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WARRANTS AND NONEMPLOYEE OPTIONS
 12 Months Ended
Sep. 30, 2023
WARRANTS AND NONEMPLOYEE OPTIONS  
WARRANTS AND NON-EMPLOYEE OPTIONS

4.   WARRANTS AND NON-EMPLOYEE OPTIONS

 

The following warrants and non-employee options are outstanding at September 30, 2023:

 

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

 

 

234,009

 

 

$1.65

 

 

10/30/2024

 

Consultant Options

 

7/28/2017 – 9/2/2023

 

 

110,000

 

 

$

1.39 - $2.18

 

 

7/27/2027 – 9/1/2028

 

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

 

 

A.  Warrant Liabilities

 

There were no warrant liabilities outstanding at September 30, 2023 and 2022. 

 

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

 

 

 

2023

 

 

2022

 

Series W warrants 

 

$-

 

 

$-

 

Series Z warrants 

 

 

-

 

 

 

64,787

 

Series ZZ warrants 

 

 

-

 

 

 

-

 

Series AA warrants 

 

 

-

 

 

 

276,035

 

Series BB warrants 

 

 

-

 

 

 

-

 

Series CC warrants 

 

 

-

 

 

 

24,372

 

Series HH warrants 

 

 

-

 

 

 

1,597

 

Net loss on warrant liabilities

 

$-

 

 

$366,791

 

 

The Company reviews all outstanding warrants in accordance with the requirements of ASC 815 , Accounting for Derivative Instruments and Hedging Activities.  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.

 

Exercise of Warrant Liabilities

 

No warrants recorded as liabilities were exercised during the year ended September 30, 2023.

 

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

 

 

B. Equity Warrants

 

Changes in Equity Warrants

 

On October 28, 2022, the expiration date of the Series RR warrants was extended two years from October 30, 2022 to October 30, 2024.  The incremental cost of this extension was approximately $172,000, which was recorded as a deemed dividend. The Series RR 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 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. 

 

Exercise of Equity Warrants

 

The following equity warrants were exercised during the year ended September 30, 2023.

 

Warrants

 

Warrants Exercised

 

 

Exercise Price

 

 

         Proceeds

 

Series RR

 

 

17,752

 

 

$1.65

 

 

$29,291

 

Series SS

 

 

200,000

 

 

 

2.09

 

 

 

418,000

 

 

 

 

217,752

 

 

 

 

 

 

$447,291

 

 

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

 

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, 2023 and 2022, the Company issued 249,997 and 156,547 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 $1.26 to $11.20 per share. The weighted average grant price was $1.83 and $4.59, respectively, for stock issued during the years ended September 30, 2023 and 2022.

 

During the years ended September 30, 2023 and 2022, the Company recorded total expense of approximately $656,000 and $762,000, respectively, relating to these consulting agreements. At September 30, 2023 and 2022, costs of approximately $205,000 and $295,000, respectively, are included in prepaid expenses.

 

During the year ended September 30, 2023, the Company issued 100,000 options to a consultant to purchase common stock with an exercise price of $1.39. These options vest 50% on September 2, 2024 and 50% on September 2, 2025 and expire on September 1, 2028. No options were issued to consultants during the year ended September 30, 2022. As of September 30, 2023, 110,000 options issued to consultants as payment for services remained outstanding, all of which were issued from the Non-Qualified Stock Option Plan.