Annual report pursuant to Section 13 and 15(d)

COMMON STOCK/PAID IN CAPITAL

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COMMON STOCK/PAID IN CAPITAL
12 Months Ended
Sep. 30, 2019
Stockholders' Equity Note [Abstract]  
COMMON STOCK/PAID IN CAPITAL

NOTE 9 - COMMON STOCK/PAID IN CAPITAL

 

As discussed in Note 7, between June and November 2016, the Company issued 27.9 million warrants in conjunction with Convertible Debentures. The warrants have an exercise price of $0.03 and a term of the earlier of three years or upon a change of control. During June through August 2017, the maturity date of all of the Bridge Financing Notes was extended to January 15, 2018, in exchange for the issuance of 25% additional warrants, or approximately 7 million extension warrants. The warrants have an exercise price of $0.03 and the same expiration date (three years from original transaction) as the original warrants. On January 15, 2018, the maturity date of the Bridge Financing Notes was extended to April 16, 2018, in exchange for the issuance of 10% additional warrants, or approximately 2.8 million extension warrants (see Note 7). The warrants have an exercise price of $0.10 per share and the same expiration date (three years from original transaction) as the original warrants. Through September 30, 2019, approximately 3.3 million warrants have been exercised, approximately 22.0 million have expired and approximately 12.5 million remain outstanding. During June 2019, the Company completed the extension of the remaining notes to April 30, 2020. In consideration for the extension of the remaining notes, the Company extended the term of the warrants until April 30, 2020.

 

The fair value of the warrants were determined using the Black Scholes valuation model with the following key assumptions:

 

    June 2016     November 2016     June 2017       January 2018  
Remaining Warrants   7.6 million     1.7 million     2.3 million       0.9 Million  
Stock Price:   $ 0.054 (1)   $ 0.029 (1)   $ 0.025 (1)   $ 0.11 (1)
Exercise Price   $ 0.03     $ 0.03     $ 0.03     $ 0.10  
Term     3 years       3 years       2 years       1.5 years  
Risk Free Rate     .87 %     1.28 %     1.35 %     1.89%  
Volatility     135 %     131 %     135 %     163%  

 

  (1) Fair market value on the date of agreement.

 

A summary of warrants, issued in conjunction with the Bridge Financing Notes and outstanding at September 30, 2019:

 

          Warrants Outstanding     Warrants Exercisable  
Date Issued   Exercise Price     Number
Outstanding
    Weighted
Average
Remaining
Contractual
Life (Yrs)
    Weighted
Average
Exercise
Price
    Number
Exercisable
    Weighted
Average
Exercise
Price
 
June 2016   $ 0.03       7,566,667       .58     $ 0.03       7,566,667     $ 0.03  
November 2016   $ 0.03       1,666,667       .58     $ 0.03       1,666,667     $ 0.03  
June 2017   $ 0.03       1,891,667       .58     $ 0.03       1,891,667     $ 0.03  
November 2017   $ 0.03       416,667       .58     $ 0.03       416,667     $ 0.03  
January 2018   $ 0.10       923,333        .58     $ 0.10       923,333     $ 0.10  

 

In December 2016 and March 2017, the Company issued 550,000 and 1,100,000 warrants to purchase stock at $0.10 per share to an investor as part of a financing transaction. The warrants have a term of five years. 

 

In October and December 2017, the Company issued 1,100,000 and 1,100,000 warrants to purchase stock at $0.10 per share to an investor as part of a financing transaction. The warrants have a term of five years.

 

A summary of the warrants, issued in conjunction with Bridge Financing Notes, Private Placements and Services Rendered and outstanding at September 30, 2019:

 

      Warrants Outstanding     Warrants Exercisable  
Exercise Price     Number
Outstanding
    Remaining
Contractual Life
(Yrs)
    Weighted
Average
Exercise Price
    Number
Exercisable
    Weighted
Average
Exercise Price
 
$ 0.10       550,000       2.25     $ 0.10       550,000     $ 0.10  
$ 0.10       1,100,000       2.46     $ 0.10       1,100,000     $ 0.10  
$ 0.10       1,100,000       3.04     $ 0.10       1,100,000     $ 0.10  
$ 0.10       1,100,000       3.21     $ 0.10       1,100,000     $ 0.10  
$ 0.09       9,662,500       1.90     $ 0.09       9,662,500     $ 0.09  
$ 0.15       2,027,780       1.99     $ 0.15       2,027,780     $ 0.15  
$ 0.042       23,809,523       0.55     $ 0.042       23,809,523     $ 0.042  
$ 0.04       50,000,000       4.73     $ 0.04       50,000,000     $ 0.04  

 

During December 2018, the Company issued approximately 19.3 million shares of common stock and approximately 9.7 million warrants to accredited investors in a private placement. The funds were received in the prior fiscal year and included as a liability because the transaction did not close until the current fiscal year and it was moved to equity during the quarter ended December 31, 2018. Based upon the allocation of proceeds between the common stock and the warrants, approximately $259,000 was allocated to the warrants.

 

The fair value of the warrants was determined using the Black Scholes valuation model with the following key assumptions:

 

Number of Warrants Issued     9,662,500  
Stock Price   $ 0.044  
Exercise Price   $ 0.09  
Term     3 years  
Risk Free Rate     2.46 %
Volatility     149 %

 

In September 2018, the Company issued approximately 4 million shares of common stock valued at approximately $231,000 on the date of grant and approximately 2 million warrants valued at $80,000 utilizing the Black Scholes model with an exercise price of $0.15 per share in settlement of a liability for services rendered.