Quarterly report pursuant to Section 13 or 15(d)

STOCK OPTIONS AND WARRANTS

v3.19.1
STOCK OPTIONS AND WARRANTS
6 Months Ended
Mar. 31, 2019
STOCK OPTIONS AND WARRANTS [Abstract]  
STOCK OPTIONS AND WARRANTS
NOTE 13 - STOCK OPTIONS AND WARRANTS

As of March 31, 2019, the Company had no outstanding stock options.

On April 21, 2016, the Company issued a warrant for 1,895,983 shares of common stock (631,994 shares post-reverse split) to NUWA Consulting Group pursuant to their agreement to purchase common stock.  The warrants have a 5-year term and exercise price of $0.21.  The Company valued the warrant using the Black-Scholes option pricing model with the following assumptions: dividend yield of zero, expected term of 5 years, risk free rate 1.93 percent, and annualized volatility of 274%. These warrants were not converted in the Merger and remain outstanding.

On May 18, 2016, the Company issued a warrant for 1,895,983 shares of common stock (631,994 shares post-reverse split) under a Debt Restructure and Conversion Agreement with a consultant.  The warrants have a 10-year term and an exercise price of $0.21 The Company valued the warrant using the Black-Scholes option pricing model with the following assumptions: dividend yield of zero, contractual term of 10 years, risk free rate of 2.45 percent, and annualized volatility of 277%. These warrants were not converted in the Merger and remain outstanding.

On December 17, 2018, the Company issued a warrant for 372,754 shares of common stock in connection with a convertible note payable.  The warrants have a 5-year term and an exercise price of $0.50 per share. The warrant includes an anti-dilution provision whereby the exercise price adjusts to the price included in the issuance of any common stock purchase warrant, option or similar security with a more favorable price during the term of the warrant.  The Company valued the warrant at a relative fair value of approximately $24,000 using the Black-Scholes option pricing model with the following assumptions: dividend yield of zero, expected term of 5 years, risk free rate 2.69 percent, and annualized volatility of 247%.

On February 6, 2019, the Company issued a warrant for 37,500 shares of common stock in connection with a convertible note payable.  The warrants have a 5-year term and an exercise price of $0.50 per share. The Company valued the warrant at a relative fair value of approximately $3,000 using the Black-Scholes option pricing model with the following assumptions: dividend yield of zero, expected term of 5 years, risk free rate 2.45 percent, and annualized volatility of 247%.  The warrant includes an anti-dilution provision whereby the exercise price adjusts to the price included in the issuance of any common stock purchase warrant, option or similar security with a more favorable price during the term of the warrant (currently at $0.03), along with an adjustment to the number of warrant shares related to the aggregate exercise price which adjusted the number shares under the warrant to 625,000.

In connection with financing referenced above, the placement agent received of a warrant to purchase 3,750 shares of common stock with terms substantially similar under an Engagement Agency Agreement dated December 7, 2018.

On February 26, 2019, the Company issued a warrant for 37,500 shares of common stock in connection with a convertible note payable.  The warrants have a 5-year term and an exercise price of $1.00 per share. The Company valued the warrant at a relative fair value of approximately $3,000 using the Black-Scholes option pricing model with the following assumptions: dividend yield of zero, expected term of 5 years, risk free rate 2.49 percent, and annualized volatility of 241%. The warrant includes an anti-dilution provision whereby the exercise price adjusts to the price included in the issuance of any common stock purchase warrant, option or similar security with a more favorable price during the term of the warrant (currently at $0.03), along with an adjustment to the number of warrant shares related to the aggregate exercise price which would adjusted the number of shares under the warrant.

In connection with financing referenced above, the placement agent received of a warrant to purchase 3,750 shares of common stock with terms substantially similar under an Engagement Agency Agreement dated December 7, 2018.

The down round anti-dilution provision in the above warrants issued on February 6, 2019 and February 26, 2019 created a deemed dividend to common stockholders of $32,588 which is reflected on the accompanying condensed consolidated statements of operations and stockholders’ deficit.

During the six months ended March 31, 2019, the Company has issued a total of 454,629 warrants with a weighted average term of 5 years and a weighted average exercise price of $0.55.  The down round feature of certain warrants created the issuance of an additional 646,250 warrants during the period.  There were 2,365,492 outstanding at March 31, 2019, with a weighted average exercise price of $0.14, weighted average remaining term of 4.7 years and weighted average intrinsic value of $0.01 per warrant.  No warrants were exercised, forfeited or cancelled during the period.