STOCK OPTIONS AND WARRANTS

12 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

STOCK OPTIONS AND WARRANTS

9. STOCK OPTIONS AND WARRANTS

Options

During the fiscal year ended September 30, 2023, the Company granted 6,000 new stock options at an exercise price of $8.15 to an employee. These options shall vest and become exercisable 1/3 on each anniversary of the grant date. The options will expire ten years from the grant date, unless terminated earlier as provided by the option agreements.

During the fiscal year ended September 30, 2022, the Company granted 5,286 new stock options at an average exercise price of $45.85 to employees. For employees, these options shall vest and become exercisable (i) in the case of time-based options, generally as to 1/3 on each anniversary of the grant date, although different vesting patterns exist, or (ii) in the case of performance-based options (the “Performance-Based Options”), based on the Company’s or individual’s achievement of certain performance milestones established by the Compensation Committee for each fiscal year in the fiscal years ending September 30, 2023, 2024 and 2025. During the fiscal year ended September 30, 2022, the Company issued a total of 3,657 Performance-Based Options, which represents the maximum number of Performance-Based Options that may be earned if all performance milestones are achieved for the applicable performance periods.

The exercise price for the options issued in the year ended September 30, 2022 ranged from $10.96 - $75.60 per share. The options will expire ten years from the grant date, unless terminated earlier as provided by the option agreements.

The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model using the assumptions noted as follows: expected volatility was based on the volatility of a peer group of companies for the years ended September 30, 2023 and 2022. For the year ended September 30, 2023 and 2022, the expected term of options granted was determined using the simplified method under SAB 107 which represents the mid-point between the vesting term and the contractual term. The risk-free rate is calculated using the U.S. Treasury yield curve and is based on the expected term of the option.

The Black-Scholes option pricing model was used with the following weighted average assumptions for options granted during the year ended September 30, 2023 and 2022, respectively:

For employees	September 30, 2023			September 30, 2022
Risk-free interest rate		4.39	%		2.38-3.71	%
Expected option life		6 years			6 years
Expected volatility		68.6	%		68.2-70.5	%
Expected dividend yield		0.00	%		0.00	%
Exercise price	$	8.15			$ 0.31-$2.16

The Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized stock option expense of $288,030 and $2,899,338, respectively, for the years ended September 30, 2023 and 2022. Unamortized option expense as of September 30, 2023, for all options outstanding amounted to approximately $108,672. These costs are expected to be recognized over a weighted-average period of 1.47 years.

During the year ended September 30, 2023, 23,192 stock options were forfeited because of termination of employment, expiration of options and performance conditions not met.

The following table summarizes stock option activity for the year ended September 30, 2023.

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding at September 30, 2022		113,650		$	149.88		7.4	$	1,207
Granted		6,000			8.15		9.88		-0-
Exercised		(-)			-		-		-
Expired		(3,343	)		145.41		-		-
Forfeited		(19,849	)		105.27		4.17		-
Outstanding at September 30, 2023		96,458			150.39		5.84	$	-
Exercisable at September 30, 2023		72,429		$	173.24		4.99	$	-

During the year ended September 30, 2022, the Company issued 400 shares of common stock upon the exercise of outstanding stock options and 16,086 stock options were forfeited because of termination of employment, expiration of options and performance conditions not met.

The following table summarizes stock option activity for the year ended September 30, 2022.

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding at September 30, 2021		128,965		$	165.55		8.4	$	452,206
Granted		5,285			46.9
Exercised		(400	)		31.50
Expired		(4,114	)		679.70
Forfeited		(16,086	)		109.20
Outstanding at September 30, 2022		113,650			149.88		7.4	$	1,207
Exercisable at September 30, 2022		63,641		$	150.65		6.5	$	-

A summary of the status of the Company’s unvested options as of September 30, 2023 and 2022, are presented below:

	Number of Nonvested Options			Weighted Average Grant Date Fair Value
Nonvested options at September 30, 2021		82,057		$	175.70
Granted		5,285		$	29.40
Exercised		—		$	—
Forfeited		(16,086	)	$	108.15
Vested		(21,247	)	$	213.85
Nonvested options at September 30, 2022		50,009		$	154.24
Granted		6,000		$	5.30
Exercised		-		$	-
Forfeited		(19,849	)	$	104.41
Vested		(12,131	)	$	307.72
Nonvested options at September 30, 2023		24,029		$	81.33

Warrants

2022 Warrants

On April 13, 2022, the Company sold 25,279 2022 Units, with each 2022 Unit consisting of (a) one share of our common stock and (b) one 2022 Warrant. Each 2022 Warrant entitles the holder to purchase one share of our common stock at an exercise price of $70.00 per share. The 2022 Warrants have a term of 5 years. Holders may exercise their 2022 Warrants on a “cashless” basis pursuant to a formula set forth in the form of 2022 Warrant.

The following table summarizes warrant activity for the year ended September 30, 2023:

	Number of Shares Issuable Upon Exercise of Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding at September 30, 2022		152,398	$	158.24		3.7	$	-
Issued
Exercised		-		-
Expired		-		-
Outstanding at September 30, 2023		152,398	$	158.24		2.65		-
Exercisable at September 30, 2023		152,398	$	158.24		2.65	$	-

The following table summarizes warrant activity for the year ended September 30, 2022:

	Number of Shares Issuable Upon Exercise of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding at September 30, 2021		138,103		$	174.30		4.5	$	-
Issued		25,279			70.00
Exercised		(10,984	)		157.85
Expired		-			-
Outstanding at September 30, 2022		152,398		$	158.24		3.7		-
Exercisable at September 30, 2022		152,398		$	158.24		3.7	$	-

In the year ended September 30, 2022, we issued 10,984 shares of common stock related to exercises of 2021 Warrants, including 10,869 shares of common stock issued upon exercise of 10,869 Series A Warrants and 115 shares of common stock issued upon exercise of 230 Series B Warrants. In connection with such exercises, in the year ended September 30, 2022, we received aggregate net proceeds of $1,702,596.