2. DERIVATIVES LIABILITIES, WARRANTS AND OTHER OPTIONS

12 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

2. DERIVATIVES LIABILITIES, WARRANTS AND OTHER OPTIONS

Below is a chart presenting the derivative liabilities, warrants and other options outstanding at September 30, 2015:

Warrants	Issue Date	Shares Issuable upon Exercise of Warrants		Exercise Price		Expiration Date	Refer -ence
Series N	8/18/08		2,844,627		0.53	8/18/17		1
Series Q	6/21/12		1,200,000		5.00	12/22/15		1
Series R	12/6/12		2,625,000		4.00	12/6/16		1
Series S	10/11/13- 10/24/14		25,928,010		1.25	10/11/18		1
Series U	4/17/14		445,514		1.75	10/17/17		1
Series V	5/28/15		20,253,164		0.79	5/28/20		1
Series P	2/10/12		590,001		4.50	3/6/17		2
Consultants	10/14/05 – 7/1/15		238,000		0.66 – 20.00	10/14/15 - 6/30/18		3

1.   Derivative Liabilities

The table below presents the derivative instruments and their respective balances at September 30.

	2015		2014
Series A through E warrants	$	-	$	6,105
Series H warrants		-		12,000
Series Q warrants		-		12,000
Series R warrants		-		157,500
Series S warrants		7,363,555		5,197,352
Series U warrants		44,551		120,289
Series V warrants		6,278,481		-
Total derivative liabilities	$	13,686,587	$	5,505,246

The table below presents the gains and (losses) on the derivative instruments for the years ended September 30:

Warrant Series	2015			2014			2013
Series A - E	$	6,105		$	1		$	780,883
Series F and G		-			12,667			1,634,000
Series H		12,000			24,000			1,764,000
Series N		-			(1,404,027	)		788,533
Series Q		12,000			36,000			1,872,000
Series R		157,500			131,250			3,911,250
Series S		(1,705,466	)		1,098,787			-
Series T		-			276,122			-
Series U		75,738			73,967			-
Series V		1,724,739			-			-
Net gain	$	282,616		$	248,767		$	10,750,666

The Company reviews all outstanding warrants in accordance with the requirements of ASC 815.  This topic provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. The warrant agreements provide for adjustments to the exercise price for certain dilutive events.  Under the provisions of ASC 815, the warrants are not considered indexed to the Company’s stock because future equity offerings or sales of the Company’s stock are not an input to the fair value of a “fixed-for-fixed” option on equity shares, and equity classification is therefore precluded.

In accordance with ASC 815, derivative liabilities must be measured at fair value upon issuance and re-valued at the end of each reporting period through expiration.  Any change in fair value between the respective reporting periods is recognized as a gain or loss in the statement of operations.

Series A through E Warrants

As of September 30, 2015, all Series A through E warrants had expired.  The Company accounted for the Series A through E Warrants as derivative liabilities in accordance with ASC 815. These warrants did not qualify for equity accounting and were accounted for as derivative liabilities because the warrant agreements provided the holders the right to require a cash settlement of the warrants in the event of a Fundamental Transaction, as defined in the warrant agreement.  Since the occurrence of a Fundamental Transaction is not entirely within the Company’s control, circumstances existed that would require net-cash settlement of the warrants while holders of shares would not receive a cash settlement.

On December 24, 2014, 130,347 Series A warrants, with an exercise price of $5.00, expired.  The fair value of the warrants on the date of expiration was $1,303.  As of September 30, 2014, all of these warrants were outstanding and the fair value of these derivative liabilities was $1,303. On January 8, 2015, 16,750 Series A warrants, with an exercise price of $5.00, expired.   The fair value of the Series A warrants was $0 on the date of expiration.  As of September 30, 2014, all of these warrants were outstanding and the fair value of these derivative liabilities was $167.

In connection with a loan received and fully repaid in a prior period, the Company issued 50,000 Series B warrants with an exercise price of $6.80 per share. On September 4, 2014, all outstanding Series B warrants expired.  As of September 30, 2014, no Series B warrants remained outstanding.

On February 20, 2015, 463,487 Series C warrants, with an exercise price of $5.50, expired.   The fair value of the Series C warrants was $0 on the date of expiration.  As of September 30, 2014, all of these warrants were outstanding.  As of September 30, 2014, the fair value of the Series C warrants was $4,635.

On August 12, 2014, all 71,428 outstanding Series E warrants, with an exercise price of $17.50, expired.  As of September 30, 2014, no Series E warrants remained outstanding.

Series F and G warrants

In October 2011, in connection with a financing, the Company issued 1,200,000 Series F warrants exercisable at $4.00 per share at any time prior to October 6, 2014.  The Company also issued 66,667 Series G warrants exercisable at $4.00 per share to the placement agent for this offering.  On August 12, 2014, all outstanding Series G warrants expired.  The fair value of the Series G warrants on the date of expiration was $0.  On October 6, 2014, all outstanding Series F warrants expired.  The fair value of the Series F warrants on the date of expiration was $0.    As of September 30, 2014, the fair value of the Series F warrants was $0.

Series H Warrants

In January 2012, in connection with a financing, the Company issued 1,200,000 Series H warrants exercisable at $5.00 per share at any time prior to August 1, 2015.    On August 1, 2015, all outstanding Series H warrants expired.  The fair value of the Series H warrants was $0 on the date of expiration.

Series Q Warrants

In June 2012, in connection with a financing, the Company issued 1,200,000 Series Q warrants exercisable at $5.00 per share at any time prior to December 22, 2015. The initial cost of the warrants of $2,160,000 was recorded as a debit to additional paid-in capital and a credit to derivative liabilities.  As of September 30, 2015, 1,200,000 Series Q warrants remained outstanding.

Series R Warrants

On December 4, 2012, the Company sold 3,500,000 shares of its common stock for $10,500,000, or $3.00 per share, in a registered direct offering.  The investors in this offering also received Series R warrants which entitle the investors to purchase up to 2,625,000 shares of the Company’s common stock.  The Series R warrants may be exercised at any time before December 6, 2016 at a price of $4.00 per share.  The initial cost of the warrants of $4,200,000 was recorded as a debit to additional paid-in capital and a credit to derivative liabilities.  As of September 30, 2015, 2,625,000 Series R warrants remained outstanding.

Series S Warrants

On October 11, 2013, the Company closed a public offering of 17,826,087 units of common stock and warrants at a price of $1.00 per unit for net proceeds of $16,400,000, net of underwriting discounts and commissions and offering expenses of the Company.  Each unit consisted of one share of common stock and one Series S warrant to purchase one share of common stock.  The Series S warrants were immediately exercisable, expire on October 11, 2018, and have an exercise price of $1.25.  In November 2013, the underwriters purchased an additional 2,648,913 warrants pursuant to the overallotment option, for which the Company received net proceeds of $24,370.  The initial cost of the Series S warrants of $6,142,500 was recorded as a debit to additional paid-in capital and a credit to derivative liabilities.

On December 24, 2013, the Company closed a public offering of 4,761,905 units of common stock and warrants at a price of $0.63 per unit for net proceeds of $2,790,000, net of underwriting discounts and commissions and offering expenses of the Company.  Each unit consisted of one share of common stock and one Series S warrant to purchase one share of common stock.  The underwriters purchased an additional 476,190 units of common stock and warrants pursuant to the overallotment option, for which the Company received net proceeds of approximately $279,000.  The initial cost of the Series S warrants of $1,178,571 was recorded as a debit to additional paid-in capital and a credit to derivative liabilities.  On February 7, 2014, the Series S warrants began trading on the NYSE MKT under the symbol CVM WS.

On October 24, 2014, the Company closed an underwritten public offering of 7,894,737 shares of common stock and 1,973,684 Series S warrants to purchase shares of common stock. Additionally, on October 21, 2014, the Company sold 1,320,000 shares of common stock and 330,000 Series S warrants to purchase shares of common stock in a private offering.  The common stock and Series S warrants were sold at a combined per unit price of $0.76 for net proceeds of approximately $6.4 million, net of underwriting discounts and commissions and offering expenses.  The initial cost of the Series S warrants of $460,737 was added to the existing Series S warrant liability.

During the year ended September 30, 2015, no Series S warrants were exercised.  During the year ended September 30, 2014, 2,088,769 Series S Warrants were exercised, and the Company received proceeds of $2,610,961.  The total fair value of the Series S warrants on the dates of exercise was $1,024,932.

As of September 30, 2015, the remaining 25,928,010 Series S warrants entitle the holders to purchase one share of the Company's common stock at a price of $1.25 per share.

Series T and U Warrants

On April 17, 2014, the Company closed a public offering of 7,128,229 shares of common stock at a price of $1.40 and 1,782,057 Series T warrants to purchase one share of common stock for net proceeds of $9,230,000, net of underwriting commissions and offering expenses.  The Series T warrants were immediately exercisable and had an exercise price of $1.58. On October 17, 2014, all of the Series T warrants expired.  The fair value of the Series T warrants was $0 on the date of expiration.  The underwriters received 445,514 Series U warrants to purchase one share of common stock.  The Series U warrants were exercisable beginning October 17, 2014, expire on October 17, 2017, and have an exercise price of $1.75.  The initial cost of the Series T and U warrants of $470,377 was recorded as a debit to additional paid-in capital and a credit to derivative liabilities.  As of September 30, 2015, 445,514 Series U warrants remained outstanding.

Series V Warrants

On May 28, 2015, the Company closed an underwritten public offering of 20,253,164 shares of common stock and 20,253,164 Series V warrants to purchase shares of common stock. The common stock and Series V warrants were sold at a combined per unit price of $0.79 for net proceeds of approximately $14.7 million, net of underwriting discounts and commissions and offering expenses.  The Series V warrants were immediately exercisable at a price of $0.79 and expire on May 28, 2020.  The initial cost of the Series V warrants of $8,003,220 was recorded as derivative liability. As of September 30, 2015, 20,253,164 Series V warrants remained outstanding.

2.   Equity Warrants

Series N Warrants

Series N warrants were previously issued in connection with a financing.  On October 11, 2013 and December 24, 2013, in connection with public offerings of common stock on those dates, the Company reset the exercise price of the 518,771 outstanding Series N warrants from $3.00 to $0.53 and issued the Series N warrant holders 2,432,649 additional warrants exercisable at $0.53, as required by the warrant agreements.  In January 2014, the Company offered the investors the option to extend the Series N warrants by one year and allow for cashless exercise in exchange for cancelling the reset provision in the warrant agreement.  One investor, holding 2,844,627 Series N warrants accepted this offer.  Accordingly, these warrants are no longer considered a derivative liability due to the cancelation of the reset provision.  The fair value of the warrants on that date totaled $1,308,528 and was reclassified from derivative liabilities to additional paid-in capital.  On March 21, 2014, the other investor exercised 106,793 Series N warrants.  The Company received cash proceeds of $7,424 for 14,078 of the warrants exercised.  The remaining 92,715 warrants were exercised in a cashless exercise.  The fair value of the warrants on the date of exercise was $137,000 and was reclassified from derivative liabilities to additional paid-in capital.

In addition, the October and December 2013 financings triggered the reset provision related to the initial Series N financing which resulted in the issuance of an additional 1,563,083 shares of common stock.  The cost of additional shares issued was $1,117,447.  This cost was recorded as a debit and a credit to additional paid-in capital and was deemed a dividend.

On October 28, 2014, the outstanding 2,844,627 Series N Warrants were transferred to the de Clara Trust, of which the Company’s CEO, Geert Kersten, is the trustee and a beneficiary. On June 29, 2015, the Company extended the expiration date of the Series N warrants to August 18, 2017.  The incremental cost of this modification was $475,333. The modification was concurrent with the extinguishment and reissuance of a note payable also held in the de Clara Trust, and was recorded as a loss on debt extinguishment.

As of September 30, 2015, the remaining 2,844,627 Series N warrants entitle the holders to purchase one share of the Company's common stock at a price of $0.53 per share at any time prior to August 18, 2017.  On September 30, 2015 and 2014, no derivative liability was recorded because the warrants no longer were considered a liability for accounting purposes.

Series L and Series M Warrants

Series L and Series M warrants were previously issued in connection with a financing. In April 2012, 25,000 Series L warrants exercisable at a price of $7.50 per share were transferred to a consultant and were extended for two years from the current expiration date.  The additional value of $43,910 was accounted for as a credit to additional paid-in capital and a debit to general and administrative expense.  On April 17, 2014, the 25,000 Series L warrants expired.  In April 2013, 100,000 Series L warrants were repriced to $2.50 per share and were extended for two years to April 2, 2015 in return for a reduction in outstanding warrants to 70,000.  The additional cost of $59,531 was recorded as a debit and a credit to additional paid-in capital and was a deemed dividend.  This cost was included in modification of warrants and increased the net loss available to shareholders on the statements of operations.  In April 2015, the remaining 70,000 of the Series L warrants, at an exercise price of $2.50, expired.  As of September 30, 2015, no Series L warrants remained outstanding.

In October 2013, the Company reduced the exercise prices of the Series M warrants from $3.40 to $1.00 in exchange for a reduction in the number of warrants from 600,000 to 500,000.  The additional cost of $76,991 was recorded as non-employee stock compensation expense.  In March 2014, 500,000 Series M warrants were exercised at a price of $1.00, and the Company received proceeds of $500,000.  As of September 30, 2014, no Series M warrants remained outstanding.

Series O and P Warrants

On February 10, 2012, the Company issued 590,001 Series P warrants to the former holder of the Series O warrants as an inducement for the early exercise of the Series O warrants. The Series P warrants allow the holder to purchase up to 590,001 shares of the Company’s common stock at a price of $4.50 per share.  The Series P warrants are exercisable at any time prior to March 6, 2017.  The warrants qualified for equity treatment in accordance with ASC 815 and were valued using the Black-Scholes method.  As of September 30, 2015, 590,001 Series P warrants remained outstanding.

Private Investor Warrants

Between February and August 2014, 132,500 warrants held by a private investor, with exercise prices between $5.60 and $8.20, expired.    On January 26, 2014, 608,438 warrants issued to the lessor of the Company’s manufacturing facility, with an exercise price of $7.50 per share, expired.  As of September 30, 2014, no private investor warrants remained outstanding.

Warrants held by Officer and Director

The Company’s President and a director, Maximilian de Clara, loaned the Company $1,104,057 under a note payable.  In accordance with the loan agreement, the Company issued Mr. de Clara warrants to purchase 164,824 shares of the Company’s common stock at a price of $4.00 per share.  In August 2014, the loan and warrants were transferred to the de Clara Trust, of which the Company’s CEO, Geert Kersten, is the trustee and a beneficiary.  The warrants expired on December 24, 2014.  In consideration for an extension of the due date for the note, Mr. de Clara received warrants to purchase 184,930 shares of the Company’s common stock at a price of $5.00 per share.  These warrants were also transferred to the de Clara Trust and expired on January 6, 2015.

3.   Options and Shares Issued to Consultants

As of September 30, 2015, 238,000 options issued to consultants as payment for services remained outstanding, of which 230,000 options were issued from the Non-Qualified Stock Option plans.

During the year ended September 30, 2015, the Company entered into four new short-term agreements for consulting services.  In accordance with these agreements, the Company issued 70,000 shares of restricted stock at an aggregate fair market value of $54,850 and 90,000 fully vested options to purchase common stock at prices ranging from $0.66 to $1.02, at an aggregate fair value of $35,800. The aggregate fair market values were recorded as prepaid expenses and are being charged to general and administrative expense over the period of service.

On December 15, 2014, the Company extended a one-year consulting agreement for services to be provided through December 15, 2015.  In consideration for services provided under the original contract and the extension, the Company issued the consultant 100,000 shares of restricted common stock during each of the years ended September 30, 2015 and 2014. The shares were issued at the fair market value on the grant dates with an aggregate fair market value of $66,900 and $108,710 for shares issued during the year ended September 30, 2015 and 2014, respectively.  The fair market value of the shares issued was recorded as a prepaid expense and is being charged to general and administrative expense over the period of service.

On October 20, 2013, the Company entered into a consulting agreement for services to be provided through October 19, 2016.  In consideration for services provided, the Company agreed to issue the consultant 34,164 restricted shares each month of the agreement, with the first three months being issued in advance. During the years ended September 30, 2015 and 2014, the Company issued the consultant 409,968 shares of restricted stock at the fair market value of $307,476 and $439,008, respectively.  The aggregate fair market value was recorded as a prepaid expense and is being charged to general and administrative expense over the period of service.  In November 2014, the Company issued the same consultant 150,000 shares of common stock at the aggregate fair market value of $97,500, in consideration for services provided.

The Company also engaged an additional consultant for services to be provided through November 30, 2014.  During the year ended September 30, 2015, the Company issued the consultant 10,000 shares of restricted stock at the fair market value of $7,250.  During the year ended September 30, 2014, the Company issued the consultant 70,000 shares of restricted stock at the fair market value of $79,400.  The fair market value of the shares issued was recorded as a prepaid expense and was charged to general and administrative expense over the period of service.

During the years ended September 30, 2015 and 2014, the Company recorded total expense of $565,915 and $600,650 relating to these consulting agreements.  In addition, $94,305 was expensed during the year ended September 30, 2014 for other prior year consulting agreements.  At September 30, 2015 and 2014, respectively, $30,329 and $26,468 relating to these consulting agreements is included in prepaid expenses.