10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2013

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________to _____________

Cellceutix Corporation 

Commission File Number: 000-52321

(Exact name of registrant as specified in its charter)

Nevada	30-0565645
(State or other jurisdiction of	(I.R.S. Empl. Ident. No.)
incorporation or organization)

100 Cumming Center, Suite 151-B

Beverly, MA 01915

(Address of principal executive offices, Zip Code)

(978)-236-8717

(Registrant’s telephone number, including area code)

_________________________________________________________

(Former Name, Former Address and Former Fiscal Year if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]                                          No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X]                                          No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer [   ] Non-Accelerated Filer [   ]	Accelerated Filer [   ] Smaller reporting company [X]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [   ]                                          No [X]

1

The number of shares outstanding of each of the issuer’s classes of common equity, as of May 8, 2013 is as follows:

Class of Securities	Shares Outstanding
Common Stock Class A, $0.001 par value	97,363,984

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Condensed Balance Sheets as of March 31, 2013 (unaudited) and June 30, 2012 (audited)	3
	Condensed Statements of Operations (unaudited) for the three and nine months ended March 31, 2013 and 2012 and for the cumulative period from June 20, 2007 (Date of Inception) to March 31, 2013	5
	Statement of Changes in Shareholders Deficit for the cumulative period from June 20, 2007 (Date of Inception) to March 31, 2013	6
	Condensed Statements of Cash Flows (unaudited) for the nine months ended March 31, 2013 and 2012 and for the cumulative period from June 20, 2007 (Date of Inception) to March 31, 2013	10
	Notes to Condensed Financial Statements (unaudited)	12
Item 2.	Management’s Discussion and Analysis of Financial Condition of and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	28
SIGNATURES		30

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, and Section 27A of the Securities Act of 1933. Any statements contained in this report that are not statements of historical fact may be forward-looking statements. When we use the words “intends,” “estimates,” “predicts,” “potential,” “continues,” “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will” or the negative of these terms or other comparable terminology, we are identifying forward-looking statements. Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. These factors include our; research and development activities, distributor channel; compliance with regulatory impositions; and our capital needs. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

2

Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward-looking statements contained in this report as a result of new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business.

All statements other than statements of historical fact are statements that could be deemed forward-looking statements. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law. When used in this report, the terms “Cellceutix”, “Company”, “we”, “our”, and “us” refer to Cellceutix Corporation.

Part 1.  Financial Information

Item 1.  Financial Statements

CELLCEUTIX CORPORATION

(A Development Stage Enterprise)

Condensed Balance Sheets

		March 31, 2013		June 30, 2012
		(Unaudited)		(Audited)
ASSETS
Current Assets:
Cash	$	1,078,042	$	27,703
Prepaid expenses		7,456		325
Total Current Assets		1,085,498		28,028
Other Assets:
Patent costs - net		3,684		-
Deferred offering costs		251,511		-
Total Other Assets		255,195		-
Total Assets	$	1,340,693	$	28,028
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable - (including related party payables of $1,692,023 and $1,695,820, respectively)	$	1,982,231	$	1,966,026
Accrued expenses - (including related party accruals of 436,515 and 316,130, respectively)		447,515		330,880
Accrued salaries and payroll taxes - related parties		3,431,972		2,789,571
Accrued settlement costs		278,326		270,055
Note payable - related party		2,022,264		2,022,264
Total Current Liabilities		8,162,308		7,378,796
Long Term Liabilities:
Accrued settlement costs - net of current settlement costs		-		275,229
Total Liabilities		8,162,308		7,654,025
Commitments and contingencies
Stockholders' Deficiency
Preferred stock, $0.001 par value, 500,000 designated shares, no shares issued and outstanding		-		-
Common Stock - Class A, $.0001 par value, 300,000,000 shares authorized, 98,746,068 issued and 97,363,984 outstanding as of March 31, 2013 and 94,968,905 issued and 92,206,821 outstanding as of June 30, 2012		9,875		9,497
Common Stock - Class B, (10 votes per share); $.0001 par value, 100,000,000 shares authorized, no shares issued and outstanding as of March 31, 2013 and June 30, 2012		-		-
Additional paid-in capital		12,076,821		9,229,157
Deficit accumulated during the development stage		(18,633,082)		(16,336,918)
Treasury stock - 1,382,084 and 2,762,084 shares at cost - as of March 31, 2013 and June 30, 2012, respectively		(275,229)		(527,733)
Total Stockholders' Deficit		(6,821,615)		(7,625,997)
Total Liabilities and Stockholders' Deficit	$	1,340,693	$	28,028
The accompanying notes are an integral part of these condensed financial statements

3

CELLCEUTIX CORPORATION

(A Development Stage Enterprise)

Condensed Statements of Operations

(Unaudited)

	For the Three Months Ended March 31,										For the Nine Months Ended March 31,					For the cumulative period from June 20, 2007 (Date of Inception) through March
	2013								2012			2013	2012			31, 2013
Revenues	$			-					$	-	$	-	$	-	$	-
Operating expenses:
Research and development, gross				543,115						269,043		1,009,584		478,909		6,106,596
Grants				-						-		-		-		(733,438)
Research and development, net of grants						543,115				269,043		1,009,584		478,909		5,373,158
General and administrative expenses							33,388			159,710		85,675		178,779		620,446
Officers' payroll and payroll tax expense						125,372				113,975		353,321		1,412,879		7,947,005
Professional fees				98,566						159,350		420,454		516,671		2,999,365
Patent expense				310						14,077		29,369		95,797		197,662
Total operating expenses				800,751						716,155		1,898,403		2,683,035		17,137,636
Loss from operations				(800,751)						(716,155)		(1,898,403)		(2,683,035)		(17,137,636)
Interest expense - net				(65,799)						(62,462)		(185,959)		(207,548)		(768,987)
Gain (loss) on financial instruments								-		470,000		-		(439,892)		(439,892)
Total other expenses				(65,799)						407,538		(185,959)		(647,440)		(1,208,879)
Net loss before provision for income taxes					(866,550)					(308,617)		(2,084,362)		(3,330,475)		(18,346,515)
Provision for income taxes				-						-		-		-		-
Net loss	$			(866,550)					$	(308,617)	$	(2,084,362)	$	(3,330,475)	$	(18,346,515)
Deemed dividends				-						-		(211,802)		-		(277,488)
Net loss attributable to common stockholders		$   (866,550)							$	(308,617)	$	(2,296,164)	$	(3,330,475)	$	(18,624,003)
Basic and diluted loss per share attributable to common stockholders	$			(0.01)					$	(0.00)	$	(0.02)	$	(0.04)
Weighted average number of common shares			96,091,495							91,256,613		94,016,785		89,649,308
The accompanying notes are an integral part of these condensed financial statements.

4

CELLCEUTIX CORPORATION

(A Development Stage Enterprise)

Statement of Changes in Stockholders' Deficit

For the cumulative

Period June 20, 2007 (Date of Inception)

through March 31, 2013

(Unaudited)

			Common Stock											Preferred Stock			Additional		Deficit Accumulated During the Development Stage		Treasury Stock
			Shares										Par Value 0.0001		Par Value		Paid-in				Shares		Amount
												$		Shares	$	0.001	Capital								Total
Shares issued June 20, 2007
(Inception)			1,000,000									$	100	-	$	-	$	-	$	-	-	$	-	$	100
Net loss			-										-	-		-		-		(530)	-		-		(530)
Balance, June 30, 2007					1,000,000								100	-		-		-		(530)	-		-		(430)
Share exchange with Cellceutix Pharma, Inc.December 6, 2007			(1,000,000)										(100)	-		-		-		100	-		-		-
Share exchange in reverse merger with Cellceutix Pharma, Inc.December 6,2007			82,000,000										8,200	-		-		-		(8,200)	-		-		-
Shares exchanged in a reverse acquisition of Cellceutix Pharma, Inc.December 6, 2007					9,791,000								979	-		-		-		(979)	-		-		-
Issuance of stock options										-			-	-		-		43,533		-	-		-		43,533
Forgiveness of debt from a stockholder										-			-	-		-		50		-	-		-		50
Capital contribution from a stockholder											-		-	-		-		50		-	-		-		50
Shares issued for services,
April 28, 2008 at $1.05							100,000						10	-		-		104,990		-	-		-		105,000
Net loss			-										-	-		-		-		(510,193)	-		-		(510,193)
Balance June 30, 2008		91,891,000											9,189	-		-		148,623		(519,802)	-		-		(361,990)
Cancellation of shares issued for services,December 31, 2008				(100,000)									(10)	-		-		(104,990)		-	-		-		(105,000)
Issuance of stock options											-		-	-		-		142,162		-	-		-		142,162
Shares issued for services,June 11, 2009 at $0.38								20,000					2	-		-		7,598		-	-		-		7,600
Shares issued for services,June 30, 2009 at $0.38								25,000					3	-		-		9,497		-	-		-		9,500
Net loss			-										-	-		-		-		(1,485,331)	-		-		(1,485,331)
Balance, June 30, 2009	91,836,000												9,184	-		-		202,890		(2,005,133)	-		-		(1,793,059)
Shares issued for services,July 6, 2009 at $0.43								25,000					2	-		-		10,748		-	-		-		10,750
Shares issued for services,February 5, 2010 at $0.30									3,500				-	-		-		1,050		-	-		-		1,050
Issuance of stock options											-		-	-		-		383,291		-	-		-		383,291
Shares issued for services June 1, 2010 at $0.45								75,000					8	-		-		33,742		-	-		-		33,750
Net loss			-										-	-		-		-		(3,433,400)	-		-		(3,433,400)
Balance, June 30, 2010		91,939,500											9,194	-		-		631,721		(5,438,533)	-		-		(4,797,618)
Shares issued for services,July 6, 2010 at $0.55								50,000					5	-		-		27,495		-	-		-		27,500
Cancellation of shares issued						(75,000)							(8)	-		-		(33,742)		-	-		-		(33,750)
Issuance of stock options											-		-	-		-		3,060,691		-	-		-		3,060,691
Modification of stock options											-		-	-		-		237,098		-	-		-		237,098
Forgiveness of liability in connection with settlement with stockholder											-		-	-		-		932,966		-	-		-		932,966
Repurchase of common stock in connection with settlement											-		-	-		-		-		-	4,602,313		(859,388)		(859,388)
Shares issued for services,March 1, 2011 at $0.32							184,375						18	-		-		58,982		-	-		-		59,000
Shares issued for services,February 8, 2011 at $0.20								70,000					7	-		-		13,993		-	-		-		14,000
Cancellation of treasury stock				(460,229)									(45)	-		-		(99,955)		-	(460,229)		100,000		-
Shares issued for services,May 26, 2011 at $0.81								12,000					1	-		-		9,719		-	-		-		9,720
Net loss			-										-	-		-		-		(5,938,297)	-		-		(5,938,297)
Balance, June 30, 2011		91,720,646											9,172	-		-		4,838,968		(11,376,830)	4,142,084		(759,388)		(7,288,078)
Issuance of stock options											-		-	-		-		2,114,386		-	-		-		2,114,386
Convertible debentures converted to common stock							707,277						71	-		-		353,564		-	-		-		353,635
Shares issued for services, August 29, 2011 at $0.38							100,000						10	-		-		37,990		-	-		-		38,000
Shares issued for services, November 8, 2011 at $0.41							125,000						13	-		-		51,236		-	-		-		51,249
Shares issued for services, January 11, 2012 at $0.45							200,000						20	-		-		89,980		-	-		-		90,000
Shares issued for charitable contributions, March 7 2012 at $0.52							265,228
													26	-		-		137,894		-	-		-		137,920
Shares issued for services, April 26, 2012 at $0.46							300,000						30	-		-		137,970		-	-		-		138,000
Shares issued for services, May 3, 2012 at $0.49							100,000						10	-		-		48,990		-	-		-		49,000
Shares issued for services, May 29, 2012 at $0.53								25,000					2	-		-		13,248		-	-		-		13,250
Shares issued for services, June 29, 2012 at $0.62								50,000					5	-		-		31,145		-	-		-		31,150
Issuance of capital stock				2,500,000									250	-		-		582,143		-	-		-		582,393
Reclassification of warrants into equity											-		-	-		-		857,500		-	-		-		857,500
Cancellation of treasury stock		(1,380,000)											(138)	-		-		(231,517)		-	(1,380,000)		231,655		-
Issuance of preferred stock											-		-	10,000		10		99,990		-	-		-		110,000
Deemed dividend's											-		-	-		-		65,686		(65,686)	-		-		-
Conversion of preferred stock to common stock							255,754						26	(10,000)		(10)		(16)		-	-		-		(10,000)
Net loss			-										-	-		-		-		(4,894,402)	-		-		(4,894,402)
Balance June 30, 2012		94,968,905										$	9,497	-	$	-	$	9,229,157	$	(16,336,918)	2,762,084	$	(527,733)	$	(7,625,997)
Issuance of stock options											-		-	-		-		170,213		-	-		-		170,213
Shares issued for services, July 25, 2012 at $0.59								25,000					3	-		-		14,747		-	-		-		14,750
Shares issued for services, August 26, 2012 at $0.60								50,000					5	-		-		29,995		-	-		-		30,000
Shares issued for services, October 24, 2012 at $0.87								50,000					5	-		-		43,495		-	-		-		43,500
Shares issued as commitment fee, December 6, 2012 at $0.89							336,625						34	-		-		299,967		-	-		-		300,001
Shares sold, December 6, 2012 at $0.89, net of offering costs							112,208						11	-		-		96,989		-	-		-		97,000
Shares sold in March 2013 at $1.45-$1.54, net of offering costs				1,000,000									100	-		-		1,470,730		-	-		-		1,470,830
Exercise of stock options				2,250,000									225	-		-		276,975		-	-		-		277,200
Exercise of warrants							741,000						74	-		-		185,176		-	-		-		185,250
Issuance of preferred stock											-		-	30,000		30		299,970		-	-		-		300,000
Cancellation of treasury stock		(1,380,000)											(138)	-		-		(252,366)		-	(1,380,000)		252,504		-
Deemed dividends											-		-	-		-		211,802		(211,802)	-		-		-
Conversion of preferred stock to common stock							592,330						59	(30,000)		(30)		(29)		-	-		-		-
Net loss			-										-	-		-		-		(2,084,362)	-		-		(2,084,362)
Balance March 31, 2013			98,746,068									$	9,875	-	$	-	$	12,076,821	$	(18,633,082)	1,382,084	$	(275,229)	$	(6,821,615)
The accompanying notes are an integral part of these condensed financial statements

5

CELLCEUTIX CORPORATION

(A Development Stage Enterprise)

Condensed Statements of Cash Flows

(Unaudited)

		For the Nine Months Ended March 31,					For the cumulative period from June 20, 2007 (Date of Inception) through March 31, 2013
			2013		2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(2,084,362)	$	(3,330,475)	$	(18,346,515)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock and stock options issued as payment for services compensation, services rendered, and charitable contributions
			258,463		1,527,323		6,947,582
Cancellation of stock issued for services			-		-		(28,750)
Amortization of accrued settlement costs			33,042		51,259		118,938
Amortization of patent costs			554		-		554
Gain (loss) on financial instruments			-		439,892		439,892
Changes in operating assets and liabilities:
	Other receivables		-		204,144		-
	Prepaid expenses		(7,131)		(1,010)		1,029
	Accounts payable		16,205		(142,163)		1,982,280
	Accrued expenses		116,635		149,562		664,925
	Accrued officers' salaries and payroll taxes		642,401		573,566		4,364,937
Net cash used in operating activities			(1,024,193)		(527,902)		(3,855,128)
CASH FLOWS FROM INVESTING ACTIVITIES:
Patent Costs			(4,238)		-		(4,238)
Net cash used in investing activities			(4,238)		-		(4,238)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from stockholder			-		-		50
Sale of common stock			-		-		100
Sale of common stock			1,616,320		-		1,616,320
Sale of preferred stock			300,000		-		400,000
Payment of settlement liabilities			(300,000)		(300,000)		(700,000)
Loan from officer			-		20,000		1,925,587
Proceeds from convertible debentures			-		-		(167,099)
Redemption of convertible debentures			-		(167,099)		400,000
Proceeds from subscription			-		1,000,000		1,000,000
Exercise of stock options and warrants			462,450		-		462,450
Net cash provided by financing activities			2,078,770		552,901		4,937,408
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS			1,050,339		24,999		1,078,042
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			27,703		68,661		-
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	1,078,042	$	93,660	$	1,078,042
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest		$	25,909	$	-	$	40,735
SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW
FINANCING ACTIVITIES
Common stock issued for acquisition		$	-	$	-	$	9,079
Forgiveness of debt		$	-	$	-	$	50
Reclassification of accrued interest to note payable and							-
convertible debentures		$	-	$	-	$	197,964
Cancellation of common stock for services		$	-	$	-	$	(138,750)
Settlement of accrued payroll and payroll taxes		$	-	$	-	$	932,966
Cancellation of common stock as a result of settlement		$	-	$	-	$	859,388
Debt converted to common stock		$	-	$	353,635	$	353,635
Cancellation of treasury stock		$	(252,504)	$	(231,655)	$	(484,159)
Reclassification of warrants to equity		$	-	$	857,500	$	857,500
Deemed dividend from beneficial conversion							-
feature on preferred stock		$	53,032	$	-	$	70,678
Deemed dividend - warrants		$	158,770	$	-	$	206,810
Conversion of preferred stock into common stock		$	(30)	$	-	$	(46)
Shares issued as deferred offering costs		$	300,001	$		$	300,001
The accompanying notes are an integral part of these condensed financial statements.

6

CELLCEUTIX CORPORATION

(A Development Stage Enterprise)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1. Basis of Presentation and Nature of Operations

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Cellceutix Corporation 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 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, 2012, included in our Annual Report on Form 10-K for the year ended June 30, 2012.

In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three month and nine month periods have been made. Results for the interim periods 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", "we", "us" or "our" mean Cellceutix Corporation. 

Cellceutix Corporation, formerly known as EconoShare, Inc., (“Cellceutix” or the “Company”) was incorporated on August 1, 2005. On December 6, 2007, the Company acquired Cellceutix Pharma, Inc. which was incorporated in the State of Delaware on June 20, 2007, in exchange for newly issued shares of the Company’s common stock. As a result of the exchange, Cellceutix Pharma, Inc. became a wholly-owned subsidiary of the Company. The Company is a clinical stage biopharmaceutical company and has no customers, products or revenues to date. The Company also follows the accounting guidelines for accounting for and reporting in Development Stage Enterprises in preparing its financial statements.

The Company’s Common Stock is quoted on the Over the Counter Bulletin Board (OTCBB), symbol “CTIX”.

All amounts, where it is designated in these notes to the financial statements as an approximate amount, are rounded to the nearest thousand dollars.

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 cancer and inflammatory disease. 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, Kevetrin and Prurisol and advancing them as quickly as possible along the regulatory pathway. We will develop the highest quality data and broadest intellectual property to support our compounds.

We currently own all development and marketing rights to our products. In order to successfully develop and market our products, we may have to partner with other 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.

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Pharmaceutical Compounds – Kevetrin and Prurisol

On August 2, 2007, the Company was assigned all right, title, and interest to three pharmaceutical compounds; Kevetrin, KM 277 and KM 278, by their inventors. The Company was assigned all right, title, and interest to an additional three pharmaceutical compounds on October 17, 2007, KM 133 (Prurisol), KM 362 and KM 3174. In July 2009, the Company was assigned all right, title, and interest to KM 732.  In exchange for these compounds, the Company agreed to pay the inventors 5% of net sales of the compounds in countries where composition of matter patents have been issued and 3% of net sales in other countries. Kevetrin, KM 277, KM 278 and KM 362 were acquired from our President and director, Dr. Krishna Menon.  In December 2012, the Company was issued a US patent for Kevetrin.  In January 2012 the Company filed a patent application for KM 133. The Company intends to file patent applications for each of the other six compounds as studies advance and funds become available for these projects.     

In December 2009, the Company was assigned all right, title and interest to a new compound, KM-391, which it intends to develop for the treatment of autism.  In exchange for this compound, the Company agreed to pay the inventors $10,000 plus 4.5% of net sales of the compound in countries where a composition of matter patent has been issued and 3% of net sales in other countries.

In March 2012, we entered into an agreement with Beth Israel Deaconess Medical Center (BIDMC), a teaching hospital of Harvard Medical School, on an innovative research project with Kevetrin. The Medical Center wishes to exploit the nuclear and/or mitochondrial pro-apoptotic function of p53 in melanoma and renal cell carcinoma, two types of cancer that are particularly resistant to therapy. BIDMC hopes to improve therapy for melanoma and renal cell carcinoma, cancers that are particularly resistant to therapy. BIDMC initiated combination studies with multikinase inhibitors which activate pro-apoptotic activity by translocation of p53 in mitochondria thereby inducing apoptosis. Apoptosis is enhanced by MDM2 inhibitors by stabilizing p53. As presented at the American Association for Cancer Research (AACR) meeting in April, Kevetrin phosphorylates MDM2 which activates and stabilizes p53 by monoubiquitination inducing apoptosis. Prior data from the BIDMC laboratory showed that agents of this class can augment the pro-apoptotic and antitumor effects of MDM2 antagonists and is expected to have a synergistic effect with Kevetrin. BIDMC will test the effects of Kevetrin alone and in combination with FDA-approved VEGFR antagonists in the renal cell carcinoma and melanoma studies. In vitro study endpoints include apoptosis by measuring caspase activation and PARP cleavage. In vivo endpoints include efficacy in a xenograft model, tumor vascularity, p53 levels, p21 expression and apoptosis. This study will provide vital insight to exploit the nuclear and/or mitochondrial pro-apoptotic function by Kevetrin in combination with other multikinase inhibitors in treatment of these difficult to treat malignancies. At this time the study is in progress. The most recent results were received from BIDMC in April 2013, which showed apoptosis induction (TUNEL) in renal cancer (786). Results of these preclinical tests provided to date to the Company are encouraging and BIDMC and Cellceutix wish to move the study further. Cellceutix has provided the requested information from BIDMC that will be used to investigate a Specialized Programs of Research Excellence (SPORE) grant for a phase 2 clinical study of renal cancer upon completion of a successful phase 1 clinical study presently in progress.

On June 21, 2012, the U.S. Food and Drug Administration ("FDA") approved the Investigational New Drug (“IND”) application for Kevetrin, Cellceutix's novel anti-cancer compound. The Phase 1 trials are being conducted at Harvard Cancer Center's Dana-Farber Cancer Institute and partner Beth Israel Deaconess Medical Center.  The clinical trial will test Kevetrin against a variety of different solid tumor cancer types in patients with advanced-stage cancers. Primary endpoints for the study will be safety, tolerable dosing levels and establishing the dose for a future Phase II clinical trial.

The trial is registered on www.clinical trials.gov. http://clinicaltrials.gov/ct2/show/NCT01664000?term=Kevetrin&rank=1

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On December 25, 2012 the United States Patent and Trademark Office (USPTO) awarded the Company U.S. Patent No. 8,338,454 B2, titled "Nitrile Derivatives and their Pharmaceutical Use and Compositions." The patent covers pharmaceutical compositions comprising Kevetrin, and related compounds and compositions.

In January 2013 the Company announced that the University of Bologna in Italy (the “University”) and The Italian Cooperative Study Group on Chronic Myeloid Leukemia (ICSG on CML) and Acute Leukemia (GIMEMA Group) plan on testing Kevetrin against Acute Myelogenous Leukemia (AML). The Company has been advised that the study, a phase 1b trial, will be titled “A Multi-Center, Open-Label, Phase 1B Study of Escalating Doses of Kevetrin (Thioureidobutyronitrile) Administered Intravenously, with Cytarabine Adminstered A) Subcutaneously, or B) Intravenously, in Patients with Acute Myelogenous Leukemia (AML).” The trial’s principal investigator plans for this phase 1b trial to begin once a higher patient dosing is achieved at the Dana Farber trial. We expect the trial to begin in the second half of 2013. The University will source the funding for this trial.

The Company is presently in discussions with other institutions for collaborations in conducting clinical trials and acquiring a new drug. There are now two material transfer agreements pending with major hospitals.

In June 2012, we participated in a pre IND meeting with the U.S. Food and Drug Administration ("FDA") pertaining to Prurisol our compound targeting psoriasis. Cellceutix had requested the meeting for guidance on its initiatives to seek a section 505(b)(2) designation for Prurisol, which would allow us to forgo early-stage trials and advance Prurisol into latter-stage clinical trials.  Cellceutix was advised by the FDA that a 505(b)(2) application would be an acceptable approach for Prurisol. Our Prurisol manufacturer, Dr. Reddy’s Laboratories Ltd., has advised us that the manufacturing of Prurisol took longer than planned, has been completed, and it is now being formulated. We plan to sponsor a Phase II/III Proof of Concept trial in Europe to begin in the third quarter 2013. This will be a relatively short trial with only 30 days of treatment and 30 days of follow-up to evaluate the efficacy and safety of Prurisol.

2. Significant Accounting Policies

Cash and Cash Equivalents, Restricted Cash and Marketable Securities

We classify all highly liquid investments with stated maturities of three months or less from date of purchase as cash equivalents. We hold cash balances in excess of the federally insured limits of $250,000 with one prominent financial institution. We deem this credit risk not to be significant as our cash is held by a major prominent financial institution. Total cash and cash equivalents held in checking accounts, as reported on the accompanying balance sheets, totaled approximately $1,078,000 and $28,000 at March 31, 2013 and June 30, 2012, respectively.

 Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Significant Estimates

These accompanying consolidated financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to valuation of stock grants and stock options, the valuation allowance on deferred tax assets and various contingent liabilities. It is reasonably possible that these above-mentioned estimates and others may be adjusted as more current information becomes available, and any adjustment could be significant in future reporting periods.

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Certain Risks and Uncertainties

Product Development

We devote significant resources to research and development programs in an effort to discover and develop potential future product candidates. Research and development expenses amounted to approximately $543,000 and $269,000 for the three months ended March 31, 2013 and 2012, respectively. Research and development expenses amounted to approximately $1,010,000 and $479,000 are for the nine months ended March 31, 2013 and 2012, respectively. The product candidates in our pipeline are at various stages of preclinical and clinical development. The path to regulatory approval includes three phases of clinical trials in which we collect data to support an application to regulatory authorities to allow us to market a product for treatment of a specified disease. There are many difficulties and uncertainties inherent in research and development of new products, resulting in a high rate of failure. To bring a drug from the discovery phase to regulatory approval, and ultimately to market, takes many years and significant cost. Failure can occur at any point in the process, including after the product is approved, based on post-market factors. New product candidates that appear promising in development may fail to reach the market or may have only limited commercial success because of efficacy or safety concerns, inability to obtain necessary regulatory approvals, limited scope of approved uses, reimbursement challenges, difficulty or excessive costs of manufacture, alternative therapies or infringement of the patents or intellectual property rights of others. Uncertainties in the FDA approval process and the approval processes in other countries can result in delays in product launches and lost market opportunities. Consequently, it is very difficult to predict which products will ultimately be submitted for approval, which have the highest likelihood of obtaining approval and which will be commercially viable and generate profits. Successful results in preclinical or clinical studies may not be an accurate predictor of the ultimate safety or effectiveness of a drug or product candidate.

Basic Earnings (Loss) per Share

Basic and diluted earnings 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, warrants and convertible notes payable. For the three months and nine months ended March 31, 2013 and 2012, 49,520,936 shares and 49,142,574 of common share equivalents were excluded from the computation of diluted earnings per share because their effect is anti-dilutive.

For the year ended March 31, 2013 and 2012, no convertible preferred stock, convertible notes, warrants and options were included in the calculation of the Company's diluted loss per share because the company reported net loss from continuing operations attributed to common shareholders.

Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with United States generally accepted accounting principles. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized. We did not provide any current or deferred income tax provision or benefit for any periods presented to date because we have continued to experience a net operating loss since inception and therefore provide a 100% valuation allowance against all of our deferred tax assets.

The Company adopted the ASC accounting pronouncement “Accounting for Uncertainty in Income Taxes”. This pronouncement provides guidance for recognizing and measuring uncertain tax positions, as defined in the FASB accounting pronouncement “Accounting for Income Taxes”. This pronouncement prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. This pronouncement also provides accounting guidance on derecognizing, classification and disclosure of these uncertain tax positions. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company has not recognized any interest and penalties in 2013 or 2012.

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Accounting for Stock Based Compensation

The stock-based compensation expense incurred by Cellceutix 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”. Our consultants do not meet the employer-employee relationship as defined by the IRS and therefore are accounted for under ASC 505-50.

ASC 505-50-30-11 (previously EITF 96-18) further provides that an issuer shall measure the fair value of the equity instruments in these transactions using the stock price and other measurement assumptions as of the earlier of the following dates, referred to as the measurement date:

i.	The date at which a commitment for performance by the counterparty to earn the equity instruments is reached (a performance commitment); and
ii.	The date at which the counterparty’s performance is complete.

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.

Recent Accounting Pronouncements

The Company has reviewed all recent accounting pronouncements issued by FASB (including EITF), the AICPA and the SEC and did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

 3.         Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. For the period since June 20, 2007 (date of inception) through March 31, 2013, the Company has had a deficit accumulated during the development stage of approximately $18,633,000 and a working capital deficit of approximately $7,077,000 at March 31, 2013.  As of March 31, 2013, the Company has not emerged from the development stage. In view of these matters, the ability of the Company to continue as a going concern is dependent upon the Company’s ability to generate additional financing. Since inception, the Company has financed its activities principally from the use of equity securities, debt issuance and loans from an officer to pay for its operations. The Company intends on financing its future development activities and its working capital needs largely from the issuance of debt and the sale of equity securities, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company has entered into a financing agreement with Aspire Capital Fund for $10,000,000 (See Note 10). 

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The economic downturn and market instability has made the business climate more volatile and more costly.  If the current equity and credit markets deteriorate further or do not improve, it may make necessary debt or equity financing more difficult, more costly and more dilutive.  Failure to secure the necessary financing in a timely manner and on favorable terms could have a material adverse effect on the Company’s growth strategy, financial performance and stock price and could require the delay of new product development and clinical trial plans.  

These factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability of the recorded assets or the classification of liabilities that may be necessary should the Company be unable to continue as a going concern. 

4. Accrued Expenses

Accrued expenses consisted of the following (rounded to nearest thousand):

		March, 31 2013		June 30, 2012
Accrued consulting fee	$	11,000	$	14,000
Accrued rent (Note 7)		58,000		50,000
Accrued interest		379,000		267,000
Total	$	448,000	$	331,000

5. Accrued Salaries and Payroll Taxes – Related Parties

Accrued salaries and payroll taxes consisted of the following (rounded to nearest thousand):

		March, 31 2013		June 30, 2012
Accrued salaries	$	3,244,000	$	2,648,000
Accrued payroll taxes		188,000		142,000
Total	$	3,432,000	$	2,790,000

Accrued payroll liabilities include accrued salaries and payroll taxes to the Company’s two executive officers.

On December 29, 2010, the Company entered into employment agreements with its two executive officers, Leo Ehrlich, the Company’s Chief Executive Officer, and Krishna Menon, Chief Scientific Officer. Both agreements provide for a three year term with each executive receiving an annual base salary for $350,000 per year commencing January 1, 2011, with an annual increase of 10% for each year commencing January 2012. The Board, at its discretion, may increase the base salary based upon relevant circumstances.

6. Commitments and Contingencies

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Settlement Agreement

On February 14, 2011, the Company announced it reached a settlement agreement on all outstanding claims and issues between the Company and our former CEO, Mr. Evans. Each party dropped their respective claims and as a result all of Mr. Evans accrued salaries and options were cancelled.  The terms of the agreement provide that the Company purchase 4,602,312 common shares held by Mr. Evans and/or Mr. Evans’ sons over a period of three years for a total sum of one million dollars.   Payment by the Company in the amount of $100,000 was made upon signing of the agreement, which resulted in reducing the liability owed to Mr. Evans; cancelling 460,229 shares of common stock.  On February 4, 2012 and January 29, 2013, the Company made the second and third payment of $300,000 each to Mr. Evans and cancelled 1,380,000 shares of its common stock in each of the two years.  The remaining 1,382,084 shares of common stock held in escrow until additional payments are made under the agreement are shown as Treasury Stock on the Company’s Balance Sheet. 

The Company had initially recorded this settlement at December 31, 2010 as a liability of the present value of the future payments and treasury stock. The Company had also recorded the forgiveness of Mr. Evans’ accrued payroll and related payroll taxes as a capital contribution of approximately $932,000.  As of March 31, 2013, the settlement liability of approximately $278,000 is due in February 2014 and recorded as current liability. 

Legal

Cellceutix Corporation has settled all claims with Toxikon in a civil action in the Commonwealth of Massachusetts.  In February 2013, Cellceutix paid Toxikon Corporation ninety-thousand ($90,000) dollars in full settlement of claims asserted.

Formatech is a former vendor of ours which had received Cellceutix common stock and had also gone bankrupt. In July 2012, Cellceutix was advised that a US Bankruptcy Court judge has allowed Formatech’s bankruptcy trustee to sell 184,375 restricted shares of Cellceutix Class A Common Stock. The proceeds of any sales of these shares will be held in escrow pending the outcome of Cellceutix’s claims against Formatech. Cellceutix has engaged an attorney with the aim of recovering these funds. The case is still pending resolution in court.

7.  Related Party Transactions

Office Lease

Dr. Menon, the Company’s principal shareholder, President, and Director, also serves as the Chief Operating Officer and Director of Kard Scientific (“KARD”). On December 7, 2007, the Company began renting office space from KARD, on a month to month basis for $900 per month.  At March 31, 2013 and June 30, 2012, payables of approximately $58,000and $50,000 to KARD were included in accrued expenses, respectively.

Clinical Studies

As of September 28, 2007 the Company engaged KARD to conduct specified pre-clinical studies necessary for the Company to prepare an IND submission to the FDA.  The Company does not have an exclusive arrangement with KARD.  All work performed by KARD must have prior approval by the executive officers of the Company, and the Company retains all intellectual property resulting from the services by KARD. For the three and nine months ended March 31, 2013 and 2012 and the period June 20, 2007 (date of inception) through March 31, 2013, the Company incurred approximately $0, $0, $0, $10,000, and $2,601,000 of research and development expenses conducted by KARD, respectively.  At March 31, 2013 and June 30, 2012 the Company has included a total of approximately $1,686,000 in accounts payable to Kard.

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8.   Note Payable – Related Party

During the year ended June 30, 2010, Mr. Ehrlich, an officer of the Company, converted previous amounts provided in cash to the Company of $32,310 into a loan (the “Ehrlich Promissory Note A”).   The Ehrlich Promissory Note A was an unsecured, 6% per annum simple interest bearing, demand note.  During the same period, Mr. Ehrlich provided an additional $85,000 in cash in the form of a loan to the Company (the “Ehrlich Promissory Note B”).  The Ehrlich Promissory Note B was an unsecured, 6% per annum simple interest bearing, demand note.

During the year ended June 30, 2010, Mr. Ehrlich, loaned the Company a total of $972,907.  A condition for this loan was that the Ehrlich Promissory Note A and Ehrlich Promissory Note B be replaced with a new note, Ehrlich Promissory Note C.  The Ehrlich Promissory Note C is an unsecured demand note that bears 10% simple interest per annum and is convertible into the Company’s common stock at $0.50 per share.  The note requires that the interest rate on the amounts due on Ehrlich Promissory Notes A and B be changed retroactively, beginning October 1, 2009, to 9%.   During the year ended June 30, 2011, Mr. Ehrlich loaned the Company an additional $997,047 which brought the balance of the demand note to $2,002,264.  On April 1, 2011, the Company amended the Ehrlich Promissory Note C and agreed to retroactively convert accrued interest of $96,677 through December 31, 2010 into additional principal.

On May 8, 2012, in connection with the renegotiation of an outstanding loan to Mr. Ehrlich, 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 (10) years from the date of issuance.

At March 31, 2013, approximately $379,000 is accrued as interest expense on this note. As of March 31, 2013, the balance of the demand note is approximately $2,022,000.

9.  Stock Options and Warrants:

Consulting Agreement

On April 1, 2009, the Company entered into an agreement, subsequently amended, with a Consultant to assist the Company’s Chief Scientific Officer to organize, manage and display data from animal studies as well as information relating to Active Pharmaceutical Ingredients and formulations of the Company’s products through November 2010. The Consultant was compensated at the rate of $4,000 per month payable on the last day of each month. In addition, at the end of each month of services provided, the Consultant is granted options to purchase 10,000 shares of Company’s common stock.  Effective September 1, 2010, the Company has extended the current agreement and beginning in August 2010, the monthly fee was increased to $5,000.  The monthly fee was increased to $6,000 beginning in November 2012. The remainder of the agreement remains unchanged.  As of March 31, 2013, the Consultant has been awarded a total of 480,000 options to purchase common stock valued at approximately $284,000 to be vested over one year from date of issuance.  For the three and nine months ended March 31, 2013, the Company has expensed approximately $44,000, and $154,000 to professional fees expense, related to these options and remeasurement at March 31, 2013.

 Stock Options

The fair value of each option for the nine months ended March 31, 2013 and 2012 was estimated on the date of grant using the Black Scholes model that uses assumptions noted in the following table.

	Nine Months Ended March 31, 2013	Nine Months Ended March 31, 2012
Expected term (in years)	5-10	5-10
Expected stock price volatility	132.51% – 137.33%	142.51% – 148.15%
Risk-free interest rate	1.53% – 1.98%	1.97% – 3.0%
Expected dividend yield	0	0

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On April 5, 2009 the Board of Directors of the Registrant adopted the 2009 Stock Option Plan (“the Plan”). The Plan permits the grant of 2,000,000 shares of both Incentive Stock Options (“ISOs”), intended to qualify under section 422 of the Code, and Non-Qualified Stock Options.

Under the 2010 Equity Incentive Plan the total number of shares of Common Stock reserved and available for issuance under the Plan shall be 45,000,000 shares. Shares of Common Stock under the Plan (“Shares”) may consist, in whole or in part, of authorized and unissued shares or treasury shares. The term of each Stock Option shall be fixed by the Committee; provided, however, that an Incentive Stock Option may be granted only within the ten-year period commencing from the Effective Date and may only be exercised within ten years of the date of grant (or five years in the case of an Incentive Stock Option granted to an optionee who, at the time of grant, owns Common Stock possessing more than 10% of the total combined voting power of all classes of voting stock of the Company (“10%Shareholder”).

The following table summarizes all stock option activity under the plans:

	Number of Options		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2012	41,277,500	$	0.14	8.46	$	21,186,000
Granted	120,000		1.08	8.36		-
Exercised	(2,250,000)		0.12	-		-
Forfeited/expired	-		-	-		-
Outstanding at March 31, 2013	39,147,500	$	0.14	7.71	$	63,003,000
Exercisable at March 31, 2013	39,082,500	$	0.14	7.70	$	62,974,000

The Company recognized approximately $44,000 and $18,000 of stock based compensation costs related to stock and stock options awards for the three months ended March 31, 2013 and 2012; approximately $258,000 and $1,175,000 for the nine months ended March 31, 2013 and 2012, and approximately $6,948,000 for the period from inception to March 31, 2013, respectively, and there is approximately $84,000 of unamortized compensation cost expected to be recognized through March 31, 2014.  

Stock Warrants

On March 5, 2013 the Company issued 370,500 Class A common shares par value $.0001 to each of two warrant holders upon exercise of Common Stock Purchase Warrants exercisable at $0.25 per share. The Company received an aggregate of $185,250. The issuance was exempt from registration under Section 4(2) of the Securities Act.

As of March 31, 2013 and June 30, 2012, there were 5,571,084 and 5,719,754 warrants issued and outstanding with a weighted average exercise price of $0.92 and $0.87, respectively.  Of these warrants, approximately 2,223,000 warrants were to expire in September 2010, however in September 2010; the Company approved the extension of these warrants to December 31, 2013.  As of March 31, 2013 and June 30, 2012, the average remaining contractual life of the outstanding warrants was 1.68 years and 2.02 years, respectively and the aggregate intrinsic value was $4,627,000 and $474,000, respectively.

10.   Equity Transactions

Aspire Agreement

On December 6, 2012, the Company entered into a Class A Common Stock Purchase Agreement with Aspire Capital Fund, LLC, which provides that upon meeting the terms of the agreement, Aspire Capital is committed to purchase up to an aggregate of $10,000,000 of our shares of Class A Common Stock over the approximately 36-month term of the Purchase Agreement. In consideration for entering into the Purchase Agreement, the Company issued to Aspire Capital 336,625 shares of our Class A Common Stock as a commitment fee and sold to Aspire Capital 112,208 shares of Class A Common Stock for $100,000. The commitment fee will be amortized as the funding is received. The unamortized portion is carried on the balance sheet as deferred offering costs.

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Concurrently with entering into the Purchase Agreement, the Company agreed to file one or more registration statements as permissible and necessary under the Securities Act of 1933, as amended, or the Securities Act, for the sale of shares of our Class A Common Stock that have been and may be issued to Aspire Capital under the Purchase Agreement. On January 22, 2012, the Company filed a Form S-3 registration statement and the registration statement was declared effective by the SEC on February 14, 2013. Thereafter, on every and any business day selected by the Company, the Company shall have the right to direct Aspire Capital Fund to purchase (each such purchase, a “Regular Purchase”), up to 100,000 shares on each and any business day chosen by the Company; however, in any event, the amount of a Regular Purchase will not exceed $500,000 per business day. The purchase price for Regular Purchases (the “Regular Purchase Price”), shall be equal to the lesser of: (i) the lowest sale price of the shares on the purchase date, or (ii) the average of the three (3) lowest closing sale prices of the shares during the twelve (12) business days prior to the purchase date. The Regular Purchase Price will be known at the time of notice and before any shares are sold to Aspire Capital Fund.

In addition to the Regular Purchases, with one day’s prior written notice, the Company shall also have the right to require the ACF Investor to purchase up to an additional 20% of the trading volume of the shares for the next business day at a purchase price (the “VWAP Purchase Price”), equal to the lesser of: (i) the closing sale price of the shares on the purchase date, or (ii) ninety-five percent (95%) of the next business day’s volume weighted average price (each such purchase, a “VWAP Purchase”). The Company shall have the right, in its sole discretion, to determine a maximum number of shares and set a minimum market price threshold for each VWAP Purchase. The Company can only require a VWAP Purchase if (a) the closing sale price for the Company Class A common shares on the notice day for the VWAP Purchase is higher than $0.50, and (b) the Company has also submitted a Regular Purchase on the notice date for the VWAP Purchase. There are no limits on the number of VWAP Purchases that the Company may require.

Aspire Capital Fund has no right to require any sales by the Company, but is obligated to make purchases from the Company as the Company directs it in accordance with the Purchase Agreement. The Company can also accelerate the amount of Class A Common Stock to be purchased under certain circumstances. There are no limitations on use of proceeds, financial or business covenants, restrictions on future funding, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement.

The Company is never under any obligation to sell shares to Aspire Capital Fund. Aspire Capital Fund has no rights to require the Company to sell shares.

During the quarter ended March 31, 2013, the Company sold an additional 1,000,000 shares generating gross proceeds of $1,516,320.

As of March 31, 2013, the Company had completed sales to Aspire totaling 1,112,208 shares of common stock generating gross proceeds of approximately $1,616,000.

Series A Convertible Preferred Shares Subscription Agreement

On May 8, 2012, the Company entered into a subscription agreement for Series A Convertible Preferred shares with an accredited investor for an aggregate of $1,000,000.  The subscription agreement provides for installment funding Amounts, at Cellceutix’s discretion, to take place every thirty days after initial closing date  for an amount of the lesser of  (i) $75,000 or  (ii) twenty five  (25%) per cent of the dollar value of the total volume traded during the preceding 22 trading days.   The Series A Preferred Shares are convertible into common stock at the lesser of 85% of the closing bid price on the date of prior to each closing, or 85% of the lowest bid price for the fifteen (15) days prior to conversion.  At no time may a holder of shares of Series A Preferred Stock convert shares of the Series A Preferred Stock if the number of shares of Common Stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares of Common Stock owned by such holder at such time, the number of shares of Common Stock which would result in such holder beneficially owning more than 9.99% of all of the Common Stock outstanding. Additionally, for each common share issued upon conversion of Series A preferred share, a five year common stock purchase warrant is issued to the Subscriber.  The warrant is exercisable at the conversion price of the common shares issued.  The fair value of the common stock into which the Series A Preferred Stock is convertible will exceed the price at which the common stock will be issued on the date of issuance of the preferred stock.  The amount by which the fair value of the common stock exceeds the issue price of the common stock is a beneficial conversion feature.  The Company will recognize the beneficial conversion feature as a one-time, non-cash deemed dividend to the holders of the Series A Preferred Stock on the date of issuance, which is the date the preferred stock first became convertible.   The Series A Convertible Preferred shares do not pay dividends.   The Common shares underlying the Series A Preferred Shares and the common stock purchase warrants are subject to piggy back registration rights. To date an aggregate of $400,000 was funded, and the Company issued an aggregate of 848,084 common shares and 848,084 common stock purchase warrants. The subscription for the remaining $600,000 subscription agreement was mutually terminated between the parties on January 8, 2013.

16

On July 3, 2012 a tranche funding was made to purchase Series A Convertible Preferred shares in the amount of seventy five thousand dollars ($75,000) for the purchase 7,500 Series A Convertible Preferred Shares. 

On June 25, 2012 the subscriber converted 10,000 Preferred Shares equal to $100,000 face value at $0.39 per share based on 85% of the closing bid price on May 7, 2012 of $0.46.   The company issued to the subscriber 255,754 shares of Cellceutix common stock.  In connection thereto the Company issued 255,754 warrants to purchase common shares of Cellceutix Corporation at $0.39 per share valid for five years.

On July 30, 2012, a tranche funding was made to purchase Series A Convertible Preferred shares in the amount of seventy five thousand dollars ($75,000) for the purchase 7,500 Series A Convertible Preferred Shares.

On August 1, 2012 the Series A Convertible Preferred subscriber converted 7,500 Preferred Shares equal to $75,000 face value at $0.49 per share based on 85% of the closing bid price on July 25, 2012 of $0.59.   The company issued to the subscriber 153,061 shares of Cellceutix Class A common stock.  In connection thereto the Company issued 153,061 warrants to purchase Class A common shares of Cellceutix Corporation at $0.49 per share and is valid for five years.   The shares and the warrants are subject to piggy back registration rights.

On August 23, 2012 the Series A Convertible Preferred subscriber converted 7,500 Preferred Shares equal to $75,000 face value at $0.485 per share based on 85% of the closing bid price on August 14, 2012 of $0.571.   The company issued to the subscriber 154,639 shares of Cellceutix Class A common stock.  In connection thereto the Company issued 154,639 warrants to purchase Class A common shares of Cellceutix Corporation at $0.485 per share and is valid for five years.

On August 31, 2012 a tranche funding was made to purchase Series A Convertible Preferred shares in the amount of $75,000 USD for the purchase of 7,500 Series A Convertible Preferred Shares.  

On September 19, 2012 the Series A Convertible Preferred subscriber converted 7,500 Preferred Shares equal to $75,000 face value at $0.527 per share based on 85% of the closing bid price on August 31, 2012 at $0.62.   The company issued to the subscriber 142,315 shares of Cellceutix Class A common stock.  In connection thereto the Company issued 142,315 warrants to purchase common shares of Cellceutix Corporation at $0.527 per share and is valid for five years.   The shares and the warrants are subject to piggy back registration rights.

On September 20, 2012 a tranche funding was made to purchase Series A Convertible Preferred shares in the amount of $75,000 USD for the purchase of 7,500 Series A Convertible Preferred Shares.

On September 24, 2012 the subscriber converted 7,500 Preferred Shares equal to $75,000 face value at $0.527 per share based on 85% of the closing bid price on August 31, 2012 of $0.62.  The company issued to the subscriber 142,315 shares of Cellceutix Class A common stock.  In connection thereto the Company issued 142,315 warrants to purchase Class A common shares of Cellceutix Corporation at $0.527 per share and is valid for five years.   The shares and the warrants are subject to piggy back registration rights.

Other Equity Transactions during the Nine Months Ended March 31, 2013

On July 25, 2012, the Company issued a total of 25,000 Class A common shares to consultants for services, valued at

$14,750 based on the closing bid price as quoted on the OTC Bulletin Board on July 24, 2012 at $.59 per share.

On August 26, 2012, the Company issued a total of 50,000 Class A common shares to consultants for services, valued at

$30,000 based on the closing bid price as quoted on the OTC Bulletin Board on August 25, 2012 at $.60 per share.

On September 7, 2012 a consultant exercised their option to purchase 250,000 shares of Class A common shares at $0.20, resulting in a payment to the Company of $50,000 and the issuance of 250,000 shares of Class A common stock.

On October 24, 2012 the Company issued a total of 50,000 Class A common shares to consultants for services through December 31, 2012, valued at $43,500 based on the closing bid price as quoted on the OTC Bulletin Board on October 23, 2012 at $.87 per share. 

17

On December 19, 2012 the Company issued 320,000 Class A common shares par value $.0001 to a consultant upon exercise of stock options granted to him pursuant to the Company’s 2009 and 2010 Equity Incentive Plans of which 80,000 were granted on March 2, 2009, exercisable at $0.14 per share; 200,000 were granted on February 8, 2011, exercisable at $0.20 per share; and 40,000 were granted on February 17, 2011 exercisable at $.20 per share.  The Company received $59,200.  

On December 21, 2012 the Company issued 1,680,000 Class A common shares to a consultant upon exercise of Stock Options granted on December 29, 2010 under the Company’s 2010 Equity Incentive Plan and exercisable at $0.10 per share.    The Company received $168,000.  

During the nine months period ended March 31, 2013, the Company issued 10,000 shares of stock options at the end of each month, totaled 90,000 shares to a Consultant as compensation for service to assist the Company’s Chief Scientific Officer (Note 9). As of March 31, 2013, a total of 480,000 options have been awarded to the Consultant.

11. Subsequent Events

Subsequent to March 31, 2013 and through May 15, 2013, the Company issued a total of 300,000 Class A common shares par value $.0001 to Aspire Capital Fund LLC against receipt of $481,340.

The company has evaluated all subsequent events through the filing date of this form 10-Q with SEC, to ensure that this form 10-Q includes subsequent events that should be recognized in the financial statements as of March 31, 2013, and appropriate disclosure of subsequent events which were not recognized in the financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of the Company’s financial condition and the results of operations should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere in this document.

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that in addition to the description of historical facts contained herein, this report contains certain forward-looking statements that involve risks and uncertainties as detailed herein and from time to time in the Company’s other filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those, described in the forward-looking statements. These factors include, among others: (a) the Company’s fluctuations in sales and operating results; (b) risks associated with international operations; (c) regulatory, competitive and contractual risks; (d) product development risks; (e) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of enhanced sales force, new products, and customer service; and (f) pending litigation.

Management’s Plan of Operation

We acquired exclusive rights to a total of eight (8) pharmaceutical compound candidates that are designed for treatment of diseases which may be either existing or diseases identified in the future. The Company has spent most of its efforts and resources on its anti-cancer compound, Kevetrin, for the treatment of certain cancers, and on Prurisol, for the treatment of psoriasis. Based on the studies to date, the Company has decided to advance these drugs along the regulatory and clinical pathway. We anticipate using our expertise to manage and perform what we believe are the most critical aspects of the product development process which include: (i) the design and oversight of clinical trials; (ii) the development and execution of strategies for the protection and maintenance of intellectual property rights; and (iii) the interaction with regulatory authorities internationally. We expect to concentrate on product development and engage in a limited way in product discovery, avoiding the significant investment of time and financial resources that is generally required before a compound is identified and brought into clinical trials. At this time the Company is focusing its research and development efforts exclusively on Kevetrin and Prurisol.

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Kevetrin

We have recently transitioned to a clinical stage company. On June 21, 2012, the U.S. Food and Drug Administration ("FDA") approved the Investigational New Drug (IND) application for Kevetrin, Cellceutix's novel anti-cancer compound. The Phase 1 trials are being conducted at Harvard Cancer Center's Dana-Farber Cancer Institute and partner Beth Israel Deaconess Medical Center.  The clinical trial will test Kevetrin against a variety of different solid tumor cancer types in patients with advanced-stage cancers. Primary endpoints for the study will be safety, tolerable dosing levels and establishing the dose for a future Phase II clinical trial. Presently, we are at the early stage of the trial. The Company has received no notice of events outside of the parameters of the protocol and the trial is progressing. The trial is registered on www.clinicaltrials.gov. http://clinicaltrials.gov/ct2/show/NCT01664000?term=Kevetrin&rank=1

Kevetrin has demonstrated the potential for a major breakthrough in cancer research by exhibiting an activation of p53 in both wild and mutant types of p53. p53, often referred to as the “Guardian Angel Gene” or the “Guardian Angel of the Human Genome” due its crucial role in controlling cell mutations, is a tumor suppressor protein that is encoded by the TP53 gene in humans and has been widely regarded as possibly holding a key to the future of cancer therapies. Additional studies have shown that Kevetrin has potent anticancer activity in a wide range of tumor types by targeting histonedeacetylase (HDAC).

In March 2012, we entered into an agreement with Beth Israel Deaconess Medical Center (BIDMC), a teaching hospital of Harvard Medical School, on an innovative research project with Kevetrin. The Medical Center wishes to exploit the nuclear and/or mitochondrial pro-apoptotic function of p53 in melanoma and renal cell carcinoma, two types of cancer that are particularly resistant to therapy. BIDMC hopes to improve therapy for melanoma and renal cell carcinoma, cancers that are particularly resistant to therapy. BIDMC initiated combination studies with multikinase inhibitors which activate pro-apoptotic activity by translocation of p53 in mitochondria thereby inducing apoptosis. Apoptosis is enhanced by MDM2 inhibitors by stabilizing p53. As presented at the American Association for Cancer Research (AACR) meeting in April, Kevetrin phosphorylates MDM2 which activates and stabilizes p53 by monoubiquitination inducing apoptosis. Prior data from the BIDMC laboratory showed that agents of this class can augment the pro-apoptotic and antitumor effects of MDM2 antagonists and is expected to have a synergistic effect with Kevetrin. BIDMC will test the effects of Kevetrin alone and in combination with FDA-approved VEGFR antagonists in the renal cell carcinoma and melanoma studies. In vitro study endpoints include apoptosis by measuring caspase activation and PARP cleavage. In vivo endpoints include efficacy in a xenograft model, tumor vascularity, p53 levels, p21 expression and apoptosis. This study will provide vital insight to exploit the nuclear and/or mitochondrial pro-apoptotic function by Kevetrin in combination with other multikinase inhibitors in treatment of these difficult to treat malignancies. At this time the study is in progress. The most recent results were received from BIDMC in April 2013, which showed apoptosis induction (TUNEL) in renal cancer (786). Results of these preclinical tests provided to date to the Company are encouraging and BIDMC and Cellceutix wish to move the study further. Cellceutix has provided the requested information from BIDMC that will be used to investigate a Specialized Programs of Research Excellence (SPORE) grant for a phase 2 clinical study of renal cancer upon completion of a successful phase 1 clinical study presently in progress.

The University of Bologna in Italy (the “University”) and The Italian Cooperative Study Group on Chronic Myeloid Leukemia (ICSG on CML) and Acute Leukemia (GIMEMA Group) plan on testing Kevetrin against Acute Myelogenous Leukemia (AML). We have been advised that the study, a phase 1b trial, will be titled “A Multi-Center, Open-Label, Phase 1B Study of Escalating Doses of Kevetrin (Thioureidobutyronitrile) Administered Intravenously, with Cytarabine Adminstered A) Subcutaneously, or B) Intravenously, in Patients with Acute Myelogenous Leukemia (AML).” The trial’s principal investigator wants this phase 1b trial to begin once a higher patient dosing is achieved at the Dana Farber trial. We expect the trial to begin in the second half of 2013. The University will source the funding for this trial.

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On December 25, 2012 the United States Patent and Trademark Office (USPTO) awarded the Company U.S. Patent No. 8,338,454 B2, titled "Nitrile Derivatives and their Pharmaceutical Use and Compositions." The patent covers pharmaceutical compositions comprising Kevetrin, and related compounds and compositions.

Prurisol

Prurisol is our anti-psoriasis drug candidate. It is a small molecule with a molecular weight of less than 500 MW. It is synthesized through a multi-step process using commercially available starting materials. Prurisol acts through immune modulation and PRINS reduction.

In June 2012, we participated in a pre IND meeting with the U.S. Food and Drug Administration ("FDA") pertaining to Prurisol our compound targeting psoriasis. Cellceutix had requested the meeting for guidance on its initiatives to seek a section 505(b)(2) designation for Prurisol, which would allow the us to forgo early-stage trials and advance Prurisol into latter-stage clinical trials.  Cellceutix was advised by the FDA that a 505(b)(2) application would be an acceptable approach for Prurisol. Our Prurisol manufacturer, Dr. Reddy’s Laboratories Ltd., has advised us that the manufacturing of Prurisol took longer than planned, has been completed, and it is now being formulated. We plan to sponsor a Phase II/III Proof of Concept trial in Europe to begin in the third quarter 2013. This will be a relatively short trial with only 30 days of treatment and 30 days of follow-up to evaluate the efficacy and safety of Prurisol.

General

The Company is presently in discussions with other institutions for collaborations in conducting clinical trials and acquiring a new drug. There are now two material transfer agreements pending with major hospitals.

We have no product sales to date and we will not receive any product revenue until we receive approval from the FDA or equivalent foreign regulatory bodies to begin selling our pharmaceutical candidates. Developing pharmaceutical products, however, is a lengthy and very expensive process. Assuming we do not encounter any unforeseen safety issues during the course of developing our product candidates, we do not expect to complete the development of a product candidate for several years, if ever.

Liquidity and Capital Resources

As of March 31, 2013 the Company had a cash balance of approximately $1,078,000.  The Company will need to raise substantial funds in order to execute its product development plan.  The Company has entered into a financing agreement with Aspire Capital Fund (Aspire Capital) for $10,000,000 which allows the Company to sell Cellceutix common stock shares to Aspire Capital. As of March 31, 2013, the Company had completed sales to Aspire totaling 1,112,208 shares of common stock generating gross proceeds of approximately $1,616,000. As of March 31, 2013, approximately $8,384,000 is available under the financing arrangement with Aspire on the sale of the Company’s common stock. Subsequent to March 31, 2013 and through May 15, 2013, the Company issued a total of 300,000 Class A common shares par value $.0001 to Aspire Capital Fund LLC against receipt of $481,340.

20

On May 8, 2012, the Company entered into a subscription agreement for Series A Convertible Preferred shares with an accredited investor for an aggregate of $1,000,000.  The Subscription Agreement provides for installment funding Amounts, at Cellceutix’s discretion, to take place every thirty days after initial closing date for an amount of the lesser of  (i) $75,000 or  (ii) twenty five  (25%) per cent of the dollar value of the total volume traded during the preceding 22 trading days.   The Series A Preferred Shares are convertible into common stock at the lesser of 85% of the closing bid price on the date of prior to each closing, or 85% of the lowest bid price for the fifteen (15) days prior to conversion.  At no time may a holder of shares of Series A Preferred Stock convert shares of the Series A Preferred Stock if the number of shares of Common Stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares of Common Stock owned by such holder at such time, the number of shares of Common Stock which would result in such holder beneficially owning more than 9.99% of all of the Common Stock outstanding. Additionally, for each common share issued upon conversion of Series A preferred share, a five year common stock purchase warrant is issued to the Subscriber.  The warrant is exercisable at the conversion price of the common shares issued.  The fair value of the common stock into which the Series A Preferred Stock is convertible will exceed the price at which the common stock will be issued on the date of issuance of the preferred stock.  The amount by which the fair value of the common stock exceeds the issue price of the common stock is a beneficial conversion feature.  The Company will recognize the beneficial conversion feature as a one-time, non-cash deemed dividend to the holders of the Series A Preferred Stock on the date of issuance, which is the date the preferred stock first became convertible.   The Series A Convertible Preferred shares do not pay dividends.   The Common shares underlying the Series A Preferred Shares and the common stock purchase warrants are subject to piggy back registration rights. As of December 31, 2012 a total of $400,000 Series A Convertible Preferred shares were subscribed too and there remained a balance of $600,000 for the Company to draw upon in installment funding per the agreement.   The Agreement was mutually terminated between the parties on January 8, 2013.

We expect to incur losses from operations for the near future. We expect to incur increasing research and development expenses, including expenses related to additional clinical trials. We expect that our general and administrative expenses will increase in the future as we expand our business development, add infrastructure and incur additional costs related to being a public company, including incremental audit fees for compliance with the provisions of the Sarbanes-Oxley Act, investor relations programs and increased professional services. Based upon our expected rate of expenditures, we currently do not have sufficient cash reserves to meet all of our anticipated obligations through our fiscal year end of June 30, 2014. 

Requirement for Additional Capital  

Research and Development Costs.  We have used and intend to continue to use the net proceeds from the above Aspire transaction to fund our product development programs and for general corporate purposes, and therefore anticipate having sufficient funds to meet our planned drug development for the next twelve (12) months. We plan to incur the following expenses over the next twelve (12) months: 

1. Research and Development- $1,500,000 in preclinical development costs including testing Kevetrin on additional tumors, and costs to manufacture Prurisol.

2. Clinical trials - $2,750,000.  We have budgeted $1,250,000 for our Phase 1 Kevetrin trials and $1,500,000 for the Prurisol pilot study and phase 2/3 trials.

3. Corporate overhead of $1,250,000: Budgeted office salaries, legal, accounting and other costs expected to be incurred.

4. Capital costs of $200,000: Estimated cost for equipment and laboratory improvements.

21

The Company will be unable to proceed with its full planned drug development programs, meet its administrative expense requirements, capital costs, or staffing costs without obtaining additional financing of approximately  $8,384,000 (as per current management’s budgets) from its financing agreement with Aspire Capital Fund.

Off-Balance Sheet Arrangements.

The Company does not have any off-balance sheet arrangements, as defined in Item 304(a)(4)(ii) of Regulation S-K under the Securities Exchange Act of 1934, as amended.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not applicable

Item 4.  Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2013 covered by this Quarterly Report on Form 10-Q.  Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This conclusion by the Company’s Chief Executive Officer and Chief Financial Officer does not relate to reporting periods after March 31, 2013.

Changes in Internal Control over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the quarter ended  March 31,  2013, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Cellceutix Corporation has settled all claims with Toxikon in a civil action in the Commonwealth of Massachusetts.  In February 2013, Cellceutix paid Toxikon Corporation ninety-thousand ($90,000) dollars in full settlement of claims asserted.

Formatech is a former vendor of ours which had received Cellceutix common stock and had also gone bankrupt. In July 2012, Cellceutix was advised that a US Bankruptcy Court judge has allowed Formatech’s bankruptcy trustee to sell 184,375 restricted shares of Cellceutix Class A Common Stock. The proceeds of any sales of these shares will be held in escrow pending the outcome of Cellceutix’s claims against Formatech. Cellceutix has engaged an attorney with the aim of recovering these funds. The case is still pending resolution in court.

Item 2. Unregistered sales of equity securities

On March 5, 2013 the Company issued 370,500 Class A common shares par value $.0001 to each of two warrant holders upon exercise of Common Stock Purchase Warrants exercisable at $0.25 per share. The Company received an aggregate of $185,250. The issuance was exempt from registration under Section 4(2) of the Securities Act.

22

Item 3. Defaults Upon Senior Securities

None

Item 4.  Mine Safety Disclosures

None

Item 5.  Other Information

None

Item 6. Exhibits

(a) Exhibit index

Exhibit
31.1	Certification of Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.

 (b)  Reports on Form 8-K

(1)	The Company filed a Form 8-K on January 8, 2013 related to Item 1.02  Termination of Material Definitive Agreement that the Company and the accredited investor mutually agreed to terminate the Series A Convertible Preferred Subscription Agreement of May 2012.
(2)	The Company filed a Form 8-K on March 8, 2013 related to Item 3.02 Unregistered Sales of Equity Securities for warrant conversions into Class A Common Stock.
(3)	The Company filed a Form 8-K on March 4, 2013 related to Item 7.01. Regulation FD Disclosure that the Company received back a signed Confidential Disclosure Agreement with one of the world’s most prominent cancer centers in the United States for The licensing of a novel new compound that potentially treats illnesses associated with cancer.

23

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 CELLCEUTIX CORPORATION

/s/ Leo Ehrlich

 Leo Ehrlich, Chief Executive Officer and Chief Financial Officer and Chairman of the Board of Directors

(Principal Executive, Accounting and Financial Officer)

/s/ Krishna Menon

Krishna Menon,

President and Director

Dated: May 20, 2013                                                                                      

24

EX-31

Exhibit 31-1

CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

I, Leo Ehrlich, certify that:

1.     I have reviewed this report on Form 10-Q of Cellceutix Corporation;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and we have:

a)     designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)     designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c)     evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)     disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer 's auditors and the audit committee of registrant 's board of directors (or persons performing the equivalent function):

a)     all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect registrant 's ability to record, process, summarize and report financial information; and

b)     any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

CELLCEUTIX CORPORATION
Date:  May 20, 2013	By:	/s/ Leo Ehrlich
		Leo Ehrlich
		Chief Executive Officer, Chief Financial Officer,
		Chairman of the Board of Directors
		(Principal Executive, Accounting and Financial Officer)

EX-32

Exhibit 32-1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350, AS

ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Leo Ehrlich, Interim Chief Executive Officer and Chief Financial  Officer of Cellceutix Corporation, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002:

(1)   the Quarterly Report on Form 10-Q of Cellceutix Corporation for the quarter ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2)    the information contained in the such Quarterly Report on Form 10-Q of Cellceutix Corporation for the quarter ended March 31, 2013 fairly presents, in all material respects, the financial condition and results of operations of Cellceutix Corporation

CELLCEUTIX CORPORATION
Date:  May 20, 2013	By:	/s/ Leo Ehrlich
	Leo Ehrlich
	Chief Executive Officer, Chief Financial Officer,
	Chairman of the Board of Directors
	(Principal Executive, Accounting and Financial Officer)

XML

Stock Options and Warrants (Detail Textuals 2) (2010 Equity Incentive Plan)	9 Months Ended
	Mar. 31, 2013
2010 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock shares reserved for future issuance	45,000,000
Term of incentive stock option granted	10 years
Percentage of combined voting power	10.00%

XML

Subsequent Events (Detail Textuals) (USD $)	3 Months Ended	9 Months Ended				1 Months Ended
	Mar. 31, 2013	Mar. 31, 2013 Aspire Capital Fund LLC	Mar. 31, 2013 Class A common stock	Mar. 05, 2013 Class A common stock	Jun. 30, 2012 Class A common stock	May 15, 2013 Subsequent Event Class A common stock Aspire Capital Fund LLC
Subsequent Event [Line Items]
Common stock, par value (in dollars per share)			$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001
Number of shares purchased (in shares)	1,000,000	1,112,208				300,000
Value Of Shares Purchased						$ 481,340

XML

Equity Transactions (Detail Textuals 3) (USD $)	3 Months Ended	9 Months Ended	0 Months Ended
	Mar. 31, 2013	Mar. 31, 2013 Stock Options	Sep. 07, 2012 Class A common stock Stock Options
Class of Stock [Line Items]
Exercised		(2,250,000)	250,000
Exercised		$ 0.12	$ 0.20
Value of shares purchased			$ 50,000
Shares issued (in shares)	1,000,000		250,000

XML

Note Payable-Related Party (Detail Textuals) (USD $)				12 Months Ended		12 Months Ended		12 Months Ended
	Mar. 31, 2013	Jun. 30, 2012	Mar. 31, 2013 Convertible Notes Payable	Jun. 30, 2010 Convertible Notes Payable Ehrlich Promissory Note A	Oct. 01, 2009 Convertible Notes Payable Ehrlich Promissory Note A	Jun. 30, 2010 Convertible Notes Payable Ehrlich Promissory Note B	Oct. 01, 2009 Convertible Notes Payable Ehrlich Promissory Note B	Jun. 30, 2011 Convertible Notes Payable Ehrlich Promissory Note C	Jun. 30, 2010 Convertible Notes Payable Ehrlich Promissory Note C	Apr. 30, 2011 Convertible Notes Payable Ehrlich Promissory Note C
Debt Instrument [Line Items]
Unsecured Ehrlich Promissory Note - total amount				$ 32,310		$ 85,000		$ 997,047	$ 972,907
Simple interest bearing unsecured Ehrlich Promissory Note				6.00%		6.00%			10.00%
Common stock per share									$ 0.50
Percentage of interest rate change					9.00%		9.00%
Debt instrument accrued interest converted into additional principal										96,677
Note payable to officer	$ 2,022,264	$ 2,022,264	$ 2,002,264

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Going Concern (Detail Textuals) (USD $)	3 Months Ended		9 Months Ended		69 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Jun. 30, 2012
Agreement [Line Items]
Deficit accumulated during the development stage	$ (18,633,082)		$ (18,633,082)		$ (18,633,082)	$ (16,336,918)
Net loss attributable to common stockholders	(866,550)	(308,617)	(2,296,164)	(3,330,475)	(18,624,003)
Working capital deficit	(7,077,000)		(7,077,000)		(7,077,000)
Financing Agreement | Aspire Capital Fund LLC
Agreement [Line Items]
Working capital fund obtained from financing agreement	$ 10,000,000		$ 10,000,000		$ 10,000,000

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Stock Options and Warrants (Detail Textuals 5) (Warrants, USD $)	9 Months Ended	12 Months Ended
	Mar. 31, 2013	Jun. 30, 2012
Warrants
Class of Warrant or Right [Line Items]
Warrants issued and outstanding	5,571,084	5,719,754
Weighted average exercise price of warrants	0.92	0.87
Warrants expired	2,223,000	2,223,000
Average remaining contractual life of the outstanding warrants	1 year 8 months 5 days	2 years 7 days
Aggregate intrinsic value	$ 4,627,000	$ 474,000

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Stock Options and Warrants (Detail Textuals) (USD $)	3 Months Ended		9 Months Ended		69 Months Ended	1 Months Ended			3 Months Ended	9 Months Ended		9 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Nov. 30, 2012 Stock Options	Aug. 31, 2010 Stock Options	Apr. 30, 2009 Stock Options	Mar. 31, 2013 Stock Options	Mar. 31, 2013 Stock Options	Apr. 01, 2009 Stock Options	Mar. 31, 2013 Stock Options Consultants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expenses per month											$ 4,000
Number of options granted								10,000		120,000
Monthly fees increased						6,000	5,000
Number of stock options awarded to consultant												480,000
Value of options granted to consultant												284,000
Vesting period for options granted to consultant												1 year
Professional fees related to stock options	$ 98,566	$ 159,350	$ 420,454	$ 516,671	$ 2,999,365				$ 44,000	$ 154,000

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Equity Transactions (Detail Textuals 4) (USD $)	9 Months Ended	69 Months Ended	1 Months Ended	9 Months Ended					1 Months Ended			0 Months Ended	1 Months Ended	0 Months Ended	1 Months Ended	0 Months Ended	1 Months Ended
	Mar. 31, 2013	Mar. 31, 2013	Apr. 30, 2009 Stock Options	Mar. 31, 2013 Stock Options	Mar. 31, 2013 Stock Options Consultants	Mar. 31, 2013 Class A common stock	Mar. 05, 2013 Class A common stock	Jun. 30, 2012 Class A common stock	Oct. 24, 2012 Class A common stock Consultants	Aug. 26, 2012 Class A common stock Consultants	Jul. 25, 2012 Class A common stock Consultants	Sep. 07, 2012 Class A common stock Stock Options	Dec. 19, 2012 Equity Incentive Plans 2009 and 2010 Class A common stock Stock Options	Feb. 08, 2011 Equity Incentive Plans 2009 and 2010 Class A common stock Stock Options	Feb. 17, 2011 Equity Incentive Plans 2009 and 2010 Class A common stock Stock Options	Mar. 02, 2009 Equity Incentive Plans 2009 and 2010 Class A common stock Stock Options	Dec. 21, 2012 Equity Incentive Plans 2010 Class A common stock Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise of stock options (in shares)				(2,250,000)								250,000	320,000				1,680,000
Common stock, par value (in dollars per share)						$ 0.0001	$ 0.0001	$ 0.0001					$ 0.0001
Shares of stock options issued at the end of each month					10,000
Common stock issue to consultants for services (in shares)					90,000				50,000	50,000	25,000
Aggregate number of options awarded during the period					480,000
Options granted to consultant to purchase common stocks			10,000	120,000										200,000	40,000	80,000
Weighted average exercise price of options exercisable				$ 0.14										$ 0.20	$ 0.20	$ 0.14	$ 0.10
Amount received on exercise of stock options	$ 462,450	$ 462,450											$ 59,200				$ 168,000

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Significant Accounting Policies

9 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Significant Accounting Policies

2. Significant Accounting Policies

 Cash and Cash Equivalents, Restricted Cash and Marketable Securities

We classify all highly liquid investments with stated maturities of three months or less from date of purchase as cash equivalents. We hold cash balances in excess of the federally insured limits of $250,000 with one prominent financial institution. We deem this credit risk not to be significant as our cash is held by a major prominent financial institution. Total cash and cash equivalents held in checking accounts, as reported on the accompanying balance sheets, totaled approximately $1,078,000 and $28,000 at March 31, 2013 and June 30, 2012, respectively.

Use of Estimates 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates. 

Significant Estimates

These accompanying consolidated financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to valuation of stock grants and stock options, the valuation allowance on deferred tax assets and various contingent liabilities. It is reasonably possible that these above-mentioned estimates and others may be adjusted as more current information becomes available, and any adjustment could be significant in future reporting periods.

Certain Risks and Uncertainties

Product Development

We devote significant resources to research and development programs in an effort to discover and develop potential future product candidates. Research and development expenses amounted to approximately $543,000 and $269,000 for the three months ended March 31, 2013 and 2012, respectively. Research and development expenses amounted to approximately $1,010,000 and $479,000 are for the nine months ended March 31, 2013 and 2012, respectively. The product candidates in our pipeline are at various stages of preclinical and clinical development. The path to regulatory approval includes three phases of clinical trials in which we collect data to support an application to regulatory authorities to allow us to market a product for treatment of a specified disease. There are many difficulties and uncertainties inherent in research and development of new products, resulting in a high rate of failure. To bring a drug from the discovery phase to regulatory approval, and ultimately to market, takes many years and significant cost. Failure can occur at any point in the process, including after the product is approved, based on post-market factors. New product candidates that appear promising in development may fail to reach the market or may have only limited commercial success because of efficacy or safety concerns, inability to obtain necessary regulatory approvals, limited scope of approved uses, reimbursement challenges, difficulty or excessive costs of manufacture, alternative therapies or infringement of the patents or intellectual property rights of others. Uncertainties in the FDA approval process and the approval processes in other countries can result in delays in product launches and lost market opportunities. Consequently, it is very difficult to predict which products will ultimately be submitted for approval, which have the highest likelihood of obtaining approval and which will be commercially viable and generate profits. Successful results in preclinical or clinical studies may not be an accurate predictor of the ultimate safety or effectiveness of a drug or product candidate.

Basic Earnings (Loss) per Share

Basic and diluted earnings 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, warrants and convertible notes payable. For the three months and nine months ended March 31, 2013 and 2012, 49,520,936 shares and 49,142,574 of common share equivalents were excluded from the computation of diluted earnings per share because their effect is anti-dilutive.

For the year ended March 31, 2013 and 2012, no convertible preferred stock, convertible notes, warrants and options were included in the calculation of the Company's diluted loss per share because the company reported net loss from continuing operations attributed to common shareholders.

Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with United States generally accepted accounting principles. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized. We did not provide any current or deferred income tax provision or benefit for any periods presented to date because we have continued to experience a net operating loss since inception and therefore provide a 100% valuation allowance against all of our deferred tax assets.

The Company adopted the ASC accounting pronouncement “Accounting for Uncertainty in Income Taxes”. This pronouncement provides guidance for recognizing and measuring uncertain tax positions, as defined in the FASB accounting pronouncement “Accounting for Income Taxes”. This pronouncement prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. This pronouncement also provides accounting guidance on derecognizing, classification and disclosure of these uncertain tax positions. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company has not recognized any interest and penalties in 2013 or 2012.

Accounting for Stock Based Compensation

The stock-based compensation expense incurred by Cellceutix 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”. Our consultants do not meet the employer-employee relationship as defined by the IRS and therefore are accounted for under ASC 505-50.

ASC 505-50-30-11 (previously EITF 96-18) further provides that an issuer shall measure the fair value of the equity instruments in these transactions using the stock price and other measurement assumptions as of the earlier of the following dates, referred to as the measurement date: 

i.	The date at which a commitment for performance by the counterparty to earn the equity instruments is reached (a performance commitment); and
ii.	The date at which the counterparty’s performance is complete.

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.

Recent Accounting Pronouncements

The Company has reviewed all recent accounting pronouncements issued by FASB (including EITF), the AICPA and the SEC and did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

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Equity Transactions (Detail Textuals) (USD $)	3 Months Ended	69 Months Ended	9 Months Ended			0 Months Ended
	Mar. 31, 2013	Mar. 31, 2013	Mar. 31, 2013 Aspire Capital Fund LLC	Mar. 31, 2013 Common Stock Purchase Agreement	Mar. 31, 2013 Common Stock Purchase Agreement Class A common stock	Dec. 06, 2012 Common Stock Purchase Agreement Class A common stock Aspire Capital Fund LLC
Agreement [Line Items]
Common stock shares committed to purchase value						$ 10,000,000
Term of agreements						36 months
Shares issued as commitment fee (in shares)						336,625
Number of common stock shares sold						112,208
Value of common stock shares sold						100,000
Number of shares authorized to purchased each and any business.					100,000
Amount of shares authorized to purchased each and any business.					500,000
Period of prior written notice				1 day
Percentage of trading volumes for next business days				20.00%
Description of VWAP Purchase Price				(i) the closing sale price of the shares on the purchase date, or (ii) ninety-five percent (95%) of the next business day's volume weighted average price (each such purchase, a "VWAP Purchase")
VWAP purchase price				$ 0.50
Shares issued (in shares)	1,000,000		1,112,208
Proceeds from issuance of common stock	$ 1,516,320	$ 100	$ 1,616,000

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Commitments and Contingencies (Detail Textuals) (USD $)	12 Months Ended			0 Months Ended	1 Months Ended	0 Months Ended		9 Months Ended
	Jun. 30, 2011	Mar. 31, 2013	Jun. 30, 2012	Feb. 04, 2012 Mr. Evans	Jan. 29, 2013 Mr. Evans	Feb. 14, 2011 Mr. Evans	Feb. 14, 2011 Settlement Agreement Mr. Evans	Mar. 31, 2013 Settlement Agreement Mr. Evans
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Repurchase of stock, shares							4,602,312
Duration of shares repurchase							3 years
Repurchase of stock, value							$ 1,000,000
Payment on signing of agreement				300,000	300,000	100,000
Cancellation of treasury stock (in shares)				1,380,000	1,380,000	460,229
Remaining shares of common stock held in escrow		1,382,084	2,762,084
Related payroll taxes as a capital contribution	932,966							932,000
Settlement liability		$ 278,000

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Accrued Salaries and Payroll Taxes-Related Parties (Details 1) (USD $)	1 Months Ended
	Dec. 29, 2010 ExecutiveOfficer
Related Party Transaction [Line Items]
Number of executive officers	2
Percentage of annual increase in salary	10.00%
Term of agreement	3 years
Leo Ehrlich
Related Party Transaction [Line Items]
Executive's annual base salary	350,000
Krishna Menon
Related Party Transaction [Line Items]
Executive's annual base salary	350,000

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Equity Transactions (Detail Textuals 1) (USD $)	0 Months Ended	3 Months Ended							0 Months Ended	1 Months Ended			0 Months Ended	1 Months Ended								1 Months Ended				0 Months Ended
	May 08, 2012	Mar. 31, 2013	Jun. 30, 2012	Sep. 24, 2012 Warrants	Sep. 19, 2012 Warrants	Aug. 23, 2012 Warrants	Aug. 01, 2012 Warrants	Jun. 25, 2012 Warrants	Jul. 03, 2012 Series A convertible preferred stock	Sep. 19, 2012 Series A convertible preferred stock	Sep. 20, 2012 Series A convertible preferred stock	Aug. 23, 2012 Series A convertible preferred stock	May 08, 2012 Series A convertible preferred stock	Aug. 31, 2012 Series A convertible preferred stock	Jul. 30, 2012 Series A convertible preferred stock	Aug. 01, 2012 Series A convertible preferred stock	Aug. 14, 2012 Series A convertible preferred stock	Jul. 25, 2012 Series A convertible preferred stock	Jun. 30, 2012 Series A convertible preferred stock	Sep. 19, 2012 Class A common stock	Jun. 25, 2012 Class A common stock	Sep. 24, 2012 Preferred Shares	Jun. 25, 2012 Preferred Shares	Aug. 31, 2012 Preferred Shares	May 07, 2012 Preferred Shares	May 08, 2012 Common Stock
Class of Stock [Line Items]
Series A Convertible Preferred shares issued- value													$ 1,000,000
Value of preferred shares purchased									75,000	75,000	75,000	75,000	75,000	75,000	75,000	75,000						75,000	100,000
Shares issued (in shares)		1,000,000							7,500	7,500	7,500	7,500		7,500	7,500	7,500						7,500	10,000			848,084
Installment funding term													30 days
Percentage of total volume traded													25.00%
Number of trading days													22 days
Maximum percentage of closing bid price on the date										85.00%		85.00%	85.00%			85.00%						85.00%	85.00%
Lowest bid price percentage prior to conversion													85.00%
Lowest bid price number of days prior to conversion													15 days
Percentage common stock beneficially owning of total common stock outstanding													9.99%
Expiry period of warrants										5 years		5 years	5 years			5 years						5 years	5 years
Preferred stock, par value (in dollars per share)		$ 0.001	$ 0.001							$ 0.527						$ 0.49			$ 0.001			$ 0.527	$ 0.39
Preferred stock conversion price										$ 0.527									$ 0.485			$ 0.527
Converted common stock price per share (in dollars per share)														$ 0.62			$ 0.571	$ 0.59						$ 0.62	$ 0.46
Aggregate amount funded under subscription agreement	400,000
Common stock purchase				142,315	142,315	154,639	153,061	255,754																		848,084
Common stock share purchase warrants (in dollars per share)				0.527	0.527	0.485	0.49	0.39												0.527	0.39
Termination of subscription for remaining amount of subscription agreement	$ 600,000

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Commitments and Contingencies (Detail Textuals 1) (USD $)	1 Months Ended	9 Months Ended
	Jul. 31, 2012 Class A common stock	Mar. 31, 2013 Settlement Agreement Toxikon Corporation
Agreement [Line Items]
Payments for legal settlement		$ 90,000
Formatech's bankruptcy trustee sell restricted shares of Cellceutix Class A Common Stock	184,375

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Related Party Transactions (Detail Textuals) (Kard Scientific, USD $)	Mar. 31, 2013	Jun. 30, 2012	Dec. 07, 2007
Kard Scientific
Related Party Transaction [Line Items]
Office space rent (per month)			$ 900
Rent payables included in accrued expenses	$ 58,000	$ 50,000

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Basis of Presentation and Nature of Operations

9 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Basis of Presentation and Nature of Operations

Note 1. Basis of Presentation and Nature of Operations

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Cellceutix Corporation 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 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, 2012, included in our Annual Report on Form 10-K for the year ended June 30, 2012.

In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three month and nine month periods have been made. Results for the interim periods 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", "we", "us" or "our" mean Cellceutix Corporation. 

Cellceutix Corporation, formerly known as EconoShare, Inc., (“Cellceutix” or the “Company”) was incorporated on August 1, 2005. On December 6, 2007, the Company acquired Cellceutix Pharma, Inc. which was incorporated in the State of Delaware on June 20, 2007, in exchange for newly issued shares of the Company’s common stock. As a result of the exchange, Cellceutix Pharma, Inc. became a wholly-owned subsidiary of the Company. The Company is a clinical stage biopharmaceutical company and has no customers, products or revenues to date. The Company also follows the accounting guidelines for accounting for and reporting in Development Stage Enterprises in preparing its financial statements.

The Company’s Common Stock is quoted on the Over the Counter Bulletin Board (OTCBB), symbol “CTIX”.

All amounts, where it is designated in these notes to the financial statements as an approximate amount, are rounded to the nearest thousand dollars.

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 cancer and inflammatory disease. 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, Kevetrin and Prurisol and advancing them as quickly as possible along the regulatory pathway. We will develop the highest quality data and broadest intellectual property to support our compounds.  

We currently own all development and marketing rights to our products. In order to successfully develop and market our products, we may have to partner with other 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.

Pharmaceutical Compounds – Kevetrin and Prurisol

On August 2, 2007, the Company was assigned all right, title, and interest to three pharmaceutical compounds; Kevetrin, KM 277 and KM 278, by their inventors. The Company was assigned all right, title, and interest to an additional three pharmaceutical compounds on October 17, 2007, KM 133 (Prurisol), KM 362 and KM 3174. In July 2009, the Company was assigned all right, title, and interest to KM 732.  In exchange for these compounds, the Company agreed to pay the inventors 5% of net sales of the compounds in countries where composition of matter patents have been issued and 3% of net sales in other countries. Kevetrin, KM 277, KM 278 and KM 362 were acquired from our President and director, Dr. Krishna Menon.  In December 2012, the Company was issued a US patent for Kevetrin.  In January 2012 the Company filed a patent application for KM 133. The Company intends to file patent applications for each of the other six compounds as studies advance and funds become available for these projects.     

In December 2009, the Company was assigned all right, title and interest to a new compound, KM-391, which it intends to develop for the treatment of autism.  In exchange for this compound, the Company agreed to pay the inventors $10,000 plus 4.5% of net sales of the compound in countries where a composition of matter patent has been issued and 3% of net sales in other countries.

In March 2012, we entered into an agreement with Beth Israel Deaconess Medical Center (BIDMC), a teaching hospital of Harvard Medical School, on an innovative research project with Kevetrin. The Medical Center wishes to exploit the nuclear and/or mitochondrial pro-apoptotic function of p53 in melanoma and renal cell carcinoma, two types of cancer that are particularly resistant to therapy. BIDMC hopes to improve therapy for melanoma and renal cell carcinoma, cancers that are particularly resistant to therapy. BIDMC initiated combination studies with multikinase inhibitors which activate pro-apoptotic activity by translocation of p53 in mitochondria thereby inducing apoptosis. Apoptosis is enhanced by MDM2 inhibitors by stabilizing p53. As presented at the American Association for Cancer Research (AACR) meeting in April, Kevetrin phosphorylates MDM2 which activates and stabilizes p53 by monoubiquitination inducing apoptosis. Prior data from the BIDMC laboratory showed that agents of this class can augment the pro-apoptotic and antitumor effects of MDM2 antagonists and is expected to have a synergistic effect with Kevetrin. BIDMC will test the effects of Kevetrin alone and in combination with FDA-approved VEGFR antagonists in the renal cell carcinoma and melanoma studies. In vitro study endpoints include apoptosis by measuring caspase activation and PARP cleavage. In vivo endpoints include efficacy in a xenograft model, tumor vascularity, p53 levels, p21 expression and apoptosis. This study will provide vital insight to exploit the nuclear and/or mitochondrial pro-apoptotic function by Kevetrin in combination with other multikinase inhibitors in treatment of these difficult to treat malignancies. At this time the study is in progress. The most recent results were received from BIDMC in April 2013, which showed apoptosis induction (TUNEL) in renal cancer (786). Results of these preclinical tests provided to date to the Company are encouraging and BIDMC and Cellceutix wish to move the study further. Cellceutix has provided the requested information from BIDMC that will be used to investigate a Specialized Programs of Research Excellence (SPORE) grant for a phase 2 clinical study of renal cancer upon completion of a successful phase 1 clinical study presently in progress.

On June 21, 2012, the U.S. Food and Drug Administration ("FDA") approved the Investigational New Drug (“IND”) application for Kevetrin, Cellceutix's novel anti-cancer compound. The Phase 1 trials are being conducted at Harvard Cancer Center's Dana-Farber Cancer Institute and partner Beth Israel Deaconess Medical Center.  The clinical trial will test Kevetrin against a variety of different solid tumor cancer types in patients with advanced-stage cancers. Primary endpoints for the study will be safety, tolerable dosing levels and establishing the dose for a future Phase II clinical trial.

The trial is registered on www.clinical trials.gov. http://clinicaltrials.gov/ct2/show/NCT01664000?term=Kevetrin&rank=1

On December 25, 2012 the United States Patent and Trademark Office (USPTO) awarded the Company U.S. Patent No. 8,338,454 B2, titled "Nitrile Derivatives and their Pharmaceutical Use and Compositions." The patent covers pharmaceutical compositions comprising Kevetrin, and related compounds and compositions.

In January 2013 the Company announced that the University of Bologna in Italy (the “University”) and The Italian Cooperative Study Group on Chronic Myeloid Leukemia (ICSG on CML) and Acute Leukemia (GIMEMA Group) plan on testing Kevetrin against Acute Myelogenous Leukemia (AML). The Company has been advised that the study, a phase 1b trial, will be titled “A Multi-Center, Open-Label, Phase 1B Study of Escalating Doses of Kevetrin (Thioureidobutyronitrile) Administered Intravenously, with Cytarabine Adminstered A) Subcutaneously, or B) Intravenously, in Patients with Acute Myelogenous Leukemia (AML).” The trial’s principal investigator plans for this phase 1b trial to begin once a higher patient dosing is achieved at the Dana Farber trial. We expect the trial to begin in the second half of 2013. The University will source the funding for this trial.

The Company is presently in discussions with other institutions for collaborations in conducting clinical trials and acquiring a new drug. There are now two material transfer agreements pending with major hospitals.

In June 2012, we participated in a pre IND meeting with the U.S. Food and Drug Administration ("FDA") pertaining to Prurisol our compound targeting psoriasis. Cellceutix had requested the meeting for guidance on its initiatives to seek a section 505(b)(2) designation for Prurisol, which would allow us to forgo early-stage trials and advance Prurisol into latter-stage clinical trials. Cellceutix was advised by the FDA that a 505(b)(2) application would be an acceptable approach for Prurisol. Our Prurisol manufacturer, Dr. Reddy’s Laboratories Ltd., has advised us that the manufacturing of Prurisol took longer than planned, has been completed, and it is now being formulated. We plan to sponsor a Phase II/III Proof of Concept trial in Europe to begin in the third quarter 2013. This will be a relatively short trial with only 30 days of treatment and 30 days of follow-up to evaluate the efficacy and safety of Prurisol.

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Related Party Transactions (Detail Textuals 1) (USD $)	3 Months Ended		9 Months Ended		69 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Jun. 30, 2012
Related Party Transaction [Line Items]
Research and development, gross	$ 543,115	$ 269,043	$ 1,009,584	$ 478,909	$ 6,106,596
Accounts payable, related party payables	1,692,023		1,692,023		1,692,023	1,695,820
Kard Scientific
Related Party Transaction [Line Items]
Research and development, gross	0	0	0	10,000	2,601,000
Accounts payable, related party payables	$ 1,686,000		$ 1,686,000		$ 1,686,000	$ 1,686,000

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Stock Options and Warrants (Detail Textuals 3) (Stock Options, USD $)	3 Months Ended		9 Months Ended		69 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 44,000	$ 18,000	$ 258,000	$ 1,175,000	$ 6,948,000
Unamortized compensation cost expected to be recognized	$ 84,000		$ 84,000		$ 84,000

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Condensed Balance Sheets (USD $)	Mar. 31, 2013	Jun. 30, 2012
Current Assets:
Cash	$ 1,078,042	$ 27,703
Prepaid expenses	7,456	325
Total Current Assets	1,085,498	28,028
Other Assets:
Patent costs - net	3,684
Deferred offering costs	251,511
Total Other Assets	255,195
Total Assets	1,340,693	28,028
Current Liabilities:
Accounts payable - (including related party payables of $1,692,023 and $1,695,820, respectively)	1,982,231	1,966,026
Accrued expenses - (including related party accruals of 436,515 and 316,130, respectively)	447,515	330,880
Accrued salaries and payroll taxes - related parties	3,431,972	2,789,571
Accrued settlement costs	278,326	270,055
Note payable - related party	2,022,264	2,022,264
Total Current Liabilities	8,162,308	7,378,796
Long Term Liabilities:
Accrued settlement costs - net of current settlement costs		275,229
Total Liabilities	8,162,308	7,654,025
Commitments and contingencies
Stockholders' Deficiency
Preferred stock, $0.001 par value, 500,000 designated shares, no shares issued and outstanding
Additional paid-in capital	12,076,821	9,229,157
Deficit accumulated during the development stage	(18,633,082)	(16,336,918)
Treasury stock - 1,382,084 and 2,762,084 shares at cost - as of March 31, 2013 and June 30, 2012, respectively	(275,229)	(527,733)
Total Stockholders' Deficit	(6,821,615)	(7,625,997)
Total Liabilities and Stockholders' Deficit	1,340,693	28,028
Class A common stock
Stockholders' Deficiency
Common Stock, Value	9,875	9,497
Class B common stock
Stockholders' Deficiency
Common Stock, Value

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Equity Transactions (Detail Textuals 2) (Class A common stock, Consultants, USD $)	1 Months Ended
	Oct. 24, 2012	Aug. 26, 2012	Jul. 25, 2012
Class A common stock | Consultants
Class of Stock [Line Items]
Common stock issue to consultants for services (in shares)	50,000	50,000	25,000
Common stock issue to consultants for services	$ 43,500	$ 30,000	$ 14,750
Closing price of shares	$ 0.87	$ 0.60	$ 0.59

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Statement of Changes in Stockholders' Deficit (Unaudited) (Parentheticals) (USD $)	12 Months Ended					9 Months Ended		12 Months Ended							9 Months Ended	12 Months Ended		9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended
	Jun. 30, 2012 January	Jun. 30, 2011 February	Jun. 30, 2010 February	Jun. 30, 2012 March	Jun. 30, 2011 March	Mar. 31, 2013 March Minimum	Mar. 31, 2013 March Maximum	Jun. 30, 2012 April	Jun. 30, 2008 April	Jun. 30, 2012 May	Jun. 30, 2011 May	Jun. 30, 2012 June	Jun. 30, 2010 June	Jun. 30, 2009 June	Mar. 31, 2013 July	Jun. 30, 2011 July	Jun. 30, 2010 July	Mar. 31, 2013 August	Jun. 30, 2012 August	Mar. 31, 2013 October	Jun. 30, 2012 November	Mar. 31, 2013 December
Shares issued, price per share for services (in dollars per share)	$ 0.45	$ 0.20	$ 0.30		$ 0.32			$ 0.46	$ 1.05	$ 0.49	$ 0.81	$ 0.62	$ 0.45	$ 0.38	$ 0.59	$ 0.55	$ 0.43	$ 0.60	$ 0.38	$ 0.87	$ 0.41
Shares issued, price per share for services (in dollars per share) (two)										$ 0.53				$ 0.38
Share issued, price per share charitable contributions (in dollars per share)				$ 0.52
Shares issued, price per share for commitment fee (in dollars per share)																						$ 0.89
Shares issued, price per share at net offering cost (in dollars per share)						$ 1.45	$ 1.54															$ 0.89

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Stock Options and Warrants - Stock option activity (Details) (Stock Options)	9 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield	0.00%	0.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	5 years	5 years
Expected stock price volatility	132.51%	142.51%
Risk-free interest rate	1.53%	1.97%
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	10 years	10 years
Expected stock price volatility	137.33%	148.15%
Risk-free interest rate	1.98%	3.00%

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Stock Options and Warrants (Tables)

9 Months Ended

Mar. 31, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of fair value of option estimated on the date of grant or grant modification using the Black Scholes model assumptions

	Nine Months Ended March 31, 2013	Nine Months Ended March 31, 2012
Expected term (in years)	5-10	5-10
Expected stock price volatility	132.51% – 137.33%	142.51% – 148.15%
Risk-free interest rate	1.53% –1.98%	1.97%–3.0%
Expected dividend yield	0	0

Schedule of stock option activity

	Number of Options		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2012	41,277,500	$	0.14	8.46	$	21,186,000
Granted	120,000		1.08	8.36		-
Exercised	(2,250,000)		0.12	-		-
Forfeited/expired	-		-	-		-
Outstanding at March 31, 2013	39,147,500	$	0.14	7.71	$	63,003,000
Exercisable at March 31, 2013	39,082,500	$	0.14	7.70	$	62,974,000

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Stock Options and Warrants - Options outstanding and exercisable (Details 1) (Stock Options, USD $)	1 Months Ended	9 Months Ended
	Apr. 30, 2009	Mar. 31, 2013
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at June 30, 2012		41,277,500
Granted	10,000	120,000
Exercised		(2,250,000)
Forfeited/expired
Outstanding at March 31, 2013		39,147,500
Exercisable at March 31, 2013		39,082,500
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding at June 30, 2012		$ 0.14
Granted		$ 1.08
Exercised		$ 0.12
Forfeited/expired
Outstanding at March 31, 2013		$ 0.14
Exercisable at March 31, 2013		$ 0.14
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term [Roll Forward]
Weighted average remaining contractual life (Years), Outstanding		8 years 5 months 16 days
Weighted average remaining contractual life (Years), Granted		8 years 4 months 10 days
Weighted average remaining contractual life (Years), Outstanding		7 years 8 months 16 days
Weighted average remaining contractual life (Years), Exercisable		7 years 8 months 12 days
Aggregate intrinsic value, Outstanding		$ 21,186,000
Aggregate intrinsic value, Outstanding		63,003,000
Aggregate intrinsic value, Exercisable		$ 62,974,000

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Significant Accounting Policies (Detail Textuals) (USD $)	3 Months Ended		9 Months Ended		69 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Jun. 30, 2012
Accounting Policies [Abstract]
Federally insured limits	$ 250,000		$ 250,000		$ 250,000
Cash and cash equivalents	1,078,000		1,078,000		1,078,000	28,000
Research and development, gross	$ 543,115	$ 269,043	$ 1,009,584	$ 478,909	$ 6,106,596
Antidilutive common share equivalents excluded from the computation of diluted earnings per share	49,520,936	49,142,574	49,520,936	49,142,574
Percentage of valuation allowance on deferred tax asset	10.00%		10.00%		10.00%

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Condensed Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended		69 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (2,084,362)	$ (3,330,475)	$ (18,346,515)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock and stock options issued as payment for services compensation, services rendered, and charitable contributions	258,463	1,527,323	6,947,582
Cancellation of stock issued for services			(28,750)
Amortization of accrued settlement costs	33,042	51,259	118,938
Amortization of patent costs	554		554
Gain (loss) on financial instruments		439,892	439,892
Changes in operating assets and liabilities:
Other receivables		204,144
Prepaid expenses	(7,131)	(1,010)	1,029
Accounts payable	16,205	(142,163)	1,982,280
Accrued expenses	116,635	149,562	664,925
Accrued officers' salaries and payroll taxes	642,401	573,566	4,364,937
Net cash used in operating activities	(1,024,193)	(527,902)	(3,855,128)
CASH FLOWS FROM INVESTING ACTIVITIES:
Patent Costs	(4,238)		(4,238)
Net cash used in investing activities	(4,238)		(4,238)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from stockholder			50
Sale of common stock			100
Sale of common stock	1,616,320		1,616,320
Sale of preferred stock	300,000		400,000
Payment of settlement liabilities	(300,000)	(300,000)	(700,000)
Loan from officer		20,000	1,925,587
Proceeds from convertible debentures			(167,099)
Redemption of convertible debentures		(167,099)	400,000
Proceeds from subscription		1,000,000	1,000,000
Exercise of stock options and warrants	462,450		462,450
Net cash provided by financing activities	2,078,770	552,901	4,937,408
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	1,050,339	24,999	1,078,042
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	27,703	68,661
CASH AND CASH EQUIVALENTS, END OF PERIOD	1,078,042	93,660	1,078,042
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	25,909		40,735
SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW FINANCING ACTIVITIES
Common stock issued for acquisition			9,079
Forgiveness of debt			50
Reclassification of accrued interest to note payable and convertible debentures			197,964
Cancellation of common stock for services			(138,750)
Settlement of accrued payroll and payroll taxes			932,966
Cancellation of common stock as a result of settlement			859,388
Debt converted to common stock		353,635	353,635
Cancellation of treasury stock	(252,504)	(231,655)	(484,159)
Reclassification of warrants to equity		857,500	857,500
Deemed dividend from beneficial conversion feature on preferred stock	53,032		70,678
Deemed dividend - warrants	158,770		206,810
Conversion of preferred stock into common stock	(30)		(46)
Shares issued as deferred offering costs	$ 300,001		$ 300,001

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Condensed Balance Sheets (Parentheticals) (USD $)	Mar. 31, 2013	Jun. 30, 2012
Accounts payable, related party payables (in dollars)	$ 1,692,023	$ 1,695,820
Accrued expenses, related party interest and rent accruals (in dollars)	$ 436,515	$ 316,130
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	500,000	500,000
Preferred stock, shares issued (in shares)
Preferred stock, shares outstanding (in shares)
Treasury stock, shares (in shares)	1,382,084	2,762,084
Class A common stock
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	300,000,000	300,000,000
Common stock, shares issued (in shares)	98,746,068	94,968,905
Common stock, shares outstanding (in shares)	97,363,984	92,206,821
Class B common stock
Number of votes entitled in class of stock (in votes)	10	10
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)
Common stock, shares outstanding (in shares)

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Equity Transactions

9 Months Ended

Mar. 31, 2013

Equity [Abstract]

Equity Transactions

10.       Equity Transactions

Aspire Agreement

On December 6, 2012, the Company entered into a Class A Common Stock Purchase Agreement with Aspire Capital Fund, LLC, which provides that upon meeting the terms of the agreement, Aspire Capital is committed to purchase up to an aggregate of $10,000,000 of our shares of Class A Common Stock over the approximately 36-month term of the Purchase Agreement. In consideration for entering into the Purchase Agreement, the Company issued to Aspire Capital 336,625 shares of our Class A Common Stock as a commitment fee and sold to Aspire Capital 112,208 shares of Class A Common Stock for $100,000. The commitment fee will be amortized as the funding is received. The unamortized portion is carried on the balance sheet as deferred offering costs.

Concurrently with entering into the Purchase Agreement, the Company agreed to file one or more registration statements as permissible and necessary under the Securities Act of 1933, as amended, or the Securities Act, for the sale of shares of our Class A Common Stock that have been and may be issued to Aspire Capital under the Purchase Agreement. On January 22, 2012, the Company filed a Form S-3 registration statement and the registration statement was declared effective by the SEC on February 14, 2013. Thereafter, on every and any business day selected by the Company, the Company shall have the right to direct Aspire Capital Fund to purchase (each such purchase, a “Regular Purchase”), up to 100,000 shares on each and any business day chosen by the Company; however, in any event, the amount of a Regular Purchase will not exceed $500,000 per business day. The purchase price for Regular Purchases (the “Regular Purchase Price”), shall be equal to the lesser of: (i) the lowest sale price of the shares on the purchase date, or (ii) the average of the three (3) lowest closing sale prices of the shares during the twelve (12) business days prior to the purchase date. The Regular Purchase Price will be known at the time of notice and before any shares are sold to Aspire Capital Fund.

In addition to the Regular Purchases, with one day’s prior written notice, the Company shall also have the right to require the ACF Investor to purchase up to an additional 20% of the trading volume of the shares for the next business day at a purchase price (the “VWAP Purchase Price”), equal to the lesser of: (i) the closing sale price of the shares on the purchase date, or (ii) ninety-five percent (95%) of the next business day’s volume weighted average price (each such purchase, a “VWAP Purchase”). The Company shall have the right, in its sole discretion, to determine a maximum number of shares and set a minimum market price threshold for each VWAP Purchase. The Company can only require a VWAP Purchase if (a) the closing sale price for the Company Class A common shares on the notice day for the VWAP Purchase is higher than $0.50, and (b) the Company has also submitted a Regular Purchase on the notice date for the VWAP Purchase. There are no limits on the number of VWAP Purchases that the Company may require.

Aspire Capital Fund has no right to require any sales by the Company, but is obligated to make purchases from the Company as the Company directs it in accordance with the Purchase Agreement. The Company can also accelerate the amount of Class A Common Stock to be purchased under certain circumstances. There are no limitations on use of proceeds, financial or business covenants, restrictions on future funding, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement.

The Company is never under any obligation to sell shares to Aspire Capital Fund. Aspire Capital Fund has no rights to require the Company to sell shares.

During the quarter ended March 31, 2013, the Company sold an additional 1,000,000 shares generating gross proceeds of $1,516,320.

As of March 31, 2013, the Company had completed sales to Aspire totaling 1,112,208 shares of common stock generating gross proceeds of approximately $1,616,000.

Series A Convertible Preferred Shares Subscription Agreement

On May 8, 2012, the Company entered into a subscription agreement for Series A Convertible Preferred shares with an accredited investor for an aggregate of $1,000,000.  The subscription agreement provides for installment funding Amounts, at Cellceutix’s discretion, to take place every thirty days after initial closing date  for an amount of the lesser of  (i) $75,000 or  (ii) twenty five  (25%) per cent of the dollar value of the total volume traded during the preceding 22 trading days.   The Series A Preferred Shares are convertible into common stock at the lesser of 85% of the closing bid price on the date of prior to each closing, or 85% of the lowest bid price for the fifteen (15) days prior to conversion.  At no time may a holder of shares of Series A Preferred Stock convert shares of the Series A Preferred Stock if the number of shares of Common Stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares of Common Stock owned by such holder at such time, the number of shares of Common Stock which would result in such holder beneficially owning more than 9.99% of all of the Common Stock outstanding. Additionally, for each common share issued upon conversion of Series A preferred share, a five year common stock purchase warrant is issued to the Subscriber.  The warrant is exercisable at the conversion price of the common shares issued.  The fair value of the common stock into which the Series A Preferred Stock is convertible will exceed the price at which the common stock will be issued on the date of issuance of the preferred stock.  The amount by which the fair value of the common stock exceeds the issue price of the common stock is a beneficial conversion feature.  The Company will recognize the beneficial conversion feature as a one-time, non-cash deemed dividend to the holders of the Series A Preferred Stock on the date of issuance, which is the date the preferred stock first became convertible.   The Series A Convertible Preferred shares do not pay dividends.   The Common shares underlying the Series A Preferred Shares and the common stock purchase warrants are subject to piggy back registration rights. To date an aggregate of $400,000 was funded, and the Company issued an aggregate of 848,084 common shares and 848,084 common stock purchase warrants. The subscription for the remaining $600,000 subscription agreement was mutually terminated between the parties on January 8, 2013.

On July 3, 2012 a tranche funding was made to purchase Series A Convertible Preferred shares in the amount of seventy five thousand dollars ($75,000) for the purchase 7,500 Series A Convertible Preferred Shares.                                                                                                             

On June 25, 2012 the subscriber converted 10,000 Preferred Shares equal to $100,000 face value at $0.39 per share based on 85% of the closing bid price on May 7, 2012 of $0.46.   The company issued to the subscriber 255,754 shares of Cellceutix common stock.  In connection thereto the Company issued 255,754 warrants to purchase common shares of Cellceutix Corporation at $0.39 per share valid for five years.

On July 30, 2012, a tranche funding was made to purchase Series A Convertible Preferred shares in the amount of seventy five thousand dollars ($75,000) for the purchase 7,500 Series A Convertible Preferred Shares.

On August 1, 2012 the Series A Convertible Preferred subscriber converted 7,500 Preferred Shares equal to $75,000 face value at $0.49 per share based on 85% of the closing bid price on July 25, 2012 of $0.59.   The company issued to the subscriber 153,061 shares of Cellceutix Class A common stock.  In connection thereto the Company issued 153,061 warrants to purchase Class A common shares of Cellceutix Corporation at $0.49 per share and is valid for five years.   The shares and the warrants are subject to piggy back registration rights.

On August 23, 2012 the Series A Convertible Preferred subscriber converted 7,500 Preferred Shares equal to $75,000 face value at $0.485 per share based on 85% of the closing bid price on August 14, 2012 of $0.571.   The company issued to the subscriber 154,639 shares of Cellceutix Class A common stock.  In connection thereto the Company issued 154,639 warrants to purchase Class A common shares of Cellceutix Corporation at $0.485 per share and is valid for five years.

On August 31, 2012 a tranche funding was made to purchase Series A Convertible Preferred shares in the amount of $75,000 USD for the purchase of 7,500 Series A Convertible Preferred Shares.  

On September 19, 2012 the Series A Convertible Preferred subscriber converted 7,500 Preferred Shares equal to $75,000 face value at $0.527 per share based on 85% of the closing bid price on August 31, 2012 at $0.62.   The company issued to the subscriber 142,315 shares of Cellceutix Class A common stock.  In connection thereto the Company issued 142,315 warrants to purchase common shares of Cellceutix Corporation at $0.527 per share and is valid for five years.   The shares and the warrants are subject to piggy back registration rights.

On September 20, 2012 a tranche funding was made to purchase Series A Convertible Preferred shares in the amount of $75,000 USD for the purchase of 7,500 Series A Convertible Preferred Shares.

On September 24, 2012 the subscriber converted 7,500 Preferred Shares equal to $75,000 face value at $0.527 per share based on 85% of the closing bid price on August 31, 2012 of $0.62.  The company issued to the subscriber 142,315 shares of Cellceutix Class A common stock.  In connection thereto the Company issued 142,315 warrants to purchase Class A common shares of Cellceutix Corporation at $0.527 per share and is valid for five years.   The shares and the warrants are subject to piggy back registration rights.

Other Equity Transactions during the Nine Months Ended March 31, 2013

On July 25, 2012, the Company issued a total of 25,000 Class A common shares to consultants for services, valued at

$14,750 based on the closing bid price as quoted on the OTC Bulletin Board on July 24, 2012 at $.59 per share.

On August 26, 2012, the Company issued a total of 50,000 Class A common shares to consultants for services, valued at

$30,000 based on the closing bid price as quoted on the OTC Bulletin Board on August 25, 2012 at $.60 per share.

On September 7, 2012 a consultant exercised their option to purchase 250,000 shares of Class A common shares at $0.20, resulting in a payment to the Company of $50,000 and the issuance of 250,000 shares of Class A common stock.

On October 24, 2012 the Company issued a total of 50,000 Class A common shares to consultants for services through December 31, 2012, valued at $43,500 based on the closing bid price as quoted on the OTC Bulletin Board on October 23, 2012 at $.87 per share. 

On December 19, 2012 the Company issued 320,000 Class A common shares par value $.0001 to a consultant upon exercise of stock options granted to him pursuant to the Company’s 2009 and 2010 Equity Incentive Plans of which 80,000 were granted on March 2, 2009, exercisable at $0.14 per share; 200,000 were granted on February 8, 2011, exercisable at $0.20 per share; and 40,000 were granted on February 17, 2011 exercisable at $.20 per share.  The Company received $59,200.  

On December 21, 2012 the Company issued 1,680,000 Class A common shares to a consultant upon exercise of Stock Options granted on December 29, 2010 under the Company’s 2010 Equity Incentive Plan and exercisable at $0.10 per share.    The Company received $168,000.  

During the nine months period ended March 31, 2013, the Company issued 10,000 shares of stock options at the end of each month, totaled 90,000 shares to a Consultant as compensation for service to assist the Company’s Chief Scientific Officer (Note 9). As of March 31, 2013, a total of 480,000 options have been awarded to the Consultant.

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Document and Entity Information	9 Months Ended
	Mar. 31, 2013	May 08, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	Cellceutix CORP
Entity Central Index Key	0001355250
Trading Symbol	ctix
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		97,363,984
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

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Subsequent Events

9 Months Ended

Mar. 31, 2013

Subsequent Events [Abstract]

Subsequent Events

11. Subsequent Events

Subsequent to March 31, 2013 and through May 15, 2013, the Company issued a total of 300,000 Class A common shares par value $.0001 to Aspire Capital Fund LLC against receipt of $481,340.

The company has evaluated all subsequent events through the filing date of this form 10-Q with SEC, to ensure that this form 10-Q includes subsequent events that should be recognized in the financial statements as of March 31, 2013, and appropriate disclosure of subsequent events which were not recognized in the financial statements.

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Condensed Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended		69 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013
Income Statement [Abstract]
Revenues
Operating expenses:
Research and development, gross	543,115	269,043	1,009,584	478,909	6,106,596
Grants					(733,438)
Research and development, net of grants	543,115	269,043	1,009,584	478,909	5,373,158
General and administrative expenses	33,388	159,710	85,675	178,779	620,446
Officers' payroll and payroll tax expense	125,372	113,975	353,321	1,412,879	7,947,005
Professional fees	98,566	159,350	420,454	516,671	2,999,365
Patent expense	310	14,077	29,369	95,797	197,662
Total operating expenses	800,751	716,155	1,898,403	2,683,035	17,137,636
Loss from operations	(800,751)	(716,155)	(1,898,403)	(2,683,035)	(17,137,636)
Interest expense - net	(65,799)	(62,462)	(185,959)	(207,548)	(768,987)
Gain (loss) on financial instruments		470,000		(439,892)	(439,892)
Total other expenses	(65,799)	407,538	(185,959)	(647,440)	(1,208,879)
Net loss before provision for income taxes	(866,550)	(308,617)	(2,084,362)	(3,330,475)	(18,346,515)
Provision for income taxes
Net loss	(866,550)	(308,617)	(2,084,362)	(3,330,475)	(18,346,515)
Deemed dividends			(211,802)		(277,488)
Net loss attributable to common stockholders	$ (866,550)	$ (308,617)	$ (2,296,164)	$ (3,330,475)	$ (18,624,003)
Basic and diluted loss per share attributable to common stockholders (in dollars per share)	$ (0.01)	$ 0.00	$ (0.02)	$ (0.04)
Weighted average number of common shares (in shares)	96,091,495	91,256,613	94,016,785	89,649,308

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Accrued Salaries and Payroll Taxes-Related Parties

9 Months Ended

Mar. 31, 2013

Accrude Expense To Related Party [Abstract]

Accrued Salaries and Payroll Taxes - Related Parties

5.        Accrued Salaries and Payroll Taxes – Related Parties

Accrued salaries and payroll taxes consisted of the following (rounded to nearest thousand):

		March, 31 2013		June 30, 2012
Accrued salaries	$	3,244,000	$	2,648,000
Accrued payroll taxes		188,000		142,000
Total	$	3,432,000	$	2,790,000

Accrued payroll liabilities include accrued salaries and payroll taxes to the Company’s two executive officers.

On December 29, 2010, the Company entered into employment agreements with its two executive officers, Leo Ehrlich, the Company’s Chief Executive Officer, and Krishna Menon, Chief Scientific Officer. Both agreements provide for a three year term with each executive receiving an annual base salary for $350,000 per year commencing January 1, 2011, with an annual increase of 10% for each year commencing January 2012. The Board, at its discretion, may increase the base salary based upon relevant circumstances.

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Accrued Expenses

9 Months Ended

Mar. 31, 2013

Accrued Expenses [Abstract]

Accrued Expenses

4.        Accrued Expenses

Accrued expenses consisted of the following (rounded to nearest thousand): 

		March, 31 2013		June 30, 2012
Accrued consulting fee	$	11,000	$	14,000
Accrued rent (Note 7)		58,000		50,000
Accrued interest		379,000		267,000
Total	$	448,000	$	331,000

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Basis of Presentation and Nature of Operations (Detail Textuals) (USD $)	1 Months Ended
	Dec. 31, 2009	Jul. 31, 2009 Compound	Oct. 17, 2007 Compound
Business Description and Basis Of Presentation [Line Items]
Number of pharmaceutical compounds			3
Number of compounds for which patent applications filed		6
Amount paid to investors	$ 10,000
Countries where composition of matter patents issued
Business Description and Basis Of Presentation [Line Items]
Percentage of net sales agreed to pay to inventors	4.50%	5.00%
Other Countries
Business Description and Basis Of Presentation [Line Items]
Percentage of net sales agreed to pay to inventors	3.00%	3.00%

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Significant Accounting Policies (Policies)

9 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Cash and Cash Equivalents, Restricted Cash and Marketable Securities

Cash and Cash Equivalents, Restricted Cash and Marketable Securities

We classify all highly liquid investments with stated maturities of three months or less from date of purchase as cash equivalents. We hold cash balances in excess of the federally insured limits of $250,000 with one prominent financial institution. We deem this credit risk not to be significant as our cash is held by a major prominent financial institution. Total cash and cash equivalents held in checking accounts, as reported on the accompanying balance sheets, totaled approximately $1,078,000 and $28,000 at March 31, 2013 and June 30, 2012, respectively.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Significant Estimates

Significant Estimates

These accompanying consolidated financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to valuation of stock grants and stock options, the valuation allowance on deferred tax assets and various contingent liabilities. It is reasonably possible that these above-mentioned estimates and others may be adjusted as more current information becomes available, and any adjustment could be significant in future reporting periods.

Certain Risks and Uncertainties

Certain Risks and Uncertainties

Product Development

We devote significant resources to research and development programs in an effort to discover and develop potential future product candidates. Research and development expenses amounted to approximately $543,000 and $269,000 for the three months ended March 31, 2013 and 2012, respectively. Research and development expenses amounted to approximately $1,010,000 and $479,000 are for the nine months ended March 31, 2013 and 2012, respectively. The product candidates in our pipeline are at various stages of preclinical and clinical development. The path to regulatory approval includes three phases of clinical trials in which we collect data to support an application to regulatory authorities to allow us to market a product for treatment of a specified disease. There are many difficulties and uncertainties inherent in research and development of new products, resulting in a high rate of failure. To bring a drug from the discovery phase to regulatory approval, and ultimately to market, takes many years and significant cost. Failure can occur at any point in the process, including after the product is approved, based on post-market factors. New product candidates that appear promising in development may fail to reach the market or may have only limited commercial success because of efficacy or safety concerns, inability to obtain necessary regulatory approvals, limited scope of approved uses, reimbursement challenges, difficulty or excessive costs of manufacture, alternative therapies or infringement of the patents or intellectual property rights of others. Uncertainties in the FDA approval process and the approval processes in other countries can result in delays in product launches and lost market opportunities. Consequently, it is very difficult to predict which products will ultimately be submitted for approval, which have the highest likelihood of obtaining approval and which will be commercially viable and generate profits. Successful results in preclinical or clinical studies may not be an accurate predictor of the ultimate safety or effectiveness of a drug or product candidate.

Basic Earnings (Loss) per Share

Basic Earnings (Loss) per Share

Basic and diluted earnings 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, warrants and convertible notes payable. For the three months and nine months ended March 31, 2013 and 2012, 49,520,936 shares and 49,142,574 of common share equivalents were excluded from the computation of diluted earnings per share because their effect is anti-dilutive.

For the year ended March 31, 2013 and 2012, no convertible preferred stock, convertible notes, warrants and options were included in the calculation of the Company's diluted loss per share because the company reported net loss from continuing operations attributed to common shareholders.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with United States generally accepted accounting principles. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized. We did not provide any current or deferred income tax provision or benefit for any periods presented to date because we have continued to experience a net operating loss since inception and therefore provide a 100% valuation allowance against all of our deferred tax assets.

The Company adopted the ASC accounting pronouncement “Accounting for Uncertainty in Income Taxes”. This pronouncement provides guidance for recognizing and measuring uncertain tax positions, as defined in the FASB accounting pronouncement “Accounting for Income Taxes”. This pronouncement prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. This pronouncement also provides accounting guidance on derecognizing, classification and disclosure of these uncertain tax positions. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company has not recognized any interest and penalties in 2013 or 2012.

Accounting for Stock Based Compensation

Accounting for Stock Based Compensation

The stock-based compensation expense incurred by Cellceutix 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”. Our consultants do not meet the employer-employee relationship as defined by the IRS and therefore are accounted for under ASC 505-50.

ASC 505-50-30-11 (previously EITF 96-18) further provides that an issuer shall measure the fair value of the equity instruments in these transactions using the stock price and other measurement assumptions as of the earlier of the following dates, referred to as the measurement date:

i.	The date at which a commitment for performance by the counterparty to earn the equity instruments is reached (a performance commitment); and
ii.	The date at which the counterparty’s performance is complete.

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.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

The Company has reviewed all recent accounting pronouncements issued by FASB (including EITF), the AICPA and the SEC and did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

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Note Payable-Related Party

9 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

Note Payable - Related Party

8.          Note Payable – Related Party

During the year ended June 30, 2010, Mr. Ehrlich, an officer of the Company, converted previous amounts provided in cash to the Company of $32,310 into a loan (the “Ehrlich Promissory Note A”).   The Ehrlich Promissory Note A was an unsecured, 6% per annum simple interest bearing, demand note.  During the same period, Mr. Ehrlich provided an additional $85,000 in cash in the form of a loan to the Company (the “Ehrlich Promissory Note B”).  The Ehrlich Promissory Note B was an unsecured, 6% per annum simple interest bearing, demand note.

During the year ended June 30, 2010, Mr. Ehrlich, loaned the Company a total of $972,907.  A condition for this loan was that the Ehrlich Promissory Note A and Ehrlich Promissory Note B be replaced with a new note, Ehrlich Promissory Note C.   The Ehrlich Promissory Note C is an unsecured demand note that bears 10% simple interest per annum and is convertible into the Company’s common stock at $0.50 per share.  The note requires that the interest rate on the amounts due on Ehrlich Promissory Notes A and B be changed retroactively, beginning October 1, 2009, to 9%.   During the year ended June 30, 2011, Mr. Ehrlich loaned the Company an additional $997,047 which brought the balance of the demand note to $2,002,264.  On April 1, 2011, the Company amended the Ehrlich Promissory Note C and agreed to retroactively convert accrued interest of $96,677 through December 31, 2010 into additional principal.

On May 8, 2012, in connection with the renegotiation of an outstanding loan to Mr. Ehrlich, 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 (10) years from the date of issuance.

At March 31, 2013, approximately $379,000 is accrued as interest expense on this note. As of March 31, 2013, the balance of the demand note is approximately $2,022,000.

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Commitments and Contingencies

9 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

6.        Commitments and Contingencies

Settlement Agreement

On February 14, 2011, the Company announced it reached a settlement agreement on all outstanding claims and issues between the Company and our former CEO, Mr. Evans. Each party dropped their respective claims and as a result all of Mr. Evans accrued salaries and options were cancelled.  The terms of the agreement provide that the Company purchase 4,602,312 common shares held by Mr. Evans and/or Mr. Evans’ sons over a period of three years for a total sum of one million dollars.   Payment by the Company in the amount of $100,000 was made upon signing of the agreement, which resulted in reducing the liability owed to Mr. Evans; cancelling 460,229 shares of common stock.  On February 4, 2012 and January 29, 2013, the Company made the second and third payment of $300,000 each to Mr. Evans and cancelled 1,380,000 shares of its common stock in each of the two years.  The remaining 1,382,084 shares of common stock held in escrow until additional payments are made under the agreement are shown as Treasury Stock on the Company’s Balance Sheet. 

The Company had initially recorded this settlement at December 31, 2010 as a liability of the present value of the future payments and treasury stock. The Company had also recorded the forgiveness of Mr. Evans’ accrued payroll and related payroll taxes as a capital contribution of approximately $932,000.  As of March 31, 2013, the settlement liability of approximately $278,000 is due in February 2014 and recorded as current liability. 

Legal

Cellceutix Corporation has settled all claims with Toxikon in a civil action in the Commonwealth of Massachusetts.  In February 2013, Cellceutix paid Toxikon Corporation ninety-thousand ($90,000) dollars in full settlement of claims asserted.

Formatech is a former vendor of ours which had received Cellceutix common stock and had also gone bankrupt. In July 2012, Cellceutix was advised that a US Bankruptcy Court judge has allowed Formatech’s bankruptcy trustee to sell 184,375 restricted shares of Cellceutix Class A Common Stock. The proceeds of any sales of these shares will be held in escrow pending the outcome of Cellceutix’s claims against Formatech. Cellceutix has engaged an attorney with the aim of recovering these funds. The case is still pending resolution in court.

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Related Party Transactions

9 Months Ended

Mar. 31, 2013

Related Party Transactions [Abstract]

Related Party Transactions

7.         Related Party Transactions

Office Lease

Dr. Menon, the Company’s principal shareholder, President, and Director, also serves as the Chief Operating Officer and Director of Kard Scientific (“KARD”). On December 7, 2007, the Company began renting office space from KARD, on a month to month basis for $900 per month.  At March 31, 2013 and June 30, 2012, payables of approximately $58,000and $50,000 to KARD were included in accrued expenses, respectively.

Clinical Studies

As of September 28, 2007 the Company engaged KARD to conduct specified pre-clinical studies necessary for the Company to prepare an IND submission to the FDA.  The Company does not have an exclusive arrangement with KARD.  All work performed by KARD must have prior approval by the executive officers of the Company, and the Company retains all intellectual property resulting from the services by KARD. For the three and nine months ended March 31, 2013 and 2012 and the period June 20, 2007 (date of inception) through March 31, 2013, the Company incurred approximately $0, $0, $0, $10,000, and $2,601,000 of research and development expenses conducted by KARD, respectively.  At March 31, 2013 and June 30, 2012 the Company has included a total of approximately $1,686,000 in accounts payable to Kard.

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Stock Options and Warrants

9 Months Ended

Mar. 31, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Stock Options and Warrants

9.  Stock Options and Warrants:

Consulting Agreement

On April 1, 2009, the Company entered into an agreement, subsequently amended, with a Consultant to assist the Company’s Chief Scientific Officer to organize, manage and display data from animal studies as well as information relating to Active Pharmaceutical Ingredients and formulations of the Company’s products through November 2010. The Consultant was compensated at the rate of $4,000 per month payable on the last day of each month. In addition, at the end of each month of services provided, the Consultant is granted options to purchase 10,000 shares of Company’s common stock.  Effective September 1, 2010, the Company has extended the current agreement and beginning in August 2010, the monthly fee was increased to $5,000.  The monthly fee was increased to $6,000 beginning in November 2012. The remainder of the agreement remains unchanged.  As of March 31, 2013, the Consultant has been awarded a total of 480,000 options to purchase common stock valued at approximately $284,000 to be vested over one year from date of issuance.  For the three and nine months ended March 31, 2013, the Company has expensed approximately $44,000, and $154,000 to professional fees expense, related to these options and remeasurement at March 31, 2013.

 Stock Options

The fair value of each option for the nine months ended March 31, 2013 and 2012 was estimated on the date of grant using the Black Scholes model that uses assumptions noted in the following table.

	Nine Months Ended March 31, 2013	Nine Months Ended March 31, 2012
Expected term (in years)	5-10	5-10
Expected stock price volatility	132.51% – 137.33%	142.51% – 148.15%
Risk-free interest rate	1.53% –1.98%	1.97%–3.0%
Expected dividend yield	0	0

On April 5, 2009 the Board of Directors of the Registrant adopted the 2009 Stock Option Plan (“the Plan”). The Plan permits the grant of 2,000,000 shares of both Incentive Stock Options (“ISOs”), intended to qualify under section 422 of the Code, and Non-Qualified Stock Options.

Under the 2010 Equity Incentive Plan the total number of shares of Common Stock reserved and available for issuance under the Plan shall be 45,000,000 shares. Shares of Common Stock under the Plan (“Shares”) may consist, in whole or in part, of authorized and unissued shares or treasury shares. The term of each Stock Option shall be fixed by the Committee; provided, however, that an Incentive Stock Option may be granted only within the ten-year period commencing from the Effective Date and may only be exercised within ten years of the date of grant (or five years in the case of an Incentive Stock Option granted to an optionee who, at the time of grant, owns Common Stock possessing more than 10% of the total combined voting power of all classes of voting stock of the Company (“10%Shareholder”).

The following table summarizes all stock option activity under the plans:

	Number of Options		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2012	41,277,500	$	0.14	8.46	$	21,186,000
Granted	120,000		1.08	8.36		-
Exercised	(2,250,000)		0.12	-		-
Forfeited/expired	-		-	-		-
Outstanding at March 31, 2013	39,147,500	$	0.14	7.71	$	63,003,000
Exercisable at March 31, 2013	39,082,500	$	0.14	7.70	$	62,974,000

The Company recognized approximately $44,000 and $18,000 of stock based compensation costs related to stock and stock options awards for the three months ended March 31, 2013 and 2012; approximately $258,000 and $1,175,000 for the nine months ended March 31, 2013 and 2012, and approximately $6,948,000 for the period from inception to March 31, 2013, respectively, and there is approximately $84,000 of unamortized compensation cost expected to be recognized through March 31, 2014.  

Stock Warrants

On March 5, 2013 the Company issued 370,500 Class A common shares par value $.0001 to each of two warrant holders upon exercise of Common Stock Purchase Warrants exercisable at $0.25 per share. The Company received an aggregate of $185,250. The issuance was exempt from registration under Section 4(2) of the Securities Act.

As of March 31, 2013 and June 30, 2012, there were 5,571,084 and 5,719,754 warrants issued and outstanding with a weighted average exercise price of $0.92 and $0.87, respectively.  Of these warrants, approximately 2,223,000 warrants were to expire in September 2010, however in September 2010; the Company approved the extension of these warrants to December 31, 2013. As of March 31, 2013 and June 30, 2012, the average remaining contractual life of the outstanding warrants was 1.68 years and 2.02 years, respectively and the aggregate intrinsic value was $4,627,000 and $474,000, respectively.

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Note Payable-Related Party (Detail Textuals 1) (USD $)			0 Months Ended
	Mar. 31, 2013	Jun. 30, 2012	May 08, 2012 Promissory Note C Mr. Ehrlich	Mar. 31, 2013 Promissory Note C Mr. Ehrlich	May 07, 2012 Promissory Note C Mr. Ehrlich
Debt Instrument [Line Items]
Number of shares converted			2,000,000
Bid price of shares converted			$ 0.51		$ 0.46
Percentage of bid price			110.00%
Term of shares			10 years
Interest accrued				$ 379,000
Note payable to officer	$ 2,022,264	$ 2,022,264		$ 2,022,000

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Accrued Salaries and Payroll Taxes-Related Parties (Tables)

9 Months Ended

Mar. 31, 2013

Accrude Expense To Related Party [Abstract]

Schedule of accrued salaries and payroll taxes

		March, 31 2013		June 30, 2012
Accrued salaries	$	3,244,000	$	2,648,000
Accrued payroll taxes		188,000		142,000
Total	$	3,432,000	$	2,790,000

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Accrued Expenses (Details) (USD $)	Mar. 31, 2013	Jun. 30, 2012
Accrued Expenses [Abstract]
Accrued consulting fee	$ 11,000	$ 14,000
Accrued rent (Note 7)	58,000	50,000
Accrued interest	379,000	267,000
Total	$ 447,515	$ 330,880

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Stock Options and Warrants (Detail Textuals 4) (USD $)	0 Months Ended
	Mar. 05, 2013	Mar. 31, 2013 Class A common stock	Mar. 05, 2013 Class A common stock	Jun. 30, 2012 Class A common stock
Class of Warrant or Right [Line Items]
Common stock, shares issued		98,746,068	370,500	94,968,905
Common stock, par value		$ 0.0001	$ 0.0001	$ 0.0001
Common stock purchase warrant exercisable price			$ 0.25
Proceeds from exercise of warrants	$ 185,250

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Statement of Changes in Stockholders' Deficit (Unaudited) (USD $)	Common Stock	Preferred Stock	Additional Paid-in Capital	Deficit Accumulated During the Development Stage	Treasury Stock	Total
Balance at Jun. 20, 2007	$ 100					$ 100
Balance (in shares) at Jun. 20, 2007	1,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss				(530)		(530)
Balance at Jun. 30, 2007	100			(530)		(430)
Balance (in shares) at Jun. 30, 2007	1,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share exchange with Cellceutix Pharma, Inc. (December)	(100)			100
Share exchange with Cellceutix Pharma, Inc. (in shares) (December)	(1,000,000)
Share exchange in reverse merger with Cellceutix Pharma, Inc (December)	8,200			(8,200)
Share exchange in reverse merger with Cellceutix Pharma, Inc (in shares) (December)	82,000,000
Shares exchanged in a reverse acquisition of Cellceutix Pharma, Inc. (December)	979			(979)
Shares exchanged in a reverse acquisition of Cellceutix Pharma, Inc. (in shares) (December)	9,791,000
Forgiveness of debt from a stockholder			50			50
Capital contribution from a stockholder			50			50
Issuance of stock options			43,533			43,533
Shares issued for services (April)	10		104,990			105,000
Shares issued for services (in shares) (April)	100,000
Net loss				(510,193)		(510,193)
Balance at Jun. 30, 2008	9,189		148,623	(519,802)		(361,990)
Balance (in shares) at Jun. 30, 2008	91,891,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cancellation of shares issued for services (December)	(10)		(104,990)			(105,000)
Cancellation of shares issued for services (in shares) (December)	(100,000)
Issuance of stock options			142,162			142,162
Shares issued for services (June)	2		7,598			7,600
Shares issued for services (in shares) (June)	20,000
Shares issued for services (two) (June)	3		9,497			9,500
Shares issued for services (two) (in shares) (June)	25,000
Net loss				(1,485,331)		(1,485,331)
Balance at Jun. 30, 2009	9,184		202,890	(2,005,133)		(1,793,059)
Balance (in shares) at Jun. 30, 2009	91,836,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of stock options			383,291			383,291
Shares issued for services (February)			1,050			1,050
Shares issued for services (June)	8		33,742			33,750
Shares issued for services (July)	2		10,748			10,750
Shares issued for services (in shares) (February)	3,500
Shares issued for services (in shares) (June)	75,000
Shares issued for services (in shares) (July)	25,000
Net loss				(3,433,400)		(3,433,400)
Balance at Jun. 30, 2010	9,194		631,721	(5,438,533)		(4,797,618)
Balance (in shares) at Jun. 30, 2010	91,939,500
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cancellation of shares issued	(8)		(33,742)			(33,750)
Cancellation of shares issued (in shares)	(75,000)
Modification of stock options			237,098			237,098
Forgiveness of liability in connection with settlement with stockholder			932,966			932,966
Repurchase of common stock in connection with settlement					(859,388)	(859,388)
Repurchase of common stock in connection with settlement (in shares)					4,602,313
Issuance of stock options			3,060,691			3,060,691
Shares issued for services (February)	7		13,993			14,000
Shares issued for services (March)	18		58,982			59,000
Shares issued for services (May)	1		9,719			9,720
Shares issued for services (July)	5		27,495			27,500
Shares issued for services (in shares) (February)	70,000
Shares issued for services (in shares) (March)	184,375
Shares issued for services (in shares) (May)	12,000
Shares issued for services (in shares) (July)	50,000
Cancellation of treasury stock	(45)		(99,955)		100,000
Cancellation of treasury stock (in shares)	(460,229)				(460,229)
Net loss				(5,938,297)		(5,938,297)
Balance at Jun. 30, 2011	9,172		4,838,968	(11,376,830)	(759,388)	(7,288,078)
Balance (in shares) at Jun. 30, 2011	91,720,646				4,142,084
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Convertible Debentures converted to common stock	71		353,564			353,635
Convertible debentures converted to common stock (in shares)	707,277
Issuance of stock options			2,114,386			2,114,386
Shares issued for charitable contributions (March)	26		137,894			137,920
Shares issued for charitable contributions (in shares) (March)	265,228
Shares issued for services (January)	20		89,980			90,000
Shares issued for services (April)	30		137,970			138,000
Shares issued for services (May)	10		48,990			49,000
Shares issued for services (June)	5		31,145			31,150
Shares issued for services (August)	10		37,990			38,000
Shares issued for services (November)	13		51,236			51,249
Shares issued for services (in shares) (January)	200,000
Shares issued for services (in shares) (April)	300,000
Shares issued for services (in shares) (May)	100,000
Shares issued for services (in shares) (June)	50,000
Shares issued for services (in shares) (August)	100,000
Shares issued for services (in shares) (November)	125,000
Shares issued for services (two) (May)	2		13,248			13,250
Shares issued for services (two) (in shares) (May)	25,000
Issuance of capital stock	250		582,143			582,393
Issuance of capital stock (in shares)	2,500,000
Reclassification of warrants into equity			857,500			857,500
Cancellation of treasury stock	(138)		(231,517)		231,655
Cancellation of treasury stock (in shares)	(1,380,000)				(1,380,000)
Issuance of preferred stock		10	99,990			110,000
Issuance of preferred stock (in shares)		10,000
Deemed dividend's			65,686	(65,686)
Conversion of preferred stock to common stock	26	(10)	(16)			(10,000)
Conversion of preferred stock to common stock (in shares)	255,754	(10,000)
Net loss				(4,894,402)		(4,894,402)
Balance at Jun. 30, 2012	9,497		9,229,157	(16,336,918)	(527,733)	(7,625,997)
Balance (in shares) at Jun. 30, 2012	94,968,905				2,762,084
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of stock options			170,213			170,213
Shares issued for services (July)	3		14,747			14,750
Shares issued for services (August)	5		29,995			30,000
Shares issued for services (October)	5		43,495			43,500
Shares issued for services (in shares) (July)	25,000
Shares issued for services (in shares) (August)	50,000
Shares issued for services (in shares) (October)	50,000
Shares issued as commitment fee (December)	34		299,967			300,001
Shares issued as commitment fee (in shares) (December)	336,625
Shares sold at net of offering costs (March)	100		1,470,730			1,470,830
Shares sold at net of offering costs (December)	11		96,989			97,000
Shares sold at net of offering costs (in shares) (March)	1,000,000
Shares sold at net of offering costs (in shares) (December)	112,208
Exercise of stock options	225		276,975			277,200
Exercise of stock options (in shares)	2,250,000
Exercise of warrants	74		185,176			185,250
Exercise of warrants (in shares)	741,000
Cancellation of treasury stock	(138)		(252,366)		252,504
Cancellation of treasury stock (in shares)	(1,380,000)				(1,380,000)
Issuance of preferred stock		30	299,970			300,000
Issuance of preferred stock (in shares)		30,000
Deemed dividend's			211,802	(211,802)
Conversion of preferred stock to common stock	59	(30)	(29)
Conversion of preferred stock to common stock (in shares)	592,330	(30,000)
Net loss				(2,084,362)		(2,084,362)
Balance at Mar. 31, 2013	$ 9,875		$ 12,076,821	$ (18,633,082)	$ (275,229)	$ (6,821,615)
Balance (in shares) at Mar. 31, 2013	98,746,068				1,382,084

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Going Concern

9 Months Ended

Mar. 31, 2013

Going Concern [Abstract]

Going Concern

3.         Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. For the period since June 20, 2007 (date of inception) through March 31, 2013, the Company has had a deficit accumulated during the development stage of approximately $18,633,000 and a working capital deficit of approximately $7,077,000 at March 31, 2013.  As of March 31, 2013, the Company has not emerged from the development stage. In view of these matters, the ability of the Company to continue as a going concern is dependent upon the Company’s ability to generate additional financing. Since inception, the Company has financed its activities principally from the use of equity securities, debt issuance and loans from an officer to pay for its operations. The Company intends on financing its future development activities and its working capital needs largely from the issuance of debt and the sale of equity securities, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company has entered into a financing agreement with Aspire Capital Fund for $10,000,000 (See Note 10). 

The economic downturn and market instability has made the business climate more volatile and more costly.  If the current equity and credit markets deteriorate further or do not improve, it may make necessary debt or equity financing more difficult, more costly and more dilutive.  Failure to secure the necessary financing in a timely manner and on favorable terms could have a material adverse effect on the Company’s growth strategy, financial performance and stock price and could require the delay of new product development and clinical trial plans.  

These factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability of the recorded assets or the classification of liabilities that may be necessary should the Company be unable to continue as a going concern. 

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Accrued Salaries and Payroll Taxes-Related Parties (Details) (USD $)	Mar. 31, 2013	Jun. 30, 2012
Accrude Expense To Related Party [Abstract]
Accrued salaries	$ 3,244,000	$ 2,648,000
Accrued payroll taxes	188,000	142,000
Total	$ 3,431,972	$ 2,789,571

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Stock Options and Warrants (Detail Textuals 1) (2009 Stock Option Plan)	Apr. 05, 2009
2009 Stock Option Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options shares permits for grant	2,000,000

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Accrued Expenses (Tables)

9 Months Ended

Mar. 31, 2013

Accrued Expenses [Abstract]

Schedule of accrued expenses

		March, 31 2013		June 30, 2012
Accrued consulting fee	$	11,000	$	14,000
Accrued rent (Note 7)		58,000		50,000
Accrued interest		379,000		267,000
Total	$	448,000	$	331,000