• Filing Date: 2019-02-14
  • Form Type: 10-Q
  • Description: Quarterly report
v3.10.0.1
Document and Entity Information - shares
3 Months Ended
Dec. 31, 2018
Feb. 13, 2019
Document And Entity Information    
Entity Registrant Name CEL SCI CORP  
Entity Central Index Key 0000725363  
Document Type 10-Q  
Document Period End Date Dec. 31, 2018  
Amendment Flag false  
Current Fiscal Year End Date --09-30  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Non-accelerated Filer  
Entity Emerging Growth Company false  
Entity Small Business true  
Entity Common Stock, Shares Outstanding   29,567,053
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2019  
v3.10.0.1
BALANCE SHEETS - USD ($)
Dec. 31, 2018
Sep. 30, 2018
CURRENT ASSETS:    
Cash and cash equivalents $ 6,682,205 $ 10,310,044
Receivables 128,762 118,657
Prepaid expenses 433,783 364,622
Inventory used for R&D and manufacturing 682,525 645,238
Total current assets 7,927,275 11,438,561
Plant, property and equipment, net 16,082,143 16,218,851
Patent costs, net 252,882 258,093
Deposits 1,670,917 1,670,917
Total Assets 25,933,217 29,586,422
CURRENT LIABILITIES:    
Accounts payable 4,903,189 5,743,913
Accrued expenses 77,710 205,310
Due to employees 896,833 764,941
Derivative instruments, current portion 0 2,498,606
Other current liabilities 13,769 14,029
Total current liabilities 5,891,501 9,226,799
Derivative instruments - net of current portion 3,760,758 6,818,458
Lease Liability 13,414,185 13,379,962
Deferred income 126,795 126,795
Other liabilities 32,126 33,492
Total liabilities 23,225,365 29,585,506
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY    
Preferred stock, $.01 par value-200,000 shares authorized; -0- shares issued and outstanding 0 0
Common stock, $.01 par value - 600,000,000 shares authorized; 27,843,327 and 28,034,487 shares issued and outstanding at December 31, 2018 and September 30, 2018, respectively 278,435 280,346
Additional paid-in capital 332,775,129 331,312,184
Accumulated deficit (330,345,712) (331,591,614)
Total stockholders' equity 2,707,852 916
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,933,217 $ 29,586,422
v3.10.0.1
BALANCE SHEETS (Parenthetical) - $ / shares
Dec. 31, 2018
Sep. 30, 2018
Stockholders Equity    
Preferred Stock Shares Par Value $ 0.01 $ 0.01
Preferred Stock Shares Authorized 200,000 200,000
Preferred Stock Shares Issued 0 0
Preferred Stock Shares Outstanding 0 0
Common Stock Shares Par Value $ 0.01 $ 0.01
Common Stock Shares Authorized 600,000,000 600,000,000
Common Stock Shares Issued 27,843,327 28,034,487
Common Stock Shares Outstanding 27,843,327 28,034,487
v3.10.0.1
STATEMENTS OF OPERATIONS - USD ($)
3 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Income Statement [Abstract]    
Grant income $ 126,414 $ 96,315
Operating Expenses:    
Research and development 3,132,188 2,326,014
General & administrative 2,028,688 2,699,313
Total operating expenses 5,160,876 5,025,327
Operating loss (5,034,462) (4,929,012)
Other income 17,911 17,582
Gain (loss) on derivative instruments 5,556,306 (958,230)
Other non-operating gains 1,152,176 746,701
Interest expense, net (446,029) (1,064,871)
Net income (loss) available to common shareholders $ 1,245,902 $ (6,187,830)
Net income (loss) per common share    
Basic $ 0.04 $ (0.53)
Diluted $ 0.02 $ (0.53)
Weighted average common shares outstanding    
Basic 27,985,327 11,636,730
Diluted 29,929,353 11,636,730
v3.10.0.1
STATEMENTS OF CASH FLOWS - USD ($)
3 Months Ended
Dec. 31, 2018
Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income (loss) $ 1,245,902 $ (6,187,830)
Adjustments to reconcile net income (loss) to net cash used in operating activities:    
Depreciation and amortization 154,821 155,417
Share-based payments for services 238,904 42,342
Equity based compensation 573,660 1,448,098
Common stock contributed to 401(k) plan 35,241 35,880
(Gain) loss on derivative instruments (5,556,306) 958,230
Amortization of debt discount 0 611,717
Capitalized lease interest 34,223 43,543
(Increase)/decrease in assets:    
Receivables (10,105) 195,871
Prepaid expenses (105,685) 3,765
Inventory used for R&D and manufacturing (37,287) 27,773
Deposits 0 150,000
Increase/(decrease) in liabilities:    
Accounts payable (734,770) (286,984)
Accrued expenses (127,600) 33,344
Due to employees 131,892 152,920
Other liabilities (369) 3,056
Net cash used in operating activities (4,157,479) (2,612,858)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of equipment (6,132) 0
Expenditures for patent costs (66,131) (959)
Net cash used in investing activities (72,263) (959)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from issuance of common stock and warrants 0 2,425,000
Payments of stock issuance costs (46,599) (35,605)
Proceeds from exercise of warrants 649,753 0
Payments on obligations under capital lease (1,251) (2,282)
Net cash provided by financing activities 601,903 2,387,113
NET DECREASE IN CASH AND CASH EQUIVALENTS (3,627,839) (226,704)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 10,310,044 2,369,438
CASH AND CASH EQUIVALENTS, END OF PERIOD 6,682,205 2,142,734
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:    
Capitalizable patent costs included in accounts payable 0 6,967
Capital lease obligation included in accounts payable 421 790
Prepaid consulting services paid with issuance of common stock (36,524) (16,935)
Notes payable converted into common shares 0 75,000
Cash paid for interest expense $ 448,486 $ 433,707
v3.10.0.1
A. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
A. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

 

The accompanying condensed financial statements of CEL-SCI Corporation (the Company) are unaudited and certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission. While management of the Company believes that the disclosures presented are adequate to make the information presented not misleading, these interim condensed financial statements should be read in conjunction with the financial statements and notes included in the Company’s annual report on Form 10-K for the year ended September 30, 2018.

 

In the opinion of management, the accompanying unaudited condensed financial statements contain all accruals and adjustments (each of which is of a normal recurring nature) necessary for a fair presentation of the Company’s financial position as of December 31, 2018 and the results of its operations for the three months then ended. The condensed balance sheet as of September 30, 2018 is derived from the September 30, 2018 audited financial statements. Significant accounting policies have been consistently applied in the interim financial statements and the annual financial statements. The results of operations for the three months ended December 31, 2018 and 2017 are not necessarily indicative of the results to be expected for the entire year.

 

The financial statements have been prepared assuming that the Company will continue as a going concern, but due to recurring losses from operations and future liquidity needs, there is substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Refer to discussion in Note B.

 

Summary of Significant Accounting Policies:

 

Research and Office Equipment and Leasehold Improvements – The leased manufacturing facility is recorded at total project costs incurred and is depreciated over the 20-year useful life of the building. Research and office equipment is recorded at cost and depreciated using the straight-line method over estimated useful lives of five to seven years. Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Repairs and maintenance which do not extend the life of the asset are expensed when incurred. The fixed assets are reviewed on a quarterly basis to determine if any of the assets are impaired.

 

Patents - Patent expenditures are capitalized and amortized using the straight-line method over the shorter of the expected useful life or the legal life of the patent (17 years). In the event changes in technology or other circumstances impair the value or life of the patent, appropriate adjustment in the asset value and period of amortization is made. An impairment loss is recognized when estimated future undiscounted cash flows expected to result from the use of the asset, and from its disposition, is less than the carrying value of the asset. The amount of the impairment loss would be the difference between the estimated fair value of the asset and its carrying value.

 

Research and Development Costs - Research and development costs are expensed as incurred. Management accrues Clinical Research Organization (“CRO”) expenses and clinical trial study expenses based on services performed and relies on the CROs to provide estimates of those costs applicable to the completion stage of a study. Estimated accrued CRO costs are subject to revisions as such studies progress to completion. The Company charges revisions to estimated expense in the period in which the facts that give rise to the revision become known.

 

Income Taxes - The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating and tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be recognized.  A full valuation allowance was recorded against the deferred tax assets as of December 31, 2018 and September 30, 2018.

 

On December 22, 2017, the “Tax Cuts and Jobs Act” (the “Tax Act"), was signed into law by the President of the United States (U.S.). The Tax Act includes significant changes to corporate taxation, including reduction of the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018, limitation of the tax deduction for interest expense to 30% of earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks. The Company has accounted for the income tax effects of the Act in applying FASB ASC 740 to the current reporting period. Because the Company records a valuation allowance for its entire deferred income tax asset, there was no impact to the amounts reported in the Company’s financial statements resulting from the Tax Act.

 

Derivative Instruments – The Company has entered into financing arrangements that consist of freestanding derivative instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification (ASC) 815, “Accounting for Derivative Instruments and Hedging Activities.” In accordance with accounting principles generally accepted in the United States (U.S. GAAP), derivative instruments and hybrid instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair value with gains or losses recognized in earnings or other comprehensive income depending on the nature of the derivative or hybrid instruments. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models giving consideration to all of the rights and obligations of each instrument. The derivative liabilities are re-measured at fair value at the end of each interim period.

 

Deferred Rent– Certain of the Company’s operating leases provide for minimum annual payments that adjust over the life of the lease.  The aggregate minimum annual payments are expensed on a straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for rent escalations when the amount of straight-line rent exceeds the lease payments, and reduces the deferred rent liability when the lease payments exceed the straight-line rent expense.  For tenant improvement allowances and rent holidays, the Company records a deferred rent liability and amortizes the deferred rent over the lease term as a reduction to rent expense.

 

Leases – Leases are categorized as either operating or capital leases at inception. Operating lease costs are recognized on a straight-line basis over the term of the lease. An asset and a corresponding liability for the capital lease obligation are established for the cost of capital leases. The capital lease obligation is amortized over the life of the lease. For build-to-suit leases, the Company establishes an asset and liability for the estimated construction costs incurred to the extent that it is involved in the construction of structural improvements or takes construction risk prior to the commencement of the lease. Upon occupancy of facilities under build-to-suit leases, the Company assesses whether these arrangements qualify for sales recognition under the sale-leaseback accounting guidance. If a lease does not meet the criteria to qualify for a sale-leaseback transaction, the established asset and liability remain on the Company's balance sheet.

 

Stock-Based Compensation – Compensation cost for all stock-based awards is measured at fair value as of the grant date in accordance with the provisions of ASC 718 “Compensation – Stock Compensation.” The fair value of stock options is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires various judgmental assumptions including volatility and expected option life. The stock-based compensation cost is recognized on the straight-line allocation method as expense over the requisite service or vesting period.

 

Equity instruments issued to non-employees are accounted for in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees.” Accordingly, compensation is recognized when goods or services are received and is measured using the Black-Scholes valuation model. The Black-Scholes model requires various judgmental assumptions regarding the fair value of the equity instruments at the measurement date and the expected life of the options.

 

The Company has Incentive Stock Option Plans, Non-Qualified Stock Option Plans, a Stock Compensation Plan, Stock Bonus Plans and an Incentive Stock Bonus Plan. In some cases, these Plans are collectively referred to as the "Plans". All Plans have been approved by the stockholders.

 

The Company’s stock options are not transferable, and the actual value of the stock options that an employee may realize, if any, will depend on the excess of the market price on the date of exercise over the exercise price. The Company has based its assumption for stock price volatility on the variance of daily closing prices of the Company’s stock. The risk-free interest rate assumption was based on the U.S. Treasury rate at date of the grant with term equal to the expected life of the option. Forfeitures are accounted for when they occur. The expected term of options represents the period that options granted are expected to be outstanding and has been determined based on an analysis of historical exercise behavior. If any of the assumptions used in the Black-Scholes model change significantly, stock-based compensation expense for new awards may differ materially in the future from that recorded in the current period.

 

Vesting of restricted stock granted under the Incentive Stock Bonus Plan is subject to service, performance and market conditions and meets the classification of equity awards. These awards were measured at market value on the grant-dates for issuances where the attainment of performance criteria is likely and at fair value on the grant-dates, using a Monte Carlo simulation for issuances where the attainment of performance criteria is uncertain. The total compensation cost will be expensed over the estimated requisite service period.

 

New Accounting Pronouncements

 

In June 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-07, Compensation—Stock Compensation (Topic 718), (“ASU 2018-7”), which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. Under current GAAP, non-employee share-based payment awards are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever can be more reliably measured. Under ASU 2018-07, non-employee share-based payments would be measured at the grant-date fair value of the equity instruments an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. Under current GAAP, the measurement date for equity classified non-employee share-based payment awards is the earlier of the date at which a commitment for performance by the counterparty is reached or the date at which the counterparty’s performance is complete. Under ASU 2018-07, equity-classified nonemployee share-based payment awards are measured at the grant date. The definition of the term grant date is amended to generally state the date at which a grantor and a grantee reach a mutual understanding of the key terms and conditions of a share-based payment award. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. An entity should only remeasure liability-classified awards that have not been settled by the date of adoption and equity classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Upon transition, the entity is required to measure these non-employee awards at fair value as of the adoption date. The entity must not remeasure awards that are completed. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and results of operations.

 

In February 2016, the FASB issued ASU 2016-02, Leases, which will require most leases (except of leases with terms of less than one year) to be recognized on the balance sheet as an asset and a lease liability. Leases will be classified as an operating lease or a financing lease. Operating leases are expensed using the straight-line method whereas financing leases will be treated similarly to a capital lease under the current standard. The new standard will be effective for annual and interim periods, within those fiscal years, beginning after December 15, 2018, but early adoption is permitted. The new standard must be presented using the modified retrospective method beginning with the earliest comparative period presented. The Company is currently evaluating the effect of the new standard on its financial statements and related disclosures.

 

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements.

v3.10.0.1
B. OPERATIONS AND FINANCING
3 Months Ended
Dec. 31, 2018
B. Operations And Financing  
B. OPERATIONS AND FINANCING

The Company has incurred significant costs since its inception for the acquisition of certain patented and unpatented proprietary technology and know-how relating to the human immunological defense system, patent applications, research and development, administrative costs, construction of laboratory facilities, and clinical trials.  The Company has funded such costs with proceeds from loans and the public and private sale of its common stock.  The Company will be required to raise additional capital or find additional long-term financing to continue with its research efforts.  To date, the Company has not generated any revenue from product sales. Thus, the Company has been dependent upon the proceeds from the sale of its securities to meet all its liquidity and capital requirements and anticipates having to do so in the future. During the three months ended December 31, 2018, the Company received net proceeds of approximately $0.6 million from the exercise of warrants. The ability of the Company to complete the necessary clinical trials and obtain US Food & Drug Administration (FDA) approval for the sale of products to be developed on a commercial basis is uncertain. Ultimately, the Company must complete the development of its products, obtain the appropriate regulatory approvals and obtain sufficient revenues to support its cost structure.

  

The Company is currently in the final stages of its large multi-national Phase 3 clinical trial for head and neck cancer with its partners TEVA Pharmaceuticals and Orient Europharma. To finance the study beyond the next twelve months, the Company plans to raise additional capital in the form of corporate partnerships, debt issuances and/or equity financings. The Company believes that it will be able to obtain additional financing because it has done so consistently in the past and because Multikine is a product in the Phase 3 clinical trial stage. However, there can be no assurance that the Company will be successful in raising additional funds on a timely basis or that the funds will be available to the Company on acceptable terms or at all.  If the Company does not raise the necessary amounts of money, it may have to curtail its operations until it can raise the required funding.

 

The financial statements have been prepared assuming the Company will continue as a going concern, but due to the Company’s recurring losses from operations and future liquidity needs, there is substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Since the Company launched its Phase 3 clinical trial for Multikine, the Company has incurred expenses of approximately $52.6 million as of December 31, 2018 on direct costs for the Phase 3 clinical trial. The Company estimates it will incur additional expenses of approximately $6.4 million for the remainder of the Phase 3 clinical trial. This estimate is based only on the information currently available in the Company’s contracts with the Clinical Research Organizations responsible for managing the Phase 3 clinical trial and does not include other related costs, e.g., the manufacturing of the drug. This number may be affected by the rate of death accumulation in the study, foreign currency exchange rates, and many other factors, some of which cannot be foreseen today. It is therefore possible that the cost of the Phase 3 clinical trial will be higher than currently estimated.

 

Nine hundred twenty-eight (928) head and neck cancer patients have been enrolled and have completed treatment in the Phase 3 study. The study end point is a 10% increase in overall survival of patients between the two main comparator groups in favor of the group receiving the Multikine treatment regimen. The determination if the study end point is met will occur when there are a total of 298 deaths in those two groups.

v3.10.0.1
C. STOCKHOLDERS EQUITY
3 Months Ended
Dec. 31, 2018
Equity [Abstract]  
C. STOCKHOLDERS' EQUITY

Stock options, stock bonuses and compensation granted by the Company as of December 31, 2018 are as follows:

 

Name of Plan   Total Shares Reserved Under Plans     Shares Reserved for Outstanding Options     Shares Issued     Remaining Options/Shares Under Plans  
                         
Incentive Stock Options Plans     138,400       123,558       N/A       385  
Non-Qualified Stock Option Plans     3,387,200       3,034,669       N/A       311,426  
Stock Bonus Plans     783,760       N/A       309,509       474,218  
Stock Compensation Plan     134,000       N/A       118,590       15,410  
Incentive Stock Bonus Plan     640,000       N/A       624,000       16,000  

 

Stock options, stock bonuses and compensation granted by the Company as of September 30, 2018 are as follows:

 

Name of Plan   Total Shares Reserved Under Plans     Shares Reserved for Outstanding Options     Shares Issued     Remaining Options/Shares Under Plans  
                         
Incentive Stock Option Plans     138,400       123,558       N/A       385  
Non-Qualified Stock Option Plans     3,387,200       3,036,569       N/A       309,526  
Bonus Plans     783,760       N/A       297,230       486,497  
Stock Compensation Plan     134,000       N/A       118,590       15,410  
Incentive Stock Bonus Plan     640,000       N/A       624,000       16,000  

 

Stock option activity:

 

    Three Months Ended December 31,  
    2018     2017  
Granted     500       10,300  
Expired     2,400       17,523  
Forfeited     -       809  

 

Stock-Based Compensation Expense

 

    Three months Ended December 31,  
    2018     2017  
Employees   $ 573,660     $ 1,448,098  
Non-employees   $ 238,904     $ 42,342  

 

Employee compensation expense includes the expense related to options issued or vested and restricted stock. Non-employee expense includes the expense related to options and stock issued to consultants expensed over the period of their service contracts. Stock based compensation expense is included in general and administrative expenses on the statements of operations.

 

Warrants and Non-Employee Options

 

The following chart represents the warrants and non-employee options outstanding at December 31, 2018:

 

Warrant Issue Date

Shares Issuable upon Exercise

of Warrants

Exercise Price Expiration Date Reference
Series N 8/18/2008 85,339 $3.00 2/18/2020 *
Series V 5/28/2015 810,127 $19.75 5/28/2020 *
Series UU 6/11/2018 187,562    $2.80 6/11/2020 *
Series W 10/28/2015 688,930 $16.75 10/28/2020 *
Series X 1/13/2016 120,000    $9.25 1/13/2021 *
Series Y 2/15/2016 26,000 $12.00 2/15/2021 *
Series ZZ 5/23/2016 20,000 $13.75 5/18/2021 *
Series BB 8/26/2016 16,000  $13.75 8/22/2021 *
Series Z 5/23/2016 264,000 $13.75 11/23/2021 *
Series FF 12/8/2016 68,048 $3.91 12/1/2021 *
Series CC 12/8/2016 680,480 $5.00 12/8/2021 *
Series HH 2/23/2017 20,000   $3.13 2/16/2022 *
Series AA 8/26/2016 200,000 $13.75 2/22/2022 *
Series JJ 3/14/2017 30,000 $3.13 3/8/2022 *
Series LL 4/30/2017 26,398 $3.59 4/30/2022 *
Series MM 6/22/2017 893,491 $1.86 6/22/2022 *
Series NN 7/24/2017 539,300 $2.52 7/24/2022  *
Series OO 7/31/2017 60,000 $2.52 7/31/2022 *
Series QQ 8/22/2017 3,500 $2.50 8/22/2022 *
Series GG 2/23/2017 200,000 $3.00 8/23/2022 *
Series II 3/14/2017 216,500 $3.00 9/14/2022 *
Series RR 10/30/2017 555,370 $1.65 10/30/2022 *
Series KK 5/3/2017 213,870 $3.04 11/3/2022 *
Series SS 12/19/2017 807,898 $2.09 12/18/2022 2
Series TT 2/5/2018 1,210,827 $2.24 2/5/2023 2
Series PP 8/28/2017 112,500 $2.30 2/28/2023 2
Series WW 7/2/2018 195,000 $1.63 6/28/2023 *
Series VV 7/2/2018 3,900,000 $1.75 1/2/2024 *
Consultants 7/1/16 - 7/28/17 28,000 $2.18-$11.50 6/30/2019- 7/27/2027 3

 

* No current period changes to these warrants

 

1. Derivative Liabilities

 

The table below presents the fair value of the warrant liabilities at the balance sheet dates:

 

   

December 31,

2018

   

September 30,

2018

 
Series S warrants   $ -     $ 33  
Series V warrants     214,104       770,436  
Series W warrants     372,231       999,081  
Series Z warrants     283,646       487,767  
Series ZZ warrants     19,892       34,215  
Series AA warrants     223,255       380,474  
Series BB warrants     16,346       28,456  
Series CC warrants     1,114,118       1,779,724  
Series DD warrants     -       1,249,287  
Series EE warrants     -       1,249,287  
Series FF warrants     119,859       188,921  
Series GG warrants     394,446       607,228  
Series HH warrants     37,865       58,816  
Series II warrants     429,546       660,135  
Series JJ warrants     57,180       88,642  
Series KK warrants     428,835       656,930  
Series LL warrants     49,435       77,632  
Total warrant liabilities   $ 3,760,758     $ 9,317,064  

 

The table below presents the gains / (losses) on the warrant liabilities for the three months ended December 31:

 

    2018      2017  
Series S warrants   $ 33     $ 13,068  
Series V warrants     556,332       (98,313 )
Series W warrants     626,850       (129,467 )
Series Z warrants     204,121       (55,535 )
Series ZZ warrants     14,323       (3,343 )
Series AA warrants     157,219       (47,360 )
Series BB warrants     12,110       (2,631 )
Series CC warrants     665,606       (196,821 )
Series DD warrants     1,249,287       5,483  
Series EE warrants     1,249,287       5,483  
Series FF warrants     69,062       (18,047 )
Series GG warrants     212,782       (115,132 )
Series HH warrants     20,951       (5,662 )
Series II warrants     230,589       (178,806 )
Series JJ warrants     31,462       (8,542 )
Series KK warrants     228,095       (115,027 )
Series LL warrants     28,197       (7,578 )
Net gain (loss) on warrant liabilities   $ 5,556,306     $ (958,230 )

  

The Company reviews all outstanding warrants in accordance with the requirements of ASC 815. This topic provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. The warrant agreements provide for adjustments to the exercise price for certain dilutive events. Under the provisions of ASC 815, the warrants are not considered indexed to the Company’s stock because future equity offerings or sales of the Company’s stock are not an input to the fair value of a “fixed-for-fixed” option on equity shares, and equity classification is therefore precluded.

 

In accordance with ASC 815, derivative liabilities must be measured at fair value upon issuance and re-valued at the end of each reporting period through expiration. Any change in fair value between the respective reporting dates is recognized as a gain or loss.

 

Expiration of Derivative Liabilities

 

On December 10, 2018, 1,360,960 Series DD and 1,360,960 Series EE warrants, with an exercise price of $4.50 expired.

 

On October 11, 2018, 327,729 Series S warrants, with an exercise price of $31.25 expired.

  

2. Changes in Equity Warrants

 

Exercise of Equity Warrants

 

The following chart lists the warrants that were exercised and the proceeds received during the three months ended December 31, 2018. No warrants were exercised during the three months ended December 31, 2017.

 

Warrants

  Warrants Exercised     Exercise Price       Proceeds  
Series PP     60,000     $ 2.30     $ 138,000  
Series SS     152,632     $ 2.09     $ 319,001  
Series TT     86,050     $ 2.24     $ 192,752  
      298,682             $ 649,753  

 

Expiration of Equity Warrants

 

No equity warrants expired during the three months ended December 31, 2018.

 

3.  Options and Shares Issued to Consultants

 

The Company typically enters into consulting arrangements in exchange for common stock or stock options. During the three months ended December 31, 2018 and 2017, respectively, the Company issued 62,784 and 13,705 shares of restricted common stock. The weighted average grant value of the shares issued to consultants was $3.22 and $1.85 during the three months ended December 31, 2018 and 2017, respectively. The aggregate values of the issuances of restricted common stock and common stock options are recorded as prepaid expenses and are charged to general and administrative expenses over the periods of service.

 

During the three months ended December 31, 2018 and 2017, the Company recorded total expense of approximately $239,000 and $42,000, respectively, relating to these consulting agreements. At December 31, 2018 and September 30, 2018, approximately $171,000 and $207,000, respectively, are included in prepaid expenses. During the three months ended December 31, 2018 and 2017, 2,400 and 2,000 options respectively were issued to consultants as payment for services rendered. As of December 31, 2018, 28,000 options issued to consultants remained outstanding, all of which were issued from the Non-Qualified Stock Option plans and are fully vested.

 

4.  Securities Purchase Agreement

 

Periodically, the Company has entered into Securities Purchase Agreements with Ergomed plc, one of the Company’s Clinical Research Organizations responsible for managing the Company’s Phase 3 clinical trial, to facilitate a partial payment of the amounts due Ergomed. Under the Agreements, the Company issued Ergomed shares of common stock as a forbearance fee in exchange for Ergomed’s agreement to provisionally forbear collection of the payables in an amount equal to the net proceeds from the resales of the shares issued to Ergomed. Upon issuance, the Company expenses the full value of the shares as Other Non-Operating Gain/Loss and subsequently offsets the expense as amounts are realized through the resale by Ergomed and reduces accounts payable to Ergomed. During the quarters ended December 31, 2018 and 2017, respectively, the Company realized approximately $1.2 million and $0.7 million through the resale of 353,995 and 415,208 shares and reduced the payables and credited Other Operating Gain by those amounts.

 

The Security Purchase Agreements expired on December 31, 2018, at which time Ergomed returned all 564,905 unsold shares for cancellation. The par value of those shares was reclassed from Common Stock to Additional Paid -In Capital on the balance sheet. As of January 8, 2019, the Company owed Ergomed, plc for services provided by Ergomed in connection with the Company’s Phase III clinical trial. On January 9, 2019 the Company agreed to issue Ergomed 500,000 restricted shares of the Company’s common stock in payment of the amount the Company owed Ergomed plus future bills payable to Ergomed.

 

v3.10.0.1
D. FAIR VALUE MEASUREMENTS
3 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
D. FAIR VALUE MEASUREMENTS

In accordance with ASC 820-10, “Fair Value Measurements,” the Company determines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company generally applies the income approach to determine fair value. This method uses valuation techniques to convert future amounts to a single present amount. The measurement is based on the value indicated by current market expectations with respect to those future amounts.

 

ASC 820-10 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to active markets for identical assets and liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The Company classifies fair value balances based on the observability of those inputs. The three levels of the fair value hierarchy are as follows:

 

●  Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities

 

●  Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and amounts derived from valuation models where all significant inputs are observable in active markets

 

●  Level 3 – Unobservable inputs that reflect management’s assumptions

 

For disclosure purposes, assets and liabilities are classified in their entirety in the fair value hierarchy level based on the lowest level of input that is significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy levels.

 

The table below sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the condensed balance sheet at December 31, 2018:

 

   

Quoted Prices in Active Markets for Identical Assets or Liabilities

 (Level 1)

   

Significant Other Observable Inputs

 (Level 2)

   

Significant Unobservable Inputs

 (Level 3)

    Total  
                         
Derivative instruments   $ -     $ -     $ 3,760,758     $ 3,760,758  

 

The table below sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the condensed balance sheet at September 30, 2018:

 

   

Quoted Prices in Active Markets for Identical Assets or Liabilities

(Level 1)

   

Significant Other Observable Inputs

(Level 2)

   

Significant Unobservable Inputs

(Level 3)

    Total  
                         
Derivative instruments   $ 33     $ -     $ 9,317,031     $ 9,317,064  

  

The following sets forth the reconciliation of beginning and ending balances related to fair value measurements using significant unobservable inputs (Level 3) for the three months ended December 31, 2018 and the year ended September 30, 2018:

 

    3 months ended     12 months ended  
   

December 31,

2018

   

September 30,

2018

 
             
Beginning balance   $ 9,317,031     $ 2,020,629  
Issuances     -       -  
Exercises     -       (595,780 )
Realized and unrealized (gains) and losses     (5,556,273 )     7,892,182  
Ending balance   $ 3,760,758     $ 9,317,031  

 

The fair values of the Company’s derivative instruments disclosed above under Level 3 are primarily derived from valuation models where significant inputs such as historical price and volatility of the Company’s stock, as well as U.S. Treasury Bill rates, are observable in active markets.

v3.10.0.1
E. COMMITMENTS AND CONTINGENCIES
3 Months Ended
Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
E. COMMITMENTS AND CONTINGENCIES

Clinical Research Agreements 

 

Under co-development and revenue sharing agreements with Ergomed, Ergomed agreed to contribute up to $12 million towards the Company’s Phase 3 Clinical Trial in the form of discounted clinical services in exchange for a single digit percentage of milestone and royalty payments, up to a specific maximum amount. The Company accounted for the co-development and revenue sharing agreements in accordance with ASC 808 “Collaborative Arrangements”. The Company determined the payments to Ergomed are within the scope of ASC 730 “Research and Development.” Therefore, the Company records the discount on the clinical services as a credit to research and development expense on its Statements of Operations. Since the inception of the agreement with Ergomed, the Company has incurred research and development expenses of approximately $28.8million for Ergomed’s services. This amount is net of Ergomed’s discount of approximately $9.7 million. During the three months ended December 31, 2018 and 2017, the Company recorded, net of Ergomed’s discount, approximately $0.8 million and $0.9 million, respectively, as research and development expense related to Ergomed’s services.

 

Lease Agreements

 

The Company leases a manufacturing facility near Baltimore, Maryland (the San Tomas lease). The building was remodeled in accordance with the Company’s specifications so that it can be used by the Company to manufacture Multikine for the Company’s Phase 3 clinical trial and sales of the drug if approved by the FDA. The lease is for a term of twenty years and requires annual base rent to escalate each year at 3%. The Company is required to pay all real estate and personal property taxes, insurance premiums, maintenance expenses, repair costs and utilities. The lease allows the Company, at its election, to extend the lease for two ten-year periods or to purchase the building at the end of the 20-year lease. The Company contributed approximately $9.3 million towards the tenant-directed improvements, of which $3.2 million is being refunded during years six through twenty through reduced rental payments. The landlord paid approximately $11.9 million towards the purchase of the building, land and the tenant-directed improvements. The Company placed the building in service in October 2008.

 

The Company was deemed to be the owner of the building for accounting purpose under the build-to-suit guidance in ASC 840-40-55. In addition to tenant improvements the Company incurred, the Company also recorded an asset for tenant-directed improvements and for the costs paid by the lessor to purchase the building and to perform improvements, as well as a corresponding liability for the landlord costs. Upon completion of the improvements, the Company did not meet the “sale-leaseback” criteria under ASC 840-40-25, Accounting for Lease, Sale-Leaseback Transactions, and therefore, treated the lease as a financing obligation. Thus, the asset and corresponding liability were not de-recognized. As of December 31, 2018 and September 30, 2018, the leased building asset has a net book value of approximately $16.0 and $16.1 million, respectively, and the landlord liability has a balance of approximately $13.4. The leased building is being depreciated using a straight-line method over the 20-year lease term to a residual value. The landlord liability is being amortized over the 20 years using the effective interest method. Lease payments allocated to the landlord liability are accounted for as debt service payments on that liability using the finance method of accounting per ASC 840-40-55.

 

The Company was required to deposit the equivalent of one year of base rent in accordance with the lease. When the Company meets the minimum cash balance required by the lease, the deposit will be returned to the Company. The approximate $1.7 million deposit is included in non-current assets at December 31, 2018 and September 30, 2018.

 

Approximate future minimum lease payments under the San Tomas lease as of December 31, 2018 are as follows:

 

 Nine months ending September 30, 2019      $ 1,360,000  
 Year ending September 30,        
 2020     1,872,000  
 2021     1,937,000  
 2022     2,004,000  
 2023     2,073,000  
 2024     2,145,000  
 Thereafter     9,540,000  
 Total future minimum lease obligation     20,931,000  
 Less imputed interest on financing obligation     (7,517,000 )
 Net present value of lease financing obligation   $ 13,414,000  

 

The Company subleases a portion of its rental space on a month-to-month term lease, which requires a 30-day notice for termination. The sublease rental income for each of the three months ended December 31, 2018 and 2017 was approximately $18,000.

 

The Company leases its research and development laboratory under a 60-month lease which expires February 28, 2022. The operating lease includes escalating rental payments. The Company is recognizing the related rent expense on a straight-line basis over the full 60-month term of the lease at the rate of approximately $13,000 per month. As of December 31, 2018 and September 30, 2018, the Company has recorded a deferred rent liability of approximately $13,000 and $12,000, respectively.

 

The Company leases its office headquarters under a 60-month lease which expires June 30, 2020. The operating lease includes escalating rental payments. The Company is recognizing the related rent expense on a straight-line basis over the full 60-month term of the lease at the rate approximately $8,000 per month. As of December 31, 2018 and September 30, 2018, the Company has recorded a deferred rent liability of approximately $12,000 and $14,000, respectively.

 

As of December 31, 2018, material contractual obligations, excluding the San Tomas lease, consisting of non-cancelable operating lease payments are as follows:

 

Nine months ending September 30, 2019   $ 194,000  
Year ending September 30,        
2020     238,000  
2021     163,000  
2022     69,000  
Total   $ 664,000  

 

The Company leases office equipment under a capital lease arrangement. The term of the capital lease is 60 months and expires on October 31, 2021. The monthly lease payment is $505. The lease bears interest at approximately 6.25% per annum.

 

v3.10.0.1
F. PATENTS
3 Months Ended
Dec. 31, 2018
Intangible Assets, Net (Excluding Goodwill) [Abstract]  
F. PATENTS

During the three months ended December 31, 2018 and 2017, no patent impairment charges were recorded. For the three months ended December 31, 2018 and 2017, amortization of patent costs totaled approximately $12,000 and $9,000, respectively. Approximate estimated future amortization expense is as follows:

 

Nine months ending September 30, 2019   $ 31,000  
Year ending September 30,        
2020     39,000  
2021     35,000  
2022     31,000  
2023     21,000  
2024     18,000  
Thereafter     78,000  
Total   $ 253,000  
v3.10.0.1
G. EARNINGS (LOSS) PER COMMON SHARE
3 Months Ended
Dec. 31, 2018
Net income (loss) per common share  
G. LOSS PER COMMON SHARE

The following tables provide the details of the basic and diluted earnings (loss) per-share computations:

 

    Three months ended December 31,  
    2018     2017  
Earnings (loss) per share - basic            
Net income (loss) available to common shareholders - basic   $ 1,245,902     $ (6,187,830 )
Weighted average shares outstanding - basic     27,985,327       11,636,730  
Basic earnings (loss) per common share   $ 0.04     $ (0.53 )
                 
Earnings (loss) per share - diluted                
Net income (loss) available to common shareholders - basic   $ 1,245,902     $ (6,187,830 )
Gain on derivatives (1)     (723,879 )     -  
Net income (loss) available to common shareholders - diluted   $ 522,023     $ (6,187,830 )
                 
Weighted average shares outstanding - basic     27,985,327       11,636,730  
Incremental shares underlying dilutive warrants and options     1,944,026       -  
Weighted average shares outstanding - diluted     29,929,353       11,636,730  
Diluted earnings (loss) per common share   $ 0.02     $ (0.53 )

 

(1) Includes Series GG, HH, II, JJ & KK warrants for the three months ended December 31, 2018

 

The gain on derivatives priced lower than the average market price during the period is excluded from the numerator and the related shares are excluded from the denominator in calculating diluted loss per share.

 

In accordance with the contingently issuable shares guidance of FASB ASC Topic 260, Earnings Per Share, the calculation of diluted net earnings (loss) per share excludes the following securities because their inclusion would have been anti-dilutive as of December 31:

 

    2018     2017    
             
Options and Warrants     3,175,384       10,491,090  
Unvested Restricted Stock     312,000       332,000  
Convertible debt     -       1,133,355  
Total     3,487,384       11,956,945  

 

v3.10.0.1
H. SUBSEQUENT EVENTS
3 Months Ended
Dec. 31, 2018
Subsequent Events [Abstract]  
H. SUBSEQUENT EVENTS

As of January 8, 2019, the Company owed Ergomed, plc for services provided by Ergomed in connection with the Company’s Phase III clinical trial. On January 9, 2019 the Company agreed to issue Ergomed 500,000 restricted shares of the Company’s common stock in payment of the amount the Company owed Ergomed plus future bills payable to Ergomed.

 

Between January 1, 2019 and February 13, 2019, the Company received approximately $2.1 million through the exercise of warrants to purchase shares of the Company's common stock.

v3.10.0.1
A. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (POLICIES)
3 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
Basis of Presentation

The accompanying condensed financial statements of CEL-SCI Corporation (the Company) are unaudited and certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission. While management of the Company believes that the disclosures presented are adequate to make the information presented not misleading, these interim condensed financial statements should be read in conjunction with the financial statements and notes included in the Company’s annual report on Form 10-K for the year ended September 30, 2018.

 

In the opinion of management, the accompanying unaudited condensed financial statements contain all accruals and adjustments (each of which is of a normal recurring nature) necessary for a fair presentation of the Company’s financial position as of December 31, 2018 and the results of its operations for the three months then ended. The condensed balance sheet as of September 30, 2018 is derived from the September 30, 2018 audited financial statements. Significant accounting policies have been consistently applied in the interim financial statements and the annual financial statements. The results of operations for the three months ended December 31, 2018 and 2017 are not necessarily indicative of the results to be expected for the entire year.

 

The financial statements have been prepared assuming that the Company will continue as a going concern, but due to recurring losses from operations and future liquidity needs, there is substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Refer to discussion in Note B.

Research and Office Equipment and Leasehold Improvements

Research and Office Equipment and Leasehold Improvements – The leased manufacturing facility is recorded at total project costs incurred and is depreciated over the 20-year useful life of the building. Research and office equipment is recorded at cost and depreciated using the straight-line method over estimated useful lives of five to seven years. Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Repairs and maintenance which do not extend the life of the asset are expensed when incurred. The fixed assets are reviewed on a quarterly basis to determine if any of the assets are impaired.

Patents

Patents - Patent expenditures are capitalized and amortized using the straight-line method over the shorter of the expected useful life or the legal life of the patent (17 years). In the event changes in technology or other circumstances impair the value or life of the patent, appropriate adjustment in the asset value and period of amortization is made. An impairment loss is recognized when estimated future undiscounted cash flows expected to result from the use of the asset, and from its disposition, is less than the carrying value of the asset. The amount of the impairment loss would be the difference between the estimated fair value of the asset and its carrying value.

 

Research and Development Costs

Research and Development Costs - Research and development costs are expensed as incurred. Management accrues Clinical Research Organization (“CRO”) expenses and clinical trial study expenses based on services performed and relies on the CROs to provide estimates of those costs applicable to the completion stage of a study. Estimated accrued CRO costs are subject to revisions as such studies progress to completion. The Company charges revisions to estimated expense in the period in which the facts that give rise to the revision become known.

 

Income Taxes

Income Taxes - The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating and tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be recognized.  A full valuation allowance was recorded against the deferred tax assets as of December 31, 2018 and September 30, 2018.

 

On December 22, 2017, the “Tax Cuts and Jobs Act” (the “Tax Act"), was signed into law by the President of the United States (U.S.). The Tax Act includes significant changes to corporate taxation, including reduction of the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018, limitation of the tax deduction for interest expense to 30% of earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks. The Company has accounted for the income tax effects of the Act in applying FASB ASC 740 to the current reporting period. Because the Company records a valuation allowance for its entire deferred income tax asset, there was no impact to the amounts reported in the Company’s financial statements resulting from the Tax Act.

Derivative Instruments

Derivative Instruments – The Company has entered into financing arrangements that consist of freestanding derivative instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification (ASC) 815, “Accounting for Derivative Instruments and Hedging Activities.” In accordance with accounting principles generally accepted in the United States (U.S. GAAP), derivative instruments and hybrid instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair value with gains or losses recognized in earnings or other comprehensive income depending on the nature of the derivative or hybrid instruments. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models giving consideration to all of the rights and obligations of each instrument. The derivative liabilities are re-measured at fair value at the end of each interim period.

 

Deferred Rent

Deferred Rent– Certain of the Company’s operating leases provide for minimum annual payments that adjust over the life of the lease.  The aggregate minimum annual payments are expensed on a straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for rent escalations when the amount of straight-line rent exceeds the lease payments, and reduces the deferred rent liability when the lease payments exceed the straight-line rent expense.  For tenant improvement allowances and rent holidays, the Company records a deferred rent liability and amortizes the deferred rent over the lease term as a reduction to rent expense.

 

Leases

Leases – Leases are categorized as either operating or capital leases at inception. Operating lease costs are recognized on a straight-line basis over the term of the lease. An asset and a corresponding liability for the capital lease obligation are established for the cost of capital leases. The capital lease obligation is amortized over the life of the lease. For build-to-suit leases, the Company establishes an asset and liability for the estimated construction costs incurred to the extent that it is involved in the construction of structural improvements or takes construction risk prior to the commencement of the lease. Upon occupancy of facilities under build-to-suit leases, the Company assesses whether these arrangements qualify for sales recognition under the sale-leaseback accounting guidance. If a lease does not meet the criteria to qualify for a sale-leaseback transaction, the established asset and liability remain on the Company's balance sheet.

 

Stock-Based Compensation

Stock-Based Compensation – Compensation cost for all stock-based awards is measured at fair value as of the grant date in accordance with the provisions of ASC 718 “Compensation – Stock Compensation.” The fair value of stock options is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires various judgmental assumptions including volatility and expected option life. The stock-based compensation cost is recognized on the straight-line allocation method as expense over the requisite service or vesting period.

 

Equity instruments issued to non-employees are accounted for in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees.” Accordingly, compensation is recognized when goods or services are received and is measured using the Black-Scholes valuation model. The Black-Scholes model requires various judgmental assumptions regarding the fair value of the equity instruments at the measurement date and the expected life of the options.

 

The Company has Incentive Stock Option Plans, Non-Qualified Stock Option Plans, a Stock Compensation Plan, Stock Bonus Plans and an Incentive Stock Bonus Plan. In some cases, these Plans are collectively referred to as the "Plans". All Plans have been approved by the stockholders.

 

The Company’s stock options are not transferable, and the actual value of the stock options that an employee may realize, if any, will depend on the excess of the market price on the date of exercise over the exercise price. The Company has based its assumption for stock price volatility on the variance of daily closing prices of the Company’s stock. The risk-free interest rate assumption was based on the U.S. Treasury rate at date of the grant with term equal to the expected life of the option. Forfeitures are accounted for when they occur. The expected term of options represents the period that options granted are expected to be outstanding and has been determined based on an analysis of historical exercise behavior. If any of the assumptions used in the Black-Scholes model change significantly, stock-based compensation expense for new awards may differ materially in the future from that recorded in the current period.

 

Vesting of restricted stock granted under the Incentive Stock Bonus Plan is subject to service, performance and market conditions and meets the classification of equity awards. These awards were measured at market value on the grant-dates for issuances where the attainment of performance criteria is likely and at fair value on the grant-dates, using a Monte Carlo simulation for issuances where the attainment of performance criteria is uncertain. The total compensation cost will be expensed over the estimated requisite service period.

 

New Accounting Pronouncements

In June 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-07, Compensation—Stock Compensation (Topic 718), (“ASU 2018-7”), which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. Under current GAAP, non-employee share-based payment awards are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever can be more reliably measured. Under ASU 2018-07, non-employee share-based payments would be measured at the grant-date fair value of the equity instruments an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. Under current GAAP, the measurement date for equity classified non-employee share-based payment awards is the earlier of the date at which a commitment for performance by the counterparty is reached or the date at which the counterparty’s performance is complete. Under ASU 2018-07, equity-classified nonemployee share-based payment awards are measured at the grant date. The definition of the term grant date is amended to generally state the date at which a grantor and a grantee reach a mutual understanding of the key terms and conditions of a share-based payment award. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. An entity should only remeasure liability-classified awards that have not been settled by the date of adoption and equity classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Upon transition, the entity is required to measure these non-employee awards at fair value as of the adoption date. The entity must not remeasure awards that are completed. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and results of operations.

 

In February 2016, the FASB issued ASU 2016-02, Leases, which will require most leases (except of leases with terms of less than one year) to be recognized on the balance sheet as an asset and a lease liability. Leases will be classified as an operating lease or a financing lease. Operating leases are expensed using the straight-line method whereas financing leases will be treated similarly to a capital lease under the current standard. The new standard will be effective for annual and interim periods, within those fiscal years, beginning after December 15, 2018, but early adoption is permitted. The new standard must be presented using the modified retrospective method beginning with the earliest comparative period presented. The Company is currently evaluating the effect of the new standard on its financial statements and related disclosures.

 

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements.

v3.10.0.1
C. STOCKHOLDERS EQUITY (Tables)
3 Months Ended
Dec. 31, 2018
Equity [Abstract]  
Stock options, stock bonuses and compensation granted by the Company

Stock options, stock bonuses and compensation granted by the Company as of December 31, 2018 are as follows:

 

Name of Plan   Total Shares Reserved Under Plans     Shares Reserved for Outstanding Options     Shares Issued     Remaining Options/Shares Under Plans  
                         
Incentive Stock Options Plans     138,400       123,558       N/A       385  
Non-Qualified Stock Option Plans     3,387,200       3,034,669       N/A       311,426  
Stock Bonus Plans     783,760       N/A       309,509       474,218  
Stock Compensation Plan     134,000       N/A       118,590       15,410  
Incentive Stock Bonus Plan     640,000       N/A       624,000       16,000  

 

Stock options, stock bonuses and compensation granted by the Company as of September 30, 2018 are as follows:

 

Name of Plan   Total Shares Reserved Under Plans     Shares Reserved for Outstanding Options     Shares Issued     Remaining Options/Shares Under Plans  
                         
Incentive Stock Option Plans     138,400       123,558       N/A       385  
Non-Qualified Stock Option Plans     3,387,200       3,036,569       N/A       309,526  
Bonus Plans     783,760       N/A       297,230       486,497  
Stock Compensation Plan     134,000       N/A       118,590       15,410  
Incentive Stock Bonus Plan     640,000       N/A       624,000       16,000  

 

Stock option activity
    Three Months Ended December 31,  
    2018     2017  
Granted     500       10,300  
Expired     2,400       17,523  
Forfeited     -       809  
Schedule of employees and non-employees stock compensation
    Three months Ended December 31,  
    2018     2017  
Employees   $ 573,660     $ 1,448,098  
Non-employees   $ 238,904     $ 42,342  
Derivative liabilities, warrants and other options
Warrant Issue Date

Shares Issuable upon Exercise

of Warrants

Exercise Price Expiration Date Reference
Series N 8/18/2008 85,339 $3.00 2/18/2020 *
Series V 5/28/2015 810,127 $19.75 5/28/2020 *
Series UU 6/11/2018 187,562    $2.80 6/11/2020 *
Series W 10/28/2015 688,930 $16.75 10/28/2020 *
Series X 1/13/2016 120,000    $9.25 1/13/2021 *
Series Y 2/15/2016 26,000 $12.00 2/15/2021 *
Series ZZ 5/23/2016 20,000 $13.75 5/18/2021 *
Series BB 8/26/2016 16,000  $13.75 8/22/2021 *
Series Z 5/23/2016 264,000 $13.75 11/23/2021 *
Series FF 12/8/2016 68,048 $3.91 12/1/2021 *
Series CC 12/8/2016 680,480 $5.00 12/8/2021 *
Series HH 2/23/2017 20,000   $3.13 2/16/2022 *
Series AA 8/26/2016 200,000 $13.75 2/22/2022 *
Series JJ 3/14/2017 30,000 $3.13 3/8/2022 *
Series LL 4/30/2017 26,398 $3.59 4/30/2022 *
Series MM 6/22/2017 893,491 $1.86 6/22/2022 *
Series NN 7/24/2017 539,300 $2.52 7/24/2022  *
Series OO 7/31/2017 60,000 $2.52 7/31/2022 *
Series QQ 8/22/2017 3,500 $2.50 8/22/2022 *
Series GG 2/23/2017 200,000 $3.00 8/23/2022 *
Series II 3/14/2017 216,500 $3.00 9/14/2022 *
Series RR 10/30/2017 555,370 $1.65 10/30/2022 *
Series KK 5/3/2017 213,870 $3.04 11/3/2022 *
Series SS 12/19/2017 807,898 $2.09 12/18/2022 2
Series TT 2/5/2018 1,210,827 $2.24 2/5/2023 2
Series PP 8/28/2017 112,500 $2.30 2/28/2023 2
Series WW 7/2/2018 195,000 $1.63 6/28/2023 *
Series VV 7/2/2018 3,900,000 $1.75 1/2/2024 *
Consultants 7/1/16 - 7/28/17 28,000 $2.18-$11.50 6/30/2019- 7/27/2027 3

 

* No current period changes to these warrants

Tabular disclosure of derivative liabilities at fair value
   

December 31,

2018

   

September 30,

2018

 
Series S warrants   $ -     $ 33  
Series V warrants     214,104       770,436  
Series W warrants     372,231       999,081  
Series Z warrants     283,646       487,767  
Series ZZ warrants     19,892       34,215  
Series AA warrants     223,255       380,474  
Series BB warrants     16,346       28,456  
Series CC warrants     1,114,118       1,779,724  
Series DD warrants     -       1,249,287  
Series EE warrants     -       1,249,287  
Series FF warrants     119,859       188,921  
Series GG warrants     394,446       607,228  
Series HH warrants     37,865       58,816  
Series II warrants     429,546       660,135  
Series JJ warrants     57,180       88,642  
Series KK warrants     428,835       656,930  
Series LL warrants     49,435       77,632  
Total warrant liabilities   $ 3,760,758     $ 9,317,064  
Schedule of gains and (losses) on derivative liabilities
    2018      2017  
Series S warrants   $ 33     $ 13,068  
Series V warrants     556,332       (98,313 )
Series W warrants     626,850       (129,467 )
Series Z warrants     204,121       (55,535 )
Series ZZ warrants     14,323       (3,343 )
Series AA warrants     157,219       (47,360 )
Series BB warrants     12,110       (2,631 )
Series CC warrants     665,606       (196,821 )
Series DD warrants     1,249,287       5,483  
Series EE warrants     1,249,287       5,483  
Series FF warrants     69,062       (18,047 )
Series GG warrants     212,782       (115,132 )
Series HH warrants     20,951       (5,662 )
Series II warrants     230,589       (178,806 )
Series JJ warrants     31,462       (8,542 )
Series KK warrants     228,095       (115,027 )
Series LL warrants     28,197       (7,578 )
Net gain (loss) on warrant liabilities   $ 5,556,306     $ (958,230 )
Exercise of equity warrants

Warrants

  Warrants Exercised     Exercise Price       Proceeds  
Series PP     60,000     $ 2.30     $ 138,000  
Series SS     152,632     $ 2.09     $ 319,001  
Series TT     86,050     $ 2.24     $ 192,752  
      298,682             $ 649,753  
v3.10.0.1
D. FAIR VALUE MEASUREMENTS (Tables)
3 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Measured at fair value on a recurring basis

The table below sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the condensed balance sheet at December 31, 2018:

 

   

Quoted Prices in Active Markets for Identical Assets or Liabilities

 (Level 1)

   

Significant Other Observable Inputs

 (Level 2)

   

Significant Unobservable Inputs

 (Level 3)

    Total  
                         
Derivative instruments   $ -     $ -     $ 3,760,758     $ 3,760,758  

 

The table below sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the condensed balance sheet at September 30, 2018:

 

   

Quoted Prices in Active Markets for Identical Assets or Liabilities

(Level 1)

   

Significant Other Observable Inputs

(Level 2)

   

Significant Unobservable Inputs

(Level 3)

    Total  
                         
Derivative instruments   $ 33     $ -     $ 9,317,031     $ 9,317,064  
Reconciliation of beginning and ending balances related to fair value measurements using significant unobservable inputs (Level 3)
    3 months ended     12 months ended  
   

December 31,

2018

   

September 30,

2018

 
             
Beginning balance   $ 9,317,031     $ 2,020,629  
Issuances     -       -  
Exercises     -       (595,780 )
Realized and unrealized (gains) and losses     (5,556,273 )     7,892,182  
Ending balance   $ 3,760,758     $ 9,317,031  
v3.10.0.1
E. COMMITMENTS AND CONTINGENCIES (Tables)
3 Months Ended
Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
Future minimum lease payments under the San Tomas lease
 Nine months ending September 30, 2019      $ 1,360,000  
 Year ending September 30,        
 2020     1,872,000  
 2021     1,937,000  
 2022     2,004,000  
 2023     2,073,000  
 2024     2,145,000  
 Thereafter     9,540,000  
 Total future minimum lease obligation     20,931,000  
 Less imputed interest on financing obligation     (7,517,000 )
 Net present value of lease financing obligation   $ 13,414,000  
Schedule of future minimum payments under operating leases
Nine months ending September 30, 2019   $ 194,000  
Year ending September 30,        
2020     238,000  
2021     163,000  
2022     69,000  
Total   $ 664,000  
v3.10.0.1
F. PATENTS (Tables)
3 Months Ended
Dec. 31, 2018
Intangible Assets, Net (Excluding Goodwill) [Abstract]  
Schedule of total estimated future amortization
Nine months ending September 30, 2019   $ 31,000  
Year ending September 30,        
2020     39,000  
2021     35,000  
2022     31,000  
2023     21,000  
2024     18,000  
Thereafter     78,000  
Total   $ 253,000  
v3.10.0.1
G. EARNINGS (LOSS) PER COMMON SHARE (Tables)
3 Months Ended
Dec. 31, 2018
Net income (loss) per common share  
Computation of dilutive net loss per share
    Three months ended December 31,  
    2018     2017  
Earnings (loss) per share - basic            
Net income (loss) available to common shareholders - basic   $ 1,245,902     $ (6,187,830 )
Weighted average shares outstanding - basic     27,985,327       11,636,730  
Basic earnings (loss) per common share   $ 0.04     $ (0.53 )
                 
Earnings (loss) per share - diluted                
Net income (loss) available to common shareholders - basic   $ 1,245,902     $ (6,187,830 )
Gain on derivatives (1)     (723,879 )     -  
Net income (loss) available to common shareholders - diluted   $ 522,023     $ (6,187,830 )
                 
Weighted average shares outstanding - basic     27,985,327       11,636,730  
Incremental shares underlying dilutive warrants and options     1,944,026       -  
Weighted average shares outstanding - diluted     29,929,353       11,636,730  
Diluted earnings (loss) per common share   $ 0.02     $ (0.53 )

 

(1) Includes Series GG, HH, II, JJ & KK warrants for the three months ended December 31, 2018

 

Antidilutive securities
    2018     2017    
             
Options and Warrants     3,175,384       10,491,090  
Unvested Restricted Stock     312,000       332,000  
Convertible debt     -       1,133,355  
Total     3,487,384       11,956,945  
v3.10.0.1
C. STOCKHOLDERS EQUITY (Details) - shares
Dec. 31, 2018
Sep. 30, 2018
Incentive Stock Option Plans    
Total shares reserved under plans 138,400 138,400
Shares reserved for outstanding options 123,558 123,558
Shares issued 0 0
Remaining options/shares under plans 385 385
Non Qualified Stock Option Plans    
Total shares reserved under plans 3,387,200 3,387,200
Shares reserved for outstanding options 3,034,669 3,036,569
Shares issued 0 0
Remaining options/shares under plans 311,426 309,526
Stock Bonus Plans    
Total shares reserved under plans 783,760 783,760
Shares reserved for outstanding options 0 0
Shares issued 309,509 297,230
Remaining options/shares under plans 474,218 486,497
Stock Compensation Plan    
Total shares reserved under plans 134,000 134,000
Shares reserved for outstanding options 0 0
Shares issued 118,590 118,590
Remaining options/shares under plans 15,410 15,410
Incentive Stock Bonus Plan    
Total shares reserved under plans 640,000 640,000
Shares reserved for outstanding options 0 0
Shares issued 624,000 624,000
Remaining options/shares under plans 16,000 16,000
v3.10.0.1
C. STOCKHOLDERS EQUITY (Details 1) - shares
3 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Equity [Abstract]    
Granted 500 10,300
Expired 2,400 17,523
Forfeited 0 809
v3.10.0.1
C. STOCKHOLDERS EQUITY (Details 2) - USD ($)
3 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Equity [Abstract]    
Employees $ 573,660 $ 1,448,098
Non-employees $ 238,904 $ 42,342
v3.10.0.1
C. STOCKHOLDERS EQUITY (Details 3)
3 Months Ended
Dec. 31, 2018
$ / shares
shares
Series N [Member]  
STOCKHOLDERS' EQUITY  
Issue date 8/18/2008
Shares issuable upon exercise of warrant | shares 85,339
Exercise price $ 3.00
Expiration date 2/18/2020
Series V [Member]  
STOCKHOLDERS' EQUITY  
Issue date 5/28/2015
Shares issuable upon exercise of warrant | shares 810,127
Exercise price $ 19.75
Expiration date 5/28/2020
Series UU [Member]  
STOCKHOLDERS' EQUITY  
Issue date 6/11/2018
Shares issuable upon exercise of warrant | shares 187,562
Exercise price $ 2.80
Expiration date 6/11/2020
Series W [Member]  
STOCKHOLDERS' EQUITY  
Issue date 10/28/2015
Shares issuable upon exercise of warrant | shares 688,930
Exercise price $ 16.75
Expiration date 10/28/2020
Series X [Member]  
STOCKHOLDERS' EQUITY  
Issue date 1/13/2016
Shares issuable upon exercise of warrant | shares 120,000
Exercise price $ 9.25
Expiration date 1/13/2021
Series Y [Member]  
STOCKHOLDERS' EQUITY  
Issue date 2/15/2016
Shares issuable upon exercise of warrant | shares 26,000
Exercise price $ 12.00
Expiration date 2/15/2021
Series ZZ [Member]  
STOCKHOLDERS' EQUITY  
Issue date 5/23/2016
Shares issuable upon exercise of warrant | shares 20,000
Exercise price $ 13.75
Expiration date 5/18/2021
Series BB [Member]  
STOCKHOLDERS' EQUITY  
Issue date 8/26/2016
Shares issuable upon exercise of warrant | shares 16,000
Exercise price $ 13.75
Expiration date 8/22/2021
Series Z [Member]  
STOCKHOLDERS' EQUITY  
Issue date 5/23/2016
Shares issuable upon exercise of warrant | shares 264,000
Exercise price $ 13.75
Expiration date 11/23/2021
Series FF [Member]  
STOCKHOLDERS' EQUITY  
Issue date 12/8/2016
Shares issuable upon exercise of warrant | shares 68,048
Exercise price $ 3.91
Expiration date 12/1/2021
Series CC [Member]  
STOCKHOLDERS' EQUITY  
Issue date 12/8/2016
Shares issuable upon exercise of warrant | shares 680,480
Exercise price $ 5.00
Expiration date 12/8/2021
Series HH [Member]  
STOCKHOLDERS' EQUITY  
Issue date 2/23/2017
Shares issuable upon exercise of warrant | shares 20,000
Exercise price $ 3.13
Expiration date 2/16/2022
Series AA [Member]  
STOCKHOLDERS' EQUITY  
Issue date 8/26/2016
Shares issuable upon exercise of warrant | shares 200,000
Exercise price $ 13.75
Expiration date 2/22/2022
Series JJ [Member]  
STOCKHOLDERS' EQUITY  
Issue date 3/14/2017
Shares issuable upon exercise of warrant | shares 30,000
Exercise price $ 3.13
Expiration date 3/8/2022
Series LL [Member]  
STOCKHOLDERS' EQUITY  
Issue date 4/30/2017
Shares issuable upon exercise of warrant | shares 26,398
Exercise price $ 3.59
Expiration date 4/30/2022
Series MM [Member]  
STOCKHOLDERS' EQUITY  
Issue date 6/22/2017
Shares issuable upon exercise of warrant | shares 893,491
Exercise price $ 1.86
Expiration date 6/22/2022
Series NN [Member]  
STOCKHOLDERS' EQUITY  
Issue date 7/24/2017
Shares issuable upon exercise of warrant | shares 539,300
Exercise price $ 2.52
Expiration date 7/24/2022
Series OO [Member]  
STOCKHOLDERS' EQUITY  
Issue date 7/31/2017
Shares issuable upon exercise of warrant | shares 60,000
Exercise price $ 2.52
Expiration date 7/31/2022
Series QQ [Member]  
STOCKHOLDERS' EQUITY  
Issue date 8/22/2017
Shares issuable upon exercise of warrant | shares 3,500
Exercise price $ 2.50
Expiration date 8/22/2022
Series GG [Member]  
STOCKHOLDERS' EQUITY  
Issue date 2/23/2017
Shares issuable upon exercise of warrant | shares 200,000
Exercise price $ 3.00
Expiration date 8/23/2022
Series II [Member]  
STOCKHOLDERS' EQUITY  
Issue date 3/14/2017
Shares issuable upon exercise of warrant | shares 216,500
Exercise price $ 3.00
Expiration date 9/14/2022
Series RR [Member]  
STOCKHOLDERS' EQUITY  
Issue date 10/30/2017
Shares issuable upon exercise of warrant | shares 555,370
Exercise price $ 1.65
Expiration date 10/30/2022
Series KK [Member]  
STOCKHOLDERS' EQUITY  
Issue date 5/3/2017
Shares issuable upon exercise of warrant | shares 213,870
Exercise price $ 3.04
Expiration date 11/3/2022
Series SS [Member]  
STOCKHOLDERS' EQUITY  
Issue date 12/19/2017
Shares issuable upon exercise of warrant | shares 807,898
Exercise price $ 2.09
Expiration date 12/18/2022
Series TT [Member]  
STOCKHOLDERS' EQUITY  
Issue date 2/5/2018
Shares issuable upon exercise of warrant | shares 1,210,827
Exercise price $ 2.24
Expiration date 2/5/2023
Series PP [Member]  
STOCKHOLDERS' EQUITY  
Issue date 8/28/2017
Shares issuable upon exercise of warrant | shares 112,500
Exercise price $ 2.30
Expiration date 2/28/2023
Series WW [Member]  
STOCKHOLDERS' EQUITY  
Issue date 7/2/2018
Shares issuable upon exercise of warrant | shares 195,000
Exercise price $ 1.63
Expiration date 6/28/2023
Series VV [Member]  
STOCKHOLDERS' EQUITY  
Issue date 7/2/2018
Shares issuable upon exercise of warrant | shares 3,900,000
Exercise price $ 1.75
Expiration date 1/2/2024
Consultants [Member]  
STOCKHOLDERS' EQUITY  
Issue date 7/1/16 - 7/28/17
Shares issuable upon exercise of warrant | shares 28,000
Exercise price minimum $ 2.18
Exercise price maximum $ 11.50
Expiration date 6/30/2019 - 7/27/2027
v3.10.0.1
C. STOCKHOLDERS EQUITY (Details 4) - USD ($)
3 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Sep. 30, 2018
Equity [Abstract]      
Series S warrants $ 0   $ 33
Series V warrants 214,104   770,436
Series W warrants 372,231   999,081
Series Z warrants 283,646   487,767
Series ZZ warrants 19,892   34,215
Series AA warrants 223,255   380,474
Series BB warrants 16,346   28,456
Series CC warrants 1,114,118   1,779,724
Series DD warrants 0   1,249,287
Series EE warrants 0   1,249,287
Series FF warrants 119,859   188,921
Series GG warrants 394,446   607,228
Series HH warrants 37,865   58,816
Series II warrants 429,546   660,135
Series JJ warrants 57,180   88,642
Series KK warrants 428,835   656,930
Series LL warrants 49,435   77,632
Total warrant liabilities 3,760,758   $ 9,317,064
Series S warrants 33 $ 13,068  
Series V warrants 556,332 (98,313)  
Series W warrants 626,850 (129,467)  
Series Z warrants 204,121 (55,535)  
Series ZZ warrants 14,323 (3,343)  
Series AA warrants 157,219 (47,360)  
Series BB warrants 12,110 (2,631)  
Series CC warrants 665,606 (196,821)  
Series DD warrants 1,249,287 5,483  
Series EE warrants 1,249,287 5,483  
Series FF warrants 69,062 (18,047)  
Series GG warrants 212,782 (115,132)  
Series HH warrants 20,951 (5,662)  
Series II warrants 230,589 (178,806)  
Series JJ warrants 31,462 (8,542)  
Series KK warrants 228,095 (115,027)  
Series LL warrants 28,197 (7,578)  
Net gain (loss) on warrant liabilities $ 5,556,306 $ (958,230)  
v3.10.0.1
C. STOCKHOLDERS EQUITY (Details 5)
3 Months Ended
Dec. 31, 2018
USD ($)
$ / shares
shares
Equity warrants exercised | shares 298,682
Proceeds from equity warrants exercised | $ $ 649,753
Series PP [Member]  
Equity warrants exercised | shares 60,000
Equity warrants exercise price | $ / shares $ 2.30
Proceeds from equity warrants exercised | $ $ 138,000
Series SS [Member]  
Equity warrants exercised | shares 152,632
Equity warrants exercise price | $ / shares $ 2.09
Proceeds from equity warrants exercised | $ $ 319,001
Series TT [Member]  
Equity warrants exercised | shares 86,050
Equity warrants exercise price | $ / shares $ 2.24
Proceeds from equity warrants exercised | $ $ 192,752
v3.10.0.1
C. STOCKHOLDERS EQUITY (Details Narrative) - USD ($)
3 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Equity [Abstract]    
Stock issued for consulting agreement 62,784 13,705
Consulting agreement expense $ 239,000 $ 42,000
v3.10.0.1
D. FAIR VALUE MEASUREMENTS (Details) - USD ($)
Dec. 31, 2018
Sep. 30, 2018
Derivative instruments $ 3,760,758 $ 9,317,064
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)    
Derivative instruments 0 33
Significant Other Observable Inputs (Level 2)    
Derivative instruments 0 0
Significant Unobservable Inputs (Level 3)    
Derivative instruments $ 3,760,758 $ 9,317,031
v3.10.0.1
D. FAIR VALUE MEASUREMENTS (Details 1) - USD ($)
3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Fair Value Disclosures [Abstract]    
Beginning balance $ 9,317,031 $ 2,020,629
Issuances 0 0
Exercises 0 (595,780)
Realized and unrealized (gains) and losses (5,556,273) 7,892,182
Ending balance $ 3,760,758 $ 9,317,031
v3.10.0.1
E. COMMITMENTS AND CONTINGENCIES (Details)
Dec. 31, 2018
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
Nine months ending September 30, 2019 $ 1,360,000
2020 1,872,000
2021 1,937,000
2022 2,004,000
2023 2,073,000
2024 2,145,000
Thereafter 9,540,000
Total future minimum lease obligation 20,931,000
Less imputed interest on financing obligation (7,517,000)
Net present value of lease financing obligation $ 13,414,000
v3.10.0.1
E. COMMITMENTS AND CONTINGENCIES (Details 1)
Dec. 31, 2018
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
Nine months ending September 30, 2019 $ 194,000
Year ending September 30, 2020 238,000
Year ending September 30, 2021 163,000
Year ending September 30, 2022 69,000
Total $ 664,000
v3.10.0.1
E. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)
Dec. 31, 2018
Sep. 30, 2018
Research and Development Lab    
Deferred rent liability $ 13,000 $ 12,000
Headquarters    
Deferred rent liability $ 12,000 $ 14,000
v3.10.0.1
F. PATENTS (Details) - USD ($)
Dec. 31, 2018
Sep. 30, 2018
Intangible Assets, Net (Excluding Goodwill) [Abstract]    
Nine months ending September 30, 2019 $ 31,000  
Year ending September 30, 2020 39,000  
Year ending September 30, 2021 35,000  
Year ending September 30, 2022 31,000  
Year ending September 30, 2023 21,000  
Year ending September 30, 2024 18,000  
Thereafter 78,000  
Total $ 252,882 $ 258,093
v3.10.0.1
F. PATENTS (Details Narrative) - USD ($)
3 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Intangible Assets, Net (Excluding Goodwill) [Abstract]    
Amortization of patent costs $ 12,000 $ 9,000
v3.10.0.1
G. EARNINGS (LOSS) PER COMMON SHARE (Details) - USD ($)
3 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Net income (loss) per common share    
Net income (loss) available to common shareholders - basic $ 1,245,902 $ (6,187,830)
Weighted average shares outstanding - basic 27,985,327 11,636,730
Basic earnings (loss) per common share $ 0.04 $ (0.53)
Net income (loss) available to common shareholders - basic $ 1,245,902 $ (6,187,830)
Gain on derivatives (723,879) [1] 0
Net income (loss) available to common shareholders - diluted $ 522,023 $ (6,187,830)
Weighted average shares outstanding, basic 27,985,327 11,636,730
Incremental shares underlying dilutive warrants and options 1,944,026 0
Weighted average shares outstanding, diluted 29,929,353 11,636,730
Diluted earnings (loss) per common share $ 0.02 $ (0.53)
[1] Includes Series GG, HH, II, JJ & KK warrants for the three months ended December 31, 2018.
v3.10.0.1
G. EARNINGS (LOSS) PER COMMON SHARE (Details 1) - shares
3 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Antidilutive securities 3,487,384 11,956,945
Options and Warrants    
Antidilutive securities 3,175,384 10,491,090
Unvested Restricted Stock    
Antidilutive securities 312,000 332,000
Convertible debt    
Antidilutive securities 0 1,133,355