5. WARRANTS AND NON-EMPLOYEE OPTIONS

12 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

5. WARRANTS AND NON-EMPLOYEE OPTIONS

The following warrants and non-employee options are outstanding at September 30, 2019:

Warrant	Issue Date	Shares Issuable upon Exercise of Warrants		Exercise Price		Expiration Date
Series N	8/18/2008	$	85,339	$	3.00	2/18/2020
Series V	5/28/2015		810,127	$	19.75	5/28/2020
Series UU	6/11/2018		154,810	$	2.80	6/11/2020
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
Series CC	12/8/2016		277,463	$	5.00	12/8/2021
Series HH	2/23/2017		6,500	$	3.13	2/16/2022
Series AA	8/26/2016		200,000	$	13.75	2/22/2022
Series JJ	3/14/2017		9,450	$	3.13	3/8/2022
Series LL	4/30/2017		26,398	$	3.59	4/30/2022
Series MM	6/22/2017		893,491	$	1.86	6/22/2022
Series NN	7/24/2017		473,798	$	2.52	7/24/2022
Series OO	7/31/2017		50,000	$	2.52	7/31/2022
Series RR	10/30/2017		457,116	$	1.65	10/30/2022
Series SS	12/19/2017		482,644	$	2.09	12/18/2022
Series TT	2/5/2018		559,689	$	2.24	2/5/2023
Series VV	7/2/2018		82,500	$	1.75	1/2/2024
Consultants	7/28/17		10,000	$	2.18	7/27/2027

The following warrants and non-employee options were outstanding at September 30, 2018:

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

1. Warrant Liabilities

Warrant liabilities outstanding at September 30 are as follows:

	2019		2018
Series S warrants	$	-	$	33
Series V warrants		674,442		770,436
Series W warrants		1,193,507		999,081
Series Z warrants		1,109,545		487,767
Series ZZ warrants		77,638		34,215
Series AA warrants		916,908		380,474
Series BB warrants		63,966		28,456
Series CC warrants		1,710,898		1,779,724
Series DD warrants		-		1,249,287
Series EE warrants		-		1,249,287
Series FF warrants		446,185		188,921
Series GG warrants		-		607,228
Series HH warrants		45,657		58,816
Series II warrants		-		660,135
Series JJ warrants		66,599		88,642
Series KK warrants		-		656,930
Series LL warrants		182,965		77,632
Total warrant liabilities	$	6,488,310	$	9,317,064

The (losses)/gains on the warrant liabilities for the years ended September 30 are as follows:

	2019			2018
Series S Warrants	$	33		$	(751,378	)
Series V warrants		95,994			(697,526	)
Series W warrants		(194,426	)		(915,327	)
Series Z warrants		(621,778	)		(410,551	)
Series ZZ warrants		(43,423	)		(29,461	)
Series AA warrants		(536,434	)		(315,387	)
Series BB warrants		(35,510	)		(24,134	)
Series CC warrants		(1,198,836	)		(1,385,504	)
Series DD warrants		1,249,287			(1,243,795	)
Series EE warrants		1,249,287			(1,243,795	)
Series FF warrants		(257,264	)		(141,767	)
Series GG warrants		195,228			(408,555	)
Series HH warrants		(24,465	)		(42,802	)
Series II warrants		(442,040	)		(462,519	)
Series JJ warrants		(35,301	)		(64,439	)
Series KK warrants		(55,622	)		(449,470	)
Series LL warrants		(105,333	)		(57,151	)
Net loss on warrant liabilities	$	(760,603	)	$	(8,643,561	)

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.

Exercise of Warrant Liabilities

The following warrants recorded as liabilities were exercised during the year ended September 30, 2019:

Warrants	Warrants Exercised		Exercise Price		Proceeds
Series CC		403,017	$	5.00	$	2,015,085
Series GG		200,000	$	3.00		600,000
Series HH		13,500	$	3.13		42,188
Series II		216,500	$	3.00		649,500
Series JJ		20,550	$	3.13		64,219
Series KK		213,870	$	3.04		649,095
		1,067,437			$	4,020,087

The following warrants recorded as liabilities were exercised during the year ended September 30, 2018:

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 December 10, 2018, 1,360,960 Series DD and 1,360,960 Series EE warrants with exercise prices of $4.50 expired. The expiration dates of these warrants had been previously extended and such modifications were reflected in the fair value measurement of the warrants on the dates of modification.

On October 11, 2018, 327,729 Series S warrants, with an exercise price of $31.25, expired. The exercise price of these warrants had been previously repriced under temporarily revised terms and such modifications were reflected in the fair value measurement of the warrants.

On October 17, 2017, 17,821 Series U warrants, with an exercise price of $43.75, expired.

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 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 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.

During the year ended September 30, 2019, 3,817,500 and 195,000 Series VV and WW warrants were exercised, respectively, for total gross proceeds of approximately $7.0 million. During the year ended September 30, 2018 no Series VV or WW warrants were exercised. As of September 30, 2019, 82,500 Series VV and 0 Series WW warrants were outstanding.

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 8). The Series UU warrants are exercisable at a fixed price of $2.80 per share and expire on June 11, 2020.  The Company recognized an expense equal to the excess of the fair value of the consideration transferred in the transaction over 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 for the year ended September 30, 2018. The Series UU warrants qualify for equity treatment in accordance with ASC 815.

During the year ended September 30, 2019, 32,752 Series UU warrants were exercised for total gross proceeds of approximately $0.1 million. During the year ended September 30, 2018 no Series UU warrants were exercised. As of September 30, 2019, 154,810 Series UU warrants were outstanding.

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 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 years ended September 30, 2019 and 2018, 737,188 and 578,983, respectively, Series TT warrants were exercised for total gross proceeds of approximately $1.6 million and $1.3 million, respectively. As of September 30, 2019, 559,689 Series TT warrants were outstanding.

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. 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 years ended September 30, 2019 and 2018, 477,886 and 328,948, respectively, Series SS warrants were exercised for total gross proceeds of approximately $1.0 million and $0.7 million, respectively. As of September 30, 2019, 482,644 Series SS warrants were outstanding.

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 8.

During the years ended September 30, 2019 and 2018, 98,254 and 27,687, respectively, Series RR warrants were exercised for total gross proceeds of approximately $160,000 and $50,000, respectively. As of September 30, 2019, 457,116 Series RR warrants were outstanding.

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 expiration date of the Series N warrants was extended to February 18, 2020. The incremental cost of this extension was approximately $14,000, which was recorded as a deemed dividend in the financial statements for the year ended September 30, 2018.

Exercise of Equity Warrants

The following equity warrants were exercised during the year ended September 30, 2019.

Warrants	Warrants Exercised		Exercise Price		Proceeds
Series NN		65,502	$	2.52	$	165,065
Series OO		10,000	$	2.52		25,200
Series PP		172,500	$	2.30		396,750
Series QQ		3,500	$	2.50		8,750
Series RR		98,254	$	1.65		162,119
Series SS		477,886	$	2.09		998,782
Series TT		737,188	$	2.24		1,651,301
Series UU		32,752	$	2.80		91,706
Series VV		3,817,500	$	1.75		6,680,625
Series WW		195,000	$	1.63		316,875
		5,610,082			$	10,497,173

The following equity warrants 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, 2019 and 2018 the Company issued 199,977 and 356,197 shares, respectively, of common stock to consultants of which 199,977 and 353,197 shares, respectively, were restricted shares. Under these arrangements, the common stock was issued with stock prices ranging between $0.85 and $8.76 per share. The weighted average grant price was $4.25 and $1.95, respectively, for stock issued during the years and September 30, 2019 and 2018.

During the years ended September 30, 2019 and 2018, the Company recorded total expense of approximately $856,000 and $531,000, respectively, relating to these consulting agreements. At September 30, 2019 and 2018, approximately $230,000 and $207,000, respectively, are included in prepaid expenses. During the year ended September 30, 2019, 10,000 options issued to consultants were exercised and 10,400 options expired. As of September 30, 2019, 10,000 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.