Quarterly report pursuant to Section 13 or 15(d)

Common Stock

v2.3.0.15
Common Stock
9 Months Ended
Sep. 30, 2011
Common Stock  
Common Stock
13.
Common Stock
 
The following transactions occurred from March 19, 2001 (inception) to September 30, 2011:
 
 
a)
On May 10, 2001, the Company issued 3,600,000 shares of common stock to the Company's founders for cash of $1.
 
 
b)
On August 10, 2001, the Company issued:
 
 
i)
1,208,332 shares of common stock to the directors of the Company for cash of $1,450,000.
 
 
ii)
958,334 shares of common stock to Rexgene for cash of $550,000.
 
 
iii)
360,000 shares of common stock in a private placement to individual investors for cash of $1,080,000.
 
These share purchases were negotiated by the parties at various dates prior to the August 10, 2001 share issuance date.
 
 
c)
On October 10, 2001, the Company issued 400,000 shares of common stock to Chong Kun Dang Pharmaceutical Corp. ("CKD") for cash of $479,991 and 400,000 shares of common stock to an individual investor for cash of $479,991.
 
 
d)
On October 10, 2001, the Company issued 200,000 shares of common stock to CKD for cash of $479,985.
 
 
e)
Since inception, the Company's founders have transferred 800,000 shares of the common stock described in a) to officers and directors of the Company.
 
 
f)
In July 2003, the stockholders described in b) (iii) and e) transferred an aggregate of 1,268,332 shares of common stock to a voting trust.  The trust allows for the unified voting of the stock by the trustees.
 
The appointed trustees are senior management of the Company who, together with their existing shares, control a majority of the voting power of the Company.
 
 
g)
On August 20, 2003, the Company issued 500,000 shares of common stock to KT&G Corporation for cash consideration of $2,000,000.
 
 
h)
On October 29, 2004, an option holder exercised options to purchase shares of common stock for cash of $1,800 and the Company issued an aggregate of 1,500 shares.
 
 
i)
Pursuant to the agreement and plan of merger which occurred on May 13, 2005, (i) each share of the issued and outstanding common stock of Rexahn, Corp ("Rexahn") (other than dissenting shares) was converted into the right to receive five shares of Rexahn Pharmaceuticals common stock; (ii) each issued, outstanding and unexercised option to purchase a share of Rexahn common stock was converted into an option to purchase five shares of Rexahn Pharmaceuticals' common stock and (iii) the par value of Rexahn's common stock was adjusted to reflect the par value of Corporate Road Show Com Inc. ("CRS") common stock.  In the acquisition merger, 289,780,000 CRS pre-reverse stock split shares were converted into 2,897,802 post-reverse stock split Rexahn Pharmaceuticals shares, and an additional 500,000 post-reverse stock split Rexahn Pharmaceuticals shares were issued to a former executive of CRS.  All shares and earnings per share information have been retroactively restated in these financial statements.
 
 
j)
On August 8, 2005, the Company issued, in a transaction exempt from registration under the Securities Act of 1993, as amended, 4,175,000 shares of common stock at a purchase price of $2.00 per share.
 
 
k)
On October 3, 2005, the Company issued 7,000 shares of common stock for $21,877 and $7,500 cash in exchange for legal services from W. Rosenstadt and Steve Sanders.
 
l)
On December 2, 2005, the holders of a convertible note that was issued on August 8, 2005 and, represented $1,300,000 aggregate principal amount, exercised their option to convert the entire principal amount of the note into the Company's common stock.  Based on a $2.00 per share conversion price, the holders received an aggregate of 650,000 shares.
 
 
m)
On December 27, 2005, option holders exercised options to purchase shares of the Company's common stock for cash of $9,600 and the Company issued an aggregate of 40,000 shares.
 
 
n)
On February 22, 2006, an option holder exercised options to purchase shares of the Company's common stock for cash of $1,200 and the Company issued an aggregate of 5,000 shares.
 
 
o)
On April 12, 2006, an option holder exercised options to purchase shares of the Company's common stock for cash of $3,409 and the Company issued an aggregate of 14,205 shares.  On the same date, the Company agreed to repurchase common stock from the option holder based on the then market price for treasury in exchange for the aggregate purchase price of $28,410 in cash.
 
 
p)
On May 13, 2006, holders of the $3,850,000 convertible notes issued on February 28, 2005, exercised their rights to convert the entire principal amount of the notes into shares of the Company's common stock.    Based on a $1.00 per share conversion price, the Company issued 3,850,000 shares of common stock in connection with the conversion.
 
 
q)
On October 9, 2006, an option holder exercised options to purchase shares of the Company's common stock for cash of $2,400 and the Company issued an aggregate of 10,000 shares.
 
 
r)
On November 19, 2006, an option holder exercised options to purchase shares of the Company's common stock for cash of $1,800 and the Company issued an aggregate of 7,500 shares.
 
 
s)
On December 19, 2006, an option holder exercised options to purchase shares of the Company's common stock for cash of $6,000 and the Company issued an aggregate of 25,000 shares.
 
 
t)
On April 18, 2007, an option holder exercised options to purchase shares of the Company's common stock for cash of $14,400 and the Company issued an aggregate of 18,000 shares.
 
 
u)
On July 23, 2007, an option holder exercised options to purchase shares of the Company's common stock for cash of $12,000 and the Company issued an aggregate of 15,000 shares.
 
 
v)
On September 27, 2007, an option holder exercised options to purchase shares of the Company's common stock for cash of $15,600 and the Company issued an aggregate of 19,500 shares.

 
w)
On December 18, 2007, the Company issued 4,857,159 units at a price $1.40 per share for total gross proceeds of $6,800,023.  Investors also were issued one warrant for every five shares purchased.  One warrant will entitle the holder to purchase an additional share of common stock at a purchase price of $1.80 at any time over a period of three years from the date of the closing. The Company has recorded the warrants as liabilities at fair value as disclosed in Note 15.  Private placement closing costs of $139,675 were recorded as a reduction of the issuance proceeds.  Private placements costs also consist of 107,144 warrants, valued at $138,326, and were recorded as a financing expense. The Company extended anti-dilutive protection to the investors. The anti-dilution protection provision is structured in a way that is designed to protect a holder's position from being diluted and contains a price protection based on a mathematical calculation, and is recorded as a liability at fair value, as disclosed in Note 16.   The Company revalues these liabilities each reporting period, with the unrealized gain (loss) recorded as other income (expense).
 
A summary of the allocation of the proceeds of the offering is shown below:
 
Gross Proceeds:
  $ 6,800,023  
         
Allocated to liabilities:
       
Warrant liabilities
    1,392,476  
Put feature on common stock
    4,401,169  
Total allocated to liabilities
    5,793,645  
         
Allocated to equity:
       
Common stock and additional paid-in capital
    1,144,704  
         
Allocated to expense:
       
Financing expense
    (138,326 )
         
Total allocated gross proceeds:
  $ 6,800,023  
 
 
x)
On December 27, 2007, an option holder exercised options to purchase shares of the Company's common stock for cash of $18,000 and the Company issued an aggregate of 75,000 shares.

 
y)
On March 20, 2008, the Company issued 642,858 units consisting of one share of the Company's common stock and one warrant for every five common shares purchased in a private placement at a price of $1.40 per unit for total gross proceeds of $900,001.  One warrant will entitle the holder to purchase an additional share of common stock at a price of $1.80 at any time over a period of three years from the date of the private placement, and is recorded as a liability at fair value.  The Company extended anti-dilution protection to investors, and the provision is structured in a way that is designed to protect the holder's position from being diluted and contains a price based on a mathematical computation.
 
A summary of the allocation of the proceeds of the offering is shown below:
 
Gross Proceeds:
  $ 900,001  
         
Allocated to liabilities:
       
Warrant liabilities
    190,917  
Put feature on common stock
    553,569  
Total allocated to liabilities
    744,486  
         
Allocated to common stock and additional paid-in capital
    155,515  
         
Total allocated gross proceeds:
  $ 900,001  
 
 
z)
On May 30, 2008, an option holder exercised options to purchase shares of the Company's common stock for cash of $7,200 and the Company issued an aggregate of 30,000 shares.
 
 
aa)
On June 2, 2008, an option holder exercised options to purchase shares of the Company's common stock for cash of $12,000 and the Company issued an aggregate of 50,000 shares.
 
 
ab)
On June 30, 2008, an option holder exercised options to purchase shares of the Company's common stock for cash of $12,000 and the Company issued an aggregate of 10,000 shares.

 
ac)
On June 5, 2009 the Company closed on a purchase agreement to issue 2,857,143 shares of common stock at a price of $1.05 per share to an institutional investor for total gross proceeds of $3,000,000 and incurred $289,090 of stock issuance costs.  The investor was also issued:
 
 
1)
Series I warrants to purchase 2,222,222 shares of common stock at a purchase price of $1.05 per share at any time before September 3, 2009;
 
 
2)
Series II warrants to purchase 1,866,666 shares of common stock at a purchase price of $1.25 per share at any time from December 3, 2009 to June 5, 2012; and
 
 
3)
Series III warrants to purchase 1,555,555 shares of common stock at a purchase price of $1.50 per share at any time from December 3, 2009 to June 5, 2014.
 
The closing costs included 142,857 warrants valued at $122,257 and were recorded as a financing expense.  All warrants issued from this purchase agreement are recorded as liabilities at fair value.
 
The Company incurred a derivative loss upon issuance of these warrants, as the fair value of the warrants at inception was greater than the proceeds received from the investor.  The derivative loss was combined with unrealized gains (losses) for the year ended December 31, 2009.
 
A summary of the allocation of the proceeds of the offering is shown below:
 
Gross Proceeds:
  $ 3,000,000  
         
Allocated to liabilities:
       
Warrant liabilities
    3,451,194  
         
Allocated to equity:
       
Common stock and additional paid-in capital
    -  
         
Allocated to expense:
       
Financing expense
    (122,257 )
Derivative loss at inception
    (328,937 )
Total allocated to expense
    (451,194 )
         
Total allocated gross proceeds:
  $ 3,000,000  
 
 
ad)
On June 9, 2009, the Company issued 1,833,341 shares of common stock and 862,246 warrants to purchase common stock at a purchase price of $1.05 per share to existing stockholders pursuant to the anti-dilution protection provisions of the private placements transacted on December 18, 2007 and March 20, 2008.  The fair value of the additional warrants issued was approximately $422,300.
 
 
ae)
On September 4, 2009, an option holder exercised options to purchase shares of the Company's common stock for cash of $3,600 and the Company issued an aggregate of 15,000 shares.
 
 
af)
On September 21, 2009, the Company issued 3,102,837 shares of common stock at a purchase price of $1.13 per share to an institutional investor for net proceeds of $3,371,340, which includes $128,659 of stock issuance costs.

 
ag)
On October 23, 2009, the Company closed on a purchase agreement to issue 6,072,383 shares of common stock at a price of $0.82 per share to five institutional investors for gross proceeds of $5,000,000, which includes $351,928 of stock issuance costs.  The investors were also issued warrants to purchase 2,125,334 shares of common stock at a purchase price of $1.00 per share, exercisable on or after the date of delivery until the five-year anniversary, and were recorded as liabilities at fair value. The closing costs included 245,932 warrants valued at $101,693 and were recorded as a financing expense.
 
A summary of the allocation of the proceeds of the offering is shown below:
 
Gross Proceeds:
  $ 5,000,000  
         
Allocated to liabilities:
       
Warrant liabilities
    1,114,627  
         
Allocated to equity:
       
Common stock and additional paid-in capital
    3,987,066  
         
Allocated to expense:
       
Financing expense
    (101,693 )
         
Total allocated gross proceeds:
  $ 5,000,000  
 
 
ah)
On October 23, 2009, the Company issued 2,018,143 shares of common stock and 569,502 warrants to purchase common stock at a purchase price of $0.82 per share to existing stockholders pursuant to anti-dilution protection provisions of the private placements transacted on December 24, 2007 and March 20, 2008.The fair value of the additional warrants issued was approximately $476,200.
 
 
ai)
On February 12, 2010, the Company entered into two consulting agreements pursuant to which the Company issued 300,000 shares of common stock upon the execution of the agreements.  Upon the extension of the term, 200,000 shares of common stock for each month will be issued until the termination of services.
 
The following table lists the issuances of shares by the Company under the consulting agreement:
 
Date of Issuance
 
Number of Shares Issued
   
Market Value Per Share
   
Total Market Value of Share Issuance
 
February 12, 2010
    300,000     $ 1.22     $ 366,000  
May 24, 2010
    200,000       1.40       280,000  
June 15, 2010
    200,000       1.15       230,000  
August 2, 2010
    400,000       1.37       548,000  
September 21, 2010
    200,000       1.20       240,000  
October 21, 2010
    200,000       1.16       232,000  
November 11, 2010
    200,000       1.06       212,000  
                         
Total
    1,700,000             $ 2,108,000  
 
The market value of these shares was recorded as an expense and is reflected in general and administrative expenses in the Company's statement of operations.  The agreements were terminated by the Company on November 11, 2010.

 
aj)
In March 2010, warrant holders exercised their warrants to purchase shares of the Company's common stock for cash of $1,297,001 and the Company issued an aggregate of 1,197,001 shares.
 
 
ak)
In March 2010, option holders exercised options to purchase shares of the Company's common stock for cash of $21,240 and the Company issued an aggregate of 48,000 shares.
 
 
al)
In April 2010, warrant holders exercised their warrants to purchase shares of the Company's common stock for cash of $1,966,375 and the Company issued an aggregate of 1,595,825 shares.
 
 
am)
On April 20, 2010, an option holder exercised options to purchase shares of the Company's common stock for cash of $86,000 and the Company issued an aggregate of 107,500 shares.
 
 
an)
In May 2010, warrant holders exercised warrants to obtain shares of the Company's common stock and the Company issued an aggregate of 547,674 shares.
 
 
ao)
On June 30, 2010, the Company entered into a purchase agreement to issue 6,666,667 shares of common stock at a price of $1.50 per share to investors for gross proceeds of $10,000,000, which includes $681,773 of stock issuance costs.  The investors were also issued warrants to purchase 2,000,000 shares of common stock at an exercise price of $1.90 per share.  The warrants became immediately exercisable on the date of delivery until the four-year anniversary of the date of issuance.  These warrants were valued at $1,800,800 and recorded as warrant liabilities.  The closing costs included 200,000 warrants valued at $180,080 and were recorded as a financing expense.
 
Gross Proceeds:
  $ 10,000,000  
         
Allocated to liabilities:
       
Warrant liabilities
    1,980,880  
         
Allocated to equity:
       
Common stock and additional paid-in capital
    8,199,200  
         
Allocated to expense:
       
Financing expense
    (180,080 )
         
Total allocated gross proceeds:
  $ 10,000,000  
 
 
ap) 
In November 2010, warrant holders exercised 936,883 cashless warrants to obtain shares of the Company's common stock and the Company issued an aggregate of 247,491 shares.
 
 
aq) 
In December 2010, warrant holders exercised 530,900 cashless warrants to obtain shares of the Company's common stock and the Company issued an aggregate of 126,195 shares.
 
 
ar)
On January 19, 2011, the Company issued 2,334,515 shares of common stock at a purchase price of $1.69 per share to an institutional investor for net proceeds of $3,926,397, which includes $23,603 of stock issuance costs.
 
 
as)
On February 15, 2011, a warrant holder exercised warrants to purchase shares of the Company's common stock for cash of $215,104 and the Company issued 209,042 shares.
 
 
at)
On February 28, 2011, an option holder exercised options to purchase shares of the Company's common stock for cash of $6,000 and the Company issued 25,000 shares.
 
 
au)
On March 11, 2011, an option holder exercised options to purchase shares of the Company's common stock for cash of $12,000 and the Company issued 50,000 shares.

 
av)
On March 28, 2011, warrant holders exercised their warrants to purchase shares of the the Company's common stock for cash of $102,857 and the Company issued 124,917 shares.
 
 
aw)
On March 31, 2011, the Company closed on a purchase agreement to issue 8,333,333 shares of common stock at a price of $1.20 per share to five institutional investors for gross proceeds of $10,000,000, which includes $803,791 of stock issuance costs.  The investors were also issued warrants to purchase 3,333,333 shares of common stock at a purchase price of $1.50 per share, exercisable on or after six months after the closing date until the five-year anniversary of the initial exercise date, and were recorded as liabilities at fair value. The closing costs included 208,333 warrants valued at $97,667 and were recorded as a financing expense.
 
A summary of the allocation of the proceeds of the offering is shown below:
 
Gross Proceeds:
  $ 10,000,000  
         
Allocated to liabilities:
       
Warrant liabilities
    2,924,333  
         
Allocated to equity:
       
Common stock and additional paid-in capital
    7,173,334  
         
Allocated to expense:
       
Financing expense
    (97,667 )
         
Total allocated gross proceeds:
  $ 10,000,000  
 
 
ax)
In September 2011, an option holder exercised options to purchase shares of the Company's common stock for cash of $22,040 and the Company issued 28,000 shares.