these forward-looking statements are subject to risks and uncertainties including those under `` risk factors `` in item 1a in this form 10-k that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements . our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors . the company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the filing date of this report . historical background citius pharmaceuticals , inc. ( `` citius `` or the `` company `` ) is a pharmaceutical company focused on developing innovative formulations aimed at improving the delivery and compliance of approved drugs . on september 12 , 2014 , we acquired citius pharmaceuticals , llc as a wholly-owned subsidiary . citius pharmaceuticals , llc was founded in massachusetts in january 2007. activities since citius pharmaceuticals , llc 's inception through september 30 , 2015 , were devoted primarily to the development and commercialization of therapeutic products for large and growing markets using innovative patented or proprietary formulations and novel drug delivery technology . 40 through september 30 , 2015 , the company has devoted substantially all of its efforts to product development , raising capital , building infrastructure through strategic alliances and coordinating activities relating to its first commercial product suprenza . the company has not yet realized any revenues from its planned principal operations . accounting principles generally accepted in the united states require that a company whose security holders retain the majority voting interest in the combined business be treated as the acquirer for financial statement reporting purposes . the acquisition was accounted for as a `` reverse acquisition `` whereby citius pharmaceuticals , llc was deemed to be the accounting acquirer . the historical financial statements of citius pharmaceuticals , llc are presented as our historical financial statements . the historical fiscal year end of citius pharmaceuticals , llc was december 31. in connection with the reverse acquisition , we adopted the fiscal year end of citius pharmaceuticals , inc. thereby changing our fiscal year end from december 31 to september 30. as a result , the fiscal year ended september 30 , 2014 consists of only nine months . the following analysis of our results of operations reflects the accounting treatment required as a result of the reverse acquisition . business agreements alpex pharma s.a. on june 12 , 2008 , the company entered into a collaboration and license agreement ( the `` alpex agreement `` ) with alpex pharma s.a. ( `` alpex `` ) , in which alpex granted the company an exclusive right and license to use certain alpex intellectual property in order to develop and commercialize orally disintegrating tablet formulations of pharmaceutical products in united states , canada and mexico . in addition , alpex manufactures suprenza , the company 's commercialized pharmaceutical product , on a contract basis . the agreement was amended on november 15 , 2011 as part of an amendment and coordination agreement ( see the `` three-party agreement `` below ) . under the terms of the alpex agreement , as amended by the three-party agreement dated november 15 , 2011 ( see below ) , alpex is entitled to a payment per tablet manufactured and a percentage of all milestone , royalty and other payments received by the company from prenzamax , llc , pursuant to a sublicense agreement ( see below ) . a milestone is generally understood in the industry as a completion of a specific defined task towards the completion of a project or performance of a contract . pursuant to our agreement with alpex , we are required to pay alpex for the completion of certain tasks including , but not limited to , the development of the analytical methods , formulations and filings of the nda , which we have done . in addition , under the terms of the alpex agreement , alpex retained the right to use the clinical data generated by the company to file for regulatory approval and market suprenza in the rest of the world . in the event that alpex has such sales , alpex will pay the company a percentage royalty on net sales , as defined ( `` alpex revenue `` ) . no milestone , royalty or other payments have been earned or received by the company through september 30 , 2015. prenzamax , llc on november 15 , 2011 , the company entered into an exclusive license agreement ( the `` sublicense agreement `` ) with prenzamax , llc ( `` prenzamax `` ) , in which the company granted prenzamax and its affiliates the exclusive right to commercialize suprenza in the united states . prenzamax is an affiliate of akrimax , a related party and was formed for the specific purpose of managing the sublicense agreement . under the terms of the sublicense agreement , prenzamax is to pay the company a percentage of the product 's ebitda , as defined ( `` profit share payments `` ) . in addition , prenzamax is to reimburse the company directly for certain development costs . these payments are to commence once prenzamax has achieved profitability , as defined in the sublicense agreement . further , under the terms of the sublicense agreement , prenzamax is required to share in the royalty payment due to alpex under the alpex agreement . in addition , prenzamax is entitled to a percentage of the alpex revenue received by the company . story_separator_special_tag under the partnering agreement , we were not entitled to any revenues during the nine months ended september 30 , 2014 and the year ended december 31 , 2013. research and development expenses for the nine months ended september 30 , 2014 , research and development expenses were $ 574 as compared to $ 492,136 during the year ended december 31 , 2013. the $ 491,562 decrease in 2014 was primarily due to our limited working capital . during the nine months ended september 30 , 2014 , we were actively seeking to raise additional capital in order to fund our research and development efforts . general and administrative expenses for the nine months ended september 30 , 2014 , general and administrative expenses decreased by $ 507,352 , or approximately 73 % , compared to general and administrative expenses for the year ended december 31 , 2013. expense decreases were primarily attributable to our limited working capital as we focused our efforts solely on raising new capital to fund operations . general and administrative staffing expenses decreased by $ 338,656 during the nine months ended september 30 , 2014 compared to the year ended december 31 , 2013 due to the resignation of certain employees . in addition , professional fees decreased by $ 176,686 primarily due to higher financing costs incurred for legal services , financial consulting and accounting fees during the year ended december 31 , 2013. stock-based compensation expense for the nine months ended september 30 , 2014 , stock-based compensation expense was $ 470,185 as compared to no expense for the year ended december 31 , 2013. the $ 470,185 expense was due to the stock options to purchase 3,300,000 shares of the company 's common stock granted to our chief executive officer in connection with his employment agreement . other income ( expense ) interest income earned on the net proceeds of our september 12 , 2014 private offering was $ 555 for the nine months ended september 30 , 2014. there was no interest income for the year ended december 31 , 2013. gain on revaluation of derivative warrant liability for the nine months ended september 30 , 2014 was $ 8,588. the gain was due to the change in the fair value of the derivative warrant liability that we recognized in connection with the first closing of the private offering on september 12 , 2014. for the nine months ended september 30 , 2014 , interest expense decreased by $ 12,404 in comparison to the year ended december 31 , 2013. on july 31 , 2014 , $ 2,035,000 of convertible promissory notes and accrued interest of $ 196,058 were converted to equity . the company borrowed $ 1,175,000 during the year ended december 31 , 2013. in addition , we incurred $ 42,000 in debt issuance costs in april 2013 that were amortized to interest expense over the twelve month term of the note . amortization expense was $ 14,000 and $ 28,000 for the nine months ended september 30 , 2014 and the year ended december 31 , 2013 , respectively . net loss for the nine months ended september 30 , 2014 , we incurred a net loss of $ 737,727 compared to a net loss for the year ended december 31 , 2013 of $ 1,288,003. the decrease in the net loss was primarily due to our decreased activities resulting from our inability to fund our operations . 44 story_separator_special_tag 815-40 , a contract designated as an asset or a liability must be carried at fair value on a company 's balance sheet , with any changes in fair value recorded in the company 's results of operations . a contract designated as an equity instrument must be included within equity , and no fair value adjustments are required from period to period . the 3,400,067 investor warrants , the 680,013 warrants underlying the placement agent 's unit warrants and the 1,000,000 warrants issued for investment banking services in the private offering on september 12 , 2014 were separately accounted for as liabilities at issuance . in addition , the 3,037,037 investor warrants issued between march 19 , 2015 and september 14 , 2015 were accounted for as liabilities at issuance . the warrants are classified as liabilities because the exercise price of the warrants is subject to adjustment in the event that the company issues common stock for less than $ 0.60 per share within one-year of the issuance of the warrants . the 2015 private placements did not result in an adjustment of the exercise price . the company performs valuations of the warrants issued in the private offering using a probability weighted black-scholes pricing model which value was compared to a binomial option pricing model for reasonableness . the model uses market-sourced inputs such as underlying stock prices , risk-free interest rates , volatility , expected life and dividend rates and has also considered the likelihood of `` down-round `` financings . selection of these inputs involves management 's judgment and may impact net income . due to our limited operating history and limited number of sales of our common stock , we estimate our volatility based on a number of factors including the volatility of comparable publicly traded pharmaceutical companies . the volatility factor used in the black-scholes pricing model has a significant effect on the resulting valuation of the derivative liabilities on our balance sheet . the volatility calculated at september 30 , 2015 was 57 % . we used a risk-free interest rate of 1.37 % and estimated lives of 4.47 to 4.96 years , which are the remaining contractual lives of the warrants . the volatility calculated at september 30 , 2014 was 54 % . we used a risk-free interest rate of 1.78 % and an estimated life of 4.95 years , which is the remaining contractual life of the warrants . on september 12 , 2015 , anti-dilution rights

liquidity and capital resources going concern uncertainty and working capital citius has incurred operating losses of $ 2,902,268 , $ 737,727 and $ 1,288,003 for the year ended september 30 , 2015 , the nine months ended september 30 , 2014 , and the year ended december 31 , 2013 , respectively . at september 30 , 2015 , citius had a stockholders ' deficit of $ 635,213 and an accumulated deficit of $ 9,040,549. citius ' net cash used in operations during the year ended september 30 , 2015 , the nine months ended september 30 , 2014 , and the year ended december 31 , 2013 was $ 2,385,416 , $ 183,164 and $ 1,095,266 , respectively . as of september 30 , 2015 , citius had a working capital deficit of $ 640,614. the working capital deficit was attributable to the operating losses incurred by the company since inception offset by our capital raising activities . at september 30 , 2015 , citius had cash and cash equivalents of $ 676,137 available to fund its operations . the company 's primary sources of cash flow since inception have been from financing activities . during the year ended september 30 , 2015 and the nine months ended september 30 , 2014 , the company received net proceeds of $ 1,509,493 and $ 1,680,834 , respectively from the issuance of equity . during the year ended december 31 , 2013 , the company received proceeds of $ 1,175,000 from the issuance of debt . our primary uses of operating cash were for product development and commercialization activities , regulatory expenses , employee compensation , consulting fees , legal and accounting fees , and insurance and travel expenses . on july 31 , 2014 , the note holders demanded conversion of the outstanding $ 1,685,000 in convertible notes , the $ 350,000 subordinated note and the accrued interest of $ 196,058 into 3,667,886 membership interests of citius . citius and the two note holders agreed to convert the convertible notes and accrued interest at the 2014 private offering price of $ 0.60 per share of common stock while the subordinated note issued in the 2013 private placement converted at $ 0.65


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```liquidity and capital resources going concern uncertainty and working capital citius has incurred operating losses of $ 2,902,268 , $ 737,727 and $ 1,288,003 for the year ended september 30 , 2015 , the nine months ended september 30 , 2014 , and the year ended december 31 , 2013 , respectively . at september 30 , 2015 , citius had a stockholders ' deficit of $ 635,213 and an accumulated deficit of $ 9,040,549. citius ' net cash used in operations during the year ended september 30 , 2015 , the nine months ended september 30 , 2014 , and the year ended december 31 , 2013 was $ 2,385,416 , $ 183,164 and $ 1,095,266 , respectively . as of september 30 , 2015 , citius had a working capital deficit of $ 640,614. the working capital deficit was attributable to the operating losses incurred by the company since inception offset by our capital raising activities . at september 30 , 2015 , citius had cash and cash equivalents of $ 676,137 available to fund its operations . the company 's primary sources of cash flow since inception have been from financing activities . during the year ended september 30 , 2015 and the nine months ended september 30 , 2014 , the company received net proceeds of $ 1,509,493 and $ 1,680,834 , respectively from the issuance of equity . during the year ended december 31 , 2013 , the company received proceeds of $ 1,175,000 from the issuance of debt . our primary uses of operating cash were for product development and commercialization activities , regulatory expenses , employee compensation , consulting fees , legal and accounting fees , and insurance and travel expenses . on july 31 , 2014 , the note holders demanded conversion of the outstanding $ 1,685,000 in convertible notes , the $ 350,000 subordinated note and the accrued interest of $ 196,058 into 3,667,886 membership interests of citius . citius and the two note holders agreed to convert the convertible notes and accrued interest at the 2014 private offering price of $ 0.60 per share of common stock while the subordinated note issued in the 2013 private placement converted at $ 0.65
```    
 Suspicious Activity Report : these forward-looking statements are subject to risks and uncertainties including those under `` risk factors `` in item 1a in this form 10-k that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements . our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors . the company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the filing date of this report . historical background citius pharmaceuticals , inc. ( `` citius `` or the `` company `` ) is a pharmaceutical company focused on developing innovative formulations aimed at improving the delivery and compliance of approved drugs . on september 12 , 2014 , we acquired citius pharmaceuticals , llc as a wholly-owned subsidiary . citius pharmaceuticals , llc was founded in massachusetts in january 2007. activities since citius pharmaceuticals , llc 's inception through september 30 , 2015 , were devoted primarily to the development and commercialization of therapeutic products for large and growing markets using innovative patented or proprietary formulations and novel drug delivery technology . 40 through september 30 , 2015 , the company has devoted substantially all of its efforts to product development , raising capital , building infrastructure through strategic alliances and coordinating activities relating to its first commercial product suprenza . the company has not yet realized any revenues from its planned principal operations . accounting principles generally accepted in the united states require that a company whose security holders retain the majority voting interest in the combined business be treated as the acquirer for financial statement reporting purposes . the acquisition was accounted for as a `` reverse acquisition `` whereby citius pharmaceuticals , llc was deemed to be the accounting acquirer . the historical financial statements of citius pharmaceuticals , llc are presented as our historical financial statements . the historical fiscal year end of citius pharmaceuticals , llc was december 31. in connection with the reverse acquisition , we adopted the fiscal year end of citius pharmaceuticals , inc. thereby changing our fiscal year end from december 31 to september 30. as a result , the fiscal year ended september 30 , 2014 consists of only nine months . the following analysis of our results of operations reflects the accounting treatment required as a result of the reverse acquisition . business agreements alpex pharma s.a. on june 12 , 2008 , the company entered into a collaboration and license agreement ( the `` alpex agreement `` ) with alpex pharma s.a. ( `` alpex `` ) , in which alpex granted the company an exclusive right and license to use certain alpex intellectual property in order to develop and commercialize orally disintegrating tablet formulations of pharmaceutical products in united states , canada and mexico . in addition , alpex manufactures suprenza , the company 's commercialized pharmaceutical product , on a contract basis . the agreement was amended on november 15 , 2011 as part of an amendment and coordination agreement ( see the `` three-party agreement `` below ) . under the terms of the alpex agreement , as amended by the three-party agreement dated november 15 , 2011 ( see below ) , alpex is entitled to a payment per tablet manufactured and a percentage of all milestone , royalty and other payments received by the company from prenzamax , llc , pursuant to a sublicense agreement ( see below ) . a milestone is generally understood in the industry as a completion of a specific defined task towards the completion of a project or performance of a contract . pursuant to our agreement with alpex , we are required to pay alpex for the completion of certain tasks including , but not limited to , the development of the analytical methods , formulations and filings of the nda , which we have done . in addition , under the terms of the alpex agreement , alpex retained the right to use the clinical data generated by the company to file for regulatory approval and market suprenza in the rest of the world . in the event that alpex has such sales , alpex will pay the company a percentage royalty on net sales , as defined ( `` alpex revenue `` ) . no milestone , royalty or other payments have been earned or received by the company through september 30 , 2015. prenzamax , llc on november 15 , 2011 , the company entered into an exclusive license agreement ( the `` sublicense agreement `` ) with prenzamax , llc ( `` prenzamax `` ) , in which the company granted prenzamax and its affiliates the exclusive right to commercialize suprenza in the united states . prenzamax is an affiliate of akrimax , a related party and was formed for the specific purpose of managing the sublicense agreement . under the terms of the sublicense agreement , prenzamax is to pay the company a percentage of the product 's ebitda , as defined ( `` profit share payments `` ) . in addition , prenzamax is to reimburse the company directly for certain development costs . these payments are to commence once prenzamax has achieved profitability , as defined in the sublicense agreement . further , under the terms of the sublicense agreement , prenzamax is required to share in the royalty payment due to alpex under the alpex agreement . in addition , prenzamax is entitled to a percentage of the alpex revenue received by the company . story_separator_special_tag under the partnering agreement , we were not entitled to any revenues during the nine months ended september 30 , 2014 and the year ended december 31 , 2013. research and development expenses for the nine months ended september 30 , 2014 , research and development expenses were $ 574 as compared to $ 492,136 during the year ended december 31 , 2013. the $ 491,562 decrease in 2014 was primarily due to our limited working capital . during the nine months ended september 30 , 2014 , we were actively seeking to raise additional capital in order to fund our research and development efforts . general and administrative expenses for the nine months ended september 30 , 2014 , general and administrative expenses decreased by $ 507,352 , or approximately 73 % , compared to general and administrative expenses for the year ended december 31 , 2013. expense decreases were primarily attributable to our limited working capital as we focused our efforts solely on raising new capital to fund operations . general and administrative staffing expenses decreased by $ 338,656 during the nine months ended september 30 , 2014 compared to the year ended december 31 , 2013 due to the resignation of certain employees . in addition , professional fees decreased by $ 176,686 primarily due to higher financing costs incurred for legal services , financial consulting and accounting fees during the year ended december 31 , 2013. stock-based compensation expense for the nine months ended september 30 , 2014 , stock-based compensation expense was $ 470,185 as compared to no expense for the year ended december 31 , 2013. the $ 470,185 expense was due to the stock options to purchase 3,300,000 shares of the company 's common stock granted to our chief executive officer in connection with his employment agreement . other income ( expense ) interest income earned on the net proceeds of our september 12 , 2014 private offering was $ 555 for the nine months ended september 30 , 2014. there was no interest income for the year ended december 31 , 2013. gain on revaluation of derivative warrant liability for the nine months ended september 30 , 2014 was $ 8,588. the gain was due to the change in the fair value of the derivative warrant liability that we recognized in connection with the first closing of the private offering on september 12 , 2014. for the nine months ended september 30 , 2014 , interest expense decreased by $ 12,404 in comparison to the year ended december 31 , 2013. on july 31 , 2014 , $ 2,035,000 of convertible promissory notes and accrued interest of $ 196,058 were converted to equity . the company borrowed $ 1,175,000 during the year ended december 31 , 2013. in addition , we incurred $ 42,000 in debt issuance costs in april 2013 that were amortized to interest expense over the twelve month term of the note . amortization expense was $ 14,000 and $ 28,000 for the nine months ended september 30 , 2014 and the year ended december 31 , 2013 , respectively . net loss for the nine months ended september 30 , 2014 , we incurred a net loss of $ 737,727 compared to a net loss for the year ended december 31 , 2013 of $ 1,288,003. the decrease in the net loss was primarily due to our decreased activities resulting from our inability to fund our operations . 44 story_separator_special_tag 815-40 , a contract designated as an asset or a liability must be carried at fair value on a company 's balance sheet , with any changes in fair value recorded in the company 's results of operations . a contract designated as an equity instrument must be included within equity , and no fair value adjustments are required from period to period . the 3,400,067 investor warrants , the 680,013 warrants underlying the placement agent 's unit warrants and the 1,000,000 warrants issued for investment banking services in the private offering on september 12 , 2014 were separately accounted for as liabilities at issuance . in addition , the 3,037,037 investor warrants issued between march 19 , 2015 and september 14 , 2015 were accounted for as liabilities at issuance . the warrants are classified as liabilities because the exercise price of the warrants is subject to adjustment in the event that the company issues common stock for less than $ 0.60 per share within one-year of the issuance of the warrants . the 2015 private placements did not result in an adjustment of the exercise price . the company performs valuations of the warrants issued in the private offering using a probability weighted black-scholes pricing model which value was compared to a binomial option pricing model for reasonableness . the model uses market-sourced inputs such as underlying stock prices , risk-free interest rates , volatility , expected life and dividend rates and has also considered the likelihood of `` down-round `` financings . selection of these inputs involves management 's judgment and may impact net income . due to our limited operating history and limited number of sales of our common stock , we estimate our volatility based on a number of factors including the volatility of comparable publicly traded pharmaceutical companies . the volatility factor used in the black-scholes pricing model has a significant effect on the resulting valuation of the derivative liabilities on our balance sheet . the volatility calculated at september 30 , 2015 was 57 % . we used a risk-free interest rate of 1.37 % and estimated lives of 4.47 to 4.96 years , which are the remaining contractual lives of the warrants . the volatility calculated at september 30 , 2014 was 54 % . we used a risk-free interest rate of 1.78 % and an estimated life of 4.95 years , which is the remaining contractual life of the warrants . on september 12 , 2015 , anti-dilution rights

