STOCKHOLDERS' DEFICIT |
Common
and Preferred Stock
As
of September 30, 2015, the Company is authorized to issue 195,000,000 shares of stock, of which 180,000,000 are Common Stock;
the remaining 15,000,000 shares, with a par value of $0.001 per shares are blank-check preferred stock which the Board is expressly
authorized to issue without shareholder approval, for one or more series of preferred stock and, with respect to each such series,
to fix the number of shares constituting such series and the designation of such series, the voting powers, if any, of the shares
of such series, and the preferences and relative, participating, optional or other special rights, if any, and any qualifications,
limitations or restrictions thereof, of the shares of such series. The powers, preferences and relative, participating, optional
and other special rights of each series of preferred stock, and the qualifications, limitations or restrictions thereof, if any,
may differ from those of any and all other series at any time outstanding.
At
the annual meeting held on October 28, 2015, shareholders approved to amend the Company’s Charter in order to increase the
number of shares of Common Stock authorized for issuance under the Charter from 180,000,000 to 500,000,000 shares.
As
of September 30, 2015, 102,417,409 shares of Common Stock were issued and outstanding. No shares of preferred stock were issued
or outstanding.
From
October 4, 2013, through July 23, 2014, 27 accredited investors purchased an aggregate of 6,940,000 shares of Common Stock, at
a price of $0.25 per share pursuant to private placements. The Company received gross aggregate cash proceeds of $1,735,000. (Refer
to Note 8. Related Party Transactions)
Between
November 11, 2013, and December 20, 2013, the Company issued an aggregate of 1,446,380 shares of its Common Stock valued at $361,500,
as full and complete settlement of trade payables totaling an aggregate $1,466,800 owed to two creditors who are also accredited
investors. As a result of this transaction the Company recorded a gain on extinguishment of debt of $1,105,200.
On
January 29, 2014 and June 20, 2014, placement agent warrants to purchase in aggregate 608,309 shares of Common Stock with a price
of $0.04718 per share were exercised on a net basis resulting in the issuance of 564,467 shares of Common Stock.
On
March 21, 2014, the Board resolved to amend the Company’s Charter in order to increase the number of shares of Common Stock
authorized for issuance under the Charter from 150,000,000 to 180,000,000. This amendment to the Charter was approved by more
than 65% of the stockholders eligible to vote at the annual meeting of stockholders held on May 13, 2014.
On
September 3, 2015, the Board resolved to amend the Company’s Charter again in order to further increase the number of shares
of Common Stock authorized for issuance under the Charter from 180,000,000 to 500,000,000. This amendment to the Charter was also
approved by more than 65% of the stockholders eligible to vote at the annual meeting of stockholders held on October 28, 2015.
(Refer to Note 12. Subsequent Events)
On
August 20, 2015, the Board approved an award of 750,000 shares of the Company's restricted Common Stock to Dr. Smith in connection
with her appointment as Chairman of the Company's Board. These shares, which are fully vested, were valued at $0.055 per share,
the closing price of the shares on the day of grant, and were valued in aggregate at $41,250. The issuance of the shares was processed
on October 30, 2015.
Stock-Option
Plans
On
August 3, 2006, CNS California adopted the CNS California 2006 Stock Incentive Plan (the “2006 Plan”). The 2006 Plan
provides for the issuance of awards in the form of restricted shares, stock options (which may constitute incentive stock options
(ISO) or non-statutory stock options (NSO), stock appreciation rights and stock unit grants to eligible employees, directors and
consultants and is administered by the Board. A total of 667,667 shares of stock were ultimately reserved for issuance under the
2006 Plan. As of September 30, 2014, 70,825 options were exercised and there were 501,924 options and 6,132 restricted shares
outstanding under the amended 2006 Plan leaving 87,786 shares which will not be issued as the 2006 Plan has been frozen. The outstanding
options have exercise prices to purchase shares of Common Stock ranging from $3.60 to $32.70.
On
March 22, 2012, our Board approved the MYnd Analytics, Inc. 2012 Omnibus Incentive Compensation Plan (the “2012 Plan”),
reserved 333,334 shares of stock for issuance and on December 10, 2012, the Board approved the amendment of the 2012 Plan to increase
the shares authorized for issuance from 333,334 shares to 5,500,000 shares. On March 26, 2013, the Board further approved the
amendment of the 2012 Plan to increase the shares authorized for issuance from 5,500,000 shares to 15,000,000 shares. The 2012
Plan, as amended, was approved by our stockholders at the 2013 annual meeting held on May 23, 2013.
On
October 8, 2013, the Board granted to the Company’s two executive officers and two senior managers (collectively, the “Managers”)
options to purchase shares of its Common Stock pursuant to the 2012 Omnibus Incentive Compensation Plan, as amended (the “2012
Plan”), at an exercise price of $0.25 per share as follows: George Carpenter 435,000 shares, Paul Buck 470,000 shares, Stewart
Navarre 385,000 shares and Brian MacDonald 310,000. These options vested pro-rata over 12 months starting from the date of grant.
The four managers agreed to forego a portion of their salaries in fiscal year 2014 as follows: George Carpenter $98,000, Paul
Buck $106,500, Stewart Navarre $83,600 and Brian MacDonald $66,700. These executive officers and managers will be paid out of
the salaries which were earned and accrued during fiscal years 2012 and 2013. The accruals to be paid out are equivalent to the
fiscal year 2014 salaries that each of the executive officers and managers agreed to forego in lieu of receiving options.
On
November 8, 2013, the Board granted 700,000 options to purchase shares of its Common Stock pursuant to the 2012 Plan, at an exercise
price of $0.25 per share to select consultants and staff, excluding the managers. The staff options vest evenly over 48 months
starting on the date of grant; consultant options vest evenly over 36 months starting on the date of grant.
On
July 31, 2014, the Board granted 425,000 options to purchase shares of its Common Stock pursuant to the 2012 Plan, at an exercise
price of $0.26 per share to select consultants. These options vest evenly over 36 months starting on the date of grant.
On
January 8, 2015, the Board granted an option to purchase 250,000 shares of its Common Stock pursuant to the 2012 Plan, at an exercise
price of $0.25 per share to a consultant. The option vesting is contingent upon the achievement of agreed upon goals.
On
August 20, 2015, August 20, 2015, the Board approved an award of options to purchase 250,000 shares of the Company’s common
stock for each of the Company's directors, for an aggregate grant of 1,750,000 options. The options are exercisable at a price
per share of $0.055, the closing price of the Company's common stock on the date of grant, and will vest pro-rata over 36 months.
As
of September 30, 2015, 70,825 options had been exercised and 501,924 options and 6,132 restricted shares were outstanding under
the amended 2006 Plan leaving 87,786 shares which management does not believe will ever be issued as the 2006 Plan is frozen.
Options to purchase 13,728,087 shares of Common Stock and 750,000 restricted shares remain outstanding under the 2012 Plan. None
of these options have been exercised, leaving 521,913 options available for issuance.
Stock-based
compensation expenses are generally recognized over the employees’ or service provider’s requisite service period, generally
the vesting period of the award. Stock-based compensation expense included in the accompanying statements of operations for the
year ended September 30, 2015 and 2014 is as follows:
|
|
September
30 |
|
|
|
2015 |
|
|
2014 |
|
Cost of Neurometric
Services revenues |
|
$ |
— |
|
|
$ |
5,100 |
|
Research |
|
|
41,600 |
|
|
|
65,500 |
|
Product Development |
|
|
52,300 |
|
|
|
249,700 |
|
Sales and marketing |
|
|
81,600 |
|
|
|
87,700 |
|
General
and administrative |
|
|
66,200 |
|
|
|
600,700 |
|
Total |
|
$ |
241,700 |
|
|
$ |
1,008,700 |
|
Total
unrecognized compensation as of September 30, 2015 amounted to $216,300.
A
summary of stock option activity is as follows:
|
|
Number of Shares |
|
|
Weighted Average Exercise
Price |
|
Outstanding at September
30, 2013 |
|
|
9,749,594 |
|
|
$ |
1.00 |
|
Granted |
|
|
2,725,000 |
|
|
|
0.25 |
|
Exercised |
|
|
- |
|
|
|
|
|
Forfeited |
|
|
(57,095 |
) |
|
|
12.67 |
|
Outstanding at September
30, 2014 |
|
|
12,417,499 |
|
|
$ |
0.84 |
|
Granted |
|
|
2,000,000 |
|
|
|
0.08 |
|
Exercised |
|
|
- |
|
|
|
- |
|
Forfeited |
|
|
(187,488 |
) |
|
|
0.11 |
|
Outstanding at September
30, 2015 |
|
|
14,230,011 |
|
|
$ |
0.75 |
|
Following
is a summary of the status of options outstanding at September 30, 2015:
Exercise Price
($) |
|
|
Number of Shares |
|
|
Expiration Date |
|
Weighted
Average Exercise
Price ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.055 |
|
|
|
1,750,000 |
|
|
08/2025 |
|
$ |
0.055 |
|
|
0.04718 |
|
|
|
8,795,308 |
|
|
12/2022 – 01/2023 |
|
|
0.04718 |
|
|
0.25 |
|
|
|
2,715,109 |
|
|
03/2023 – 01/2025 |
|
|
0.25 |
|
|
0.26 |
|
|
|
425,000 |
|
|
07/2024 |
|
|
0.26 |
|
|
3.00 |
|
|
|
42,670 |
|
|
03/2022 |
|
|
3.00 |
|
|
3.60 |
|
|
|
28,648 |
|
|
08/2016 |
|
|
3.60 |
|
|
3.96 |
|
|
|
32,928 |
|
|
08/2016 |
|
|
3.96 |
|
|
9.00 |
|
|
|
4,525 |
|
|
11/2016 |
|
|
9.00 |
|
|
12.00 |
|
|
|
28,535 |
|
|
03/2019 – 07/2020 |
|
|
12.00 |
|
|
14.10 |
|
|
|
10,000 |
|
|
03/2021 |
|
|
14.10 |
|
|
15.30 |
|
|
|
1,373 |
|
|
09/2018 |
|
|
15.30 |
|
|
16.50 |
|
|
|
262,441 |
|
|
03/2020 |
|
|
16.50 |
|
|
17.70 |
|
|
|
953 |
|
|
08/2016 |
|
|
17.70 |
|
|
24.00 |
|
|
|
4,667 |
|
|
12/2017 |
|
|
24.00 |
|
|
26.70 |
|
|
|
32,297 |
|
|
09/2017 |
|
|
26.70 |
|
|
28.80 |
|
|
|
11,767 |
|
|
04/2018 |
|
|
28.80 |
|
$ |
32.70 |
|
|
|
83,790 |
|
|
08/2017 |
|
$ |
32.70 |
|
|
Total |
|
|
|
14,230,011 |
|
|
Average |
|
$ |
0.75 |
|
Warrants
to Purchase Common Stock
The
warrant activity for the period starting October 1, 2013, through September 30, 2015, is described as follows:
|
|
Number of Shares |
|
|
Weighted Average Exercise
Price |
|
Outstanding at October
1, 2013 |
|
|
1,497,556 |
|
|
$ |
3.03 |
|
Granted |
|
|
152,200 |
|
|
|
0.27 |
|
Exercised |
|
|
(608,309 |
) |
|
|
0.04718 |
|
Expired |
|
|
(226,703 |
) |
|
|
9.14 |
|
Outstanding at September
30, 2014 |
|
|
814,744 |
|
|
$ |
3.07 |
|
Granted |
|
|
200,000 |
|
|
|
0.25 |
|
Exercised |
|
|
— |
|
|
|
— |
|
Expired |
|
|
(233,220 |
) |
|
|
9.14 |
|
Outstanding at September
30, 2015 |
|
|
781,524 |
|
|
$ |
0.53 |
|
Following
is a summary of the status of warrants outstanding at September 30, 2015:
Exercise Price |
|
|
Number of Shares |
|
|
Expiration Date |
|
Weighted
Average Exercise
Price |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.04718 |
|
|
|
38,152 |
|
|
03/2018 |
|
$ |
0.04718 |
|
|
0.25 |
|
|
|
332,200 |
|
|
04/2016 – 07/2017 |
|
|
0.25 |
|
|
0.275 |
|
|
|
324,000 |
|
|
06/2018 – 03/2019 |
|
|
0.275 |
|
|
1.00 |
|
|
|
67,170 |
|
|
10/2015 – 01/2017 |
|
|
1.00 |
|
|
7.50 |
|
|
|
3,334 |
|
|
05/2016 |
|
|
7.50 |
|
$ |
9.00 |
|
|
|
16,668 |
|
|
07/2017 |
|
|
9.00 |
|
|
Total |
|
|
|
781,524 |
|
|
|
|
$ |
0.53 |
|
On
March 22, 2014, a warrant to purchase 120,000 shares of Common Stock at an exercise price of $0.275 per share was issued to Monarch
Capital who acted as placement agents in raising $300,000 from 11 accredited investors who purchased restricted Common Stock in
private placement agreements dated October 2, 2013 and January 8, 2014.
Also
on March 22, 2014, a warrant to purchase 32,200 shares of Common Stock at an exercise price of $0.25 per share was issued to D&D
Securities, Inc. who acted as placement agents in raising $115,000 from three accredited investors who purchased restricted Common
Stock in private placement agreements dated January 8, 2014.
On
August 1, 2014, a warrant to purchase 200,000 shares of Common Stock at an exercise price of $0.25 per share was issued to Red
Chip Companies, Inc. pursuant to an investor relations services agreement.
At
September 30, 2015, there were warrants outstanding to purchase 781,524 shares of the Company’s Common Stock. The exercise
price of the outstanding warrants range from $0.04718 to $9.00 with a weighted average exercise price of $0.53. The warrants expire
at various times starting 2015 through 2019.
Please refer to Note 12. Subsequent Events
for Note activity after September 30, 2015, regarding issuances of warrants.
|