4. WARRANTS AND NON-EMPLOYEE OPTIONS

12 Months Ended

Sep. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

4. WARRANTS AND NON-EMPLOYEE OPTIONS

The following chart represents the warrants and non-employee options outstanding at September 30, 2018:

Warrant	Issue Date	Shares Issuable upon Exercise of Warrants		Exercise Price		Expiration Date	Reference
Series S	10/11/13- 10/24/14		327,729	$	31.25	10/11/2018		1
Series DD	12/8/2016		1,360,960	$	4.50	12/10/2018		1
Series EE	12/8/2016		1,360,960	$	4.50	12/10/2018		1
Series N	8/18/2008		85,339	$	3.00	2/18/2020		2
Series V	5/28/2015		810,127	$	19.75	5/28/2020		*
Series UU	6/11/2018		187,562	$	2.80	6/11/2020		2
Series W	10/28/2015		688,930	$	16.75	10/28/2020		*
Series X	1/13/2016		120,000	$	9.25	1/13/2021		*
Series Y	2/15/2016		26,000	$	12.00	2/15/2021		*
Series ZZ	5/23/2016		20,000	$	13.75	5/18/2021		*
Series BB	8/26/2016		16,000	$	13.75	8/22/2021		*
Series Z	5/23/2016		264,000	$	13.75	11/23/2021		*
Series FF	12/8/2016		68,048	$	3.91	12/1/2021		1
Series CC	12/8/2016		680,480	$	5.00	12/8/2021		1
Series HH	2/23/2017		20,000	$	3.13	2/16/2022		1
Series AA	8/26/2016		200,000	$	13.75	2/22/2022		*
Series JJ	3/14/2017		30,000	$	3.13	3/8/2022		1
Series LL	4/30/2017		26,398	$	3.59	4/30/2022		1
Series MM	6/22/2017		893,491	$	1.86	6/22/2022		2
Series NN	7/24/2017		539,300	$	2.52	7/24/2022		2
Series OO	7/31/2017		60,000	$	2.52	7/31/2022		2
Series QQ	8/22/2017		3,500	$	2.50	8/22/2022		2
Series GG	2/23/2017		200,000	$	3.00	8/23/2022		1
Series II	3/14/2017		216,500	$	3.00	9/14/2022		1
Series RR	10/30/2017		555,370	$	1.65	10/30/2022		2
Series KK	5/3/2017		213,870	$	3.04	11/3/2022		1
Series SS	12/19/2017		960,530	$	2.09	12/18/2022		2
Series TT	2/5/2018		1,296,877	$	2.24	2/5/2023		2
Series PP	8/28/2017		172,500	$	2.30	2/28/2023		2
Series WW	7/2/2018		195,000	$	1.63	6/28/2023		2
Series VV	7/2/2018		3,900,000	$	1.75	1/2/2024		2
Consultants	1/1/16 - 7/28/17		30,400	$	2.18- $11.50	12/31/18- 7/27/27		3

*No current period changes to these warrants.

The following chart represents the warrants and non-employee options outstanding at September 30, 2017:

Warrant	Issue Date	Shares Issuable upon Exercise of Warrants		Exercise Price
Series U	4/17/2014		17,821	$	43.75
Series DD	12/8/2016		1,360,960	$	4.50
Series EE	12/8/2016		1,360,960	$	4.50
Series N	8/18/2008		85,339	$	3.00
Series S	10/11/13- 10/24/14		1,037,120	$	31.25
Series V	5/28/2015		810,127	$	19.75
Series W	10/28/2015		688,930	$	16.75
Series X	1/13/2016		120,000	$	9.25
Series Y	2/15/2016		26,000	$	12.00
Series ZZ	5/23/2016		20,000	$	13.75
Series BB	8/26/2016		16,000	$	13.75
Series Z	5/23/2016		264,000	$	13.75
Series FF	12/8/2016		68,048	$	3.91
Series CC	12/8/2016		680,480	$	5.00
Series HH	2/23/2017		20,000	$	3.13
Series AA	8/26/2016		200,000	$	13.75
Series JJ	3/14/2017		30,000	$	3.13
Series LL	4/30/2017		26,398	$	3.59
Series MM	6/22/2017		893,491	$	1.86
Series NN	7/24/2017		539,300	$	2.52
Series OO	7/31/2017		60,000	$	2.52
Series QQ	8/22/2017		87,500	$	2.50
Series GG	2/23/2017		400,000	$	3.00
Series II	3/14/2017		600,000	$	3.00
Series KK	5/3/2017		395,970	$	3.04
Series PP	8/28/2017		1,750,000	$	2.30
Consultants	12/28/12- 7/28/17		42,000	$	2.18- $70.00

*No current period changes to these warrants.

1. Warrant Liabilities

The table below presents the warrant liabilities and their respective balances at September 30:

	2018		2017
Series S warrants	$	33	$	32,773
Series V warrants		770,436		72,912
Series W warrants		999,081		83,754
Series Z warrants		487,767		77,216
Series ZZ warrants		34,215		4,753
Series AA warrants		380,474		65,087
Series BB warrants		28,456		4,322
Series CC warrants		1,779,724		394,220
Series DD warrants		1,249,287		5,492
Series EE warrants		1,249,287		5,492
Series FF warrants		188,921		47,154
Series GG warrants		607,228		342,173
Series HH warrants		58,816		16,014
Series II warrants		660,135		511,636
Series JJ warrants		88,642		24,203
Series KK warrants		656,930		345,720
Series LL warrants		77,632		20,481
Total warrant liabilities	$	9,317,064	$	2,053,402

The table below presents the (losses)/gains on the warrant liabilities for the years ended September 30:

	2018			2017
Series S Warrants	$	(751,378	)	$	3,078,588
Series V warrants		(697,526	)		1,547,341
Series W warrants		(915,327	)		1,716,104
Series Z warrants		(410,551	)		893,388
Series ZZ warrants		(29,461	)		65,856
Series AA warrants		(315,387	)		698,574
Series BB warrants		(24,134	)		54,266
Series CC warrants		(1,385,504	)		666,203
Series DD warrants		(1,243,795	)		437,780
Series EE warrants		(1,243,795	)		685,915
Series FF warrants		(141,767	)		73,828
Series GG warrants		(408,555	)		272,464
Series HH warrants		(42,802	)		13,616
Series II warrants		(462,519	)		404,823
Series JJ warrants		(64,439	)		20,410
Series KK warrants		(449,470	)		25,564
Series LL warrants		(57,151	)		352,495
Net (loss) gain on warrant liabilities	$	(8,643,561	)	$	11,007,215

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.

Issuance of Warrant Liabilities

On March 14, 2017, the Company sold 600,000 registered shares of common stock and 600,000 Series II warrants to purchase 600,000 unregistered shares of common stock at combined offering price of $2.50 per share.  The Series II warrants have an exercise price of $3.00 per share and expire September 14, 2022. In addition, the Company issued 30,000 Series JJ warrants to purchase 30,000 shares of unregistered common stock to the placement agent. The Series JJ warrants have an exercise price $3.13 and expire on March 8, 2022. The net proceeds from this offering were approximately $1.3 million. The fair value of the Series II and JJ warrants of approximately $1.0 million on the date of issuance was recorded as a warrant liability.

On February 23, 2017, the Company sold 400,000 registered shares of common stock and 400,000 Series GG warrants to purchase 400,000 unregistered shares of common stock at a combined price of $2.50 per share.  The Series GG warrants have an exercise price of $3.00 per share and expire August 23, 2022. In addition, the Company issued to the placement agent 20,000 Series HH warrants to purchase 20,000 shares of unregistered common stock. The Series HH warrants have an exercise price $3.13 and expire on February 16, 2022. The net proceeds from this offering were approximately $0.8 million. The fair value of the Series GG and HH warrants of approximately $0.6 million on the date of issuance was recorded as a warrant liability.

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 were immediately exercisable, expire in five-years from the offering date and have an exercise price of $5.00 per share. The Series DD warrants were immediately exercisable and have an exercise price of $4.50 per share. On June 5, 2017 and June 29, 2017, the expiration date of the Series DD warrants was extended from June 8, 2017 to July 10, 2017 and then to August 10, 2017. On August 29, 2017, the expiration date of the Series DD warrants was extended to December 1, 2017. The Series EE warrants are immediately exercisable and have an exercise price of $4.50 per share. On August 29, 2017, the initial expiration date of the Series EE warrants was extended from September 8, 2017 to December 1, 2017. 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 expire on December 1, 2021 and have an exercise price $3.91. Net proceeds from this offering were 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.

On July 10, 2018, the Company extended the expiration date of its Series DD and Series EE warrants to December 10, 2018. The Series DD and Series EE warrants were issued on December 8, 2016. These warrants had been previously extended to July 12, 2018. The modifications are reflected in the fair value measurement of the warrants.

On April 30, 2017, the Company entered into a securities purchase agreement with an institutional investor whereby it sold 527,960 shares of its common stock for net proceeds of approximately $1.4 million, or $2.875 per share, in a registered direct offering. In a concurrent private placement, the Company also issued to the purchaser of the Company’s common stock Series KK warrants to purchase 395,970 shares of common stock. The warrants can be exercised at a price of $3.04 per share at any time on or after November 3, 2017 and expire on November 3, 2022. In addition, the Company issued 26,398 Series LL warrants to the placement agent as part of its compensation. The Series LL warrants are exercisable on October 30, 2017 at a price of $3.59 per share and expire on April 30, 2022. The fair value of the Series KK and LL warrants of approximately $0.7 million on the date of issuance was recorded as a warrant liability.

Exercise of Warrant Liabilities

The following chart lists the warrant liabilities that were exercised during the year ended September 30, 2018. No warrants were exercised during the year ended September 30, 2017.

Warrants	Warrants Exercised		Exercise Price		Proceeds
Series S		709,391	$	1.75	$	1,241,434
Series GG		200,000	$	3.00		600,000
Series II		383,500	$	3.00		1,150,500
Series KK		182,100	$	3.04		552,674
		1,474,991			$	3,544,608

Expiration of Warrants

On October 17, 2017, 17,821 Series U warrants, with an exercise price of $43.75, expired. The fair value of the Series U warrants was $0 on the date of expiration.

On March 16, 2017, 23,600 Series P warrants, with an exercise price of $112.50, expired. The fair value of the Series P warrants was $0 on the date of expiration.

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.

2. Equity Warrants

Series VV and Series WW Warrants

On July 2, 2018 the Company issued 3,900,000 registered shares of common stock at a purchase price of $1.30 per share in a registered direct offering. For each share of common stock purchased, the investors received an unregistered Series VV warrant to purchase one share of common stock. The Series VV warrants have an exercise price of $1.75 per share, will be exercisable on January 2, 2019 and expire on January 2, 2024. As part of this transaction, the Company also issued 195,000 Series WW warrants to the placement agent. These Series WW warrants have an exercise price of $1.63 per share, will be exercisable on January 2, 2018 and expire on June 28, 2023. The Company allocated the proceeds received to the shares and the warrants on a relative fair value basis. As a result of such allocation, the Company determined the relative fair value of the Series VV warrants to be approximately $1.88 million and the relative fair value of the Series WW warrants to be approximately $0.1 million. The Series VV and WW warrants qualify for equity treatment in accordance with ASC 815.

Series UU Warrants

On June 11, 2018, the Company issued 187,562 Series UU Warrants to holders of the outstanding Series MM and NN notes payable as an inducement to convert their notes into common stock (See Note F). The Series UU warrants are exercisable at a fixed price of $2.80 per share, will not be exercisable on December 11, 2018 and expire on June 11, 2020.  Shares issuable upon the exercise of the warrants are restricted securities unless registered. The Company recognized an expense equal to the fair value of the consideration transferred in the transaction in excess of the fair value of consideration issuable under the original conversion terms. This expense represents the fair value of the Series UU warrants, which was calculated to be approximately $291,000 and is included as interest expense on the statement of operations. The Series UU warrants qualify for equity treatment in accordance with ASC 815.

Series TT Warrants

On February 5, 2018, the Company sold 2,501,145 shares of its common stock at a price of $1.87 per share for total proceeds of approximately $4.7 million. The purchasers of the common stock also received Series TT warrants which allow the purchasers to acquire up to 1,875,860 shares of the Company’s common stock. The warrants are exercisable at a fixed price of $2.24 per share, were exercisable on August 6, 2018 and expire on February 5, 2023. The shares issued and those issuable upon the exercise of the warrants were restricted until they were registered on February 28, 2018. The Company allocated the proceeds received to the shares and the Series TT warrants on a relative fair value basis. As a result of such allocation, the Company determined the relative fair value of the Series TT warrants to be approximately $1.56 million. The Series TT warrants qualify for equity treatment in accordance with ASC 815.

During the period from issuance through September 30, 2018, 578,983 Series TT Warrants were exercised for total proceeds of approximately $1.3 million.

Series SS Warrants

On December 19, 2017 the Company sold 1,289,478 shares of its common stock at a price of $1.90 per share for total proceeds of approximately $2.45 million.  The purchasers of the common stock also received Series SS warrants which allow the purchasers to acquire up to 1,289,478 shares of the Company’s common stock.  The warrants are exercisable at a fixed price of $2.09 per share, and will expire on December 18, 2022. Shares issuable upon the exercise of the warrants were restricted securities until they were registered on January 23, 2018. The Company allocated the proceeds received to the shares and the Series SS warrants on a relative fair value basis. As a result of such allocation, the Company determined the relative fair value of the Series SS warrants to be approximately $1.0 million. The Series SS warrants qualify for equity treatment in accordance with ASC 815.

During the period from issuance through September 30, 2018, 328,948 Series SS warrants were exercised for total proceeds of approximately $0.7 million.

Series RR Warrants 

On October 30, 2017, in consideration for an extension of the maturity date of the Series MM and Series NN convertible notes, the Company issued a total of 583,057 Series RR warrants to the note holders who agreed to the extension.  Each Series RR warrant allows the holder to purchase one share of the Company’s common stock at an exercise price of $1.65 per share through the expiration date of October 30, 2022. The Series RR warrants were classified as equity warrants and are recorded at approximately $0.7 million, the relative fair value on the date of issuance, as described in Note 7.

During the period from issuance through September 30, 2018, 27,687 Series RR warrants were exercised for total proceeds of approximately $46,000.

Series PP and Series QQ Warrants

On August 22, 2017, the Company entered into a securities purchase agreement with institutional investors whereby it sold 1,750,000 shares of its common stock for net proceeds of approximately $3.2 million, or $2.00 per share, in a registered direct offering. In a concurrent private placement, the Company also issued to the purchasers of the Company’s common stock Series PP warrants to purchase 1,750,000 shares of common stock. The warrants can be exercised at a price of $2.30 per share and expire on February 28, 2023. In addition, the Company issued 87,500 Series QQ warrants to the placement agent as part of its compensation. The Series QQ warrants can be exercised at a price of $2.50 per share and expire on August 22, 2022. The Series PP and Series QQ warrants qualify for equity treatment in accordance with ASC 815. The relative fair value of the warrants was approximately $1.4 million.

During the period from issuance through September 30, 2018, 1,577,500 and 84,000 Series PP and Series QQ warrants were exercised for total proceeds of approximately $3.6 and $0.2 million, respectively.

Series OO Warrants

On July 26, 2017, the Company entered into a securities purchase agreement with an investor whereby it sold 100,000 shares of its common stock for gross proceeds of $229,000, or $2.29 per share, in a registered offering. In a concurrent private placement, the Company also issued to the purchaser of the common stock Series OO warrants to purchase 60,000 shares of the Company’s common stock. The warrants can be exercised at a price of $2.52 per share, and expire on July 31, 2022. The Series OO warrants qualify for equity treatment in accordance with ASC 815. The relative fair value of the warrants was approximately $62,000.

Series NN Warrants

On July 24, 2017, in connection with the issuances of convertible notes (See Note 7), the Company issued the note holders Series NN warrants which entitle the purchasers to acquire up to an aggregate of 539,300 shares of the Company’s common stock. The warrants are exercisable at a fixed price of $2.52 per share and expire on July 24, 2022. The Company allocated the proceeds received to the notes and the Series NN warrants on a relative fair value basis. As a result of such allocation, the Company determined the initial carrying value of the Series NN warrants to be approximately $0.5 million. The Series NN warrants qualify for equity treatment in accordance with ASC 815.

Series MM Warrants

On June 22, 2017, in connection with the issuance of convertible notes (see Note 7), the Company issued the note holders Series MM warrants, which entitle the purchasers to acquire up to an aggregate of 893,491 shares of the Company’s common stock. The Series MM warrants are exercisable at a price of $1.86 per share and expire on June 22, 2022. The Company allocated proceeds received to the Notes and the Series MM warrants on a relative fair value basis. As a result of such allocation, the Company determined the initial carrying value of the Series MM warrants to be approximately $0.6 million. The Series MM warrants qualify for equity treatment in accordance with ASC 815.

Series N Warrants

Series N warrants were previously issued in connection with a financing and were subsequently transferred to the de Clara Trust, of which the Company’s CEO, Geert Kersten, is a beneficiary.

On August 4, 2018, the Series N warrants were modified. The modification extended the expiration date to February 18, 2020. The incremental cost of this modification was approximately $14,000, which was recorded as a deemed dividend. The warrants had previously been modified on July 17, 2017, when the expiration date was extended by one year to August 18, 2018; the 113,785 warrants outstanding were reduced by 25% to 85,339 warrants outstanding; and the exercise price was reduced to $3.00 per share. The incremental cost of this modification was approximately $64,000, which was recorded as a deemed dividend.

On August 4, 2018 the expiration date of the Series N warrants was extended by eighteen months to expire on February 18, 2020. The incremental cost of this extension was approximately $14,000, which was recorded as a deemed dividend.

Exercise of Equity Warrants

The following chart lists the equity warrants that were exercised during the year ended September 30, 2018.

Warrants	Warrants Exercised		Exercise Price		Proceeds
Series PP		1,577,500	$	2.30	$	3,628,250
Series QQ		84,000	$	2.50		210,000
Series RR		27,687	$	1.65		45,684
Series SS		328,948	$	2.09		687,500
Series TT		578,983	$	2.24		1,296,922
		2,597,118			$	5,868,356

3.  Options and Shares Issued to Consultants

The Company typically enters into consulting arrangements in exchange for common stock or stock options. During the years ended September 30, 2018 and 2017 the Company issued 356,197 and 76,551 shares, respectively, of common stock to consultants of which 353,197 and 68,352 shares, respectively, were restricted shares. Under these arrangements, the common stock was issued with stock prices ranging between $0.85 and $7.25 per share. The weighted average grant price was $1.95 and $2.67 for stock issued during the years and September 30, 2018 and 2017, respectively.

Additionally, during the year ended September 30, 2017 the Company issued to consultants 20,000 options to purchase common stock with an exercise price of $2.18 per share and a fair value of $1.87 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 years ended September 30, 2018 and 2017, the Company recorded total expense of approximately $531,000 and $233,000, respectively, relating to these consulting agreements. At September 30, 2018 and 2017, approximately $207,000 and $45,000, respectively, are included in prepaid expenses. As of September 30, 2018, 42,000 options issued to consultants as payment for services remained outstanding, all of which were issued from the Non-Qualified Stock Option plans and are fully vested.