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WARRANTS AND NON-EMPLOYEE OPTIONS

12 Months Ended

Sep. 30, 2020

4.	WARRANTS AND NON-EMPLOYEE OPTIONS

	The following warrants and non-employee options are outstanding at September 30, 2020:

Warrant	Issue Date	Shares Issuable upon Exercise of Warrants		Exercise Price		Expiration Date
Series N	8/18/2008		85,339	$	3.00	2/18/2021
Series UU	6/11/2018		93,603	$	2.80	12/31/2020
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 CC	12/8/2016		148,643	$	5.00	12/8/2021
Series HH	2/23/2017		200	$	3.13	2/16/2022
Series AA	8/26/2016		200,000	$	13.75	2/22/2022
Series MM	6/22/2017		797,633	$	1.86	6/22/2022
Series NN	7/24/2017		348,842	$	2.52	7/24/2022
Series RR	10/30/2017		417,649	$	1.65	10/30/2022
Series SS	12/19/2017		326,064	$	2.09	12/18/2022
Series TT	2/5/2018		371,564	$	2.24	2/5/2023
Consultants	7/28/17		10,000	$	2.18	7/27/2027

The following warrants and non-employee options were 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

A.	Warrant Liabilities

	Warrant liabilities outstanding at September 30 are as follows:

	2020		2019
Series V warrants	$	-	$	674,442
Series W warrants		73,570		1,193,507
Series Z warrants		1,207,902		1,109,545
Series ZZ warrants		75,044		77,638
Series AA warrants		1,082,212		916,908
Series BB warrants		65,173		63,966
Series CC warrants		1,259,712		1,710,898
Series FF warrants		-		446,185
Series HH warrants		2,000		45,657
Series JJ warrants		-		66,599
Series LL warrants		-		182,965

Total warrant liabilities	$	3,765,613	$	6,488,310

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

	2020			2019
Series S Warrants	$	-		$	33
Series V warrants		185,652			95,994
Series W warrants		1,119,937			(194,426	)
Series Z warrants		(98,357	)		(621,778	)
Series ZZ warrants		2,594			(43,423	)
Series AA warrants		(165,304	)		(536,434	)
Series BB warrants		(1,207	)		(35,510	)
Series CC warrants		(875,040	)		(1,198,836	)
Series DD warrants		-			1,249,287
Series EE warrants		-			1,249,287
Series FF warrants		(319,706	)		(257,264	)
Series GG warrants		-			195,228
Series HH warrants		(34,589	)		(24,465	)
Series II warrants		-			(442,040	)
Series JJ warrants		(64,992	)		(35,301	)
Series KK warrants		-			(55,622	)
Series LL warrants		(98,066	)		(105,333	)
Net loss on warrant liabilities	$	(349,078	)	$	(760,603	)

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.

Changes in Warrant Liabilities

On May 26, 2020, the Company lowered the exercise price of 810,127 Series V warrants from $19.75 to $13.75 per share and extended the expiration dates of the Series V warrants from May 28, 2020 to June 25, 2020. The incremental cost of this modification was approximately $664,000, which was included in the net loss on derivatives for the year ended September 30, 2020. On June 25, 2020, 135,963 Series V warrants, with an exercise price of $13.75 expired. The warrants were valued at approximately $211,000 on the date of expiration.

On December 10, 2018, 1,360,960 Series DD and 1,360,960 Series EE warrants, with an exercise price of $4.50 expired.

On October 11, 2018, 327,729 Series S warrants, with an exercise price of $31.25 expired.

Exercise of Warrant Liabilities

The following warrants recorded as liabilities were exercised during the year ended September 30, 2020:

Warrants	Warrants Exercised		Exercise Price		Proceeds
Series V		674,164	$	13.75	$	9,269,755
Series CC		128,820	$	5.00		644,100
Series FF		68,048	$	3.91		265,812
Series HH		6,300	$	3.13		19,687
Series JJ		9,450	$	3.13		29,531
Series LL		26,398	$	3.59		94,867
		913,180			$	10,323,752

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

Equity Warrants

Changes in Equity Warrants

On May 26, 2020, the Company provided that for each Series V liability warrant exercised on or before June 10, 2020, the former holder of the Series V warrant received one Series XX warrant. Each Series XX warrant allowed the holder to purchase one share of the Company’s common stock at a price of $18.00 per share at any time on or before September 10, 2020. For each Series V liability warrant exercised after June 10, 2020 but on or before June 25, 2020, the former holder of the Series V warrant received one Series YY warrant. Every two Series YY warrants allowed the holder to purchase one share of the Company’s common stock at a price of $20.00 per share at any time on or before September 25, 2020. In June 2020, 461,953 Series XX warrants and 101,839 Series YY warrants were issued to the former holders of the Series V warrants. The Series XX and YY warrants qualified for equity treatment in accordance with ASC 815. The Company recognized a warrant inducement expense equal to the fair value of the Series XX and Series YY warrants issued as of the date the inducement offers were accepted. The fair values of the Series XX and Series YY warrants were calculated to be approximately $629,000 and $177,000, respectively. The total expense of approximately $806,000 is reported as warrant inducement expense in the statement of operations for the year ended September 30, 2020. All Series XX and YY warrants expired in September 2020.

On May 8, 2020, the expiration dates of 93,593 Series UU warrants were extended from June 11, 2020 to December 31, 2020. These warrants were previously issued as an inducement to convert notes payable into shares of common stock. The incremental cost of this extension was approximately $6,000 and was recorded as interest expense during the year ended September 30, 2020. The Series UU warrants are held by Geert Kersten, Patricia Prichep (current Officers of the Company) and the de Clara Trust, of which the Company’s CEO, Geert Kersten, is a beneficiary.

On January 23, 2020, the expiration date of the Series N warrants was extended to February 18, 2021. The incremental cost of this extension was approximately $22,000, which was recorded as a deemed dividend in the financial statements for the year ended September 30, 2020. The Series N warrants are held by the de Clara Trust.

Exercise of Equity Warrants

The following equity warrants were exercised during the year ended September 30, 2020.

Warrants	Warrants Exercised		Exercise Price		Proceeds
Series MM		95,858	$	1.86	$	178,296
Series NN		124,956	$	2.52		314,889
Series OO		50,000	$	2.52		126,000
Series RR		39,467	$	1.65		65,121
Series SS		156,580	$	2.09		327,252
Series TT		188,125	$	2.24		421,400
Series UU		61,207	$	2.80		171,380
Series VV		82,500	$	1.75		144,375
		798,693			$	1,748,713

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

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, 2020 and 2019 the Company issued 79,950 and 199,977 shares, respectively, of common stock to consultants, all of which were restricted shares. Under these arrangements, the common stock was issued with stock prices ranging between $2.66 and $17.60 per share. The weighted average grant price was $12.01 and $4.25, respectively, for stock issued during the years ended September 30, 2020 and 2019.

During the years ended September 30, 2020 and 2019, the Company recorded total expense of approximately $863,000 and $856,000, respectively, relating to these consulting agreements. At September 30, 2020 and 2019, costs of approximately $395,000 and $230,000, respectively, are included in prepaid expenses. No options were issued to consultants during the year ended September 30, 2020. During the year ended September 30, 2019, 10,000 options issued to consultants were exercised and 10,400 options expired. As of September 30, 2020,10,000 options issued to consultants as payment for services remained outstanding, all of which were issued from the Non-Qualified Stock Option plan and are fully vested.