UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)(Zip Code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. There were
Table of Contents
PART I — FINANCIAL INFORMATION |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk. |
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PART II — OTHER INFORMATION |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. |
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Part I — Financial Information
Item 1. Financial Statements.
NOVACCESS GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2022 |
September 30, 2021 |
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(Unaudited) |
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ASSETS |
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CURRENT ASSETS |
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Cash |
$ | $ | ||||||
Employee Advances |
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Prepaid expenses |
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TOTAL ASSETS |
$ | $ | ||||||
LIABILITIES AND SHAREHOLDERS' DEFICIT |
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CURRENT LIABILITIES |
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Accounts payable |
$ | $ | ||||||
Other payable |
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Accrued expenses and interest on notes payable |
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Accrued payroll |
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Deferred Compensation |
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License Fees Payable |
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Derivative liability |
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Derivative liability warrants |
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Due to related party |
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Payable to TN3 |
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Promissory notes payable net of debt discount and debt issuance costs of $ |
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Bridge Loans Payable - related parties |
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Convertible loan payable |
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Convertible promissory notes net of debt discount and debt issuance costs of $ |
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Total Current Liabilities |
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LONG TERM LIABILITIES |
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Convertible promissory notes |
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Total Long Term Liabilities |
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TOTAL LIABILITIES |
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SHAREHOLDERS' DEFICIT |
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Preferred stock 50,000,000 shares authorized, shares issued and outstanding designated as follows: |
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Preferred Stock Series B, $ 600 and |
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Common stock, |
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Additional paid in capital |
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Paid in capital, common stock warrants |
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Paid in capital, preferred stock |
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Accumulated deficit |
( |
) | ( |
) | ||||
TOTAL SHAREHOLDERS' DEFICIT |
( |
) | ( |
) | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT |
$ | $ |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NOVACCESS GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2022 AND 2021
(Unaudited)
Three Months Ended |
Six Months Ended |
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March 31, 2022 |
March 31, 2021 |
March 31, 2022 |
March 31, 2021 |
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OPERATING EXPENSES |
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Research and development expenses |
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Selling, general and administrative expenses |
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TOTAL OPERATING EXPENSES |
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LOSS FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSES) |
( |
) |
( |
) |
( |
) |
( |
) |
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OTHER INCOME/(EXPENSES) |
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Gain (Loss) on change in derivative liability |
( |
) |
( |
) |
( |
) |
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Extinguishment of derivatives |
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Extinguishment of debt |
( |
) |
( |
) |
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Interest expense |
( |
) |
( |
) |
( |
) |
( |
) |
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TOTAL OTHER INCOME/(EXPENSES) |
( |
) |
( |
) |
( |
) |
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NET INCOME (LOSS) |
( |
) |
( |
) |
( |
) |
( |
) |
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BASIC INCOME (LOSS) PER SHARE |
$ | ( |
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$ | ( |
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$ | ( |
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$ | ( |
) |
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DILUTED INCOME (LOSS) PER SHARE |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
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WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING |
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BASIC |
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DILUTED |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NOVACCESS GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
FOR THE SIX MONTHS ENDED MARCH 31, 2022 AND 2021
SIX MONTHS ENDED MARCH 31, 2021 |
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Stock Options/ Warrants Paid in |
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Paid in
Capital, Preferred |
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Additional Paid-in |
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Preferred Stock, Class A |
Preferred Stock, Class B |
Common Stock |
Accumulated |
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Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Capital |
Capital |
Stock |
Deficit |
Total |
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Balance at September 30, 2020 |
- | $ | - | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||
Common stock issued for StemVax Acquisition - from stock payable |
- | - | - | - | ( |
) | - | - | - | - | ||||||||||||||||||||||||||||||||||
Stock compensation cost |
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Common stock issued for Services |
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Common Stock Issued - Subscriptions |
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Net Income |
- | - | - | - | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||
Balance at March 31, 2021 (Unaudited) |
- | $ | - | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) |
SIX MONTHS ENDED MARCH 31, 2022 |
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Stock Options/ Warrants Paid in |
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Paid in
Capital, Preferred |
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Additional Paid-in |
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Preferred Stock, Class A |
Preferred Stock, Class B |
Common Stock |
Accumulated |
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Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Capital |
Capital |
Stock |
Deficit |
Total |
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Balance at September 30, 2021 |
- | $ | - | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||
Preferred Stock Redemption |
- | - | ( |
) | ( |
) | - | - | ( |
) | - | |||||||||||||||||||||||||||||||||
Stock compensation cost |
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Common Stock issued for services |
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Common Stock issued , subscriptions |
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Common Stock issued as repayment of loans |
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Common Stock issued as commitment fee on promissory note payable |
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Common Stock Issuable, Subscriptions |
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Net Loss |
- | - | - | - | - | - | - | - | - | ( |
) | ( |
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Balance at March 31, 2022 (Unaudited) |
- | $ | - | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NOVACCESS GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 2022 AND 2021
(Unaudited)
For the Six Months Ended |
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March 31, 2022 |
March 31, 2021 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net Loss |
$ | ( |
) |
$ | ( |
) |
||
Adjustment to reconcile net loss to net cash provided by (used in) operating activities |
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Amortization of debt discount and debt issuance costs recorded as interest expense |
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(Gain)/Loss on change in derivative liability |
( |
) |
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Extinguishment of derivatives |
( |
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Extinguishment of debt |
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Stock compensation expense |
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Stock issued and issuable for services |
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Stock issued as commitment fee on promissory note payable |
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Non-cash interest expense on bridge loan |
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Changes in Assets and Liabilities: |
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Employee advances |
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Prepaid expenses |
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Accounts payable |
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Other payable |
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License fees payable |
( |
) |
( |
) |
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Accrued expenses and interest on notes payable |
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Accrued payroll |
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Deferred Compensation |
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NET CASH USED IN OPERATING ACTIVITIES |
( |
) |
( |
) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Stock subscriptions received |
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Due to related party |
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Proceeds from a note payable |
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Payments to TN3 for redemption of preferred stock |
( |
) |
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Payments on convertible notes payable |
( |
) |
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Proceeds from bridge loans payable - related parties |
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Payment on the bridge loans payable |
( |
) |
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Proceeds from a related party loan |
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Payments on related party loan payable |
( |
) |
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NET CASH PROVIDED BY FINANCING ACTIVITIES |
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NET INCREASE (DECREASE) IN CASH |
( |
) |
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CASH, BEGINNING OF PERIOD |
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CASH, END OF PERIOD |
$ | $ | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
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Interest paid |
$ | $ | ||||||
Taxes paid |
$ | $ | ||||||
SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS |
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Accrued interest capitalized into convertible note |
$ | $ | ||||||
Shares issued for StemVax Acquisition – from stock payable |
$ | $ | ||||||
Cash payable to TN3 for preferred stock |
$ | $ |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NOVACCESS GLOBAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
MARCH 31, 2022 AND 2021
1. ORGANIZATION AND LINE OF BUSINESS
Organization
NovAccess Global Inc. (“NovAccess,” the “Company”) is a Colorado corporation formerly known as Sun River Mining Inc. and XsunX, Inc. The Company was originally incorporated in Colorado on February 25, 1997. Effective September 24, 2003, the Company completed a plan of reorganization and name change to XsunX, Inc. In June 2020, the Company was acquired and changed its name to NovAccess Global Inc.
Line of Business
NovAccess Global Inc. is a biopharmaceutical company that is developing novel immunotherapies to treat brain tumor patients in the United States with plans to expand globally. We specialize in cutting-edge research related to utilizing a patient’s own immune system to attack the cancer. We are filing an Investigational New Drug Application (IND) and working closely with the Food and Drug Administration (FDA) to obtain approval for human clinical trials to determine safety and efficacy of our drug product for brain cancer patients. Once we have successfully completed the clinical trials and proven that the new therapy is safe and efficacious, we plan to commercialize the product. We also have expertise in successfully executing clinical trials, bringing products to market and increasing the market size of products through our advisory board. Our scientists are well versed in immunology, stem cell biology, neuroscience, molecular biology, imaging, small molecules development, gene therapy and other technical assays needed for protein and genetic analysis of cancer cells.
NovAccess operates as a research and development (R&D) company out of Ohio and California, and our executive management and scientific advisory board provide over 15 years of extensive experience in all aspects of biopharmaceutical R&D and commercialization of drug candidates. We guide our performance by striving to deliver consistently on the following core objectives: (1) Accountability — taking responsibility for providing safe and effective options for patients; (2) Integrity — doing what is ethically right for the patient; (3) Excellence — doing your best and working hard; and (4) Teamwork — bringing together a strong working team to deliver the best products for brain tumor patients.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the six months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ended September 30, 2022. For further information refer to the financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended September 30, 2021.
Going Concern
The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company does not generate revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern.
The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. The Company has obtained funds from its shareholders and lenders since its inception through the period ended March 31, 2022. Management believes the existing shareholders and the prospective new investors will provide the additional cash needed to meet the Company’s obligations as they become due and will allow the development of its business.
This summary of significant accounting policies of NovAccess is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.
NOVACCESS GLOBAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
MARCH 31, 2022 AND 2021
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary StemVax, LLC. All significant inter-company accounts and transactions between these entities have been eliminated in these condensed consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements. Significant estimates made in preparing these consolidated financial statements include the estimate of derivative liabilities, the deferred tax valuation allowance, and the fair value of stock options. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash equivalents include cash in banks and money markets with an original maturity of three months or less.
Property and Equipment
Property and equipment are stated at cost, and are depreciated using the straight-line method over its estimated useful lives:
Leasehold improvements |
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Computer software and equipment |
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Furniture & fixtures |
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Machinery & equipment |
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The Company capitalizes property and equipment over $500. Property and equipment under $500 are expensed in the year purchased.
Stock-Based Compensation
Net Earnings (Loss) per Share Calculations
Net earnings (Loss) per share dictates the calculation of basic earnings (loss) per share and diluted earnings per share. Basic earnings (loss) per share are computed by dividing by the weighted average number of common shares outstanding during the period. Diluted net earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the effect of stock options and stock-based awards plus the assumed conversion of convertible debt (Notes 4 and 5).
For the three months ended |
For the six months ended |
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March 31, |
March 31, |
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2022 |
2021 |
2022 |
2021 |
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Loss to common shareholders (Numerator) |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
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Basic weighted average number of common shares outstanding (Denominator) |
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Diluted weighted average number of common shares outstanding (Denominator) |
Diluted weighted average number of shares for the three and six months ended March 31, 2022 and March 31, 2021 is the same as basic weighted average number of shares because the Company had net losses for these respective periods.
NOVACCESS GLOBAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
MARCH 31, 2022 AND 2021
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Value of Financial Instruments
Fair Value of Financial Instruments requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2022, the balances reported for cash, prepaid expenses, accounts payable, accrued expenses approximate the fair value because of their short maturities.
We adopted Accounting Standards Codification (“ASC”) Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, an established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:
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Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; |
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● |
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
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● |
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
We measure certain financial instruments at fair value on a recurring basis. The Company had no assets that are required to be valued on a recurring basis as of March 31, 2022 and September 30, 2021. The Company had liabilities that are required to be measured at fair value on a recurring basis as follows at March 31, 2022 and September 30, 2021:
Total |
(Level 1) |
(Level 2) |
(Level 3) |
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Assets: |
$ | $ | $ | $ | ||||||||||||
Liabilities: |
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Derivative Liability at fair value as of September 30, 2021 |
$ | $ | $ | $ | ||||||||||||
Derivative Liability warrants at fair value as of September 30, 2021 |
$ | $ | $ | $ | ||||||||||||
Derivative Liability at fair value as of March 31, 2022 |
$ | $ | $ | $ | ||||||||||||
Derivative Liability warrants at fair value as of March 31, 2022 |
$ | $ | $ | $ |
The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:
Derivative Liability |
Derivative Liability Warrants |
|||||||
Balance as of September 30, 2021 |
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Extinguishment of derivatives |
( |
) |
||||||
Initial derivative liabilities |
||||||||
Net (Gain)/Loss on change in fair value of derivative liability |
( |
) |
||||||
Ending balance as of March 31, 2022 |
$ | $ |
NOVACCESS GLOBAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
MARCH 31, 2022 AND 2021
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements
In May 2021, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) 2021-04—Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2021, and interim periods with fiscal years beginning after December 15, 2021. Early adoption is permitted, including adoption in an interim period. The Company has evaluated the impact of the adoption of ASU 2021-04, which had no effect on the Company’s financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
3. CAPITAL STOCK
At March 31, 2022, the Company’s authorized stock consisted of
The Company is also authorized to issue
Preferred Stock
As of March 31, 2022 the Company had
Common Stock
Effective August 25, 2020, we filed articles of amendment to our articles of incorporation with the Colorado Secretary of State to effectuate a
NOVACCESS GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
MARCH 31, 2022 AND 2021
3. CAPITAL STOCK (Continued)
During the six months ended March 31, 2022, the Company issued
During the six months ended March 31, 2021, the Company issued
4. CONVERTIBLE PROMISSORY NOTES
As of March 31, 2022, the outstanding convertible promissory notes are summarized as follows:
Convertible Promissory Notes |
$ | |||
Less current portion |
||||
Total long-term liabilities |
$ |
Maturities of long-term debt for the next four years are as follows:
Year Ending |
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September 30, |
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2023 |
|
|
|
|
|
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$ |
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|
On November 20, 2014, the Company issued a
On May 10, 2017, the Company issued a
On June 2, 2021, the Company issued a
NOVACCESS GLOBAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
MARCH 31, 2022 AND 2021
4. CONVERTIBLE PROMISSORY NOTES (Continued)
On July 6, 2021, the Company issued a
On August 20, 2021, the Company issued a
On February 16, 2022, the Company issued a
We evaluated the financing transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion feature of the convertible promissory notes was not afforded the exemption for conventional convertible instruments due to its variable conversion rate. The notes have no explicit limit on the number of shares issuable so they did not meet the conditions set forth in current accounting standards for equity classification. The Company elected to recognize the notes under paragraph 815-15-25-4, whereby there would be a separation into a host contract and derivative instrument. The Company elected to initially and subsequently measure the notes in their entirety at fair value, with changes in fair value recognized in earnings. The Company recorded a derivative liability representing the imputed interest associated with the embedded derivative. The derivative liability is adjusted periodically according to the stock price fluctuations based upon the Binomial lattice model calculation.
The convertible notes issued and described in this Note 4 above, do not have fixed settlement provisions because their conversion prices are not fixed. The conversion feature has been characterized as a derivative liability to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.
We record the full value of the derivative as a liability at issuance with an offset to valuation discount, which will be amortized over the life of the notes.
At March 31, 2022, the fair value of the derivative liability was $
NOVACCESS GLOBAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
MARCH 31, 2022 AND 2021
4. CONVERTIBLE PROMISSORY NOTES (Continued)
For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used Binomial lattice valuation model. The significant assumptions used in the Binomial lattice valuation of the derivatives are as follows:
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5. CONVERTIBLE LOAN PAYABLE
As of March 31, 2016, Company issued an unsecured Convertible Promissory Note (the “Note”) in the amount of $
6. WARRANTS
On August 20, 2021, for value received in connection with the issuance of the August Note (see note 4 for more details), the Company issued
On February 16, 2022, for value received in connection with the issuance of the February Note (see note 4 for more details), the Company issued
At March 31, 2022, and September 30, 2021, the fair value of the derivative liability warrants was $
For the purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used the Binomial lattice valuation model. The significant assumptions used in the Binomial lattice valuation of the derivatives are as follows:
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7. OPTIONS
On June 2, 2020, the Company issued
NOVACCESS GLOBAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
MARCH 31, 2022 AND 2021
7. OPTIONS (Continued)
At March 31, 2022, the weighted average remaining contractual life of options outstanding:
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8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of the following at March 31, 2022 and September 30, 2021:
03/31/2022 |
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9. BRIDGE LOANS PAYABLE
Related Parties
In December 2021, the Company’s CEO and CFO each advanced funds to the Company for operating expenses in the total amount of $50,000. The notes were payable on demand with a five business day written notice and bear interest at a rate of
During the period ended March 31, 2022 the Company made payments to our CEO in the total amount of $
Service Provider
In December 2021, one of the Company’s service providers advanced funds to the Company for operating expenses in the total amount of $
NOVACCESS GLOBAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
MARCH 31, 2022 AND 2021
10. DUE TO RELATED PARTY
During the periods prior to the period ended March 31, 2022, Innovest Global, Inc. (Innovest) advanced funds to the Company for operating expenses in the amount of $
11. COMMITMENTS AND CONTINGENCIES
There are no material pending legal proceedings to which we are a party to, nor are there any such proceedings known to be contemplated by governmental authorities. None of our directors, officers, or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.
12. RELATED PARTY TRANSACTIONS
On September 4, 2020, the Company entered into a management services agreement (the “Agreement”) with TN3, LLC. Pursuant to the Agreement, TN3 was to provide NovAccess with office space in Chesterland, Ohio and management, administrative, marketing, bookkeeping and IT services for a fee of $
On October 4, 2021, the Company issued
On January 31, 2022, the Company entered into a preferred stock redemption agreement (the “redemption agreement”) with Daniel G. Martin, at the time our sole board member and chairman, TN3, LLC, a company owned by Mr. Martin, Dwain K. Morris-Irvin, our chief executive officer, and Irvin Consulting, LLC, a company owned by Dr. Irvin. TN3 owned
Upon completion of the redemption, Mr. Martin resigned from the NovAccess board of directors and was replaced by Dr. Irvin and John Cassarini. On March 18, 2022, the board of directors of NovAccess voted to expand the size of the company’s board to three members and appointed Jason M. Anderson to the board to fill the resulting vacancy.
NOVACCESS GLOBAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
MARCH 31, 2022 AND 2021
13. SUBSEQUENT EVENTS
Management has evaluated subsequent events as of May 13, 2022, the date the consolidated financial statements were available to be issued according to the requirements of ASC topic 855.
On May 5, 2022, NovAccess entered into a securities purchase agreement (the “SPA”) with AJB Capital Investments, LLC (“AJB”) and issued a promissory note in the principal amount of $
The note has an original issuance discount of
NovAccess provided customary representations and covenants to AJB in the SPA. NovAccess’ breach of any representation or failure to comply with the covenants would constitute an event of default.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Statement Concerning Forward-Looking Statements
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from those anticipated by these forward-looking statements as a result of many factors, including those discussed under Item 1A. Risk Factors of our Form 10-K for the fiscal year ended September 30, 2021.
We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of this report. Readers should carefully review the factors described in other documents that NovAccess files from time to time with the SEC.
Results of Operations for the Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021
Revenue and Cost of Sales:
The Company generated no revenue or cost of goods sold in the second quarters of fiscal years ended March 31, 2022 and 2021.
Research and development expenses
In the second quarter of 2022 the Company incurred $45,516 in research and development expenses related to activities performed by Dr. Christopher Wheeler and Dr. Dwain K. Morris-Irvin related to preparing the application to obtain FDA approval to start human clinical trials for StemVax Glioblast (SVX-GB) compared to $8,446 incurred in the second quarter of 2021.
Selling, General and Administrative Expenses:
Selling, general and administrative (SG&A) expenses increased by $108,555 during the second quarter 2022 to $381,428 as compared to $272,873 for the second quarter of 2021. The increase in SG&A expenses was related primarily to increase of $55,541 in legal expenses related to the Series B Convertible Preferred Stock redemption transaction, increase of $48,018 in accounting and CFO services fees, recognition of $25,000 in insurance expense and $45,619 in stock compensation for a service provider, partially offset by $38,643 decrease in payroll related expenses due to the Company having a lower head count in the second quarter of 2022 compared to the second quarter of 2021, as well as a decrease of $25,600 in other professional fees and outside services due to termination of management services Agreement with TN3 and timing of investors relations services.
Other Income/(Expenses):
Other net expense increased by $414,954 to $802,841 for the second quarter of fiscal 2022 from $387,887 for the second quarter of fiscal 2021. The increase in net total other expense was primarily due to recognition of a $109,886 higher loss on net change in fair market value of the derivative instruments in the second quarter of 2022 compared to the loss recognized in the second quarter of 2021, as well as recognition of $202,053 amortization of debt discount, commitment fees on notes payable and debt issuance costs on loans entered to in fiscal 2022.
Net Loss:
For the second quarter of fiscal 2022, our net loss was $1,229,785 as compared to a net loss of $669,206 for the second quarter of fiscal 2021. The increase in net loss of $560,579 was due to an increase in net other expenses associated with the net change in derivative instruments estimated each period and increase in interest expense and other financing costs, as well as an increase in SG&A expenses and higher research and development expenses recognized in fiscal 2022.
Results of Operations for the Six Months Ended March 31, 2022 Compared to the Six Months Ended March 31, 2021
Revenue and Cost of Sales:
The Company generated no revenue or cost of goods sold for the six months ended March 31, 2022 and March 31, 2021.
Research and development expenses
In the six months ended March 31, 2022 the Company incurred $87,915 in research and development expenses related to activities performed by Dr. Christopher Wheeler and Dr. Dwain K. Morris-Irvin related to preparing the application to obtain FDA approval to start human clinical trials for StemVax Glioblast (SVX-GB) compared to $8,446 recognized in the six months ended March 31, 2021.
Selling, General and Administrative Expenses:
Selling, general and administrative (SG&A) expenses decreased by $1,011,406 during the six months ended March, 31 2022 to $661,358 as compared to $1,672,764 for the six months ended March 31, 2021. The decrease in SG&A expenses was related primarily to the Company recognizing $846,000 in stock compensation expense in connection with the issuance of stock to our chief executive officer in fiscal 2021, as well as a decrease of $36,381 in other stock compensation expense. Payroll expenses also decreased by $117,904 in fiscal 2022 due to a $50,000 bonus accrual for our CEO in fiscal 2021, outsourcing CFO services and allocating a portion of our CEO compensation to research and development expenses in fiscal 2022. The decrease in payroll and stock compensation expenses are partially offset by increases of $61,117 in professional fees and outside services due to change in providers and timing of investors relations services.
Other Income/(Expenses):
Net other income decreased by $1,790,938 from other income of $1,167,118 for the six months ended March 31, 2021 to other expenses of $623,820 for the six months ended March 31, 2022. The decrease in net total other income was primarily due to recognition of a $1,213,446 lower gain on net change in fair market value of the derivative instruments in the six months ended March 31, 2022 compared to the gain recognized in the six months ended March 31, 2021, as well as recognition of $526,348 amortization of debt discount, commitment fees on notes payable, and debt issuance costs, partially offset by recognition of $96,205 gain on extinguishment of derivative liability and loss of $54,813 on extinguishment of bridge loans.
Net Loss:
For the six months ended March 31, 2022, our net loss was $1,373,093 as compared to a net loss of $514,092 for the six months ended March 31, 2021. The increase in net loss of $859,001 was due to a decrease in net other income associated with the net change in derivative instruments estimated each period and increase in interest expense and other financing costs partially offset by a decrease in SG&A expenses in 2022.
Liquidity and Capital Resources
We had a working capital deficit as of March 31, 2022 of $4,432,339, compared to a working capital deficit of $3,762,214 as of September 30, 2021. The increase of $670,125 in working capital deficit was primarily the result of an increase in the balance of promissory notes payable and payable to TN3 for the Series B Preferred Stock redemption.
For the six months ended March 31, 2022, our cash flow used in operating activities was $438,844, compared to cash flow used in operating activities of $280,521 for the first half of 2021. The net increase of $158,323 in cash flow used in operating activities was primarily due to lower stock compensation expense, higher net loss and changes in assets and liabilities, partially offset by lower gain on change in derivative liabilities.
There was no cash flow provided by/(used in) investing activities for the six months ended March 31, 2022 or 2021.
Cash flow provided by financing activities was $319,785 for the six months ended March 31, 2022, compared to cash provided by financing activities of $302,341 during the first half of 2021. The increase in cash flow provided by financing activities was primarily the result of the mix of funds raised by selling equity and debt instruments.
The Company will need to raise additional funds to finance its ongoing operations, complete its Investigational New Drug (IND) application to the FDA and to make payments under its loan agreements. We expect this will require approximately $3.0 million through December 31, 2022. We plan to raise this capital through the issuance of additional common stock as well as obtaining additional debt as needed.
Off-Balance Sheet Arrangements
We do not have any relationships with unconsolidated entities or financial partnerships such as entities often referred to as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance-sheet arrangements or for other contractually narrow or limited purposes. As a result, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Because NovAccess is a “smaller reporting company” as defined by the Securities and Exchange Commission (the “SEC”) we are not required to provide quantitative and qualitative disclosures about market risk.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management team, with the participation of our chief executive officer, Dwain K. Morris-Irvin, and chief financial officer, Neil J. Laird, evaluated the effectiveness of the design and operation of NovAccess’ disclosure controls and procedures (as defined under the Securities Exchange Act) as of March 31, 2022. Based upon this evaluation, Messrs. Morris-Irvin and Laird concluded that the Company’s disclosure controls and procedures were effective as of March 31.
Changes in Internal Control Over Financial Reporting
Our senior management team is responsible for establishing and maintaining adequate internal control over financial reporting, defined under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our board, senior management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with United States generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. We continue to review our internal control over financial reporting and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.
During the quarter the Company implemented enhanced review procedures for the accounting of certain derivatives and other income. This included engaging a third party to review the assumptions and calculation. There were no other changes in our internal control over financial reporting identified in connection with the evaluation required by the Securities Exchange Act that occurred during our first fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II — Other Information
Item 1. Legal Proceedings.
We are not involved in any legal proceedings.
Item 1A. Risk Factors.
Please refer to the risk factors listed under Item 1A. Risk Factors of our Form 10-K for the fiscal year ended September 30, 2021 for information relating to certain risk factors applicable to NovAccess.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the quarter end of March 31, 2022, we issued 1,069,306 unregistered shares of our common stock for capital raising and compensatory purposes as described in more detail below.
During the quarter end of March 31, 2022, we offered unregistered shares of our common stock in a private placement to accredited investors to fund our working capital needs. During the quarter we sold to ten investors 840,000 shares for an aggregate amount of $170,000. Neil J. Laird, the company’s chief financial officer, and Letzhangout, LLC, a company that provides accounting consulting services to NovAccess (“Letzhangout”), each purchased 250,000 shares in the private placement for $0.20 a share (a portion of which was paid by the cancellation of loans made to the company in December 2021). The issuance of shares in the private placement was exempt from registration under Section 4(a)(2) of the Securities Act and Rule 506(a) under the Securities Act.
On March 31, 2022, we issued 108,750 of our unregistered shares to Letzhangout, LLC for accounting services provided to NovAccess. On February 14, 2022, we issued 85,000 shares to Letzhangout for accounting services. We recognized stock compensation expense in the amount of $45,619 in relation to stock issuances to this service provider. On February 23, 2022, we issued 35,556 shares of our shares to Satya Chillara, an employee of Darrow Associates, for investor relations services provided to NovAccess. The issuances of shares to our service providers were exempt from registration under Section 4(a)(2) of the Securities Act.
Item 3. Defaults Upon Senior Securities.
During the quarter ended March 31, 2022, NovAccess was not in material default with respect to any its material indebtedness.
Item 4. Mine Safety Disclosures.
We are not engaged in mining operations.
Item 5. Other Information.
We have disclosed on Form 8-K all reportable events that occurred in the quarter ended March 31, 2022.
Item 6. Exhibits.
Exhibit |
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Description |
31.1 |
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Certification Pursuant to Section 302 of the Sarbanes-Oxley Act — Dwain Morris-Irvin |
31.2 |
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Certification Pursuant to Section 302 of the Sarbanes-Oxley Act — Neil J. Laird |
32.1 |
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Certification Pursuant to Section 906 of the Sarbanes-Oxley Act |
101 |
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The following materials from the NovAccess Global Inc. Quarterly Report on Form 10-Q for the period ended March 31, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at March 31, 2022 and September 30, 2021, (ii) the Condensed Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2022 and March 31, 2021, (iii) the Condensed Consolidated Statements of Shareholders’ Deficit for the Six Months Ended March 31, 2022 and 2021, (iv) the Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2022 and March 31, 2021, and (v) Related Notes to the Condensed Consolidated Financial Statements. |
104 |
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Signatures
Pursuant to the requirements 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.
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NovAccess Global Inc. |
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Date: May 13, 2022 |
/s/ Dwain K. Morris-Irvin |
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Dwain K. Morris-Irvin, Chief Executive Officer |
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(Principal Executive Officer) |
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Date: May 13, 2022 |
/s/ Neil J. Laird |
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Neil J. Laird, Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
17 CFR SECTION 240.13a-14(a)
I, Dwain Morris-Irvin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of NovAccess Global Inc. for the period ending March 31, 2022;
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 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, including its consolidated subsidiaries, 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; and
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 registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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 the 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.
Date: May 13, 2022 |
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/s/ Dwain Morris-Irvin |
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Dwain Morris-Irvin, Chief Executive Officer |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
17 CFR SECTION 240.13a-14(a)
I, Neil J. Laird, certify that:
1. I have reviewed this quarterly report on Form 10-Q of NovAccess Global Inc. for the period ending March 31, 2022;
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 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, including its consolidated subsidiaries, 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; and
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 registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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 the 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.
Date: May 13, 2022 |
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/s/ Neil J. Laird |
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Neil J. Laird, Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of the Quarterly Report of NovAccess Global Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2022 (the “Report”) with the Securities and Exchange Commission, I, Dwain Morris-Irvin, Chief Executive Officer of the Company, and I, Neil J. Laird, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Report fairly presents, in all material respects, the financial condition and the results of operations of the Company for such period.
Dated: May 13, 2022
/s/ Dwain Morris-Irvin |
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Dwain Morris-Irvin, Chief Executive Officer |
/s/ Neil J. Laird |
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Neil J. Laird, Chief Financial Officer and Treasurer |
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) |
Mar. 31, 2022 |
Sep. 30, 2021 |
---|---|---|
Promissory notes payable, debt discount and debt issuance costs (in Dollars) | $ 188,247 | $ 395,027 |
Convertible promissory notes, debt discount and debt issuance costs (in Dollars) | $ 0 | $ 69,567 |
Preferred stock, shares issued | 25,000 | 25,000 |
Preferred stock, par (in Dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | |
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued | 17,523,673 | 14,404,030 |
Common stock, shares outstanding | 17,523,673 | 14,404,030 |
Common stock, no par value (in Dollars per share) | $ 0 | $ 0 |
Series B Preferred Stock [Member] | ||
Preferred stock, shares issued | 600 | |
Preferred stock, shares authorized | 25,000 | 25,000 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
|
OPERATING EXPENSES | ||||
Research and development expenses | $ 45,516 | $ 8,446 | $ 87,915 | $ 8,446 |
Selling, general and administrative expenses | 381,428 | 272,873 | 661,358 | 1,672,764 |
TOTAL OPERATING EXPENSES | 426,944 | 281,319 | 749,273 | 1,681,210 |
LOSS FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSES) | (426,944) | (281,319) | (749,273) | (1,681,210) |
OTHER INCOME/(EXPENSES) | ||||
Gain (Loss) on change in derivative liability | (492,425) | (382,539) | (33,399) | 1,180,067 |
Extinguishment of derivatives | 0 | 0 | 96,205 | 0 |
Extinguishment of debt | (54,813) | 0 | (54,813) | 0 |
Interest expense | (255,603) | (5,348) | (631,813) | (12,949) |
TOTAL OTHER INCOME/(EXPENSES) | (802,841) | (387,887) | (623,820) | 1,167,118 |
NET INCOME (LOSS) | $ (1,229,785) | $ (669,206) | $ (1,373,093) | $ (514,092) |
BASIC INCOME (LOSS) PER SHARE (in Dollars per share) | $ (0.08) | $ (0.05) | $ (0.09) | $ (0.06) |
DILUTED INCOME (LOSS) PER SHARE (in Dollars per share) | $ (0.08) | $ (0.05) | $ (0.09) | $ (0.06) |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | ||||
BASIC (in Shares) | 15,379,289 | 12,455,164 | 14,914,920 | 9,099,121 |
DILUTED (in Shares) | 15,379,289 | 12,455,164 | 14,914,920 | 9,099,121 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) |
Series B Preferred Stock [Member]
Preferred Stock [Member]
|
Series B Preferred Stock [Member] |
Common Stock Issuable [Member]
Additional Paid-in Capital [Member]
|
Common Stock Issuable [Member] |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Additional Paid in Capital Stock Options / Warrants [Member] |
Retained Earnings [Member] |
Additional Paid in Capital Preferred Stock [Member] |
Total |
---|---|---|---|---|---|---|---|---|---|---|
Balance at Sep. 30, 2020 | $ 250 | $ 33,369,424 | $ 11,710,398 | $ 4,210,960 | $ 5,088,324 | $ (57,949,086) | $ (3,569,730) | |||
Balance (in Shares) at Sep. 30, 2020 | 25,000 | 1,603,492 | ||||||||
Common Stock issued for StemVax acquisition - from stock payable | $ 6,375,000 | (6,375,000) | 6,375,000 | |||||||
Common Stock issued for StemVax acquisition - from stock payable (in Shares) | 7,500,000 | |||||||||
Stock compensation cost | $ 936,000 | $ 936,000 | ||||||||
Stock compensation cost (in Shares) | 2,000,000 | 9,500,000 | ||||||||
Common Stock issued for services | $ 145,941 | $ 145,941 | ||||||||
Common Stock issued for services (in Shares) | 311,945 | 311,945 | ||||||||
Common Stock issued , subscriptions | $ 295,000 | $ 295,000 | ||||||||
Common Stock issued , subscriptions (in Shares) | 1,440,905 | 1,440,905 | ||||||||
Common Stock issued as commitment fee on promissory note payable (in Shares) | 11,252,850 | |||||||||
Net income (loss) | (514,092) | $ (514,092) | ||||||||
Balance at Mar. 31, 2021 | $ 250 | $ 41,121,365 | 5,335,398 | 4,210,960 | 5,088,324 | (58,463,178) | (2,706,881) | |||
Balance (in Shares) at Mar. 31, 2021 | 25,000 | 12,856,342 | ||||||||
Balance at Sep. 30, 2021 | $ 250 | $ 41,882,535 | 5,351,398 | 4,210,960 | 5,088,324 | (60,461,561) | (3,928,094) | |||
Balance (in Shares) at Sep. 30, 2021 | 25,000 | 14,404,030 | ||||||||
Preferred Stock Redemption | $ (244) | $ 525,935 | (341,216) | $ 184,475 | ||||||
Preferred Stock Redemption (in Shares) | (24,400) | 1,502,670 | 1,502,670 | |||||||
Common Stock issued for StemVax acquisition - from stock payable | $ 0 | |||||||||
Stock compensation cost | $ 8,000 | $ 8,000 | ||||||||
Stock compensation cost (in Shares) | 10,000 | 10,000 | ||||||||
Common Stock issued for services | $ 119,480 | $ 73,861 | ||||||||
Common Stock issued for services (in Shares) | 265,973 | 265,973 | ||||||||
Common Stock issued , subscriptions | $ 5,000 | $ 5,000 | $ 170,200 | $ 170,200 | ||||||
Common Stock issued , subscriptions (in Shares) | 600 | 791,000 | 791,000 | |||||||
Common Stock issued as repayment of loans | $ 104,813 | $ 50,000 | ||||||||
Common Stock issued as repayment of loans (in Shares) | 250,000 | 250,000 | ||||||||
Common Stock issued as commitment fee on promissory note payable | $ 111,000 | $ 111,000 | ||||||||
Common Stock issued as commitment fee on promissory note payable (in Shares) | 24,400 | 300,000 | 3,119,643 | |||||||
Net income (loss) | (1,373,093) | $ (1,373,093) | ||||||||
Balance at Mar. 31, 2022 | $ 6 | $ 42,921,963 | $ 5,356,398 | $ 4,210,960 | $ 4,747,108 | $ (61,834,654) | $ (4,598,219) | |||
Balance (in Shares) at Mar. 31, 2022 | 600 | 17,523,673 |
ORGANIZATION AND LINE OF BUSINESS |
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Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | 1. ORGANIZATION AND LINE OF BUSINESS
Organization NovAccess Global Inc. (“NovAccess,” the “Company”) is a Colorado corporation formerly known as Sun River Mining Inc. and XsunX, Inc. The Company was originally incorporated in Colorado on February 25, 1997. Effective September 24, 2003, the Company completed a plan of reorganization and name change to XsunX, Inc. In June 2020, the Company was acquired and changed its name to NovAccess Global Inc.
Line of Business NovAccess Global Inc. is a biopharmaceutical company that is developing novel immunotherapies to treat brain tumor patients in the United States with plans to expand globally. We specialize in cutting-edge research related to utilizing a patient’s own immune system to attack the cancer. We are filing an Investigational New Drug Application (IND) and working closely with the Food and Drug Administration (FDA) to obtain approval for human clinical trials to determine safety and efficacy of our drug product for brain cancer patients. Once we have successfully completed the clinical trials and proven that the new therapy is safe and efficacious, we plan to commercialize the product. We also have expertise in successfully executing clinical trials, bringing products to market and increasing the market size of products through our advisory board. Our scientists are well versed in immunology, stem cell biology, neuroscience, molecular biology, imaging, small molecules development, gene therapy and other technical assays needed for protein and genetic analysis of cancer cells.
NovAccess operates as a research and development (R&D) company out of Ohio and California, and our executive management and scientific advisory board provide over 15 years of extensive experience in all aspects of biopharmaceutical R&D and commercialization of drug candidates. We guide our performance by striving to deliver consistently on the following core objectives: (1) Accountability — taking responsibility for providing safe and effective options for patients; (2) Integrity — doing what is ethically right for the patient; (3) Excellence — doing your best and working hard; and (4) Teamwork — bringing together a strong working team to deliver the best products for brain tumor patients.
Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the six months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ended September 30, 2022. For further information refer to the financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended September 30, 2021.
Going Concern The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company does not generate revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern.
The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. The Company has obtained funds from its shareholders and lenders since its inception through the period ended March 31, 2022. Management believes the existing shareholders and the prospective new investors will provide the additional cash needed to meet the Company’s obligations as they become due and will allow the development of its business.
This summary of significant accounting policies of NovAccess is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies [Text Block] | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary StemVax, LLC. All significant inter-company accounts and transactions between these entities have been eliminated in these condensed consolidated financial statements.
Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements. Significant estimates made in preparing these consolidated financial statements include the estimate of derivative liabilities, the deferred tax valuation allowance, and the fair value of stock options. Actual results could differ from those estimates.
Cash and Cash Equivalents For purposes of the statements of cash flows, cash and cash equivalents include cash in banks and money markets with an original maturity of three months or less.
Property and Equipment Property and equipment are stated at cost, and are depreciated using the straight-line method over its estimated useful lives:
The Company capitalizes property and equipment over $500. Property and equipment under $500 are expensed in the year purchased.
Stock-Based Compensation Share-based Payment applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to liabilities an entity may incur for goods or services that are to follow a fair value of those equity instruments. We are required to follow a fair value approach using an option-pricing model, such as the Binomial lattice valuation model, at the date of a stock option grant. The deferred compensation calculated under the fair value method would then be amortized over the respective vesting period of the stock option. This has not had a material impact on our results of operations.
Net Earnings (Loss) per Share Calculations Net earnings (Loss) per share dictates the calculation of basic earnings (loss) per share and diluted earnings per share. Basic earnings (loss) per share are computed by dividing by the weighted average number of common shares outstanding during the period. Diluted net earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the effect of stock options and stock-based awards plus the assumed conversion of convertible debt (Notes 4 and 5).
Diluted weighted average number of shares for the three and six months ended March 31, 2022 and March 31, 2021 is the same as basic weighted average number of shares because the Company had net losses for these respective periods.
Fair Value of Financial Instruments
Fair Value of Financial Instruments requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2022, the balances reported for cash, prepaid expenses, accounts payable, accrued expenses approximate the fair value because of their short maturities.
We adopted Accounting Standards Codification (“ASC”) Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, an established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:
We measure certain financial instruments at fair value on a recurring basis. The Company had no assets that are required to be valued on a recurring basis as of March 31, 2022 and September 30, 2021. The Company had liabilities that are required to be measured at fair value on a recurring basis as follows at March 31, 2022 and September 30, 2021:
The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:
Recent Accounting Pronouncements
In May 2021, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) 2021-04—Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2021, and interim periods with fiscal years beginning after December 15, 2021. Early adoption is permitted, including adoption in an interim period. The Company has evaluated the impact of the adoption of ASU 2021-04, which had no effect on the Company’s financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements. |
CAPITAL STOCK |
6 Months Ended |
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Mar. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | 3. CAPITAL STOCK
At March 31, 2022, the Company’s authorized stock consisted of 2,000,000,000 shares of common stock, with no par value. Effective August 25, 2020, we filed articles of amendment to our articles of incorporation with the Colorado Secretary of State to effectuate a 1-for-1,000 reverse stock split of the Company’s outstanding shares of common stock.
The Company is also authorized to issue 50,000,000 shares of preferred stock with a par value of $0.01 per share. The rights, preferences and privileges of the holders of the preferred stock are determined by the Board of Directors prior to issuance of such shares.
Preferred Stock
As of March 31, 2022 the Company had 600 shares of issued and outstanding Series B Preferred Stock following the conversion of 5,000 shares of Series A Preferred Stock and redemption of 24,400 shares of Series B Preferred Stock. The Series A shares were originally issued in consideration for the contribution of services by Tom Djokovich, the former President and Chief Executive Officer, to the Company valued at fifty dollars, which the Board deemed full and fair consideration. Because of such issuance, Mr. Djokovich had the ability to influence and determine stockholder votes. On March 18, 2020, the Company, Mr. Djokovich, and TN3, LLC, a Wyoming limited liability company owned by Daniel G. Martin (“TN3”), entered into a Stock Purchase Agreement (the “Agreement”). Pursuant to the Agreement, Mr. Djokovich agreed to sell his 5,000 shares of Series A Preferred Stock to TN3 in a private sale for cash. The holder of the Series A Preferred Stock could cast votes equal to not less than 60% of the total outstanding voting power of the Company on all matters voted on by the shareholders of the Company. On September 4, 2020, the Company issued 25,000 shares of unregistered Series B Convertible Preferred stock, $0.01 par value per share to TN3 in exchange for the redemption of 5,000 shares of Series A preferred stock. On March 14, 2022 the Novaccess redeemed 24,400 shares of the Company’s Series B Convertible Preferred Stock held by TN3. Irvin Consulting LLC, a company owned by Dwain Irvin, the CEO of NovAccess, purchased remaining 600 shares (please refer to Note 12 for more details).
Each share of outstanding Series B Preferred Stock entitles the holder to cast 40,000 votes. Each share of Series B Preferred Stock is convertible at the option of the holder into 10,000 common shares. In the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation, the holders of shares of Series B Preferred Stock shall be paid out based on an as converted basis. Dividend for Series B Preferred Stock shall be declared on an as converted basis.
Common Stock
Effective August 25, 2020, we filed articles of amendment to our articles of incorporation with the Colorado Secretary of State to effectuate a 1-for-1,000 reverse stock split of the Company’s outstanding shares of common stock.
During the six months ended March 31, 2022, the Company issued 3,119,643 shares of common stock. 1,502,670 shares were issued to TN3 as part of the transaction to redeem 24,400 shares of Series B Preferred Stock, 265,973 shares were issued to various vendors for services provided; 791,000 shares were issued in relation to stock subscriptions; 300,000 shares were issued as a commitment fee on a promissory note payable; 250,000 shares were issued as repayment of bridge loans (please refer to Note 4 for more details); and 10,000 shares were issued to related parties (please refer to Note 12 for more details).
During the six months ended March 31, 2021, the Company issued 11,252,850 shares of common stock. For an expense of $145,941 based on the closing market value on grant date 311,945 shares were issued to various vendors for services provided; 1,440,905 shares were issued in relation to stock subscriptions for net proceeds of $295,000; and 9,500,000 shares were issued to related parties for services and expense at $936,000 based upon the closing market value on grant date. |
CONVERTIBLE PROMISSORY NOTES |
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Debt Disclosure [Text Block] | 4. CONVERTIBLE PROMISSORY NOTES
As of March 31, 2022, the outstanding convertible promissory notes are summarized as follows:
Maturities of long-term debt for the next four years are as follows:
On November 20, 2014, the Company issued a 10% unsecured convertible promissory note (the “2014 Note”) for the principal sum of up to $400,000 plus accrued interest on any advanced principal funds. The 2014 Note matures eighteen months from each advance. The 2014 Note may be converted by the lender into shares of common stock of the Company at the lesser of $12.50 per share or (b) fifty percent (50%) of the lowest trade prices following issuance of the 2014 Note or (c) the lowest effective price per share granted to any person or entity. On November 20, 2014, the lender advanced $50,000 to the Company under the 2014 Note at inception. On various dates from February 18, 2015 through September 30, 2016, the lender advanced an additional $350,000 under the 2014 Note. During the period ended September 30, 2021, the Company and lender agreed to extend the maturity date for the outstanding balance to June 30, 2023. As of March 31, 2022, there remains an aggregate outstanding principal balance of $50,880.
On May 10, 2017, the Company issued a 10% unsecured convertible promissory note (the “2017 Note”) for the principal sum of up to $150,000 plus accrued interest on any advanced principal funds. The lender may pay additional consideration at the lender’s discretion. The Company received a tranche in the amount of $25,000 upon execution of the 2017 Note. On various dates, the Company received additional tranches in the aggregate sum of $90,000. The 2017 Note matured twelve months from each tranche. Within thirty (30) days prior to the maturity date, the lender may extend the maturity date to sixty (60) months. During the period ended September 30, 2021, the Company and lender agreed to extend the maturity date for the outstanding balance to June 30, 2023. The 2017 Note may be converted by the lender into shares of common stock of the Company at the lesser of $10 per share or (b) fifty percent (50%) of the lowest trade price of common stock recorded on any trade day after the effective date, or (c) the lowest effective price per share granted to any person or entity. As of March 31, 2022, the balance remaining on the May Note was $115,000.
On June 2, 2021, the Company issued a 12% unsecured convertible promissory note (the “June Note”) for the principal sum of $55,500 plus accrued interest. The June Note was to mature on June 2, 2022. The June Note could be converted by the lender into shares of common stock of the Company at sixty-one percent (61%) of the lowest trade price of common stock recorded during the fifteen (15) trading days prior to conversion. On October 5, 2021 the Company paid the balance of this note to the lender including accrued interest and prepayment settlement fee of $17,520. The Company recorded amortization of debt discount of $36,493 and amortization of debt issuance costs of $1,458, both of which were recognized as interest expense during the six months ended March 31, 2022. The Company also recognized a gain of $59,915 on the extinguishment of this convertible note during the six months ended March 31, 2022. As of March 31, 2022, the balance of the June Note was $0.
On July 6, 2021, the Company issued a 12% unsecured convertible promissory note (the “July Note”) for the principal sum of $38,750 plus accrued interest. The July Note was to mature on July 6, 2022. The July Note could be converted by the lender into shares of common stock of the Company at sixty-one percent (61%) of the lowest trade price of common stock recorded during the fifteen (15) trading days prior to conversion. On December 30, 2021 the Company paid the balance of this note to the lender including accrued interest and prepayment settlement fee of $16,936. The Company recorded amortization of debt discount of $29,620 and amortization of debt issuance costs of $1,996, both of which were recognized as interest expense during the six months ended March 31, 2022. The Company also recognized a gain of $36,289 on the extinguishment of this convertible note during the six months ended March 31, 2022. As of March 31, 2022, the balance of the June Note was $0.
On August 20, 2021, the Company issued a 10% unsecured promissory note (the “August Note”) for the principal sum of $500,000 plus accrued interest. The August Note was to mature on February 20, 2022, unless extended for up to an additional six months. The August Note may be converted, only following an event of default, and therefore not included in summary of convertibles note, by the lender into shares of common stock of the Company at the lesser of 90% (representing a 10% discount) multiplied by the lowest trading price during the previous twenty (20) trading day period ending on the issuance date, or during the previous twenty (20) trading day period. In February 2022 the Company extended the term of the August note for an additional six months. The extended maturity date is February 20, 2023. The Company recorded amortization of debt discount of $391,319 related to derivative portion of the August Note, amortization of debt issuance costs of $75,000, and $34,181 amortization of debt discount representing commitment fee all of which were recognized as interest expense during the six months ended March 31, 2022 in the consolidated statement of operations for the six months ended March 31, 2022. As of March 31, 2022, the balance of the August Note was $500,000.
On February 16, 2022, the Company issued a 10% unsecured promissory note (the “February note”) for the principal sum of $250,000 plus accrued interest. The February Note matures on August 15, 2022, unless extended for up to an additional six months. The February Note may be converted, only following an event of default, and therefore is not included in summary of convertibles note, by the lender into shares of common stock of the Company at the lesser of 90% (representing a 10% discount) multiplied by the lowest trading price during the previous twenty (20) trading day period ending on the issuance date, or during the previous twenty (20) trading day period. The Company recorded amortization of debt discount of $32,849 related to derivative portion of the February Note and amortization of debt issuance costs of $9,250, and $19,654 amortization of debt discount representing commitment fee, all of which were recognized as interest expense during the three months ended March 31, 2022, in the consolidated statement of operations for the three months ended March 31, 2022. As of March 31, 2022, the balance of the August Note was $250,000, which is the total of initial debt discount of $134,384, initial debt issuance costs of $37,000 and initial debt discount representing a commitment fee of $78,616.
We evaluated the financing transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion feature of the convertible promissory notes was not afforded the exemption for conventional convertible instruments due to its variable conversion rate. The notes have no explicit limit on the number of shares issuable so they did not meet the conditions set forth in current accounting standards for equity classification. The Company elected to recognize the notes under paragraph 815-15-25-4, whereby there would be a separation into a host contract and derivative instrument. The Company elected to initially and subsequently measure the notes in their entirety at fair value, with changes in fair value recognized in earnings. The Company recorded a derivative liability representing the imputed interest associated with the embedded derivative. The derivative liability is adjusted periodically according to the stock price fluctuations based upon the Binomial lattice model calculation.
The convertible notes issued and described in this Note 4 above, do not have fixed settlement provisions because their conversion prices are not fixed. The conversion feature has been characterized as a derivative liability to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.
We record the full value of the derivative as a liability at issuance with an offset to valuation discount, which will be amortized over the life of the notes.
At March 31, 2022, the fair value of the derivative liability was $2,400,203.
For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used Binomial lattice valuation model. The significant assumptions used in the Binomial lattice valuation of the derivatives are as follows:
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CONVERTIBLE LOAN PAYABLE |
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Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Short-Term Debt [Text Block] | 5. CONVERTIBLE LOAN PAYABLE
As of March 31, 2016, Company issued an unsecured Convertible Promissory Note (the “Note”) in the amount of $12,000 to a former Board member (the “Holder”) in exchange for retention as a director during the fiscal year ending September 30, 2014. The Note can be converted into shares of common stock by the Holder for $4.50 per share. The Note matured on October 1, 2015, and bore a one-time interest charge of $1,200 which was applied to the principal on October 1, 2014. So long as any shares issuable under a conversion are subject to transfer and sale restrictions imposed pursuant to SEC Rule 144 of the Rules promulgated under the Securities Act of 1933, the Company shall, upon written request by Holder, file Form S-8, if applicable, with the U.S. Securities and Exchange commission to register the issued. |
WARRANTS |
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Shareholders' Equity and Share-Based Payments [Text Block] | 6. WARRANTS
On August 20, 2021, for value received in connection with the issuance of the August Note (see note 4 for more details), the Company issued 1,000,000 warrants to the lender with an exercise price of $1.50 per share with a five-year exercise period.
On February 16, 2022, for value received in connection with the issuance of the February Note (see note 4 for more details), the Company issued 500,000 warrants to the lender with an exercise price of $1.50 per share with a five-year exercise period.
At March 31, 2022, and September 30, 2021, the fair value of the derivative liability warrants was $597,997 and $372,643, respectively.
For the purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used the Binomial lattice valuation model. The significant assumptions used in the Binomial lattice valuation of the derivatives are as follows:
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OPTIONS |
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Share-Based Payment Arrangement [Text Block] | 7. OPTIONS
On June 2, 2020, the Company issued 2,000,000 options to purchase common stock at an exercise price of $0.01 per share (adjusted for the August 2020 stock split). These options will be exercisable on a cashless basis for a period of ten years from August 25, 2020. The purpose of the options is to compensate our directors for serving on the board without compensation in fiscal 2019. It is difficult to assess the value of the options given the highly limited trading in our common stock, the fact that the options shares have not been and are not expected to be registered for resale and will be restricted, and the speculative nature of the Company’s future business plans. However, we estimated the value of the services provided by each of our directors during 2019 and believe that the value of the options to be issued to each of our resigning directors approximates that amount.
At March 31, 2022, the weighted average remaining contractual life of options outstanding:
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Accounts Payable and Accrued Liabilities Disclosure [Text Block] | 8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of the following at March 31, 2022 and September 30, 2021:
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BRIDGE LOANS PAYABLE - RELATED PARTIES |
6 Months Ended |
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Mar. 31, 2022 | |
Other Liabilities and Financial Instruments Subject to Mandatory Redemption [Abstract] | |
Other Liabilities Disclosure [Text Block] | 9. BRIDGE LOANS PAYABLE
Related Parties
In December 2021, the Company’s CEO and CFO each advanced funds to the Company for operating expenses in the total amount of $50,000. The notes were payable on demand with a five business day written notice and bear interest at a rate of 10% per annum. The Company could prepay all or any part of the balance owed without penalty. In the event of the default, the notes were to bear additional interest at a rate of 12% per annum. On January 25, 2022 the Company issued 125,000 shares of its common stock in settlement of a bridge loan to the Company’s CFO and recognized a loss on extinguishment of debt in the amount of $17,313. Any potential gain would not have been recognized on extinguishment of this loan due to the nature of the relationship between the parties. The company recognized and paid interest expense in the amount of $237 to our CFO during the period ended March 31, 2022.
During the period ended March 31, 2022 the Company made payments to our CEO in the total amount of $20,938, of which $18,616 were used to purchase 600 shares of Serie B Preferred stock, and $2,316 were related to reimbursement of expenses. The company recognized and capitalized into the principle of the loan interest expense of $546. As of March 31, 2022, the balance on the bridge loan payable to our CEO was $4,068. No balance was outstanding on the notes payable to our CFO.
Service Provider
In December 2021, one of the Company’s service providers advanced funds to the Company for operating expenses in the total amount of $25,000. On February 14, 2022 the Company issued 125,000 shares of its common stock to the service provider in settlement of the note payable. The Company recognized a loss on extinguishment of debt in the amount of $37,500. During the period ended March 31, 2022 the Company recognized and paid interest expense of $226 in relation to this loan. No balance was outstanding on the note payable to our service provider as of March 31, 2022. |
DUE TO RELATED PARTY |
6 Months Ended |
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Other Liabilities and Financial Instruments Subject to Mandatory Redemption [Abstract] | |
Other Liabilities [Table Text Block] | 10. DUE TO RELATED PARTY
During the periods prior to the period ended March 31, 2022, Innovest Global, Inc. (Innovest) advanced funds to the Company for operating expenses in the amount of $86,073. As of March 31, 2022, the amount has not been reimbursed to Innovest. Our former Chairman Daniel Martin was the CEO of Innovest when the funds were advanced. Imputed interest is calculated on an annual basis at the market rate and is estimated to equal $516 as of March 31, 2022. |
COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | 11. COMMITMENTS AND CONTINGENCIES
There are no material pending legal proceedings to which we are a party to, nor are there any such proceedings known to be contemplated by governmental authorities. None of our directors, officers, or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business. |
RELATED PARTY TRANSACTIONS |
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Mar. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | 12. RELATED PARTY TRANSACTIONS
On September 4, 2020, the Company entered into a management services agreement (the “Agreement”) with TN3, LLC. Pursuant to the Agreement, TN3 was to provide NovAccess with office space in Chesterland, Ohio and management, administrative, marketing, bookkeeping and IT services for a fee of $30,000 a month. The initial term of the Agreement was three years, with subsequent one-year renewals. During the three months ended March 31, 2022, the Company entered into a transaction with TN3 to redeem its shares of the Company’s Series B Convertible preferred stock (please refer to more details below). This transaction terminated the Agreement, including satisfaction for all services provided and any amounts outstanding. As of March 31, 2022 there was zero balance reported as the outstanding payable amount in relation to the Agreement.
On October 4, 2021, the Company issued 10,000 shares of common stock to Neil J. Laird to compensate him for serving as our chief financial officer. The stock-based compensation expense in the amount of $8,000 was reported on the Company’s financial statements for the six months ended March 31, 2022.
On January 31, 2022, the Company entered into a preferred stock redemption agreement (the “redemption agreement”) with Daniel G. Martin, at the time our sole board member and chairman, TN3, LLC, a company owned by Mr. Martin, Dwain K. Morris-Irvin, our chief executive officer, and Irvin Consulting, LLC, a company owned by Dr. Irvin. TN3 owned 25,000 shares of our Series B convertible preferred stock. Pursuant to the redemption agreement, on March 14, 2022, NovAccess redeemed 24,400 of the preferred shares and Irvin Consulting purchased 600 of the preferred shares from TN3. In connection with the redemption, we issued to TN3 1,502,670 shares of unregistered common stock. To redeem the preferred shares, the Company is to pay TN3 a total of $250,000 over a period of ten months, with payment accelerated if the company raises significant capital. The company paid $50,000 to TN3 in relation to this transaction during the three months ended March 31, 2022. As of March 31, 2022 the balance owed to TN3 on this transaction is $200,000.
Upon completion of the redemption, Mr. Martin resigned from the NovAccess board of directors and was replaced by Dr. Irvin and John Cassarini. On March 18, 2022, the board of directors of NovAccess voted to expand the size of the company’s board to three members and appointed Jason M. Anderson to the board to fill the resulting vacancy. |
SUBSEQUENT EVENTS |
6 Months Ended |
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Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | 13. SUBSEQUENT EVENTS
Management has evaluated subsequent events as of May 13, 2022, the date the consolidated financial statements were available to be issued according to the requirements of ASC topic 855.
On May 5, 2022, NovAccess entered into a securities purchase agreement (the “SPA”) with AJB Capital Investments, LLC (“AJB”) and issued a promissory note in the principal amount of $1.0 million (the “note”) to AJB pursuant to the SPA. The loan closed and was funded on May 9, 2022. NovAccess used $500,000 of the proceeds of the loan to repay AJB’s August 20, 2021 loan and will use the remaining loan proceeds for general working capital purposes.
The note has an original issuance discount of 10% of the principal and bears interest at 12% a year. The note is due on November 5, 2022, but may be extended for six months by NovAccess, at which time the rate will increase to 15%. NovAccess must repay the note with the proceeds of any loan or capital raise exceeding $5.0 million and may otherwise prepay the note at any time without penalty. Under the terms of the note, NovAccess may not sell a significant portion of its assets without the approval of AJB, may not issue additional debt that is not subordinate to AJB, must comply with the company’s reporting requirements under the Securities Exchange Act of 1934, and must maintain the listing of the company’s common stock on the OTC Market or other exchange, among other restrictions and requirements. NovAccess’ failure to make required payments under the note or to comply with any of these covenants, among other matters, would constitute an event of default. Upon an event of default under the SPA or note, the note will bear interest at 18%, AJB may immediately accelerate the note due date, AJB may convert the amount outstanding under the note into shares of NovAccess common stock at a discount to the market price of the stock, and AJB will be entitled to its costs of collection, among other penalties and remedies.
NovAccess provided customary representations and covenants to AJB in the SPA. NovAccess’ breach of any representation or failure to comply with the covenants would constitute an event of default. Also pursuant to the SPA, NovAccess paid AJB a commitment fee of 875,000 unregistered shares of the company’s common stock (the “commitment fee shares”). If, after May 5, 2023 and before May 5, 2025, AJB is unable to sell the commitment fee shares for $700,000, then AJB may require NovAccess to issue additional shares or pay cash in the amount of the shortfall. However, if NovAccess pays the note off before November 5, 2022, then the company may redeem 437,500 of the commitment shares for one dollar. Pursuant to the SPA, NovAccess also issued to AJB a common stock purchase warrant (the “warrant”) to purchase 1.0 million shares of the company’s common stock for $0.01 a share. The warrant expires on May 5, 2027. NovAccess also entered into a security agreement with AJB (the “security agreement”) pursuant to which NovAccess granted to AJB a security interest in all of the company’s assets, including the equity of StemVax, LLC, securing NovAccess’ obligations under the SPA, note and warrant. In addition, NovAccess entered into a registration rights agreement with AJB (the “registration agreement”) pursuant to which NovAccess agreed to file with the Securities and Exchange Commission a Form S-1 by August 3, 2022 to register for resale the commitment fee shares and the shares issuable upon exercise of the warrant. |
Accounting Policies, by Policy (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary StemVax, LLC. All significant inter-company accounts and transactions between these entities have been eliminated in these condensed consolidated financial statements.
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Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements. Significant estimates made in preparing these consolidated financial statements include the estimate of derivative liabilities, the deferred tax valuation allowance, and the fair value of stock options. Actual results could differ from those estimates.
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Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents For purposes of the statements of cash flows, cash and cash equivalents include cash in banks and money markets with an original maturity of three months or less.
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Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment Property and equipment are stated at cost, and are depreciated using the straight-line method over its estimated useful lives:
The Company capitalizes property and equipment over $500. Property and equipment under $500 are expensed in the year purchased.
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Share-Based Payment Arrangement [Policy Text Block] | Stock-Based Compensation Share-based Payment applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to liabilities an entity may incur for goods or services that are to follow a fair value of those equity instruments. We are required to follow a fair value approach using an option-pricing model, such as the Binomial lattice valuation model, at the date of a stock option grant. The deferred compensation calculated under the fair value method would then be amortized over the respective vesting period of the stock option. This has not had a material impact on our results of operations |
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Earnings Per Share, Policy [Policy Text Block] | Net Earnings (Loss) per Share Calculations Net earnings (Loss) per share dictates the calculation of basic earnings (loss) per share and diluted earnings per share. Basic earnings (loss) per share are computed by dividing by the weighted average number of common shares outstanding during the period. Diluted net earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the effect of stock options and stock-based awards plus the assumed conversion of convertible debt (Notes 4 and 5).
Diluted weighted average number of shares for the three and six months ended March 31, 2022 and March 31, 2021 is the same as basic weighted average number of shares because the Company had net losses for these respective periods.
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Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value of Financial Instruments
Fair Value of Financial Instruments requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2022, the balances reported for cash, prepaid expenses, accounts payable, accrued expenses approximate the fair value because of their short maturities.
We adopted Accounting Standards Codification (“ASC”) Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, an established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:
We measure certain financial instruments at fair value on a recurring basis. The Company had no assets that are required to be valued on a recurring basis as of March 31, 2022 and September 30, 2021. The Company had liabilities that are required to be measured at fair value on a recurring basis as follows at March 31, 2022 and September 30, 2021:
The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:
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New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements
In May 2021, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) 2021-04—Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2021, and interim periods with fiscal years beginning after December 15, 2021. Early adoption is permitted, including adoption in an interim period. The Company has evaluated the impact of the adoption of ASU 2021-04, which had no effect on the Company’s financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Table Text Block] | Property and equipment are stated at cost, and are depreciated using the straight-line method over its estimated useful lives:
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Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | We measure certain financial instruments at fair value on a recurring basis. The Company had no assets that are required to be valued on a recurring basis as of March 31, 2022 and September 30, 2021. The Company had liabilities that are required to be measured at fair value on a recurring basis as follows at March 31, 2022 and September 30, 2021:
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Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:
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CONVERTIBLE PROMISSORY NOTES (Tables) |
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Schedule of Debt [Table Text Block] | As of March 31, 2022, the outstanding convertible promissory notes are summarized as follows:
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Schedule of Maturities of Long-Term Debt [Table Text Block] | Maturities of long-term debt for the next four years are as follows:
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CONVERTIBLE PROMISSORY NOTES (Tables) [Line Items] | |||||||||||||||||||||
Fair Value Measurement Inputs and Valuation Techniques [Table Text Block] | For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used Binomial lattice valuation model. The significant assumptions used in the Binomial lattice valuation of the derivatives are as follows:
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WARRANTS (Tables) |
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WARRANTS (Tables) [Line Items] | |||||||||||||
Fair Value Measurement Inputs and Valuation Techniques [Table Text Block] | For the purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used the Binomial lattice valuation model. The significant assumptions used in the Binomial lattice valuation of the derivatives are as follows:
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OPTIONS (Tables) |
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Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement, Option, Exercise Price Range [Table Text Block] | At March 31, 2022, the weighted average remaining contractual life of options outstanding:
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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) |
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Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | Accounts payable and accrued liabilities consisted of the following at March 31, 2022 and September 30, 2021:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Property, Plant and Equipment |
6 Months Ended |
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Mar. 31, 2022 | |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Estimated Useful Life | Length of the lease |
Computer Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Estimated Useful Life | 3 years |
Furniture and Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Estimated Useful Life | 5 years |
Machinery and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Estimated Useful Life | 5 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of Earnings Per Share, Basic and Diluted - USD ($) |
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Mar. 31, 2022 |
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Mar. 31, 2022 |
Mar. 31, 2021 |
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Schedule of Earnings Per Share, Basic and Diluted [Abstract] | ||||
Loss to common shareholders (Numerator) (in Dollars) | $ (1,229,785) | $ (669,206) | $ (1,373,093) | $ (514,092) |
Basic weighted average number of common shares outstanding (Denominator) | 15,379,289 | 12,455,164 | 14,914,920 | 9,099,121 |
Diluted weighted average number of common shares outstanding (Denominator) | 15,379,289 | 12,455,164 | 14,914,920 | 9,099,121 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation - Fair Value, Inputs, Level 3 [Member] |
6 Months Ended |
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Mar. 31, 2022
USD ($)
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Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance | $ 2,553,979 |
Extinguishment of derivatives | (96,205) |
Initial derivative liabilities | 134,384 |
Net (Gain)/Loss on change in fair value of derivative liability | (191,955) |
Balance | 2,400,203 |
Embedded Derivative Financial Instruments [Member] | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance | 372,643 |
Extinguishment of derivatives | 0 |
Initial derivative liabilities | 0 |
Net (Gain)/Loss on change in fair value of derivative liability | 225,354 |
Balance | $ 597,997 |
CONVERTIBLE PROMISSORY NOTES (Details) - USD ($) |
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Jul. 06, 2021 |
Jun. 02, 2021 |
May 10, 2017 |
Oct. 20, 2015 |
Nov. 20, 2014 |
Dec. 31, 2021 |
Sep. 18, 2017 |
Mar. 31, 2022 |
Mar. 31, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
Sep. 30, 2016 |
Dec. 30, 2021 |
Oct. 05, 2021 |
Sep. 30, 2021 |
Aug. 20, 2021 |
Mar. 31, 2016 |
|
CONVERTIBLE PROMISSORY NOTES (Details) [Line Items] | ||||||||||||||||||
Debt Instrument, Face Amount | $ 12,000 | |||||||||||||||||
Proceeds from Convertible Debt | $ (94,250) | $ 0 | ||||||||||||||||
Gain (Loss) on Extinguishment of Debt | $ (37,500) | $ (54,813) | $ 0 | (54,813) | $ 0 | |||||||||||||
Derivative Liability, Current | 2,400,203 | 2,400,203 | $ 2,553,979 | |||||||||||||||
June Note [Member] | ||||||||||||||||||
CONVERTIBLE PROMISSORY NOTES (Details) [Line Items] | ||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | |||||||||||||||||
Debt Instrument, Face Amount | $ 55,500 | |||||||||||||||||
Debt Instrument, Convertible, Terms of Conversion Feature | The June Note could be converted by the lender into shares of common stock of the Company at sixty-one percent (61%) of the lowest trade price of common stock recorded during the fifteen (15) trading days prior to conversion. | |||||||||||||||||
Convertible Debt | 0 | 0 | ||||||||||||||||
Debt Instrument, Fee Amount | $ 17,520 | |||||||||||||||||
Amortization of Debt Discount (Premium) | 36,493 | |||||||||||||||||
Amortization of Debt Issuance Costs | 1,458 | |||||||||||||||||
Gain (Loss) on Extinguishment of Debt | 59,915 | |||||||||||||||||
July Note [Member] | ||||||||||||||||||
CONVERTIBLE PROMISSORY NOTES (Details) [Line Items] | ||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | |||||||||||||||||
Debt Instrument, Face Amount | $ 38,750 | |||||||||||||||||
Debt Instrument, Convertible, Terms of Conversion Feature | The July Note could be converted by the lender into shares of common stock of the Company at sixty-one percent (61%) of the lowest trade price of common stock recorded during the fifteen (15) trading days prior to conversion. | |||||||||||||||||
Convertible Debt | 0 | 0 | ||||||||||||||||
Debt Instrument, Fee Amount | $ 16,936 | |||||||||||||||||
Amortization of Debt Discount (Premium) | 29,620 | |||||||||||||||||
Amortization of Debt Issuance Costs | 1,996 | |||||||||||||||||
Gain (Loss) on Extinguishment of Debt | 36,289 | |||||||||||||||||
August Note [Member] | ||||||||||||||||||
CONVERTIBLE PROMISSORY NOTES (Details) [Line Items] | ||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | |||||||||||||||||
Debt Instrument, Face Amount | $ 500,000 | |||||||||||||||||
Convertible Debt | 500,000 | 500,000 | ||||||||||||||||
Amortization of Debt Discount (Premium) | 391,319 | |||||||||||||||||
Amortization of Debt Issuance Costs | 75,000 | |||||||||||||||||
Amortization of Deferred Loan Origination Fees, Net | 34,181 | |||||||||||||||||
February Note [Member] | ||||||||||||||||||
CONVERTIBLE PROMISSORY NOTES (Details) [Line Items] | ||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | |||||||||||||||||
Debt Instrument, Face Amount | $ 250,000 | |||||||||||||||||
Debt Instrument, Convertible, Terms of Conversion Feature | converted, only following an event of default, and therefore is not included in summary of convertibles note, by the lender into shares of common stock of the Company at the lesser of 90% (representing a 10% discount) multiplied by the lowest trading price during the previous twenty (20) trading day period ending on the issuance date, or during the previous twenty (20) trading day period | |||||||||||||||||
Convertible Debt | 250,000 | 250,000 | ||||||||||||||||
Amortization of Debt Discount (Premium) | 32,849 | |||||||||||||||||
Amortization of Debt Issuance Costs | 9,250 | |||||||||||||||||
Amortization of Deferred Loan Origination Fees, Net | 19,654 | |||||||||||||||||
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | 134,384 | 134,384 | ||||||||||||||||
Debt Issuance Costs, Net | 37,000 | 37,000 | ||||||||||||||||
Debt Issuance Costs, Gross | 78,616 | 78,616 | ||||||||||||||||
Convertible Debt [Member] | ||||||||||||||||||
CONVERTIBLE PROMISSORY NOTES (Details) [Line Items] | ||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | |||||||||||||||||
Debt Instrument, Face Amount | $ 150,000 | |||||||||||||||||
Debt Instrument, Convertible, Terms of Conversion Feature | The 2017 Note may be converted by the lender into shares of common stock of the Company at the lesser of $10 per share or (b) fifty percent (50%) of the lowest trade price of common stock recorded on any trade day after the effective date, or (c) the lowest effective price per share granted to any person or entity | |||||||||||||||||
Proceeds from Convertible Debt | $ 25,000 | $ 90,000 | ||||||||||||||||
Convertible Debt | 115,000 | 115,000 | ||||||||||||||||
Debt Instrument, Maturity Date, Description | The 2017 Note matured twelve months from each tranche. Within thirty (30) days prior to the maturity date, the lender may extend the maturity date to sixty (60) months | |||||||||||||||||
Convertible Debt [Member] | Convertible Note Payable Two [Member] | ||||||||||||||||||
CONVERTIBLE PROMISSORY NOTES (Details) [Line Items] | ||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | |||||||||||||||||
Debt Instrument, Face Amount | $ 400,000 | |||||||||||||||||
Debt Instrument, Term | 18 months | |||||||||||||||||
Debt Instrument, Convertible, Terms of Conversion Feature | The 2014 Note may be converted by the lender into shares of common stock of the Company at the lesser of $12.50 per share or (b) fifty percent (50%) of the lowest trade prices following issuance of the 2014 Note or (c) the lowest effective price per share granted to any person or entity | |||||||||||||||||
Proceeds from Convertible Debt | $ 50,000 | $ 350,000 | ||||||||||||||||
Convertible Debt | $ 50,880 | $ 50,880 | ||||||||||||||||
Convertible Debt [Member] | Convertible Note Payable One [Member] | ||||||||||||||||||
CONVERTIBLE PROMISSORY NOTES (Details) [Line Items] | ||||||||||||||||||
Debt Instrument, Convertible, Terms of Conversion Feature | converted, only following an event of default, and therefore not included in summary of convertibles note, by the lender into shares of common stock of the Company at the lesser of 90% (representing a 10% discount) multiplied by the lowest trading price during the previous twenty (20) trading day period ending on the issuance date, or during the previous twenty (20) trading day period |
CONVERTIBLE PROMISSORY NOTES (Details) - Schedule of Debt |
Mar. 31, 2022
USD ($)
|
---|---|
Schedule of Debt [Abstract] | |
Convertible Promissory Notes | $ 165,880 |
Less current portion | 0 |
Total long-term liabilities | $ 165,880 |
CONVERTIBLE PROMISSORY NOTES (Details) - Schedule of Maturities of Long-term Debt |
Mar. 31, 2022
USD ($)
|
---|---|
Schedule of Maturities of Long-term Debt [Abstract] | |
2023 | $ 165,880 |
$ | $ 165,880 |
CONVERTIBLE LOAN PAYABLE (Details) - USD ($) |
6 Months Ended | ||
---|---|---|---|
Oct. 01, 2014 |
Mar. 31, 2022 |
Mar. 31, 2016 |
|
Debt Disclosure [Abstract] | |||
Debt Instrument, Face Amount | $ 12,000 | ||
Debt Instrument, Convertible, Conversion Price (in Dollars per share) | $ 4.5 | ||
Interest Expense, Debt | $ 1,200 | $ 226 |
WARRANTS (Details) - USD ($) |
Feb. 16, 2022 |
Aug. 20, 2021 |
Mar. 31, 2022 |
Sep. 30, 2021 |
---|---|---|---|---|
Disclosure Text Block Supplement [Abstract] | ||||
Class of Warrant or Rights, Granted | 500,000 | 1,000,000 | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.5 | $ 1.5 | ||
Embedded Derivative, Fair Value of Embedded Derivative Liability | $ 597,997 | $ 372,643 |
OPTIONS (Details) - Share-based Payment Arrangement, Option, Exercise Price Range |
6 Months Ended |
---|---|
Mar. 31, 2022
$ / shares
shares
| |
Share-based Payment Arrangement, Option, Exercise Price Range [Abstract] | |
Exercisable Prices (in Dollars per share) | $ / shares | $ 0.01 |
Options Outstanding | 2,000,000 |
Options Exercisable | 2,000,000 |
Weighted Average Remaining Contractual Life | 8 years 4 months 28 days |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - Schedule of Accounts Payable and Accrued Liabilities - USD ($) |
Mar. 31, 2022 |
Sep. 30, 2021 |
---|---|---|
Schedule of Accounts Payable and Accrued Liabilities [Abstract] | ||
Trade accounts payable | $ 161,922 | $ 143,074 |
Credit cards payable | 66,894 | 66,894 |
Accrued liabilities | 105,783 | 356,683 |
Accrued payroll | 11,268 | 10,712 |
Deferred compensation | 270,433 | 201,383 |
License fees payable | 36,912 | 40,402 |
$ 653,212 | $ 819,148 |
DUE TO RELATED PARTY (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
DUE TO RELATED PARTY (Details) [Line Items] | ||
Proceeds from Related Party Debt | $ 0 | $ 25,000 |
Imputed Interest | 516 | |
Affiliated Entity [Member] | ||
DUE TO RELATED PARTY (Details) [Line Items] | ||
Proceeds from Related Party Debt | $ 86,073 |
SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] |
May 05, 2022
USD ($)
|
---|---|
SUBSEQUENT EVENTS (Details) [Line Items] | |
Debt Instrument, Face Amount (in Dollars) | $ 1 |
Repayments of Debt (in Dollars) | $ 500,000 |
Debt, Original Issue Discount Rate | 10.00% |
Debt Instrument, Interest Rate, Stated Percentage | 12.00% |
Debt Instrument, Maturity Date, Description | The note is due on November 5, 2022, but may be extended for six months by NovAccess |
Debt Instrument, Description | NovAccess must repay the note with the proceeds of any loan or capital raise exceeding $5.0 million and may otherwise prepay the note at any time without penalty |
Debt, Default Interest Rate | 18.00% |
Debt Instrument, Fee | Also pursuant to the SPA, NovAccess paid AJB a commitment fee of 875,000 unregistered shares of the company’s common stock (the “commitment fee shares”). If, after May 5, 2023 and before May 5, 2025, AJB is unable to sell the commitment fee shares for $700,000, then AJB may require NovAccess to issue additional shares or pay cash in the amount of the shortfall. However, if NovAccess pays the note off before November 5, 2022, then the company may redeem 437,500 of the commitment shares for one dollar. Pursuant to the SPA, NovAccess also issued to AJB a common stock purchase warrant (the “warrant”) to purchase 1.0 million shares of the company’s common stock for $0.01 a share. The warrant expires on May 5, 2027. NovAccess also entered into a security agreement with AJB (the “security agreement”) pursuant to which NovAccess granted to AJB a security interest in all of the company’s assets, including the equity of StemVax, LLC, securing NovAccess’ obligations under the SPA, note and warrant. In addition, NovAccess entered into a registration rights agreement with AJB (the “registration agreement”) pursuant to which NovAccess agreed to file with the Securities and Exchange Commission a Form S-1 by August 3, 2022 to register for resale the commitment fee shares and the shares issuable upon exercise of the warrant. |
Maximum [Member] | |
SUBSEQUENT EVENTS (Details) [Line Items] | |
Debt Instrument, Interest Rate, Stated Percentage | 15.00% |
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