Note 8 - Shareholders' Equity

3 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 8 – SHAREHOLDERS’ EQUITY

Preferred Stock – The Company is authorized to issue 50,000,000 shares of preferred stock, par value $0.001 per share. In October 2019, the Company designated 5,000,000 of these shares as 8.0% Series A Cumulative Convertible Preferred Stock. Our 8.0% Series A Cumulative Convertible Preferred Stock ranks senior to our common stock for liquidation or dividend provisions and holders are entitled to receive cumulative cash dividends at an annual rate of 8.0% payable monthly in arrears for the prior month. The Company reviewed ASC 480 – Distinguishing Liabilities from Equity in order to determine the appropriate accounting treatment for the preferred stock and determined that the preferred stock should be treated as equity. There were 5,000,000 shares of 8.0% Series A Cumulative Convertible Preferred Stock issued and outstanding at December 31, 2022 and September 30, 2022.

The total amount of preferred dividends declared and paid were $1,000,502 and $1,000,502, respectively, for the three months ended December 31, 2022 and 2021. 

Common Stock – The Company is authorized to issue 150,000,000 shares of common stock, par value $0.001 per share. There were 60,712,262 and 60,665,595 shares of common stock issued and outstanding at December 31, 2022 and September 30, 2022, respectively. 

Preferred stock transactions:

The Company had no preferred stock transactions in the three months ended December 31, 2022 and 2021.

Common stock transactions:

In the three months ended December 31, 2022:

In December 2022, the Company issued 50,000 shares of restricted common stock to an employee.  25,000 shares vested upon issuance and the Company recorded a total expense of $6,250.  25,000 shares vest based on meeting certain direct to consumer revenue performance hurdles prior to December 2024.

In the three months ended December 31, 2021:

On December 28, 2021, the Company issued 466,713 shares of restricted common stock in connection with the Earnout Shares as referenced in Note 6.

In October 2021, the Company issued 25,000 shares of restricted common stock to an executive officer of the Company, subject to vesting on January 1, 2022.

Stock option transactions:

In the three months ended December 31, 2022:

In December 2022, the Company issued 100,000 options to an employee.  75,000 options vest equally at each anniversary for the next 3 years, have a strike price of $0.25 and a five year term.  The total expense of these options is $13,150 and will be amortized over the term of the vesting periods.  25,000 options vest based on meeting certain direct to consumer revenue requirements by the end of December 2024.

In the three months ended December 31, 2021:

In October 2021, the Company granted an aggregate of 75,000 common stock options to an executive officer. These options vest on October 1, 2022. The Company has recorded an expense for these options of $23,025 for the three months ended December 31, 2021. These options were fully vested as of September 30,2022.

The expected volatility rate was estimated based on a weighted average mix of the volatilities of the Company and a peer group of companies in similar industries. The expected term used was the full term of the contract for the issuances. The risk-free interest rate for periods within the contractual life of the option is based on U.S. Treasury securities. Management will continue to assess the assumptions and methodologies used to calculate estimated fair value of share-based compensation. Circumstances may change and additional data may become available over time, which could result in changes to these assumptions and methodologies, and thereby materially impact our fair value determination.

The following table summarizes the inputs used for the Black-Scholes pricing model on the options issued in the three months ended December 31, 2022 and 2021:

	December 31,		December 31,
	2022		2021
Weighted average exercise price	0.233 -0.2525		$	3.91
Risk free interest rate		3.93% - 4.71%		0.16% - 0.85%
Volatility		106.51%		100.72% - 105.43%
Expected term (in years)		2.5 - 4		2.5 - 6.2
Dividend yield	None		None

Warrant Transactions:

The Company has no warrant transactions during the three months ended December 31, 2022.