SHAREHOLDERS EQUITY

3 Months Ended

Dec. 31, 2021

SHAREHOLDERS EQUITY

NOTE 8 - SHAREHOLDERS' EQUITY

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 and 5,000,000 shares of 8.0% Series A Cumulative Convertible Preferred Stock issued and outstanding at December 31, 2021 and September 30, 2021, respectively.

The total amount of preferred dividends declared and paid were $1,000,502 and $100,050, respectively, for the three months ended December 31, 2021 and 2020.

Common Stock – The Company is authorized to issue 150,000,000 shares of common stock, par value $0.001 per share. There were 58,277,970 and 57,783,340 shares of common stock issued and outstanding at December 31, 2021 and September 30, 2021, respectively.

Preferred stock transactions:

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

In the three months ended December 31, 2020:

On December 8, 2020, the Company completed a follow-on firm commitment underwritten public offering of 2,300,000 shares of its 8.0% Series A Cumulative Convertible Preferred Stock for aggregate gross proceeds of $17.25 million. The Company received approximately $15.8 million in net proceeds after deducting underwriting discounts and commissions. The Company also issued to the representative of the underwriters warrants to purchase in aggregate 150,502 shares of common stock with an exercise price of $3.74. The warrants were valued at $254,950 and expire on December 8, 2025.

Common stock transactions:

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.

Stock option transactions:

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 $2,302 for the three and months ended December 31, 2021.

In the three months ended December 31, 2020:

In October 2020, the Company granted an aggregate of 350,000 common stock options to an executive officer. The options vest in three equal tranches, the first on October 1, 2021, the second on October 1, 2022 and the third on October 1, 2023, and have an exercise price of $3,50, $5.00, and $6.50 per share and a term of 5 years. The Company has recorded an expense for these options of $31,054 for both the three months ended December 31, 2021 and 2020, respectively.

The expected volatility rate was estimated based on comparison to the volatility of 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. The pre-vesting forfeiture rate of zero is based upon the experience of the Company. As required under ASC 718, the Company will adjust the estimated forfeiture rate to its actual experience. 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, 2021 and 2020:

	2021			2020
Weighted average exercise price	$	1.96		$	5.11
Risk free interest rate	0.93		%		0.16	%
Volatility	101.62		%		100.72	%
Expected term	3 Years				4 years
Divident yield	None				None

Warrant Transactions:

The Company has no warrant transactions during the three month ended December 31, 2021.

In the three months ended December 31, 2020:

In December 2020 in relation to the follow-on firm commitment underwritten public offering of the 8.0% Series A Cumulative Convertible Preferred Stock, the Company issued to the representative of the underwriters warrants to purchase in aggregate 150,502 shares of common stock with an exercise price of $3.74. The warrants expire on December 8, 2025.

The following table summarizes the inputs used for the Black-Scholes pricing model on the warrants issued in the three months ended December 31, 2021 and 2020:

	2021		2020
Weighted average exercise price	$	-	$	3.74
Risk free interest rate		-		0.39	%
Volatility		-		103.42	%
Expected term		-		2.75 years
Divident yield		-		None