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C. STOCKHOLDERS EQUITY

3 Months Ended

Dec. 31, 2016

Stock options, stock bonuses and compensation granted by the Company as of December 31, 2016 are as follows:

Name of Plan	Total Shares Reserved Under Plans		Shares Reserved for Outstanding Options		Shares Issued		Remaining Options/Shares Under Plans

Incentive Stock Options Plans		138,400		65,959		N/A		60,453
Non-Qualified Stock Option Plans		387,200		262,531		N/A		95,564
Stock Bonus Plans		223,760		N/A		160,157		63,570
Stock Compensation Plan		134,000		N/A		83,490		49,188
Incentive Stock Bonus Plan		640,000		N/A		624,000		16,000

Stock options, stock bonuses and compensation granted by the Company as of September 30, 2016 are as follows:

Name of Plan	Total Shares Reserved Under Plans		Shares Reserved for Outstanding Options		Shares Issued		Remaining Options/Shares Under Plans

Incentive Stock Option Plans		138,400		65,959		N/A		60,453
Non-Qualified Stock Option Plans		387,200		277,613		N/A		82,370
Bonus Plans		223,760		N/A		26,448		97,278
Stock Compensation Plan		134,000		N/A		79,401		53,276
Incentive Stock Bonus Plan		640,000		N/A		624,000		16,000

Stock option activity:

	Three Months Ended December 31,
	2016		2015
Granted		-		-
Expired		15,081		-
Forfeited		-		919

Stock-Based Compensation Expense

	Three months Ended December 31,
	2016		2015
Employees	$	312,375	$	427,910
Non-employees	$	78,553	$	329,195

Employee compensation expense includes the expense related to options issued or vested and restricted stock. Non-employee expense includes the expense related to options and stock issued to consultants expensed over the period of their service contracts.

Warrants and Non-employee Options

The following chart presents the outstanding warrants and non-employee options, listed by expiration date at December 31, 2016:

Warrant	Issue Date	Shares Issuable upon Exercise of Warrant		Exercise Price		Expiration Date	Reference

Series P	2/10/12		23,600	$	112.50	3/6/17
Series DD	12/8/16		1,360,960	$	4.50	6/8/17		1
Series EE	12/8/16		1,360,960	$	4.50	9/8/17		1
Series N	8/18/08		113,785	$	13.18	8/18/17
Series U	4/17/14		17,821	$	43.75	10/17/17		1
Series S	10/11/13 -10/24/14		1,037,120	$	31.25	10/11/18		1
Series V	5/28/15		810,127	$	19.75	5/28/20		1
Series W	10/28/15		688,930	$	16.75	10/28/20		1
Series X	1/13/16		120,000	$	9.25	1/13/21
Series Y	2/15/16		26,000	$	12.00	2/15/21
Series Z	5/23/16		264,000	$	13.75	11/23/21		1
Series ZZ	5/23/16		20,000	$	13.75	5/18/21		1
Series BB	8/26/16		16,000	$	13.75	8/22/21		1
Series FF	12/8/16		68,048	$	4.00	12/1/21		1
Series CC	12/8/16		680,480	$	5.00	12/8/21		1
Series AA	8/26/16		200,000	$	13.75	2/22/22		1
Consultants	3/6/12- 7/1/16		23,000	$	9.25- $87.50	3/5/17- 6/30/19		2

1.	Derivative Liabilities

The table below presents the warrant liabilities and their respective balances at the balance sheet dates:

	December 31, 2016		September 30, 2016
Series S warrants	$	490,040	$	3,111,361
Series U warrants		-		-
Series V warrants		202,532		1,620,253
Series W warrants		132,254		1,799,858
Series Z warrants		101,817		970,604
Series ZZ warrants		6,725		70,609
Series AA warrants		84,092		763,661
Series BB warrants		5,916		58,588
Series CC warrants		455,931		-
Series DD warrants		72,353		-
Series EE warrants		176,804		-
Series FF warrants		54,242		-

Total warrant liabilities	$	1,782,706	$	8,394,934

The table below presents the gains on the warrant liabilities for the three months ended December 31:

	2016		2015
Series S warrants	$	2,621,321	$	2,826,153
Series U warrants		-		31,186
Series V warrants		1,417,721		3,240,506
Series W warrants		1,667,604		2,025,115
Series Z warrants		868,787		-
Series ZZ warrants		63,884		-
Series AA warrants		679,569		-
Series BB warrants		52,672		-
Series CC warrants		604,492		-
Series DD warrants		370,919		-
Series EE warrants		514,603		-
Series FF warrants		66,740		-

Net gain on warrant liabilities	$	8,928,312	$	8,122,960

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 dates is recognized as a gain or loss.

Issuance of additional Warrants

On December 8, 2016, the Company sold 1,360,960 shares of common stock and warrants to purchase common stock at a price of $3.13 in a public offering. The warrants consist of 680,480 Series CC warrants to purchase 680,480 shares of common stock, 1,360,960 Series DD warrants to purchase 1,360,960 shares of common stock and 1,360,960 Series EE warrants to purchase 1,360,960 shares of common stock. The Series CC warrants are immediately exercisable, expire in five-years from the offering date and have an exercise price of $5.00 per share. The Series DD warrants are immediately exercisable, expire in six-months from the offering date and have an exercise price of $4.50 per share. The Series EE warrants are immediately exercisable, expire in nine-months from the offering date and have an exercise price of $4.50 per share. In addition, the Company issued 68,048 Series FF warrants to purchase 68,048 shares of common stock to the placement agent. The FF warrants are exercisable at any time on or after June 8, 2017 and expire on December 1, 2021 and have an exercise price $3.91. The net proceeds from this offering was approximately $3.7 million. The fair value of the Series CC, DD, EE and FF warrants of approximately $2.3 million on the date of issuance was recorded as a warrant liability.

Expiration of Warrants

On December 6, 2016, 105,000 Series R warrants, with an exercise price of $100.00, expired. The fair value of the Series R warrants was $0 on the date of expiration.

On December 22, 2015, 48,000 Series Q warrants, with an exercise price of $125.00, expired. The fair value of the Series Q warrants was $0 on the date of expiration.

2.	Options and shares issued to Consultants

The Company typically enters into consulting arrangements in exchange for common stock or stock options. During the three months ended December 31, 2016, the Company issued 14,900 shares of common stock, of which 10,800 were restricted shares. The common stock was issued with stock prices ranging between $2.25 and $7.25 per share. During the three months ended December 31, 2015, the Company issued 17,700 shares of common stock, of which 13,600 were restricted shares. The common stock was issued with stock prices ranging between $10.25 and $18.00 per share. Additionally, during the three months ended December 31, 2015, the Company issued a consultant 6,000 options to purchase common stock at $15.00 per share and a fair value of $7.50 per share. The aggregate values of the issuances of restricted common stock and common stock options are recorded as prepaid expenses and are charged to general and administrative expenses over the periods of service.

During the three months ended December 31, 2016 and 2015, the Company recorded total expense of approximately $79,000 and $329,000, respectively, relating to these consulting agreements. At December 31, 2016 and September 30, 2016, approximately $30,000 and $48,000, respectively, are included in prepaid expenses. As of December 31, 2016, the Company had 23,000 options outstanding, which were issued to consultants as payment for services. Of these 23,000 outstanding options, 19,000 were vested, all of which were issued from the Non-Qualified Stock Option plans.