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WARRANTS AND NON-EMPLOYEE OPTIONS | 12 Months Ended
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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.

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