Stockholders' Deficiency | 6. Stockholders’ Deficiency Preferred Stock The Company has authorized a total of 5,000,000 shares of preferred stock, par value $0.001 per share. As of March 31, 2019 and December 31, 2018, 1,250,000 shares were designated as 9% Cumulative Convertible Preferred Stock (non-voting, “9% Preferred Stock”); 37,500 shares were designated as Series B Convertible Preferred Stock (non-voting, “Series B Preferred Stock”); 205,000 shares were designated as Series A Junior Participating Preferred Stock (non-voting, “Series A Junior Participating Preferred Stock”); and 1,700 shares were designated as Series G 1.5% Convertible Preferred Stock. Accordingly, as of March 31, 2019 and December 31, 2018, 3,505,800 shares of preferred stock were undesignated and may be issued with such rights and powers as the Board of Directors may designate. Series B Preferred Stock outstanding as of March 31, 2019 and 2018 consisted of 37,500 shares issued in a May 1991 private placement. Each share of Series B Preferred Stock is convertible into approximately 0.00030 shares of common stock at an effective conversion price of $2,208.375 per share of common stock, which is subject to adjustment under certain circumstances. As of March 31, 2019 and December 31, 2018, the shares of Series B Preferred Stock outstanding are convertible into 11 shares of common stock. The Company may redeem the Series B Preferred Stock for $25,001, equivalent to $0.6667 per share, an amount equal to its liquidation preference, at any time upon 30 days prior notice. Common Stock There are 3,872,076 shares of the Company’s Common Stock outstanding as of March 31, 2019. After reserving an aggregate of 10,726,417 for conversions of convertible debt as well as common stock purchase options and warrants exercises, there are 50,401,507 shares of the Company’s Common Stock available for future issuances. Common Stock Warrants Information with respect to the issuance and exercise of common stock purchase warrants in connection with the Convertible Note Payable and Warrant Purchase Agreement, and Notes Payable to Officers, is provided at Note 4. A summary of warrant activity for the three-months ended March 31, 2019 is presented below. Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in Years) Warrants outstanding at December 31, 2018 1,783,229 $ 2.20393 Issued 110,000 1.50000 Expired (18,401 ) 5.71706 Warrants outstanding at March 31, 2019 1,874,828 $ 2.12815 2.96 Warrants exercisable at March 31, 2019 1,874,828 $ 2.12815 2.96 The exercise prices of common stock warrants outstanding and exercisable are as follows at March 31, 2019: Exercise Price Warrants Outstanding (Shares) Warrants Exercisable (Shares) Expiration Date $ 1.0000 916,217 916,217 September 20, 2022 $ 1.2870 41,002 41,002 April 17, 2019 $ 1.5000 190,000 190,000 December 30, 2023 $ 1.5620 130,284 130,284 December 31, 2021 $ 1.5750 238,814 238,814 April 30, 2023 $ 2.7500 8,000 8000 September 20, 2022 $ 4.8500 5,155 5,155 September 23, 2019 $ 4.8750 108,594 108,594 September 30, 2020 $ 5.0000 5,000 5,000 September 22, 2019 $ 6.8348 145,758 145,758 September 30, 2020 $ 7.9300 86,004 86,004 February 28, 2021 1,874, 828 1,874,828 Based on a fair market value of $0.85000 per share on March 31, 2019, there was no intrinsic value of exercisable in-the-money common stock warrants as of March 31, 2019. A summary of warrant activity for the three-months ended March 31, 2018 is presented below. Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in Years) Warrants outstanding at December 31, 2017 1,464,415 $ 2.68146 Issued - - Warrants outstanding at March 31, 2018 1,464,415 $ 2.68146 4.59 Warrants exercisable at March 31, 2018 1,464,415 $ 2.68146 4.59 The exercise prices of common stock warrants outstanding and exercisable are as follows at March 31, 2018: Exercise Price Warrants Outstanding (Shares) Warrants Exercisable (Shares) Expiration Date $ 1.0000 916,217 916,217 September 20, 2022 $ 1.2870 41,002 41,002 April 17, 2019 $ 1.5620 130,284 130,284 December 31, 2021 $ 2.7500 8,000 8000 September 20, 2022 $ 4.8500 5,155 5,155 September 23, 2019 $ 4.8750 108,594 108,594 September 30, 2020 $ 5.0000 5,000 5,000 September 22, 2019 $ 5.1025 10,309 10,309 January 29, 2019 $ 6.5000 8,092 8,092 February 4, 2019 $ 6.8348 145,758 145,758 September 30, 2020 $ 7.9300 86,004 86,004 February 28, 2021 1,464,415 1,464,415 Based on a fair market value of $1.3100 per share on March 31, 2018, the intrinsic value of exercisable in-the-money common stock warrants was $284,970 as of March 31, 2018. Stock Options On March 18, 2014, the stockholders of the Company holding a majority of the votes to be cast on the issue approved the adoption of the Company’s 2014 Equity, Equity-Linked and Equity Derivative Incentive Plan (the “2014 Plan”), which had been previously adopted by the Board of Directors of the Company, subject to stockholder approval. The Plan permits the grant of options and restricted stock with respect to up to 325,025 shares of common stock, in addition to stock appreciation rights and phantom stock, to directors, officers, employees, consultants and other service providers of the Company. On June 30, 2015, the Board of Directors adopted the 2015 Stock and Stock Option Plan (the “2015 Plan”). The 2015 Plan initially provided for, among other things, the issuance of either or any combination of restricted shares of common stock and non-qualified stock options to purchase up to 461,538 shares of the Company’s common stock for periods up to ten years to management, members of the Board of Directors, consultants and advisors. The Company has not and does not intend to present the 2015 Plan to stockholders for approval. On August 18, 2015, the Board of Directors increased the number of shares that may be issued under the 2015 Plan to 769,231 shares of the Company’s common stock. On March 31, 2016, the Board of Directors further increased the number of shares that may be issued under the 2015 Plan to 1,538,461 shares of the Company’s common stock. On January 17, 2017, the Board of Directors further increased the number of shares that may be issued under the 2015 Plan to 3,038,461 shares of the Company’s common stock. On December 9, 2017, the Board of Directors further increased the number of shares that may be issued under the 2015 Plan to 6,985,260 shares of the Company’s common stock. On December 28, 2018, the Board of Directors further increased the number of shares that may be issued under the 2015 Plan to 8,985,260 shares of the Company’s common stock. Information with respect to the Black-Scholes variables used in connection with the evaluation of the fair value of stock-based compensation is provided at Note 3. There were no grants of common stock options or of stock for the three-month period ended March 31, 2019. The exercise prices of common stock options outstanding and exercisable were as follows at March 31, 2019: Exercise Price Options Outstanding (Shares) Options Exercisable (Shares) Expiration Date $ 0.7000 21,677 21,677 November 21, 2023 $ 1.1200 310,388 310,388 April 5, 2023 $ 1.2500 16,762 16,762 December 7, 2022 $ 1.3500 34,000 34,000 July 28, 2022 $ 1.4500 1,849,418 1,849,418 December 9, 2027 $ 1.4500 100,000 100,000 December 9, 2027 $ 2.0000 285,000 285,000 June 30, 2022 $ 2.0000 25,000 25,000 July 26, 2022 $ 3.9000 395,000 395,000 January 17, 2022 $ 4.5000 7,222 7,222 September 2, 2021 $ 5.6875 89,686 89,686 June 30, 2020 $ 5.7500 2,608 2,608 September 12, 2021 $ 6.4025 27,692 27,692 August 18, 2020 $ 6.4025 129,231 129,231 August 18, 2022 $ 6.4025 261,789 261,789 August 18, 2025 $ 6.8250 8,791 8,791 December 11, 2020 $ 7.3775 523,077 523,077 March 31, 2021 $ 8.1250 169,231 169,231 June 30, 2022 $ 13.0000 3,846 3,846 April 14, 2019 $ 13.9750 3,385 3,385 March 14, 2024 $ 15.4700 7,755 7,755 April 8, 2020 $ 15.9250 2,462 2,462 February 28, 2024 $ 16.0500 46,154 46,154 July 17, 2019 $ 16.6400 1,538 1,538 January 29, 2020 $ 19.5000 9,487 9,487 July 17, 2022 $ 19.5000 6,410 6,410 August 10, 2022 4,337,609 4,337,609 There was no deferred compensation expense for the outstanding stock options at March 31, 2019. Based on a fair market value of $0.8500 per share on March 31, 2019, the intrinsic value of exercisable in-the-money options was $3,252 as of March 31, 2019. Pier Contingent Stock Consideration In connection with the merger transaction with Pier effective August 10, 2012, RespireRx issued 179,747 newly issued shares of its common stock with an aggregate fair value of $3,271,402 ($18.2000 per share), based upon the closing price of RespireRx’s common stock on August 10, 2012. The shares of common stock were distributed to stockholders, convertible note holders, warrant holders, option holders, and certain employees and vendors of Pier in satisfaction of their interests and claims. The common stock issued by RespireRx represented approximately 41% of the 443,205 common shares outstanding immediately following the closing of the transaction. Pursuant to the terms of the transaction, RespireRx agreed to issue additional contingent consideration, consisting of up to 56,351 shares of common stock, to Pier’s former security holders and certain other creditors and service providers (the “Pier Stock Recipients”) that received RespireRx’s common stock as part of the Pier transaction if certain of RespireRx’s stock options and warrants outstanding immediately prior to the closing of the merger were subsequently exercised. In the event that such contingent shares were issued, the ownership percentage of the Pier Stock Recipients, following their receipt of such additional shares, could not exceed their ownership percentage as of the initial transaction date. The stock options and warrants outstanding at June 30, 2012 were all out-of-the-money on August 10, 2012. During late July and early August 2012, shortly before completion of the merger, the Company issued options to officers and directors at that time to purchase a total of 22,651 shares of common stock exercisable for ten years at $19.5000 per share. By October 1, 2012, these options, as well as the options and warrants outstanding at June 30, 2012, were also out-of-the-money and continued to be out-of-the-money through March 31, 2019. There were no stock options or warrants exercised subsequent to August 10, 2012 that triggered additional contingent consideration, and the only remaining stock options outstanding that could still trigger the additional contingent consideration remained out-of-the-money through March 31, 2019. As of March 31, 2019, due to the expirations and forfeitures of RespireRx stock options and warrants occurring since August 10, 2012, 6,497 contingent shares of common stock remained potentially issuable under the Pier merger agreement. The Company concluded that the issuance of any of the contingent shares to the Pier Stock Recipients was remote, as a result of the large spread between the exercise prices of these stock options and warrants as compared to the common stock trading range, the subsequent expiration or forfeiture of most of the options and warrants, the Company’s distressed financial condition and capital requirements, and that these stock options and warrants have remained significantly out-of-the-money through March 31, 2019. Accordingly, the Company considered the fair value of the contingent consideration to be immaterial and therefore did not ascribe any value to such contingent consideration. If any such shares are ultimately issued to the former Pier stockholders, the Company will recognize the fair value of such shares as a charge to operations at that time. Reserved and Unreserved Shares of Common Stock On January 17, 2017, the Board of Directors of the Company approved the adoption of an amendment of the Amended and Restated RespireRx Pharmaceuticals, Inc. 2015 Stock and Stock Option Plan (as amended, the “2015 Plan”). That amendment increases the shares issuable under the plan by 1,500,000, from 1,538,461 to 3,038,461. On December 9, 2017, the Board of Directors further amended the 2015 Plan to increase the number of shares that may be issued under the 2015 Plan to 6,985,260 shares of the Company’s common stock. On December 28, 2018, the Board of Directors further amended the 2015 Plan to increase the number of shares that may be issued under the 2015 Plan to 8,985,260 shares of the Company’s common stock. Other than the change in the number of shares available under the 2015 Plan, no other changes were made to the 2015 Plan by these amendments noted above. At March 31, 2019, the Company had 65,000,000 shares of common stock authorized and 3,872,076 shares of common stock issued and outstanding. Furthermore, as of March 31, 2019, the Company had reserved an aggregate of 11 shares for issuance upon conversion of the Series B Preferred Stock; 1,874,828 shares for issuance upon exercise of warrants; 4,337,609 shares for issuance upon exercise of outstanding stock options; 63,236 shares to cover equity grants available for future issuance pursuant to the Company’s 2014 Equity, Equity-linked and Equity Derivative Incentive Plan; 4,427,343 shares to cover equity grants available for future issuance pursuant to the 2015 Plan; 16,893 shares for issuance upon conversion of the Convertible Notes; and 6,497 shares issuable as contingent shares pursuant to the Pier merger. Accordingly, as of March 31, 2019, the Company had an aggregate of 10,726,417 shares of common stock reserved for issuance and 50,401,507 shares of common stock unreserved and available for future issuance. The Company expects to satisfy its future common stock commitments through the issuance of authorized but unissued shares of common stock. |