• Filing Date: 2019-05-14
  • Form Type: 10-Q/A
  • Description: Quarterly report (Amendment)
v3.19.1
C. STOCKHOLDERS EQUITY
6 Months Ended
Mar. 31, 2019
Equity [Abstract]  
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.