NeuBase Therapeutics, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

WARRANTS

WARRANTS

12 Months Ended

Sep. 30, 2011

NOTE 9 - WARRANTS

The Company has determined the estimated value of the warrants granted to employees and non-employees in exchange for services and financing expenses using the Black-Scholes pricing model and the following assumptions: stock price at valuation, $0.21-$0.73; expected term of 3-5 years, exercise price of $0.50-$0.67, a risk free interest rate of 1.15-2.90 percent, a dividend yield of 0 percent and volatility of 132-276 percent.

Between October 29 and December 4, 2009, the Company issued a total of 236,000 warrants for services rendered to the Company. As a result of this issuance, the Company recognized $88,562 in consulting expense.

On April 9, 2010 the Company granted 10,000 warrants as payment for an outstanding accounts payable balance of $3,991.

In connection with the January 15, 2010 financing, the Company issued 5,583,336 Class H warrants to the Series F warrant holders who exercised their Series F warrants. The Class H Warrants have a 5 year term with a strike price of $0.55.

On June 22, 2010 the Company authorized the issuance of 93,000 warrants for services to the Company. Of these authorized warrants, 90,000 were issued on June 23, 2010 once the contract for services was finalized. These warrants have a 5 year term with a strike price of $0.50. The remaining 3,000 warrants were issued September 2, 2010. These warrants have a three year term with a strike price of $0.50. The combined value of these warrants was $41,129 at the time of issuance and the value was expensed as research and development expense.

In connection with the December 30, 2010 financing, the investors received 2,520,000 Class I five year warrants to purchase common stock at an exercise price of $0.55 per share. The exercise price of these warrants contains certain reset provisions which require the fair value of the warrants to be reported as a liability and not in permanent equity. On the date of issuance, the Company calculated the fair value of these warrants to be $528,847 (see note 7). The total cash proceeds of $1,050,000 were first applied to the warrants with the remaining $521,153 being allocated to the common shares and being recorded in additional paid-in capital.

Between May 12 and August 23, 2011, the Company issued a total of 625,000 warrants for services rendered to the Company. As of September 30, 2011, 230,000 warrants with a fair value of $123,170 had vested. The Company recorded a corresponding expense of $71,687 to professional fees and $51,483 to research and development expense.

Below is a table summarizing the warrants issued and outstanding as of September 30, 2011.

Date	Number			Exercise		Contractual		Expiration		Value if
Issued	Outstanding			Price		Life (Years)		Date		Exercised
Balance 10/1/08		13,509,857			1.18		5		Various		15,941,631
03/20/09		5,000,000			0.50		5		03/31/14		2,500,000
06/03/09		11,166,672			0.18		5		06/03/14		2,010,001
09/30/09		150,000			0.40		5		06/30/14		60,000
Expired
Balance 9/30/09		29,826,529			0.69						20,511,632
10/09/09		88,000			0.50		5		10/29/14		44,000
11/09/09		18,000			0.50		5		11/09/14		9,000
12/04/09		130,000			0.60		2		12/04/11		78,000
12/15/09		(5,583,336	)		0.18						(1,005,000	)
01/15/10		5,583,336			0.55		5		01/15/15		3,070,835
01/15/10		(5,583,336	)		0.18						(1,005,000	)
04/09/10		10,000			0.55		5		4/9/2015		5,500
07/23/10		93,000			0.50		3		07/23/13		46,500
Expired
Balance 9/30/10		24,582,193			0.89						21,755,466
12/30/10		2,520,000			0.55		5		12/30/15		1,386,000
05/12/11		55,000			0.50		5		05/12/16		27,500
06/13/11		300,000			0.50		2		06/13/13		150,000
07/15/11		100,000			0.54		5		07/15/16		54,000
07/15/11		120,000			0.54		2		07/15/13		64,800
08/23/11		50,000			0.67		3		08/23/14		33,500
Expired		(1,090,568	)		1.19						(1,297,776	)
Balance 9/30/11		26,636,625			0.83						22,173,490

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

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