WARRANTS AND NON-EMPLOYEE OPTIONS

12 Months Ended

Sep. 30, 2021

WARRANTS AND NON-EMPLOYEE OPTIONS

4. WARRANTS AND NON-EMPLOYEE OPTIONS

4.	WARRANTS AND NON-EMPLOYEE OPTIONS
	The following warrants and non-employee options are outstanding at September 30, 2021:

Warrant/Options	Issue Date	Shares Issuable upon Exercise of Warrants/ Options		Exercise Price		Expiration Date
Series N	8/18/2008		85,339	$	3.00	8/18/2022
Series UU	6/11/2018		93,603	$	2.80	6/30/2022
Series X	1/13/2016		120,000	$	9.25	7/13/2022
Series Y	2/15/2016		26,000	$	12.00	8/15/2022
Series Z	5/23/2016		184,800	$	13.75	11/23/2021
Series CC	12/8/2016		15,845	$	5.00	12/8/2021
Series HH	2/23/2017		200	$	3.13	2/16/2022
Series AA	8/26/2016		100,000	$	13.75	2/22/2022
Series MM	6/22/2017		333,432	$	1.86	6/22/2022
Series NN	7/24/2017		210,087	$	2.52	7/24/2022
Series RR	10/30/2017		251,761	$	1.65	10/30/2022
Series SS	12/19/2017		200,000	$	2.09	12/18/2022
Series TT	2/5/2018		600	$	2.24	2/5/2023
Consultants	7/28/2017 – 11/18/2020		15,000	$	2.18 - $11.61	11/17/2022 - 7/27/2027

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

Warrant	Issue Date	Shares Issuable upon Exercise of Warrants/Options		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

A. Warrant Liabilities

Warrant liabilities outstanding at September 30 are as follows:

	2021		2020
Series W warrants	$	-	$	73,570
Series Z warrants		64,787		1,207,902
Series ZZ warrants		-		75,044
Series AA warrants		276,035		1,082,212
Series BB warrants		-		65,173
Series CC warrants		94,961		1,259,712
Series HH warrants		1,597		2,000
Total warrant liabilities	$	437,380	$	3,765,613

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

	2021			2020
Series V Warrants	$	-		$	185,652
Series W warrants		73,570			1,119,937
Series Z warrants		252,115			(98,357	)
Series ZZ warrants		(98,692	)		2,594
Series AA warrants		(318,823	)		(165,304	)
Series BB warrants		65,173			(1,207	)
Series CC warrants		(668,605	)		(875,040	)
Series FF warrants		-			(319,706	)
Series HH warrants		404			(34,589	)
Series JJ warrants		-			(64,992	)
Series LL warrants		-			(98,066	)
Net loss on warrant liabilities	$	(694,858	)	$	(349,078	)

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 August 22, 2021, 16,000 Series BB warrants, with an exercise price of $13.75 expired.

On October 28, 2020, 688,930 Series W warrants, with an exercise price of $16.75 expired.

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.

Exercise of Warrant Liabilities

The following warrants recorded as liabilities were exercised during the year ended September 30, 2021:

Warrants	Warrants Exercised		Exercise Price		Proceeds
Series Z		79,200	$	13.75	$	1,089,000
Series ZZ		20,000	$	13.75		275,000
Series AA		100,000	$	13.75		1,375,000
Series CC		132,798	$	5.00		663,990
		331,998			$	3,402,990

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

B.	Equity Warrants
	Changes in Equity Warrants
	On December 7, 2020, the expiration dates of the Series N, Series X, Series Y and Series UU warrants were extended six months. On June 28, 2021, the expiration dates of these same warrants were extended one year. The incremental costs of both warrant extensions were recorded consistent with the accounting for the initial warrant issuances. The incremental costs of the Series N and Series X warrant extensions were recorded as a deemed dividend and totaled approximately $351,000 for the year ended September 30, 2021. The Series N and Series X warrants are held by the de Clara Trust, of which the Company’s CEO, Geert Kersten, is a beneficiary. The incremental cost of the Series Y warrants extension approximated $103,000 and had no impact on the financial statements for the year ended September 30,2021 due to offsetting entries recorded within additional paid in capital. The incremental cost of the Series UU warrant extension was recorded as interest expense, because these warrants were initially issued as an inducement to convert notes payable into common stock, and totaled approximately $24,000 for the year ended September 30, 2021. The Series UU warrants are held by Geert Kersten, Patricia Prichep (current Officers of the Company) and the de Clara Trust.
	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, 2021.

Warrants	Warrants Exercised		Exercise Price		Proceeds
Series MM		464,201	$	1.86	$	863,414
Series NN		138,755	$	2.52		349,663
Series RR		165,888	$	1.65		273,715
Series SS		126,064	$	2.09		263,474
Series TT		370,964	$	2.24		830,959
		1,265,872			$	2,581,225

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

C.	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, 2021 and 2020 the Company issued 75,885 and 79,950 shares, respectively, of common stock to consultants, all of which were restricted shares. Under these arrangements, during the periods presented, the common stock was issued with stock prices ranging from $6.86 to $24.95 per share. The weighted average grant price was $15.46 and $12.01, respectively, for stock issued during the years ended September 30, 2021 and 2020.
	During the years ended September 30, 2021 and 2020, the Company recorded total expense of approximately $1,227,000 and $863,000, respectively, relating to these consulting agreements. At September 30, 2021 and 2020, costs of approximately $364,000 and $395,000, respectively, are included in prepaid expenses.
	During the year ended September 30, 2021, the Company issued 5,000 options to a consultant to purchase common stock with an exercise price of $11.61 and an expiration of November 17, 2022. No options were issued to consultants during the year ended September 30, 2020. As of September 30, 2021, 15,000 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.