Cover
Cover - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Dec. 19, 2023 | Mar. 31, 2023 | |
Cover [Abstract] | |||
Entity Registrant Name | KNOW LABS, INC. | ||
Entity Central Index Key | 0001074828 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Sep. 30, 2023 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2023 | ||
Entity Common Stock Shares Outstanding | 81,346,524 | ||
Entity Public Float | $ 32,309,758 | ||
Entity File Number | 001-37479 | ||
Entity Incorporation State Country Code | NV | ||
Entity Tax Identification Number | 90-0273142 | ||
Entity Address Address Line 1 | 500 Union Street | ||
Entity Address Address Line 2 | Suite 810 | ||
Entity Address City Or Town | Seattle | ||
Entity Address State Or Province | WA | ||
Entity Address Postal Zip Code | 98101 | ||
City Area Code | 206 | ||
Local Phone Number | 903-1351 | ||
Security 12b Title | Common Stock, par value $0.001 per share | ||
Trading Symbol | KNW | ||
Security Exchange Name | NYSE | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity Interactive Data Current | Yes | ||
Auditor Location | Walnut Creek, California | ||
Auditor Name | BPM LLP | ||
Auditor Firm Id | 207 | ||
Document Fin Stmt Error Correction Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2023 | Sep. 30, 2022 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 8,023,716 | $ 12,593,692 |
Total current assets | 8,023,716 | 12,593,692 |
PROPERTY AND EQUIPMENT, NET | 81,325 | 862,977 |
OTHER ASSETS | ||
Other assets | 15,766 | 13,767 |
Operating lease right-of-use asset | 145,090 | 287,930 |
TOTAL ASSETS | 8,265,897 | 13,758,366 |
CURRENT LIABILITIES: | ||
Accounts payable - trade | 1,292,861 | 526,968 |
Accrued expenses | 94,062 | 462,940 |
Accrued expenses - related parties | 218,334 | 348,264 |
Convertible notes payable, net | 2,761,931 | 2,255,066 |
Current portion of operating lease right-of-use liability | 154,797 | 215,397 |
Total current liabilities | 4,521,985 | 3,808,635 |
NON-CURRENT LIABILITIES: | ||
Operating lease right-of-use liability, net of current portion | 0 | 87,118 |
Total non-current liabilities | 0 | 87,118 |
COMMITMENTS AND CONTINGENCIES (Note 11) | 0 | 0 |
STOCKHOLDERS' EQUITY | ||
Common stock - $0.001 par value, 200,000,000 shares authorized, 80,358,463 and 48,156,062 shares issued and outstanding at 9/30/2023 and 9/30/2022, respectively | 80,358 | 48,158 |
Additional paid in capital | 125,501,537 | 111,209,388 |
Accumulated deficit | (121,840,788) | (101,397,738) |
Total stockholders' equity | 3,743,912 | 9,862,613 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 8,265,897 | 13,758,366 |
Series C PreferredStockMember | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, value | 1,790 | 1,790 |
Series D Preferred Stock Member | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, value | $ 1,015 | $ 1,015 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2023 | Sep. 30, 2022 |
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 5,000,000 | 5,000,000 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 200,000,000 | 200,000,000 |
Common stock shares issued | 80,358,463 | 48,156,062 |
Common stock shares outstanding | 80,358,463 | 48,156,062 |
Convertible Preferred Stock Series C [Member] | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 30,000 | 30,000 |
Preferred stock shares issued | 17,858 | 17,858 |
Preferred stock shares outstanding | 17,858 | 17,858 |
Convertible Preferred Stock Series D [Member] | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 20,000 | 20,000 |
Preferred stock shares issued | 10,161 | 10,161 |
Preferred stock shares outstanding | 10,161 | 10,161 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
REVENUE- DIGITAL ASSET SALES | $ 0 | $ 4,360,087 |
OPERATING EXPENSES- | ||
RESEARCH AND DEVELOPMENT EXPENSES | 7,727,467 | 5,385,586 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 6,570,597 | 8,118,137 |
SELLING AND TRANSACTIONAL COSTS FOR DIGITAL ASSETS | (274,019) | (3,430,438) |
Total operating expenses | 14,024,045 | 16,934,161 |
OPERATING LOSS | (14,024,045) | (12,574,074) |
OTHER INCOME (EXPENSE), NET | ||
Interest income | 127,145 | 15,283 |
Interest expense | (389,626) | (8,034,081) |
Loss on debt extinguishment | (506,865) | 0 |
Other (expense) income, net | (495,776) | 521,628 |
Total other (expense), net | (1,265,122) | (7,497,170) |
LOSS BEFORE INCOME TAXES | (15,289,167) | (20,071,244) |
Income tax expense | 0 | 0 |
NET LOSS | (15,289,167) | (20,071,244) |
Common stock dividends on Series D Preferred Stock | (1,627,230) | 0 |
Deemed dividends on Series C and D Preferred Stock | (3,526,653) | 0 |
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (20,443,050) | $ (20,071,244) |
Basic and diluted loss per share | $ (0.41) | $ (0.50) |
Weighted average shares of common stock outstanding- basic and diluted | 49,581,467 | 40,370,473 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Total | Series C Convertibles Preferred Stock [Member] | Series D Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid In Capital [Member] | Accumulated Deficit [Member] |
Balance, shares at Sep. 30, 2021 | 17,858 | 10,161 | 35,166,551 | |||
Balance, amount at Sep. 30, 2021 | $ 1,242,163 | $ 1,790 | $ 1,015 | $ 35,168 | $ 82,530,684 | $ (81,326,494) |
Stock compensation expense - employee options | 4,421,634 | 0 | 0 | $ 0 | 4,421,634 | 0 |
Conversion of debt offering and accrued interest (Note 7), shares | 7,672,860 | |||||
Conversion of debt offering and accrued interest (Note 7), amount | 15,345,720 | 0 | 0 | $ 7,673 | 15,338,047 | 0 |
Issuance of common stock for stock option exercises, shares | 26,293 | |||||
Issuance of common stock for stock option exercises, amount | 26,687 | 0 | 0 | $ 26 | 26,661 | 0 |
Issuance of common stock for exercise of warrants, shares | 1,045,724 | |||||
Issuance of common stock for exercise of warrants, amount | 838,487 | 0 | 0 | $ 1,046 | 837,441 | 0 |
Issuance of common stock for services, shares | 104,634 | |||||
Issuance of common stock for services, amount | 183,000 | 0 | 0 | $ 105 | 182,895 | 0 |
Issuance of common stock warrant for services | 451,487 | 0 | 0 | $ 0 | 451,487 | 0 |
Isssuance of common stock for NYSE uplisting, shares | 4,140,000 | |||||
Isssuance of common stock for NYSE uplisting, amount | 7,424,679 | 0 | 0 | $ 4,140 | 7,420,539 | 0 |
Net loss | (20,071,244) | $ 0 | $ 0 | $ 0 | 0 | (20,071,244) |
Balance, shares at Sep. 30, 2022 | 17,858 | 10,161 | 48,156,062 | |||
Balance, amount at Sep. 30, 2022 | 9,862,613 | $ 1,790 | $ 1,015 | $ 48,158 | 111,209,388 | (101,397,738) |
Stock compensation expense - employee options | 2,955,933 | 0 | 0 | $ 0 | 2,955,933 | 0 |
Issuance of common stock for stock option exercises, shares | 166,890 | |||||
Issuance of common stock for stock option exercises, amount | 4,687 | 0 | 0 | $ 166 | 4,521 | 0 |
Issuance of common stock for exercise of warrants, shares | 2,632,727 | |||||
Issuance of common stock for exercise of warrants, amount | 387,334 | 0 | 0 | $ 2,631 | 384,703 | 0 |
Issuance of common stock for services, amount | 0 | |||||
Net loss | (15,289,167) | 0 | 0 | $ 0 | 0 | (15,289,167) |
Common stock dividends on Series D Preferred Stock, shares | 1,402,784 | |||||
Common stock dividends on Series D Preferred Stock, amount | 0 | 0 | 0 | $ 1,403 | 1,625,827 | (1,627,230) |
Deemed dividends on Series C and D Preferred Stock | 0 | 0 | 0 | $ 0 | 3,526,653 | (3,526,653) |
Isssuance of common stock for common stock offering, shares | 28,000,000 | |||||
Isssuance of common stock for common stock offering, amount | 5,472,791 | 0 | 0 | $ 28,000 | 5,444,791 | 0 |
Expenses for extension of notes and warrants | 349,721 | $ 0 | $ 0 | $ 0 | 349,721 | 0 |
Balance, shares at Sep. 30, 2023 | 17,858 | 10,161 | 80,358,463 | |||
Balance, amount at Sep. 30, 2023 | $ 3,743,912 | $ 1,790 | $ 1,015 | $ 80,358 | $ 125,501,537 | $ (121,840,788) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (15,289,167) | $ (20,071,244) |
Adjustments to reconcile net loss to net cash (used in) operating activities | ||
Depreciation and amortization | 313,019 | 320,995 |
Issuance of common stock for services | 0 | 183,000 |
Issuance of common stock warrants for services | 0 | 451,487 |
Gain on debt settlement | (50,000) | (268,872) |
Loss on disposal of property and equipment | 549,431 | 0 |
Loss on debt extinguishment | 506,865 | 0 |
Modification of notes and warrants - interest expense | 349,721 | 0 |
Stock based compensation- stock option grants | 2,955,933 | 4,421,634 |
Gain on forgiveness of notes payable-PPP Loans | 0 | (252,700) |
Amortization of operating lease right-of-use asset | 142,840 | 35,963 |
Amortization of debt discount to interest expense | 0 | 7,272,911 |
Changes in operating assets and liabilities: | ||
Other long-term assets | (1,999) | 0 |
Operating lease right-of-use liability | (147,719) | (22,917) |
Accounts payable - trade and accrued expenses | 317,085 | 1,009,935 |
NET CASH (USED IN) OPERATING ACTIVITIES | (10,353,991) | (6,919,808) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (80,797) | (855,468) |
NET CASH (USED IN) INVESTING ACTIVITIES: | (80,797) | (855,468) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from isssuance of common stock for NYSE uplisting | 0 | 8,280,000 |
Proceeds from issuance of common stock offering, net | 5,472,791 | 0 |
Payments for stock for NYSE uplisting | 0 | (855,321) |
Settlement of notes payable-PPP loans | 0 | (179,103) |
Proceeds from issuance of common stock for stock options exercise | 4,687 | 26,687 |
Proceeds from issuance of common stock for warrant exercise | 387,334 | 838,487 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 5,864,812 | 8,110,750 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (4,569,976) | 335,474 |
CASH AND CASH EQUIVALENTS, beginning of period | 12,593,692 | 12,258,218 |
CASH AND CASH EQUIVALENTS, end of period | 8,023,716 | 12,593,692 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 0 | 0 |
Taxes paid | 0 | 0 |
Supplemental disclosure of non-cash financing activity: | ||
Conversion of debt | 0 | 14,209,000 |
Conversion of accrued interest | 0 | 1,136,720 |
Common stock dividends on Series D Preferred Stock | 1,627,230 | 0 |
Deemed dividends on Series C and D Preferred Stock | 3,526,653 | 0 |
Issuance costs from common stock offering | $ 1,527,209 | $ 0 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Sep. 30, 2023 | |
ORGANIZATION | |
ORGANISATION | 1. ORGANIZATION Know Labs, Inc. (the “Company”) was incorporated under the laws of the State of Nevada in 1998. The Company currently has authorized 205,000,000 shares of capital stock, of which 200,000,000 are shares of voting common stock, par value $0.001 per share, and 5,000,000 are shares preferred stock, par value $0.001 per share. At the annual shareholder meeting held on October 15, 2021, the Company’s authorized shares of common stock was increased to 200,000,000 shares of voting common stock, par value $0.001 per share. The Company is focused on the development and commercialization of our proprietary sensor technology utilizing radio and microwave spectroscopy. When paired with our machine learning platform, our technology is capable of uniquely identifying and measuring almost any material or analyte using electromagnetic energy to detect, record, identify, and measure the unique “signature” of said materials or analytes. The first application of our sensor technology is in a product to non-invasively monitor blood glucose levels. Our device will provide the user with real-time information on their blood glucose levels. We recently announced our Generation 1 working prototype device. This device embodies the sensor which has been used in internal clinical testing. We have also announced the work our R&D team is doing on the Generation 2 of our device, which is a wearable format and could be a final form factor, ready for commercial application. We are expanding our testing, both internally and externally, and will refine the device over time, which will require FDA clearance before entering the market. |
LIQUIDITY
LIQUIDITY | 12 Months Ended |
Sep. 30, 2023 | |
LIQUIDITY | |
LIQUIDITY | 2. LIQUIDITY The Company has cash and cash equivalents of $8,023,716 and net working capital of $6,262,662 (exclusive of convertible notes payable) as of September 30, 2023. The Company anticipates that it will record losses from operations for the foreseeable future. During the end of the year ended September 30, 2023, the Company made some adjustments to its staffing level and the impact of those adjustments, plus the departure of our chief technology and executive office, has significantly reduced our monthly burn rate. The Company will further adjust its cost structure if new debt or equity capital is not received. The Company’s ability to transition profitable operations is dependent upon achieving a level of revenues adequate to support its cost structure. The Company believes that it has enough available cash and flexibility with its operating expenses to operate until at least June 30, 2024. Based on current operating levels, the Company will need to raise additional funds by selling additional equity or incurring debt. To date, the Company has funded its operations primarily through issuance of equity securities, and proceeds from the exercise of warrants to purchase common stock and the sale of debt instruments. Additionally, future capital requirements will depend on many factors, including the rate of revenue growth, the selling price of the Company’s products, the expansion of sales and marketing activities, the timing and extent of spending on research and development efforts and the continuing market acceptance of the Company’s products. These factors raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months from the date of this Report. Management of the Company intends to raise additional funds through the issuance of equity securities or debt. The Company is currently working on some capital fund raising transactions and while they expect to have something finalized by March 31, 2024, as of this date, there is no commitment. There can be no assurance that, in the event the Company requires additional financing, such financing will be available at terms acceptable to the Company, if at all. Failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary spending could have a material adverse effect on the Company’s ability to achieve its intended business objectives. As a result, the substantial doubt about the Company’s ability to continue as a going concern has not been alleviated. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The proceeds of warrants currently outstanding, which could be exercised on a cash basis, may generate potential proceeds. The Company expects that portions of these warrants will be exercised but there is no guarantee any portion will be exercised. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES ADOPTION OF ACCOUNTING STANDARDS | 12 Months Ended |
Sep. 30, 2023 | |
SIGNIFICANT ACCOUNTING POLICIES ADOPTION OF ACCOUNTING STANDARDS | |
SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS | 3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS Basis of Presentation Principles of Consolidation Cash and Cash Equivalents Property and Equipment Long-Lived Assets Revenue Recognition · identification of the contract, or contracts, with the customer; · identification of the performance obligations in the contract; · determination of the transaction price; · allocation of the transaction price to the performance obligations in the contract; and · recognition of the revenue when, or as, the Company satisfies a performance obligation. Revenue is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. During the three months ended December 31, 2021, the Company generated revenue from digital asset sales of NFTs. The Company engineering team, using its research data, AI and proprietary algorithms, produced NFTs in the form of digital art. The NFTs produced had no recorded cost basis. The Company does not expect future activity or revenue from that source. Research and Development Expenses The Company’s current research and development efforts are primarily focused on improving its radio frequency spectroscopy technology and its first focus on non-invasive monitoring of blood glucose levels; extending its capacity and developing new and unique applications for this technology. The Company believes that continued development of new and enhanced technologies is essential to its future success. The Company incurred expenses of $7,727,467 and $5,385,586 for the years ended September 30, 2023 and 2022, respectively, on development activities. Included in the expense for 2023 is approximately $859,000 related to severance and other expenses associated with the departure of the Company’s former chief technology officer and chief executive officer, Philip A. Bosua, and other employees. Advertising Fair Value Measurements and Financial Instruments Fair Value Measurement and Disclosures Level 1 – Quoted prices in active markets for identical assets and liabilities; Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses approximate the fair value of the respective assets and liabilities as of September 30, 2023 and 2022 are based upon the short-term nature of the assets and liabilities. The fair value of the Company’s convertible notes payable are not readily available given the terms and conditions, including the conversion features, are complex. The Company has a money market account which is considered a Level 1 asset. The balance as of September 30, 2023 and 2022 was $7,836,393 and $11,821,931, respectively. No other assets or liabilities are required to be recorded at fair value on a recurring nature. Derivative Financial Instruments – The Company determined that the conversion features for purposes of bifurcation within its convertible notes payable issued during 2020 and 2021 were immaterial and as of September 30, 2023 all such convertible notes have been converted to common stock and there was no derivative liability. Stock Based Compensation Convertible Securities Net Loss per Share As of September 30, 2023, the Company had 80,358,463 shares of common stock issued and outstanding. As of September 30, 2023, there were options outstanding for the purchase of 14,506,158 shares of our common stock (including unearned stock option grants totaling 3,869,825 shares related to performance targets), warrants for the purchase of 20,866,313 shares of our common stock, 8,108,356 shares of the Company’s common stock issuable, collectively, upon the conversion of our Series C Convertible Preferred Stock and Series D Convertible Preferred Stock, and approximately 3,040,219 shares of our common stock, collectively, reserved to pay accrued dividends on our Series C Convertible Preferred Stock and Series D Convertible Preferred Stock. In addition, the Company currently has 9,020,264 shares of its common stock at the current price of $0.25 per share reserved and are issuable upon conversion of convertible debentures of $2,761,931. Further, under the current terms of our Series C Convertible Preferred Stock and Series D Convertible Preferred Stock, and assuming no changes in the ownership thereof, going forward on a quarterly basis the Company will accrete as a preferred dividend the value of approximately 160,000 shares of common stock, which are issuable if such dividends become payable as additional shares of preferred stock, and such preferred stock is then converted into common stock. All of the foregoing shares could potentially dilute future earnings per share but are excluded from the September 30, 2023, calculation of net loss per share because their impact is antidilutive As of September 30, 2022, the Company had 48,156,062 shares of common stock issued and outstanding. As of September 30, 2022, there were options outstanding for the purchase of 20,792,370 common shares (including unearned stock option grants totaling 9,704,620 shares related to performance targets), warrants for the purchase of 21,786,313 common shares, and 8,108,356 shares of our common stock issuable upon the conversion of Series C and Series D Convertible Preferred Stock. In addition, the Company currently has 9,020,264 common shares at the current price of $0.25 per share reserved and are issuable upon conversion of convertible debentures of $2,255,066. All of the foregoing shares could potentially dilute future earnings per share but are excluded from the September 30, 2022, calculation of net loss per share because their impact is antidilutive. Comprehensive loss Dividend Policy Use of Estimates Recent Accounting Pronouncements Based on the Company’s review of accounting standard updates recently issued, those standards not yet required to be adopted and proposed standards for the future, the Company does believe such items are expected to have a significant impact on the Company’s consolidated financial statements. |
AI DEEP LEARNING PLATFORM
AI DEEP LEARNING PLATFORM | 12 Months Ended |
Sep. 30, 2023 | |
AI DEEP LEARNING PLATFORM | |
AI DEEP LEARNING PLATFORM | 4. AI DEEP LEARNING PLATFORM On September 17, 2021, the Company incorporated AI Mind, Inc. (“AI Mind”) in the State of Nevada. AI Mind was focused on monetizing intellectual property relating to the artificial intelligence utilized as a part of the data analytics performed with trade secret algorithms. Since incorporation, it focused on creating graphical images which were sold as Non Fungible Tokens (“NFTs”). During the year ended September 30, 2022, the Company began generating revenue from digital asset sales of NFTs and had sales of $4,360,087 of which substantially all were recorded in the three months ended December 31, 2021. After the sale of the NFT, the Ethereum was converted to US dollars as soon as practically possible. The Company recorded the total value of the gross NFT sale in revenue. Costs incurred in connection with the NFT transaction were recorded in the statement of operations as selling and transactional cost of digital assets and include costs to outside consultants, estimated employee and former CEO special bonus compensation, digital asset conversion losses and estimated sales and use tax. The amount totaled $3,430,438 for the year ended September 30, 2022. As of September 30, 2023 and September 30, 2022, accrued expenses include $0 and $343,878 of expenses, respectively, primarily sales and use tax and other expenses. During the current year, based on new information, we revised our estimate downward for sales and use tax liability resulting in a $274,019 benefit that is recorded in Selling and Transactional Costs for Digital Assets in the consolidated statements of operations. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Sep. 30, 2023 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | 5. PROPERTY AND EQUIPMENT Property and equipment as of September 30, 2023 and 2022 was comprised of the following: Total depreciation expense was $313,019 and $320,995 for the years ended September 30, 2023 and 2022, respectively. All equipment is used primarily for research and development purposes and accordingly $295,260 and $304,637 in depreciation is classified in research and development expenses during the years ending September 30, 2023 and 2022. The Company retired assets with a net book value of $549,431 during the year ended September 30, 2023 related to the consolidation of leased offices and the reduction on headcount. |
LEASES
LEASES | 12 Months Ended |
Sep. 30, 2023 | |
LEASES | |
LEASES | 6. LEASES The Company has entered into operating leases for office and development facilities which range from two to three years and include options to renew. The Company determines whether an arrangement is or contains a lease based upon the unique facts and circumstances at the inception of the lease. Operating lease liabilities and their corresponding right-of-use asses are recorded based upon the present value of the lease payments over the expected lease term. As of September 30, 2023 and 2022, total operating lease liabilities for remaining long term leases was approximately $155,000 and $303,000, respectively. Right of use assets totaled approximately $145,000 and $288,000 at September 30, 2023 and 2022, respectively. In the year ended September 30, 2023 and 2022, the Company recognized $268,000 and $289,000, respectively in total lease costs for the leases. Because the rate implicit in each lease is not readily determinable, the Company uses its estimated incremental borrowing rate to determine the present value of the lease payments. Recently the Company, as a result of certain headcount adjustments, has listed two of its leased premises as available for sublease. There can be no assurance such sublease will be successful or lead to a reduction in current on-going lease payments. The weighted average remaining lease term for the operating leases was 9 months at September 30, 2023 and the weighted average discount rate was 7%. The minimum future lease payments as of September 30, 2023 are as follows: |
CONVERTIBLE NOTES PAYABLE AND N
CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE | 12 Months Ended |
Sep. 30, 2023 | |
CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE | |
CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE | 7. CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE Convertible notes payable as of September 30, 2023 and 2022 consisted of the following: Convertible Promissory Notes with Clayton A. Struve The Company owes Clayton A. Struve, a significant stockholder, $1,301,005 under convertible promissory or OID notes. The Company recorded accrued interest of $94,062 and $86,562 as of September 30, 2023 and 2022, respectively. On December 7, 2022, the Company signed Amendments to the convertible promissory or OID notes, extending the due dates to September 30, 2023. On September 15, 2023, the due dates on the notes was further extended to September 30, 2024. The Company expensed $230,005 as loss on debt extinguishment during the year ended September 30, 2023 related to the extension of the notes. The Company recorded in convertible note payable the incremental value related to the conversion feature and as such, we recorded the extension value as an expense with an offset to convertible note payable. Convertible Redeemable Promissory Notes with J3E2A2Z The Company owes Ronald P. Erickson and J3E2A2Z, an entity affiliated controlled by Ronald P. Erickson $1,460,926 under convertible promissory notes On March 16, 2018, the Company entered into a Note and Account Payable Conversion Agreement pursuant to which (a) all $664,233 currently owing under the J3E2A2Z Notes was converted to a Convertible Redeemable Promissory Note in the principal amount of $664,233, and (b) all $519,833 of the J3E2A2Z Account Payable was converted into a Convertible Redeemable Promissory Note in the principal amount of $519,833 together with a warrant to purchase up to 1,039,666 shares of common stock of our for a period of five years. The initial exercise price of the warrants described above is $0.50 per share, also subject to certain adjustments. The Company recorded accrued interest of $218,334 and $287,290 as of September 30, 2023 and 2022, respectively. On December 7, 2022, the Company approved Amendments to the convertible redeemable promissory notes with Ronald P. Erickson and J3E2A2Z, extending the due dates to January 30, 2023. On January 25, 2023, the Company approved Amendments to the convertible redeemable promissory notes with Ronald P. Erickson and J3E2A2Z, extending the due dates to September 30, 2023. On September 15, 2023, the due dates on the notes was further extended to September 30, 2024. The Company expensed $276,860 as loss on debt extinguishment during the year ended September 30, 2023 related to the extension of the notes. The Company recorded in convertible note payable the incremental value related to the conversion feature and as such, we recorded the extension value as an expense with an offset to convertible note payable. Convertible Debt Offering Beginning in 2019, the Company entered into a series of debt offerings with similar and consistent terms. The Company issued Subordinated Convertible Notes and Warrants in a private placement to accredited investors, pursuant to a series of substantially identical Securities Purchase Agreements, Common Stock Warrants, and related documents. As of September 30, 2022, all convertible notes and accrued interest had been converted to common stock. During the year ended September 30, 2022, amortization related to the debt offerings of $7,272,911 was recognized as interest expense in the consolidated statements of operations. Convertible notes payable as of September 30, 2023 and 2022 are summarized below: September 30, 2023 September 30, 2022 Convertible note- Clayton A. Struve $ 1,301,005 $ 1,071,000 Convertible note- Ronald P. Erickson and affiliates 1,460,926 1,184,066 2021 Convertible notes - 14,209,000 Less conversions of notes - (14,209,000 ) $ 2,761,931 $ 2,255,066 |
EQUITY
EQUITY | 12 Months Ended |
Sep. 30, 2023 | |
EQUITY | |
EQUITY | 8. EQUITY Authorized Capital Stock The following description summarizes important terms of the classes of our capital stock as of September 30, 2023. This summary does not purport to be complete and is qualified in its entirety by the provisions of our articles of incorporation as amended, restated and supplemented to date, or our articles of incorporation, and our second amended and restated bylaws, or our bylaws, which have been filed as exhibits to this Annual Report on Form 10-K. Authorized Capital Stock · 200,000,000 shares of common stock, par value $0.001 per share; and · 5,000,000 shares of “blank check” preferred stock, par value $0.001 per share, of which: · 30,000 shares have been designated as our Series C Convertible Preferred Stock, $0.001 par value per share; and · 20,000 shares have been designated as our Series D Convertible Preferred Stock, $0.001 par value per share. Outstanding Shares of Capital Stock · 80,358,643 shares of common stock issued and outstanding, held by holders of record; · 17,858 shares of Series C Convertible Preferred Stock issued and outstanding, held by one holder of record; and · 10,161 shares of Series D Convertible Preferred Stock issued and outstanding, held by one holder of record. Common Stock Holders of the Company’s common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, including the election of directors. The Company’s articles of incorporation do not provide for cumulative voting in the election of directors. Subject to any preferential rights of any outstanding preferred stock, holders of common stock are entitled to receive ratably those dividends, if any, as may be declared from time to time by the board of directors on the common stock out of legally available funds. In the event of the Company’s liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of the Company’s debts and other liabilities and the satisfaction of any preferential rights of any outstanding preferred stock. Holders of common stock have no preemptive, conversion or subscription rights and there are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock, including our Series C Convertible Preferred Stock and Series D Convertible Preferred Stock. Preferred Stock The Company’s articles of incorporation authorize its board of directors, without stockholder approval, to issue up to 5,000,000 shares of preferred stock in one or more series, and to determine the designation, preferences, limitations and relative rights thereof, including, without limitation, such matters as dividends, redemption, liquidation, conversion and voting. The Company’s board of directors has the discretion to issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of common stock, or which could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, a majority of the Company’s outstanding voting stock. In connection with the amendment and restatement of our preferred stock, we effected a reverse split of our outstanding Series C Convertible Preferred Stock and Series D Convertible Preferred Stock by a factor of 1-for-100. No changes were made to the 5 million total shares of “blank-check” preferred stock authorized in our Articles. Prior to such reverse split, there were 1,785,715 and 1,016,004 shares of Series C Convertible Preferred Stock and Series D Convertible Preferred Stock designated and outstanding, respectively. To account for the reverse split, but in order to provide the ability to issue “pay in kind” dividends in lieu of cash dividends, at the time of the reverse split, we designated 30,000 shares of Series C Convertible Preferred Stock and 20,000 shares of Series D Convertible Preferred Stock, of which 17,858 and 10,161 shares were, respectively, outstanding immediately after such reverse split. In order to maintain the economic rights of the Series C Convertible Preferred Stock and Series D Convertible Preferred Stock, the definition of “Stated Value” was multiplied by 100, to offset the reverse split factor. All amount related to the preferred shares have been restated to reflect the reverse stock split as it occurred on the date of the first period presented. Securities Subject to Price Adjustments If in the future, the Company sells its common stock at a price below $0.25 per share, the conversion price of the Company’s outstanding shares of series C convertible preferred stock and series D convertible preferred stock would adjust below $0.25 per share pursuant to the documents governing such instruments. In addition, the conversion price of the convertible promissory notes referred to above and the exercise price of certain outstanding warrants to purchase 7,684,381 shares of common stock would adjust below $0.25 per share pursuant to the documents governing such instruments. Warrants totaling 4,439,707 would adjust below $1.20 per share and warrants totaling 4,424,425 would adjust below $2.40 per share, in each case pursuant to the documents governing such instruments. Series C and D Preferred Stock, Warrants and Dividends On August 5, 2016, the Company closed a Series C Preferred Stock and Warrant Purchase Agreement with Clayton A. Struve, an accredited investor for the purchase of $1,250,000 of preferred stock with a conversion price of $0.70 per share. The preferred stock has a cumulative dividend of 8% and an ownership blocker of 4.99%. Dividends are due and payable in cash when declared by the Company or when the stock is converted. Series C Preferred stock is senior to Series D Preferred stock and is entitled to receive equal dividends paid to Series D. In addition, Mr. Struve received a five-year warrant to acquire 1,785,714 shares of common stock at $0.70 per share. On August 14, 2017, the price of the Series C Stock and warrant and its conversion price, were adjusted to $0.25 per share pursuant to the documents governing such instruments. As of September 30, 2023, Mr. Struve owns all of the 1,785,715 issued and outstanding shares of Series C Preferred Stock. Each holder of Preferred Series C is allowed to vote as a common shareholder as if the shares were converted to common stock up to the ownership blocker of 4.99%. In 2017 the Company closed a $750,000 Series D Preferred Stock and Warrant offering with Mr. Struve. As of September 30, 2023, Mr. Struve owns all of the 1,016,004 issued and outstanding shares of Series D Preferred Stock. Each outstanding share of series D preferred stock will accrue cumulative cash dividends at a rate equal to 8.0% per annum, subject to adjustment as provided in the series D preferred stock certificate of designations. Dividends are due and payable in cash when declared by the Company or when the stock is converted. In addition, On August 14, 2017, the price of the Series D Preferred Stock were adjusted to $0.25 per share pursuant to the documents governing such instruments. Each holder of Preferred Series D is allowed to vote as a common shareholder as if the shares were converted to common stock up to the ownership blocker of 4.99%. In August, 2023, as part of a modification of the Series C and Series D Preferred certificates of designation, such preferred stock does not accrue or pay cash dividends. All future dividends will be accrued and paid in Series C or Series D stock, as applicable. As was the case prior to the modifications of the Series C and Series D preferred stock, although accrual of dividends is required as described below, no dividends are actually paid, and no shares actually issued, until a conversion of such stock or declaration of the dividend by the Board of Directors. Additionally the Series D Preferred stock will no longer be required to automatically convert to common stock based on listing of the Company’s common stock on the NYSE American, except if the volume weighted average price of the common stock is at least $2.50 per share for 20 trading days and certain other requirements are satisfied. The cumulative dividends accrued and paid in preferred stock will be determined based upon a $.70 stated value. The conversion from preferred stock into common stock is determined based dividing the $.70 stated value by the $.25 conversion price. In June, 2023, as part of the anticipated modification of the certificates of designation of the Series C and Series D preferred stock, at Mr. Struve’s request, the Company settled all cash dividends with respect to the Series D preferred stock accrued and accumulated through December 31, 2022 in exchange for the issuance to Mr. Struve of 1,402,784 shares of the Company’s common stock in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. In connection with this transaction, the Company recorded $1,627,230 in dividends, representing the fair market value of the 1,402,784 shares issued. Based upon the modified terms and conditions of Series C and D certificates of designations, it was determined that Series C and D preferred dividends need to be accreted going forward. As of September 30, 2023, cumulative unpaid Series C and D dividends totaled approximately $770,000, which on a converted-to-common-stock basis represents approximately 3,040,000 shares of common stock. The value of the 3.0 million shares of common totaled $3,526,653. The Company recorded $3,526,653in cumulative deemed dividends related to Series C and D Preferred Stock which have not been paid, net of the approximately $351,000 of accumulated dividends with respect to the Series D preferred that were settled for 1,402,784 shares of common stock as noted above. Mr. Struve is subject to an ownership blocker limiting his ownership to 4.99% and thus the amount of common shares he can receive for dividends. Unpaid accreted stock dividends will be issued to Mr. Struve if he converts preferred stock or if the Board declares a dividend thereon, limited to his 4.99% ownership blocker. Assuming no changes in the amount of outstanding Preferred Series C or D ownership, going forward on a quarterly basis the Company will accrete as a preferred dividend the value of approximately 160,000 shares of common stock, which are issuable if such dividends become payable as additional shares of preferred stock, and such preferred stock is then converted into common stock. Common Stock Each share of common stock entitles its holder to one vote on each matter submitted to the stockholders for a vote, and no cumulative voting for directors is permitted. Stockholders do not have any preemptive rights to acquire additional securities issued by the Company. Year Ended September 30, 2023 The Company issued 2,632,727 shares of common stock related to warrant exercises and received $387,334. On June 27, 2023, at Mr. Struve’s request, the Company settled all cash dividends with respect to the Series D preferred stock accrued and accumulated through December 31, 2022 in exchange for the issuance to Mr. Struve of 1,402,784 shares of the Company’s common stock in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. The Company issued 3,750 shares related to the exercise of stock option grants and received $4,687. On September 29, 2023, the Company closed an offering of our common stock pursuant to which the Company sold 28,000,000 shares of common stock, at a purchase price of $0.25 per share. After deducting underwriting commissions and other offering expenses, the Company received net proceeds of $5,472,791. Year Ended September 30, 2022 The Company issued 7,672,860 shares of common stock related to the automatic conversion of convertible notes and interest from a private placement to accredited investors in 2021. The convertible notes and interest were automatically converted to common stock at $2.00 per share on the one-year anniversary in March 2022. The Company issued 1,045,724 shares of common stock related to warrant exercises and received $838,487. The Company issued 26,293 shares related to the exercise of stock option grants and received $26,887. The Company issued 104,634 shares each to three directors and three consultants at $1.749 per share. On September 20, 2022, the Company completed a public offering of our common stock pursuant to which the Company sold 4,140,000 shares of common stock, at a purchase price of $2.00 per share, for total gross proceeds of $8,280,000. After deducting underwriting commissions and other offering expenses, the Company received net proceeds of $7,424,679. Warrants to Purchase Common Stock Year Ended September 30, 2023 On December 7, 2022, the Company signed an Extension of Warrant Agreement with Clayton Struve, extending the exercise dates as follows: Warrant No./Class Issue Date No. Warrant Shares Exercise Price Current Expiration Date Amended Expiration Date Clayton A. Struve Warrant 08-14-2017 1,440,000 $0.25 08-13-2024 08-13-2025 Clayton A. Struve Warrant 12-12-2017 1,200,000 $0.25 12-11-2024 12-11-2025 Clayton A. Struve Warrant 08-04-2016 1,785,715 $0.25 08-04-2024 08-04-2025 Clayton A. Struve Warrant 02-28-2018 1,344,000 $0.25 02-28-2024 02-28-2025 The Company recorded interest expense of $194,019 during the year ended September 30, 2023 related to the extension of the warrants. The Company recorded the original value of warrants in equity and as such, the Company recorded the extension value as an expense with an offset to additional paid in capital. On January 19, 2023, the Company signed an Extension of Warrant Agreements with Ronald P. Erickson and an entity controlled by Mr. Erickson, extending the exercise dates from January 30, 2023 to January 30, 2024. The Company issued 2,632,727 shares of common stock related to warrant exercises and received $387,334. Warrants to purchase 297,273 shares of common stock at $0.250 per share expired. On September 29, 2023, pursuant to the Underwriting Agreement, the Company issued common stock purchase warrants to Boustead Securities, LLC and The Benchmark Company, LLC to purchase an aggregate of 1,960,000 shares of Common Stock at an exercise price of $0.25 per share, subject to adjustments. The Representatives’ Warrants are immediately exercisable, and may be exercised at any time and from time to time, in whole or in part, until September 26, 2028 and may be exercised on a cashless basis. The Representatives’ Warrants also include customary anti-dilution provisions and immediate piggyback registration rights with respect to the registration of the shares underlying the Representatives’ Warrants. The warrants were valued at $486,080 and recorded in additional paid in capital as costs form common stock offering. Year Ended September 30, 2022 The Company issued 389,800 warrants to purchase common stock to three directors and four consultants at $1.899 per share. The warrants expire five years from the date of issuance. On May 3, 2022, the Company signed an extension of warrant agreement with Clayton Struve, extending the exercise dates as follows: Warrant No./Class Issue Date No. Warrant Shares Exercise Price Original Expiration Date Amended Expiration Date Clayton A. Struve Warrant 08-14-2017 1,440,000 $0.25 08-13-2023 08-13-2024 Clayton A. Struve Warrant 12-12-2017 1,200,000 $0.25 12-11-2023 12-11-2024 Clayton A. Struve Warrant 08-04-2016 1,785,715 $0.25 08-04-2023 08-04-2024 Clayton A. Struve Warrant 02-28-2018 1,344,000 $0.25 02-28-2023 02-28-2024 The Company recorded interest expense of $244,260 during the year ended September 30, 2022 related to the extension of the warrants. Warrants to purchase 122,018 shares of common stock at $0.918 per share expired. The Company issued 1,045,724 shares of common stock related to warrant exercises and received $838,487. A summary of the warrants outstanding as of September 30, 2023 were as follows: September 30, 2023 Weighted Average Exercise Shares Price Outstanding October 1, 2022 21,786,313 $ 1.029 Issued 980,000 0.250 Exercised (2,582,727 ) (0.250 ) Forfeited (297,273 ) (0.250 ) Expired - - Outstanding at end of period 20,886,313 $ 1.103 Exercisable at end of period 20,886,313 The following table summarizes information about warrants outstanding and exercisable as of September 30, 2023: September 30, 2023 Weighted Weighted Weighted Average Average Average Number of Remaining Exercise Shares Exercise Warrants Life ( In Years) Price Exercisable Price 9,649,381 2.16 $ 0.250 9,649,381 $ 0.250 6,512,207 1.37 1.20-1.85 6,512,207 1.20-1.85 4,694,725 2.59 2.00-3.00 4,694,725 2.00-3.00 10,000 0.43 4.080 10,000 4.080 20,886,313 2.07 $ 1.163 20,886,313 $ 1.163 The significant weighted average assumptions relating to the valuation of the Company’s warrants for the year ended September 30, 2023 were as follows: Dividend yield 0% Expected life 3-5 years Expected volatility 104% Risk free interest rate 2.96% There were vested warrants of 20,866,313 with an aggregate intrinsic value of $0. |
STOCK INCENTIVE PLANS
STOCK INCENTIVE PLANS | 12 Months Ended |
Sep. 30, 2023 | |
STOCK INCENTIVE PLANS | |
STOCK INCENTIVE PLANS | 9. EQUITY INCENTIVE PLANS On August 12, 2021, the Company established its 2021 Equity Incentive Plan (the “2021 Plan”), which was adopted by stockholders on October 15, 2021. The Company initially had 20,000,000 shares of its common stock authorized as the maximum number of shares of common stock that may be delivered to participants under the 2021 Plan, subject to adjustment for certain corporate changes affecting the shares, such as stock splits. This number was increased to 22,000,000 shares of common stock as of January 1, 2022 as a result of the automatic share reserve increase described below. Year Ended September 30, 2023 During the year ended September 30, 2023, the Company issued stock option grants to eighteen employees and consultants for 4,158,333 shares at an average exercise price of $1.381 per share. The stock option grants expire in five years. The stock option grants primarily vest quarterly over two to four years. During the year ended September 30, 2023, stock option grants for 10,277,655 shares at an average exercise price of $1.647 per share were forfeited. During the year ended September 30, 2023, stock option grants for 166,890 shares at an average exercise price of $0.272 per share were exercised. Year Ended September 30, 2022 On December 16, 2021, the Company issued a stock option grant to Ronald P. Erickson for 1,000,000 shares at an exercise price of $2.09 per share. The stock option grant expires in five years. The stock option grant vests quarterly over four years. On December 16, 2021, the Company issued a stock option grant to Phillip A. Bosua for 1,300,000 shares at an exercise price of $2.09 per share. The stock option grant expires in five years. The stock option grant vests quarterly over four years. On May 20, 2022, the Company issued a stock option grant to Peter Conley for 1,000,000 shares at an exercise price of $1.48 per share. The stock option grant expires in five years. The stock option grant vests quarterly over four years after two quarters. During the year ended September 30, 2022, the Company also issued stock option grants to nineteen employees and consultants for 3,336,000 shares at an average exercise price of $1.726 per share. The stock option grants expire in five years. The stock option grants primarily vest quarterly over four years. During the year ended September 30, 2022, the Company issued 26,293 shares related to the exercise of stock option grants and received $26,887. During the year ended September 30, 2022, eight employees and consultants forfeited stock option grants for 1,132,457 shares at an average of $2.057 per share. Stock option activity for the years ended September 30, 2023 and 2022 was as follows: Weighted Average Options Exercise Price Outstanding as of October 1, 2021 15,315,120 $ 1.565 Granted 6,636,000 1.815 Exercised (26,293 ) (1.376 ) Forfeitures (1,132,457 ) (2.057 ) Outstanding as of September 30, 2022 20,792,370 1.618 Granted 4,158,333 1.381 Exercised (166,890 ) (0.272 ) Forfeitures (10,277,655 ) (1.647 ) Outstanding as of September 30, 2023 14,506,158 $ 1.546 The following table summarizes information about stock options outstanding and exercisable as of September 30, 2023: Weighted Weighted Weighted Average Average Average Range of Number Remaining Life Exercise Price Number Exercise Price Exercise Prices Outstanding In Years Outstanding Exercisable Exercisable $.88-1.25 2,161,875 2.91 1.105 1,946,758 $ 1.107 1.28-1.67 9,754,283 3.00 1.473 2,920,291 1.415 1.79-3.67 2,590,000 3.05 2.186 1,213,750 2.151 14,506,158 3.00 $ 1.546 6,080,800 $ 1.498 There were stock option grants of 14,906,158 with an aggregate intrinsic value of $0. |
OTHER SIGNIFICANT TRANSACTIONS
OTHER SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | 12 Months Ended |
Sep. 30, 2023 | |
OTHER SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | |
OTHER SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | 10. OTHER SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES Transactions with Clayton Struve See Notes 7 and 8 for related party transactions with Clayton A. Struve, a significant stockholder. On June 27, 2023, at Mr. Struve’s request, the Company settled all cash dividends with respect to the Series D preferred stock accrued and accumulated through December 31, 2022 in exchange for the issuance to Mr. Struve of 1,402,784 shares of the Company’s common stock in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. In connection with this transaction, the Company recorded $1,627,230 in dividends, representing the fair market value of the 1,402,784 shares issued. On December 7, 2022, we signed an Extension of Warrant Agreement with Clayton Struve, extending the exercise dates. We recorded interest expense of $194,019 during the year ended September 30, 2023 related to the extension of the warrants. We recorded the original value of warrants in equity and as such, we recorded the extension value as an expense with an offset to additional paid in capital. Transactions with Ronald P. Erickson See Notes 7, 8 and 9 for related party transactions with Ronald P. Erickson, the Company’s Chairman and Chief Executive Officer and affiliated entities. On December 14, 2022, the Company issued a stock option grant to Ronald P. Erickson for 1,000,000 shares at an exercise price of $1.41 per share. The stock option grant expires in five years. The stock option grant vests quarterly over four years. On November 4, 2019, the Company granted a stock option grant to Ronald P. Erickson for 1,200,000 shares with an exercise price of $1.10 per share. The performance grant expires November 4, 2024 and vests upon uplisting to the NASDAQ or NYSE exchanges. The Company’s common stock began trading on NYSE American under the symbol “KNW” on September 16, 2022 and the Company expensed $1,207,200 during the year ended September 30, 2022. On December 15, 2020, the Company issued a stock option grant to Ronald P. Erickson for 1,865,675 shares at an exercise price of $1.53 per share. The stock option grant expires in five years. The grant vests in increments if the market capitalization of our commons stock exceeds for 20 consecutive trading days starting at $100 million to $1 billion. The Company estimated at grant date the fair value of these options at approximately $520,869 which is being amortized over 5 years. As of September 30, 2023 and 2022, the Company recorded an expense of $104,172 and a cumulative expense of $186,657, respectively. The Company is valuing this stock option using the Monte Carlo pricing model which included key assumptions of 100% stock volatility, five year life and no forfeitures. The stock option grant was not vested as of September 30, 2023 and 2022. On December 15, 2020, the Company issued an additional stock option grant to Ronald P. Erickson for 1,865,675 shares at an exercise price of $1.53 per share. The stock option grant expires in five years. The Company’s common stock began trading on NYSE American under the symbol “KNW” on September 16, 2022 and the Company expensed $263,593 during the year ended September 30, 2022. Mr. Erickson was paid interest of $173,855 during the year ended September 30, 2023 and deferred compensation of $165,000 during the year ended September 30, 2022 that were previously accrued and reported but were deferred. Mr. Erickson and/or entities with which he is affiliated also have accrued compensation, travel and interest of approximately $218,334 and $295,418 as of September 30, 2023 and 2022, respectively. Transactions with Phillip A. Bosua See Notes 4, 8, 9 and 11 for related party transactions with Phillip A. Bosua. On December 15, 2020, the Company issued a stock option grant to Phillip A. Bosua for 2,132,195 shares at an exercise price of $1.53 per share. The stock option grant expires in five years. The grant vested in increments if the market capitalization of our commons stock exceeds for 20 consecutive trading days starting at $100 million to $1 billion. The Company estimated at grant date the fair value of these options at approximately $595,277 which is being amortized over 5 years. As of September 30, 2023 and 2022, the Company recorded an expense of $37,370 and a cumulative expense of $231,321, respectively. The Company is valuing this stock option using the Monte Carlo pricing model which included key assumptions of 100% stock volatility, five year life and no forfeitures. The stock option grant was not vested as of September 30, 2023 and 2022. On December 15, 2020, the Company issued another stock option grant to Phillip A. Bosua for 2,132,195 shares at an exercise price of $1.53 per share. The stock option grants expire in five years. The stock option grants vest when earned based on certain performance criteria. The Company’s common stock began trading on NYSE American under the symbol “KNW” on September 16, 2022 and we expensed $301,249 during the year ended September 30, 2022. Mr. Bosua resigned from the Board of Directors and from his position as Chief Executive Officer on January 23, 2023. Mr. Bosua was paid $400,000 in severance and $96,440 in rent and other costs during the year ended September 30, 2023. Mr. Bosua was paid $1,097,928 in compensation and $91,500 in rent expenses for services provided to AI Mind, a wholly owned subsidiary of the Company, in connection with the development of NFT sales for the year ended September 30, 2022. Stock Issuances to Named Executive Officers and Directors On February 15, 2023, the Company issued stock option grants to two directors for a total of 50,000 shares at an exercise price of $1.24 per share. The stock option grant expires in five years. The stock option grants vested at issuance. On January 5, 2022, the Company issued 30,000 shares each to three directors at an exercise price of $1.70 per share. On January 5, 2022, the Company issued 20,000 warrants to purchase common stock each to three directors shares at $1.70 per share. The warrants expire on January 5, 2027. |
COMMITMENTS CONTINGENCIES AND L
COMMITMENTS CONTINGENCIES AND LEGAL PROCEEDINGS | 12 Months Ended |
Sep. 30, 2023 | |
COMMITMENTS CONTINGENCIES AND LEGAL PROCEEDINGS | |
COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS | 11. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS Legal Proceedings The Company may from time to time become a party to various legal proceedings arising in the ordinary course of business. The Company is currently not a party to any pending legal proceeding that is not ordinary routine litigation incidental to the Company’s business. Employment Agreements On April 10, 2018, the Company entered into an amended employment agreement for Ronald P. Erickson which amends our employment agreement with him dated July 1, 2017. The employment agreement provides for a base salary of $180,000 per year, which was increased to $215,000 from May 1, 2020 to March 31, 2021, to $300,000 from April 1, 2021 to March 15, 2022 and to $325,000 from March 15, 2022 to September 30, 2022. From December 14, 2022, Mr. Erickson has been compensated with an annual salary of $375,000. Mr. Erickson will be entitled to participate in all group employment benefits that are offered by us to our senior executives and management employees from time to time, subject to the terms and conditions of such benefit plans, including any eligibility requirements. The employment agreement is for an initial term of 12 months (subject to earlier termination) and will be automatically extended for additional 12-month terms unless either party notifies the other party of its intention to terminate the employment agreement at least ninety (90) days prior to the end of the initial term or renewal term. If the company terminates Mr. Erickson’s employment at any time prior to the expiration of the term without cause, as defined in the employment agreement, or if Mr. Erickson terminates his employment at any time for “good reason” or due to a “disability,” Mr. Erickson will be entitled to receive (i) his base salary amount for one year; and (ii) medical benefits for eighteen months. On January 23, 2023, the Board appointed Mr. Erickson to the position of Chief Executive Officer of the Company. Mr. Erickson was appointed to serve until his successor is duly elected. On April 10, 2018, the Company entered into an employment agreement with Phillip A. Bosua reflecting his appointment as Chief Executive Officer. The employment agreement provided for a base salary of $225,000 per year, which was increased to $260,000 from May 1, 2020 to March 31, 2021 and to $350,000 from April 1, 2021 to January 23, 2023. Mr. Bosua also received 500,000 shares of common stock valued at $0.33 per share and was entitled to bonuses and equity awards at the discretion of the Board or a committee of the Board. Mr. Bosua was entitled to participate in all group employment benefits that are offered by us to our senior executives and management employees from time to time, subject to the terms and conditions of such benefit plans, including any eligibility requirements. The employment agreement was for an initial term of 12 months (subject to earlier termination) and was automatically extended for additional 12-month terms unless either party notified the other party of its intention to terminate the employment agreement at least ninety (90) days prior to the end of the initial term or renewal term. If the Company terminated Mr. Bosua’s employment at any time prior to the expiration of the term without cause, as defined in the employment agreement, or if Mr. Bosua terminated his employment at any time for “good reason” or due to a “disability,” Mr. Bosua was entitled to receive (i) his base salary amount for one year; and (ii) medical benefits for eighteen months. On January 23, 2023, Mr. Bosua resigned from the Board and from his position as Chief Executive Officer of the Company. In connection with his resignation, we entered into a Separation and Release Agreement (the “Separation Agreement”) with Mr. Bosua containing customary terms and mutual releases, pursuant to which Mr. Bosua is entitled receive a $400,000 severance payment and benefits pursuant to his prior employment agreement. Pursuant to the Separation Agreement, Mr. Bosua’s outstanding stock options ceased vesting as of January 23, 2023, and all vested stock options remain exercisable through January 23, 2024. Mr. Bosua has been engaged as a consultant to the Company for a period of one year at a rate of $10,000 per month. Mr. Bosua also entered into a lock up and leak out agreement with respect to 3,005,000 common shares owned by Mr. Bosua and shares issuable upon exercise of his vested option awards. During the period commencing March 17, 2023 through March 17, 2024, Mr. Bosua may sell no more than 1,500,000 shares. During the period commencing April 1, 2024 through June 30, 2026, Mr. Bosua may sell no more than 375,000 shares per quarter (or 1,500,000 shares per year), unless the stock price of the Company’s common stock exceeds $5.00 per share on the NYSE American (the “Stock Price Threshold”), then Mr. Bosua may sell a maximum of 750,000 shares during any such quarter that the Stock Price Threshold is met. Notwithstanding the foregoing, any lock-up or leak-out restrictions are waived for any sales of shares from Mr. Bosua to Todd Baszucki. On May 13, 2022, the Company entered into an employment agreement with Peter J. Conley reflecting his appointment as our Chief Financial Officer and Senior Vice President, Intellectual Property. The employment agreement provides for a base salary of $300,000. From December 14, 2022 to September 30, 2023, Mr. Conley has been compensated with an annual salary of $325,000, Mr. Conley may also be entitled to bonuses from time to time as determined by our Board or our compensation committee in their sole discretion. Mr. Conley is eligible to participate in all the Company’s employee benefit plans, policies and arrangements that are applicable to other executive officers, as such plans, policies and arrangements may exist or change from time to time at our discretion. The Company will reimburse Mr. Conley for reasonable travel, entertainment and other expenses he incurs in the furtherance of his duties under the employment agreement. The employment agreement is at will, meaning either we or Mr. Conley may terminate the employment relationship at any time, with or without cause, upon written notice to the other party. The employment agreement provides for severance pay equal to 12 months of then-in-effect base salary if Mr. Conley is terminated without “cause” or voluntarily terminates his employment for “good reason,” as defined in the employment agreement. Properties and Operating Leases The Company is obligated under the following leases for our various facilities. Corporate Offices On April 13, 2017, the Company leased its executive office located at 500 Union Street, Suite 810, Seattle, Washington, USA, 98101. The Company leases 943 square feet and the current net monthly payment is $3,334. The monthly payment increases approximately 3% each year and the lease expired on May 31, 2022. On October 31, 2021, the Company extended the lease from June 1, 2022 to May 31, 2023 at $2,986 per month. On April 26, 2023, the Company extended the lease from June 1, 2023 to May 31, 2024 at $2,908. Lab Facilities and Executive Offices On May 18, 2021, the Company entered into a lease for its lab facilities located at 914 E Pine Street, Suite 212, Seattle, WA 98122 and leased 2,642 square feet. The net monthly lease payment was $8,697 and increases by 3% annually. The lease expires on June 30, 2024. The lease can be extended for one additional three-year term. On October 11, 2021, the Company entered into the First Amendment of Lease and added 2,485 square feet for $5,000 per month. On September 20, 2022, the Company entered into the Second Amendment of Lease for additional space. The expanded space will be utilized for research and testing. The Amendment of Lease expires on December 31, 2023. On September 22, 2022, the Company leased lab facilities and executive offices in Yucca Valley, CA from Phillip Bosua, our former CEO. The Company leased 1,700 square feet of the total 2,134 square feet of the premises and the current net monthly payment is $7,000. The lease was to expire September 30, 2023 and could be extended on a month to month basis. The Company paid $91,500 in rent on September 28, 2022 for the period September 1, 2021 to September 30, 2022. The Company paid $28,000 for the year ended September 30, 2023. The lease was terminated on January 23, 2023, the date of Mr. Bosua’s resignation. On November 22, 2022, the Company leased an additional 1,800 square feet of lab facilities at 123 Boylston Ave, Suite C, Seattle, WA 98102 with a net monthly payment is $2,250. The lease was set to expire on November 21, 2023 and has been extended on a month-to-month basis. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Sep. 30, 2023 | |
INCOME TAXES | |
INCOME TAXES | 12. INCOME TAXES The Company has incurred losses since inception, which have generated net operating loss carryforwards. The net operating loss carryforwards arise from United States sources. Losses arising from United States taxable operations were approximately $4.2 million and $7.3 million for the years ended September 30, 2023 and 2022. The Company has Federal net operating loss carryforwards of approximately $49.5 million which expire in 2028-2042. Because it is not more likely than not that sufficient tax earnings will be generated to utilize the net operating loss carryforwards, a corresponding valuation allowance equal to 100% of the gross deferred tax asset of approximately $14.2 million and $11.4 million was established as of September 30, 2023 and 2022, respectively. The Company does not recognize the majority of state tax loss operating loss carryforwards as a deferred tax asset given it no longer has any operation in those states. Under the Tax Reform Act of 1986, the amounts of, and benefits from, net operating losses may be limited in certain circumstances, including a change in control. Section 382 of the Internal Revenue Code generally imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in its stock ownership. There can be no assurance that the Company will be able to utilize any net operating loss carryforwards in the future. The Company is subject to possible tax examination for the years 2017 through 2023. The principal components of the Company’s deferred tax assets at September 30, 2023 and 2022 are as follows: Net operating loss carryforward $ 10,476,000 $ 9,372,000 Stock based compensation 2,174,000 1,677,000 Research and Development 1,460,000 - Intangibles - 221,000 Accruals and reserves 46,000 97,000 Total deferred tax asset 14,156,000 11,367,000 Valuation allowance (14,156,000 ) (11,367,000 ) Net deferred tax assets $ - $ - Change in valuation allowance during the year $ (2,789,000 ) $ (1,666,000 ) A reconciliation of the United States Federal Statutory rate to the Company’s effective tax rate for the years ended September 30, 2023 and 2022 are as follows. For the years ended September 30, 2023 and 2022, the Company’s effective tax rate differs from the federal statutory rate principally due to nondeductible expenses plus an increase in the deferred tax asset valuation allowance. 2023 2022 Income tax provision at statutory rate 21 % 21 % Non deductible expenses 1 % 12 % Change in valuation allowance 18 % 7 % Other and prior year true up 2 % 2 % Effective tax rate 0 % 0 % As of September 30, 2023, there were no uncertain tax positions. Management does not anticipate any future adjustments in the next twelve months which would result in a material change to its tax position. For the years ended September 30, 2023 and 2022, the Company did not have any interest and penalties. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Sep. 30, 2023 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 13. SEGMENT REPORTING The management of the Company considers the business to currently have two operating segments (i) the development of the Bio-RFID™” and “ChromaID™” technologies; (ii) Particle, Inc. technology; and (iii) AI sales of NFT products. Particle commenced operations in the year ended September 30, 2020. AI commenced operations during the year ended September 30, 2021. The reporting for the year ended September 30, 2023 and 2022 was as follows (in thousands): Segment Operating Segment Segment Revenue Profit (Loss) Assets Year Ended September 30, 2023 Development of the Bio-RFID™” and “ChromaID™” technologies $ - $ (14,298 ) $ 8,266 Particle, Inc. technology - - - Digital asset sales - 274 - Total segments $ - $ (14,024 ) $ 8,266 Year Ended September 30, 2022 Development of the Bio-RFID™” and “ChromaID™” technologies $ - $ (13,482 ) $ 13,360 Particle, Inc. technology - (22 ) - Digital asset sales 4,360 930 398 Total segments $ 4,360 $ (12,574 ) $ 13,758 During years ended September 30, 2023 and 2022, the Company incurred non-cash expenses related to operations of $4,767,809 and $12,164,418, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Sep. 30, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 14. SUBSEQUENT EVENTS The Company evaluated subsequent events, for the purpose of adjustment or disclosure, up through the date the financial statements were issued. Subsequent to September 30, 2023, there were the following material transactions that require disclosure: On October 12, 2023, the Company issued 30,000 shares each to three directors at $0.25 per share. On October 26, 2023, the Company’s underwriters exercised their over-allotment option under the Underwriting Agreement by and between the Company and the underwriters dated September 26, 2023, electing to purchase an additional 883,061 shares of Common Stock at a purchase price to the public of $0.25 per share. The Company also issued additional warrants to the Representatives to purchase an aggregate of 61,814 shares of Common Stock at an exercise price of $0.25 per share, subject to adjustments, with the same terms as the warrants issued in connection with the initial closing of the Offering. On November 3, 2023, the Company appointed Larry K. Ellingson, John Cronin and Timothy M. Londergan, as new non-employee members of the Board. Messrs. Ellingson, Cronin, and Londergan are deemed to qualify as independent under the director independence standards set forth in the rules and regulations of the SEC and applicable NYSE listing standards. On November 28, 2023, the Board adopted, based on the recommendation of the Compensation Committee of the Board, the Know Labs Inc. Compensation Recovery Policy (the “Policy”) for the recovery of Erroneously Awarded Compensation in order to comply with Section 10D of the Exchange Act, Rule 10D-1 promulgated under the Exchange Act, and the listing standards of the New York Stock Exchange adopted pursuant thereto. The Board has designated the Compensation Committee of the Board as the administrator of the Policy. Since September 30, 2023, the Company issued stock option grants to employees, directors and directors for 13,909,315 shares at an average exercise price of $0.256 per share. The stock option grants expire in five years. The stock option grants primarily vest quarterly over four years. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES ADOPTION OF ACCOUNTING STANDARDS (Policies) | 12 Months Ended |
Sep. 30, 2023 | |
SIGNIFICANT ACCOUNTING POLICIES ADOPTION OF ACCOUNTING STANDARDS | |
Basis of Presentation | Basis of Presentation |
Principles of Consolidation | Principles of Consolidation |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Property and Equipment | Property and Equipment |
Long-Lived Assets | Long-Lived Assets |
Revenue Recognition | Revenue Recognition · identification of the contract, or contracts, with the customer; · identification of the performance obligations in the contract; · determination of the transaction price; · allocation of the transaction price to the performance obligations in the contract; and · recognition of the revenue when, or as, the Company satisfies a performance obligation. Revenue is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. During the three months ended December 31, 2021, the Company generated revenue from digital asset sales of NFTs. The Company engineering team, using its research data, AI and proprietary algorithms, produced NFTs in the form of digital art. The NFTs produced had no recorded cost basis. The Company does not expect future activity or revenue from that source. |
Research and Development Expenses | Research and Development Expenses The Company’s current research and development efforts are primarily focused on improving its radio frequency spectroscopy technology and its first focus on non-invasive monitoring of blood glucose levels; extending its capacity and developing new and unique applications for this technology. The Company believes that continued development of new and enhanced technologies is essential to its future success. The Company incurred expenses of $7,727,467 and $5,385,586 for the years ended September 30, 2023 and 2022, respectively, on development activities. Included in the expense for 2023 is approximately $859,000 related to severance and other expenses associated with the departure of the Company’s former chief technology officer and chief executive officer, Philip A. Bosua, and other employees. |
Advertising | Advertising |
Fair Value Measurements and Financial Instruments | Fair Value Measurements and Financial Instruments Fair Value Measurement and Disclosures Level 1 – Quoted prices in active markets for identical assets and liabilities; Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses approximate the fair value of the respective assets and liabilities as of September 30, 2023 and 2022 are based upon the short-term nature of the assets and liabilities. The fair value of the Company’s convertible notes payable are not readily available given the terms and conditions, including the conversion features, are complex. The Company has a money market account which is considered a Level 1 asset. The balance as of September 30, 2023 and 2022 was $7,836,393 and $11,821,931, respectively. No other assets or liabilities are required to be recorded at fair value on a recurring nature. |
Derivative Financial Instruments | Derivative Financial Instruments – The Company determined that the conversion features for purposes of bifurcation within its convertible notes payable issued during 2020 and 2021 were immaterial and as of September 30, 2023 all such convertible notes have been converted to common stock and there was no derivative liability. |
Stock Based Compensation | Stock Based Compensation |
Convertible Securities | Convertible Securities |
Net Loss per Share | Net Loss per Share As of September 30, 2023, the Company had 80,358,463 shares of common stock issued and outstanding. As of September 30, 2023, there were options outstanding for the purchase of 14,506,158 shares of our common stock (including unearned stock option grants totaling 3,869,825 shares related to performance targets), warrants for the purchase of 20,866,313 shares of our common stock, 8,108,356 shares of the Company’s common stock issuable, collectively, upon the conversion of our Series C Convertible Preferred Stock and Series D Convertible Preferred Stock, and approximately 3,040,219 shares of our common stock, collectively, reserved to pay accrued dividends on our Series C Convertible Preferred Stock and Series D Convertible Preferred Stock. In addition, the Company currently has 9,020,264 shares of its common stock at the current price of $0.25 per share reserved and are issuable upon conversion of convertible debentures of $2,761,931. Further, under the current terms of our Series C Convertible Preferred Stock and Series D Convertible Preferred Stock, and assuming no changes in the ownership thereof, going forward on a quarterly basis the Company will accrete as a preferred dividend the value of approximately 160,000 shares of common stock, which are issuable if such dividends become payable as additional shares of preferred stock, and such preferred stock is then converted into common stock. All of the foregoing shares could potentially dilute future earnings per share but are excluded from the September 30, 2023, calculation of net loss per share because their impact is antidilutive As of September 30, 2022, the Company had 48,156,062 shares of common stock issued and outstanding. As of September 30, 2022, there were options outstanding for the purchase of 20,792,370 common shares (including unearned stock option grants totaling 9,704,620 shares related to performance targets), warrants for the purchase of 21,786,313 common shares, and 8,108,356 shares of our common stock issuable upon the conversion of Series C and Series D Convertible Preferred Stock. In addition, the Company currently has 9,020,264 common shares at the current price of $0.25 per share reserved and are issuable upon conversion of convertible debentures of $2,255,066. All of the foregoing shares could potentially dilute future earnings per share but are excluded from the September 30, 2022, calculation of net loss per share because their impact is antidilutive. |
Comprehensive Loss | Comprehensive loss |
Dividend Policy | Dividend Policy |
Use of Estimates | Use of Estimates |
Recent Accounting Pronouncements | Based on the Company’s review of accounting standard updates recently issued, those standards not yet required to be adopted and proposed standards for the future, the Company does believe such items are expected to have a significant impact on the Company’s consolidated financial statements. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and equipment | EstimatedUseful Lives June 30,2023 September 30,2022 Machinery and equipment 2-3 years $961,529 $1,510,265 Furniture and fixtures 5 years 26,855 26,855 Leasehold improvements 5 years 3,612 3,612 Less: accumulated depreciation (691,899) (677,755) $300,097 $862,977 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
LEASES | |
Summary of minimum future lease payments | Year Ended June 30, 2024- Total remaining payments $204,534 Less imputed interest (1,822)Total lease liability $202,712 |
CONVERTIBLE NOTES PAYABLE AND_2
CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE | |
Schedule of convertible notes payable | September 30, 2023 September 30, 2022 Convertible note- Clayton A. Struve $ 1,301,005 $ 1,071,000 Convertible note- Ronald P. Erickson and affiliates 1,460,926 1,184,066 2021 Convertible notes - 14,209,000 Less conversions of notes - (14,209,000 ) $ 2,761,931 $ 2,255,066 |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
EQUITY | |
Schedule of Warrant activity | Warrant No./Class Issue Date No. Warrant Shares Exercise Price Current Expiration Date Amended Expiration Date Clayton A. Struve Warrant 08-14-2017 1,440,000 $0.25 08-13-2024 08-13-2025 Clayton A. Struve Warrant 12-12-2017 1,200,000 $0.25 12-11-2024 12-11-2025 Clayton A. Struve Warrant 08-04-2016 1,785,715 $0.25 08-04-2024 08-04-2025 Clayton A. Struve Warrant 02-28-2018 1,344,000 $0.25 02-28-2024 02-28-2025 Warrant No./Class Issue Date No. Warrant Shares Exercise Price Original Expiration Date Amended Expiration Date Clayton A. Struve Warrant 08-14-2017 1,440,000 $0.25 08-13-2023 08-13-2024 Clayton A. Struve Warrant 12-12-2017 1,200,000 $0.25 12-11-2023 12-11-2024 Clayton A. Struve Warrant 08-04-2016 1,785,715 $0.25 08-04-2023 08-04-2024 Clayton A. Struve Warrant 02-28-2018 1,344,000 $0.25 02-28-2023 02-28-2024 |
Schedule of Warrants outstanding and exercisable | September 30, 2023 Weighted Average Exercise Shares Price Outstanding October 1, 2022 21,786,313 $ 1.029 Issued 980,000 0.250 Exercised (2,582,727 ) (0.250 ) Forfeited (297,273 ) (0.250 ) Expired - - Outstanding at end of period 20,886,313 $ 1.103 Exercisable at end of period 20,886,313 September 30, 2023 Weighted Weighted Weighted Average Average Average Number of Remaining Exercise Shares Exercise Warrants Life ( In Years) Price Exercisable Price 9,649,381 2.16 $ 0.250 9,649,381 $ 0.250 6,512,207 1.37 1.20-1.85 6,512,207 1.20-1.85 4,694,725 2.59 2.00-3.00 4,694,725 2.00-3.00 10,000 0.43 4.080 10,000 4.080 20,886,313 2.07 $ 1.163 20,886,313 $ 1.163 |
Schedule of weighted average assumptions | Dividend yield 0% Expected life 3-5 years Expected volatility 104% Risk free interest rate 2.96% |
STOCK INCENTIVE PLANS (Tables)
STOCK INCENTIVE PLANS (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
STOCK INCENTIVE PLANS | |
Schedule of Stock option activity | Weighted Average Options Exercise Price Outstanding as of October 1, 2021 15,315,120 $ 1.565 Granted 6,636,000 1.815 Exercised (26,293 ) (1.376 ) Forfeitures (1,132,457 ) (2.057 ) Outstanding as of September 30, 2022 20,792,370 1.618 Granted 4,158,333 1.381 Exercised (166,890 ) (0.272 ) Forfeitures (10,277,655 ) (1.647 ) Outstanding as of September 30, 2023 14,506,158 $ 1.546 |
Schedule of Stock options outstanding and exercisable | Weighted Weighted Weighted Average Average Average Range of Number Remaining Life Exercise Price Number Exercise Price Exercise Prices Outstanding In Years Outstanding Exercisable Exercisable $.88-1.25 2,161,875 2.91 1.105 1,946,758 $ 1.107 1.28-1.67 9,754,283 3.00 1.473 2,920,291 1.415 1.79-3.67 2,590,000 3.05 2.186 1,213,750 2.151 14,506,158 3.00 $ 1.546 6,080,800 $ 1.498 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
INCOME TAXES | |
Schedule of Schedule of deferred tax | Net operating loss carryforward $ 10,476,000 $ 9,372,000 Stock based compensation 2,174,000 1,677,000 Research and Development 1,460,000 - Intangibles - 221,000 Accruals and reserves 46,000 97,000 Total deferred tax asset 14,156,000 11,367,000 Valuation allowance (14,156,000 ) (11,367,000 ) Net deferred tax assets $ - $ - Change in valuation allowance during the year $ (2,789,000 ) $ (1,666,000 ) |
Schedule of Schedule of Effective tax rate | 2023 2022 Income tax provision at statutory rate 21 % 21 % Non deductible expenses 1 % 12 % Change in valuation allowance 18 % 7 % Other and prior year true up 2 % 2 % Effective tax rate 0 % 0 % |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
SEGMENT REPORTING | |
Schedule of Segment reporting | Segment Operating Segment Segment Revenue Profit (Loss) Assets Year Ended September 30, 2023 Development of the Bio-RFID™” and “ChromaID™” technologies $ - $ (14,298 ) $ 8,266 Particle, Inc. technology - - - Digital asset sales - 274 - Total segments $ - $ (14,024 ) $ 8,266 Year Ended September 30, 2022 Development of the Bio-RFID™” and “ChromaID™” technologies $ - $ (13,482 ) $ 13,360 Particle, Inc. technology - (22 ) - Digital asset sales 4,360 930 398 Total segments $ 4,360 $ (12,574 ) $ 13,758 |
ORGANIZATION (Details Narrative
ORGANIZATION (Details Narrative) - $ / shares | Sep. 30, 2023 | Sep. 30, 2022 | Oct. 15, 2021 |
ORGANIZATION | |||
Authorized shares of capital stock | 205,000,000 | ||
Authorized shares of capital common stock | 200,000,000 | ||
Authorized shares of capital stock par value | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 5,000,000 | 5,000,000 | |
Preferred stock share par value | $ 0.001 | $ 0.001 | |
Authorized common stock increased | 200,000,000 |
LIQUIDITY (Details Narrative)
LIQUIDITY (Details Narrative) | Sep. 30, 2023 USD ($) |
LIQUIDITY | |
Cash and cash equivalents | $ 8,023,716 |
Net working capital | $ 6,262,662 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES ADOPTION OF ACCOUNTING STANDARDS (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
FDIC insurance | $ 250,000 | |
Severance and other expenses | 859,000 | |
Convertible debentures | 2,761,931 | $ 2,255,066 |
Research and development expense | 7,727,467 | 5,385,586 |
Advertising and marketing costs | 305,292 | 379,724 |
Money market accounts | $ 7,836,393 | $ 11,821,931 |
Common stock shares issued | 80,358,463 | 48,156,062 |
Common stock shares outstanding | 80,358,463 | |
Issuable upon conversion of convertible debentures | 14,506,158 | 20,792,370 |
Common shares current price per share | $ 1.381 | |
Leasehold Improvements | ||
Estimated useful lives of assets | 5 years | |
Minimum | ||
Estimated useful lives of assets | 2 years | |
Maximum | ||
Estimated useful lives of assets | 5 years | |
Stock Option 1 [Member] | ||
Unearned stock option grants | 160,000 | |
Warrants | ||
Antidilutive securities | 20,866,313 | 21,786,313 |
Convertible Preferred Stock | ||
Common stock shares issued | 8,108,356 | |
Common stock shares outstanding | 9,020,264 | 9,020,264 |
Reserved shares to pay series C and D dividends | 3,040,219 | |
Antidilutive securities | 8,108,356 | |
Common shares current price per share | $ 0.25 | $ 0.25 |
AI DEEP LEARNING PLATFORM (Deta
AI DEEP LEARNING PLATFORM (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Selling and Transactional Costs | $ 274,019 | $ 3,430,438 |
Accrued expenses | 94,062 | 462,940 |
Technology Equipment [Member] | ||
Revenue Digital Asset Sales | 4,360,087 | |
Amount total | 3,430,438 | |
Selling and Transactional Costs | 274,019 | |
Accrued expenses | $ 0 | $ 343,878 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2023 | Sep. 30, 2022 |
PROPERTY AND EQUIPMENT | ||
Machinery and equipment (2-3 years) | $ 213,330 | $ 1,510,265 |
Leasehold improvements (5 years) | 3,612 | |
Furniture and fixtures (3 years) | 21,366 | 26,855 |
Less: accumulated depreciation | (153,371) | (677,755) |
Property and equipment, net | $ 81,325 | $ 862,977 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Net book value of assets | $ 549,431 | |
Depreciation expense | 313,019 | $ 320,995 |
Research And Development And Sellings General And Administrative [Mmber] | ||
Depreciation expense | $ 295,260 | $ 304,637 |
LEASES (Details)
LEASES (Details) | Sep. 30, 2023 USD ($) |
LEASES | |
Total Remaining Payments | $ 153,401 |
Less imputed interest | (1,396) |
Total lease liability | $ 154,797 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
LEASES | ||
Lease cost | $ 268,000 | $ 289,000 |
Right-of-use assets | 145,000 | 288,000 |
Total lease liability | $ 155,000 | $ 303,000 |
Weighted-average discount rate | 7% |
LIQUIDITY AND GOING CONCERN (De
LIQUIDITY AND GOING CONCERN (Details Narrative) | 12 Months Ended |
Sep. 30, 2023 USD ($) | |
Cash and cash equivalents | $ 8,023,716 |
Net working capital | 6,262,662 |
31 December,2023 [Member] | |
Gross proceed from public issue stock | $ 8,280,000 |
CONVERTIBLE NOTES PAYABLE AND_3
CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE (Details) - USD ($) | Sep. 30, 2023 | Sep. 30, 2022 |
less conversions of notes | $ 0 | $ (14,209,000) |
Convertible notes, net | 2,761,931 | 2,255,066 |
Convertibles Note - Clayton A. Struve | ||
Convertible notes, gross | 1,301,005 | 1,071,000 |
Convertibles Note - Ronald P. Erickson and Affiliates | ||
Convertible notes, gross | 1,460,926 | 1,184,066 |
2021 Convertibles notes | ||
Convertible notes, gross | $ 0 | $ 14,209,000 |
CONVERTIBLE NOTES PAYABLE AND_4
CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Mar. 16, 2018 | |
Expensed | $ 230,005 | ||
Amortization related to the debt | $ 7,272,911 | ||
Accrued interest | 94,062 | 86,562 | |
Convertible Note - Ronald P. Erickson and Affiliates | |||
Warrant to purchase common stock shares | 1,039,666 | ||
Exercise price of warrants | $ 0.50 | ||
Convertible promissory notes | $ 1,460,926 | ||
Convertible Note - Clayton A. Struve | |||
Expensed | 276,860 | ||
Accrued interest amount | 218,334 | $ 287,290 | |
Convertible promissory or OID notes | $ 1,301,005 | ||
Convertible Note - J3E2A2Z Notes | |||
Convertible redeemable promissory note amount | 664,233 | ||
Convertible redeemable promissory note principal amount | 664,233 | ||
Convertible Note - J3E2A2Z Account Payable | |||
Convertible redeemable promissory note amount | 519,833 | ||
Convertible redeemable promissory note principal amount | $ 519,833 |
EQUITY (Details)
EQUITY (Details) - $ / shares | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Warrant One [Member] | ||
Number of warrant shares | 1,440,000 | 1,440,000 |
Issue date | Aug. 14, 2017 | Aug. 14, 2017 |
Original Expiration Date | Aug. 13, 2024 | Aug. 13, 2023 |
Amended Expiration Date | Aug. 13, 2025 | Aug. 13, 2024 |
Exercise price | $ 0.25 | $ 0.25 |
Warrant Two [Member] | ||
Number of warrant shares | 1,200,000 | 1,200,000 |
Issue date | Dec. 12, 2017 | Dec. 12, 2017 |
Original Expiration Date | Dec. 11, 2024 | Dec. 11, 2023 |
Amended Expiration Date | Dec. 11, 2025 | Dec. 11, 2024 |
Exercise price | $ 0.25 | $ 0.25 |
Warrant Three [Member] | ||
Number of warrant shares | 1,785,715 | 1,785,715 |
Issue date | Aug. 04, 2016 | Aug. 04, 2016 |
Original Expiration Date | Aug. 04, 2024 | Aug. 04, 2023 |
Amended Expiration Date | Aug. 04, 2025 | Aug. 04, 2024 |
Exercise price | $ 0.25 | $ 0.25 |
Warrant Four [Member] | ||
Number of warrant shares | 1,344,000 | 1,344,000 |
Issue date | Feb. 28, 2018 | Feb. 28, 2018 |
Original Expiration Date | Feb. 28, 2024 | Feb. 28, 2023 |
Amended Expiration Date | Feb. 28, 2025 | Feb. 28, 2024 |
Exercise price | $ 0.25 | $ 0.25 |
EQUITY (Details 1)
EQUITY (Details 1) - $ / shares | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Warrant One [Member] | ||
Number of warrant shares | 1,440,000 | 1,440,000 |
Issue date | Aug. 14, 2017 | Aug. 14, 2017 |
Original Expiration Date | Aug. 13, 2024 | Aug. 13, 2023 |
Amended Expiration Date | Aug. 13, 2025 | Aug. 13, 2024 |
Exercise price | $ 0.25 | $ 0.25 |
Warrant Two [Member] | ||
Number of warrant shares | 1,200,000 | 1,200,000 |
Issue date | Dec. 12, 2017 | Dec. 12, 2017 |
Original Expiration Date | Dec. 11, 2024 | Dec. 11, 2023 |
Amended Expiration Date | Dec. 11, 2025 | Dec. 11, 2024 |
Exercise price | $ 0.25 | $ 0.25 |
Warrant Three [Member] | ||
Number of warrant shares | 1,785,715 | 1,785,715 |
Issue date | Aug. 04, 2016 | Aug. 04, 2016 |
Original Expiration Date | Aug. 04, 2024 | Aug. 04, 2023 |
Amended Expiration Date | Aug. 04, 2025 | Aug. 04, 2024 |
Exercise price | $ 0.25 | $ 0.25 |
Warrant Four [Member] | ||
Number of warrant shares | 1,344,000 | 1,344,000 |
Issue date | Feb. 28, 2018 | Feb. 28, 2018 |
Original Expiration Date | Feb. 28, 2024 | Feb. 28, 2023 |
Amended Expiration Date | Feb. 28, 2025 | Feb. 28, 2024 |
Exercise price | $ 0.25 | $ 0.25 |
EQUITY (Details 2)
EQUITY (Details 2) | 12 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Shares | |
Share Outstanding at beginning of period | shares | 21,786,313 |
Issued | shares | 980,000 |
Exercised | shares | (2,582,727) |
Forfeited | shares | (297,273) |
Outstanding at end of period | shares | 20,886,313 |
Exercisable at end of period | shares | 20,886,313 |
Weighted Average Exercise Price: | |
Outstanding at begin of period | $ / shares | $ 1.029 |
Weighted Average Exercise Price Issued | $ / shares | 0.250 |
Weighted Average Exercise Price Exercised | $ / shares | (0.250) |
Weighted Average Exercise Price Forfeited | $ / shares | (0.250) |
Weighted Average Exercise PriceExpired | $ / shares | 0 |
Outstanding at end of period | $ / shares | $ 1.103 |
EQUITY (Details 3)
EQUITY (Details 3) | 12 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Number of warrants | shares | 20,886,313 |
Weighted average remaining life (years) | 2 years 25 days |
Weighted average exercise price, outstanding | $ 1.163 |
Shares exercisable | shares | 20,886,313 |
Weighted average exercise price, exercisable | $ 1.163 |
Warrant One [Member] | |
Number of warrants | shares | 9,649,381 |
Weighted average remaining life (years) | 2 years 1 month 28 days |
Weighted average exercise price, outstanding | $ 0.250 |
Shares exercisable | shares | 9,649,381 |
Weighted average exercise price, exercisable | $ 0.250 |
Warrant Two [Member] | |
Number of warrants | shares | 6,512,207 |
Weighted average remaining life (years) | 1 year 4 months 13 days |
Shares exercisable | shares | 6,512,207 |
Warrant Two [Member] | Minimum | |
Weighted average exercise price, outstanding | $ 1.20 |
Weighted average exercise price, exercisable | 1.20 |
Warrant Two [Member] | Maximum | |
Weighted average exercise price, outstanding | 1.85 |
Weighted average exercise price, exercisable | $ 1.85 |
Warrant Three [Member] | |
Number of warrants | shares | 4,694,725 |
Weighted average remaining life (years) | 2 years 7 months 2 days |
Shares exercisable | shares | 4,694,725 |
Warrant Three [Member] | Minimum | |
Weighted average exercise price, outstanding | $ 2 |
Weighted average exercise price, exercisable | 2 |
Warrant Three [Member] | Maximum | |
Weighted average exercise price, outstanding | 3 |
Weighted average exercise price, exercisable | $ 3 |
Warrant Four [Member] | |
Number of warrants | shares | 10,000 |
Weighted average remaining life (years) | 5 months 4 days |
Weighted average exercise price, outstanding | $ 4.080 |
Shares exercisable | shares | 10,000 |
Weighted average exercise price, exercisable | $ 4.080 |
EQUITY (Details 4)
EQUITY (Details 4) | 12 Months Ended |
Sep. 30, 2023 | |
EQUITY | |
Dividend yield | 0% |
Expected life minimum | 3 years |
Expected life Maximum | 5 years |
Expected volatility | 104% |
Risk free interest rate | 2.96% |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||||||
Aug. 05, 2016 | Sep. 29, 2023 | Aug. 31, 2023 | Dec. 31, 2022 | Sep. 20, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Aug. 30, 2023 | Jun. 27, 2023 | Jan. 05, 2022 | Oct. 15, 2021 | Aug. 14, 2017 | |
Weighted average price of the common stock | $ 0.250 | |||||||||||
Common stock shares value | $ 80,358 | $ 48,158 | ||||||||||
Intrinsic value | 0 | |||||||||||
Automatic conversion of Convertible | The Company issued 7,672,860 shares of common stock related to the automatic conversion of convertible notes and interest from a private placement to accredited investors in 2021. The convertible notes and interest were automatically converted to common stock at $2.00 per share on the one-year anniversary in March 2022 | |||||||||||
Money warrants | $ 20,866,313 | |||||||||||
Warrant issued to common stock | 26,293 | |||||||||||
Shrare issued warrant to purchased price | $ 1.749 | |||||||||||
Shrare issued warrant to purchased | 7,684,381 | |||||||||||
Interest expenses | $ 194,019 | $ 244,260 | ||||||||||
Authorized shares of capital stock par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||
Preferred stock share par value | $ 0.001 | $ 0.001 | ||||||||||
Common stock share issued | 80,358,463 | 48,156,062 | ||||||||||
Net proceeds from sale | $ 0 | $ 8,280,000 | ||||||||||
Preferred stock shares authorized | 5,000,000 | 5,000,000 | ||||||||||
Common stock shares authorized | 200,000,000 | 200,000,000 | ||||||||||
Preferred Stock | ||||||||||||
Preferred stock shares issued | 5,000,000 | |||||||||||
Series D Convertible Preferred Stock designated | 30,000 | |||||||||||
Three Director [Member] | ||||||||||||
Warrants to purchase common stock | 20,000 | |||||||||||
Shrare issued warrant to purchased price | $ 2.40 | |||||||||||
Share issued price | $ 1.70 | |||||||||||
Warrants to Purchase Common Stock [Member] | ||||||||||||
warrants and received | $ 387,334 | $ 838,487 | ||||||||||
Warrant issued to common stock | 2,632,727 | 389,800 | ||||||||||
Warrants to purchase common stock | 297,273 | 122,018 | ||||||||||
Warrants expired per share | $ 0.250 | $ 0.918 | ||||||||||
Common Stock Shares issued related to warrant exercises | 1,045,724 | |||||||||||
Common Stock Shares issued | 104,634 | |||||||||||
Series C PreferredStockMember | ||||||||||||
Purchase preferred stock | $ 1,790 | $ 1,790 | ||||||||||
Series D Preferred Stock Member | ||||||||||||
Purchase preferred stock | 1,015 | 1,015 | ||||||||||
Common Preferred Stock [Member] | ||||||||||||
Proceeds from issuance of common stock | $ 3,750 | $ 26,887 | ||||||||||
Exercise of stock option | 4,687 | 26,293 | ||||||||||
Authorized Capital Stock [Member] | ||||||||||||
Authorized shares of capital stock par value | $ 0.001 | |||||||||||
Preferred stock share par value | $ 0.001 | |||||||||||
Preferred stock shares authorized | 5,000,000 | |||||||||||
Common stock shares authorized | 200,000,000 | |||||||||||
Series C Convertible Preferred Stock designated | 30,000 | |||||||||||
Series D Convertible Preferred Stock designated | 20,000 | |||||||||||
Convertible Preferred Stock Series C [Member] | ||||||||||||
Common stock share issued | 80,358,643 | |||||||||||
Preferred stock shares issued | 17,858 | |||||||||||
Preferred stock shares outstanding | 17,858 | |||||||||||
Share issued price | $ 0.25 | |||||||||||
Series D Convertible Preferred Stock designated | 20,000 | |||||||||||
Stock at 2.00 | ||||||||||||
Share issued price | $ 0.25 | |||||||||||
Warrants totaling | $ 4,439,707 | |||||||||||
Stock at 0.25 | ||||||||||||
Share issued price | $ 1.20 | |||||||||||
Warrants totaling | $ 4,424,425 | |||||||||||
Convertible Preferred Stock D [Member] | ||||||||||||
Preferred stock shares issued | 10,161 | |||||||||||
Preferred stock shares outstanding | 10,161 | |||||||||||
Reverse stock split | 1-for-100 | |||||||||||
Common Stock Offerings | ||||||||||||
Common stock share issued | 28,000,000 | 4,140,000 | ||||||||||
Net proceeds from sale | $ 5,472,791 | $ 7,424,679 | ||||||||||
Gross proceeds from sale | $ 8,280,000 | |||||||||||
Share issued price | $ 0.25 | $ 2 | ||||||||||
Warrant To Purchase Common Stock Member | Boustead Securities LLC Member | ||||||||||||
Common stock share issued | 1,960,000 | 4,140,000 | ||||||||||
Warrants valued | $ 486,080 | |||||||||||
Issued amount received | $ 838,487 | |||||||||||
Common Stock Shares issued | 1,045,724 | |||||||||||
Share issued price | $ 0.25 | |||||||||||
Mr. Struve [Member] | ||||||||||||
warrants and received | $ 387,334 | |||||||||||
Warrant issued to common stock | 2,632,727 | |||||||||||
Series D preferred stock dividends shares | 1,402,784 | |||||||||||
Common Stock Shares issued | 1,402,784 | |||||||||||
Mr. Struve [Member] | Series C PreferredStockMember | ||||||||||||
Ownership interest | 4.99% | |||||||||||
Cumulative Dividend | 8% | |||||||||||
Purchase preferred stock | $ 1,250,000 | |||||||||||
Conversion price | $ 0.70 | |||||||||||
Warrant to acquire common stock shares | 1,785,714 | |||||||||||
Share price | $ 0.25 | |||||||||||
Adjusted conversion price | $ 0.25 | |||||||||||
Preferred stock shares issued | 1,785,715 | 1,785,715 | ||||||||||
Mr. Struve [Member] | Series D Preferred Stock Member | ||||||||||||
Ownership interest | 4.99% | 4.99% | ||||||||||
Cumulative dividend cash | $ 351,000 | |||||||||||
Cumulative Dividend | 8% | |||||||||||
Weighted average price of the common stock | $ 2.50 | |||||||||||
Convertible common stock shares | 1,402,784 | |||||||||||
Common stock shares value | $ 1,627,230 | |||||||||||
Purchase preferred stock | $ 750,000 | |||||||||||
Adjusted conversion price | $ 0.25 | |||||||||||
Preferred stock shares issued | 1,016,004 | |||||||||||
Preferred stock shares outstanding | 1,016,004 | |||||||||||
Mr. Struve [Member] | Series C and D Preferred Stock [Member] | ||||||||||||
Ownership interest | 4.99% | |||||||||||
Cumulative Dividend | 4.99% | |||||||||||
Shares of common stock issued during period | 3,000,000 | |||||||||||
Number of common stock shares settled | 1,402,784 | 1,402,784 | ||||||||||
Dividend distributed per share | The cumulative dividends accrued and paid in preferred stock will be determined based upon a $.70 stated value. The conversion from preferred stock into common stock is determined based dividing the $.70 stated value by the $.25 conversion price | |||||||||||
Convertible common stock shares | 3,040,000 | |||||||||||
Common stock shares value | $ 3,526,653 | |||||||||||
Cumulative unpaid dividend | 770,000 | |||||||||||
Cumulative deemed dividends | $ 3,526,653 | |||||||||||
Preferred dividend value accrete common stock shares | 160,000 |
STOCK INCENTIVE PLANS (Details)
STOCK INCENTIVE PLANS (Details) - $ / shares | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Granted | 980,000 | |
Exercised | (2,582,727) | |
Forfeited | (297,273) | |
Weighted Average Exercise Price Granted | $ 0.250 | |
Weighted Average Exercise Price Exercised | (0.250) | |
Outstanding at end of period | $ 0.256 | |
Stock Option [Member] | ||
Share Outstanding at beginning of period | 20,792,370 | 15,315,120 |
Granted | 4,158,333 | 6,636,000 |
Exercised | (166,890) | (26,293) |
Forfeited | (10,277,655) | (1,132,457) |
Share Outstanding at ending of period | 14,506,158 | 20,792,370 |
Outstanding at begin of period | $ 1.618 | $ 1.565 |
Weighted Average Exercise Price Granted | 1.381 | 1.815 |
Weighted Average Exercise Price Exercised | (0.272) | (1.376) |
Weighted Average Exercise Price Forfeitures | (1.647) | (2.057) |
Outstanding at end of period | $ 1.546 | $ 1.618 |
STOCK INCENTIVE PLANS (Details
STOCK INCENTIVE PLANS (Details 1) | 12 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Number of outstanding stock options | shares | 20,886,313 |
Number exercisable | shares | 20,886,313 |
Weighted average exercise price exerciseable | $ 1.163 |
Employee Stock Options One [Member] | |
Number of outstanding stock options | shares | 14,506,158 |
Weighted average remaining life (years) | 3 years |
Weighted average exercise price outstanding | $ 1.546 |
Number exercisable | shares | 6,080,800 |
Weighted average exercise price exerciseable | $ 1.498 |
Stock Options 1 [Member] | |
Number of outstanding stock options | shares | 2,161,875 |
Weighted average remaining life (years) | 2 years 10 months 28 days |
Weighted average exercise price outstanding | $ 1.105 |
Number exercisable | shares | 1,946,758 |
Weighted average exercise price exerciseable | $ 1.107 |
Stock Options 2 [Member] | |
Number of outstanding stock options | shares | 9,754,283 |
Weighted average remaining life (years) | 3 years |
Weighted average exercise price outstanding | $ 1.473 |
Number exercisable | shares | 2,920,291 |
Weighted average exercise price exerciseable | $ 1.415 |
Stock Option 3 [Member] | |
Number of outstanding stock options | shares | 2,590,000 |
Weighted average remaining life (years) | 3 years 18 days |
Weighted average exercise price outstanding | $ 2.186 |
Number exercisable | shares | 1,213,750 |
Weighted average exercise price exerciseable | $ 2.151 |
Minimum | Stock Option 2 [Member] | |
Range of exercise prices | 1.28 |
Minimum | Stock Option 3 [Member] | |
Range of exercise prices | 1.79 |
Minimum | Stock Option 1 [Member] | |
Range of exercise prices | 0.88 |
Maximum | Stock Option 2 [Member] | |
Range of exercise prices | 1.67 |
Maximum | Stock Option 3 [Member] | |
Range of exercise prices | 3.67 |
Maximum | Stock Option 1 [Member] | |
Range of exercise prices | $ 1.25 |
STOCK INCENTIVE PLANS (Detail_2
STOCK INCENTIVE PLANS (Details Narrative) - USD ($) | 12 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Jan. 01, 2022 | Oct. 15, 2021 | |
Intrinsic value | $ 0 | |||
Stock option grants | 14,906,158 | |||
Weighted Average Exercise Price Exercised | $ 0.250 | |||
Average exercise price | $ 1.163 | |||
Number of common stock authorized shares | 20,886,313 | |||
Unearned stock option grants | 4,158,333 | |||
Common shares current price per share | $ 1.381 | |||
Stock option grants share exercised | 166,890 | |||
Exercise stock option grants | $ 26,887 | |||
Warrant issued to common stock | 26,293 | |||
Stock option grants shares forfeitures | 297,273 | |||
Ronald P Erickson [Member] | ||||
Common shares current price per share | $ 2.09 | |||
Warrant issued to common stock | 1,000,000 | |||
Phillip A. Bosua [Member] | ||||
Common shares current price per share | $ 2.09 | |||
Warrant issued to common stock | 1,300,000 | |||
Peter Conley [Member] | ||||
Common shares current price per share | $ 1.48 | |||
Warrant issued to common stock | 1,000,000 | |||
2021 Equity Incentive Plan [Member] | ||||
Number of common stock authorized shares | 20,000,000 | |||
Number of common stock shares increase | 22,000,000 | |||
Stock Option [Member] | ||||
Weighted Average Exercise Price Exercised | $ 0.272 | $ 1.376 | ||
Weighted Average Exercise Price Forfeitures | $ 1.647 | $ 2.057 | ||
Stock option grants shares forfeitures | 10,277,655 | 1,132,457 | ||
Stock Option [Member] | Eight Employees And Consultants [Member] | ||||
Average exercise price | $ 2.057 | |||
Unearned stock option grants | 1,132,457 | |||
Stock Option [Member] | Nineteen Employees And Consultants [Member] | ||||
Average exercise price | $ 1.726 | |||
Unearned stock option grants | 3,336,000 |
OTHER SIGNIFICANT TRANSACTION_2
OTHER SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (Details Narrative) - USD ($) | 12 Months Ended | |||||||
Dec. 14, 2022 | Dec. 15, 2020 | Nov. 04, 2019 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2023 | Jun. 27, 2023 | Jan. 05, 2022 | |
Expensed | $ 230,005 | |||||||
Ronald P Erickson [Member] | ||||||||
No of share granted for stock option | 1,000,000 | 1,200,000 | ||||||
Expensed | $ 263,593 | $ 1,207,200 | ||||||
Share exercise price | $ 1.41 | $ 1.53 | $ 1.10 | |||||
Common stock shares | 1,865,675 | |||||||
Company common stock description | exceeds for 20 consecutive trading days starting at $100 million to $1 billion | |||||||
Cumulative expenses | 186,657 | |||||||
Additional stock option grant | 1,865,675 | |||||||
Additional exercise price | $ 1.53 | |||||||
Interest paid | 173,855 | |||||||
Deferred compensation | 165,000 | |||||||
Accrued compensastion & travel and interest | 218,334 | 295,418 | ||||||
Phillip A. Bosua [Member] | ||||||||
Expensed | $ 301,249 | 37,370 | ||||||
Share exercise price | $ 1.53 | |||||||
Common stock shares | 2,132,195 | |||||||
Company common stock description | exceeds for 20 consecutive trading days starting at $100 million to $1 billion | |||||||
Cumulative expenses | $ 231,321 | |||||||
Additional stock option grant | 2,132,195 | |||||||
Additional exercise price | $ 1.53 | |||||||
Severance | 400,000 | |||||||
Rent and other costs | 96,440 | |||||||
AI Mind [Member] | ||||||||
Compensation | 1,097,928 | |||||||
Rent and other costs | 91,500 | |||||||
Three Director [Member] | ||||||||
Share exercise price | $ 1.70 | |||||||
Share issued | 30,000 | |||||||
Warrants to purchase common stock | 20,000 | |||||||
Price per share | $ 1.70 | |||||||
Mr. Struve [Member] | ||||||||
Series D preferred stock dividends | $ 1,627,230 | |||||||
Preferred stock shares issued | 1,402,784 | |||||||
Interest expense | $ 194,019 | |||||||
Director [Member] | ||||||||
Share exercise price | $ 1.24 | |||||||
Rent | $ 50,000 |
COMMITMENTS CONTINGENCIES AND_2
COMMITMENTS CONTINGENCIES AND LEGAL PROCEEDINGS (Details narrative) - USD ($) | 1 Months Ended | 11 Months Ended | 12 Months Ended | 18 Months Ended | ||||||||||
May 13, 2022 | Dec. 15, 2020 | Apr. 10, 2018 | Apr. 13, 2017 | Apr. 26, 2023 | Nov. 22, 2022 | Sep. 28, 2022 | Sep. 22, 2022 | Oct. 11, 2021 | May 18, 2021 | Mar. 15, 2022 | Mar. 31, 2021 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases, net monthly payment | $ 3,334 | $ 2,908 | $ 2,250 | $ 7,000 | $ 5,000 | $ 8,697 | $ 2,986 | |||||||
Lease description | increases by 3% annually. The lease expires on June 30, 2024. The lease can be extended for one additional three-year term | pursuant to which Mr. Bosua is entitled receive a $400,000 severance payment and benefits pursuant to his prior employment agreement. Pursuant to the Separation Agreement, Mr. Bosua’s outstanding stock options ceased vesting as of January 23, 2023, and all vested stock options remain exercisable through January 23, 2024. Mr. Bosua has been engaged as a consultant to the Company for a period of one year at a rate of $10,000 per month. Mr. Bosua also entered into a lock up and leak out agreement with respect to 3,005,000 common shares owned by Mr. Bosua and shares issuable upon exercise of his vested option awards. During the period commencing March 17, 2023 through March 17, 2024, Mr. Bosua may sell no more than 1,500,000 shares. During the period commencing April 1, 2024 through June 30, 2026, Mr. Bosua may sell no more than 375,000 shares per quarter (or 1,500,000 shares per year), unless the stock price of the Company’s common stock exceeds $5.00 per share on the NYSE American (the “Stock Price Threshold”), then Mr. Bosua may sell a maximum of 750,000 shares during any such quarter that the Stock Price Threshold is met. Notwithstanding the foregoing, any lock-up or leak-out restrictions are waived for any sales of shares from Mr. Bosua to Todd Baszucki. | ||||||||||||
Rent paid | $ 91,500 | $ 28,000 | ||||||||||||
Mr. Bosua [Member] | ||||||||||||||
Annual salary | $ 260,000 | $ 350,000 | ||||||||||||
Base salary | $ 225,000 | |||||||||||||
Common stock shares | 500,000 | |||||||||||||
Common stock per shares | $ 0.33 | |||||||||||||
Ronald P Erickson [Member] | ||||||||||||||
Annual salary | $ 300,000 | $ 215,000 | ||||||||||||
Base salary | $ 180,000 | |||||||||||||
Common stock shares | 1,865,675 | |||||||||||||
Peter Conley [Member] | ||||||||||||||
Annual salary | $ 325,000 | |||||||||||||
Base salary | $ 300,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
INCOME TAXES | ||
Net operating loss carryforward | $ 10,476,000 | $ 9,372,000 |
Stock based compensation | 2,174,000 | 1,677,000 |
Research and Development | 1,460,000 | 0 |
Intangibles | 0 | 221,000 |
Accruals and reserves | 46,000 | 97,000 |
Total deferred tax asset | 14,156,000 | 11,367,000 |
Valuation allowance | (14,156,000) | (11,367,000) |
Net deferred tax assets | 0 | 0 |
Change in valuation allowance during the year | $ (2,789,000) | $ (1,666,000) |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
INCOME TAXES | ||
Income tax provision at statutory rate | 21% | 21% |
Non deductible expenses | 1% | 12% |
Change in valuation allowance | 18% | 7% |
Other and prior year true up | 2% | 2% |
Effective tax rate | 0% | 0% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
INCOME TAXES | ||
Federal net operating loss carryforwards expired | expire in 2028-2042 | |
Federal net operating loss carryforwards | $ 49.5 | |
Gross deferred tax asset | $ 14.2 | $ 11.4 |
Effective tax rate | 100% |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue | $ 0 | $ 4,360 |
Segment Operating Profit (Loss) | (14,024,000) | (12,574,000) |
Segment assets | 8,266 | 13,758 |
Development of the Bio-RFID and ChromaID Technologies [Member] | ||
Revenue | 0 | 0 |
Segment Operating Profit (Loss) | (14,298,000) | (13,482,000) |
Segment assets | 8,266,000 | 13,360,000 |
Particle, Inc. Technology [Member] | ||
Revenue | 0 | 0 |
Segment Operating Profit (Loss) | 0 | (22) |
Segment assets | 0 | 0 |
Digital asset sales [Member] | ||
Revenue | 0 | 4,360 |
Segment Operating Profit (Loss) | 274 | 930 |
Segment assets | $ 0 | $ 398 |
SEGMENT REPORTING (Details Narr
SEGMENT REPORTING (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
SEGMENT REPORTING | ||
Non-cash expenses | $ 4,767,809 | $ 12,164,418 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - $ / shares | 2 Months Ended | 12 Months Ended | |
Oct. 26, 2023 | Sep. 30, 2023 | Oct. 12, 2023 | |
Stock option grants to employees and directors | 13,909,315 | ||
Average exercise price | $ 0.256 | ||
Stock option expiry term | 5 years | ||
Subsequent Event [Member] | |||
Preferred stock shares issued | 30,000 | ||
Price per share | $ 0.25 | $ 0.25 | |
Additional share purchase | 883,061 | ||
Additional warrants issued | 61,814 | ||
Exercise price | $ 0.25 |