SHAREHOLDERS’ EQUITY

6 Months Ended

Mar. 31, 2024

Equity [Abstract]

SHAREHOLDERS’ EQUITY

NOTE 7 SHAREHOLDERS’ EQUITY

Stock Options

On October 1, 2023, the Company granted options to three of its non-employee directors to purchase an aggregate of 332,409 shares of its common stock at an exercise price of $0.76 per share. The options vest one year from the date of grant, expire five years from the date of the grant and 110,803 were forfeited prior to vesting. The options have a weighted average grant-date fair value of $0.36 per share and an aggregate grant-date fair value of $120,000, which will be recognized, net of forfeitures, ratably over the vesting period. No options were granted during the three and six months ended March 31, 2023. There were no options exercised during the three and six months ended March 31, 2024 or 2023.

The Company recognized compensation expense for stock option awards of $10,000 and $15,000 during the three months ended March 31, 2024 and 2023, respectively, and $61,000 and $39,000 during the six months ended March 31, 2024 and 2023, respectively, which was recorded as a component of general and administrative expenses in its condensed consolidated statements of operations. At March 31, 2024, there was $41,000 of total unrecognized compensation cost related to nonvested stock option awards that is expected to be recognized over a weighted average period of 0.5 years.

Nasdaq

  

On July 31, 2023, the Company was notified by Nasdaq that it was not compliant with its closing bid price requirement because the closing bid price of our common stock was below $1.00 per share for 30 consecutive trading days. The Company had 180 days, or until January 29, 2024, to regain compliance with this requirement. On January 30, 2024, we were notified by Nasdaq that based on our continued non-compliance with this requirement, it had determined that the Company’s common stock would be scheduled for delisting from Nasdaq. On February 6, 2024, the Company requested a hearing on this matter with the Nasdaq Hearings Panel (“Panel”), which was held on April 9, 2024. This request stayed any trading suspension or delisting of the Company’s common stock until the completion of the hearings process.

On February 22, 2024, the Company was notified by Nasdaq that its shareholders’ equity of $2,312,852 as reported in its Form 10-Q for the period ended December 31, 2023 fell below the $2,500,000 minimum required for continued listing and that the Panel would consider this additional deficiency at the April 9^th hearing.

At the hearing, the Company presented a plan of action to meet compliance with both bid price and shareholders’ equity (our “Compliance Plan”). On April 19, 2024, the Company was notified by the Panel that its request for an extension was granted. The Company has until July 9, 2024 to become compliant with both bid price and shareholders’ equity. We can provide no assurance that we will regain compliance by July 9, 2024.

In order to meet the shareholders’ equity requirement, the Company is in negotiations with Forward China to convert a portion of the accounts payable due to them from the purchase of product into equity. We can provide no assurance that these negotiations will be successful.

Reverse Stock Split

On February 6, 2024, the Company's shareholders approved an amendment to our Restated Certificate of Incorporation (the “Amendment”) to effect a reverse stock split at a ratio in the range of 1-for-2 to 1-for-3, with such ratio to be determined at the discretion of the Company's board of directors and with such reverse stock split to be effected at such time and date, if at all, as determined by the Company's board of directors in its sole discretion. Due to the decline in its stock price since February 6, 2024, the Company does not believe the ratio approved in February will be significant enough to maintain long term compliance with Nasdaq’s bid price requirement. The Company is therefore currently seeking shareholder approval at a special meeting on June 10, 2024 to increase the range of the reverse stock split from 1-for-3 to 1-for-10, which if approved, would void the ratio approved by shareholders on February 6, 2024. If shareholder approval is obtained, the Company’s board of directors intends to determine whether to proceed with the reverse stock split, the effective time and ratio of the reverse stock split at a future date. We can provide no assurances that it will be approved by shareholders or implemented by the board of directors or that it will result in our stock price increasing to meet the bid price requirement for a period sufficient to regain compliance with Nasdaq listing requirements.