/14 | 1,782,057 | 1.58 | 10/17/14 | 1 | ||||
Series U | 4/17/14 | 445,514 | 1.75 | 10/17/17 | 1 | ||||
Series L | 4/18/07 | - | 7.5 | 4/17/14 | 2 | ||||
Series L (repriced) | 4/18/07 | 70,000 | 2.5 | 4/2/15 | 2 | ||||
Series P | 2/10/12 | 590,001 | 4.50 | 3/6/17 | 3 | ||||
Private Investor | 7/18/05 | - | 6.5 | 7/18/14 | 4 | ||||
Warrants held by Officer and Director | 6/24/09 – 7/6/09 | 349,754 | 4.00 – 5.00 | 12/24/14 – 1/6/15 | 5 | ||||
Consultants | 2/15/05 – 4/25/14 | 149,500 | 0.85 – 20.00 | 2/15/15 - 12/27/17 | 6 | ||||
1 | Derivative Liabilities | ||||||||
The table below presents the derivative instruments and their respective balances at September 30. | |||||||||
2014 | 2013 | ||||||||
Series N warrants | $ | - | $ | 41,501 | |||||
Series A through E warrants | 6,105 | 6,106 | |||||||
Series F and G warrants | - | 12,667 | |||||||
Series H warrants | 12,000 | 36,000 | |||||||
Series Q warrants | 12,000 | 48,000 | |||||||
Series R warrants | 157,500 | 288,750 | |||||||
Series S warrants | 5,197,352 | - | |||||||
Series T warrants | - | - | |||||||
Series U warrants | 120,289 | - | |||||||
Total derivative liabilities | $ | 5,505,246 | $ | 433,024 | |||||
The Company reviews all outstanding warrants in accordance with the requirements of ASC 815. This topic provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. The warrant agreements provide for adjustments to the exercise price for certain dilutive events. Under the provisions of ASC 815, the warrants are not considered indexed to the Company’s stock because future equity offerings or sales of the Company’s stock are not an input to the fair value of a “fixed-for-fixed” option on equity shares, and equity classification is therefore precluded. | |||||||||
In accordance with ASC 815, derivative liabilities must be measured at fair value upon issuance and re-valued at the end of each reporting period through expiration. Any change in fair value between the respective reporting periods is recognized as a gain or loss in the statement of operations. | |||||||||
Series N Warrants | |||||||||
In August 2008, CEL-SCI sold 138,339 shares of common stock and 207,508 Series N warrants in a private financing for $1,037,500. In June 2009, an additional 116,667 shares and 181,570 Series N warrants were issued to the investors. In October 2011, the outstanding 389,078 Series N warrants issued were reset from $4.00 to $3.00. In addition, the investors were issued 129,693 warrants exercisable at $3.00 per share at an initial cost of $220,478. | |||||||||
On October 11, 2013 and December 24, 2013, in connection with public offerings of common stock on those dates, the Company reset the exercise price from $3.00 to $0.53 and issued the Series N warrant holders 2,432,649 additional warrants exercisable at $0.53 as required by the warrant agreements. In January 2014, the Company offered the investors the option to extend the Series N warrants by one year and allow for cashless exercise, in exchange for cancelling the reset provision in the warrant agreement. One of the investors with 2,844,627 warrants accepted this offer. Accordingly, these warrants are no longer considered a derivative liability due to the cancelation of the reset provision. The fair value of the warrants on that date totaled $1,308,528 and was reclassified from derivative liabilities to additional paid-in capital. On March 21, 2014, the other investor exercised 106,793 Series N Warrants. The Company received cash proceeds of $7,424 for 14,078 of the warrants exercised. The remaining 92,715 warrants were exercised in a cashless exercise. The fair value of the warrants on the date of exercise was $137,000 and was reclassified from derivative liabilities to additional paid-in capital. | |||||||||
In addition, the October and December 2013 financings triggered the reset provision included in the August 2008 financing which resulted in the issuance of an additional 1,563,083 shares of common stock. The cost of additional shares issued was $1,117,447. This cost was recorded as a debit and a credit to additional paid-in capital and was deemed a dividend. | |||||||||
As of September 30, 2014, the remaining 2,844,627 Series N warrants entitle the holders to purchase one share of the Company's common stock at a price of $0.53 per share at any time prior to August 18, 2015. On September 30, 2014, no derivative liability was recorded because the warrants no longer were considered a liability for accounting purposes. On September 30, 2013, the value of the Series N warrants was $41,501. During the year ended September 30, 2014, the Company recorded a loss of $1,404,027 on the Series N warrants. During the years ended September 30, 2013 and 2012, the Company recorded a gain of $788,533 and $207,507, respectively, on Series N warrants. On October 28, 2014, the remaining Series N warrants were transferred to the de Clara Trust, of which the Company’s CEO, Geert Kersten, is the Trustee and a beneficiary. | |||||||||
Series K and Series A through E Warrants | |||||||||
The Company accounted for the Series K and A through E Warrants as derivative liabilities in accordance with ASC 815. These warrants do not qualify for equity accounting and must be accounted for as derivative liabilities since the warrant agreements provide the holder with the right, at its option, to require the Company to a cash settlement of the warrants at Black-Scholes value in the event of a Fundamental Transaction, as defined in the warrant agreement. Since the occurrence of a Fundamental Transaction is not entirely within the Company’s control, there exist circumstances that would require net-cash settlement of the warrants while holders of shares would not receive a cash settlement. | |||||||||
In October 2011, 231,840 warrants held by the investors were reset from $4.00 to $3.00. In addition, the investors were issued 77,280 warrants exercisable at $3.00 per share at an initial cost of $30,912. This cost was accounted for as a debit to loss on derivatives and a credit to derivative liabilities. | |||||||||
In February 2012, all Series K warrants were exercised, and the Company received $927,359 from the exercise of Series K warrants to purchase 309,120 of the Company’s common shares. When the warrants were exercised, the value of the warrants, or $122,367, was converted from derivative liabilities to equity. During the year ended September 30, 2012, the Company recorded a loss of $21,903 from the exercise and mark to market on the remaining Series K warrants. As of September 30, 2012, all Series K warrants had been exercised and no liability was recorded. | |||||||||
In June 2009, the Company issued 1,011,656 Series A warrants exercisable at $5.00 per share in connection with a financing. The cost of the warrants of $2,775,021 was recorded as a debit to additional paid-in capital and a credit to derivative liabilities. As of September 30, 2014, 130,347 of these warrants remained outstanding. As of September 30, 2014 and 2013, the fair value of these derivative liabilities was $1,303. | |||||||||
In July 2009, the Company issued 16,750 warrants to a private investor. The warrants were issued with an exercise price of $5.00 per share and valued at $43,550 using the Black Scholes method. The cost of the warrants was accounted for as a debit to additional paid-in capital and a credit to derivative liabilities. As of September 30, 2014, 16,750 warrants remained outstanding. As of September 30, 2014 and 2013, the fair value of these derivative liabilities was $167 and $168, respectively. | |||||||||
In connection with a loan received and fully repaid in a prior period, the Company issued 50,000 Series B warrants with an exercise price of $6.80 per share. On September 4, 2014, all outstanding Series B warrants expired. As of September 30, 2014, no Series B warrants remained outstanding. As of September 30, 2013, the fair value of the Series B warrants was $0. | |||||||||
In connection with an August 2009 financing, the Company issued 539,222 Series C warrants exercisable at $5.50 per share. As of September 30, 2014, 463,487 of these warrants remained outstanding. As of September 30, 2014 and 2013, the fair value of the Series C warrants was $4,635. | |||||||||
In September 2009, 71,428 Series E warrants were issued to the placement agent in connection with a financing, with an exercise price of $17.50 per share. On August 12, 2014, all outstanding Series E warrants expired. As of September 30, 2014, no Series E warrants remained outstanding. As of September 30, 2013, the fair value of the Series E warrants was $0. | |||||||||
During the years ended September 30, 2014, 2013 and 2012, the Company recorded a gain of $1, $780,883, and $588,469, respectively, on the Series A through E warrants. | |||||||||
Series F and G warrants | |||||||||
In October 2011, in connection with a financing, the Company issued 1,200,000 Series F warrants exercisable at $4.00 per share at any time prior to October 6, 2014. The Company also issued 66,667 Series G warrants exercisable at $4.00 per share to the placement agent for this offering. The initial cost of the warrants of $2,146,667 was recorded as a debit to additional paid-in capital and a credit to derivative liabilities. On August 12, 2014, all outstanding Series G warrants expired. As of September 30, 2014, 1,200,000 Series F warrants and no Series G warrants remained outstanding. As of September 30, 2014, the fair value of the Series F warrants was $0. As of September 30, 2013, the fair value of the Series F and G warrants was $12,000 and $667, respectively. During the years ended September 30, 2014, 2013 and 2012, the Company recorded a gain of $12,667, $1,634,000, and $500,000 respectively, on the Series F and G warrants. On October 6, 2014, all of the Series F warrants expired. | |||||||||
Series H Warrants | |||||||||
In January 2012, in connection with a financing, the Company issued 1,200,000 Series H warrants exercisable at $5.00 per share at any time prior to August 1, 2015. The initial cost of the warrants of $2,400,000 was recorded as a debit to additional paid-in capital and a credit to derivative liabilities. As of September 30, 2014, 1,200,000 Series H warrants remained outstanding. As of September 30, 2014 and 2013, the fair value of the warrants was $12,000 and $36,000, respectively. During the years ended September 30, 2014, 2013 and 2012, the Company recorded a gain of $24,000, $1,764,000 and $600,000, respectively, on the Series H warrants. | |||||||||
Series Q Warrants | |||||||||
In June 2012, in connection with a financing, the Company issued 1,200,000 Series Q warrants exercisable at $5.00 per share at any time prior to December 22, 2015. The initial cost of the warrants of $2,160,000 was recorded as a debit to additional paid-in capital and a credit to derivative liabilities. As of September 30, 2014, 1,200,000 Series Q warrants remained outstanding. As of September 30, 2014 and 2013, the fair value of the warrants was $12,000 and $48,000, respectively. During the years ended September 30, 2014, 2013 and 2012, the Company recorded a gain of $36,000, $1,872,000 and $240,000, respectively, on the Series Q warrants. | |||||||||
Series R Warrants | |||||||||
On December 4, 2012, the Company sold 3,500,000 shares of its common stock for $10,500,000, or $3.00 per share, in a registered direct offering. The investors in this offering also received Series R warrants which entitle the investors to purchase up to 2,625,000 shares of the Company’s common stock. The Series R warrants may be exercised at any time before December 6, 2016 at a price of $4.00 per share. The initial cost of the warrants of $4,200,000 was recorded as a debit to additional paid-in capital and a credit to derivative liabilities. As of September 30, 2014, 2,625,000 Series R warrants remained outstanding. As of September 30, 2014 and 2013, the fair value of the Series R warrants was $157,500 and $288,750, respectively. During the years ended September 30, 2014 and 2013, the Company recorded a gain of $131,250 and $3,911,250, respectively, on the Series R warrants. | |||||||||
Series S Warrants | |||||||||
On October 11, 2013, the Company closed a public offering of 17,826,087 units of common stock and warrants at a price of $1.00 per unit for net proceeds of $16,400,000, net of underwriting discounts and commissions and offering expenses of the Company. Each unit consisted of one share of common stock and one Series S warrant to purchase one share of common stock. The Series S warrants are immediately exercisable, expire on October 11, 2018, and have an exercise price of $1.25. In November 2013, the underwriters purchased an additional 2,648,913 warrants pursuant to the overallotment option, for which the Company received net proceeds of $24,370. | |||||||||
On December 24, 2013, the Company closed a public offering of 4,761,905 units of common stock and warrants at a price of $0.63 per unit for net proceeds of $2,790,000, net of underwriting discounts and commissions and offering expenses of the Company. Each unit consisted of one share of common stock and one Series S warrant to purchase one share of common stock. The Series S warrants were immediately exercisable, expire on October 11, 2018, and have an exercise price of $1.25. The underwriters purchased an additional 476,190 units of common stock and warrants pursuant to the overallotment option, for which the Company received net proceeds of approximately $279,000. The initial cost of the S warrants of $7,321,071 was recorded as a debit to additional paid-in capital and a credit to derivative liabilities. | |||||||||
On February 7, 2014, the Series S warrants began trading on the New York Stock Exchange. During the year ended September 30, 2014, 2,088,769 Series S Warrants had been exercised at a price of $1.25, and the Company received proceeds of $2,610,961. The fair value of the warrants on the date of exercise was $1,024,932. As of September 30, 2014, the remaining 23,624,326 Series S warrants entitle the holders to purchase one share of the Company's common stock at a price of $1.25 per share. | |||||||||
As of September 30, 2014, the fair value of the Series S warrants was $5,197,352. During the year ended September 30, 2014, the Company recorded a gain of $1,098,787 on the Series S warrants. | |||||||||
Series T and U Warrants | |||||||||
On April 17, 2014, the Company closed a public offering of 7,128,229 shares of common stock at a price of $1.40 and 1,782,057 Series T warrants to purchase one share of common stock for net proceeds of $9,230,000, net of underwriting commissions and offering expenses. The Series T warrants are immediately exercisable, expire on October 17, 2014, and have an exercise price of $1.58. The underwriters received 445,514 Series U warrants to purchase one share of common stock. The Series U warrants are exercisable beginning October 17, 2014, expire on October 17, 2017, and have an exercise price of $1.75. The initial cost of the Series T and U warrants of $470,377 was recorded as a debit to additional paid-in capital and a credit to derivative liabilities. | |||||||||
As of September 30, 2014, the fair value of the Series T and U warrants was $120,289. During the year ended September 30, 2014, the Company recorded a gain of $350,088, on the Series T and U warrants. On October 17, 2014, all of the Series T warrants expired. | |||||||||
Senior Convertible Notes and Redeemable Series A Convertible Preferred Stock | |||||||||
In March 2012, the Company repaid the remaining Senior Secured Convertible Notes derived from the settlement, thereby completely eliminating the Senior Secured Convertible Notes, satisfying the settlement and having the lien on the Company’s assets removed. | |||||||||
The accounting for the Senior Secured Convertible Notes was within the scope of ASC 815. Under ASC 815 or ASC 825,”Financial Instruments,” the Company may make an irrevocable election to initially and subsequently measure a hybrid financial instrument in its entirety at fair value. Any change in fair value between the respective reporting dates is recognized as a gain or loss. Based on the analysis of the Senior Secured Convertible Notes, the Company identified several embedded derivative features. The Company elected, in accordance with ASC 825, to initially and subsequently carry the instrument at fair value without bi-furcating the embedded derivatives. For the year ended September 30, 2012, the Company recorded a gain of $49,000 on the Senior Secured Convertible Notes. | |||||||||
2 | Series L and M Warrants | ||||||||
In April 2007, the Company completed a $15 million private financing. Shares were sold at $7.50, a premium over the closing price of the previous two weeks. The financing was accompanied by 1,000,000 warrants with an exercise price of $7.50 and 1,000,000 warrants with an exercise price of $20.00. The warrants are known as Series L and Series M warrants, respectively. The warrants issued with the financing qualified for equity treatment in accordance with ASC 815. The cost of Series L and Series M warrants were recorded as a debit and a credit to additional paid-in capital. In June 2012, 10,167 Series L warrants with an exercise price of $7.50 per share, expired. | |||||||||
In November 2011, the Company reduced the exercise price of 160,000 Series L warrants to $3.40. The additional cost of $86,826 was recorded as a debit and a credit to additional paid-in capital and was a deemed dividend. This cost is included in modification of warrants and increased the net loss available to shareholders on the statement of operations. In March 2012, 60,000 Series L warrants were exercised at a price of $3.40, and the Company received proceeds of $204,000. | |||||||||
In April 2012, 25,000 Series L warrants exercisable at a price of $7.50 per share were transferred to a consultant and were extended for two years from the current expiration date. The additional value of $43,910 was accounted for as a credit to additional paid-in capital and a debit to general and administrative expense. On April 17, 2014, the 25,000 Series L warrants expired. In April 2013, 100,000 Series L warrants were repriced to $2.50 per share and were extended for two years to April 2, 2015 in return for a reduction in outstanding warrants to 70,000. The additional cost of $59,531 was recorded as a debit and a credit to additional paid-in capital and was a deemed dividend. This cost was included in modification of warrants and increased the net loss available to shareholders on the statements of operations. As of September 30, 2014, 70,000 of the Series L warrants at the reduced exercise price of $2.50 remained outstanding. | |||||||||
In November 2011, the Company reduced the exercise price of 600,000 Series M warrants from $6.00 to $3.40. The additional cost of $238,794 was recorded as a debit and a credit to additional paid-capital and was a deemed dividend. This cost is included in modification of warrants and increased the net loss available to shareholders on the statement of operations. | |||||||||
In October 2013, the Company reduced the exercise prices of the Series M warrants from $3.40 to $1.00 in exchange for a reduction in the number of warrants from 600,000 to 500,000. The additional cost of $76,991 was recorded as non-employee stock compensation expense. In March 2014, 500,000 Series M warrants were exercised at a price of $1.00, and the Company received proceeds of $500,000. As of September 30, 2014, no Series M warrants remained outstanding. | |||||||||
3. Series O and P Warrants | |||||||||
In March 2009, as further consideration for its rights under a licensing agreement, Byron Biopharma LLC (“Byron”) purchased 375,000 Units from the Company at a price of $2.00 per Unit. Each Unit consisted of one share of the Company’s common stock and two Series O warrants. During the year ended September 30, 2012, all 650,000 of the outstanding Series O warrants were exercised. There were no Series O warrants outstanding at September 30, 2012. | |||||||||
On February 10, 2012, the Company issued 590,001 Series P warrants to the former holder of the Series O warrants as an inducement for the early exercise of the Series O warrants. Series O warrants entitled the holder to purchase 590,001 shares of the Company’s common stock at a price of $2.50 per share at any time on or prior to March 6, 2016. The Series P warrants allow the holder to purchase up to 590,001 shares of the Company’s common stock at a price of $4.50 per share. The Series P warrants are exercisable at any time prior to March 6, 2017. The warrants were accounted for as an equity transaction using the Black-Scholes method to value the warrants. The fair value of the warrants was calculated to be $1,593,000. This cost was recorded as a debit and a credit to additional paid-in capital. This cost is included in inducement warrants and increased the net loss available to shareholders on the statement of operations. As of September 30, 2014, 590,001 Series P warrants remained outstanding. | |||||||||
4 | Private Investor Warrants | ||||||||
In February 2011, 132,500 warrants issued to a private investor with exercise prices between $5.60 and $8.20 were extended for three years. Between February and August 2014, all 132,500 outstanding warrants expired. As of September 30, 2014, no warrants remained outstanding. | |||||||||
On January 26, 2014, 608,438 warrants issued to the lessor of the Company’s manufacturing facility, priced at $7.50 per share, expired. As of September 30, 2014, no warrants relating to the facilities lease remained outstanding. | |||||||||
5 | Warrants held by Officer and Director | ||||||||
Between December 2008 and June 2009, Maximilian de Clara, the Company’s President and a director, loaned the Company $1,104,057 under a note payable. In June 2009, the Company issued 164,824 warrants, exercisable at $4.00 per share, to Mr. de Clara. The warrants are exercisable at any time prior to December 24, 2014. These warrants were valued at $65,796 using the Black-Scholes method. In July 2009, as consideration for a further extension of the loan, the Company issued 184,930 warrants exercisable at $5.00 per share to Mr. de Clara. These warrants were valued at $341,454 using the Black-Scholes method and can be exercised at any time prior to January 6, 2015. The first warrants were recorded as a discount to the loan and a credit to additional paid-in capital. The second warrants were recorded as a debit to derivative loss of $831,230, a premium of $341,454 on the loan and a credit to additional paid-in capital of $489,776. The warrants and premium are fully amortized. As of September 30, 2014, 349,754 warrants remained outstanding (Note 10). In August 2014, the loan and warrants were transferred to the de Clara Trust, of which the Company’s CEO, Geert Kersten, is the Trustee and a beneficiary. | |||||||||
6 | Options and Shares Issued to Consultants | ||||||||
As of September 30, 2014, 149,500 options that were issued to consultants as payment for services remained outstanding, of which 140,000 options were issued from the Non-Qualified Stock Option plans. During the year ended September 30, 2014 and 2013, 71,250 and 3,000 options previously issued to a consultant from the Non-Qualified Stock Option plans expired, respectively. | |||||||||
In December 2011, 5,000 options were issued to a consultant with an exercise price of $3.00 which vested immediately and expire on December 1, 2016. The cost of these options was $10,211 calculated using the Black-Scholes method and was accounted for as a credit to additional paid-in capital and a debit to general and administrative expense. | |||||||||
In March 2012, 5,000 options were issued to a consultant with an exercise price of $3.50 which vested immediately and expire on March 5, 2017. The cost of these options was $12,037 calculated using the Black-Scholes method and was accounted for as a credit to additional paid-in capital and a debit to general and administrative expense. | |||||||||
In April 2012, 7,000 options issued to a consultant with exercise prices between $6.30 and $7.00 were extended for two years from the current expiration date. The additional value of $10,879 was accounted for as a credit to additional paid-in capital and a debit to general and administrative expense. During the year ended September 30, 2014, the 7,000 options expired. | |||||||||
On October 15, 2013, the Company entered into a consulting agreement for services to be provided through October 14, 2014. In consideration for services provided, the Company issued the consultant 100,000 restricted shares in three installments – 34,000 upon signing, 33,000 on January 15, 2014, and 33,000 on March 14, 2014. The aggregate fair market value of the 100,000 restricted shares of $108,710 was recorded as a prepaid expense and is being charged to general and administrative expense over the period of service. During the year ended September 30, 2014, the Company recorded $104,540 in consulting expense. At September 30, 2014, $4,170 is included in prepaid expenses. | |||||||||
On October 20, 2013, the Company entered into a consulting agreement for services to be provided through October 19, 2016. In consideration for services provided, the Company agreed to issue the consultant 34,164 restricted shares each month of the agreement, with the first three month issued in advance. During the year ended September 30, 2014, the Company issued the consultant a total of 409,968 shares of restricted stock at the fair market value on the dates of issuance. The aggregate fair market value of $439,008 was recorded as a prepaid expense and is being charged to general and administrative expense over the period of service. The Company had previously entered into a one year consulting agreement with this same consultant for services to be provided through December 27, 2013. In consideration for the services to be provided under that earlier agreement, the Company issued the consultant 50,000 shares of common stock and 50,000 options to purchase common stock at a price of $2.80 per share. The common shares were issued at the fair market value on the agreement date of $2.80. The aggregate fair market value of $140,000 was recorded as a prepaid expense and was charged to general and administrative expense over the period of service. The fair value of the options issued, as calculated using the Black-Scholes method, was determined to be $98,150 and was also charged to general and administrative expense over the period of service. During the years ended September 30, 2014 and 2013, the Company recorded expense of $474,263 and $180,597 for services provided by this consultant, respectively. | |||||||||
On October 28, 2013, the Company entered into a consulting agreement for services to be provided through April 27, 2014. In consideration for services provided, the Company granted the consultant 60,000 options to purchase common stock at a price of $0.85 per share. The fair value of the options issued, as calculated using the Black-Scholes method, was determined to be $24,294 and was charged to general and administrative expense over the period of service. | |||||||||
On December 1, 2013, the Company extended an agreement with a public relations consultant through December 1, 2014. In consideration for services provided, the Company agreed to continue to issue the consultant a monthly retainer of 5,000 shares of restricted stock. In addition, the consultant received an additional 20,000 shares of restricted stock for meeting certain performance requirements. During the years ended September 30, 2014 and 2013, respectively, the Company issued the consultant 70,000 and 60,000 restricted shares of common stock at the fair market value on the grant dates, for an aggregate fair market value of $79,400 and $161,500, respectively which was recorded as a general and administrative expense. | |||||||||
On April 25, 2014, the Company entered into a consulting agreement for services to be provided through August 25, 2014. In consideration for services provided, the Company granted the consultant 20,000 options to purchase common stock at a price of $1.22 per share. The fair value of the options issued, as calculated using the Black-Scholes method, was determined to be $12,458 and was charged to general and administrative expense over the period of service. | |||||||||
During the years ended September 30, 2014 and 2013, the Company recorded total expense of $694,955 and $342,097 relating to these consulting arrangements. As of September 30, 2014 and 2013, the Company recorded $26,468 and $57,553, respectively, in prepaid consulting expenses. |
3_OPERATIONS_FINANCING
3. OPERATIONS, FINANCING | 12 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | |
3. OPERATIONS, FINANCING | 3. OPERATIONS AND FINANCING |
The Company has incurred significant costs since its inception in connection with the acquisition of certain patented and unpatented proprietary technology and know-how relating to the human immunological defense system, patent applications, research and development, administrative costs, construction of laboratory facilities, and clinical trials. The Company has funded such costs with proceeds from loans and the public and private sale of its common and preferred stock. The Company will be required to raise additional capital or find additional long-term financing in order to continue with its research efforts. To date, the Company has not generated any revenue from product sales. The ability of the Company to complete the necessary clinical trials and obtain Federal Drug Administration (FDA) approval for the sale of products to be developed on a commercial basis is uncertain. Ultimately, the Company must complete the development of its products, obtain the appropriate regulatory approvals and obtain sufficient revenues to support its cost structure. | |
The Company is currently running a large multi-national Phase III clinical trial for head and neck cancer. The Company believes that it has enough capital to support its operations for more than the next twelve months as it believes that it has ready access to new equity capital should the need arise. During fiscal year 2013, the Company raised $9.8 million net proceeds from several institutional investors. During fiscal year 2014, the Company raised approximately $31.5 million in net proceeds through the sale of common stock and warrants in three public offerings and from the exercise of previously issued warrants. In October 2014, the Company raised approximately $6.4 million in net proceeds through the sale of common stock and warrants in a public and a registered direct offering. To finance the study beyond the next 12 months, the Company plans to raise additional capital in the form of corporate partnerships, debt and/or equity financings. The Company believes that it will be able to obtain additional financing because it has done so consistently in the past, and because Multikine is a product in the Phase III trial stage. However, there can be no assurance that the Company will be successful in raising additional funds or that funds will be available to the Company on acceptable terms or at all. If the Company does not raise the necessary amounts of money, the Company will either have to slow down or delay the Phase III clinical trial or even significantly curtail its operations until such time as it is able to raise the required funding. | |
Since the Company launched its Phase III trial for Multikine, the Company has spent approximately $16,400,000 as of September 30, 2014 on direct costs for the Phase III clinical trial. The total remaining cash cost of the clinical trial is estimated to be approximately $28,200,000. It should be noted that this estimate is based only on the information currently available in the Company’s contracts with the Clinical Research Organizations responsible for managing the Phase III trial. This number can be affected by the speed of enrollment, foreign currency exchange rates and many other factors, some of which cannot be foreseen today. It is therefore possible that the cost of the Phase III trial will be higher than currently estimated. |
4_RESEARCH_AND_OFFICE_EQUIPMEN
4. RESEARCH AND OFFICE EQUIPMENT | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | |||||||||
4. RESEARCH AND OFFICE EQUIPMENT | 4. RESEARCH AND OFFICE EQUIPMENT | ||||||||
Research and office equipment consisted of the following at September 30: | |||||||||
2014 | 2013 | ||||||||
Research equipment | $ | 3,230,882 | $ | 3,184,779 | |||||
Furniture and equipment | 141,269 | 139,992 | |||||||
Leasehold improvements | 131,910 | 131,910 | |||||||
3,504,061 | 3,456,681 | ||||||||
Less: Accumulated depreciation and amortization | (3,101,057 | ) | (2,967,345 | ) | |||||
Net research and office equipment | $ | 403,004 | $ | 489,336 | |||||
Depreciation expense for the years ended September 30, 2014, 2013 and 2012 totaled $188,967, $275,917 and $447,171, respectively. During the years ended September 30, 2014, 2013 and 2012, equipment with a net book value of $268, $4,350 and $9,399, respectively, was retired. |
5_PATENTS
5. PATENTS | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Accounting Policies [Abstract] | |||||||||
5. PATENTS | 5. PATENTS | ||||||||
Patents consisted of the following at September 30: | |||||||||
2014 | 2013 | ||||||||
Patents | $ | 1,517,344 | $ | 1,470,047 | |||||
Accumulated amortization | (1,193,756 | ) | (1,151,852 | ) | |||||
Net Patents | $ | 323,588 | $ | 318,195 | |||||
During the years ended September 30, 2014, 2013 and 2012, the Company recorded patent impairment charges of $1,182, $22,628 and $44,921, respectively, for the net book value of patents abandoned during the year. These amounts are included in general and administrative expenses. Amortization expense for the years ended September 30, 2014, 2013 and 2012 totaled $42,785, $88,207 and $86,297, respectively. The total estimated future amortization is as follows: | |||||||||
Year ending September 30, | |||||||||
2015 | $ | 36,051 | |||||||
2016 | 36,051 | ||||||||
2017 | 36,051 | ||||||||
2018 | 35,716 | ||||||||
2019 | 34,014 | ||||||||
Thereafter | 145,705 | ||||||||
$ | 323,588 |
6_INCOME_TAXES
6. INCOME TAXES | 12 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||
6. INCOME TAXES | 6. INCOME TAXES | ||||||||||||
At September 30, 2014, the Company had a federal net operating loss carryforward of approximately $141 million, which begins to expire during the fiscal year ended in 2018 and is fully expired by the end of the fiscal year ended 2034. In addition, the Company has a general business credit as a result of the credit for increasing research activities (“R&D credit”) of approximately $1.2 million at September 30, 2014, which begins to expire during the fiscal year ended 2020 and is fully expired during the fiscal year ended 2029. At September 30, 2013, the Company had a federal net operating loss carryforward of approximately $130 million and an R&D credit of approximately $1.2 million. Deferred taxes at September 30 consisted of the following: | |||||||||||||
2014 | 2013 | ||||||||||||
Net operating loss carryforwards | $ | 55,229,799 | $ | 50,485,248 | |||||||||
R&D credit | 1,221,487 | 1,221,487 | |||||||||||
Stock-based compensation | 4,054,450 | 3,323,353 | |||||||||||
Fixed assets and intangibles | 26,329 | - | |||||||||||
Capitalized R&D | 9,897,041 | 5,542,816 | |||||||||||
Vacation and other | 108,891 | 270,121 | |||||||||||
Total deferred tax assets | 70,537,997 | 60,843,025 | |||||||||||
Fixed assets and intangibles | - | (1,968 | ) | ||||||||||
Total deferred tax liabilities | - | (1,968 | ) | ||||||||||
Valuation allowance | (70,537,997 | ) | (60,841,057 | ) | |||||||||
Net deferred tax asset | $ | - | $ | - | |||||||||
In assessing the realization of deferred tax assets, management considered whether it was more likely than not that some, or all, of the deferred tax asset will be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income. Management has considered the history of the Company’s operating losses and believes that the realization of the benefit of the deferred tax assets cannot be reasonably assured. In addition, under Internal Revenue Code Section 382, the Company’s ability to utilize these net operating loss carryforwards may be limited or eliminated in the event of future changes in ownership. | |||||||||||||
Certain net deferred tax liabilities at September 30, 2013, totaling approximately $6.3 million were reversed, with the offsetting adjustment increasing deferred tax allowances. These adjustments had no effect on the Company’s financial position or operating results. | |||||||||||||
The Company has no federal or state current or deferred tax expense or benefit. The Company’s effective tax rate differs from the applicable federal statutory tax rate. The reconciliation of these rates for the three years ended September 30, 2014 is as follows: | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Federal Rate | 34 | % | 34 | % | 34 | % | |||||||
State tax rate, net of federal benefit | 5.15 | 4.97 | 5.21 | ||||||||||
State tax rate change | 0.93 | (3.77 | ) | 18.07 | |||||||||
Other adjustments | 0 | 0 | (0.53 | ) | |||||||||
Expired tax attributes | 0 | (87.87 | ) | (33.54 | ) | ||||||||
Adjustment to deferreds | 19.13 | 14.3 | 0 | ||||||||||
Permanent differences | (0.43 | ) | (1.59 | ) | (0.68 | ) | |||||||
Change in valuation allowance | (58.78 | ) | 39.96 | (23.53 | ) | ||||||||
Effective tax rate | 0 | % | 0 | % | 0 | % | |||||||
The Company applies the provisions of ASC 740, “Accounting for Uncertainty in Income Taxes,” which requires financial statement benefits to be recognized for positions taken for tax return purposes when it is more likely than not that the position will be sustained. The Company has elected to reflect any tax penalties or interest resulting from tax assessments on uncertain tax positions as a component of tax expense. The tax return years 2009 through 2013 remain open to examination by the major domestic taxing jurisdictions to which the Company is subject. |
7_STOCK_COMPENSATION
7. STOCK COMPENSATION | 12 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||
7. STOCK COMPENSATION | 7. STOCK COMPENSATION | ||||||||||||
The Company awarded employees and non-employees with stock compensation as follows: | |||||||||||||
Fiscal Year Ended September 30, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Employees | $ | 3,958,637 | $ | 2,636,905 | $ | 2,266,316 | |||||||
Non-employees | $ | 771,946 | $ | 454,855 | $ | 581,996 | |||||||
During the years ended September 30, 2014, 2013 and 2012, non-employee compensation excluded $26,468, $57,553 and $53,333, respectively, for future services to be performed (Note 11). | |||||||||||||
During the years ended September 30, 2014, 2013 and 2012, the Company recognized expense of $3,958,637, $2,636,905 and $2,229,326, respectively, for options issued or vested and restricted stock awarded during the year. This expense was recorded as general and administrative expense. No options were exercised during the years ended September 30, 2014, 2013 and 2012. No restricted shares vested during the year ended September 30, 2014. | |||||||||||||
During the year ended September 30, 2014, the Company issued 1,643,240 stock options to employees and directors at a fair value of $1,518,862, ($0.92 fair value per option). During the year ended September 30, 2013, the Company issued 1,809,387 stock options to employees and directors at a fair value of $3,652,630, ($2.02 fair value per option). During the year ended September 30, 2012, the Company issued 667,937 stock options to employees and directors at a fair value of $1,876,122, ($2.80 fair value per option) and also cancelled 390,047 stock options that were outstanding to employees and directors at a fair value of $265,096, ($0.68 fair value per option). On September 30, 2014, the Company had 3,387,265 options that were unvested at a fair value of $7,288,244, which is a weighted average fair value of $2.15 per share with a weighted average remaining vesting life of 1.87 years. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions. | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Expected stock price volatility | 72.81 – 86.87% | 84.41-92.28% | 87.72-94.93% | ||||||||||
Risk-free interest rate | 0.59 – 2.65% | 0.75-2.73% | 0.83-1.92% | ||||||||||
Expected life of options | 3.0 – 9.76 Years | 4.85-9.77 Years | 4.82-9.66 Years | ||||||||||
Expected dividend yield | - | - | - | ||||||||||
Non-Qualified Stock Option Plan--At September 30, 2014, the Company has collectively authorized the issuance of 5,680,000 shares of common stock under its Non-Qualified Stock Option Plan. Options typically vest over a three-year period and expire no later than ten years after the grant date. Terms of the options are to be determined by the Company’s Compensation Committee, which administers the plans. The Company’s employees, directors, officers, and consultants or advisors are eligible to be granted options under the Non-Qualified Stock Option Plans. | |||||||||||||
Incentive Stock Option Plan--At September 30, 2014, the Company had collectively authorized the issuance of 1,960,000 shares of common stock under its Incentive Stock Option Plan. Options typically vest over a three-year period and expire no later than ten years after the grant date. Terms of the options were determined by the Company’s Compensation Committee, which administers the plans. Only the Company’s employees are eligible to be granted options under the Incentive Stock Option Plans. | |||||||||||||
Activity in the Company’s Non-Qualified and Incentive Stock Option Plans for the year ended September 30, 2014 is summarized as follows: | |||||||||||||
Non-Qualified and Incentive Stock Option Plans | |||||||||||||
Outstanding | Exercisable | ||||||||||||
Weighted | Weighted | ||||||||||||
Weighted | Ave | Aggregate | Weighted | Ave | Aggregate | ||||||||
Number of | Average | Remaining Contractual | Intrinsic | Number of | Average | Remaining Contractual | Intrinsic | ||||||
Shares | Exercise Price | Term (Years) | Value | Shares | Exercise Price | Term (Years) | Value | ||||||
Outstanding at October 1, 2013 | 5,188,141 | $3.62 | 6.53 | $133 | 2,422,997 | $4.00 | 4.95 | $133 | |||||
Vested | 1,094,803 | $2.14 | |||||||||||
Granted (a) | 1,723,240 | $1.09 | |||||||||||
Exercised | |||||||||||||
Forfeited | 6,316 | $1.60 | |||||||||||
Expired | 73,916 | $4.29 | 73,916 | $4.29 | |||||||||
Cancelled | |||||||||||||
Outstanding at September 30, 2014 | 6,831,149 | $2.98 | 6.55 | $3,600 | 3,443,884 | $3.40 | 5.49 | $3,600 | |||||
(a) | During the year ending September 30, 2014, 80,000 stock options were granted to consultants. | ||||||||||||
A summary of the status of the Company’s non-vested options for the year ended September 30, 2014 is presented below: | |||||||||||||
Weighted Average | |||||||||||||
Number of | Grant Date | ||||||||||||
Shares | Fair Value | ||||||||||||
Unvested at October 1, 2012 | 1,649,063 | $ | 3.6 | ||||||||||
Vested | (729,087 | ) | |||||||||||
Granted | 1,859,387 | ||||||||||||
Forfeited | (14,219 | ) | |||||||||||
Unvested at October 1, 2013 | 2,765,144 | $ | 2.79 | ||||||||||
Vested | (1,094,803 | ) | |||||||||||
Granted | 1,723,240 | ||||||||||||
Forfeited | (6,316 | ) | |||||||||||
Unvested at September 30, 2014 | 3,387,265 | $ | 2.15 | ||||||||||
In November 2011, the Company modified the number of options issued to certain employees and directors, as well as the exercise prices and the expiration dates of the options. This resulted in the cancellation of 390,047 options priced between $5.40 and $19.40 and the issuance of 312,037 options at $3.20. In accordance with ASC 718, the incremental compensation cost was $409,370 and amortized over the remaining service period. | |||||||||||||
In December 2011, the Company extended the expiration date on 29,167 options from the Stock Option Plans with exercise prices ranging from $1.60 to $3.30. The options originally would have expired between April 2012 and August 2012 and were extended for three years to expiration dates ranging from April 2015 to August 2015. This extension was considered a new measurement date with respect to the modified options. At the date of modification, the additional cost of the options was $36,990. As of September 30, 2014, all repriced options remained outstanding. | |||||||||||||
In December 2012, the Company offered employees and directors holding options that expire on April 1, 2013 the opportunity to forfeit these options and have new options issued with an expiration date of December 17, 2017. All twelve employees and directors eligible for this offer accepted the terms. This resulted in the cancellation of 387,466 options priced at $2.20 per share and the concurrent issuance of the same number of options at $2.80 per share. At the cancellation date, the incremental compensation cost was $477,879 which was amortized over the remaining service period. As of September 30, 2014, all options remained outstanding. | |||||||||||||
Stock Bonus Plans -- At September 30, 2014, the Company was authorized to issue up to 1,594,000 shares of common stock under its Stock Bonus Plans. All employees, directors, officers, consultants, and advisors are eligible to be granted shares. During the year ended September 30, 2014, 164,787 shares were issued to the Company’s 401(k) plan for a cost of $155,434. During the year ended September 30, 2013, 74,230 shares were issued to the Company’s 401(k) plan for a cost of $158,856. During the year ended September 30, 2012, 42,627 shares were issued to the Company’s 401(k) plan for a cost of $154,516. During the years ended September 30, 2012, the Company issued 618 shares from Stock Bonus Plans to consultants for payment of services at a cost $1,792. As of September 30, 2014, the Company has issued a total of 1,058,896 shares of common stock from the Stock Bonus Plans. | |||||||||||||
Stock Compensation Plan-- At September 30, 2014, 1,350,000 shares were authorized for use in the Company’s stock compensation plan. During the years ended September 30, 2014, 2013 and 2012, 409,968, 50,000 and 100,000 shares were issued from the Stock Compensation Plan to consultants for payment of services at a cost of $439,008, $140,000 and $320,000, respectively. As of September 30, 2014, the Company has issued 1,098,621 shares of common stock from the Stock Compensation Plan. | |||||||||||||
Incentive Stock Bonus Plan-- On July 22, 2014 the Company's shareholders approved the 2014 Incentive Stock Bonus Plan, authorizing the issuance of 16,000,000 shares in the Company’s Incentive Stock Bonus Plan. During the year ended September 30, 2014, 15,700,000 shares were issued from the Incentive Stock Bonus Plan to officers and employees. The shares are unvested and are held in escrow. The shares will only be earned upon the achievement of certain milestones leading to the commercialization of the Company’s Multikine technology, or specified increases in the market price of the Company’s stock. If the performance or market criteria are not met as specified in the Incentive Stock Bonus Plan, all or a portion of the awarded shares will be forfeited. At September 30, 2014, no restricted shares were vested. The fair value of the shares on the grant date was calculated to be $8,662,502, using the market value on the grant-date for issuances where the attainment of performance criteria is likely and using a Monte Carlo simulation for issuances where the attainment of performance criteria is uncertain. The total value of the shares, if earned, will be expensed over the requisite service periods for each milestone, provided the requisite service periods are rendered, regardless of whether the market conditions are met. No compensation cost is recognized for awards where the requisite service period is not rendered. During the year ended September 30, 2014, the Company recorded expense relating to the restricted stock of $1,477,954. At September 30, 2014, the Company has unrecognized compensation expense of $7,184,548 which is expected to be recognized over a weighted average period of 5.35 years. |
8_EMPLOYEE_BENEFIT_PLAN
8. EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Sep. 30, 2014 | |
Compensation and Retirement Disclosure [Abstract] | |
8. EMPLOYEE BENEFIT PLAN | 8. EMPLOYEE BENEFIT PLAN |
The Company maintains a defined contribution retirement plan, qualifying under Section 401(k) of the Internal Revenue Code, subject to the Employee Retirement Income Security Act of 1974, as amended, and covering substantially all Company employees. Each participant’s contribution is matched by the Company with shares of common stock that have a value equal to 100% of the participant’s contribution, not to exceed the lesser of $10,000 or 6% of the participant’s total compensation. The Company’s contribution of common stock is valued each quarter based upon the closing bid price of the Company’s common stock. Total expense, including plan maintenance, for the years ended September 30, 2014, 2013 and 2012, in connection with this Plan was $159,632, $162,865 and $158,500, respectively. |
9_COMMITMENTS_AND_CONTINGENCIE
9. COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||
Sep. 30, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
9. COMMITMENTS AND CONTINGENCIES | 9. COMMITMENTS AND CONTINGENCIES | ||||
Clinical Research Agreements | |||||
In March 2013, the Company entered into an agreement with Aptiv Solutions to provide certain clinical research services in accordance with a master service agreement. The Company will reimburse Aptiv for costs incurred. In May 2013, CEL-SCI made an advance payment of $400,000. In October 2013, the Company made the second and final advance payment of $200,000. The funds advanced will be credited back in $150,000 annual increments from December 2014 through December 2017. As of September 30, 2014, $150,000 of the deposit is classified as a current asset. | |||||
In April 2013, the Company entered into a co-development and revenue sharing agreement with Ergomed. Under the agreement, Ergomed will contribute up to $10 million towards the Phase III head and neck cancer study in the form of offering discounted clinical services in exchange for a single digit percentage of milestone and royalty payments, up to four times Ergomed’s contribution amount. The Company accounted for the co-development and revenue sharing agreement in accordance with ASC 808 “Collaborative Arrangements”. The Company determined the payments to Ergomed are within the scope of ASC 730 “Research and Development.” Therefore, the Company records the discount on the clinical services as a credit to research and development expense on its Statements of Operations. Since the Company entered into the co-development and revenue sharing agreement with Ergomed it has incurred research and development expenses of approximately $5,223,000 related to Ergomed’s services. This amount is net of Ergomed’s discount of approximately $1,794,000. During the years ended September 30, 2014 and 2013, the Company recorded, approximately $4,385,000 and $838,000, respectively, as research and development expense related to Ergomed’s services. These amounts were net of Ergomed’s discount of approximately $1,513,000 and $281,000, respectively. | |||||
In October 2013, the Company entered into two co-development and profit sharing agreements with Ergomed. One agreement supports the U.S. Navy with the development of Multikine as a potential treatment for peri-anal warts in HIV/HPV co-infected men and women. The other agreement focuses on the development of Multikine as a potential treatment for cervical dysplasia in HIV/HPV co-infected women. Ergomed will assume up to $3 million in clinical and regulatory costs for each study. | |||||
In April 2013, the Company dismissed inVentiv Health Clinical, LLC (inVentiv, f/k/a PharmaNet, LLC), the Company’s former clinical research organization and replaced it with Aptiv Solutions, Inc. and Ergomed Clinical Research Ltd, as noted above. On October 31, 2013, the Company commenced arbitration proceedings against inVentiv. The arbitration claim, initiated under the Commercial Rules of the American Arbitration Association, alleges (i) breach of contract, (ii) fraud in the inducement, and (iii) common law fraud, and seeks at least $50 million in damages. | |||||
On December 12, 2013, inVentiv filed a counterclaim, alleging breach of contract on the part of the Company and seeking at least $2 million in damages. On December 20, 2013, inVentiv moved to dismiss certain claims. On June 24, 2014, the arbitrator denied inVentiv’s motion to dismiss. Given that this matter is at a preliminary stage, the Company is not in a position to predict or assess the likely outcome of these proceedings. | |||||
Lease Agreements | |||||
The future minimum annual rental payments due under non-cancelable operating leases for office and laboratory space are as follows: | |||||
2015 | $ | 1,785,873 | |||
2016 | 1,769,497 | ||||
2017 | 1,746,328 | ||||
2018 | 1,746,802 | ||||
2019 | 1,808,302 | ||||
2020 and thereafter | 19,570,627 | ||||
Total minimum lease payments: | $ | 28,427,429 | |||
Rent expense, including amortization of deferred rent, for the years ended September 30, 2014, 2013 and 2012, was $2,650,829, $2,651,460 and $2,659,532, respectively. The Company’s three leases expire between June 2015 and October 2028. | |||||
In August 2007, the Company leased a building near Baltimore, Maryland. The building was remodeled in accordance with the Company’s specifications so that it can be used by the Company to manufacture Multikine for the Company’s Phase III clinical trial and sales of the drug if approved by the FDA. The lease is for a term of twenty years and requires annual base rent to escalate each year at 3%. The Company is required to pay all real estate and personal property taxes, insurance premiums, maintenance expenses, repair costs and utilities. The lease allows the Company, at its election, to extend the lease for two ten-year periods or to purchase the building at the end of the 20-year lease. | |||||
At September 30, 2014, the Company recorded a total deferred rent asset of $5,277,939, of which $4,733,865 is long term and the balance of $544,074 is included in current assets. At September 30, 2013, the Company recorded a total deferred rent asset of $6,047,098, of which $5,448,381 is long term and the balance of $598,717 is included in current assets. On September 30, 2014 and 2013, the Company has included in deferred rent the following: 1) deposit on the manufacturing facility ($3,150,000); 2) the fair value of the warrants issued to lessor ($1,403,654); 3) additional investment ($2,995,541); 4) deposit on the cost of the leasehold improvements for the manufacturing facility ($1,786,591). At September 30, 2014, the Company has also included accrued interest on deposit of $329,525, and accumulated amortization of $4,387,374. At September 30, 2013, the Company has also included accrued interest on deposit of $499,968, and accumulated amortization of $3,788,656. | |||||
The Company was required to deposit the equivalent of one year of base rent in accordance with the lease. When the Company meets the minimum cash balance required by the lease, the deposit will be returned to the Company. The $1,670,917 is included in non-current assets on September 30, 2014 and 2013. | |||||
In December 2011, the Company began subleasing a portion of its rental space on a month to month term lease, which requires a 30 day notice for termination. The sublease rent for the years ended September 30, 2014, 2013 and 2012 was $63,144, $61,305 and $48,500, respectively, and is recorded in grant income and other in the statements of operations. | |||||
The Company leases its research and development laboratory under a 60 month lease which expires February 28, 2017. The operating lease includes escalating rental payments. The Company is recognizing the related rent expense on a straight line basis over the full 60 month term of the lease at the rate of $11,360 per month. As of September 30, 2014 and 2013, the Company has recorded a deferred rent liability of $6,387 and $3,992, respectively. | |||||
The Company leases office headquarters under a 36 month lease which expires June 30, 2015. The operating lease includes escalating rental payments. The Company is recognizing the related rent expense on a straight line basis over the full 36 month term of the lease at the rate $7,864 per month. As of September 30, 2014 and 2013, the Company has recorded a deferred rent liability of $6,278 and $12,412, respectively. | |||||
The Company leases office equipment under a capital lease arrangement. The term of the capital lease is 48 months and expires on September 30, 2016. The monthly lease payment is $1,025. The lease bears interest at approximately 6% per annum. | |||||
Employment Contracts | |||||
On August 30, 2013, the Company’s employment agreement with Maximilian de Clara, the Company’s President and a director, as amended on September 8, 2006 and extended on August 30, 2010, was further extended to August 30, 2016. The employment agreement provides that the Company will pay Mr. de Clara an annual salary of $363,000 during the term of the agreement. In the event that there is a material reduction in his authority, duties or activities, or in the event there is a change in the control of the Company, then the agreement allows him to resign from his position at the Company and receive a lump-sum payment from the Company equal to 18 months of salary. For purposes of the employment agreement, a change in the control of the Company means the sale of more than 50% of the outstanding shares of the Company’s common stock, or a change in a majority of the Company’s directors. | |||||
On September 1, 2011, the Company agreed to extend its employment agreement with Geert Kersten, the Company’s Chief Executive Officer, to August 31, 2016. Mr. Kersten’s annual salary for fiscal year 2014 was $521,893. Mr. Kersten will receive at least the same salary increases each year as do other senior executives of the Company. Further increases, if any, will be made at the sole discretion of the Company’s directors. | |||||
During the employment term, Mr. Kersten will be entitled to receive any other benefits which are provided to the Company’s executive officers or other fulltime employees in accordance with the Company’s policies and practices and subject to Mr. Kersten’s satisfaction of any applicable condition of eligibility. | |||||
If Mr. Kersten resigns within ninety (90) days of the occurrence of any of the following events: (i) a relocation (or demand for relocation) of Mr. Kersten’s place of employment to a location more than thirty-five (35) miles from his current place of employment, (ii) a significant and material reduction in Mr. Kersten’s authority, job duties or level of responsibility or (iii) the imposition of significant and material limitations on the Mr. Kersten’s autonomy in his position, the employment agreement will be terminated. | |||||
The employment agreement will also terminate upon the death of Mr. Kersten, Mr. Kersten’s physical or mental disability, willful misconduct, an act of fraud against the Company, or a breach of the employment agreement by Mr. Kersten. | |||||
If the employment agreement is terminated for any of the foregoing, Mr. Kersten, or his legal representatives, as the case may be, will be paid the salary provided by the employment agreement through the date of termination, any options or bonus shares of the Company then held by Mr. Kersten will become fully vested and the expiration date of any options which would expire during the four year period following his termination of employment will be extended to the date which is four years after his termination of employment. | |||||
In the event there is a change in the control of the Company, the agreement allows Mr. Kersten to resign from his position at the Company and receive a lump-sum payment from the Company equal to 24 months of salary, based upon his salary then in effect on the date of his resignation. For purposes of the employment agreement a change in the control of the Company means: (1) the merger of the Company with another entity if after such merger the shareholders of the Company do not own at least 50% of voting capital stock of the surviving corporation; (2) the sale of substantially all of the assets of the Company; (3) the acquisition by any person of more than 50% of the Company’s common stock; or (4) a change in a majority of the Company’s directors which has not been approved by the incumbent directors. | |||||
On August 30, 2013, the Company amended certain sections of Mr. Kersten’s employee agreement so that it would correspond with similar sections of the employment agreements discussed below. | |||||
On August 30, 2013, the Company extended its employment agreement with Patricia B. Prichep, the Company’s Senior Vice President of Operations, through August 30, 2016. Ms. Prichep’s annual salary for fiscal year 2014 was $229,465. | |||||
On August 30, 2013, the Company extended its employment agreement with Eyal Talor, Ph.D., the Company’s Chief Scientific Officer, through August 30, 2016. Dr. Talor’s annual salary for fiscal year 2014 was $283,283. | |||||
In the event there is a change in the control of the Company, the employment agreements with Ms. Prichep and Dr. Talor allow Ms. Prichep and/or Dr. Talor (as the case may be) to resign from her or his position at the Company and receive a lump-sum payment from the Company equal to 18 months of salary. For purposes of the employment agreements, a change in the control of the Company means: (1) the merger of the Company with another entity if after such merger the shareholders of the Company do not own at least 50% of voting capital stock of the surviving corporation; (2) the sale of substantially all of the assets of the Company; (3) the acquisition by any person of more than 50% of the Company’s common stock; or (4) a change in a majority of the Company’s directors which has not been approved by the incumbent directors. | |||||
The employment agreements with Ms. Prichep and Dr. Talor will also terminate upon the death of the employee, the employee’s physical or mental disability, willful misconduct, an act of fraud against the Company, or a breach of the employment agreement by the employee. If the employment agreement is terminated for any of these reasons the employee, or her or his legal representatives, as the case may be, will be paid the salary provided by the employment agreement through the date of termination. | |||||
Further, the Company has contingent obligations with other vendors for work that will be completed in relation to the Phase III trial. The timing of these obligations cannot be determined at this time. The total remaining cash cost of these future obligations for the Phase III trial is estimated to be approximately $28,200,000. |
10_LOANS_FROM_OFFICER_AND_INVE
10. LOANS FROM OFFICER AND INVESTOR | 12 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | |
10. LOANS FROM OFFICER AND INVESTOR | 10. LOANS FROM OFFICER AND INVESTOR |
The Company’s President, and a director, Maximilian de Clara, loaned the Company $1,104,057 under a note payable. The loan from Mr. de Clara bears interest at 15% per year and is secured by a lien on substantially all of the Company’s assets. The Company does not have the right to prepay the note without Mr. de Clara’s consent. The note was initially payable at the end of March 2009, but was extended. At the time of the first extension, and in accordance with the loan agreement, the Company issued Mr. de Clara warrants to purchase 164,824 shares of the Company’s common stock at a price of $4.00 per share. The warrants are exercisable at any time prior to December 24, 2014. In June 2009, the note with Mr. de Clara was extended for the second time to July 6, 2014. At Mr. de Clara’s option, the note may be converted into shares of the Company’s common stock. The number of shares which will be issued upon any conversion will be determined by dividing the amount to be converted by $4.00. As further consideration for the second extension, Mr. de Clara received warrants to purchase 184,930 shares of the Company’s common stock at a price of $5.00 per share at any time prior to January 6, 2015. On May 13, 2011, to recognize Mr. de Clara’s willingness to agree to subordinate his note to the convertible preferred shares and convertible debt, the Company extended the maturity date of the note to July 6, 2015, however Mr. de Clara may demand payment upon giving the Company 10 days of notice. In August 2014, the loan and warrants were transferred to the de Clara Trust, of which the Company’s CEO, Geert Kersten, is the Trustee and a beneficiary. Mr. de Clara will continue to receive the interest payments. | |
During the years ended September 30, 2014, 2013 and 2012, the Company paid $179,409, $151,808 and $165,608, respectively, in interest expense to Mr. de Clara. |
11_STOCKHOLDERS_EQUITY
11. STOCKHOLDERS EQUITY | 12 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | |
11. STOCKHOLDERS' EQUITY | 11. STOCKHOLDERS’ EQUITY |
During the year ended September 30, 2014, 2,695,562 Series M, N and S warrants were exercised. The Company issued 2,668,508 shares of common stock and received $3,118,387 from the exercise of these warrants since 92,715 Series N warrants were exercised in a cashless exercise. During the year ended September 30, 2013, no warrants were exercised. During the year ended September 30, 2012, 650,000 Series O warrants issued in connection with a licensing agreement with Byron (Note 2), were exercised. The Company received $1,625,000 from the exercise of these warrants. Also during the year ended September 30, 2012, Series K and Series L warrants were exercised resulting in the issuance of 369,120 shares of common stock at prices ranging from $3.00 to $3.40. The Company received a total of $1,131,359 from the exercise of these warrants. The Company incurred direct financing fees of $91,820, which were charged to additional paid-in capital during the year ended September 30, 2012. | |
In October 2011, the Company sold 1,333,334 shares of its common stock, at a price per share of $3.00, in a registered direct offering to institutional investors, representing gross proceeds of $4.0 million. Investors also received Series F warrants to purchase up to 1,200,000 shares of the Company’s common stock at a purchase price of $4.00 at any time prior to October 6, 2014. The Company paid Chardan Capital Markets, LLC, the placement agent for this offering, a cash commission of $140,000, and issued 66,667 Series G warrants to Chardan. This financing triggered the reset provision from the August 2008 financing which resulted in the issuance of an additional 83,333 shares of common stock. The cost of additional shares issued was $250,000. This cost was recorded as a debit and a credit to additional paid-in capital and was deemed a dividend. On August 12, 2014, all outstanding Series G warrants expired. As of September 30, 2014, 1,200,000 Series F warrants and no Series G warrants remained outstanding. At September 30, 2014, the fair value of the outstanding Series F warrants was $0 (Note 2). On October 6, 2014, all of the Series F warrants expired. | |
In January 2012, the Company sold 1,600,000 shares of its common stock, at a price per share of $3.60, in a registered direct offering to institutional investors, representing gross proceeds of $5.76 million. Investors also received Series H warrants to purchase up to 1,200,000 shares of the Company’s common stock at a purchase price of $5.00 at any time prior to August 1, 2015. The Company paid Chardan Capital Markets, LLC, the placement agent for this offering, a cash commission of $403,200. The initial cost of the warrants was $2,400,000 and was recorded as a debit to additional paid-in capital and a credit to derivative liabilities. As of September 30, 2014, all of the Series H warrants remained outstanding, with a fair value of $12,000, which is shown on the Company’s balance sheet as a derivative liability (Note 2). | |
In June 2012, the Company sold 1,600,000 shares of its common stock, at a price per share of $3.50, in a registered direct offering to institutional investors, representing gross proceeds of $5.60 million. Investors also received Series Q warrants to purchase up to 1,200,000 shares of the Company’s common stock at a purchase price of $5.00 at any time prior to December 22, 2015. The Company paid Chardan Capital Markets, LLC, the placement agent for this offering, a cash commission of $448,000. The initial cost of the warrants was $2,160,000 and was recorded as a debit to additional paid-in capital and a credit to derivative liabilities. As of September 30, 2014, all of the Series Q warrants remained outstanding, with a fair value of $12,000, which is shown on the Company’s balance sheet as a derivative liability (Note 2). | |
In December 2012, the Company sold 3,500,000 shares of its common stock for $10,500,000, or $3.00 per share, in a registered direct offering. The investors in this offering also received Series R warrants which entitle the investors to purchase up to 2,625,000 shares of the Company’s common stock. The Series R warrants may be exercised at any time before December 7, 2016 at a price of $4.00 per share. The Company paid Chardan Capital Markets, LLC, the placement agent for this offering, a cash commission of $682,500. The initial cost of the warrants was $4,200,000 and was recorded as a debit to additional paid-in capital and a credit to derivative liabilities. As of September 30, 2014, all of the Series R warrants remained outstanding, with a fair value of $157,500, which is shown on the Company’s balance sheet as a derivative liability (Note 2). | |
On October 11, 2013, the Company closed a public offering of units of common stock and Series S warrants at a price of $1.00 per unit for net proceeds of $16,400,000, net of underwriting discounts and commissions. Each unit consisted of one share of common stock and a warrant to purchase one share of common stock. The warrants are immediately exercisable and expire on October 11, 2018, and have an exercise price of $1.25. In November 2013, the underwriters purchased an additional 2,648,913 warrants pursuant to the overallotment option, for which the Company received net proceeds of $24,370. | |
On December 24, 2013, the Company closed a public offering of units of common stock and warrants at a price of $0.63 per unit for net proceeds of $2,790,000, net of underwriting discounts and commissions. Each unit consisted of one share of common stock and a warrant to purchase one share of common stock. The warrants are immediately exercisable and expire on October 11, 2018, and have an exercise price of $1.25. The underwriters exercised the option for the full 10% overallotment, for which the Company received net proceeds of approximately $279,000. | |
The Company incurred $189,188 in offering costs related to the October and December 2013 offerings which were charged to additional paid-in capital and netted against the cash proceeds in the Statement of Cash Flows. As of September 30, 2014, 23,624,326 Series S warrants remained outstanding, with a fair value of $5,197,352, which is shown on the Company’s balance sheet as a derivative liability (Note 2). | |
The October and December 2013 financings triggered the reset provision from the August 2008 financing which resulted in the issuance of an additional 1,563,083 shares of common stock. The cost of additional shares issued was $1,117,447. This cost was recorded as a debit and a credit to additional paid-in capital and was deemed a dividend. | |
On April 17, 2014, the Company closed a public offering of units consisting of an aggregate of 7,128,229 shares of common stock and Series T warrants to purchase an aggregate of 1,782,057 shares of common stock. The units were sold at a price of $1.40 per unit. The common stock and warrants separated immediately. The warrants are immediately exercisable, expire on October 17, 2014, and have an exercise price of $1.58 per share. The Company received net proceeds of approximately $9,143,000, after deducting the underwriting commissions and offering expenses. The underwriters received 445,514 Series U warrants to purchase one share of common stock. The Series U warrants are exercisable beginning October 17, 2014, expire on October 17, 2017, and have an exercise price of $1.75. As of September 30, 2014, all of the Series T and U warrants remained outstanding, with a fair value of $0 and $120,289, respectively, which is shown on the Company’s balance sheet as a derivative liability (Note 2). On October 17, 2014, all of the Series T warrants expired. | |
During the year ended September 30, 2014, the Company issued 15,700,000 restricted shares from the Incentive Stock Bonus Plan to officers and employees. The shares are unvested and held in escrow. The shares will only be earned upon the achievement of certain milestones leading to the commercialization of the Company’s Multikine technology, or specified increases in the market price of the Company’s stock. If the performance or market criteria are not met as specified in the Incentive Stock Bonus Plan, all or a portion of the awarded shares will be forfeited. The fair value of the shares on the date of issuance was calculated by using the market value on the grant-date for issuances where the attainment of performance criteria is likely and using a Monte Carlo simulation for issuances where the attainment of performance criteria is uncertain. The total value of the shares, if earned, is calculated to be $8,662,502 and will be expensed over the requisite service period for each milestone. At September 30, 2014, the Company had unrecognized compensation expense of $7,184,548 relating to the restricted stock awards. None of these restricted shares were vested at September 30, 2014. |
12_FAIR_VALUE_MEASUREMENTS
12. FAIR VALUE MEASUREMENTS | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
12. FAIR VALUE MEASUREMENTS | 12. FAIR VALUE MEASUREMENTS | ||||||||||||||||
In accordance with the provisions of ASC 820, “Fair Value Measurements,” the Company determines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company generally applies the income approach to determine fair value. This method uses valuation techniques to convert future amounts to a single present amount. The measurement is based on the value indicated by current market expectations about those future amounts. | |||||||||||||||||
ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to active markets for identical assets and liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The Company classifies fair value balances based on the observability of those inputs. The three levels of the fair value hierarchy are as follows: | |||||||||||||||||
o | Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities | ||||||||||||||||
o | Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and amounts derived from valuation models where all significant inputs are observable in active markets | ||||||||||||||||
o | Level 3 – Unobservable inputs that reflect management’s assumptions | ||||||||||||||||
For disclosure purposes, assets and liabilities are classified in their entirety in the fair value hierarchy level based on the lowest level of input that is significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy levels. | |||||||||||||||||
The table below sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the balance sheet at September 30, 2014: | |||||||||||||||||
Quoted Prices in | Significant | ||||||||||||||||
Active Markets for | Other | Significant | |||||||||||||||
Identical Assets or | Observable | Unobservable | |||||||||||||||
Liabilities (Level 1) | Inputs (Level 2) | Inputs (Level 3) | Total | ||||||||||||||
Derivative Instruments | $ | 5,197,352 | $ | - | $ | 307,894 | $ | 5,505,246 | |||||||||
The table below sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the balance sheet at September 30, 2013: | |||||||||||||||||
Quoted Prices in | Significant | ||||||||||||||||
Active Markets for | Other | Significant | |||||||||||||||
Identical Assets or | Observable | Unobservable | |||||||||||||||
Liabilities (Level 1) | Inputs (Level 2) | Inputs (Level 3) | Total | ||||||||||||||
Derivative Instruments | $ | - | $ | - | $ | 433,024 | $ | 433,024 | |||||||||
The following sets forth the reconciliation of beginning and ending balances related to fair value measurements using significant unobservable inputs (Level 3), as of September 30: | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Beginning balance | $ | 433,024 | $ | 6,983,690 | |||||||||||||
Issuances | 7,791,448 | 4,200,000 | |||||||||||||||
Settlements | (1,445,528 | ) | - | ||||||||||||||
Transfers to Level 1 | (7,321,071 | ) | - | ||||||||||||||
Realized and unrealized losses/(gains) recorded in earnings | 850,021 | (10,750,066 | ) | ||||||||||||||
Ending balance | $ | 307,894 | $ | 433,024 | |||||||||||||
The fair values of the Company’s derivative instruments disclosed above under Level 3 are primarily derived from valuation models where significant inputs such as historical price and volatility of the Company’s stock as well as U.S. Treasury Bill rates are observable in active markets. |
13_NET_LOSS_PER_COMMON_SHARE
13. NET LOSS PER COMMON SHARE | 12 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
13. NET LOSS PER COMMON SHARE | 13. NET LOSS PER COMMON SHARE | ||||||||||||
Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. The Company’s potentially dilutive shares, which include outstanding common stock options, common stock warrants, restricted stock and shares issuable on convertible debt, have not been included in the computation of diluted net loss per share for all periods presented, as the result would be anti-dilutive. For the years presented, the gain on derivative instruments in not included in net loss available to common shareholders for purposes of computing dilutive loss per share because its effect is anti-dilutive. | |||||||||||||
The following table provides a reconciliation of the numerators and denominators of the basic and diluted per-share computations: | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Net loss – available to | |||||||||||||
common shareholders | $ | (28,483,712 | ) | $ | (9,230,478 | ) | $ | (17,645,930 | ) | ||||
Less: Gain on derivative | |||||||||||||
Instruments | (248,767 | ) | (10,750,666 | ) | (1,911,683 | ) | |||||||
Net loss - diluted | $ | (28,732,479 | ) | $ | (19,981,144 | ) | $ | (19,557,613 | ) | ||||
Weighted average number of | |||||||||||||
shares - basic and diluted | 58,804,622 | 30,279,442 | 25,183,654 | ||||||||||
Loss per share - basic | $ | (0.48 | ) | $ | (0.30 | ) | $ | (0.70 | ) | ||||
Loss per share - diluted | $ | (0.49 | ) | $ | (0.66 | ) | $ | (0.78 | ) | ||||
In accordance with the contingently issuable shares guidance of FASB ASC Topic 260, Earnings Per Share, the calculation of diluted net loss per share excludes 15,700,000 shares of unvested restricted stock for the year ended September 30, 2014, because their inclusion would be anti-dilutive. Also excluded from the above computations of weighted-average shares for diluted net loss per share were options and warrants to purchase approximately 40,271,000, 12,351,000 and 9,827,000 shares of common stock as of September 30, 2014, 2013 and 2012, respectively, because their inclusion would be anti-dilutive. |
14_SEGMENT_REPORTING
14. SEGMENT REPORTING | 12 Months Ended |
Sep. 30, 2014 | |
Segment Reporting [Abstract] | |
14. SEGMENT REPORTING | 14. SEGMENT REPORTING |
ASC 280, “Disclosure about Segments of an Enterprise and Related Information” establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. This topic also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The Company’s chief decision maker, as defined under this topic, is the Chief Executive Officer. To date, the Company has viewed its operations as principally one segment, the research and development of certain drugs and vaccines. As a result, the financial information disclosed herein materially represents all of the financial information related to the Company’s principal operating segment. |
15_QUARTERLY_INFORMATION_UNAUD
15. QUARTERLY INFORMATION (UNAUDITED) | 12 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||
15. QUARTERLY INFORMATION (UNAUDITED) | The following quarterly data are derived from the Company’s statements of operations. | ||||||||||||||||||||
Financial Data | |||||||||||||||||||||
Fiscal 2014 | |||||||||||||||||||||
Three months | Three months | Three months | Three months | ||||||||||||||||||
ended | ended | ended | Ended | Year ended | |||||||||||||||||
31-Dec | March 31, | June 30, | September 30, | September 30, | |||||||||||||||||
2013 | 2014 | 2014 | 2014 | 2014 | |||||||||||||||||
Revenue | $ | 113,144 | $ | 67,157 | $ | 15,914 | $ | 67,818 | $ | 264,033 | |||||||||||
Operating expenses | 6,047,454 | 6,293,592 | 6,917,243 | 8,579,856 | 27,838,145 | ||||||||||||||||
Non-operating expenses, net | (10,925 | ) | (6,797 | ) | (10,927 | ) | (12,271 | ) | (40,920 | ) | |||||||||||
Gain (loss) on derivative instruments | 1,610,817 | (7,132,348 | ) | 4,467,776 | 1,302,522 | 248,767 | |||||||||||||||
Net loss | (4,334,418 | ) | (13,365,580 | ) | (2,444,480 | ) | (7,221,787 | ) | (27,366,265 | ) | |||||||||||
Issuance of shares due to reset provisions | (1,117,447 | ) | - | - | - | (1,117,447 | ) | ||||||||||||||
Net loss available to | |||||||||||||||||||||
common shareholders | $ | (5,451,865 | ) | $ | (13,365,580 | ) | $ | (2,444,480 | ) | $ | (7,221,787 | ) | $ | (28,483,712 | ) | ||||||
Net loss per share-basic | $ | (0.11 | ) | $ | (0.24 | ) | $ | (0.04 | ) | $ | (0.11 | ) | $ | (0.48 | ) | ||||||
Net loss per share-diluted | $ | (0.15 | ) | $ | (0.24 | ) | $ | (0.11 | ) | $ | (0.13 | ) | $ | (0.49 | ) | ||||||
Weighted average shares-basic and diluted | 48,215,919 | 56,239,562 | 64,664,274 | 66,091,826 | 58,804,622 | ||||||||||||||||
Fiscal 2013 | |||||||||||||||||||||
Three months | Three months | Three months | Three months | ||||||||||||||||||
ended | ended | ended | ended | Year ended | |||||||||||||||||
31-Dec | March 31, | June 30, | September 30, | September 30, | |||||||||||||||||
2012 | 2013 | 2013 | 2013 | 2013 | |||||||||||||||||
Revenue | $ | 15,000 | $ | 15,405 | $ | 113,728 | $ | 15,450 | $ | 159,583 | |||||||||||
Operating expenses | 5,059,457 | 4,255,229 | 5,626,927 | 5,087,191 | 20,027,859 | ||||||||||||||||
Non operating expenses, net | (11,987 | ) | (11,811 | ) | (13,666 | ) | (14,928 | ) | (53,337 | ) | |||||||||||
Gain on derivative instruments | 2,746,198 | 3,538,264 | 1,079,392 | 3,386,812 | 10,750,666 | ||||||||||||||||
Net loss | (2,310,246 | ) | (713,371 | ) | (4,447,473 | ) | (1,699,857 | ) | (9,170,947 | ) | |||||||||||
Modification of warrants | - | - | (59,531 | ) | - | (59,531 | ) | ||||||||||||||
Net loss available to | |||||||||||||||||||||
common shareholders | $ | (2,310,246 | ) | $ | (713,371 | ) | $ | (4,507,004 | ) | $ | (1,699,857 | ) | $ | (9,230,478 | ) | ||||||
Net loss per share-basic | $ | (0.08 | ) | $ | (0.02 | ) | $ | (0.15 | ) | $ | (0.05 | ) | $ | (0.30 | ) | ||||||
Net loss per share-diluted | $ | (0.18 | ) | $ | (0.14 | ) | $ | (0.18 | ) | $ | (0.16 | ) | $ | (0.66 | ) | ||||||
Weighted average shares-basic and diluted | 28,311,602 | 30,901,177 | 30,930,650 | 30,994,932 | 30,279,442 | ||||||||||||||||
The Company has experienced large swings in its quarterly gains and losses in 2014 and 2013 caused by the changes in the fair value of warrants each quarter. | |||||||||||||||||||||
17_SUBSEQUENT_EVENTS
17. SUBSEQUENT EVENTS | 12 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | |
17. SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS |
In accordance with ASC 855, “Subsequent Events”, the Company has reviewed subsequent events through the date of the filing. | |
On October 24, 2014 the Company announced that it closed an underwritten public offering of 7,894,737 shares of common stock and 1,973,684 warrants to purchase shares of common stock. For every four shares of common stock sold, investors in this offering were issued a warrant to purchase one share of common stock. The common stock and warrants were sold at a combined price of $0.76 for net proceeds of approximately $5.5 million, net of underwriting discounts and commissions and offering expenses. The warrants were immediately exercisable, expire October 11, 2018 and have an exercise price of $1.25. | |
Additionally, on October 21, 2014, the Company announced that it had sold 1,320,000 shares of the Company’s common stock, as well as warrants to purchase an additional 330,000 shares of common stock. For every four shares sold, the Company issued to investors in this offering one warrant. The shares of common stock and warrants are being sold at a combined price of $0.76 per share with net proceeds from the offering of approximately $928,000, after deducting the sales and commissions and estimated expenses. The common stock and warrants will separate immediately. The warrants were immediately exercisable, expire October 11, 2018 and have an exercise price of $1.25. |
1_ORGANIZATION_AND_SUMMARY_OF_1
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (POLICIES) | 12 Months Ended |
Sep. 30, 2014 | |
Organization And Summary Of Significant Accounting Policies Policies | |
Cash and Cash Equivalents | Cash and Cash Equivalents - For purposes of the statements of cash flows, cash and cash equivalents consist principally of unrestricted cash on deposit and short-term money market funds. The Company considers all highly liquid investments with a maturity when purchased of less than three months as cash and cash equivalents. |
Prepaid Expenses and Inventory | Prepaid Expenses and Inventory - Prepaid expenses are payments for future services to be rendered and are expensed over the time period for which the service is rendered. Prepaid expenses may also include payment for goods to be received within one year of the payment date. Inventory consists of manufacturing production advances and bulk purchases of laboratory supplies to be consumed in the manufacturing of the Company’s product for clinical studies. Inventories are stated at the lower of cost or market, where cost is determined using the first-in, first out method applied on a consistent basis. |
Deposits | Deposits - The deposits are required by the lease agreement for the manufacturing facility and by the clinical research organization (CRO) agreements. |
Research and Office Equipment and Leasehold Improvements-- | Research and Office Equipment and Leasehold Improvements - Research and office equipment is recorded at cost and depreciated using the straight-line method over estimated useful lives of five to seven years. Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Repairs and maintenance which do not extend the life of the asset are expensed when incurred. The fixed assets are reviewed on a quarterly basis to assess impairment, if any. |
Patents | Patents - Patent expenditures are capitalized and amortized using the straight-line method over the shorter of the expected useful life or the legal life of the patent (17 years). In the event changes in technology or other circumstances impair the value or life of the patent, appropriate adjustment to the asset value and period of amortization is made. An impairment loss is recognized when estimated future undiscounted cash flows expected to result from the use of the asset, and from disposition, is less than the carrying value of the asset. The amount of the impairment loss would be the difference between the estimated fair value of the asset and its carrying value. |
Deferred Rent (Asset) | Deferred Rent (Asset) - Consideration paid, including deposits, related to operating leases is recorded as a deferred rent asset and amortized as rent expense over the lease term. Interest on the deferred rent is calculated at 3% on the funds deposited on the manufacturing facility and is included in deferred rent. This interest income will be used to offset future rent. |
Deferred Rent (Liability) | Deferred Rent (Liability) - Certain of the Company’s operating leases provide for minimum annual payments that adjust over the life of the lease. The aggregate minimum annual payments are expensed on a straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for rent escalations when the amount of straight-line rent exceeds the lease payments, and reduces the deferred rent liability when the lease payments exceed the straight-line rent expense. For tenant improvement allowances and rent holidays, the Company records a deferred rent liability and amortizes the deferred rent over the lease term as a reduction to rent expense. |
Derivative Instruments | Derivative Instruments - The Company has entered into financing arrangements that consist of freestanding derivative instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification (ASC) 815, “Accounting for Derivative Instruments and Hedging Activities”. In accordance with accounting principles generally accepted in the United States (U.S.GAAP), derivative instruments and hybrid instruments are recognized as either assets or liabilities on the balance sheet and are measured at fair value with gains or losses recognized in earnings or other comprehensive income depending on the nature of the derivative or hybrid instruments. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument. The derivative liabilities are remeasured at fair value at the end of each reporting period as long as they are outstanding. |
Research and Development Grant Revenues | Research and Development Grant Revenues -The Company's grant arrangements are handled on a reimbursement basis. Grant revenues under the arrangements are recognized when costs are incurred. |
Research and Development Costs | Research and Development Costs -Research and development expenditures are expensed as incurred. |
Net Loss Per Common Share | Net Loss Per Common Share - The Company calculates net loss per common share in accordance with ASC 260 “Earnings Per Share” (ASC 260). Basic and diluted net loss per common share was determined by dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding during the period. The Company’s potentially dilutive shares, which include outstanding common stock options, restricted stock units, convertible preferred stock and common stock warrants, have not been included in the computation of diluted net loss per share for all periods as the result would be anti-dilutive. |
Concentration of Credit Risk | Concentration of Credit Risk - Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents. The Company maintains its cash and cash equivalents with high quality financial institutions. At times, these accounts may exceed federally insured limits. The Company has not experienced any losses in such bank accounts. The Company believes it is not exposed to significant credit risk related to cash and cash equivalents. All non-interest bearing cash balances were fully insured up to $250,000 at September 30, 2014. |
Income Taxes | Income Taxes - The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating and tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be recognized. |
Use of Estimates | Use of Estimates - The preparation of financial statements in conformity U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, inventory obsolescence, accruals, stock options, useful lives for depreciation and amortization of long-lived assets, deferred tax assets and the valuation of derivative liabilities. Actual results could differ from estimates, although management does not generally believe such differences would materially affect the financial statements in any given year. However, in regard to the valuation of derivative liabilities determined using various valuation techniques including the Black-Scholes and binomial pricing methodologies, significant fluctuations may materially affect the financial statements in a given year. The Company considers such valuations to be significant estimates. |
Fair Value Measurements | Fair Value Measurements - The Company evaluates financial assets and liabilities subject to fair value measurements in accordance with a fair value hierarchy to prioritize the inputs used to measure fair value. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement, where Level 1 is the highest and Level 3 is the lowest. See Note 12 for the definition of levels and the classification of assets and liabilities in those levels. |
Stock-Based Compensation | Stock-Based Compensation – Compensation cost for all stock-based awards is measured at fair value as of the grant date in accordance with the provisions of ASC 718, “Compensation – Stock Compensation.” The fair value of stock options is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires various judgmental assumptions including volatility and expected option life. The stock-based compensation cost is recognized on the straight line allocation method as expense over the requisite service or vesting period. |
Equity instruments issued to non-employees are accounted for in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees.” Accordingly, compensation is recognized when goods or services are received and is measured using the Black-Scholes valuation model. The Black-Scholes model requires various judgmental assumptions regarding the fair value of the equity instruments at the measurement date and the expected life of the options. | |
The Company has Incentive Stock Option Plans, Non-Qualified Stock Options Plans, a Stock Compensation Plan, Stock Bonus Plans and an Incentive Stock Bonus Plan. In some cases, these Plans are collectively referred to as the “Plans.” All Plans have been approved by the stockholders. | |
The Company’s stock options are not transferable, and the actual value of the stock options that an employee may realize, if any, will depend on the excess of the market price on the date of exercise over the exercise price. The Company has based its assumption for stock price volatility on the variance of daily closing prices of the Company’s stock. The risk-free interest rate assumption was based on the U.S. Treasury rate at date of the grant with term equal to the expected life of the option. Historical data was used to estimate option exercise and employee termination within the valuation model. The expected term of options represents the period of time that options granted are expected to be outstanding and has been determined based on an analysis of historical exercise behavior. If any of the assumptions used in the Black-Scholes model change significantly, stock-based compensation expense for new awards may differ materially in the future from that recorded in the current period. | |
Vesting of restricted stock granted under the Incentive Stock Bonus Plan is subject to service, performance or market conditions and meets the classification of equity awards. These awards were measured at fair market value on the grant-dates for issuances where the attainment of performance criteria is probable and at fair value on the grant-dates, using a Monte Carlo simulation for issuances where the attainment of performance criteria is uncertain. The total compensation cost will be expensed over the estimated requisite service period. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements – In November 2014, the FASB issued guidance codified in ASC 815, Derivatives and Hedging: Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2017. The Company is currently evaluating the impact of the provisions of the update. |
The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements. |
2_DERIVATIVES_LIABILITIES_WARR1
2. DERIVATIVES LIABILITIES, WARRANTS AND OTHER OPTIONS (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||
Derivative liabilities, warrants and other options outstanding | Below is a chart presenting the derivative liabilities, warrants and other options outstanding at September 30, 2014: | ||||||||
Warrants | Issue Date | Shares Issuable upon Exercise of | Exercise | Expiration Date | Refer-ence | ||||
Warrants | Price | ||||||||
Series N | 8/18/08 | 2,844,627 | 0.53 | 8/18/15 | 1 | ||||
Series A | 6/24/09 | 130,347 | 5 | 12/24/14 | 1 | ||||
Schleuning (Series A) | 7/8/09 | 16,750 | 5 | 1/8/15 | 1 | ||||
Series B | 9/4/09 | - | 6.8 | 9/4/14 | 1 | ||||
Series C | 8/20/09 – 8/26/09 | 463,487 | 5.5 | 2/20/15 | 1 | ||||
Series E | 9/21/09 | - | 17.5 | 8/12/14 | 1 | ||||
Series F | 10/6/11 | 1,200,000 | 4 | 10/6/14 | 1 | ||||
Series G | 10/6/11 | - | 4 | 8/12/14 | 1 | ||||
Series H | 1/26/12 | 1,200,000 | 5 | 8/1/15 | 1 | ||||
Series Q | 6/21/12 | 1,200,000 | 5 | 12/22/15 | 1 | ||||
Series R | 12/6/12 | 2,625,000 | 4 | 12/6/16 | 1 | ||||
Series S | 10/11/13-12/24/13 | 23,624,326 | 1.25 | 10/11/18 | 1 | ||||
Series T | 4/17/14 | 1,782,057 | 1.58 | 10/17/14 | 1 | ||||
Series U | 4/17/14 | 445,514 | 1.75 | 10/17/17 | 1 | ||||
Series L | 4/18/07 | - | 7.5 | 4/17/14 | 2 | ||||
Series L (repriced) | 4/18/07 | 70,000 | 2.5 | 4/2/15 | 2 | ||||
Series P | 2/10/12 | 590,001 | 4.50 | 3/6/17 | 3 | ||||
Private Investor | 7/18/05 | - | 6.5 | 7/18/14 | 4 | ||||
Warrants held by Officer and Director | 6/24/09 – 7/6/09 | 349,754 | 4.00 – 5.00 | 12/24/14 – 1/6/15 | 5 | ||||
Consultants | 2/15/05 – 4/25/14 | 149,500 | 0.85 – 20.00 | 2/15/15 - 12/27/17 | 6 | ||||
Derivative Liabilities | The table below presents the derivative instruments and their respective balances at September 30. | ||||||||
2014 | 2013 | ||||||||
Series N warrants | $ | - | $ | 41,501 | |||||
Series A through E warrants | 6,105 | 6,106 | |||||||
Series F and G warrants | - | 12,667 | |||||||
Series H warrants | 12,000 | 36,000 | |||||||
Series Q warrants | 12,000 | 48,000 | |||||||
Series R warrants | 157,500 | 288,750 | |||||||
Series S warrants | 5,197,352 | - | |||||||
Series T warrants | - | - | |||||||
Series U warrants | 120,289 | - | |||||||
Total derivative liabilities | $ | 5,505,246 | $ | 433,024 | |||||
4_RESEARCH_AND_OFFICE_EQUIPMEN1
4. RESEARCH AND OFFICE EQUIPMENT (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | |||||||||
Research and office equipment | Research and office equipment consisted of the following at September 30: | ||||||||
2014 | 2013 | ||||||||
Research equipment | $ | 3,230,882 | $ | 3,184,779 | |||||
Furniture and equipment | 141,269 | 139,992 | |||||||
Leasehold improvements | 131,910 | 131,910 | |||||||
3,504,061 | 3,456,681 | ||||||||
Less: Accumulated depreciation and amortization | (3,101,057 | ) | (2,967,345 | ) | |||||
Net research and office equipment | $ | 403,004 | $ | 489,336 |
5_PATENTS_Tables
5. PATENTS (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Patents Tables | |||||||||
Schedule of Patents | Patents consisted of the following at September 30: | ||||||||
2014 | 2013 | ||||||||
Patents | $ | 1,517,344 | $ | 1,470,047 | |||||
Accumulated amortization | (1,193,756 | ) | (1,151,852 | ) | |||||
Net Patents | $ | 323,588 | $ | 318,195 | |||||
Schedule of total estimated future amortization | The total estimated future amortization is as follows: | ||||||||
Year ending September 30, | |||||||||
2015 | $ | 36,051 | |||||||
2016 | 36,051 | ||||||||
2017 | 36,051 | ||||||||
2018 | 35,716 | ||||||||
2019 | 34,014 | ||||||||
Thereafter | 145,705 | ||||||||
$ | 323,588 |
6_INCOME_TAXES_Tables
6. INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||
Net deferred tax asset | Deferred taxes at September 30 consisted of the following: | ||||||||||||
2014 | 2013 | ||||||||||||
Net operating loss carryforwards | $ | 55,229,799 | $ | 50,485,248 | |||||||||
R&D credit | 1,221,487 | 1,221,487 | |||||||||||
Stock-based compensation | 4,054,450 | 3,323,353 | |||||||||||
Fixed assets and intangibles | 26,329 | - | |||||||||||
Capitalized R&D | 9,897,041 | 5,542,816 | |||||||||||
Vacation and other | 108,891 | 270,121 | |||||||||||
Total deferred tax assets | 70,537,997 | 60,843,025 | |||||||||||
Fixed assets and intangibles | - | (1,968 | ) | ||||||||||
Total deferred tax liabilities | - | (1,968 | ) | ||||||||||
Valuation allowance | (70,537,997 | ) | (60,841,057 | ) | |||||||||
Net deferred tax asset | $ | - | $ | - | |||||||||
Reconciliation of effective tax rate | The reconciliation of these rates for the three years ended September 30, 2014 is as follows: | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Federal Rate | 34 | % | 34 | % | 34 | % | |||||||
State tax rate, net of federal benefit | 5.15 | 4.97 | 5.21 | ||||||||||
State tax rate change | 0.93 | (3.77 | ) | 18.07 | |||||||||
Other adjustments | 0 | 0 | (0.53 | ) | |||||||||
Expired tax attributes | 0 | (87.87 | ) | (33.54 | ) | ||||||||
Adjustment to deferreds | 19.13 | 14.3 | 0 | ||||||||||
Permanent differences | (0.43 | ) | (1.59 | ) | (0.68 | ) | |||||||
Change in valuation allowance | (58.78 | ) | 39.96 | (23.53 | ) | ||||||||
Effective tax rate | 0 | % | 0 | % | 0 | % |
7_STOCK_COMPENSATION_Tables
7. STOCK COMPENSATION (Tables) | 12 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||
Employees and non-employees stock compensation | The Company awarded employees and non-employees with stock compensation as follows: | ||||||||||||
Fiscal Year Ended September 30, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Employees | $ | 3,958,637 | $ | 2,636,905 | $ | 2,266,316 | |||||||
Non-employees | $ | 771,946 | $ | 454,855 | $ | 581,996 | |||||||
Assumptions for Option Pricing | The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions. | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Expected stock price volatility | 72.81 – 86.87% | 84.41-92.28% | 87.72-94.93% | ||||||||||
Risk-free interest rate | 0.59 – 2.65% | 0.75-2.73% | 0.83-1.92% | ||||||||||
Expected life of options | 3.0 – 9.76 Years | 4.85-9.77 Years | 4.82-9.66 Years | ||||||||||
Expected dividend yield | - | - | - | ||||||||||
Stock Option Plans | Non-Qualified and Incentive Stock Option Plans | ||||||||||||
Outstanding | Exercisable | ||||||||||||
Weighted | Weighted | ||||||||||||
Weighted | Ave | Aggregate | Weighted | Ave | Aggregate | ||||||||
Number of | Average | Remaining Contractual | Intrinsic | Number of | Average | Remaining Contractual | Intrinsic | ||||||
Shares | Exercise Price | Term (Years) | Value | Shares | Exercise Price | Term (Years) | Value | ||||||
Outstanding at October 1, 2013 | 5,188,141 | $3.62 | 6.53 | $133 | 2,422,997 | $4.00 | 4.95 | $133 | |||||
Vested | 1,094,803 | $2.14 | |||||||||||
Granted (a) | 1,723,240 | $1.09 | |||||||||||
Exercised | |||||||||||||
Forfeited | 6,316 | $1.60 | |||||||||||
Expired | 73,916 | $4.29 | 73,916 | $4.29 | |||||||||
Cancelled | |||||||||||||
Outstanding at September 30, 2014 | 6,831,149 | $2.98 | 6.55 | $3,600 | 3,443,884 | $3.40 | 5.49 | $3,600 | |||||
(a) | During the year ending September 30, 2014, 80,000 stock options were granted to consultants. | ||||||||||||
Schedule of non-vested options | A summary of the status of the Company’s non-vested options for the year ended September 30, 2014 is presented below: | ||||||||||||
Weighted Average | |||||||||||||
Number of | Grant Date | ||||||||||||
Shares | Fair Value | ||||||||||||
Unvested at October 1, 2012 | 1,649,063 | $ | 3.6 | ||||||||||
Vested | (729,087 | ) | |||||||||||
Granted | 1,859,387 | ||||||||||||
Forfeited | (14,219 | ) | |||||||||||
Unvested at October 1, 2013 | 2,765,144 | $ | 2.79 | ||||||||||
Vested | (1,094,803 | ) | |||||||||||
Granted | 1,723,240 | ||||||||||||
Forfeited | (6,316 | ) | |||||||||||
Unvested at September 30, 2014 | 3,387,265 | $ | 2.15 |
9_COMMITMENTS_AND_CONTINGENCIE1
9. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||
Sep. 30, 2014 | |||||
Commitments And Contingencies Tables | |||||
Schedule of future minimum annual rental payments due under non-cancelable operating leases | Year Ending September 30, | ||||
2015 | $ | 1,785,873 | |||
2016 | 1,769,497 | ||||
2017 | 1,746,328 | ||||
2018 | 1,746,802 | ||||
2019 | 1,808,302 | ||||
2020 and thereafter | 19,570,627 | ||||
Total minimum lease payments: | $ | 28,427,429 |
12_FAIR_VALUE_MEASUREMENTS_Tab
12. FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Fair Value Measurements Tables | |||||||||||||||||
Measured at fair value on a recurring basis | The table below sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the balance sheet at September 30, 2014: | ||||||||||||||||
Quoted Prices in | Significant | ||||||||||||||||
Active Markets for | Other | Significant | |||||||||||||||
Identical Assets or | Observable | Unobservable | |||||||||||||||
Liabilities (Level 1) | Inputs (Level 2) | Inputs (Level 3) | Total | ||||||||||||||
Derivative Instruments | $ | 5,197,352 | $ | - | $ | 307,894 | $ | 5,505,246 | |||||||||
The table below sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the balance sheet at September 30, 2013: | |||||||||||||||||
Quoted Prices in | Significant | ||||||||||||||||
Active Markets for | Other | Significant | |||||||||||||||
Identical Assets or | Observable | Unobservable | |||||||||||||||
Liabilities (Level 1) | Inputs (Level 2) | Inputs (Level 3) | Total | ||||||||||||||
Derivative Instruments | $ | - | $ | - | $ | 433,024 | $ | 433,024 | |||||||||
Reconciliation of beginning and ending balances related to fair value measurements using significant unobservable inputs (Level 3) | The following sets forth the reconciliation of beginning and ending balances related to fair value measurements using significant unobservable inputs (Level 3), as of September 30: | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Beginning balance | $ | 433,024 | $ | 6,983,690 | |||||||||||||
Issuances | 7,791,448 | 4,200,000 | |||||||||||||||
Settlements | (1,445,528 | ) | - | ||||||||||||||
Transfers to Level 1 | (7,321,071 | ) | - | ||||||||||||||
Realized and unrealized losses/(gains) recorded in earnings | 850,021 | (10,750,066 | ) | ||||||||||||||
Ending balance | $ | 307,894 | $ | 433,024 |
13_NET_LOSS_PER_COMMON_SHARE_T
13. NET LOSS PER COMMON SHARE (Tables) | 12 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Net Loss Per Common Share Tables | |||||||||||||
Earnings per share | The following table provides a reconciliation of the numerators and denominators of the basic and diluted per-share computations: | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Net loss – available to | |||||||||||||
common shareholders | $ | (28,483,712 | ) | $ | (9,230,478 | ) | $ | (17,645,930 | ) | ||||
Less: Gain on derivative | |||||||||||||
Instruments | (248,767 | ) | (10,750,666 | ) | (1,911,683 | ) | |||||||
Net loss - diluted | $ | (28,732,479 | ) | $ | (19,981,144 | ) | $ | (19,557,613 | ) | ||||
Weighted average number of | |||||||||||||
shares - basic and diluted | 58,804,622 | 30,279,442 | 25,183,654 | ||||||||||
Loss per share - basic | $ | (0.48 | ) | $ | (0.30 | ) | $ | (0.70 | ) | ||||
Loss per share - diluted | $ | (0.49 | ) | $ | (0.66 | ) | $ | (0.78 | ) |
15_QUARTERLY_INFORMATION_Table
15. QUARTERLY INFORMATION (Tables) | 12 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||
QUARTERLY INFORMATION | The following quarterly data are derived from the Company’s statements of operations. | ||||||||||||||||||||
Financial Data | |||||||||||||||||||||
Fiscal 2014 | |||||||||||||||||||||
Three months | Three months | Three months | Three months | ||||||||||||||||||
ended | ended | ended | Ended | Year ended | |||||||||||||||||
31-Dec | March 31, | June 30, | September 30, | September 30, | |||||||||||||||||
2013 | 2014 | 2014 | 2014 | 2014 | |||||||||||||||||
Revenue | $ | 113,144 | $ | 67,157 | $ | 15,914 | $ | 67,818 | $ | 264,033 | |||||||||||
Operating expenses | 6,047,454 | 6,293,592 | 6,917,243 | 8,579,856 | 27,838,145 | ||||||||||||||||
Non-operating expenses, net | (10,925 | ) | (6,797 | ) | (10,927 | ) | (12,271 | ) | (40,920 | ) | |||||||||||
Gain (loss) on derivative instruments | 1,610,817 | (7,132,348 | ) | 4,467,776 | 1,302,522 | 248,767 | |||||||||||||||
Net loss | (4,334,418 | ) | (13,365,580 | ) | (2,444,480 | ) | (7,221,787 | ) | (27,366,265 | ) | |||||||||||
Issuance of shares due to reset provisions | (1,117,447 | ) | - | - | - | (1,117,447 | ) | ||||||||||||||
Net loss available to | |||||||||||||||||||||
common shareholders | $ | (5,451,865 | ) | $ | (13,365,580 | ) | $ | (2,444,480 | ) | $ | (7,221,787 | ) | $ | (28,483,712 | ) | ||||||
Net loss per share-basic | $ | (0.11 | ) | $ | (0.24 | ) | $ | (0.04 | ) | $ | (0.11 | ) | $ | (0.48 | ) | ||||||
Net loss per share-diluted | $ | (0.15 | ) | $ | (0.24 | ) | $ | (0.11 | ) | $ | (0.13 | ) | $ | (0.49 | ) | ||||||
Weighted average shares-basic and diluted | 48,215,919 | 56,239,562 | 64,664,274 | 66,091,826 | 58,804,622 | ||||||||||||||||
Fiscal 2013 | |||||||||||||||||||||
Three months | Three months | Three months | Three months | ||||||||||||||||||
ended | ended | ended | ended | Year ended | |||||||||||||||||
31-Dec | March 31, | June 30, | September 30, | September 30, | |||||||||||||||||
2012 | 2013 | 2013 | 2013 | 2013 | |||||||||||||||||
Revenue | $ | 15,000 | $ | 15,405 | $ | 113,728 | $ | 15,450 | $ | 159,583 | |||||||||||
Operating expenses | 5,059,457 | 4,255,229 | 5,626,927 | 5,087,191 | 20,027,859 | ||||||||||||||||
Non operating expenses, net | (11,987 | ) | (11,811 | ) | (13,666 | ) | (14,928 | ) | (53,337 | ) | |||||||||||
Gain on derivative instruments | 2,746,198 | 3,538,264 | 1,079,392 | 3,386,812 | 10,750,666 | ||||||||||||||||
Net loss | (2,310,246 | ) | (713,371 | ) | (4,447,473 | ) | (1,699,857 | ) | (9,170,947 | ) | |||||||||||
Modification of warrants | - | - | (59,531 | ) | - | (59,531 | ) | ||||||||||||||
Net loss available to | |||||||||||||||||||||
common shareholders | $ | (2,310,246 | ) | $ | (713,371 | ) | $ | (4,507,004 | ) | $ | (1,699,857 | ) | $ | (9,230,478 | ) | ||||||
Net loss per share-basic | $ | (0.08 | ) | $ | (0.02 | ) | $ | (0.15 | ) | $ | (0.05 | ) | $ | (0.30 | ) | ||||||
Net loss per share-diluted | $ | (0.18 | ) | $ | (0.14 | ) | $ | (0.18 | ) | $ | (0.16 | ) | $ | (0.66 | ) | ||||||
Weighted average shares-basic and diluted | 28,311,602 | 30,901,177 | 30,930,650 | 30,994,932 | 30,279,442 |
1_ORGANIZATION_AND_SUMMARY_OF_2
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | Sep. 30, 2014 |
Organization And Summary Of Significant Accounting Policies Details | |
Fully Insured Amount of non-interest bearing cash balances | $250,000 |
2_DERIVATIVES_LIABILITIES_WARR2
2. DERIVATIVES LIABILITIES, WARRANTS AND OTHER OPTIONS Outstanding (Details) (USD $) | 12 Months Ended |
Sep. 30, 2014 | |
Series N [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 18-Aug-08 |
Shares Issuable upon Exercise of Warrant | 2,844,627 |
Exercise Price | $0.53 |
Expiration Date | 18-Aug-15 |
Series A [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 24-Jun-09 |
Shares Issuable upon Exercise of Warrant | 130,347 |
Exercise Price | $5 |
Expiration Date | 24-Dec-14 |
SchleuningSeriesAMember | |
STOCKHOLDERS' EQUITY | |
Issue Date | 8-Jul-09 |
Shares Issuable upon Exercise of Warrant | 16,750 |
Exercise Price | $5 |
Expiration Date | 8-Jan-15 |
Series B [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 4-Sep-09 |
Exercise Price | $6.80 |
Expiration Date | 4-Sep-14 |
Series C [Member] | |
STOCKHOLDERS' EQUITY | |
Shares Issuable upon Exercise of Warrant | 463,487 |
Exercise Price | $5.50 |
Expiration Date | 20-Feb-15 |
Issue Start date | 20-Aug-09 |
Issue End Date | 26-Aug-09 |
Series E [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 21-Sep-09 |
Exercise Price | $17.50 |
Expiration Date | 12-Aug-14 |
Series F [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 6-Oct-11 |
Shares Issuable upon Exercise of Warrant | 1,200,000 |
Exercise Price | $4 |
Expiration Date | 6-Oct-14 |
Series G [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 6-Oct-11 |
Exercise Price | $4 |
Expiration Date | 12-Aug-14 |
Series H [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 26-Jan-12 |
Shares Issuable upon Exercise of Warrant | 1,200,000 |
Exercise Price | $5 |
Expiration Date | 1-Aug-15 |
Series Q [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 21-Jun-12 |
Shares Issuable upon Exercise of Warrant | 1,200,000 |
Exercise Price | $5 |
Expiration Date | 22-Dec-15 |
SeriesRMember | |
STOCKHOLDERS' EQUITY | |
Issue Date | 6-Dec-12 |
Shares Issuable upon Exercise of Warrant | 2,625,000 |
Exercise Price | $4 |
Expiration Date | 6-Dec-16 |
Series S [Member] | |
STOCKHOLDERS' EQUITY | |
Shares Issuable upon Exercise of Warrant | 23,624,326 |
Exercise Price | $1.25 |
Expiration Date | 11-Oct-18 |
Issue Start date | 11-Oct-13 |
Issue End Date | 24-Dec-13 |
Series T [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 17-Apr-14 |
Shares Issuable upon Exercise of Warrant | 1,782,057 |
Exercise Price | $1.58 |
Expiration Date | 17-Oct-14 |
Series U [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 17-Apr-14 |
Shares Issuable upon Exercise of Warrant | 445,514 |
Exercise Price | $1.75 |
Expiration Date | 17-Oct-17 |
Series L [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 18-Apr-07 |
Exercise Price | $7.50 |
Expiration Date | 17-Apr-14 |
Series L Repriced [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 18-Apr-07 |
Shares Issuable upon Exercise of Warrant | 70,000 |
Exercise Price | $2.50 |
Expiration Date | 2-Apr-15 |
Series P [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 10-Feb-12 |
Shares Issuable upon Exercise of Warrant | 590,001 |
Exercise Price | $4.50 |
Expiration Date | 6-Mar-17 |
Private Investors [Member] | |
STOCKHOLDERS' EQUITY | |
Issue Date | 18-Jul-05 |
Exercise Price | $6.50 |
Expiration Date | 18-Jul-14 |
Warrants Held by Officer And Director [Member] | |
STOCKHOLDERS' EQUITY | |
Shares Issuable upon Exercise of Warrant | 349,754 |
Issue Start date | 24-Jun-09 |
Issue End Date | 6-Jul-09 |
Expiration start date | 24-Dec-14 |
Expiration end date | 6-Jan-15 |
Exercise Price Minimum | $4 |
Exercise Price Maximum | $5 |
Consultants [Member] | |
STOCKHOLDERS' EQUITY | |
Shares Issuable upon Exercise of Warrant | 149,500 |
Issue Start date | 15-Feb-05 |
Issue End Date | 25-Apr-14 |
Expiration start date | 15-Feb-15 |
Expiration end date | 27-Dec-17 |
Exercise Price Minimum | $0.85 |
Exercise Price Maximum | $20 |
2_DERIVATIVES_LIABILITIES_WARR3
2. DERIVATIVES LIABILITIES, WARRANTS AND OTHER OPTIONS (Details 1) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Derivatives Liabilities Warrants And Other Options Details 1 | ||
Series N | $0 | $41,501 |
Series A through E warrants | 6,105 | 6,106 |
Series F and G warrants | 0 | 12,667 |
Series H warrants | 12,000 | 36,000 |
Series Q warrants | 12,000 | 48,000 |
Series R warrants | 157,500 | 288,750 |
Series S warrants | 5,197,352 | 0 |
Series T warrants | 0 | 0 |
Series U warrants | 120,289 | 0 |
Total derivative liabilities | $5,505,246 | $433,024 |
2_DERIVATIVES_LIABILITIES_WARR4
2. DERIVATIVES LIABILITIES, WARRANTS AND OTHER OPTIONS (Details Narrative) (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Gain on warrants | $248,767 | $10,750,666 | $1,911,683 |
Expense recorded for consulting arrangement | 694,955 | 342,097 | |
Prepaid consulting expenses | 26,468 | 57,553 | |
General and administrative expense | 79,400 | 161,500 | |
Common restricted stock | 70,000 | 60,000 | |
Series A through E warrants | |||
Gain on warrants | 1 | 780,883 | 588,469 |
Series B [Member] | |||
Fair value of outstanding warrants | 0 | ||
Series C [Member] | |||
Warrants outstanding | 463,487 | ||
Fair value of outstanding warrants | 4,635 | 4,635 | |
Series E [Member] | |||
Fair value of outstanding warrants | 0 | ||
Series N [Member] | |||
Loss on warrants | 1,404,027 | ||
Gain on warrants | 788,533 | 207,507 | |
Fair value of outstanding warrants | 41,501 | ||
Series F [Member] | |||
Fair value of outstanding warrants | 0 | 12,000 | |
SeriesFAndGWarrantsMember | |||
Gain on warrants | 12,667 | 1,634,000 | 500,000 |
Series H [Member] | |||
Gain on warrants | 24,000 | 1,764,000 | 600,000 |
Series T [Member] | |||
Gain on warrants | 350,088 | ||
Series Q [Member] | |||
Gain on warrants | 36,000 | 1,872,000 | 240,000 |
SeriesRMember | |||
Gain on warrants | 131,250 | 3,911,250 | |
Consultants [Member] | |||
Expense recorded for consulting arrangement | 104,540 | ||
Prepaid consulting expenses | 4,170 | ||
General and administrative expense | 439,008 | ||
Common restricted stock | 409,968 | ||
Expenses recorded for services | 474,263 | 180,597 | |
Series S [Member] | |||
Gain on warrants | 1,098,787 | ||
Series A [Member] | Series K and Series A through E Warrants [Member] | |||
Warrants outstanding | 130,347 | ||
Derivative liability | 1,303 | 1,303 | |
Private Investors [Member] | Series K and Series A through E Warrants [Member] | |||
Warrants outstanding | 16,750 | ||
Derivative liability | 167 | 168 | |
Series G [Member] | |||
Fair value of outstanding warrants | $667 |
4_RESEARCH_AND_OFFICE_EQUIPMEN2
4. RESEARCH AND OFFICE EQUIPMENT (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Research And Office Equipment Details | ||
Research equipment | $3,230,882 | $3,184,779 |
Furniture and equipment | 141,269 | 139,992 |
Leasehold improvements | 131,910 | 131,910 |
Gross | 3,504,061 | 3,456,681 |
Less: Accumulated depreciation and amortization | -3,101,057 | -2,967,345 |
Net research and office equipment | $403,004 | $489,336 |
4_RESEARCH_AND_OFFICE_EQUIPMEN3
4. RESEARCH AND OFFICE EQUIPMENT (Details Narrative) (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Research And Office Equipment Details Narrative | |||
Depreciation expense | $188,967 | $275,917 | $447,171 |
5_PATENTS_Details
5. PATENTS (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Patents | $1,517,344 | $1,470,047 |
Accumulated amortization | -1,193,756 | -1,151,852 |
Net Patents | $323,588 | $318,195 |
5_PATENTS_Details_1
5. PATENTS (Details 1) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Patents Details 1 | ||
Year ending September 30, 2015 | $36,051 | |
Year ending September 30, 2016 | 36,051 | |
Year ending September 30, 2017 | 36,051 | |
Year ending September 30, 2018 | 35,716 | |
Year ending September 30, 2019 | 34,014 | |
Thereafter | 145,705 | |
Total | $323,588 | $318,195 |
5_PATENTS_Details_Narrative
5. PATENTS (Details Narrative) (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Patents Details Narrative | |||
Patent impairment charges | $1,182 | $22,628 | $44,921 |
Amortization of patent costs | $42,785 | $88,207 | $86,297 |
6_INCOME_TAXES_Net_deferred_ta
6. INCOME TAXES Net deferred tax asset (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Income Taxes Net Deferred Tax Asset Details | ||
Net operating loss carryforwards | $55,229,799 | $50,485,248 |
R&D credit | 1,221,487 | 1,221,487 |
Stock-based compensation | 4,054,450 | 3,323,353 |
Fixed assets and intangibles | 26,329 | 0 |
Capitalized R&D | 9,897,041 | 5,542,816 |
Vacation and other | 108,891 | 270,121 |
Total deferred tax assets | 70,537,997 | 60,843,025 |
Fixed assets and intangibles | 0 | -1,968 |
Total deferred tax liabilities | 0 | -1,968 |
Valuation allowance | -70,537,997 | -60,841,057 |
Net deferred tax asset | $0 | $0 |
6_INCOME_TAXES_Reconciliation_
6. INCOME TAXES Reconciliation of effective tax rate (Details) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Income Taxes Reconciliation Of Effective Tax Rate Details | |||
Federal Rate | 34.00% | 34.00% | 34.00% |
State tax rate, net of federal benefit | 5.15% | 4.97% | 5.21% |
State tax rate change | 0.93% | -3.77% | 18.07% |
Other adjustments | 0.00% | 0.00% | -0.53% |
Expired tax attributes | 0.00% | -87.87% | -33.54% |
Adjustment to Deferreds | 19.13% | 14.30% | 0.00% |
Permanent differences | -0.43% | -1.59% | -0.68% |
Change in valuation allowance | -58.78% | 39.96% | -23.53% |
Effective tax rate | 0.00% | 0.00% | 0.00% |
7_STOCK_COMPENSATION_Awards_De
7. STOCK COMPENSATION Awards (Details) (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Stock Compensation Awards Details | |||
Employees | $3,958,637 | $2,636,905 | $2,266,316 |
Non-employees | $771,946 | $454,855 | $581,996 |
7_STOCK_COMPENSATION_Assumptio
7. STOCK COMPENSATION Assumptions (Details) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Stock Compensation Assumptions Details | |||
Expected stock price volatility, min | 72.81% | 84.41% | 87.82% |
Expected stock price volatility, max | 86.87% | 92.28% | 94.93% |
Risk-free interest rate, min | 0.59% | 0.75% | 0.83% |
Risk-free interest rate, max | 2.65% | 2.73% | 1.92% |
Expected life of options, min | 3 years | 4 years 10 months 6 days | 4 years 9 months 26 days |
Expected life of options, max | 9 years 9 months 4 days | 9 years 9 months 7 days | 9 years 7 months 28 days |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
7_STOCK_COMPENSATION_NonQualif
7. STOCK COMPENSATION Non-Qualified and Incentive Stock Option Plans (Details) (USD $) | 12 Months Ended |
Sep. 30, 2014 | |
Outstanding | |
Number of Stocks Outstanding, Beginning | 5,188,141 |
Number of Stocks Granted | 1,723,240 |
Number of Stocks Forfeited | 6,316 |
Number of Stocks Expired | 73,916 |
Number of Stocks Cancelled | 0 |
Number of Options Outstanding, Ending | 6,831,149 |
Weighted Average Exercise Price Outstanding, Beginning | $3.62 |
Weighted Average Exercise Price Granted | $1.09 |
Weighted Average Exercise Price Forfeited | $1.60 |
Weighted Average Exercise Price Expired | $4.29 |
Weighted Average Exercise Price Outstanding, Ending | $2.98 |
Weighted Average Remaining Contractual Life (in years) Outstanding, Beginning | 6 years 6 months 11 days |
Weighted Average Remaining Contractual Life (in years) Outstanding, Ending | 6 years 6 months 18 days |
Aggregate Intrinsic Value Outstanding, Beginning | $133 |
Aggregate Intrinsic Value Outstanding, Ending | 3,600 |
Exercisable | |
Number of Stocks Outstanding, Beginning | 2,422,997 |
Number of Stock Vested | 1,094,803 |
Number of Stocks Expired | 73,916 |
Number of Options Outstanding, Ending | 3,443,884 |
Weighted Average Exercise Price Outstanding, Beginning | $4 |
Weighted Average Exercise Price Vested | $2.14 |
Weighted Average Exercise Price Expired | $4.29 |
Weighted Average Exercise Price Outstanding, Ending | $3.40 |
Weighted Average Remaining Contractual Life (in years) Outstanding, Beginning | 4 years 11 months 12 days |
Weighted Average Remaining Contractual Life (in years) Outstanding, Ending | 5 years 5 months 27 days |
Aggregate Intrinsic Value Exercisable, beginning | 133 |
Aggregate Intrinsic Value Exercisable, ending | $3,600 |
7_STOCK_COMPENSATION_Nonvested
7. STOCK COMPENSATION Nonvested Options (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Stock Compensation Nonvested Options Details | ||
Number of unvested shares, Beginning | 2,765,144 | 1,649,063 |
Vested shares | -1,094,803 | -729,087 |
Granted shares | 1,723,240 | 1,859,387 |
Forfeited shares | -6,316 | -14,219 |
Number of unvested shares, Ending | 3,387,265 | 2,765,144 |
Weighted Average Grant Date Fair Value, Beginning | $2.79 | $3.60 |
Weighted Average Grant Date Fair Value, Ending | $2.15 | $2.79 |
7_STOCK_COMPENSATION_Details_N
7. STOCK COMPENSATION (Details Narrative) (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Stock Compensation Details Narrative | |||
Expense recognized for options issued or vested during the year | $3,958,637 | $2,636,905 | $2,229,326 |
Expense relating to the restricted stock | 1,477,954 | ||
Unrecognized compensation expense | $7,184,548 | ||
Weighted average period | 5 years 4 months 6 days |
8_EMPLOYEE_BENEFIT_PLAN_Detail
8. EMPLOYEE BENEFIT PLAN (Detail Narrative) (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Employee Benefit Plan Detail Narrative | |||
Expense for Company's contribution to employee benefit plan | $159,632 | $162,865 | $158,500 |
9_COMMITMENTS_AND_CONTINGENCIE2
9. COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Sep. 30, 2014 |
Commitments And Contingencies Details | |
2015 | $1,785,873 |
2016 | 1,769,497 |
2017 | 1,746,328 |
2018 | 1,746,802 |
2019 | 1,808,302 |
2020 and thereafter | 19,570,627 |
Total minimum lease payments: | $28,427,429 |
9_COMMITMENTS_AND_CONTINGENCIE3
9. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Research and development expense | $17,000,145 | $12,681,049 | $10,368,695 |
Rent expense, including amortization of deferred rent | 2,650,829 | 2,651,460 | 2,659,532 |
Total deferred rent asset | 5,277,939 | 4,733,865 | |
Deferred rent asset, non-current | 4,733,865 | 5,448,381 | |
R & D deferred rent liability | 6,387 | 3,992 | |
Deferred rent liability | 6,278 | 12,412 | |
Ergomed Collaborative Arrangement | |||
Research and development expense | $4,385,000 | $838,000 |
10_LOANS_FROM_OFFICER_AND_INVE1
10. LOANS FROM OFFICER AND INVESTOR (Details Narrative) (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Loans From Officer And Investor Details Narrative | |||
Interest expense paid to Mr. de Clara | $179,409 | $151,808 | $165,608 |
11_STOCKHOLDERS_EQUITY_Details
11. STOCKHOLDERS EQUITY (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2012 | |
Stock warrants exercised | 2,695,562 | |
Direct financing fees | $91,820 | |
Restricted shares issued to officers and employees | 15,700,000 | |
Unrecognized compensation expense | 7,184,548 | |
Unrecognized compensation expense, options | 7,288,244 | |
Series N [Member] | ||
Stock warrants exercised | 92,715 | |
Series O [Member] | ||
Stock warrants exercised | 650,000 | |
Proceeds from warrants exercised | 1,625,000 | |
Series K and Series L warrants [Member] | ||
Stock warrants exercised | 369,120 | |
Proceeds from warrants exercised | 1,131,359 | |
Exercise price, minimum | $3 | |
Exercise price, maximum | $3.40 | |
Series F [Member] | ||
Warrants outstanding | 1,200,000 | |
Fair value of warrants | 0 | |
Series H [Member] | ||
Warrants outstanding | 1,200,000 | |
Fair value of warrants | 12,000 | |
Series Q [Member] | ||
Warrants outstanding | 1,200,000 | |
Fair value of warrants | 12,000 | |
SeriesRMember | ||
Warrants outstanding | 2,625,000 | |
Fair value of warrants | 157,500 | |
Series S [Member] | ||
Warrants outstanding | 23,624,326 | |
Fair value of warrants | 5,197,352 | |
Series T [Member] | ||
Fair value of warrants | 0 | |
Series U [Member] | ||
Fair value of warrants | $120,289 |
12_FAIR_VALUE_MEASUREMENTS_Det
12. FAIR VALUE MEASUREMENTS (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Level1 | ||
Derivative instruments | $5,197,352 | $0 |
Level2 | ||
Derivative instruments | 0 | 0 |
Level3 | ||
Derivative instruments | 307,894 | 433,024 |
Total | ||
Derivative instruments | $5,505,246 | $433,024 |
12_FAIR_VALUE_MEASUREMENTS_Det1
12. FAIR VALUE MEASUREMENTS (Details 1) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Fair Value Measurements Details 1 | ||
Beginning balance | $433,024 | $6,983,690 |
Issuances | 7,791,448 | 4,200,000 |
Settlements | -1,445,528 | 0 |
Transfers to Level 1 | -7,321,071 | 0 |
Realized and unrealized losses/(gains) recorded in earnings | 850,021 | -10,750,066 |
Ending balance | $307,894 | $433,024 |
13_NET_LOSS_PER_COMMON_SHARE_D
13. NET LOSS PER COMMON SHARE (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Net Loss Per Common Share Details | |||||||||||
Net loss - available to common shareholders | ($7,221,787) | ($2,444,480) | ($13,365,580) | ($5,451,865) | ($1,699,857) | ($4,507,004) | ($713,371) | ($2,310,246) | ($28,483,712) | ($9,230,478) | ($17,645,930) |
Less: Gain on derivative Instruments | 248,767 | 10,750,666 | 1,911,683 | ||||||||
Net loss - diluted | ($28,732,479) | ($19,981,144) | ($19,557,613) | ||||||||
Weighted average number of shares - basic and diluted | 66,091,826 | 64,664,274 | 56,239,562 | 48,215,919 | 30,994,932 | 30,930,650 | 30,901,177 | 28,311,602 | 58,804,622 | 30,279,442 | 25,183,654 |
Loss per share - basic | ($0.11) | ($0.04) | ($0.24) | ($0.11) | ($0.05) | ($0.15) | ($0.02) | ($0.08) | ($0.48) | ($0.30) | ($0.70) |
Loss per share - diluted | ($0.13) | ($0.11) | ($0.24) | ($0.15) | ($0.16) | ($0.18) | ($0.14) | ($0.18) | ($0.49) | ($0.66) | ($0.78) |
13_NET_LOSS_PER_COMMON_SHARE_D1
13. NET LOSS PER COMMON SHARE (Details Narrative) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Net Loss Per Common Share Details Narrative | |||
Options and warrants excluded from earnings per share due to anti-dilutive effect | 40,271,000 | 12,351,000 | 9,827,000 |
15_QUARTERLY_INFORMATION_Detai
15. QUARTERLY INFORMATION (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Quarterly Information Details | |||||||||||
Revenue | $67,818 | $15,914 | $67,157 | $113,144 | $15,450 | $113,728 | $15,405 | $15,000 | $264,033 | $159,583 | |
Operating expenses | 8,579,856 | 6,917,243 | 6,293,592 | 6,047,454 | 5,087,191 | 5,626,927 | 4,255,229 | 5,059,457 | 27,838,145 | 20,027,859 | 17,497,450 |
Non-operating expenses, net | -12,271 | -10,927 | -6,797 | -10,925 | -14,928 | -13,666 | -11,811 | -11,987 | -40,920 | -53,337 | |
Gain (loss) on derivative instruments | 1,302,522 | 4,467,776 | -7,132,348 | 1,610,817 | 3,386,812 | 1,079,392 | 3,538,264 | 2,746,198 | 248,767 | 10,750,666 | |
Net loss | -7,221,787 | -2,444,480 | -13,365,580 | -4,334,418 | -1,699,857 | -4,447,473 | -713,371 | -2,310,246 | -27,366,265 | -9,170,947 | -15,477,310 |
Modification of warrants | 0 | -59,531 | 0 | 0 | -59,531 | ||||||
Issuance of shares due to reset provisions | 0 | 0 | 0 | -1,117,447 | 0 | -59,531 | 0 | 0 | -1,117,447 | -59,531 | |
Net loss available to common shareholders | ($7,221,787) | ($2,444,480) | ($13,365,580) | ($5,451,865) | ($1,699,857) | ($4,507,004) | ($713,371) | ($2,310,246) | ($28,483,712) | ($9,230,478) | ($17,645,930) |
Net loss per share-basic | ($0.11) | ($0.04) | ($0.24) | ($0.11) | ($0.05) | ($0.15) | ($0.02) | ($0.08) | ($0.48) | ($0.30) | ($0.70) |
Net loss per share-diluted | ($0.13) | ($0.11) | ($0.24) | ($0.15) | ($0.16) | ($0.18) | ($0.14) | ($0.18) | ($0.49) | ($0.66) | ($0.78) |
Weighted average shares-basic and diluted | 66,091,826 | 64,664,274 | 56,239,562 | 48,215,919 | 30,994,932 | 30,930,650 | 30,901,177 | 28,311,602 | 58,804,622 | 30,279,442 | 25,183,654 |