WARRANTS AND NON-EMPLOYEE OPTIONS

12 Months Ended

Sep. 30, 2022

WARRANTS AND NON-EMPLOYEE OPTIONS

WARRANTS AND NON-EMPLOYEE OPTIONS

4. WARRANTS AND NON-EMPLOYEE OPTIONS

The following warrants and non-employee options are outstanding at September 30, 2022:

Warrant/Options	Issue Date	Shares Issuable upon Exercise of Warrants/ Options		Exercise Price		Expiration Date
Series N	8/18/2008		85,339	$	3.00	8/18/2024
Series UU	6/11/2018		93,603	$	2.80	6/30/2024
Series X	1/13/2016		120,000	$	9.25	7/13/2024
Series Y	2/15/2016		26,000	$	12.00	8/15/2024
Series MM	6/22/2017		333,432	$	1.86	6/22/2024
Series NN	7/24/2017		200,087	$	2.52	7/24/2024
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
Consultant Options	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, 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
Consultant Options	7/28/2017 – 11/18/2020		15,000	$	2.18 - $11.61	11/17/2022 - 7/27/2027

A. Warrant Liabilities

Warrant liabilities outstanding at September 30 are as follows:

	2022		2021
Series Z warrants	$	-	$	64,787
Series AA warrants		-		276,035
Series CC warrants		-		94,961
Series HH warrants		-		1,597
Total warrant liabilities	$	-	$	437,380

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

	2022		2021
Series W warrants	$	-	$	73,570
Series Z warrants		64,787		252,115
Series ZZ warrants		-		(98,692	)
Series AA warrants		276,035		(318,823	)
Series BB warrants		-		65,173
Series CC warrants		24,372		(668,605	)
Series HH warrants		1,597		404
Net loss on warrant liabilities	$	366,791	$	(694,858	)

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

In February 2022, 100,000 Series AA warrants with an exercise price of $13.75 and 200 Series HH warrants with an exercise price of $3.13, expired.

In December 2021, 640 Series CC warrants, with an exercise price of $5.00, expired.

In November 2021, 184,800 Series Z warrants, with an exercise price of $13.75, expired.

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.

Exercise of Warrant Liabilities

The following warrants recorded as liabilities were exercised during the year ended September 30, 2022:

Warrants	Warrants Exercised		Exercise Price		Proceeds
Series CC		15,205	$	5.00	$	76,025

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

B. Equity Warrants

Changes in Equity Warrants

On June 13, 2022, the expiration dates of the Series N, Series X, Series Y, Series UU, Series MM and Series NN warrants were extended two years.  The incremental costs of the Series N, Series X and Series Y warrant extensions were recorded as a deemed dividend and totaled approximately $294,000 for the year ended September 30, 2022.  The Series N and Series X warrants are held by the de Clara Trust.  The incremental cost of the Series MM, Series NN and Series UU warrant extensions of approximately $635,000 was recorded as a deemed dividend because there were no longer any notes payable associated with these warrants at the time of modification.  The Series UU warrants and a portion of the Series MM and Series NN warrants are held by Geert Kersten, Patricia Prichep (current officers of the Company) and the de Clara Trust.

On June 28, 2021, the expiration dates of the Series N, Series X, Series Y and Series UU warrants were extended one year.  On December 7, 2020, the expiration dates of the Series N, Series X, Series Y and Series UU warrants were extended six months. The incremental costs of the 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, respectively.  The Series N and Series X warrants are held by the de Clara Trust.  The incremental cost of the Series Y warrant extension was recorded as additional paid in capital and totaled approximately $103,000 for the year ended September 30, 2021.  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 and the de Clara Trust.

Exercise of Equity Warrants

The following equity warrants were exercised during the year ended September 30, 2022.

Warrants	Warrants Exercised		Exercise Price		Proceeds
Series NN		10,000	$	2.52	$	25,200

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

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, 2022 and 2021, the Company issued 156,547 and 75,885 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 $2.86 to $24.95 per share.  The weighted average grant price was $4.59 and $15.46, respectively, for stock issued during the years ended September 30, 2022 and 2021.

During the years ended September 30, 2022 and 2021, the Company recorded total expense of approximately $762,000 and $1,227,000, respectively, relating to these consulting agreements. At September 30, 2022 and 2021, unamortized balances of $295,000 and $364,000, respectively, are included in prepaid expenses as the contracts are ongoing and will be recognized in future periods as incurred.

No options were issued to consultants during the year ended September 30, 2022.  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.  As of September 30, 2022, 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.