EQUITY

6 Months Ended

Mar. 31, 2025

EQUITY

EQUITY

7. EQUITY 

Authorized Capital Stock

The following description summarizes important terms of the classes of our capital stock as of March 31, 2025. 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 the Company Annual Report on Form 10-K filed with the SEC on November 14, 2024 and as amended on December 10, 2024.

Authorized Capital Stock.  The Company’s authorized capital stock currently consists of:

· 7,500,000 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. The Company’s common stock is the only security of the Company registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. All outstanding shares of the Company’s capital stock are fully paid and nonassessable. As of March 31, 2025, there were:

· 3,541,707 shares of common stock issued and outstanding, held by holders of record; held by held by 164 stockholders of record. This number does not include approximately 5,000 beneficial owners whose shares are held in the names of various security brokers, dealers and registered clearing agencies.

· 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.

Reverse Stock Split

The Board of Directors the Company approved a reverse stock split of the Company’s authorized and issued and outstanding shares of common stock, par value $0.001 per share at a ratio of 1-for-40 (the “Reverse Stock Split”). The Company filed a Certificate of Change (the “Certificate of Change”) pursuant to Nevada Revised Statutes Section 78.209 with the Secretary of State of the State of Nevada on February 10, 2025. The reverse stock split was processed and announced by FINRA on February 18, 2025 and became effective on February 19, 2025.

As a result of the reverse stock split on the effective date, the number of shares of the Company’s authorized common stock was  reduced from 300,000,000 shares to 7,500,000 shares and each forty (40) shares of common stock outstanding was automatically combined into one (1) new share of common stock without any action on the part of the holders, and the number of outstanding shares common stock was reduced from 112,423,912 shares to approximately 2,810,598 shares (subject to rounding of fractional shares and fractional shares were issued).

The reverse stock split has no effect on the par value of the Company’s common stock or authorized or outstanding shares of preferred stock, and did not modify any voting rights or other terms of the common stock or preferred stock.

Securities Subject to Price Adjustments 

If in the future, the Company sells its common stock at a price below $9.60 per share, the conversion price of the outstanding shares of Series C and D Convertible Preferred Stock; (ii) promissory notes convertible into shares of our common stock; and (iii) warrants to purchase shares of common stock would adjust below $9.60 per share. The Company has the option to repay Lind in cash or common stock. Should we make our monthly payments in common stock, there may be a price adjustment.

Series C and D Convertible Preferred Stock, Warrants and Dividends

On August 5, 2016, the Company closed a Series C Convertible 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 $28.00 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 Convertible Preferred stock is senior to Series D Convertible Preferred stock and is entitled to receive equal dividends paid to Series D. In addition, Mr. Struve received a five-year warrant to acquire 44,643 shares of common stock at $28.00 per share. The price of the Series C Convertible Preferred Stock and warrant and its conversion price, is currently $9.60 per share pursuant to the documents governing such instruments. As of March 31, 2025, Mr. Struve owns all of the 17,858 issued and outstanding shares of Series C Convertible 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 Convertible Preferred Stock and Warrant offering with Mr. Struve. As of March 31, 2025, Mr. Struve owns all of the 10,161 issued and outstanding shares of Series D Convertible Preferred Stock. Each outstanding share of Series D Convertible 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 Convertible Preferred Stock certificate of designations. Dividends are due and payable in cash when declared by the Company or when the stock is converted. The price of the Series D Convertible Preferred Stock is currently to $9.60 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%.

Based upon the modified terms and conditions of our Series C and D Convertible Preferred Stock certificates of designations dated August 10, 2023, it was determined that Series C and D Convertible Preferred Stock dividends need to be accreted going forward. As of March 31, 2025, the Company has recorded $1,350,970 in cumulative deemed dividends related to Series C and D Convertible Preferred Stock which have not been paid, net of (i) $350,696 of accumulated dividends with respect to the Series D Convertible Preferred Stock that were settled for 35,070 shares of common stock on June 28, 2023 and (ii) $800,384 of accumulated dividends with respect to the Series C and D Convertible Preferred Stock that were settled for 80,038 shares of common stock on June 18, 2024. Mr. Struve is subject to an ownership blocker limiting his ownership to 4.99% of our outstanding shares of common stock and thus the number 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 Series C or D Convertible Preferred Stock ownership, going forward on a quarterly basis the Company will accrete as a preferred dividend the value of approximately 3,945 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. Pursuant to their terms, both Series C and Series D Convertible Preferred instruments are subject to repricing. 

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.

Six Months Ended March 31, 2025

On December 12, 2024, the Company entered into subscription agreements with certain investors (for a registered direct offering of 31,250 units consisting of one share of the Company’s common stock, and one warrant to purchase one share of Common Stock at an exercise price equal to $9.60 per share of Common Stock at an offering price of $9.60 per Unit, for an aggregate purchase price of $300,000. The aggregate gross proceeds to the Company from the Offering was approximately $300,000, before deducting fees payable to the placement agent and advisors and other estimated offering expenses payable by the Company, and excluding the proceeds from any exercise of the Warrants.

On December 31, 2024, the Company entered into a Capital on Demand Sales Agreement (“Sales Agreement”) with JonesTrading Institutional Services LLC, as sales agent, pursuant to which the Company may, from time to time, offer and sell shares of its common stock, through or to JonesTrading as its sales agent or manager.

The offer and sale of the Shares will be made pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-276246) (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (“SEC”) on December 22, 2023 and declared effective by the SEC on January 11, 2024, as supplemented by a prospectus supplement dated December 31, 2024 and filed with the SEC pursuant to Rule 424(b) (the “Prospectus Supplement”) under the Securities Act of 1933, as amended (the “Securities Act”). Pursuant to the Prospectus Supplement, the Company may offer and sell up to a maximum of $5,000,000 of Shares under the Sales Agreement. The Company issued 379,451 shares and received proceeds of $510,705 during the six months ended March 31, 2025.

During the six months ended March 31, 2025, the Company issued 428,573 shares of our common stock at $1.74 per share related to a principal payment of convertible debt settled with a common stock issuance for a total value of $746,001.

Warrants to Purchase Common Stock

Six Months Ended March 31, 2025

On December 12, 2024, the Company closed a registered direct offering and issued 31,250 warrants to purchase common stock at an exercise price equal to $9.60 per share. The five year warrants expires on December 12, 2029. The Company also issued a warrant to purchase 2,188 shares of common stock to the placement agent. The five year warrant expires on December 12, 2029.

The Company issued a warrant to purchase common stock of 1,250 shares at $9.60 per share. The five year warrant expires on December 10, 2029.

Warrants to purchase 1,188 shares of common stock at $87.98 per share were forfeited.

Extension of Warrant with Clayton A. Struve

On December 17, 2024, the Company approved the 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	36,000	$9.60	08-13-2025	08-13-2030
Clayton A. Struve Warrant	12-12-2017	30,000	$9.60	12-11-2025	12-11-2030
Clayton A. Struve Warrant	08-04-2016	44,643	$9.60	08-04-2025	08-04-2030
Clayton A. Struve Warrant	02-28-2018	33,600	$9.60	02-28-2025	02-28-2030

We recorded interest expense of $513,499 during the six months ended March 31, 2025 related to the extension of the warrants.  

A summary of the warrants outstanding as of March 31, 2025 were as follows:

				Weighted
				Average
				Exercise
	Shares			Price
Outstanding October 1, 2024		1,233,547		$	26.58
Issued		34,688			9.60
Exercised		-			-
Forfeited		(1,188	)		(87.98	)
Expired		-			-
Outstanding at end of period		1,267,047		$	23.35

The following table summarizes information about warrants outstanding and exercisable as of March 31, 2025:

 

	March 31, 2025
			Weighted		Weighted				Weighted
			Average		Average				Average
Range of	Number of		Remaining Life		Exercise Price		Shares		Exercise Price
Exercise Prices	Warrants		( In Years)		Outstanding		Exercisable		Exercisable
$9.60-11.60		989,561		4.25	$	10.10		989,561	$	10.10
$48.00-74.00		160,368		0.73		52.50		160,368		52.50
$80.00-120.00		117,118		1.08		95.38		117,118		95.38
		1,267,047		2.05	$	23.35		1,267,047	$	23.35

The significant weighted average assumptions relating to the valuation of the Company’s warrants for the six months ended March 31, 2025 were as follows:

Assumptions
Dividend yield		0	%
Stock price	$	10.00
Exercise price	$	9.60
Expected life	3 years
Expected volatility		107	%
Risk free interest rate		4.26	%

The vested warrants of 1,267,047 had no aggregate intrinsic value as of March 31, 2025.