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STOCK WARRANTS

6 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

11. STOCK WARRANTS

The following is a summary of stock warrant activity during the six months ended March 31, 2019.

		Number of Warrant Shares				Weighted Average Exercise Price
Balance, September 30, 2018			8,989,299			$	0.89
Warrants granted			4,113,333			$	2.89
Warrants expired			—				—
Warrants canceled			—				—
Warrants exercised			(2,253,000	)			0.36
Balance, March 31, 2019			10,840,632			$	1.50

As of March 31, 2019, the outstanding warrants have a weighted average remaining term of was 5.28 years and an intrinsic value of $20,216,703.

As of March 31, 2019, there are warrants exercisable to purchase 10,349,632 shares of common stock in the Company and 482,714 unvested warrants outstanding that cannot be exercised until vesting conditions are met. 7,661,980 of the warrants require a cash investment to exercise as follows, 50,000 required a cash investment of $0.80 per share, 4,498,647 require a cash investment of $1.50 per share, 1,250,000 require a cash investment of $2.00 per share, 1,030,000 require a cash investment of $2.50 per share, 500,000 require an investment of $5.00 per share and 333,333 require a cash investment of $7.50 per share. 3,187,652 of the outstanding warrants contain provisions allowing a cashless exercise at their respective exercise price.

Warrant activity for the six months ended March 31, 2019

On October 15, 2018, the Company entered into an agreement with a consultant for services. Under this agreement the Company agreed to issue 30,000 warrants to purchase shares of the Company’s common stock at an exercise price of $2.50 for a period of five years which vest evenly over a six-month period from the agreement date. During the six months ended March 31, 2019, the Company recorded stock compensation of $68,642 was recorded as a result of the stock issued under the agreement. The warrants were valued using the black-Scholes valuation model.

On December 31, 2018, in connection with a Securities purchase agreement (see note 7 for additional details) the Company issued Common Stock Purchase Warrants to acquire up to 3,083,333 shares of common stock for a term of three years on a cash-only basis at an exercise price of $2.00 per share with respect to 1,250,000 Warrant Shares, $2.50 with respect to 1,000,000 Warrant Shares, $5.00 with respect to 500,000 Warrant Shares and $7.50 with respect to 333,333 Warrant Shares.

On August 28, 2018, in connection with the Consulting agreement executed with Zero Positive, LLC. the Company issued warrants to purchase 900,000 shares of common stock at an exercise price of $0.80 per share to Zero Positive. The warrants were valued at $2,607,096 using the Black Scholes option pricing model. The warrants vest as follows: 300,000 warrants vested immediately, the balance vest evenly on the last day of each month over the forty-two months beginning August 31, 2018. As of March 31, 2019, 371,429 warrants had vested, and the Company recorded an expense of $124,147 during the six months ended March 31, 2019. (See Note 9 for additional details.)

On January 22, 2019, in accordance with a merger agreement CleanSpark issued; a five-year warrant to purchase 500,000 shares of CleanSpark common stock at an exercise price of $1.60 per share, and a five-year warrant to purchase 500,000 shares of CleanSpark common stock at an exercise price of $2.00 per share. (see note 3 for additional details.) The warrants were valued at $1,102,417 and $1,102,107, respectively.

The Black-Scholes model utilized the following inputs to value the warrants granted during the six months ended March 31, 2019:

Fair value assumptions – Warrants:		March 31, 2019
Risk free interest rate			2.46% -3.01%
Expected term (years)			3-5
Expected volatility			265-268%
Expected dividends			0%

On January 7, 2019, a total of 1,444,170 shares of the Company’s common stock were issued in connection with the cashless exercise of 1,500,000 common stock warrants with an exercise prices of $0.083.

On February 26, 2019, a total of 246,227 shares of the Company’s common stock were issued in connection with the cashless exercise of 250,000 common stock warrants at an exercise price of $0.083.

On March 26, 2019, a total of 488,567 shares of the Company’s common stock were issued in connection with the cashless exercise of 500,000 common stock warrants at an exercise price of $0.083.

Warrant activity for the six months ended March 31, 2018

On December 13, 2017, an investor exercised warrants to purchase 27,548 shares of the Company’s $0.001 par value common stock at a purchase price equal to $0.363 for each share of Common stock. The Company received $10,000 as a result of this exercise.

On January 1, 2018, the Company issued warrants to purchase 100,000 shares of common stock at an exercise price of $0.80 per share to an advisor for business advisory services. The warrants were valued at $234,095 using the Black Scholes option pricing model based upon the following assumptions: term of 5 years, risk free interest rate of 2.01%, a dividend yield of 0% and volatility rate of 158%. The warrants vest evenly over the six month services period ending June 30, 2018.

On January 19, 2018, an investor exercised warrants to purchase 180,000 shares of the Company’s $0.001 par value common stock at a purchase price equal to $0.083 for each share of Common stock. The Company received $14,940 as a result of this exercise.

On January 19, 2018, an investor exercised warrants to purchase 15,000 shares of the Company’s $0.001 par value common stock at a purchase price equal to $0.363 for each share of Common stock. The Company received $5,445 as a result of this exercise.

On January 29, 2018, an investor exercised warrants to purchase 4,500 shares of the Company’s $0.001 par value common stock at a purchase price equal to $0.363 for each share of Common stock. The Company received $1,634 as a result of this exercise.

On February 8, 2018, an investor exercised 456,000 warrants to purchase shares of the Company’s $0.001 par value common stock at a purchase price equal to $0.367 for each share of Common stock. The investor elected to use the cashless exercise option and as a result the Company issued 387,475 shares of common stock.

During the six months ended March 31, 2019, the Company recognized $508,363 of stock-based compensation related to warrants.

As of March 31, 2019, the Company expects to recognize $1,531,152 of stock-based compensation for the non-vested outstanding warrants over a weighted-average period of 3.08 years.