Note 8 - Shareholders' Equity

3 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Equity [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, 2023 and September 30, 2022.

The total amount of preferred dividends declared and accrued were $1,000,501 for the three months ended December 31, 2023 and the total amount of preferred dividends declared and paid were $1,000,502 for the three months ended December 31, 2022.

Common Stock – The Company is authorized to issue 150,000,000 shares of common stock, par value $0.001 per share. There were 2,961,056 and 2,960,573 shares of common stock issued and outstanding at December 31, 2023 and September 30, 2023, respectively. 

On March 2, 2023 Company entered into a purchase agreement (the "ELOC") with Keystone Capital Partners, LLC (“Keystone”), pursuant to which Keystone committed to purchase up to 281,934 of shares of our common stock. Upon the execution of the ELOC, The Company issued 2,616 shares of common stock as "Commitment Shares" to Keystone as consideration for its commitment to purchase shares of our common stock under the ELOC. An additional 6,104 Commitment Shares were issued 180 days after the date of the ELOC. The 281,934 shares of the Company's common stock were registered for resale and may be issued under the ELOC or sold by us to Keystone at our discretion from time to time over a 12 month period commencing April 1, 2023. The purchase price for the shares that the Company may sell to Keystone under the ELOC will fluctuate based on the price of the Company's common stock. Depending on market liquidity at the time, sales of such shares may cause the trading price of our common stock to fall. On January 11, 2024, we issued Keystone 64,218 shares of common stock for an aggregate purchase price of $50,000 or $0.7786 per share.  As of the filing of this report, Keystone has purchased an aggregate of 180,955 shares under the ELOC.

On April 12, 2023, the Company effected the Reverse Stock Split. All fractional shares were rounded up when effectuating the reverse stock split. A total of 39,455 shares of common stock were issued to account for rounding up of fractional shares.

Preferred stock transactions:

The Company had no preferred stock transactions in the three months ended December 31, 2023 and 2022.

Common stock transactions:

In the three months ended December 31, 2023:

The Company has no common stock transactions in the three months ended December 31, 2023.

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.

Stock option transactions:

In the three months ended December 31, 2023:

The Company has no stock option transactions in the three months ended December 31, 2023.

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.

The expected volatility rate for the Company's stock options 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, 2023 and 2022:

		December 31,				December 31,
		2023				2022
Exercise price	$	-			$		10.355 - 12.6060
Risk free interest rate			0.00	%			3.93% - 4.71	%
Volatility			0.00	%			106.48% - 106.51	%
Expected term (in years)			-				2.5 - 4
Dividend yield		None				None

Warrant Transactions:

The Company has no warrant transactions in the three months ended December 31, 2023.