Cover
Cover - shares | 3 Months Ended | |
Sep. 30, 2020 | Nov. 12, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Innovation Pharmaceuticals Inc. | |
Entity Central Index Key | 0001355250 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Sep. 30, 2020 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 | |
Entity Common Stock Shares Outstanding | 355,957,332 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Current Assets: | ||
Cash | $ 7,252,000 | $ 6,018,000 |
Prepaid expenses and other current assets | 74,000 | 92,000 |
Total Current Assets | 7,326,000 | 6,110,000 |
Other Assets: | ||
Patent costs - net | 5,437,000 | 3,060,000 |
Deferred offering costs | 1,318,000 | 0 |
Security deposit | 78,000 | 78,000 |
Total Other Assets | 4,365,000 | 3,138,000 |
Total Assets | 11,691,000 | 9,248,000 |
Current Liabilities: | ||
Accounts payable - (including related party payables of approx. $1,486,000 and $1,498,000, respectively) | 2,165,000 | 2,043,000 |
Accrued expenses - (including related party accruals of approx. $49,000 and $19,000, respectively) | 89,000 | 59,000 |
Accrued salaries and payroll taxes - (including related party accrued salaries of approx. $2,377,000 and $2,777,000, respectively) | 2,573,000 | 3,215,000 |
Operating lease - current liability | 144,000 | 138,000 |
Note payable - related party | 1,580,000 | 1,822,000 |
Accrued dividend - Series B 5% convertible preferred stock | 13,000 | 13,000 |
Loan payable | 79,000 | 79,000 |
Total Current Liabilities | 6,643,000 | 7,369,000 |
Other Liabilities: | ||
Operating lease - long term liability | 379,000 | 417,000 |
Total Liabilities | 7,022,000 | 7,786,000 |
Commitments and contingencies (Note 9) | 0 | 0 |
Stockholders' Equity | ||
Preferred stock, $0.001 par value, 10,000,000 designated shares, no shares issued and outstanding | 0 | 0 |
Additional paid-in capital | 107,290,000 | 102,819,000 |
Accumulated deficit | (102,417,000) | (101,244,000) |
Treasury Stock, at cost (1,093,292 shares and 659,448 shares as of September 30, 2020 and June 30, 2020, respectively) | (239,000) | (146,000) |
Total Stockholders' Equity | 4,669,000 | 1,462,000 |
Total Liabilities and Stockholders' Equity | 11,691,000 | 9,248,000 |
Common Class A [Member] | ||
Stockholders' Equity | ||
Common stock value | 35,000 | 33,000 |
Common Class B [Member] | ||
Stockholders' Equity | ||
Common stock value | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Related party payables | $ 1,486,000 | $ 1,498,000 |
Related party expenses | 49,000 | 19,000 |
Related party accrued salaries | $ 2,377,000 | $ 2,777,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares designated | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury Stock Shares | 1,093,292 | 659,448 |
Common Class A [Member] | ||
Common stock , par value | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 600,000,000 | 300,000,000 |
Common Stock, shares issued | 349,638,386 | 329,829,992 |
Common Stock, shares outstanding | 348,957,332 | 329,170,544 |
Common Class B [Member] | ||
Common stock , par value | $ .0001 | $ .0001 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 4,018,180 | 1,818,180 |
Common Stock, shares outstanding | 3,605,942 | 1,818,180 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||
Revenues | $ 0 | $ 400,000 |
Operating expenses: | ||
Research and development expenses | 524,000 | 803,000 |
General and administrative expenses | 264,000 | 265,000 |
Officers' payroll and payroll tax expenses | 127,000 | 118,000 |
Professional fees | 214,000 | 155,000 |
Total operating expenses | 1,129,000 | 1,341,000 |
Net loss from operations | (1,129,000) | (941,000) |
Other income (expense) | ||
Other income | 0 | 0 |
Change in fair value of preferred stock | 0 | 102,000 |
Interest expense - debt | (44,000) | (48,000) |
Interest expense - preferred stock liability | 0 | (20,000) |
Warrants modification expense | 0 | 0 |
Impairment expense of operating lease | 0 | (643,000) |
Total other income (expense) | (44,000) | (609,000) |
Loss before provision for income taxes | (1,173,000) | (1,550,000) |
Provision for income taxes | 0 | 0 |
Net loss | $ (1,173,000) | $ (1,550,000) |
Basic and diluted loss per share attributable to common stockholders | $ 0 | $ (0.01) |
Basic and diluted weighted average number of common shares | 337,494,640 | 205,666,583 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY) - USD ($) | Total | Common Stock A [Member] | Common Stock B [Member] | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit [Member] |
Balance, shares at Jun. 30, 2019 | 202,631,923 | 909,090 | 228,218 | |||
Balance, amount at Jun. 30, 2019 | $ (4,129,000) | $ 21,000 | $ 0 | $ (91,000) | $ 90,537,000 | $ (94,596,000) |
Shares issued to officer as equity awards at $0.398 to $0.705 | 65,000 | 0 | 0 | 0 | 65,000 | 0 |
Stock options issued to officer as equity awards at $0.398 to $0.705 | 124,000 | 0 | 0 | 0 | 124,000 | 0 |
Shares issued to employee for services at $0.398 - $1.37 | 28,000 | 0 | 0 | 0 | 28,000 | 0 |
Stock options issued to employee for services at $0.398 - $1.37 | 10,000 | 0 | 0 | 0 | 10,000 | 0 |
Shares issued to consultant for services at $0.43 - $0.73 | 3,000 | 0 | 0 | 0 | 3,000 | 0 |
Stock options issued to consultant for services at $0.43 | 6,000 | $ 0 | $ 0 | $ 0 | 6,000 | 0 |
Issuance of 12,500 shares to Consultant, shares | 12,500 | |||||
Issuance of 12,500 shares to Consultant, amount | 0 | $ 0 | $ 0 | $ 0 | 0 | 0 |
Issuance of 1,066,667 shares to Officer & 421,611 shares were withheld for tax purposes as Treasury shares, shares | 1,066,667 | |||||
Issuance of 1,066,667 shares to Officer & 421,611 shares were withheld for tax purposes as Treasury shares, amount | 0 | $ 0 | $ 0 | $ 0 | 0 | 0 |
Issuance of shares for tax purposes as Treasury Shares one, shares | (421,611) | 421,611 | ||||
Issuance of shares for tax purposes as Treasury Shares one, amount | (54,000) | $ 0 | $ 0 | $ (54,000) | 0 | 0 |
Issuance of 58,394 shares to employee & 9,619 shares were withheld for tax purposes as Treasury shares, shares | 58,394 | |||||
Issuance of 58,394 shares to employee & 9,619 shares were withheld for tax purposes as Treasury shares, amount | 0 | $ 0 | $ 0 | $ 0 | 0 | 0 |
Issuance of shares for tax purposes as Treasury Shares, shares | (9,619) | 9,619 | ||||
Issuance of shares for tax purposes as Treasury Shares, amount | (1,000) | $ 0 | $ 0 | $ (1,000) | 0 | 0 |
Conversion of 890 preferred stocks to 9,030,870 common stock, shares | 9,030,870 | |||||
Conversion of 890 preferred stocks to 9,030,870 common stock, amount | 476,000 | $ 1,000 | $ 0 | $ 0 | 475,000 | 0 |
Excess of exercise price of 1,045 warrants over fair value | 478,000 | 0 | 0 | 0 | 478,000 | 0 |
Net loss for the three months ended 9/30/2019 | (1,550,000) | $ 0 | $ 0 | $ 0 | 0 | (1,550,000) |
Balance, shares at Sep. 30, 2019 | 212,369,124 | 909,090 | 659,448 | |||
Balance, amount at Sep. 30, 2019 | (4,544,000) | $ 22,000 | $ 0 | $ (146,000) | 91,726,000 | (96,146,000) |
Balance, shares at Jun. 30, 2020 | 329,170,544 | 1,818,180 | 659,448 | |||
Balance, amount at Jun. 30, 2020 | 1,462,000 | $ 33,000 | $ 0 | $ (146,000) | 102,819,000 | (101,244,000) |
Issuance of shares for tax purposes as Treasury Shares one, shares | (412,238) | 412,238 | ||||
Issuance of shares for tax purposes as Treasury Shares one, amount | (90,000) | $ 0 | $ 0 | $ (90,000) | 0 | 0 |
Issuance of shares for tax purposes as Treasury Shares, shares | (21,606) | 21,606 | ||||
Issuance of shares for tax purposes as Treasury Shares, amount | (3,000) | $ 0 | $ 0 | $ (3,000) | 0 | 0 |
Excess of exercise price of 1,045 warrants over fair value | 0 | |||||
Net loss for the three months ended 9/30/2019 | (1,173,000) | $ 0 | $ 0 | $ 0 | 0 | (1,173,000) |
Shares sold to Aspire Capital under 2020 Agreement at $0.20 - $0.22 range, shares | 13,500,000 | |||||
Shares sold to Aspire Capital under 2020 Agreement at $0.20 - $0.22 range, amount | 2,851,000 | $ 1,000 | $ 0 | $ 0 | 2,850,000 | 0 |
Shares issued as commitment fee, 7/31/2020 at $0.23, net, shares | 6,250,000 | |||||
Shares issued as commitment fee, 7/31/2020 | 1,318,000 | $ 1,000 | 0 | 0 | 1,317,000 | 0 |
Shares issued to employee for services at $0.132 to $0.398 | 5,000 | 0 | 0 | 0 | 5,000 | 0 |
Stock options issued to employee for services at $0.132 to $0.398 | 14,000 | 0 | 0 | 0 | 14,000 | 0 |
Stock options issued to consultant for services at $0.14 to $0.32 | 43,000 | $ 0 | $ 0 | $ 0 | 43,000 | 0 |
Purchase of 2,200,000 shares of Common Stock Class B to Officer & 412,238 shares were withheld for tax purposes as Treasury shares, shares | 2,200,000 | |||||
Purchase of 2,200,000 shares of Common Stock Class B to Officer & 412,238 shares were withheld for tax purposes as Treasury shares, amount | 242,000 | $ 0 | $ 0 | $ 0 | 242,000 | 0 |
Issuance of 58,394 shares to employee & 21,606 shares were withheld for tax purposes as Treasury shares, shares | 58,394 | |||||
Issuance of 58,394 shares to employee & 21,606 shares were withheld for tax purposes as Treasury shares, amount | 0 | $ 0 | $ 0 | $ 0 | 0 | 0 |
Balance, shares at Sep. 30, 2020 | 348,957,332 | 3,605,942 | 1,093,292 | |||
Balance, amount at Sep. 30, 2020 | $ 4,669,000 | $ 35,000 | $ 0 | $ (239,000) | $ 107,290,000 | $ (102,417,000) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,173,000) | $ (1,550,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock based compensation | 62,000 | 236,000 |
Amortization of patent costs | 94,000 | 93,000 |
Interest expense-preferred stock | 0 | 20,000 |
Change in fair value of preferred stock | 0 | (102,000) |
Impairment of operating lease | 0 | 643,000 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and security deposits | 18,000 | (11,000) |
Accounts payable | 122,000 | 16,000 |
Accrued expenses | 30,000 | (3,000) |
Accrued officers' salaries and payroll taxes | (642,000) | 38,000 |
Operating lease liability | (32,000) | 0 |
Net cash used in operating activities | (1,521,000) | (620,000) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Patent costs | (3,000) | (21,000) |
Net cash used in investing activities | (3,000) | (21,000) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Sale of common stock, net of offering costs | 2,851,000 | 0 |
Proceeds from exercise of warrants | 0 | 1,027,000 |
Purchase of treasury stock | (93,000) | (55,000) |
Net cash provided by financing activities | 2,758,000 | 972,000 |
NET DECREASE IN CASH | 1,234,000 | 331,000 |
CASH, BEGINNING OF PERIOD | 6,018,000 | 579,000 |
CASH, END OF PERIOD | 7,252,000 | 910,000 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid for interest | 15,000 | 51,000 |
Cash paid for tax | 0 | 0 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW INVESTING AND FINANCING ACTIVITIES | ||
Shares issued as deferred offering costs | 1,438,000 | 0 |
Cancellation of shareholder debt for the purchase of 2.2M shares of Common Stock Class B shares | 242,000 | 0 |
Conversion of Series B Convertible Preferred stock to Common stock | 0 | 476,000 |
Excess of exercise price of 1,045 warrants over fair value | $ 0 | $ 478,000 |
Basis of Presentation and Natur
Basis of Presentation and Nature of Operations | 3 Months Ended |
Sep. 30, 2020 | |
Basis of Presentation and Nature of Operations | |
Note 1. Basis of Presentation and Nature of Operations | Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements of Innovation Pharmaceuticals Inc. have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements and should be read in conjunction with our audited financial statements for the year ended June 30, 2020, included in our Annual Report on Form 10-K for the year ended June 30, 2020. In the opinion of the management of Innovation Pharmaceuticals Inc., all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three-month periods have been made. Results for the interim period presented are not necessarily indicative of the results that might be expected for the entire fiscal year. When used in these notes, the terms “Company,” “Innovation,” “we,” “us” or “our” mean Innovation Pharmaceuticals Inc. Basis of Presentation Innovation Pharmaceuticals Inc. was incorporated on August 1, 2005 in the State of Nevada. Effective June 5, 2017, the Company amended its Articles of Incorporation and changed its name from Cellceutix Corporation to Innovation Pharmaceuticals Inc. On February 15, 2019, the Company formed IPIX Pharma Limited (“IPIX Pharma”), a wholly-owned subsidiary incorporated under the Companies Act 2014 of Ireland. IPIX Pharma is a Private Company Limited by Shares. The subsidiary will serve as a key hub for strategic collaboration with European companies and medical communities in addition to providing cost-saving efficiencies and flexibility with respect to developing Brilacidin under European Medicines Agency standards. The Company is a clinical stage biopharmaceutical company. The Company’s common stock is quoted on OTCQB, symbol “IPIX.” Basis of Consolidation These consolidated financial statements include the accounts of Innovation, a Nevada corporation, and our wholly-owned subsidiary, IPIX Pharma, an Ireland limited company. All significant intercompany transactions and balances have been eliminated in consolidation. There was no translation gain and loss for the three months ended September 30, 2020 and 2019. Nature of Operations - Overview We are in the business of developing innovative small molecule therapies to treat diseases with significant medical need, particularly in the areas of inflammatory diseases, cancer, dermatology and anti-infectives. Our strategy is to use our business and scientific expertise to maximize the value of our pipeline. We will do this by focusing initially on our lead compounds, Brilacidin and Kevetrin, and advancing them as quickly as possible along the regulatory pathway. We aim to develop the highest quality data and broadest intellectual property to support our compounds. We currently own all development and marketing rights to our products, other than the license rights granted to Alfasigma S.p.A. in July 2019 for the development, manufacturing and commercialization of locally-administered Brilacidin for UP/UPS. In order to successfully develop and market our products, we may have to partner with additional companies. Prospective partners may require that we grant them significant development and/or commercialization rights in return for agreeing to share the risk of development and/or commercialization. |
Liquidity
Liquidity | 3 Months Ended |
Sep. 30, 2020 | |
Liquidity | |
Note 2. Liquidity | As of September 30, 2020, the Company’s cash amounted to $7.3 million and current liabilities amounted to $6.6 million. The Company had expended substantial funds on its clinical trials and expects to continue our spending on research and development expenditures. Our net losses incurred for the three months ended September 30, 2020 and 2019, amounted to $1.2 million and $1.6 million, respectively, and we had a working capital of approximately $0.7 million at September 30, 2020 and a working capital deficit of approximately $(1.2) million atJune 30, 2020. On July 31, 2020, the Company entered into a new common stock purchase agreement (the “2020 Agreement”) with Aspire Capital which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $30.0 million of the Company’s common stock over the 24-month term of the Agreement. In consideration for entering into the 2020 Agreement, the Company issued to Aspire Capital 6,250,000 shares of its Class A Common Stock as a commitment fee. The commitment fee of approximately $1.4 million was recorded as deferred financing costs and additional paid-in capital and this asset will be amortized over the life of the 2020 Agreement. As of September 30, 2020, the available balance is $27.1 million. We anticipate that future budget expenditures will be approximately $10.3 million for the fiscal year ending June 30, 2021, including approximately $8.3 million for clinical activities, supportive research, and drug product. Alternatively, if we decide to pursue a more aggressive plan with our clinical trials, we will require additional sources of capital during the fiscal year 2021 to meet our working capital requirements for our planned clinical trials. Potential sources for capital include grant funding for COVID-19 research and equity financings. There can be no assurances that we will be successful in receiving any grant funding for our programs. Management believes that the amounts available from Aspire Capital and under the Company’s effective shelf registration statement will be sufficient to fund the Company’s operations for the next 12 months. If we are unable to generate enough working capital from our current or future financing agreements with Aspire Capital when needed or secure additional sources of funding, it may be necessary to significantly reduce our current rate of spending through reductions in staff and delaying, scaling back or stopping certain research and development programs, including more costly Phase 2 and Phase 3 clinical trials on our wholly-owned development programs as these programs progress into later stage development. Insufficient liquidity may also require us to relinquish greater rights to product candidates at an earlier stage of development or on less favorable terms to us and our stockholders than we would otherwise choose in order to obtain up-front license fees needed to fund operations. These events could prevent us from successfully executing our operating plan. |
Significant Accounting Policies
Significant Accounting Policies and Recent Accounting Pronouncements | 3 Months Ended |
Sep. 30, 2020 | |
Significant Accounting Policies and Recent Accounting Pronouncements | |
Note 3. Significant Accounting Policies and Recent Accounting Pronouncements | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include contract research accruals, recoverability of long-lived assets, valuation of equity grants and income tax valuation. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates. Basic Loss per Share Basic and diluted loss per share are computed based on the weighted-average common shares and common share equivalents outstanding during the period. Common share equivalents consist of stock options, restricted stock, warrants and convertible related party notes payable. Common share equivalents were excluded from the computation of diluted earnings per share for the three months ended September 30, 2020 and 2019, because their effect was anti-dilutive. Weighted average shares of common stock outstanding used in the calculation of basic and diluted earnings per share were as follows: September 30, 2020 2019 Weighted average shares outstanding-basic 337,494,640 205,666,583 Dilutive options and restricted stock and warrants — — Weighted average shares outstanding-diluted 337,494,640 205,666,583 Antidilutive securities not included: Stock options 20,876,085 22,662,383 Stock options arising from convertible note payable and accrued interest 1,620,842 3,911,188 Restricted stock grants 116,786 1,729,288 Warrants — 8,000,000 Convertible preferred stock — 16,154,108 Total 22,613,713 52,456,967 Treasury Stock The Company accounts for treasury stock using the cost method. There were 681,054 shares of Class A common stock and 412,238 shares of Class B common stock held in treasury, purchased at a total cumulative cost of $239,000 as of September 30, 2020. There were 659,448 shares of Class A common stock held in treasury, purchased at a total cumulative cost of $146,000 as of June 30, 2020 (see Note 14. Equity Transactions to the condensed consolidated financial statements). Treasury stock, representing shares of the Company’s common stock that have been acquired for payroll tax withholding on vested stock grants, is recorded at its acquisition cost and these shares are not considered outstanding. Revenue Recognition On July 1, 2019, the Company adopted the new accounting standard ASC 606 (Topic 606), Revenue from Contracts with Customers, and all the related amendments (“new revenue standard”) using the modified retrospective method applied to those contracts which were not completed as of July 1, 2019. The adoption of ASC Topic 606 did not have impact on the Company’s consolidated financial statements or cash flows, for the Company had no revenue and no contracts which were not completed as of July 1, 2019. The Company has acquired and further developed license rights to Functional Intellectual Property (“functional IP”) that it licenses to customers for defined license periods. A functional IP license is a license to intellectual property that has significant standalone functionality that does not include supporting or maintaining the intellectual property during the license period. The Company’s patented drug formulas have significant standalone functionality in the form of their abilities to treat a disease or condition. Further, there is no expectation that the Company will undertake any activities to change the functionality of the drug formulas during the license periods (see Note 7. Exclusive License Agreement to the condensed consolidated financial statements). Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. Pursuant to ASC 606, a customer is a party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract, including whether they are distinct in the context of the contract; (iii) determine the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. If a promised good or service is not distinct, it is combined with other performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The terms of the Company’s licensing agreement include the following: (i) up-front fees; (ii) milestone payments related to the achievement of development, regulatory, or commercial goals; and (iii) royalties on net sales of licensed products. License of Intellectual Property: Milestone Payments: Royalties: Accounting for Stock Based Compensation The stock-based compensation expense incurred by the Company for employees and directors in connection with its stock option plan is based on the employee model of ASC 718, and the fair market value of the options is measured at the grant date. Under ASC 718 employee is defined as “An individual over whom the grantor of a share-based compensation award exercises or has the right to exercise sufficient control to establish an employer-employee relationship based on common law as illustrated in case law and currently under U.S. tax regulations.” On July 1, 2019, the Company adopted ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. Beginning with the adoption of ASU 2018-07 options granted to our consultants are accounted for in the same manner as options issued to employees. Awards with service-based vesting conditions only – Expense recognized on a straight-line basis over the requisite service period of the award. Awards with performance-based vesting conditions – Expense is not recognized until it is determined that it is probable the performance-based conditions will be met. When achievement of a performance-based condition is probable, a catch-up of expense will be recorded as if the award had been vesting on a straight-line basis from the award date. The award will continue to be expensed on a straight-line basis over the requisite service period basis until a higher performance-based condition is met, if applicable. Awards with market-based vesting conditions – Expense recognized on a straight-line basis over the requisite service period, which is the lesser of the derived service period or the explicit service period if one is present. However, if the market condition is satisfied prior to the end of the requisite service period, the Company will accelerate all remaining expense to be recognized. Awards with both performance-based and market-based vesting conditions – if an award vesting or exercisability is conditional upon the achievement of either a market condition or performance or service conditions, the requisite service period is generally the shortest of the explicit, implicit, and derived service period. We have elected to use the Black-Scholes-Merton pricing model to determine the fair value of stock options on the dates of grant. Restricted stock units are measured based on the fair market values of the underlying stock on the dates of grant. We recognize stock-based compensation using the straight-line method. |
Patents net
Patents net | 3 Months Ended |
Sep. 30, 2020 | |
Patents net | |
Note 4. Patents, net | Patents, net consisted of the following (rounded to nearest thousand): Useful life September 30, 2020 June 30, 2020 Purchased Patent Rights- Brilacidin, and related compounds 14 $ 4,082,000 $ 4,082,000 Purchased Patent Rights-Anti-microbial- surfactants and related compounds 12 144,000 144,000 Patents - Kevetrin and related compounds 17 1,211,000 1,208,000 5,437,000 5,434,000 Less: Accumulated amortization for Brilacidin, Anti-microbial- surfactants and related compounds (2,145,000 ) (2,069,000 ) Accumulated amortization for Patents-Kevetrin and related compounds (323,000 ) (305,000 ) Total $ 2,969,000 $ 3,060,000 The patents are amortized on a straight-line basis over the useful lives of the assets, determined to be 12-17 years from the date of acquisition. Amortization expense for the three months ended September 30, 2020 and 2019 was approximately $94,000 and $93,000, respectively. At September 30, 2020, the future amortization period for all patents was approximately 5.0 years to 16.75 years. Future estimated amortization expenses are approximately $281,000 for the year ending June 30, 2021, $375,000 for each year from 2022 to 2025, and a total of $1,189,000 for the year ending June 30, 2026 and thereafter. |
Accrued Expenses - Related Part
Accrued Expenses - Related Parties and Other | 3 Months Ended |
Sep. 30, 2020 | |
Accrued Expenses - Related Parties and Other | |
Note 5. Accrued Expenses - Related Parties and Other | Accrued expenses consisted of the following (rounded to nearest thousand): September 30, 2020 June 30, 2020 Accrued research and development consulting fees $ 40,000 $ 40,000 Accrued rent (Note 10) - related parties 8,000 8,000 Accrued interest (Note 11) - related parties 41,000 11,000 Total $ 89,000 $ 59,000 |
Accrued Salaries and Payroll Ta
Accrued Salaries and Payroll Taxes - Related Parties and Other | 3 Months Ended |
Sep. 30, 2020 | |
Accrued Salaries and Payroll Taxes - Related Parties and Other | |
Note 6. Accrued Salaries and Payroll Taxes - Related Parties and Other | Accrued salaries and payroll taxes consisted of the following (rounded to nearest thousand): September 30, 2020 June 30, 2020 Accrued salaries - related parties $ 2,247,000 $ 2,647,000 Accrued payroll taxes - related parties 130,000 130,000 Accrued salaries – others 154,000 279,000 Accrued salaries – employee — 91,000 Withholding tax - payroll 42,000 68,000 Total $ 2,573,000 $ 3,215,000 |
Exclusive License Agreement
Exclusive License Agreement | 3 Months Ended |
Sep. 30, 2020 | |
Exclusive License Agreement | |
Note 7. Exclusive License Agreement | On July 18, 2019, the Company entered into an Exclusive License Agreement (the “License Agreement”) with Alfasigma S.p.A., a global pharmaceutical company (“Alfasigma”), granting Alfasigma the worldwide right to develop, manufacture and commercialize locally-administered Brilacidin for the treatment of ulcerative proctitis/ulcerative proctosigmoiditis (UP/UPS). Under the terms of the License Agreement, Alfasigma made an initial upfront non-refundable payment of $0.4 million to the Company and will make additional payments of up to $24.0 million to the Company based upon the achievement of certain milestones, including a $1.0 million payment due following commencement of the first phase III clinical trial of Brilacidin for UP/UPS and an additional $1.0 million payment upon the filing of a marketing approval application with the U.S. Food and Drug Administration or the European Medicines Agency. At this time Alfasigma has not commenced a Phase 1 clinical trial with Brilacidin. In addition to the milestones, Alfasigma will pay a royalty to the Company equal to six percent of net sales of Brilacidin for UP/UPS, subject to adjustment as provided in the License Agreement. The Company generated revenue of $0 million and $0.4 million for the three months ended September 30, 2020 and 2019, respectively. Revenue during the three months ended September 30, 2019 represented the initial non-refundable payment of $0.4 million received from Alfasigma. |
Operating Leases
Operating Leases | 3 Months Ended |
Sep. 30, 2020 | |
Operating Leases | |
Note 8. Operating Leases | Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. Our variable lease payments primarily consist of maintenance and other operating expenses from our real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components. We have elected to account for these lease and non-lease components as a single lease component. We are also electing not to apply the recognition requirements to short-term leases of twelve months or less and instead will recognize lease payments as expense on a straight-line basis over the lease term. The Company determined that the operating lease right-of-use asset is fully impaired on September 30, 2019. As such, the Company recognized an impairment loss of approximately $643,000, after recording amortization of the right-of-use asset for July, August, and September 2019 totaling approximately $27,000, resulting in a carrying value of $0 since September 30, 2019. The Company vacated the leased office space in December 2019, and in January 2020 the Company initiated a lawsuit against the lessor relating to an automatic extension of the lease for the office space and related matters (See Note 9. Commitments and Contingencies). The components of lease expense and supplemental cash flow information related to leases for the period are as follows: Three Months Ended September 30, 2020 Lease Cost Operating lease cost (included in general and administrative in the Company’s consolidated statement of operations) $ 24,000 Variable lease cost 3,000 $ 27,000 Other Information Cash paid for amounts included in the measurement of lease liabilities for the three months ended September 30, 2020 $ 56,000 Weighted average remaining lease term – operating leases (in years) 3.00 Average discount rate – operating leases 18 % The supplemental balance sheet information related to leases for the period is as follows: At September 30, 2020 Operating leases Short-term operating lease liabilities $ 144,000 Long-term operating lease liabilities 379,000 Total operating lease liabilities $ 523,000 The following table provides maturities of the Company’s lease liabilities at September 30, 2020 as follows: Operating Leases Fiscal Year Ending June 30, 2021 $ 167,000 2022 223,000 2023 223,000 2024 (remaining 3 months) 60,000 Total lease payments 673,000 Less: Imputed interest/present value discount (150,000 ) Present value of lease liabilities $ 523,000 Operating lease cost for the three months ended September 30, 2020 was approximately $27,000. Rent expense under this operating lease agreement for the three months ended September 30, 2019 was approximately $37,000. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
Note 9. Commitments and Contingencies | Litigation On January 22, 2020, the Company filed a complaint against Cummings Properties, LLC in the Superior Court of the Commonwealth of Massachusetts (C.A. No. 20-77CV00101), seeking, among other things, declaratory relief that the lease for the Company’s prior principal executive offices did not automatically extend for an additional five years from September 2018, return of the Company’s security deposit, and damages. This action is in the preliminary stages and the Company is currently unable to determine the probability of the outcome or reasonably estimate the loss or gain, if any. Contractual Commitments The Company has total non-cancellable contractual minimum commitments of approximately $4.2 million to contract research organizations as of September 30, 2020. Expenses are recognized when services are performed by the contract research organizations. Contingent Liability - Disputed Invoices As described in Note 6. Accrued Salaries and Payroll Taxes, the Company accrued payroll to Dr. Krishna Menon, ex-President of Research of approximately $1,443,000 for his past services with the Company, and this amount was included in accrued salaries and payroll taxes. As described in Note 10. Related Party Transactions, the Company has a payable to KARD of approximately $1,486,000 for its research and development expenses and this amount was included in accounts payable. KARD is a company owned by Dr. Menon. Dr. Menon’s employment was terminated with the Company on September 18, 2018, and Dr. Menon resigned from the Company’s Board of Directors on December 11, 2018. Dr. Menon, on behalf of himself and KARD, demanded payment of these amounts in October 2019; however, the Company disputes the underlying basis for these amounts and notified Dr. Menon in November 2019 of the Company’s intent not to pay them. All of the above disputed invoices were reflected as current liabilities as of September 30, 2020. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions | |
Note 10. Related Party Transactions | Pre-clinical Studies The Company previously engaged KARD to conduct specified pre-clinical studies. The Company did not have an exclusive arrangement with KARD. All work performed by KARD needed prior approval by the executive officers of the Company, and the Company retained all intellectual property resulting from the services by KARD. The Company no longer uses KARD. At September 30, 2020 and June 30, 2020, the accrued research and development expenses payable to KARD was approximately $1,486,000 and this amount was included in accounts payable. Dr. Menon, on behalf of himself and KARD, demanded payment of these amounts in October 2019; however, the Company disputes the underlying basis for these amounts and notified Dr. Menon in November 2019 of the Company’s intent not to pay them. Share Issuance On February 23, 2020, the Company issued (i) options for the purchase of 500,000 shares of Class A common stock at an exercise price of $0.10 per share, which is 110% of the previous per share closing price of $0.09 on February 21, 2020, and (ii) 500,000 shares of Class A common stock to each member of the Company’s Board of Directors, consisting of Leo Ehrlich, Barry Schechter and Zorik Spektor. Other related party transactions are disclosed in Note 11. Convertible Note Payable - Related Party below. |
Convertible Note Payable - Rela
Convertible Note Payable - Related Party | 3 Months Ended |
Sep. 30, 2020 | |
Convertible Note Payable - Related Party | |
Note 11. Convertible Note Payable - Related Party | The Ehrlich Promissory Note C is an unsecured demand note with Mr. Ehrlich, the Company’s Chairman and CEO, that originated in 2010, bears 9% simple interest per annum and is convertible into the Company’s Class A common stock at $0.50 per share. On December 29, 2010, the Company issued 18,000,000 Equity Incentive Options to Mr. Ehrlich, which are exercisable at $0.11 per share. On May 8, 2012, the Company did not have the ability to repay the Ehrlich Promissory Note C loan of approximately $2,022,000 and agreed to change the interest rate from 9% simple interest to 10% simple interest, and the Company issued 2,000,000 Equity Incentive Options exercisable at $0.51 per share equal to 110% of the closing bid price of $0.46 per share on May 7, 2012. Options are valid for ten years from the date of issuance. On January 29, 2019, the Company issued 909,090 shares of Class B common stock at the option exercise price of $0.11 per share to Mr. Ehrlich for his partial exercise of his option, paid by the cancellation of debt to Mr. Ehrlich of $100,000 to satisfy the exercise price (as permitted pursuant to the terms of the option agreement). On March 30, 2020, the Company issued 909,090 shares of Class B common stock at the option exercise price of $0.11 per share to Mr. Ehrlich for his partial exercise of his option, paid by the cancellation of debt to Mr. Ehrlich of $100,000 to satisfy the exercise price (as permitted pursuant to the terms of the option agreement). On September 8, 2020, the Company issued 1,787,762 shares of Class B common shares (net of 412,238 shares of Class B common shares withheld to satisfy taxes) at the option exercise price of $0.11 per share to Mr. Ehrlich for his partial exercise of his option, paid by the cancellation of debt to Mr. Ehrlich of $242,000 to satisfy the exercise price (as permitted pursuant to the terms of the option agreement). As of September 30, 2020 and June 30, 2020, the principal balance of this convertible note payable to Mr. Ehrlich, the Company’s Chairman and CEO was approximately $1,580,000 and $1,822,000, respectively. As of September 30, 2020 and June 30, 2020, the balance of accrued interest payable was $41,000 and $11,000, respectively (see Note 5. Accrued Expenses – Related Parties and Other). As of September 30, 2020 and June 30, 2020, the total outstanding balances of principal and interest were approximately $1,621,000 and $1,833,000, respectively. |
Loan payable
Loan payable | 3 Months Ended |
Sep. 30, 2020 | |
Loan payable | |
Note 12. Loan payable | On May 10, 2020, the Company received loan proceeds in the amount of approximately $79,000 under the Paycheck Protection Program (“PPP”) and it was recorded under loan payable. The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. While the Company believes that its use of the loan proceeds satisfied the conditions for forgiveness of the loan, we cannot assure you that we have not or will not take actions that could cause the Company to be ineligible for forgiveness of the loan, in whole or in part. |
Equity Incentive Plans, Stock-B
Equity Incentive Plans, Stock-Based Compensation, Exercise of Options and Warrants Outstanding | 3 Months Ended |
Sep. 30, 2020 | |
Equity Incentive Plans, Stock-Based Compensation, Exercise of Options and Warrants Outstanding | |
Note 13. Equity Incentive Plans, Stock-Based Compensation, Exercise of Options and Warrants Outstanding | Stock-based Compensation – Stock Options 2016 Equity Incentive Plan (the “2016 Plan”) On February 23, 2020, the Board of Directors approved an amendment to Section 4.1 of the 2016 Plan to increase the annual limit on the number of awards under such Plan to outside directors from 250,000 to 1,500,000. On June 30, 2016, the Board of Directors adopted the Company’s 2016 Plan. The 2016 Plan became effective upon adoption by the Board of Directors on June 30, 2016. Up to 20,000,000 shares of the Company’s Class A common stock may be issued under the 2016 Plan (subject to adjustment as described in the 2016 Plan). Stock Options The fair value of options granted for the three months ended September 30, 2020 and 2019 was estimated on the date of grant using the Black-Scholes-Merton Model that uses assumptions noted in the following table. Three months ended September 30, 2020 2019 Expected term (in years) 10 10 Expected stock price volatility 93.95 to 95.47% 92.21 % Risk-free interest rate 0.59 to 0.68% 1.50 % Expected dividend yield 0 0 The components of stock-based compensation expense included in the Company’s Statement of Operations for the three months ended September 30, 2020 and 2019 are as follows (rounded to nearest thousand): Three months ended September 30, Stock-based compensation 2020 2019 Stock-based compensation – officers — 189,000 Stock-based compensation – employees 19,000 38,000 Stock-based compensation – consultants 43,000 9,000 – included in Research and Development expenses 62,000 236,000 Exercise of options On January 29, 2019, the Company issued 909,090 shares of Class B common stock at the option exercise price of $0.11 per share to Mr. Ehrlich, the Company’s Chairman and CEO, for his partial exercise of his 909,090 options, paid by the cancellation of debt to Mr. Ehrlich of $100,000 to satisfy the exercise price (as permitted pursuant to the terms of the option agreement; see Note 11). On March 30, 2020, the Company issued 909,090 shares of Class B common stock at the option exercise price of $0.11 per share to Mr. Ehrlich for his partial exercise of his 909,090 options, paid by the cancellation of debt to Mr. Ehrlich of $100,000 to satisfy the exercise price (as permitted pursuant to the terms of the option agreement; see Note 11). On September 8, 2020, Mr. Ehrlich partially exercised an option to purchase 2.2 million shares of Class B common stockat the option exercise price of $0.11 per share,paid by the cancellation of debt to Mr. Ehrlich of $242,000to satisfy the exercise price (as permitted pursuant to the terms of the option agreement; see Note 11). The total taxable compensation to Mr. Ehrlich for the 2.2 million shares was approximately $90,223, based upon the closing stock price on September 4, 2020 of $0.21 a share. The Company issued 1,787,762 shares of Class B common shares (net share issuance amount) to Mr. Ehrlich. The remaining 412,238 shares of Class B common shares were withheld from Mr. Ehrlich for the payment of payroll taxes to the Federal and State taxing authorities and these shares withheld are being reported by the Company as treasury stock, at cost, on the Company’s accompanying balance sheets. Forfeiture of options Dr. Bertolino resigned as President and Chief Medical Officer and as a member of the Board of Directors of the Company on December 19, 2019. On February 17, 2020, all his 2,858,521 options he held were forfeited, representing the options he was granted since June 27, 2016 to September 1, 2019. The Company reversed the $251,000 of unvested options and shares that were expensed in the current year and prior years. Stock Options Issued and Outstanding The following table summarizes all stock option activity under the Company’s equity incentive plans: Number of Weighted Average Weighted Average Contractual Life (Years) Aggregate Intrinsic Value Outstanding at June 30, 2019 22,669,883 $ 0.24 2.41 $ 1,340,000 Granted 3,540,826 $ 0.09 7.44 — Exercised (909,090 ) $ 0.11 — — Forfeited/expired (2,498,521 ) $ 0.67 — — Outstanding at June 30, 2020 22,803,098 $ 0.18 1.83 $ 5,857,312 Granted 272,987 $ 0.26 9.90 — Exercised (2,200,000 ) $ 0.11 — — Forfeited/expired — $ — — — Outstanding at September 30, 2020 20,876,085 $ 0.19 1.82 $ 1,711,775 Exercisable at September 30, 2020 19,796,777 $ 0.19 1.51 $ 1,656,113 Unvested stock options at September 30, 2020 1,079,308 $ 0.18 7.58 $ 55,662 Restricted Stock Awards Outstanding The following summarizes our restricted stock activity: Weighted Average Number of Grant Date Shares Fair Value Total awards outstanding at June 30, 2019 1,729,288 $ 0.51 Total shares granted 2,625,061 $ 0.11 Total shares vested (2,637,561 ) $ 0.29 Total shares forfeited (1,600,001 ) $ 0.22 Total unvested shares outstanding at June 30, 2020 116,787 $ 0.32 Total shares granted 58,394 $ 0.22 Total shares vested (58,395 ) $ 0.41 Total shares forfeited - $ - Total unvested shares outstanding atSeptember 30, 2020 116,786 $ 0.22 Scheduled vesting for outstanding restricted stock awards at September 30, 2020 is as follows: Year Ending June 30, 2022 2023 2024 Total Scheduled vesting 58,394 38,928 19,464 116,786 As of September 30, 2020, there was approximately $25,000 of net unrecognized compensation cost related to unvested restricted stock-based compensation arrangements. This compensation is recognized on a straight-line basis resulting in approximately $14,000 of compensation expected to be expensed over the next twelve months, and the total unrecognized stock-based compensation expense having a weighted average recognition period of 2.16 years Stock Warrants Outstanding Warrants to Purchase 5% convertible preferred stock (“Series B preferred stock”) On October 5, 2018, the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) with one multi-family office for the sale of 2,000 shares of the Company’s newly-created Series B 5% convertible preferred stock (“Series B preferred stock”), for aggregate gross proceeds of approximately $2.0 million. Each share of preferred stock was initially sold together with three warrants: (i) a Series 1 warrant, which entitles the holder thereof to purchase 1.25 shares of preferred stock at $982.50 per share, or 2,500 shares of preferred stock in the aggregate for approximately $2.5 million in aggregate exercise price, for a period of up to nine months following issuance (later extended to 15 months following issuance), (ii) a Series 2 warrant, which entitles the holder thereof to purchase 1.25 shares of preferred stock at $982.50 per share, or 2,500 shares of preferred stock in the aggregate for approximately $2.5 million in aggregate exercise price, for a period of up to 15 months following issuance, and (iii) a Series 3 warrant, which entitles the holder thereof to purchase 1.50 shares of preferred stock at $982.50 per share, or 3,000 shares of preferred stock in the aggregate for approximately $2.9 million in aggregate exercise price, for a period of up to 24 months following issuance. On May 9, 2019, the Company entered into a warrant restructuring and additional issuance agreement (the “Issuance Agreement”) with the holders of the Series B preferred stock and warrants pursuant to which the Company issued an additional 100 shares of Series B preferred stock and Series 4 warrants to purchase an additional 2,500 shares of preferred stock, and the holders of the Series B preferred stock and warrants agreed to exercise warrants to purchase up to $2.0 million of Series B preferred stock through November 2019 subject to the conditions set forth in the Issuance Agreement. The Series 4 warrant entitles the holder thereof to purchase 2,500 shares of preferred stock at $982.50 per share for approximately $2.5 million in aggregate exercise price, for a period of up to nine months following issuance. In addition, the Company extended the termination date for the Series 1 warrants by six months, and agreed to issue one additional share of preferred stock to the Series B investors for each five shares issued upon the exercise of the existing warrants or Series 4 warrants through November 9, 2019, up to a maximum of 400 shares of preferred stock. All 400 shares of preferred stock were issued from May 2029 to September, 2019. On December 26, 2019, the Company extended the termination date for each series of warrants to December 31, 2021 and decreased the exercise pricefor each series of warrants to $850.00 per share of preferred stock.The warrants modification expense of $1,212,000 was computed as the incremental value of the modified warrants over the unmodified warrants on the modification date using a per share price of $0.05 per share, which was the market price on December 26, 2019. Assumptions used in the Black Scholes option-pricing model for these warrants were as follows: Average risk-free interest rate 1.64 % Average expected life-years 2 Expected volatility 99.03 % Expected dividends 0 % The warrants issued in connection with the Series B preferred stock are deemed to be free standing equity instruments and are recorded in permanent equity (additional paid in capital) based on a relative fair value allocation of proceeds (i.e. warrants’ relative fair value to the Series B preferred stock fair value (without the warrants)) with an offsetting discount to the Series B preferred stock. During the period from October 5, 2018 (date of issuance of preferred stock and warrants) to June 30, 2020, the Company issued all 10,500 shares of its Series B 5% convertible preferred stock, for aggregate gross proceeds of $9.43 million. As of September 30, 2020 and June 30, 2020, all Series 1-4 warrants to purchase shares of Series B preferred stock were exercised, and no Series 1-4 warrants were outstanding. Warrants to Purchase Common Stock On June 28, 2018, the Company entered into a Securities Purchase Agreement with Aspire Capital Fund, LLC, pursuant to which the Company agreed to sell up to $7.0 million of shares of the Company’s Class A common stock to Aspire Capital, without an underwriter or placement agent. The Company issued to Aspire Capital warrants to purchase 8,000,000 shares of its common stock exercisable for 5 years at an exercise price of $0.38 per share. The warrants were recorded within stockholders’ deficiency. The fair value of the warrants issued on June 28, 2018 was estimated on the date of issuance using the Black-Scholes-Merton Model. The value of the warrants issued was approximately $1.7 million. Assumptions used in the Black Scholes option-pricing model for these warrants were as follows: Average risk-free interest rate 2.73 % Average expected life-years 5 Expected volatility 52.77 % Expected dividends 0 % All 8,000,000 warrants to purchase shares of the Company’s common stock were exercised at an exercise price of $0.38 per share onJune 18, 2020 and June 23, 2020. |
Equity Transactions
Equity Transactions | 3 Months Ended |
Sep. 30, 2020 | |
Equity Transactions | |
Note 14. Equity Transactions | $30 million Class A Common Stock Purchase Agreement with Aspire Capital On July 31, 2020, the Company entered into a new common stock purchase agreement (the “2020 Agreement”) with Aspire Capital which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $30.0 million of the Company’s common stock over the 24-month term of the Agreement. In consideration for entering into the 2020 Agreement, the Company issued to Aspire Capital 6,250,000 shares of its Class A Common Stock as a commitment fee. The commitment fee of approximately $1.4 million was recorded as deferred financing costs and additional paid-in capital and this asset will be amortized over the life of the 2020 Agreement. The amortized amount of approximately $0.1 million was recorded to additional paid-in capital for the quarter ended September 30, 2020. The unamortized portion is carried on the balance sheet as deferred offering costs and was approximately $1.3 million at September 30, 2020. During the period from July 31, 2020 to September 30, 2020, the Company generated proceeds of approximately $2.9 million under this 2020 Agreement with Aspire Capital from the sale of approximately 13.5 million shares of its common stock. As of September 30, 2020, the available balance under the new equity line agreement was approximately $27.2 million. Class B Common Stock On January 29, 2019, the Company issued 909,090 shares of Class B common stock at the option exercise price of $0.11 per share to Mr. Ehrlich, the Company’s Chairman and CEO, for his partial exercise of his option, paid by the cancellation of debt to Mr. Ehrlich of $100,000 to satisfy the exercise price (as permitted pursuant to the terms of the option agreement). On March 30, 2020, the Company issued 909,090 shares of Class B common stock at the option exercise price of $0.11 per share to Mr. Ehrlich for his partial exercise of his option, paid by the cancellation of debt to Mr. Ehrlich of $100,000 to satisfy the exercise price On September 8, 2020, the Company issued 2.2 million shares of Class B common stock at the option exercise price of $0.11 per share to Mr. Ehrlich for his partial exercise of his option, paid by the cancellation of debt to Mr. Ehrlich of $242,000 to satisfy the exercise price (See Note 11. Convertible Note Payable to the consolidated financial statements). As of September 30, 2020 and June 30, 2020, the total issued number of Class B common stock were 4,018,180 shares and 1,818,180 shares, respectively, and the total outstanding number of Class B common stock were 3,605,942 shares and 1,818,180 shares, respectively. As of September 30, 2020 and June 30, 2020, the total number of treasury shares of Class B common stockwere 412,238 shares and 0 shares, respectively. Class A Common Stock On February 23, 2020, the Company issued 500,000 options each to our Chairman and CEO and two other Board members (see Note 13) and the Company also issued 500,000 shares of Class A common stock each to our Chairman and CEO and two other Board members, which shares were vested on February 24, 2020. During the year ended June 30, 2020, the Company recorded approximately $237,000 of stock-based compensation expense to our Chairman and CEO and two other Board members including approximately $102,000 of stock option expense and $135,000 of stock awards. Series B 5% convertible preferred stock purchase agreement On October 5, 2018, as modified on May 9, 2019 (see Warrant Restructuring and Additional Issuance Agreement as described below), the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) with one multi-family office for the sale of an aggregate of 2,000 shares of the Company’s newly-created Series B 5% convertible preferred stock (“Series B preferred stock” or “preferred stock”), for aggregate gross proceeds of approximately $2.0 million. An initial closing for the sale of 1,250 shares of the Series B preferred stock closed on October 9, 2018, and a second closing for the sale of 750 shares of the Series B preferred stock closed on October 12, 2018. Under the Securities Purchase Agreement, the Company also issued to the investors warrants to purchase up to an additional 8,000 shares of preferred stock. The issuance costs associated with the Series B preferred stock transaction were attributed to the Series B preferred stock (without the warrants) and to the Series 1, Series 2 and Series 3 warrants based on their relative fair values. The issuance costs attributed to the warrants of $32,000 were reflected as a reduction to additional paid-in capital. The issuances costs associated with the Series B preferred stock liability of $41,000 was recorded immediately as an element of interest cost, which are reflected in interest expense - preferred stock. The Company recognized change in fair value of preferred stock liabilities of $0 and $102,000 under Other (income) expense in the accompanying consolidated Statements of Operations for the three months ended September 30, 2020 and 2019, respectively. Underlying Series B preferred stock dividends, paid quarterly, was accrued as interest (given the liability classification of the Series B preferred stock) on a daily basis given fixed dividend terms under the Series B preferred stock. The Company recorded 5% dividend accretion on total outstanding Series B preferred stock up toJune 30, 2020. The total dividends of approximately$0 and $20,000 are treated as interest expense – preferred stock during the three months ended September 30, 2020 and 2019, respectively. The balance of unpaid dividends of $13,000 was included at accrued dividend under current liabilities as of September 30, 2020 and June 30, 2020. Terms of the Preferred Stock The rights and preferences of the preferred stock are set forth in a Certificate of Designation of Preferences, Rights and Limitations of Series B 5% Convertible Preferred Stock filed with the Nevada Secretary of State on October 5, 2018 (the “Certificate of Designation”). Each share of preferred stock has an initial stated value of $1,080 and may be converted at any time at the holder’s option into shares of the Company’s common stock at a conversion price equal of the lower of (i) $0.32 per share and (ii) 85% of the lowest volume weighted average price of the Company’s common stock on a trading day during the ten trading days prior to and ending on, and including, the conversion date. The conversion price may be adjusted following certain triggering events and subsequent equity sales and is subject to appropriate adjustment in the event of stock splits, stock dividends, recapitalization or similar events affecting the Company’s common stock. Warrants See Note 13 for a description of the Series 1-4 warrants issued in connection with the preferred stock. No Series 1-4 warrants were outstanding as of September 30, 2020 and June 30, 2020. Conversion of preferred stock to common stock During the three months ended September 30, 2020 and 2019, the two preferred stockholders converted 0 shares and 890 shares of Series B preferred stock into 9.0 million shares of common stock, respectively. As of September 30, 2020 and June 30, 2020, there was no Series B 5% convertible preferred stock was outstanding. Treasury Stock During the three months ended September 30, 2020 and 2019, the Company withheld 21,606 and 431,230 shares of Class A common stock upon the vesting of restricted shares for the payment of payroll taxes to federal and state taxing authorities. In addition, during the three months ended September 30, 2020, the Company withheld 412,238 shares of Class B common stock following the exercise of an option for the payment of payroll taxes to the Federal and State taxing authorities. No shares of Class B common stock were withheld during the three months ended September 30, 2019.All of the foregoing shares withheld are being reported by the Company as treasury stock, at cost, on the Company’s accompanying balance sheets. There were 681,054 shares of Class A common stock and412,238 shares of Class B common stock held in treasury, purchased at a total cumulative cost of $239,000 as of September 30, 2020. There were 659,448 shares of Class A common stock held in treasury, purchased at a total cumulative cost of $146,000 as of June 30, 2020. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Sep. 30, 2020 | |
Subsequent Event | |
Note 15. Subsequent Event | Equity Transactions From October 1, 2020 to November 16, 2020, the Company has generated additional proceeds of approximately $1.4 million under the 2020 Agreement with Aspire Capital from the sale of 7 million shares of its common stock. On October 2, 2020, Mr. Ehrlich exercised 909,090 options to purchase 909,090 shares of Class B common stock at the option exercise price of $0.11 per share. Mr. Ehrlich paid for this exercise of his option by the cancellation of debt to Mr. Ehrlich of $100,000 to satisfy the exercise price. The total taxable compensation to Mr. Ehrlich for these 909,090 shares was approximately $86,000 based upon the closing stock price on October 2, 2020 of $0.21 a share. The Company issued 727, 994 shares of Class B common stock (net share issuance amount), to Mr. Ehrlich. The remaining 181,096 shares of Class B common stock were withheld from Mr. Ehrlich for the payment of payroll taxes to the Federal and State taxing authorities and these shares withheld are being reported by the Company as treasury stock, at cost, on the Company’s accompanying balance sheets. The Company has evaluated events subsequent to September 30, 2020 through the issuance of these financial statements and determined that there were no additional events requiring disclosure. |
Significant Accounting Polici_2
Significant Accounting Policies and Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Sep. 30, 2020 | |
Significant Accounting Policies and Recent Accounting Pronouncements | |
Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include contract research accruals, recoverability of long-lived assets, valuation of equity grants and income tax valuation. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates. |
Basic Loss per Share | Basic and diluted loss per share are computed based on the weighted-average common shares and common share equivalents outstanding during the period. Common share equivalents consist of stock options, restricted stock, warrants and convertible related party notes payable. Common share equivalents were excluded from the computation of diluted earnings per share for the three months ended September 30, 2020 and 2019, because their effect was anti-dilutive. Weighted average shares of common stock outstanding used in the calculation of basic and diluted earnings per share were as follows: September 30, 2020 2019 Weighted average shares outstanding-basic 337,494,640 205,666,583 Dilutive options and restricted stock and warrants — — Weighted average shares outstanding-diluted 337,494,640 205,666,583 Antidilutive securities not included: Stock options 20,876,085 22,662,383 Stock options arising from convertible note payable and accrued interest 1,620,842 3,911,188 Restricted stock grants 116,786 1,729,288 Warrants — 8,000,000 Convertible preferred stock — 16,154,108 Total 22,613,713 52,456,967 |
Treasury Stock | The Company accounts for treasury stock using the cost method. There were 681,054 shares of Class A common stock and 412,238 shares of Class B common stock held in treasury, purchased at a total cumulative cost of $239,000 as of September 30, 2020. There were 659,448 shares of Class A common stock held in treasury, purchased at a total cumulative cost of $146,000 as of June 30, 2020 (see Note 14. Equity Transactions to the condensed consolidated financial statements). Treasury stock, representing shares of the Company’s common stock that have been acquired for payroll tax withholding on vested stock grants, is recorded at its acquisition cost and these shares are not considered outstanding. |
Revenue Recognition | On July 1, 2019, the Company adopted the new accounting standard ASC 606 (Topic 606), Revenue from Contracts with Customers, and all the related amendments (“new revenue standard”) using the modified retrospective method applied to those contracts which were not completed as of July 1, 2019. The adoption of ASC Topic 606 did not have impact on the Company’s consolidated financial statements or cash flows, for the Company had no revenue and no contracts which were not completed as of July 1, 2019. The Company has acquired and further developed license rights to Functional Intellectual Property (“functional IP”) that it licenses to customers for defined license periods. A functional IP license is a license to intellectual property that has significant standalone functionality that does not include supporting or maintaining the intellectual property during the license period. The Company’s patented drug formulas have significant standalone functionality in the form of their abilities to treat a disease or condition. Further, there is no expectation that the Company will undertake any activities to change the functionality of the drug formulas during the license periods (see Note 7. Exclusive License Agreement to the condensed consolidated financial statements). Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. Pursuant to ASC 606, a customer is a party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract, including whether they are distinct in the context of the contract; (iii) determine the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. If a promised good or service is not distinct, it is combined with other performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The terms of the Company’s licensing agreement include the following: (i) up-front fees; (ii) milestone payments related to the achievement of development, regulatory, or commercial goals; and (iii) royalties on net sales of licensed products. License of Intellectual Property: Milestone Payments: Royalties: |
Accounting for Stock Based Compensation | The stock-based compensation expense incurred by the Company for employees and directors in connection with its stock option plan is based on the employee model of ASC 718, and the fair market value of the options is measured at the grant date. Under ASC 718 employee is defined as “An individual over whom the grantor of a share-based compensation award exercises or has the right to exercise sufficient control to establish an employer-employee relationship based on common law as illustrated in case law and currently under U.S. tax regulations.” On July 1, 2019, the Company adopted ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. Beginning with the adoption of ASU 2018-07 options granted to our consultants are accounted for in the same manner as options issued to employees. Awards with service-based vesting conditions only – Expense recognized on a straight-line basis over the requisite service period of the award. Awards with performance-based vesting conditions – Expense is not recognized until it is determined that it is probable the performance-based conditions will be met. When achievement of a performance-based condition is probable, a catch-up of expense will be recorded as if the award had been vesting on a straight-line basis from the award date. The award will continue to be expensed on a straight-line basis over the requisite service period basis until a higher performance-based condition is met, if applicable. Awards with market-based vesting conditions – Expense recognized on a straight-line basis over the requisite service period, which is the lesser of the derived service period or the explicit service period if one is present. However, if the market condition is satisfied prior to the end of the requisite service period, the Company will accelerate all remaining expense to be recognized. Awards with both performance-based and market-based vesting conditions – if an award vesting or exercisability is conditional upon the achievement of either a market condition or performance or service conditions, the requisite service period is generally the shortest of the explicit, implicit, and derived service period. We have elected to use the Black-Scholes-Merton pricing model to determine the fair value of stock options on the dates of grant. Restricted stock units are measured based on the fair market values of the underlying stock on the dates of grant. We recognize stock-based compensation using the straight-line method. |
Significant Accounting Polici_3
Significant Accounting Policies and Recent Accounting Pronouncements (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Significant Accounting Policies and Recent Accounting Pronouncements | |
Schedule of basic and diluted earning per share | September 30, 2020 2019 Weighted average shares outstanding-basic 337,494,640 205,666,583 Dilutive options and restricted stock and warrants — — Weighted average shares outstanding-diluted 337,494,640 205,666,583 Antidilutive securities not included: Stock options 20,876,085 22,662,383 Stock options arising from convertible note payable and accrued interest 1,620,842 3,911,188 Restricted stock grants 116,786 1,729,288 Warrants — 8,000,000 Convertible preferred stock — 16,154,108 Total 22,613,713 52,456,967 |
Patents net (Tables)
Patents net (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Patents net (Tables) | |
Schedule of patents | Useful life September 30, 2020 June 30, 2020 Purchased Patent Rights- Brilacidin, and related compounds 14 $ 4,082,000 $ 4,082,000 Purchased Patent Rights-Anti-microbial- surfactants and related compounds 12 144,000 144,000 Patents - Kevetrin and related compounds 17 1,211,000 1,208,000 5,437,000 5,434,000 Less: Accumulated amortization for Brilacidin, Anti-microbial- surfactants and related compounds (2,145,000 ) (2,069,000 ) Accumulated amortization for Patents-Kevetrin and related compounds (323,000 ) (305,000 ) Total $ 2,969,000 $ 3,060,000 |
Accrued Expenses Related Partie
Accrued Expenses Related Parties and Other (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Accrued Expenses - Related Parties and Other | |
Schedule of accrued expenses | September 30, 2020 June 30, 2020 Accrued research and development consulting fees $ 40,000 $ 40,000 Accrued rent (Note 10) - related parties 8,000 8,000 Accrued interest (Note 11) - related parties 41,000 11,000 Total $ 89,000 $ 59,000 |
Accrued Salaries and Payroll _2
Accrued Salaries and Payroll Taxes Related Parties And Other (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Accrued Salaries and Payroll Taxes - Related Parties and Other | |
Schedule of accrued salaries and payroll taxes | September 30, 2020 June 30, 2020 Accrued salaries - related parties $ 2,247,000 $ 2,647,000 Accrued payroll taxes - related parties 130,000 130,000 Accrued salaries – others 154,000 279,000 Accrued salaries – employee — 91,000 Withholding tax – payroll 42,000 68,000 Total $ 2,573,000 $ 3,215,000 |
Operating Leases (Tables)
Operating Leases (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Operating Leases | |
Schedule of components of lease expense | Three Months Ended September 30 , 2020 Lease Cost Operating lease cost (included in general and administrative in the Company’s consolidated statement of operations) $ 24,000 Variable lease cost 3,000 $ 27,000 Other Information Cash paid for amounts included in the measurement of lease liabilities for the three months ended September 30, 2020 $ 56,000 Weighted average remaining lease term – operating leases (in years) 3.00 Average discount rate – operating leases 18 % |
Schedule of operating lease liabilities | At September 30, 2020 Operating leases Short-term operating lease liabilities $ 144,000 Long-term operating lease liabilities 379,000 Total operating lease liabilities $ 523,000 |
Schedule of maturities of the lease liabilities | Operating Leases Fiscal Year Ending June 30, 2021 $ 167,000 2022 223,000 2023 223,000 2024 (remaining 3 months) 60,000 Total lease payments 673,000 Less: Imputed interest/present value discount (150,000 ) Present value of lease liabilities $ 523,000 |
Equity Incentive Plans StockBas
Equity Incentive Plans StockBased Compensation Exercise of Options and Warrants Outstanding (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Equity Incentive Plans StockBased Compensation Exercise of Options and Warrants Outstanding (Tables) | |
Schedule of fair value of the warrants assumptions | Three months ended September 30, 2020 2019 Expected term (in years) 10 10 Expected stock price volatility 93.95 to 95.47 % 92.21 % Risk-free interest rate 0.59 to 0.68 % 1.50 % Expected dividend yield 0 0 |
Components of stock-based compensation expense | Three months ended September 30, Stock-based compensation 2020 2019 Stock-based compensation – officers — 189,000 Stock-based compensation – employees 19,000 38,000 Stock-based compensation – consultants 43,000 9,000 – included in Research and Development expenses 62,000 236,000 |
Schedule of stock option activity | Number of Weighted Average Weighted Average Aggregate Intrinsic Value Outstanding at June 30, 2019 22,669,883 $ 0.24 2.41 $ 1,340,000 Granted 3,540,826 $ 0.09 7.44 — Exercised (909,090 ) $ 0.11 — — Forfeited/expired (2,498,521 ) $ 0.67 — — Outstanding at June 30, 2020 22,803,098 $ 0.18 1.83 $ 5,857,312 Granted 272,987 $ 0.26 9.90 — Exercised (2,200,000 ) $ 0.11 — — Forfeited/expired — $ — — — Outstanding at September 30, 2020 20,876,085 $ 0.19 1.82 $ 1,711,775 Exercisable at September 30, 2020 19,796,777 $ 0.19 1.51 $ 1,656,113 Unvested stock options at September 30, 2020 1,079,308 $ 0.18 7.58 $ 55,662 |
Schedule of Restricted Stock Award Activity | Weighted Average Number of Grant Date Shares Fair Value Total awards outstanding at June 30, 2019 1,729,288 $ 0.51 Total shares granted 2,625,061 $ 0.11 Total shares vested (2,637,561 ) $ 0.29 Total shares forfeited (1,600,001 ) $ 0.22 Total unvested shares outstanding at June 30, 2020 116,787 $ 0.32 Total shares granted 58,394 $ 0.22 Total shares vested (58,395 ) $ 0.41 Total shares forfeited - $ Total unvested shares outstanding at September 30, 2020 116,786 $ 0.22 |
Schedule of vesting outstanding restricted stock | Year Ending June 30, 2022 2023 2024 Total Scheduled vesting 58,394 38,928 19,464 116,786 |
Schedule of outstanding Series B preferred stock warrants | Average risk-free interest rate 1.64 % Average expected life-years 2 Expected volatility 99.03 % Expected dividends 0 % |
Schedule of assumptions used in the Black Scholes option-pricing model | Average risk-free interest rate 2.73 % Average expected life-years 5 Expected volatility 52.77 % Expected dividends 0 % |
Liquidity (Details Narrative)
Liquidity (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Jul. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Cash | $ 7,252,000 | $ 910,000 | $ 6,018,000 | $ 579,000 | ||
Total Current Liabilities | 6,643,000 | 7,369,000 | ||||
Net loss | (1,173,000) | $ (1,550,000) | ||||
Working capital (deficit) | 700,000 | $ (1,200,000) | ||||
Future budget expenditures | $ 10,300,000 | |||||
Clinical activities | $ 8,300,000 | |||||
2020 Agreement [Member] | Class A Common Stock [Member] | Aspire Capital [Member] | ||||||
Aggregate Purchase | $ 30,000,000 | |||||
Common stock, shares issued | 6,250,000 | |||||
Commitment fee | $ 1,400,000 | |||||
Available balance | $ 27,100,000 |
Significant Accounting Polici_4
Significant Accounting Policies and Recent Accounting Pronouncements (Details ) - shares | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Significant Accounting Policies and Recent Accounting Pronouncements | ||
Weighted average shares outstanding-basic | 337,494,640 | 205,666,583 |
Dilutive options and restricted stock and warrants | ||
Weighted average shares outstanding-diluted | 337,494,640 | 205,666,583 |
Antidilutive securities not included: | ||
Stock options | 20,876,085 | 22,662,383 |
Stock options arising from convertible note payable and accrued interest | 1,620,842 | 3,911,188 |
Restricted stock grants | 116,786 | 1,729,288 |
Warrants | 8,000,000 | |
Convertible preferred stock | 16,154,108 | |
Total | 22,613,713 | 52,456,967 |
Significant Accounting Polici_5
Significant Accounting Policies and Recent Accounting Pronouncements (Details Narrative) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Treasury Stock, value | $ (239,000) | $ (146,000) |
Treasury Stock Shares | 1,093,292 | 659,448 |
Class B Common Stock [Member] | ||
Treasury Stock Shares | 412,238 | |
Class A Common Stock [Member] | ||
Treasury Stock Shares | 681,054 | 659,448 |
Patents net (Details)
Patents net (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Jun. 30, 2020 | |
Patent costs - net | $ 5,437,000 | $ 3,060,000 |
Total Patents cost, net | 2,969,000 | 3,060,000 |
Patents [Member] | ||
Patent costs - net | $ 4,082,000 | 4,082,000 |
Useful life | 14 years | |
Accumulated amortization | $ (2,145,000) | (2,069,000) |
Patents Two [Member] | ||
Patent costs - net | $ 144,000 | 144,000 |
Useful life | 12 years | |
Accumulated amortization | $ (2,145,000) | (2,069,000) |
Patents Three [Member] | ||
Patent costs - net | $ 1,211,000 | 1,208,000 |
Useful life | 17 years | |
Accumulated amortization | $ (323,000) | $ (305,000) |
Patents net (Details Narrative)
Patents net (Details Narrative) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Amortization of patent costs | $ 94,000 | $ 93,000 |
Patents [Member] | ||
June 30, 2021 | 281,000 | |
June 30, 2022 | 375,000 | |
June 30, 2023 | 375,000 | |
June 30, 2024 | 375,000 | |
June 30, 2025 | 375,000 | |
June 30, 2026 and Thereafter | $ 1,189,000 | |
Future amortization period | 14 years | |
Patents [Member] | Minimum [Member] | IntangibleAssets [Member] | ||
Estimated remaining useful lives of the assets | 12 years | |
Future amortization period | 5 years | |
Patents [Member] | Maximum [Member] | IntangibleAssets [Member] | ||
Estimated remaining useful lives of the assets | 17 years | |
Future amortization period | 16 years 8 months 30 days |
Accrued Expenses Related Part_2
Accrued Expenses Related Parties and Other (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Accrued Expenses - Related Parties and Other | ||
Accrued research and development consulting fees | $ 40,000 | $ 40,000 |
Accrued rent (Note 10) - related parties | 8,000 | 8,000 |
Accrued interest (Note 11) - related parties | 41,000 | 11,000 |
Total | $ 89,000 | $ 59,000 |
Accrued Salaries and Payroll _3
Accrued Salaries and Payroll Taxes Related Parties And Other (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Accrued Salaries and Payroll Taxes Related Parties And Other (Details) | ||
Accrued salaries - related parties | $ 2,247,000 | $ 2,647,000 |
Accrued payroll taxes - related parties | 130,000 | 130,000 |
Accrued salaries - others | 154,000 | 279,000 |
Accrued Salaries - employee | 0 | 91,000 |
Withholding tax - payroll | 42,000 | 68,000 |
Total | $ 2,537,000 | $ 3,215,000 |
Exclusive License Agreement (De
Exclusive License Agreement (Details Narrative) - USD ($) | 3 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Jul. 18, 2019 | |
Non-refundable payment | $ 400,000,000 | ||
Revenues | $ 0 | $ 400,000 | |
License Agreement [Member] | |||
Non-refundable payment | $ 400,000 | ||
Payment due following commencement of first phase III clinical trial of Brilacidin | 1,000,000 | ||
Payment due upon filing of a marketing approval application | 1,000,000 | ||
Additional payments payable upon achievement of certain milestones under agreement by related party | $ 24,000,000 |
Operating Leases (Details)
Operating Leases (Details) | 3 Months Ended |
Sep. 30, 2020USD ($) | |
Lease Cost | |
Operating lease cost (included in general and administrative in the Company's consolidated statement of operations) | $ 24,000 |
Variable lease cost | 3,000 |
Total operating cost | 27,000 |
Cash paid for amounts included in the measurement of lease liabilities for the three months ended September 30, 2020 | $ 56,000 |
Weighted average remaining lease term - operating leases (in years) | 3 years |
Average discount rate - operating leases | 18.00% |
Operating Leases (Details 1)
Operating Leases (Details 1) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Operating leases | ||
Short-term operating lease liabilities | $ 144,000 | $ 138,000 |
Long-term operating lease liabilities | 379,000 | $ 417,000 |
Total operating lease liabilities | $ 523,000 |
Operating Leases (Details 2)
Operating Leases (Details 2) | Sep. 30, 2020USD ($) |
Fiscal Year Ending June 30, | |
2021 | $ 167,000 |
2022 | 223,000 |
2023 | 223,000 |
2024 (remaining 3 months) | 60,000 |
Total lease payments | 673,000 |
Less: Imputed interest/present value discount | (150,000) |
Present value of lease liabilities | $ 523,000 |
Operating Leases (Details Narra
Operating Leases (Details Narrative) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating Leases (Details Narrative) | ||
Impairment expense of operating lease | $ (643,000) | |
Amortization of the right-of-use asset | 27,000 | |
Operating lease cost | $ 27,000 | |
Operating lease carrying value | 0 | |
Operating lease expense | $ 37,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Sep. 30, 2020USD ($) |
Contractual commitments | $ 4,200,000 |
Dr Krishna Menon [Member] | |
Accrued salaries and payroll taxes | 1,443,000 |
Accounts payable | $ 1,486,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 1 Months Ended | ||
Feb. 23, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | |
Clinical Studies [Member] | |||
Accrued research and development expenses | $ 1,486,000 | $ 1,486,000 | |
Common Class A [Member] | |||
Options to purchase shares | 500,000 | ||
Exercise price | $ 0.10 | ||
Exercise price description | A common stock at an exercise price of $0.10 per share, which is 110% of the previous per share closing price of $0.09 on February 21, 2020 | ||
Common Class A [Member] | Zorik Spektor [Member] | |||
Shres issued | 500,000 | ||
Common Class A [Member] | Barry Schechter [Member] | |||
Shres issued | 500,000 | ||
Common Class A [Member] | Leo Ehrlich [Member] | |||
Shres issued | 500,000 |
Convertible Note Payable Relate
Convertible Note Payable Related Party (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |||||
May 07, 2012 | Sep. 30, 2020 | Sep. 08, 2020 | Jun. 30, 2020 | Mar. 30, 2020 | Jan. 29, 2019 | May 08, 2012 | |
Total outstanding balance of principal and interest | $ 1,621,000 | $ 1,833,000 | |||||
Accrued interest - related parties | $ 41,000 | $ 11,000 | |||||
Treasury Stock Shares | 1,093,292 | 659,448 | |||||
Ehrlich Promissory Note C [Member] | |||||||
Exercise price | $ 0.51 | ||||||
Principal balance of demand notes | $ 2,022,000 | ||||||
Equity incentive shares | 2,000,000 | ||||||
Interest rate | 10.00% | ||||||
Closing bid price per share | $ 0.46 | ||||||
Percentage of closing bid price | 110.00% | ||||||
Mr. Ehrlich [Member] | |||||||
Principal balance of demand notes | $ 1,580,000 | $ 1,822,000 | |||||
Mr. Ehrlich [Member] | Common Class B [Member] | |||||||
Exercise price | $ 0.11 | $ 0.11 | $ 0.11 | ||||
Amount of debt extinguished | $ 242,000 | $ 100,000 | $ 100,000 | ||||
Common stock shares issued upon extinguishment of debt | 1,787,762 | 909,000 | 909,090 | ||||
Treasury Stock Shares | 412,238 | ||||||
December 29, 2010 [Member] | Mr. Ehrlich [Member] | |||||||
Exercise price | $ 0.11 | ||||||
Option issued | 18,000,000 | ||||||
Originated In 2010 [Member] | Ehrlich Promissory Note C [Member] | |||||||
Interest rate | 9.00% | ||||||
Common stock price per share | $ 0.50 |
Loan payable (Details Narrative
Loan payable (Details Narrative) - Paycheck Protection Program [Member] - USD ($) | May 10, 2020 | Sep. 30, 2020 |
Payroll expenses description | The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business | |
Loan proceeds | $ 79,000 | |
Interest rate | 1.00% |
Equity Incentive Plans StockB_2
Equity Incentive Plans StockBased Compensation Exercise of Options and Warrants Outstanding (Details) - Stock Option [Member] | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Expected dividend yield | 0.00% | 0.00% |
Expected term (in years) | 10 years | 10 years |
Expected stock price volatility | 92.21% | |
Risk-free interest rate | 1.50% | |
Minimum [Member] | ||
Expected stock price volatility | 93.95% | |
Risk-free interest rate | 0.59% | |
Maximum [Member] | ||
Expected stock price volatility | 95.47% | |
Risk-free interest rate | 0.68% |
Equity Incentive Plans StockB_3
Equity Incentive Plans StockBased Compensation Exercise of Options and Warrants Outstanding (Details 1) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Equity Incentive Plans StockBased Compensation Exercise of Options and Warrants Outstanding (Tables) | ||
Stock-based compensation - officers | $ 0 | $ 189,000 |
Stock-based compensation - employees | 19,000 | 38,000 |
Stock-based compensation - consultants | 43,000 | 9,000 |
Included in Research and Development expenses | $ 62,000 | $ 236,000 |
Equity Incentive Plans StockB_4
Equity Incentive Plans StockBased Compensation Exercise of Options and Warrants Outstanding (Details 2) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Exercised | 20,876,085 | 22,662,383 |
Stock Option [Member] | ||
Beginning balance, outstanding | 22,803,098 | 22,669,883 |
Granted | 272,987 | 3,540,826 |
Exercised | (2,200,000) | (909,090) |
Forfeited/expired | (2,498,521) | |
Ending balance, outstanding | 20,876,085 | 22,803,098 |
Exercisable | 19,796,777 | |
Unvested stock options | 1,079,308 | |
Weighted average exercise price, beginning balance | $ 0.18 | $ 0.24 |
Granted | 0.26 | 0.09 |
Exercised | 0.11 | 0.11 |
Forfeited/expired | 0 | 0.67 |
Weighted average exercise price, ending balance | 0.19 | $ 0.18 |
Weighted average exercise price, exercisable | 0.19 | |
Weighted average exercise price, unvested stock options | $ 0.18 | |
Weighted average remaining contractual life, beginning balance | 1 year 9 months 29 days | 2 years 4 months 28 days |
Granted | 9 years 10 months 24 days | 7 years 5 months 9 days |
Weighted average remaining contractual life, ending balance | 1 year 9 months 26 days | 1 year 9 months 29 days |
Weighted average remaining contractual life, Exercisable | 1 year 6 months 4 days | |
Weighted average remaining contractual life, Unvested stock options | 7 years 6 months 29 days | |
Aggregate intrinsic value beginning | $ 5,857,312 | $ 1,340,000 |
Aggregate intrinsic value ending | 1,711,775 | $ 5,857,312 |
Aggregate intrinsic value Exercisable | 1,656,113 | |
Aggregate intrinsic value unvested stock options | $ 55,662 |
Equity Incentive Plans StockB_5
Equity Incentive Plans StockBased Compensation Exercise of Options and Warrants Outstanding (Details 3) - Restricted Stock [Member] - $ / shares | 3 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Jun. 30, 2020 | |
Awards outstanding, Beginning balance | 116,787 | 1,729,288 |
Total shares granted | 58,394 | 2,625,061 |
Total shares vested | (58,395) | (2,637,561) |
Total shares forfeited | (1,600,001) | |
Awards outstanding, Ending balance | 116,786 | 116,787 |
Weighted average, Beginning balance | $ 0.32 | $ 0.51 |
Weighted average, total shares granted | 0.22 | 0.11 |
Weighted average, total shares vested | 0.41 | 0.29 |
Weighted average, total shares forfeited | 0 | 0.22 |
Weighted average, ending balance | $ 0.22 | $ 0.32 |
Equity Incentive Plans StockB_6
Equity Incentive Plans StockBased Compensation Exercise of Options and Warrants Outstanding (Details 4) | 3 Months Ended |
Sep. 30, 2020shares | |
Scheduled vesting | 116,786 |
Year Ending June 30, 2024 [Member] | |
Scheduled vesting | 19,464 |
Year Ending June 30, 2022 [Member] | |
Scheduled vesting | 58,394 |
Year Ending June 30, 2023 [Member] | |
Scheduled vesting | 38,928 |
Equity Incentive Plans StockB_7
Equity Incentive Plans StockBased Compensation Exercise of Options and Warrants Outstanding (Details 5) - Black Scholes Option [Member] | 3 Months Ended |
Sep. 30, 2020 | |
Average expected life-years | 2 years |
Average risk-free interest rate | 1.64% |
Expected volatility | 99.03% |
Expected dividends | 0.00% |
Equity Incentive Plans StockB_8
Equity Incentive Plans StockBased Compensation Exercise of Options and Warrants Outstanding (Details 6) - Warrants to Purchase Common Stock [Member] | 3 Months Ended |
Sep. 30, 2020 | |
Average risk-free interest rate | 2.73% |
Average expected life-years | 5 years |
Expected volatility | 52.77% |
Expected dividends | 0.00% |
Equity Incentive Plans StockB_9
Equity Incentive Plans StockBased Compensation Exercise of Options and Warrants Outstanding (Details Narrative) - USD ($) | Sep. 08, 2020 | Feb. 17, 2020 | May 09, 2019 | Oct. 05, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 04, 2020 | Jun. 30, 2020 | Mar. 30, 2020 | Jan. 29, 2019 |
Compensation cost not yet recognized, period for recognition | 2 years 1 month 28 days | |||||||||
Expected share based compensation expenses | $ 14,000 | |||||||||
Unrecognized compensation cost related to unvested restricted stock-based compensation | $ 25,000 | |||||||||
Treasury Stock Shares | 1,093,292 | 659,448 | ||||||||
Proceeds from warrant exercises | $ 0 | $ 1,027,000 | ||||||||
Warrants exercised | 20,876,085 | 22,662,383 | ||||||||
2016 Equity Incentive Plan [Member] | ||||||||||
Stock option vested or to be vested, description | Up to 20,000,000 shares of the Company’s Class A common stock may be issued under the 2016 Plan (subject to adjustment as described in the 2016 Plan) | |||||||||
Annual limit description | the Board of Directors approved an amendment to Section 4.1 of the 2016 Plan to increase the annual limit on the number of awards under such Plan to outside directors from 250,000 to 1,500,000. | |||||||||
Warrant [Member] | ||||||||||
Warrants exercised | 8,000,000 | |||||||||
Dr. Bertolino [Member] | ||||||||||
Unrecognized compensation cost related to unvested restricted stock-based compensation | $ 251,000 | |||||||||
Stock options forfeited | 2,858,521 | |||||||||
December 26, 2019 [Member] | ||||||||||
Warrants modification expense | $ 1,212,000 | |||||||||
Warrant per share | $ 0.05 | |||||||||
Preferred stock, exercise price | $ 850 | |||||||||
On June 28, 2018 [Member] | Warrant [Member] | ||||||||||
Beginning balance, Shares | 2,000 | |||||||||
Common Class B [Member] | ||||||||||
Common stock shares issued | 4,018,180 | 1,818,180 | ||||||||
Common Class B [Member] | Mr. Ehrlich [Member] | ||||||||||
Amount of debt extinguished | $ 242,000 | $ 100,000 | $ 100,000 | |||||||
Exercise price | $ 0.11 | $ 0.11 | $ 0.11 | |||||||
Common stock shares issued upon extinguishment of debt | 1,787,762 | 909,000 | 909,090 | |||||||
Treasury Stock Shares | 412,238 | |||||||||
Common Class B [Member] | Mr. Ehrlich [Member] | Exercise options [Member] | ||||||||||
Amount of debt extinguished | $ 100,000 | $ 100,000 | ||||||||
Exercise price | $ 0.11 | $ 0.11 | ||||||||
Common stock shares issued upon extinguishment of debt | 909,090 | 909,090 | ||||||||
Common stock shares issued | 909,090 | 909,090 | ||||||||
Common Class B [Member] | Mr. Ehrlich [Member] | ||||||||||
Amount of debt extinguished | $ 242,000 | $ 100,000 | $ 100,000 | |||||||
Exercise price | $ 0.11 | |||||||||
Option exercised | $ 2,200,000 | |||||||||
Common stock shares issued upon extinguishment of debt | 1,787,762 | 909,090 | 909,090 | |||||||
Taxable compensation | $ 90,223 | |||||||||
Closing stock price | $ 0.21 | |||||||||
Treasury Stock Shares | 412,238 | |||||||||
Series B [Member] | Series 1-4 warrants [Member] | ||||||||||
Exercised | 10,500 | |||||||||
Proceeds from warrant exercises | $ 9,430,000 | |||||||||
Series B [Member] | Series 1 warrant [Member] | Securities Purchase Agreement [Member] | ||||||||||
Rights and preferences of preferred stock description | Series 1 warrant, which entitles the holder thereof to purchase 1.25 shares of preferred stock at $982.50 per share, or 2,500 shares of preferred stock in the aggregate for approximately $2.5 million in aggregate exercise price, for a period of up to nine months following issuance (later extended to 15 months following issuance) | |||||||||
Series B [Member] | Series 2 warrant [Member] | Securities Purchase Agreement [Member] | ||||||||||
Rights and preferences of preferred stock description | Series 2 warrant, which entitles the holder thereof to purchase 1.25 shares of preferred stock at $982.50 per share, or 2,500 shares of preferred stock in the aggregate for approximately $2.5 million in aggregate exercise price, for a period of up to 15 months following issuance | |||||||||
Series B [Member] | Series 4 warrant [Member] | Securities Purchase Agreement [Member] | ||||||||||
Rights and preferences of preferred stock description | The Series 4 warrant entitles the holder thereof to purchase 2,500 shares of preferred stock at $982.50 per share for approximately $2.5 million in aggregate exercise price, for a period of up to nine months following issuance. In addition, the Company extended the termination date for the Series 1 warrants by six months, and agreed to issue one additional share of preferred stock to the Series B investors for each five shares issued upon the exercise of the existing warrants or Series 4 warrants through November 9, 2019, up to a maximum of 400 shares of preferred stock | |||||||||
Common Class A [Member] | ||||||||||
Common stock shares issued | 349,638,386 | 329,829,992 | ||||||||
Common Class A [Member] | On June 28, 2018 [Member] | Securities Purchase Agreement [Member] | Aspire Capital Fund LLC [Member] | ||||||||||
Purchase of warrants | 8,000,000 | |||||||||
Proceeds from issuance of warrants | $ 1,700,000 | |||||||||
Warrants exercisable period | 5 years | |||||||||
Exercise price | 0.38 | |||||||||
Common stock shares issuable under agreement | 7,000,000 |
Equity Transaction (Details Nar
Equity Transaction (Details Narrative) - USD ($) | Sep. 08, 2020 | Jul. 31, 2020 | Oct. 05, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Mar. 30, 2020 | Jan. 29, 2019 |
Treasury Stock, value | $ (239,000) | $ (146,000) | ||||||
Convertible preferred stock liability, stated value | $ 1,080 | |||||||
Warrants exercised | 20,876,085 | 22,662,383 | ||||||
Stock based compensation | $ 62,000 | $ 236,000 | ||||||
Two Preferred Stockholders [Member] | ||||||||
Conversion of Series B Convertible Preferred stock to Common stock, reversed | $ 0 | $ 890 | ||||||
Common stock shares issued upon conversion of preferred stock | 9,000,000 | 9,000,000 | ||||||
Aspire Capital [Member] | ||||||||
Proceeds From sale of common stock | $ 1,400,000 | |||||||
Common Class A [Member] | ||||||||
Common stock shares issued | 349,638,386 | 329,829,992 | ||||||
Common stock held in treasury | 21,606 | |||||||
Common stock, share outstanding | 348,957,332 | 329,170,544 | ||||||
Treasury shares | 412,238 | 659,448 | ||||||
Common Class B [Member] | ||||||||
Common stock shares issued | 4,018,180 | 1,818,180 | ||||||
Common stock held in treasury | 431,238 | |||||||
Common stock, share outstanding | 3,605,942 | 1,818,180 | ||||||
Treasury shares | 681,054 | 0 | ||||||
Common Class B [Member] | Mr. Ehrlich [Member] | ||||||||
Amount of debt extinguished | $ 242,000 | $ 100,000 | $ 100,000 | |||||
Option exercised | $ 2,200,000 | |||||||
Exercise price | $ 0.11 | $ 0.11 | $ 0.11 | |||||
Common stock shares issued upon extinguishment of debt | 1,787,762 | 909,090 | 909,090 | |||||
Series B Convertible Preferred Stock [Member] | ||||||||
Unpaid dividend | $ 13,000 | $ 13,000 | ||||||
Dividend | 0 | $ 20,000 | ||||||
Stock issuance cost | 41,000 | |||||||
Change in fair value of preferred stock liabilities | $ 0 | $ 102,000 | ||||||
2020 Agreement [Member] | Class A Common Stock [Member] | Aspire Capital [Member] | ||||||||
Aggregate Purchase | $ 30,000,000 | |||||||
Common stock shares issued during the period | 13,500,000 | |||||||
Proceeds From sale of common stock | $ 2,900,000 | |||||||
Amortized expenses | 100,000 | |||||||
Deferred offering costs | 1,300,000 | |||||||
Common stock shares issued | 6,250,000 | |||||||
Commitment fee | $ 1,400,000 | |||||||
Available balance, Amount | $ 27,200,000 | |||||||
On February 23, 2020 [Member] | Common Class A [Member] | Chairman and CEO [Member] | Two other Board Members [Member] | ||||||||
Warrants exercised | 500,000 | |||||||
Stock option expense | $ 102,000 | |||||||
Stock based compensation | 237,000 | |||||||
Stock awards | 135,000 | |||||||
Warrant [Member] | ||||||||
Stock issuance cost | $ 32,000 | |||||||
Warrants exercised | 8,000,000 | |||||||
Warrant [Member] | October 5, 2018 [Member] | ||||||||
Proceeds from issuance of shares | $ 200,000 | |||||||
Sale of preferred stock | 1,250 | |||||||
Warrants to purchase additional shares | 8,000 |
Subsequent Event (Details narra
Subsequent Event (Details narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Oct. 02, 2020 | Sep. 30, 2020 | Sep. 08, 2020 | Jun. 30, 2020 | Mar. 30, 2020 | Jan. 29, 2019 | |
Treasury Stock Shares | 1,093,292 | 659,448 | ||||
Common Class B [Member] | ||||||
Common stock shares issued | 4,018,180 | 1,818,180 | ||||
Common Class B [Member] | Mr. Ehrlich [Member] | ||||||
Amount of debt extinguished | $ 242,000 | $ 100,000 | $ 100,000 | |||
Exercise price | $ 0.11 | $ 0.11 | $ 0.11 | |||
Treasury Stock Shares | 412,238 | |||||
Common Class B [Member] | Subsequent Event [Member] | Mr. Ehrlich [Member] | ||||||
Option exercised | $ 909,090 | |||||
Amount of debt extinguished | 100,000 | |||||
Taxable compensation | $ 86,000 | |||||
Exercise price | $ 0.11 | |||||
Common stock shares issued | 727,994 | |||||
Closing stock price | $ 0.21 | |||||
Treasury Stock Shares | 181,096 | |||||
Aspire Capital [Member] | ||||||
Proceeds From sale of common stock | $ 1,400,000 | |||||
Sale of common stock | 7,000,000 |