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CONVERTIBLE NOTES PAYABLE | 6 Months Ended
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Mar. 31, 2020
Debt Disclosure [Abstract] |
CONVERTIBLE NOTES PAYABLE | Short-Term convertible notes Securities Purchase Agreement – December 31, 2018 On December 31, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) with an otherwise unaffiliated third-party institutional investor (the “Investor”), pursuant to which the Company issued to the Investor a Senior Secured Redeemable Convertible Debenture (the “Debenture”) in the aggregate face value of $5,250,000. The note is secured by all assets of the Company. The Debenture has a maturity date of two years from the issuance date and the Company has agreed to pay compounded interest on the unpaid principal balance of the Debenture at the rate equal 7.5% per annum. Interest is payable on the date the applicable principal is converted or on maturity. The interest must be paid in cash and, in certain circumstances, may be paid in shares of common stock. The transactions described above closed on December 31, 2018. In connection with the issuance of the Debenture and pursuant to the terms of the SPA, the Company issued to the Investor 10,000 shares of common stock and a Common Stock Purchase Warrant to acquire up to 308,333 shares of common stock for a term of three years (the “Warrant”) on a cash-only basis at an exercise price of $20.00 per share with respect to 125,000 Warrant Shares, $25.00 with respect to 100,000 Warrant Shares, $50.00 with respect to 50,000 Warrant Shares and $75.00 with respect to 33,333 Warrant Shares. The warrants and shares issued were fair valued and a debt discount of $4,995,000 was recorded as a result of the issuance of the warrants and shares and the recognition of a beneficial conversion feature on the Debenture. The Company also paid a $5,000 due diligence fee prior to receiving the funding which was also recorded as a debt discount. Pursuant to the terms of the SPA, the Investor agreed to tender to the Company the sum of $5,000,000, of which the Company received the full amount as of the closing. Prior to the maturity date, provided that no trigger event has occurred, the Company will have the right at any time upon 30 trading days’ prior written notice, in its sole and absolute discretion, to redeem all or any portion of the Debenture then outstanding by paying to the Investor an amount equal to 140% of the of the portion of the Debenture being redeemed. The Investor may convert the Debenture into shares of the Company’s common stock at a conversion price equal to 95% of the mathematical average of the 5 lowest individual daily volume weighted average prices of the common stock, less $0.50 per share, during the period beginning on the issuance date and ending on the maturity date subject to certain floor price restrictions. In the event certain equity conditions exist, the Company may require that the Investor convert the Debenture. In no event shall the Debenture be allowed to affect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by the Investor and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company. While the note is outstanding if Triggering Events occur the conversion rate may be decreased by 10% and the interest rate increased by 10% for each Triggering Event. On January 7, 2019, the investor converted $2,500,000 in principal and $875,000 in interest as a conversion premium, for 178,473 shares of the Company common stock at an effective conversion price of $18.90, due to a trigger event for the Company not filing its annual report on Form 10-K for the fiscal year ended September 30, 2018 on or before December 31, 2018. On March 6, 2019, the investor converted $1,000,000 in principal and $350,000 in interest as a conversion premium, for 71,389 shares of the Company common stock at an effective conversion price of $18.90, due to a trigger event for the Company not filing its annual report on Form 10-K for the fiscal year ended September 30, 2018 on or before December 31, 2018. On July 9, 2019, in accordance with the terms of the agreement the investor was issued an additional 45,614 shares of common stock due to the decrease in stock price resulting in an effective conversion price of $15.06. On July 16, 2019, in accordance with the terms of the agreement the investor was issued an additional 18,246 shares of common stock due to the decrease in stock price resulting in an effective conversion price of $15.06. On July 19, 2019, an investor converted $500,000 in principal and $175,000 in interest as a conversion premium, for 45,109 shares of the Company common stock at an effective conversion price of $15.00 due to a trigger event for the Company not filing its annual report on Form 10-K for the fiscal year ended September 30, 2018 on or before December 31, 2018. On August 23, 2019, in accordance with the terms of the agreement the investor was issued an additional 43,721 shares of common stock due to the decrease in stock price resulting in an effective conversion price of $7.60. On September 16, 2019, in accordance with the terms of the agreement the investor was issued an additional 61,500 shares of common stock due to the decrease in stock price resulting in an effective conversion price of $7.30. On October 17, 2019, in accordance with the terms of the agreement the investor was issued an additional 90,000 shares of common stock due to the decrease in stock price resulting in an effective conversion price of $3.74. On December 5, 2019, in accordance with the terms of the agreement the investor was issued an additional 97,100 shares of common stock due to the decrease in stock price resulting in an effective conversion price of $3.15. On February 10, 2020, in accordance with the terms of the agreement the investor was issued an additional 100,000 shares of common stock due to the decrease in stock price resulting in an effective conversion price of $3.15. On February 21, 2020, in accordance with the terms of the agreement the investor was issued an additional 108,770 shares of common stock due to the decrease in stock price resulting in an effective conversion price of 2.69. On March 2, 2020, in accordance with the terms of the agreement the investor was issued an additional 167,100 shares of common stock due to the decrease in stock price resulting in an effective conversion price of $1.87. On March 5, 2020, in accordance with the terms of the agreement the investor was issued an additional 154,835 shares of common stock due to the decrease in stock price resulting in an effective conversion price of $1.83. On March 13, 2020, in accordance with the terms of the agreement the investor was issued an additional 116,000 shares of common stock due to the decrease in stock price resulting in an effective conversion price of $1.50. On March 20, 2020, in accordance with the terms of the agreement the investor was issued an additional 163,800 shares of common stock due to the decrease in stock price resulting in an effective conversion price of $1.50. The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $355,972 during the six months ended March 31, 2020. The Debenture at March 31, 2020 consists of:
Principal |  | $ | 1,250,000
Unamortized debt discount |  |  | (427,502)
Total, net of unamortized discount |  |  | 822,498
On March 4, and March 13, 2020 the Company entered into amendments (the “Amendments”) with the Investor. The Amendments amended the SPA and Debenture, as follows:
| 1) | A Floor Price of $1.50 per share of Common Stock was placed on conversions by the Investor under the Debenture, with the Floor Price on the First Debenture not applying in the occurrence of an event of default;
| 2) | Lowered the closing price of the Common Stock which may trigger an event of default from $5.00 per share to $1.75 per share for 5 consecutive trading days provided that any event of default will not be triggered, if at all, until after June 11, 2020;
| 3) | Deleted the requirement that the Investor convert the Debenture at maturity and
| 4) | Allowed the Company, for a period of 90 days from March 13, 2020, to not reserve or issue to the Investor more shares of Common Stock than were reserved for the Investor prior to March 31, 2020.
On April 15, 2020, the Investor fully converted the remaining principal and interest into shares of the Company’s Common Stock. (See note 17 for additional details) Long-Term convertible notes Securities Purchase Agreement – April 17, 2019 On April 17, 2019, the Company entered into a Securities Purchase Agreement (the “Agreement”) with an otherwise unaffiliated third-party institutional investor (the “Investor”), pursuant to which the Company agreed to issue to the Investor a $10,750,000 face value Senior Secured Redeemable Convertible Promissory Note (the “Debenture”) with a 7.5% original issue discount, 215 shares of our Series B Preferred Stock with a 7.5% original issue discount, a Common Stock Purchase Warrant (the “Warrant”) on a cash-only basis to acquire up to 230,000 shares (the “Warrant Shares”) of our common stock and 125,000 shares of our Common Stock. The aggregate purchase price for the Debenture, the Series B Preferred Stock the Warrant and the Common Stock is $20,000,000. (See Notes 12 and 13 for additional details.) The Debenture is secured by all assets of the Company. Pursuant to the first closing of the Agreement, which occurred on April 18, 2019, the Investor agreed to tender to the Company the sum of $10,000,000, for the Debenture, the Common Stock and the Warrant. No additional closings to sell the preferred stock had occurred as of September 30, 2019. The Debenture has a maturity date of two years from the issuance date and the Company has agreed to pay compounded interest on the unpaid principal balance of the Debenture at the rate equal 7.5% per annum. Interest is payable on the date the applicable principal is converted or on maturity. The interest must be paid in cash and, in certain circumstances, may be paid in shares of common stock. Prior to the maturity date, provided that no trigger event has occurred, the Company will have the right at any time upon 30 trading days’ prior written notice, in its sole and absolute discretion, to redeem all or any portion of the Debenture then outstanding by paying to the Investor an amount equal to 145% of the of the portion of the Debenture being redeemed. The Investor may convert the Debenture into shares of the Company’s common stock at a conversion price equal to 90% of the mathematical average of the 5 lowest individual daily volume weighted average prices of the common stock, less $0.75 per share, during the period beginning on the issuance date and ending on the maturity date subject to certain floor price restrictions. In the event certain equity conditions exist, the Company may require that the Investor convert the Debenture. In no event shall the Debenture be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by the Investor and its affiliates would exceed 4.99% of the outstanding shares of the common stock of the Company. While the note is outstanding if Triggering Events occur the conversion rate may be decreased by 10% and the interest rate increased by 10% for each Triggering Event. The Debenture at March 31, 2020 consists of:
Principal |  | $ | 10,750,000
Unamortized debt discount |  |  | (5,625,342)
Total, net of unamortized discount |  | $ | 5,124,658
The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $2,694,863 during the six months ended March 31, 2020. On March 4, and March 13, 2020 the Company entered into amendments (the “Amendments”) with the Investor. The Amendments amended the SPA and Debenture, as follows:
| 1) | A Floor Price of $1.50 per share of Common Stock was placed on conversions by the Investor under the Debenture;
| 2) | Lowered the closing price of the Common Stock which may trigger an event of default from $5.00 per share to $1.75 per share for 5 consecutive trading days provided that any event of default will not be triggered, if at all, until after June 11, 2020;
| 3) | Deleted the requirement that the Investor convert the Debenture at maturity and
| 4) | Allowed the Company, for a period of 90 days from March 13, 2020, to not reserve or issue to the Investor more shares of Common Stock than were reserved for the Investor prior to March 31, 2020.
| 5) | The Company and the Investor also agreed to remove the Second Closing and Company Option to sell an aggregate of an additional $10,000,000 in securities under the Debenture. As a result of these changes, the Company was authorized to terminate any and all documentation related to the 100,000 shares of Series B Preferred Stock that the Company’s Board of Directors had previously voted to designate back on April 16, 2019.
On May 5, 2020, the investor converted $750,000 of principal and $112,500 of accrued interest into 575,000 shares of Common Stock. (See note 17 for additional details) On May 6, 2020, the investor converted $600,000 of principal and $90,000 of accrued interest into 460,000 shares of Common Stock. (See note 17 for additional details) On May 7, 2020, the investor converted $595,000 of principal and $87,250 of accrued interest into 456,167 shares of Common Stock. (See note 17 for additional details) On May 8, 2020, the investor converted $350,000 of principal and $52,500 of accrued interest into 268,333 shares of Common Stock. (See note 17 for additional details)

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- Definition Tabular disclosure of borrowings which can be exchanged for a specified number of another security at the option of the issuer or the holder. Disclosures include, but are not limited to, principal amount, amortized premium or discount, and amount of liability and equity components. + References No definition available. + Details
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