C. STOCKHOLDERS' EQUITY |
The changes in stockholders’
equity during the six months ended March 31, 2019 are as follows:
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
|
Common |
|
|
Stock |
|
|
Paid-In |
|
|
Accumulated |
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCES AT OCTOBER 1, 2018 |
|
|
28,034,487 |
|
|
$ |
280,346 |
|
|
$ |
331,312,184 |
|
|
$ |
(331,591,614 |
) |
|
$ |
916 |
|
Warrant exercises |
|
|
298,682 |
|
|
|
2,987 |
|
|
|
646,766 |
|
|
|
- |
|
|
|
649,753 |
|
401(k) contributions paid in common stock |
|
|
12,279 |
|
|
|
123 |
|
|
|
35,118 |
|
|
|
- |
|
|
|
35,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued to nonemployees for service |
|
|
62,784 |
|
|
|
628 |
|
|
|
201,752 |
|
|
|
- |
|
|
|
202,380 |
|
Shares returned for settlement of clinical research costs |
|
|
(564,905 |
) |
|
|
(5,649 |
) |
|
|
5,649 |
|
|
|
- |
|
|
|
- |
|
Equity based compensation - employees |
|
|
- |
|
|
|
- |
|
|
|
573,660 |
|
|
|
- |
|
|
|
573,660 |
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,245,902 |
|
|
|
1,245,902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCES AT DECEMBER 31, 2018 |
|
|
27,843,327 |
|
|
|
278,435 |
|
|
|
332,775,129 |
|
|
|
(330,345,712 |
) |
|
|
2,707,852 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant exercises |
|
|
1,523,933 |
|
|
|
15,239 |
|
|
|
2,640,395 |
|
|
|
- |
|
|
|
2,655,634 |
|
401(k) contributions paid in common stock |
|
|
10,419 |
|
|
|
104 |
|
|
|
36,779 |
|
|
|
- |
|
|
|
36,883 |
|
Stock issued to nonemployees for service |
|
|
77,449 |
|
|
|
774 |
|
|
|
224,855 |
|
|
|
- |
|
|
|
225,629 |
|
Equity based compensation - employees |
|
|
(3,500 |
) |
|
|
(35 |
) |
|
|
530,865 |
|
|
|
- |
|
|
|
530,830 |
|
Shares issued for settlement of clinical research costs |
|
|
500,000 |
|
|
|
5,000 |
|
|
|
1,285,000 |
|
|
|
- |
|
|
|
1,290,000 |
|
Stock issuance costs |
|
|
- |
|
|
|
- |
|
|
|
(43,625 |
) |
|
|
- |
|
|
|
(43,625 |
) |
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6,447,681 |
) |
|
|
(6,447,681 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCES AT MARCH 31, 2019 |
|
|
29,951,628 |
|
|
$ |
299,517 |
|
|
$ |
337,449,398 |
|
|
$ |
(336,793,393 |
) |
|
$ |
955,522 |
|
The changes in stockholders’
equity during the six months ended March 31, 2018 are as follows:
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
|
Common |
|
|
Stock |
|
|
Paid-In |
|
|
Accumulated |
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCES AT OCTOBER 1, 2017 |
|
|
11,903,133 |
|
|
$ |
119,031 |
|
|
$ |
296,298,401 |
|
|
$ |
(299,754,409 |
) |
|
$ |
(3,336,977 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock |
|
|
1,289,478 |
|
|
|
12,895 |
|
|
|
2,437,105 |
|
|
|
- |
|
|
|
2,450,000 |
|
401(k) contributions paid in common stock |
|
|
18,984 |
|
|
|
190 |
|
|
|
35,690 |
|
|
|
- |
|
|
|
35,880 |
|
Stock issued to nonemployees for service |
|
|
13,705 |
|
|
|
137 |
|
|
|
25,270 |
|
|
|
- |
|
|
|
25,407 |
|
Equity based compensation - employees |
|
|
- |
|
|
|
- |
|
|
|
1,448,098 |
|
|
|
- |
|
|
|
1,448,098 |
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6,187,830 |
) |
|
|
(6,187,830 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCES AT DECEMBER 31, 2017 |
|
|
13,258,051 |
|
|
|
132,581 |
|
|
|
300,975,618 |
|
|
|
(305,942,239 |
) |
|
|
(4,834,040 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock |
|
|
2,501,145 |
|
|
|
25,011 |
|
|
|
4,652,130 |
|
|
|
- |
|
|
|
4,667,141 |
|
401(k) contributions paid in common stock |
|
|
25,901 |
|
|
|
259 |
|
|
|
36,261 |
|
|
|
- |
|
|
|
36,520 |
|
Stock issued to nonemployees for service |
|
|
124,082 |
|
|
|
1,241 |
|
|
|
227,254 |
|
|
|
- |
|
|
|
228,495 |
|
Equity based compensation - employees |
|
|
- |
|
|
|
- |
|
|
|
279,817 |
|
|
|
- |
|
|
|
279,817 |
|
Conversion of notes payable and interest to common stock |
|
|
55,373 |
|
|
|
554 |
|
|
|
108,746 |
|
|
|
- |
|
|
|
109,300 |
|
Shares issued for settlement of clinical research costs |
|
|
660,000 |
|
|
|
6,600 |
|
|
|
1,240,800 |
|
|
|
- |
|
|
|
1,247,400 |
|
Stock issuance cost |
|
|
- |
|
|
|
- |
|
|
|
(94,773 |
) |
|
|
- |
|
|
|
(94,773 |
) |
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,708,135 |
) |
|
|
(4,708,135 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCES AT MARCH 31, 2018 |
|
|
16,624,552 |
|
|
$ |
166,246 |
|
|
$ |
307,425,853 |
|
|
$ |
(310,650,374 |
) |
|
$ |
(3,058,275 |
) |
Stock options, stock bonuses and
compensation granted by the Company as of March 31, 2019 are as follows:
Name of Plan |
|
Total Shares Reserved Under Plans |
|
|
Shares Reserved for Outstanding Options |
|
|
Shares Issued |
|
|
Remaining Options/Shares
Under Plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Stock Options Plans |
|
|
138,400 |
|
|
|
123,558 |
|
|
|
N/A |
|
|
|
385 |
|
Non-Qualified Stock Option Plans |
|
|
3,387,200 |
|
|
|
3,010,476 |
|
|
|
N/A |
|
|
|
335,619 |
|
Stock Bonus Plans |
|
|
783,760 |
|
|
|
N/A |
|
|
|
322,928 |
|
|
|
460,799 |
|
Stock Compensation Plan |
|
|
134,000 |
|
|
|
N/A |
|
|
|
115,590 |
|
|
|
18,410 |
|
Incentive Stock Bonus Plan |
|
|
640,000 |
|
|
|
N/A |
|
|
|
620,500 |
|
|
|
16,000 |
|
Stock options, stock bonuses and
compensation granted by the Company as of September 30, 2018 are as follows:
Name of Plan |
|
Total Shares Reserved Under Plans |
|
|
Shares Reserved for Outstanding Options |
|
|
Shares Issued |
|
|
Remaining Options/Shares Under Plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Stock Option Plans |
|
|
138,400 |
|
|
|
123,558 |
|
|
|
N/A |
|
|
|
385 |
|
Non-Qualified Stock Option Plans |
|
|
3,387,200 |
|
|
|
3,036,569 |
|
|
|
N/A |
|
|
|
309,526 |
|
Stock Bonus Plans |
|
|
783,760 |
|
|
|
N/A |
|
|
|
297,230 |
|
|
|
486,497 |
|
Stock Compensation Plan |
|
|
134,000 |
|
|
|
N/A |
|
|
|
118,590 |
|
|
|
15,410 |
|
Incentive Stock Bonus Plan |
|
|
640,000 |
|
|
|
N/A |
|
|
|
624,000 |
|
|
|
16,000 |
|
Stock option activity:
|
Six Months Ended March 31, |
|
2019 |
2018 |
Granted |
500 |
10,300 |
Expired |
2,400 |
24,379 |
Forfeited |
24,193 |
1,393 |
|
Three Months Ended March 31, |
|
2019 |
2018 |
Granted |
- |
- |
Expired |
- |
584 |
Forfeited |
24,193 |
6,856 |
Employee stock based compensation
expense includes the expense related to options issued or vested and restricted stock. Non-employee expense includes the expense
related to options and stock issued to consultants expensed over the period of their service contracts. Stock based compensation
expense is included in general and administrative expenses on the statements of operations.
Non-employee stock based compensation
expense includes the value of shares and options issued under consulting arrangements. At March 31, 2019 and September 30, 2018,
approximately $124,000 and $207,000, respectively, are included in prepaid expenses.
Warrants and Non-Employee Options
The following chart represents the
warrants and non-employee options outstanding at March 31, 2019:
Warrant |
Issue Date |
|
Shares Issuable upon Exercise
of Warrants |
|
|
Exercise Price |
|
Expiration
Date |
|
Series N |
8/18/2008 |
|
|
85,339 |
|
|
$ |
3.00 |
|
2/18/2020 |
|
|
Series V |
5/28/2015 |
|
|
810,127 |
|
|
$ |
19.75 |
|
5/28/2020 |
|
|
Series UU |
6/11/2018 |
|
|
187,562 |
|
|
$ |
2.80 |
|
6/11/2020 |
|
|
Series W |
10/28/2015 |
|
|
688,930 |
|
|
$ |
16.75 |
|
10/28/2020 |
|
|
Series X |
1/13/2016 |
|
|
120,000 |
|
|
$ |
9.25 |
|
1/13/2021 |
|
|
Series Y |
2/15/2016 |
|
|
26,000 |
|
|
$ |
12.00 |
|
2/15/2021 |
|
|
Series ZZ |
5/23/2016 |
|
|
20,000 |
|
|
$ |
13.75 |
|
5/18/2021 |
|
|
Series BB |
8/26/2016 |
|
|
16,000 |
|
|
$ |
13.75 |
|
8/22/2021 |
|
|
Series Z |
5/23/2016 |
|
|
264,000 |
|
|
$ |
13.75 |
|
11/23/2021 |
|
|
Series FF |
12/8/2016 |
|
|
68,048 |
|
|
$ |
3.91 |
|
12/1/2021 |
|
|
Series CC |
12/8/2016 |
|
|
680,480 |
|
|
$ |
5.00 |
|
12/8/2021 |
|
|
Series HH |
2/23/2017 |
|
|
20,000 |
|
|
$ |
3.13 |
|
2/16/2022 |
|
|
Series AA |
8/26/2016 |
|
|
200,000 |
|
|
$ |
13.75 |
|
2/22/2022 |
|
|
|
Series JJ |
3/14/2017 |
|
|
30,000 |
|
|
$ |
3.13 |
|
3/8/2022 |
|
|
|
Series LL |
4/30/2017 |
|
|
26,398 |
|
|
$ |
3.59 |
|
4/30/2022 |
|
|
|
Series MM |
6/22/2017 |
|
|
893,491 |
|
|
$ |
1.86 |
|
6/22/2022 |
|
|
|
Series NN |
7/24/2017 |
|
|
539,300 |
|
|
$ |
2.52 |
|
7/24/2022 |
|
|
|
Series OO |
7/31/2017 |
|
|
60,000 |
|
|
$ |
2.52 |
|
7/31/2022 |
|
|
|
Series QQ |
8/22/2017 |
|
|
3,500 |
|
|
$ |
2.50 |
|
8/22/2022 |
|
|
|
Series GG |
2/23/2017 |
|
|
200,000 |
|
|
$ |
3.00 |
|
8/23/2022 |
|
|
|
Series II |
3/14/2017 |
|
|
216,500 |
|
|
$ |
3.00 |
|
9/14/2022 |
|
|
|
Series RR |
10/30/2017 |
|
|
555,370 |
|
|
$ |
1.65 |
|
10/30/2022 |
|
|
|
Series KK |
5/3/2017 |
|
|
213,870 |
|
|
$ |
3.04 |
|
11/3/2022 |
|
|
|
Series SS |
12/19/2017 |
|
|
794,740 |
|
|
$ |
2.09 |
|
12/18/2022 |
|
|
|
Series TT |
2/5/2018 |
|
|
1,210,827 |
|
|
$ |
2.24 |
|
2/5/2023 |
|
|
|
Series PP |
8/28/2017 |
|
|
112,500 |
|
|
$ |
2.30 |
|
2/28/2023 |
|
|
|
Series WW |
7/2/2018 |
|
|
69,225 |
|
|
$ |
1.63 |
|
6/28/2023 |
|
|
|
Series VV |
7/2/2018 |
|
|
2,515,000 |
|
|
$ |
1.75 |
|
1/2/2024 |
|
|
|
Consultants |
7/1/16 - 7/28/17 |
|
|
28,000 |
|
|
$ |
2.18-$11.50 |
|
6/30/2019-
7/27/2027 |
|
|
|
* No current
period changes to these warrants
1. |
Derivative Liabilities |
The table below presents the fair
value of the warrant liabilities at the balance sheet dates:
|
|
March 31,
2019 |
|
|
September 30,
2018 |
|
Series S warrants |
|
$ |
- |
|
|
$ |
33 |
|
Series V warrants |
|
|
275,584 |
|
|
|
770,436 |
|
Series W warrants |
|
|
383,053 |
|
|
|
999,081 |
|
Series Z warrants |
|
|
372,936 |
|
|
|
487,767 |
|
Series ZZ warrants |
|
|
21,577 |
|
|
|
34,215 |
|
Series AA warrants |
|
|
287,206 |
|
|
|
380,474 |
|
Series BB warrants |
|
|
20,720 |
|
|
|
28,456 |
|
Series CC warrants |
|
|
1,440,026 |
|
|
|
1,779,724 |
|
Series DD warrants |
|
|
- |
|
|
|
1,249,287 |
|
Series EE warrants |
|
|
- |
|
|
|
1,249,287 |
|
Series FF warrants |
|
|
154,318 |
|
|
|
188,921 |
|
Series GG warrants |
|
|
500,478 |
|
|
|
607,228 |
|
Series HH warrants |
|
|
48,174 |
|
|
|
58,816 |
|
Series II warrants |
|
|
544,792 |
|
|
|
660,135 |
|
Series JJ warrants |
|
|
72,716 |
|
|
|
88,642 |
|
Series KK warrants |
|
|
543,463 |
|
|
|
656,930 |
|
Series LL warrants |
|
|
62,886 |
|
|
|
77,632 |
|
Total warrant liabilities |
|
$ |
4,727,929 |
|
|
$ |
9,317,064 |
|
|
|
|
|
|
|
|
|
|
The table below presents the gains/(losses)
on the warrant liabilities for the six months ended March 31:
|
|
2019 |
|
|
2018 |
|
Series S warrants |
|
$ |
33 |
|
|
$ |
11,927 |
|
Series V warrants |
|
|
494,852 |
|
|
|
(3,547 |
) |
Series W warrants |
|
|
616,028 |
|
|
|
(24,131 |
) |
Series Z warrants |
|
|
114,831 |
|
|
|
8,095 |
|
Series ZZ warrants |
|
|
12,638 |
|
|
|
189 |
|
Series AA warrants |
|
|
93,268 |
|
|
|
8,676 |
|
Series BB warrants |
|
|
7,736 |
|
|
|
293 |
|
Series CC warrants |
|
|
339,698 |
|
|
|
41,919 |
|
Series DD warrants |
|
|
1,249,287 |
|
|
|
5,456 |
|
Series EE warrants |
|
|
1,249,287 |
|
|
|
5,456 |
|
Series FF warrants |
|
|
34,603 |
|
|
|
7,301 |
|
Series GG warrants |
|
|
106,750 |
|
|
|
37,419 |
|
Series HH warrants |
|
|
10,642 |
|
|
|
2,683 |
|
Series II warrants |
|
|
115,343 |
|
|
|
50,608 |
|
Series JJ warrants |
|
|
15,926 |
|
|
|
4,010 |
|
Series KK warrants |
|
|
113,467 |
|
|
|
36,924 |
|
Series LL warrants |
|
|
14,746 |
|
|
|
3,307 |
|
Net gain on warrant liabilities |
|
$ |
4,589,135 |
|
|
$ |
196,585 |
|
The table below presents the gains/(losses)
on the warrant liabilities for the three months ended March 31:
|
|
2019 |
|
|
2018 |
|
Series S warrants |
|
$ |
- |
|
|
$ |
(1,141 |
) |
Series V warrants |
|
|
(61,480 |
) |
|
|
94,766 |
|
Series W warrants |
|
|
(10,822 |
) |
|
|
105,336 |
|
Series Z warrants |
|
|
(89,290 |
) |
|
|
63,630 |
|
Series ZZ warrants |
|
|
(1,685 |
) |
|
|
3,532 |
|
Series AA warrants |
|
|
(63,951 |
) |
|
|
56,036 |
|
Series BB warrants |
|
|
(4,374 |
) |
|
|
2,924 |
|
Series CC warrants |
|
|
(325,908 |
) |
|
|
238,740 |
|
Series DD warrants |
|
|
- |
|
|
|
(27 |
) |
Series EE warrants |
|
|
- |
|
|
|
(27 |
) |
Series FF warrants |
|
|
(34,459 |
) |
|
|
25,348 |
|
Series GG warrants |
|
|
(106,032 |
) |
|
|
152,551 |
|
Series HH warrants |
|
|
(10,309 |
) |
|
|
8,345 |
|
Series II warrants |
|
|
(115,246 |
) |
|
|
229,414 |
|
Series JJ warrants |
|
|
(15,536 |
) |
|
|
12,552 |
|
Series KK warrants |
|
|
(114,628 |
) |
|
|
151,951 |
|
Series LL warrants |
|
|
(13,451 |
) |
|
|
10,885 |
|
Net (loss)/gain on warrant liabilities |
|
$ |
(967,171 |
) |
|
$ |
1,154,815 |
|
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 dates is recognized as a gain or loss.
Expiration of Derivative Liabilities
On December 10, 2018, 1,360,960 Series
DD and 1,360,960 Series EE warrants, with an exercise price of $4.50, expired.
On October 11, 2018, 327,729 Series
S warrants, with an exercise price of $31.25, expired.
No derivative liabilities expired
during the three months ended March 31, 2019.
2.
Securities Purchase Agreement
The Company has entered into several
Securities Purchase Agreements (SPAs) with Ergomed plc, one of its Clinical Research Organizations responsible for managing the
Phase 3 clinical trial, to facilitate a partial payment of amounts due Ergomed. Under the Agreements, the Company issued Ergomed
shares of common stock as a forbearance fee in exchange for Ergomed’s agreement to provisionally forbear collection of the
payables in an amount equal to the net proceeds from the resales of the shares issued to Ergomed. Upon issuance, the Company expenses
the full value of the shares as Other Non-Operating Gain/Loss and subsequently offsets the expense as amounts are realized through
the resale by Ergomed and reduces accounts payable to Ergomed. Any amounts received from the resell of the shares in excess of
the payables will be applied towards the satisfaction of any future amounts owed.
On December 31, 2018, the prior SPA
expired. Pursuant to that arrangement, Ergomed returned all 564,905 unsold shares for cancellation. The par value of those shares
was reclassed from Common Stock to Additional Paid-In Capital on the balance sheet.
On January 9, 2019, the Company entered
into a new SPA under which it issued Ergomed 500,000 restricted shares of the Company’s common stock valued at approximately
$1.3 million. This current SPA expires on December 31, 2019.
During the six months ended March
31, 2019 and 2018, respectively, the Company decreased Accounts Payable by approximately $1.7 million and $1.2 million through
the resale of 545,324 and 684,541 shares.
The following table summarizes the
Other Non-Operating Gains (Loss) for the six and three months ended March 31, 2019 and 2018 relating to these agreements:
|
|
Six Months Ended |
|
|
Three Months Ended |
|
|
|
3/31/2019 |
|
|
3/31/2018 |
|
|
3/31/2019 |
|
|
3/31/2018 |
|
Amount realized through the resale of shares |
|
$ |
1,711,353 |
|
|
$ |
1,225,291 |
|
|
$ |
559,177 |
|
|
$ |
478,590 |
|
Fair value of shares upon issuance |
|
|
1,290,000 |
|
|
|
1,247,400 |
|
|
|
1,290,000 |
|
|
|
1,247,400 |
|
Other non-operating gain (loss) |
|
$ |
421,353 |
|
|
$ |
(22,109 |
) |
|
$ |
(730,823 |
) |
|
$ |
(768,810 |
) |
As of March 31, 2019, Ergomed holds
308,671 shares and may resell the shares or return the shares to the Company for cancellation until December 31, 2019.
3. Incentive Stock
Bonus Plan
During the six and three months ended
March 31, 2019, 3,500 shares of common stock issued from the 2014 Incentive Stock Bonus Plan were forfeited.
|