Aeolus Pharmaceuticals (AOLS) 10-Q 15 May 14 2014 Q2 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
	Mar. 31, 2014	12-May-14
Document And Entity Information	'	'
Entity Registrant Name	'AEOLUS PHARMACEUTICALS, INC.	'
Entity Central Index Key	'0001261734	'
Document Type	'10-Q	'
Document Period End Date	31-Mar-14	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--09-30	'
Is Entity a Well-known Seasoned Issuer?	'No	'
Is Entity a Voluntary Filer?	'No	'
Is Entity's Reporting Status Current?	'Yes	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	134,550,068
Document Fiscal Period Focus	'Q2	'
Document Fiscal Year Focus	'2014	'

CONDENSED_CONSOLIDATED_BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)	Mar. 31, 2014	Sep. 30, 2013
In Thousands, unless otherwise specified
ASSETS	'	'
Cash and cash equivalents	$520	$869
Accounts receivable	1,839	370
Deferred subcontractor cost	1,402	656
Prepaid and other current assets	96	39
Total current assets	3,857	1,935
Investment in CPEC LLC	32	32
Total assets	3,889	1,966
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	'	'
Accounts payable and accrued expenses	2,394	579
Deferred revenue	1,458	682
Total current liabilities	3,852	1,261
Total liabilities	3,852	1,261
Commitments and Contingencies (Note F)	'	'
Stockholders' equity:	'	'
Common stock, $.01 par value per share, 200,000,000 shares authorized; 134,550,068 shares issued and outstanding as of March 31, 2014 and September 30, 2013, respectively	1,346	1,346
Additional paid-in capital	183,739	183,276
Accumulated deficit	-185,053	-183,922
Total stockholders' equity	37	705
Total liabilities and stockholders' equity	3,889	1,966
Series A nonredeemable convertible preferred stock	'	'
Stockholders' equity:	'	'
Preferred stock, Value	'	'
Series B nonredeemable convertible preferred stock	'	'
Stockholders' equity:	'	'
Preferred stock, Value	$5	$5

CONDENSED_CONSOLIDATED_BALANCE1

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $)	Mar. 31, 2014	Sep. 30, 2013
Stockholder's deficit:	'	'
Preferred stock par value	$0.01	$0.01
Preferred stock, authorized shares	10,000,000	10,000,000
Common stock, par value	$0.01	$0.01
Common stock, Authorized	200,000,000	200,000,000
Common stock, Issued	134,550,068	134,550,068
Common stock, outstanding	134,550,068	134,550,068
Series A nonredeemable convertible preferred stock	'	'
Stockholder's deficit:	'	'
Preferred stock, authorized shares	1,250,000	1,250,000
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0
Series B nonredeemable convertible preferred stock	'	'
Stockholder's deficit:	'	'
Preferred stock, authorized shares	1,600,000	1,600,000
Preferred stock shares issued	526,080	526,080
Preferred stock shares outstanding	526,080	526,080

CONDENSED_CONSOLIDATED_STATEME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended		6 Months Ended
In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Revenue:	'	'	'	'
Contract revenue	$1,438	$859	$2,231	$2,201
Costs and expenses:	'	'	'	'
Research and development	1,173	618	1,880	1,787
General and administrative	702	1,003	1,483	1,659
Total costs and expenses	1,875	1,621	3,363	3,446
Loss from operations	-437	-762	-1,132	-1,245
Non-cash financing charges and change in fair value of warrants (Note B)	'	-5,020	'	-510
Net income (loss)	($437)	($5,782)	($1,132)	($1,755)
Net income (loss) per weighted share attributable to common stockholders:	'	'	'	'
Basic (Note D)	$0	($0.06)	($0.01)	($0.03)
Diluted (Note D)	$0	($0.06)	($0.01)	($0.03)
Weighted average common shares outstanding:	'	'	'	'
Basic	134,550	94,425	134,550	69,664
Diluted	134,550	94,425	134,550	69,664

CONDENSED_CONSOLIDATED_STATEME1

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	6 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Cash flows used in operating activities	'	'
Net income (loss)	($1,132)	($1,755)
Adjustments to reconcile net loss to net cash used in operating activities:	'	'
Stock-based compensation	463	309
Change in fair value of warrants	'	510
Change in assets and liabilities:	'	'
Accounts receivable	-1,468	-738
Deferred subcontractor cost	-746	-1,005
Prepaid and other assets	-57	-31
Accounts payable and accrued expenses	1,815	-249
Deferred revenue	776	1,046
Net cash used in operating activities	-349	-1,913
Cash flows provided by financing activities:	'	'
Proceeds from issuance of common stock and warrants	'	3,616
Costs related to the issuance of common stock and warrants	'	-58
Net cash provided by financing activities	'	3,558
Net decrease in cash and cash equivalents	-349	1,645
Cash and cash equivalents at beginning of period	869	281
Cash and cash equivalents at end of period	520	1,926
Supplemental disclosure of cash flow information:	'	'
State income taxes	'	'

A_Organization_Business_and_Su

A. Organization, Business and Summary of Significant Accounting Policies	6 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
A. Organization, Business and Summary of Significant Accounting Policies	'
	Organization
	The accompanying unaudited condensed consolidated financial statements include the accounts of Aeolus Pharmaceuticals, Inc. and its wholly-owned subsidiary, Aeolus Sciences, Inc. (collectively, “we,” “us,” “Company” or “Aeolus”). All significant intercompany accounts and transactions have been eliminated in consolidation.  Aeolus is a Delaware corporation. The Company’s primary operations are located in Mission Viejo, California.
	Business
	Aeolus is a biopharmaceutical company developing a platform of a new class of broad-spectrum, catalytic antioxidant compounds that protect healthy tissue from the damaging effects of oxidative stress. The principal endeavor of the Company is protecting against damaging effects of oxidative stress induced by radiation. Its first compound, AEOL 10150, is being developed as a medical countermeasure against the pulmonary effects of radiation exposure under a contract (“BARDA Contract”) valued at up to $118.4 million with the Biomedical Advanced Research and Development Authority (“BARDA”), a division of the Department of Health and Human Services (“HHS”). Aeolus is in its fourth year under the BARDA Contract. Aeolus also receives development support from the National Institutes of Health (“NIH”) for development of the compound as a medical countermeasure against radiation and exposure to chemical and nerve agents. Additionally, Aeolus is developing AEOL 10150 for oncology indications, where it is used in combination with radiation and chemotherapy. Aeolus’ strategy is to leverage the substantial investment in toxicology, manufacturing, and preclinical and clinical studies made by U.S. government agencies in AEOL 10150, including the BARDA Contract, to develop the compound efficiently for use in oncology.
	Basis of Presentation
	All significant intercompany activity has been eliminated in the preparation of the unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q and Rule 10-01 of Regulation S-X. Some information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows of the Company. The condensed balance sheet at September 30, 2013 was derived from the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013, filed with the Securities and Exchange Commission (the “SEC”) on December 20, 2013.
	Use of Estimates
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
	Cash and Cash Equivalents
	The Company invests available cash in short-term bank deposits. Cash and cash equivalents include investments with maturities of six months or less at the date of purchase. The carrying value of cash and cash equivalents approximate their fair market value at March 31, 2014 and September 30, 2013 due to their short-term nature.
	Significant customers and accounts receivable
	For the six months ended March 31, 2014, the Company’s primary customer was BARDA. For the six months ended March 31, 2014, revenues from BARDA comprised 100% of total revenues. As of March 31, 2014, the Company’s receivable balances were comprised 100% from this customer. There was $195,000 of unbilled accounts receivable, included in accounts receivable, as of March 31, 2014. Unbilled accounts receivable relates to work that has been performed, though invoicing has not yet occurred. All of the unbilled receivables are expected to be billed and collected within the next 12 months. Accounts receivable are stated at invoice amounts and consist primarily of amounts due from BARDA as well as amounts due under reimbursement contracts with other government entities and non-government and philanthropic organizations. If necessary, the Company records a provision for doubtful receivables to allow for any amounts which may be unrecoverable. This provision is based upon an analysis of the Company’s prior collection experience, customer creditworthiness and current economic trends. As of March 31, 2014 and September 30, 2013, an allowance for doubtful accounts was not recorded as the collection history from the Company’s customer indicated that collection was probable.
	Concentrations of credit risk
	Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with high quality financial institutions. Management believes that the financial risks associated with its cash and cash equivalents and investments are minimal. Because accounts receivable consist primarily of amounts due from the U.S. federal government agencies, management deems there to be minimal credit risk.
	Revenue Recognition
	Aeolus recognizes revenue in accordance with the authoritative guidance for revenue recognition.  Revenue is recognized when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery (or passage of title) has occurred or services have been rendered, (iii) the seller’s price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured.
	The BARDA Contract is classified as a “cost-plus-fixed-fee” contract. Aeolus recognizes government contract revenue in accordance with the authoritative guidance for revenue recognition including the authoritative guidance specific to federal government contracts. Reimbursable costs under the contract primarily include direct labor, subcontract costs, materials, equipment, travel, and indirect costs. In addition, we receive a fixed fee under the BARDA Contract, which is unconditionally earned as allowable costs are incurred and is not contingent on success factors. Reimbursable costs under the BARDA Contract, including the fixed fee, are generally recognized as revenue in the period the reimbursable costs are incurred and become billable.
	Fair Value of Financial Instruments
	The carrying amounts of Aeolus’ short-term financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to their short maturities.
	Fair Value Measurements
	The Company adopted Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, for financial and non-financial assets and liabilities.
	ASC Topic 820 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The statement utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
		·	Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
		·	Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
		·	Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
	Research and Development
	Research and development costs are expensed in the period incurred.
	Leases
	The Company leases office space and office equipment under month to month operating lease agreements. For the six months ended March 31, 2014 and 2013, total rent expense was approximately $21,000 and $20,000, respectively.
	Income Taxes
	The Company recognizes liabilities or assets for the deferred tax consequences of temporary differences between the tax bases of assets or liabilities and their reported amounts in the financial statements. These temporary differences will result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled. A valuation allowance is established when management determines that is more likely than not that all or a portion of a deferred tax asset will not be realized. Management evaluates the Company’s ability to realize its net deferred tax assets on a quarterly basis and valuation allowances are provided, as necessary. During this evaluation, management reviews its forecasts of income in conjunction with other positive and negative evidence surrounding the Company’s ability to realize its deferred tax assets to determine if a valuation allowance is required. Adjustments to the valuation allowance will increase or decrease the Company’s income tax provision or benefit. Management also applies the relevant guidance to determine the amount of income tax expense or benefit to be allocated among continuing operations, discontinued operations, and items charged or credited directly to stockholders’ equity.
	A tax position must meet a minimum probability threshold before a financial statement benefit is recognized. The minimum threshold is a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation process, based on the technical merits of the position. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.
	Net Income (Loss) Per Common Share
	The Company computes net income attributable to common stockholders using the two-class method required for participating securities. Under the two-class method, securities that participate in dividends, such as the Company’s outstanding preferred shares, preferred warrants, and most common stock warrants, are considered “participating securities.” Our preferred shares, preferred warrants and common stock warrants are considered “participating securities” because they include non-forfeitable rights to dividends.
	In applying the two-class method, (i) basic net income (loss) per share is computed by dividing net income (less any dividends paid on participating securities) by the weighted average number of shares of common stock and participating securities outstanding for the period and (ii) diluted earnings per share may include the additional effect of other securities, if dilutive, in which case the dilutive effect of such securities is calculated using the treasury stock method. The Company does have other securities with a dilutive effect outstanding, so the Company’s basic net income (loss) per share uses the two-class method and diluted net income (loss) per share uses the treasury stock method.
	Accounting for Stock-Based Compensation
	The Company recognizes stock based compensation expense in the statement of operations based upon the fair value of the equity award amortized over the vesting period.
	Segment Reporting
	The Company currently operates in one segment.

B_Stockholders_Equity_Deficit

B. Stockholders' Equity (Deficit)	6 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
B. Stockholders' Equity (Deficit)	'
	Preferred Stock
	The Certificate of Incorporation of Aeolus authorizes the issuance of up to 10,000,000 shares of Preferred Stock, at a par value of $.01 per share. The Board of Directors has the authority to issue Preferred Stock in one or more series, to fix the designation and number of shares of each such series, and to determine or change the designation, relative rights, preferences, and limitations of any series of Preferred Stock, without any further vote or action by the stockholders of the Company.
	Of the 10,000,000 shares of total authorized shares of Preferred Stock, 1,250,000 shares are designated as Series A Convertible Preferred Stock and 1,600,000 shares are designated as Series B Stock. The Series B Stock is not entitled to vote on any matter submitted to the vote of holders of the common stock except that the Company must obtain the approval of a majority of the outstanding shares of Series B Stock to either amend the Company’s Certificate of Incorporation in a manner that would adversely affect the Series B Stock (including by creating an additional class or series of stock with rights that are senior or pari passu to the Series B Stock) or change the rights of the holders of the Series B Stock in any other respect. Each share of Series B Stock is convertible at any time by the holder thereof into one share of the Company’s common stock, provided that no conversion may be effected that would result in the holders of Series B Stock owning more than 9.9% of the Company’s common stock on a fully converted to common stock basis. If the Company pays a cash dividend on its common stock, it must also pay the same dividend on an as converted basis on the Series B Stock. Upon a liquidation, dissolution, bankruptcy or winding up of the Company or the sale of all or substantially all of the Company’s assets, the holders of Series B Stock will be entitled to receive, together with the holders of common stock, the assets of the Company in proportion to the number of shares of common stock held (assuming conversion of the Series B Stock into shares of common stock).
	As of March 31, 2014, 526,080 shares of Series B Stock were outstanding, all of which were held by Elan. Each share of Series B Stock was convertible into one share of common stock as of March 31, 2014.
	There were no shares of Series A Convertible Preferred Stock issued or outstanding as of March 31, 2014.
	Common Stock
	February/March 2013 Financing
	On February 19, 2013 and March 4, 2013, the Company entered into Securities Purchase Agreements (the “Purchase Agreements”) with certain accredited investors (the “Purchasers”). Under the terms of the agreements, the Company received approximately $3,616,000 in gross proceeds in exchange for the issuance of an aggregate of 14,462,000 units (the “Units”), consisting of 14,462,000 shares of common stock and 14,462,000 warrants, at a purchase price of $0.25 per unit. Each Unit consists of (i) one share of common stock (the “Common Shares”) and (ii) a five-year warrant to purchase one share of the Company’s common stock (the “Warrants”). The Warrants have an initial exercise price of $0.25 per share.
	On February 19, 2013, the Company received $3,225,000 in gross proceeds in exchange for the issuance of an aggregate of 12,900,000 Units, which consisted of 12,900,000 shares of common stock and 12,900,000 warrants.
	On March 4, 2013, the Company received approximately $390,000 in gross proceeds in exchange for the issuance of an aggregate of 1,562,000 Units, which consisted of 1,562,000 shares of common stock and 1,562,000 warrants.
	Net cash proceeds from the February/March 2013 Financing, after deducting for expenses, were approximately $3,558,000. The Company also incurred non-cash expenses in the form of 365,000 warrants issued to consultants, at similar terms as the financing Warrants, for services provided. The Company issued a total of 14,827,000 warrants in connection with the February/March 2013 Financing.
	The fair value of the February/March 2013 Financing warrants was estimated to be $4,791,000 using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%, expected volatility of 154.84%, risk free interest rate of 0.87% and an expected life of five years. The proceeds from the February/March 2013 Financing were allocated based upon the relative fair values of the February/March 2013 Financing Warrants and the February/March 2013 Common Shares.
	The February/March 2013 Financing contains a registration rights agreement with an arrangement for liquidated damages in the event of a failure to maintain the effectiveness with the SEC of a registration statement covering the February/March 2013 Financing Units. The Company must use its commercially reasonable efforts to maintain the registration statement continuously effective until the earlier to occur of (i) the date on which all securities covered by such registration statement have been sold, and (ii) the date on which all securities covered by such registration statement may be sold without volume restrictions pursuant to Rule 144 under the Securities Act of 1933, as amended. In the event the Company fails to meet this obligation, subject to certain exceptions, the Company will be required to make a cash payment of 0.5% of the aggregate amount invested to the Purchasers of the February/March 2013 Financing Units. The 0.5% payment equaling $18,000 would be due for every 30-day period in which the registration statement is not continuously effective. The maximum liability would be $108,000 and no damages would accrue after August 19, 2013, the date that is six months from the closing of the February/March 2013 Financing.  The registration statement was declared effective by the SEC as of June 13, 2013. No liability was recorded as the registration statement was continuously effective through March 31, 2014.
	Modification to rights of Security Holders
	Effective February 19, 2013, the Company and each of Xmark JV Investment Partners, LLC, Xmark Opportunity Fund, Ltd. and Xmark Opportunity Fund, L.P. (collectively, the “Xmark Entities”) entered into a Warrant Repricing, Exercise and Lockup Agreement (the “Xmark Warrant Agreement”) pursuant to which the Company agreed to reduce the exercise price of outstanding warrants to purchase an aggregate of up to 59,149,999 shares of Common Stock held by the Xmark Entities (the “Xmark Warrants”) to $0.01 per share. In consideration for the reduction of the exercise price of the Xmark Warrants, each of the Xmark Entities agreed to immediately exercise all of the Xmark Warrants by cashless exercise. The Xmark Warrant Agreement also provides that the Xmark Entities will not transfer the shares issuable upon exercise of the Xmark Warrants (the “Xmark Warrant Shares”) until the Company either (i) declares a cash dividend on its common stock or otherwise makes a cash distribution or (ii) effects a Change of Control, subject in each case to the terms of the Xmark Warrant Agreement.
	Modifying the exercise price of the warrants to a fixed amount of $0.01 eliminated the requirement for warrant liability accounting treatment and resulted in a charge of $2,084,000.
	March 2012 Financing
	On March 30, 2012 and April 4, 2012, the Company entered into Securities Purchase Agreements (the “Purchase Agreements”) with certain accredited investors (the “Purchasers”) and completed a financing (the “March 2012 Financing”). Under the terms of the Purchase Agreements, the Company received $660,000 in gross proceeds in exchange for the issuance of an aggregate of 2,200,166 units (the “March 2012 Units”), consisting of 2,200,166 shares of common stock and 1,650,126 warrants, at a purchase price of $0.30 per Unit. Each Unit consisted of (i) one share of common stock (the “March 2012 Common Shares”) and (ii) a five-year warrant to purchase 0.75 of a share of the Company’s common stock (the “March 2012 Warrants”). The March 2012 Warrants have an initial exercise price of $0.40 per share.
	On March 30, 2012, the Company received $530,000 in gross proceeds in exchange for the issuance of an aggregate of 1,766,833 March 2012 Units, which consisted of 1,766,833 shares of common stock and 1,325,126 warrants.
	On April 4, 2012, the Company received $130,000 in gross proceeds in exchange for the issuance of an aggregate of approximately 433,333 March 2012 Units, which consisted of 433,333 shares of common stock and 325,000 warrants.
	Net cash proceeds from the March 2012 Financing, after deducting for expenses, were $642,000. The Company also incurred non-cash expenses in the form of 12,501 warrants issued to consultants, at similar terms as the March 2012 Warrants, for services provided. Pursuant to the warrants, the Company is obligated to issue up to a total of 1,662,627 shares of common stock as of September 30, 2012 in connection with the March 2012 Financing.
	The fair value of the March 2012 Warrants issued on March 30, 2012 was estimated to be $363,000 using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%, expected volatility of 150.74%, risk free interest rate of 1.04% and an expected life of five years. The proceeds from the March 2012 Financing were allocated based upon the relative fair values of the March 2012 Warrants and the March 2012 Common Shares.
	The fair value of the March 2012 Warrants issued on April 4, 2012 was estimated to be $84,000 using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%, expected volatility of 149.36%, risk free interest rate of 1.05% and an expected life of five years. The proceeds from the March 2012 Financing were allocated based upon the relative fair values of the March 2012 Warrants and the March 2012 Common Shares.
	Dividends
	The Company has never paid a cash dividend on its common stock and does not anticipate paying cash dividends on its common stock in the foreseeable future. If the Company pays a cash dividend on its common stock, it also must pay the same dividend on an as converted basis on its outstanding Series B Stock.
	Warrants
	As of March 31, 2014, warrants to purchase an aggregate of 17,879,627 shares of common stock were outstanding with a weighted average exercise price of $0.30 per share. Details of the warrants for common stock outstanding at March 31, 2014 are as follows:
	Number of Shares	Exercise Price			Expiration Date
	100,000	$	0.5		May-14
	100,000	$	1		May-14
	100,000	$	1.5		May-14
	125,000	$	0.51		Jun-14
	125,000	$	1		Jun-14
	20,000	$	0.39		Sep-14
	15,000	$	0.5		Sep-14
	15,000	$	0.6		Sep-14
	50,000	$	0.38		Apr-15
	50,000	$	0.5		May-16
	50,000	$	0.5		Jul-16
	50,000	$	1		Jul-16
	50,000	$	1.5		Jul-16
	50,000	$	2		Jul-16
	50,000	$	2.5		Jul-16
	1,337,627	$	0.4		Mar-17
	325,000	$	0.4		Apr-17
	300,000	$	0.258		Jun-17
	140,000	$	0.35		Oct-17
	13,085,000	$	0.25		Feb-18
	1,742,000	$	0.25		Mar-18
	17,879,627	$	0.3
	As of March 31, 2014, one warrant to purchase an aggregate of 896,037 shares of preferred stock was outstanding. The warrant has an exercise price of $0.01 per share and expires in February 2016.
	Below is a summary of warrant activity (“common and preferred”) for the six months ended March 31, 2014:
						Weighted Average
		Number of Shares				Exercise Price		Remaining Contractual		Aggregate
								Term (in years)		Intrinsic Value
	Outstanding at 9/30/2013		18,775,664			$	0.29		4.05	$	693,340
	Granted		-			$	-		-	$	-
	Exercised		-			$	-		-	$	-
	Expired or Canceled		-			$	-		-	$	-
	Forfeited		-			$	-		-	$	-
	Vested		-			$	-		-	$	-
	Outstanding at 3/31/2014		18,775,664			$	0.29		3.55	$	215,048
	Below is a summary of warrant activity (“common and preferred”) for the six months ended March 31, 2013:
					Weighted Average
	Number of Shares				Exercise Price		Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at 9/30/2012		62,993,663			$	0.3		4.2	$	5,344,623
Granted		14,932,000			$	0.25		4.89	$	1,039,373
Exercised		(59,149,999	)		$	0.01		3.75	$	19,519,500
Expired or Canceled		-			$	-		-	$	-
Forfeited		-			$	-		-	$	-
Vested		-			$	-		-	$	-
Outstanding at 3/31/2013		18,775,664			$	0.29		4.55	$	1,335,864

C_StockBased_Compensation

C. Stock-Based Compensation	6 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
C. Stock-Based Compensation	'
	Below is a summary of stock option activity for the six months ended March 31, 2014:
						Weighted Average
		Number of Shares				Exercise Price				Remaining Contractual			Aggregate
										Term (in years)			Intrinsic Value
	Outstanding at 9/30/2013		11,214,898			$	0.52				6.67		$	3,825
	Granted		-			$	-				-		$	-
	Exercised		-			$	-				-		$	-
	Expired or Canceled		(62,890	)		$	2.93				-		$	-
	Forfeited		-			$	-				-		$	-
	Vested (RSAs)		-			$	-				-		$	-
	Outstanding at 3/31/2014		11,152,008			$	0.51				6.21		$	1,463
	For the six months ended March 31, 2014, all stock options were granted with an exercise price at or above the fair market value of the Company’s common stock on the date of grant.
	Below is a summary of stock option activity for the six months ended March 31, 2013:
						Weighted Average
		Number of Shares				Exercise Price				Remaining Contractual			Aggregate
										Term (in years)			Intrinsic Value
	Outstanding at 9/30/2012		9,473,661			$	0.7				5.81		$	153,850
	Granted		2,745,000			$	0.39				9.92		$	901
	Exercised		-			$	-				-		$	-
	Expired or Canceled		(72,744	)		$	0.85				-		$	-
	Forfeited		-			$	-				-		$	-
	Vested (RSAs)		-			$	-				-		$	-
	Outstanding at 3/31/2013		12,145,917			$	0.63				6.38		$	45,084
	The details of stock options for the six months ended March 31, 2014 were as follows:
		Options Outstanding							Options Exercisable
							Weighted						Weighted
		Number		Weighted			Average		Number		Weighted		Average
	Range of	Outstanding		Average			Remaining		Exercisable		Average		Remaining
	Exercise	at March 31,		Exercise			Contractual		At March 31,		Exercise		Contractual
	Prices	2014		Price			Life (in years)		2014		Price		Life (in years)
	$0.23-$0.30	1,612,500		$	0.29		5.81		1,612,500		$	0.29	5.81
	$0.31-$0.40	6,501,500		$	0.39		7.32		6,501,500		$	0.39	7.32
	$0.41-$0.50	502,000		$	0.45		7.75		447,833		$	0.45	7.58
	$0.51-$0.60	963,750		$	0.59		5.14		963,750		$	0.59	5.14
	$0.61-$0.70	66,500		$	0.68		2.38		66,500		$	0.68	2.38
	$0.71-$0.80	382,250		$	0.75		3.17		382,250		$	0.75	3.17
	$0.81-$0.90	697,091		$	0.88		2.51		697,091		$	0.88	2.51
	$0.91-$1.00	44,500		$	0.94		1.49		44,500		$	0.94	1.49
	$1.01-$1.50	81,500		$	1.13		1.06		81,500		$	1.13	1.06
	$1.51-$5.00	300,417		$	2.73		0.4		300,417		$	2.73	0.4
	Stock-based compensation expense recognized in the statement of operations is as follows (in thousands):
		For the three months ended								For the six months ended
		March 31,								March 31,
		2014				2013				2014			2013
	Research and Development Expenses	$	5			$	5			$	11		$	9
	General and Administrative Expenses		190				232				452			300
		$	195			$	237			$	463		$	309
	The total unrecognized compensation expense for outstanding and unvested stock options for the six months ended March 31, 2014 was $15,000. The weighted average remaining recognition period for the total deferred compensation expense is approximately one month. The fair value of  options was determined at the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions:
		For the three months ended								For the six months ended
		March 31,								March 31,
		2014				2013				2014			2013
	Dividend yield		—	*			0	%			—	*		0	%
	Expected volatility		—	*			154.91	%			—	*		154.61	%
	Risk-free interest rate		—	*			0.86	%			—	*		0.86	%
	Expected term		—	*		5.27 years					—	*	5.27 years
	* No stock options were granted for the three and six months ended March 31, 2014

D_Net_Income_Loss_Per_Common_S

D. Net Income (Loss) Per Common Share	6 Months Ended
	Mar. 31, 2014
Net income (loss) per weighted share attributable to common stockholders:	'
D. Net Income (Loss) Per Common Share	'
	The Company computes basic net income (loss) per weighted average share attributable to common stockholders using the weighted average number of shares of common stock outstanding during the period. The Company computes diluted net income (loss) per weighted average share attributable to common stockholders using the weighted average number of shares of common and dilutive potential common shares outstanding during the period. Potential common shares outstanding consist of stock options, convertible debt, warrants and convertible preferred stock using the treasury stock method and are excluded if their effect is anti-dilutive. Diluted weighted average common shares did not include any incremental shares for the six months ended March 31, 2014 and 2013 issuable upon the exercise or conversion of convertible debt, stock options to purchase common stock, convertible preferred stock and warrants to purchase common stock. Diluted weighted average common shares excluded incremental shares of approximately 2,294,000  and 5,069,000 respectively, for the six months ended 2014 and 2013, due to their anti-dilutive effect.
		For the three months						For the six months
		ended March 31,						ended March 31,
		2014			2013			2014			2013
		(in thousands, except per share data)
	Numerator:
	Net income (loss)	$	(437	)	$	(5,782	)	$	(1,132	)	$	(1,755	)
	Less net income (loss) attributable to participating securities		-			-			-			-
	Net income (loss) attributable to common stockholders – basic	$	(437	)	$	(5,782	)	$	(1,132	)	$	(1,755	)
	Net income (loss)	$	(437	)	$	(5,782	)	$	(1,132	)	$	(1,755	)
	Less gain (loss) on warrant liability for participating
	common warrants		-			-			-			-
	Net loss attributable to common stockholders – diluted	$	(437	)	$	(5,782	)	$	(1,132	)	$	(1,755	)
	Denominator:
	Weighted-average shares used in computing net income per
	share attributable to common stockholders – basic		134,550			94,425			134,550			69,664
	Effect of potentially dilutive securities:
	Common stock warrants		-			-			-			-
	Convertible preferred warrants		-			-			-			-
	Convertible preferred stock		-			-			-			-
	Common stock options		-			-			-			-
	Non-participating common stock warrants		-			-			-			-
	Weighted-average shares used in computing net income
	(loss) per share attributable to common stockholders - diluted		134,550			94,425			134,550			69,664
	Basic net income per common share	$	0		$	(0.06	)	$	(0.01	)	$	(0.03	)
	Diluted net income (loss) per common share	$	0		$	(0.06	)	$	(0.01	)	$	(0.03	)

E_Subsequent_Events

E. Subsequent Events	6 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
E. Subsequent Events	'
	On May 5, 2014, the Company executed a Modification of Contract (the "Modification") with the BARDA. The purpose of the Modification is to 1) make available $1,778,000 to reimburse the Company for actual costs incurred under the first three years of the BARDA Contract, 2) establish an increased provisional indirect billing rate for fiscal year 2014 and the rest of the BARDA Contract period of performance, and 3) establish a cap on the indirect billing rate for the remaining contract period of performance.
	The effect of the Modification will be (a) to increase the cash balance of the Company and (b) to increase the billing rate for indirect costs under the contract. The Company believes that the cash from the modification, in addition to its existing cash balance, will be sufficient to operate the company for at least two years.

F_Commitments

F. Commitments	6 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
F. Commitments and Contingencies	'
	The Company acquires assets still in development and enters into research and development arrangements with third parties that often require milestone and royalty payments to the third party contingent upon the occurrence of certain future events linked to the success of the asset in development. Milestone payments may be required, contingent upon the successful achievement of an important point in the development life-cycle of the pharmaceutical product (e.g., approval of the product for marketing by a regulatory agency). If required by the arrangement, the Company may have to make royalty payments based upon a percentage of the sales of the pharmaceutical product in the event that regulatory approval for marketing is obtained. Because of the contingent nature of these payments, they are not included in the table of contractual obligations. No milestones have been met, nor have any payments been paid, as of March 31, 2014.
	The Company is also obligated to pay patent filing, prosecution, maintenance and defense costs, if any, for the intellectual property it has licensed from National Jewish Health, National Jewish Medical and Research Center and Duke University.
	These arrangements may be material individually, and in the unlikely event that milestones for multiple products covered by these arrangements were reached in the same period, the aggregate charge to expense could be material to the results of operations in any one period. In addition, these arrangements often give Aeolus the discretion to unilaterally terminate development of the product, which would allow Aeolus to avoid making the contingent payments; however, Aeolus is unlikely to cease development if the compound successfully achieves clinical testing objectives.

A_Organization_Business_and_Su1

A. Organization, Business and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Mar. 31, 2014
A. Organization Business And Summary Of Significant Accounting Policies Policies	'
Organization	'
	Organization
	The accompanying unaudited condensed consolidated financial statements include the accounts of Aeolus Pharmaceuticals, Inc. and its wholly-owned subsidiary, Aeolus Sciences, Inc. (collectively, “we,” “us,” “Company” or “Aeolus”). All significant intercompany accounts and transactions have been eliminated in consolidation.  Aeolus is a Delaware corporation. The Company’s primary operations are located in Mission Viejo, California.
Business	'
	Business
	Aeolus is a biopharmaceutical company developing a platform of a new class of broad-spectrum, catalytic antioxidant compounds that protect healthy tissue from the damaging effects of oxidative stress. The principal endeavor of the Company is protecting against damaging effects of oxidative stress induced by radiation. Its first compound, AEOL 10150, is being developed as a medical countermeasure against the pulmonary effects of radiation exposure under a contract (“BARDA Contract”) valued at up to $118.4 million with the Biomedical Advanced Research and Development Authority (“BARDA”), a division of the Department of Health and Human Services (“HHS”). Aeolus is in its fourth year under the BARDA Contract. Aeolus also receives development support from the National Institutes of Health (“NIH”) for development of the compound as a medical countermeasure against radiation and exposure to chemical and nerve agents. Additionally, Aeolus is developing AEOL 10150 for oncology indications, where it is used in combination with radiation and chemotherapy. Aeolus’ strategy is to leverage the substantial investment in toxicology, manufacturing, and preclinical and clinical studies made by U.S. government agencies in AEOL 10150, including the BARDA Contract, to develop the compound efficiently for use in oncology.
Basis of Presentation	'
	Basis of Presentation
	All significant intercompany activity has been eliminated in the preparation of the unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q and Rule 10-01 of Regulation S-X. Some information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows of the Company. The condensed balance sheet at September 30, 2013 was derived from the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013, filed with the Securities and Exchange Commission (the “SEC”) on December 20, 2013.
Use of Estimates	'
	Use of Estimates
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents	'
	Cash and Cash Equivalents
	The Company invests available cash in short-term bank deposits. Cash and cash equivalents include investments with maturities of six months or less at the date of purchase. The carrying value of cash and cash equivalents approximate their fair market value at March 31, 2014 and September 30, 2013 due to their short-term nature.
Significant customer and accounts receivable	'
	Significant customers and accounts receivable
	For the six months ended March 31, 2014, the Company’s primary customer was BARDA. For the six months ended March 31, 2014, revenues from BARDA comprised 100% of total revenues. As of March 31, 2014, the Company’s receivable balances were comprised 100% from this customer. There was $195,000 of unbilled accounts receivable, included in accounts receivable, as of March 31, 2014. Unbilled accounts receivable relates to work that has been performed, though invoicing has not yet occurred. All of the unbilled receivables are expected to be billed and collected within the next 12 months. Accounts receivable are stated at invoice amounts and consist primarily of amounts due from BARDA as well as amounts due under reimbursement contracts with other government entities and non-government and philanthropic organizations. If necessary, the Company records a provision for doubtful receivables to allow for any amounts which may be unrecoverable. This provision is based upon an analysis of the Company’s prior collection experience, customer creditworthiness and current economic trends. As of March 31, 2014 and September 30, 2013, an allowance for doubtful accounts was not recorded as the collection history from the Company’s customer indicated that collection was probable.
Concentrations of credit risk	'
	Concentrations of credit risk
	Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with high quality financial institutions. Management believes that the financial risks associated with its cash and cash equivalents and investments are minimal. Because accounts receivable consist primarily of amounts due from the U.S. federal government agencies, management deems there to be minimal credit risk.
Revenue Recognition	'
	Revenue Recognition
	Aeolus recognizes revenue in accordance with the authoritative guidance for revenue recognition.  Revenue is recognized when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery (or passage of title) has occurred or services have been rendered, (iii) the seller’s price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured.
	The BARDA Contract is classified as a “cost-plus-fixed-fee” contract. Aeolus recognizes government contract revenue in accordance with the authoritative guidance for revenue recognition including the authoritative guidance specific to federal government contracts. Reimbursable costs under the contract primarily include direct labor, subcontract costs, materials, equipment, travel, and indirect costs. In addition, we receive a fixed fee under the BARDA Contract, which is unconditionally earned as allowable costs are incurred and is not contingent on success factors. Reimbursable costs under the BARDA Contract, including the fixed fee, are generally recognized as revenue in the period the reimbursable costs are incurred and become billable.
Fair Value of Financial Instruments	'
	Fair Value of Financial Instruments
	The carrying amounts of Aeolus’ short-term financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to their short maturities.
Fair Value Measurements	'
	Fair Value Measurements
	The Company adopted Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, for financial and non-financial assets and liabilities.
	ASC Topic 820 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The statement utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
		·	Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
		·	Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
		·	Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
Research and Development	'
	Research and Development
	Research and development costs are expensed in the period incurred.
Leases	'
	Leases
	The Company leases office space and office equipment under month to month operating lease agreements. For the six months ended March 31, 2014 and 2013, total rent expense was approximately $21,000 and $20,000, respectively.
Income Taxes	'
	Income Taxes
	The Company recognizes liabilities or assets for the deferred tax consequences of temporary differences between the tax bases of assets or liabilities and their reported amounts in the financial statements. These temporary differences will result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled. A valuation allowance is established when management determines that is more likely than not that all or a portion of a deferred tax asset will not be realized. Management evaluates the Company’s ability to realize its net deferred tax assets on a quarterly basis and valuation allowances are provided, as necessary. During this evaluation, management reviews its forecasts of income in conjunction with other positive and negative evidence surrounding the Company’s ability to realize its deferred tax assets to determine if a valuation allowance is required. Adjustments to the valuation allowance will increase or decrease the Company’s income tax provision or benefit. Management also applies the relevant guidance to determine the amount of income tax expense or benefit to be allocated among continuing operations, discontinued operations, and items charged or credited directly to stockholders’ equity.
	A tax position must meet a minimum probability threshold before a financial statement benefit is recognized. The minimum threshold is a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation process, based on the technical merits of the position. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.
Net Income (Loss) Per Common Share	'
	Net Income (Loss) Per Common Share
	The Company computes net income attributable to common stockholders using the two-class method required for participating securities. Under the two-class method, securities that participate in dividends, such as the Company’s outstanding preferred shares, preferred warrants, and most common stock warrants, are considered “participating securities.” Our preferred shares, preferred warrants and common stock warrants are considered “participating securities” because they include non-forfeitable rights to dividends.
	In applying the two-class method, (i) basic net income (loss) per share is computed by dividing net income (less any dividends paid on participating securities) by the weighted average number of shares of common stock and participating securities outstanding for the period and (ii) diluted earnings per share may include the additional effect of other securities, if dilutive, in which case the dilutive effect of such securities is calculated using the treasury stock method. The Company does have other securities with a dilutive effect outstanding, so the Company’s basic net income (loss) per share uses the two-class method and diluted net income (loss) per share uses the treasury stock method.
Accounting for Stock-Based Compensation	'
	Accounting for Stock-Based Compensation
	The Company recognizes stock based compensation expense in the statement of operations based upon the fair value of the equity award amortized over the vesting period.
Segment Reporting	'
	Segment Reporting
	The Company currently operates in one segment.

B_Stockholders_Equity_Tables

B. Stockholder's Equity (Tables)	6 Months Ended
	Mar. 31, 2014
B. Stockholders Equity Tables	'
Warrants for Common Stock Outstanding	'
	As of March 31, 2014, warrants to purchase an aggregate of 17,879,627 shares of common stock were outstanding with a weighted average exercise price of $0.30 per share. Details of the warrants for common stock outstanding at March 31, 2014 are as follows:
	Number of Shares	Exercise Price			Expiration Date
	100,000	$	0.5		May-14
	100,000	$	1		May-14
	100,000	$	1.5		May-14
	125,000	$	0.51		Jun-14
	125,000	$	1		Jun-14
	20,000	$	0.39		Sep-14
	15,000	$	0.5		Sep-14
	15,000	$	0.6		Sep-14
	50,000	$	0.38		Apr-15
	50,000	$	0.5		May-16
	50,000	$	0.5		Jul-16
	50,000	$	1		Jul-16
	50,000	$	1.5		Jul-16
	50,000	$	2		Jul-16
	50,000	$	2.5		Jul-16
	1,337,627	$	0.4		Mar-17
	325,000	$	0.4		Apr-17
	300,000	$	0.258		Jun-17
	140,000	$	0.35		Oct-17
	13,085,000	$	0.25		Feb-18
	1,742,000	$	0.25		Mar-18
	17,879,627	$	0.3
Summary Of Warrant Activity	'
	Below is a summary of warrant activity (“common and preferred”) for the six months ended March 31, 2014:
						Weighted Average
		Number of Shares				Exercise Price		Remaining Contractual		Aggregate
								Term (in years)		Intrinsic Value
	Outstanding at 9/30/2013		18,775,664			$	0.29		4.05	$	693,340
	Granted		-			$	-		-	$	-
	Exercised		-			$	-		-	$	-
	Expired or Canceled		-			$	-		-	$	-
	Forfeited		-			$	-		-	$	-
	Vested		-			$	-		-	$	-
	Outstanding at 3/31/2014		18,775,664			$	0.29		3.55	$	215,048
	Below is a summary of warrant activity (“common and preferred”) for the six months ended March 31, 2013:
						Weighted Average
		Number of Shares				Exercise Price		Remaining Contractual Term (in years)		Aggregate Intrinsic Value
	Outstanding at 9/30/2012		62,993,663			$	0.3		4.2	$	5,344,623
	Granted		14,932,000			$	0.25		4.89	$	1,039,373
	Exercised		(59,149,999	)		$	0.01		3.75	$	19,519,500
	Expired or Canceled		-			$	-		-	$	-
	Forfeited		-			$	-		-	$	-
	Vested		-			$	-		-	$	-
	Outstanding at 3/31/2013		18,775,664			$	0.29		4.55	$	1,335,864

C_StockBased_Compensation_Tabl

C. Stock-Based Compensation (Tables)	6 Months Ended
	Mar. 31, 2014
C. Stock-Based Compensation Tables	'
Summary Of Stock Option Activity	'
	Below is a summary of stock option activity for the six months ended March 31, 2014:
						Weighted Average
		Number of Shares				Exercise Price				Remaining Contractual			Aggregate
										Term (in years)			Intrinsic Value
	Outstanding at 9/30/2013		11,214,898			$	0.52				6.67		$	3,825
	Granted		-			$	-				-		$	-
	Exercised		-			$	-				-		$	-
	Expired or Canceled		(62,890	)		$	2.93				-		$	-
	Forfeited		-			$	-				-		$	-
	Vested (RSAs)		-			$	-				-		$	-
	Outstanding at 3/31/2014		11,152,008			$	0.51				6.21		$	1,463
	For the six months ended March 31, 2014, all stock options were granted with an exercise price at or above the fair market value of the Company’s common stock on the date of grant.
	Below is a summary of stock option activity for the six months ended March 31, 2013:
						Weighted Average
		Number of Shares				Exercise Price				Remaining Contractual			Aggregate
										Term (in years)			Intrinsic Value
	Outstanding at 9/30/2012		9,473,661			$	0.7				5.81		$	153,850
	Granted		2,745,000			$	0.39				9.92		$	901
	Exercised		-			$	-				-		$	-
	Expired or Canceled		(72,744	)		$	0.85				-		$	-
	Forfeited		-			$	-				-		$	-
	Vested (RSAs)		-			$	-				-		$	-
	Outstanding at 3/31/2013		12,145,917			$	0.63				6.38		$	45,084
Details Of Stock Options	'
	The details of stock options for the six months ended March 31, 2014 were as follows:
		Options Outstanding							Options Exercisable
							Weighted						Weighted
		Number		Weighted			Average		Number		Weighted		Average
	Range of	Outstanding		Average			Remaining		Exercisable		Average		Remaining
	Exercise	at March 31,		Exercise			Contractual		At March 31,		Exercise		Contractual
	Prices	2014		Price			Life (in years)		2014		Price		Life (in years)
	$0.23-$0.30	1,612,500		$	0.29		5.81		1,612,500		$	0.29	5.81
	$0.31-$0.40	6,501,500		$	0.39		7.32		6,501,500		$	0.39	7.32
	$0.41-$0.50	502,000		$	0.45		7.75		447,833		$	0.45	7.58
	$0.51-$0.60	963,750		$	0.59		5.14		963,750		$	0.59	5.14
	$0.61-$0.70	66,500		$	0.68		2.38		66,500		$	0.68	2.38
	$0.71-$0.80	382,250		$	0.75		3.17		382,250		$	0.75	3.17
	$0.81-$0.90	697,091		$	0.88		2.51		697,091		$	0.88	2.51
	$0.91-$1.00	44,500		$	0.94		1.49		44,500		$	0.94	1.49
	$1.01-$1.50	81,500		$	1.13		1.06		81,500		$	1.13	1.06
	$1.51-$5.00	300,417		$	2.73		0.4		300,417		$	2.73	0.4
Stock-based compensation expense	'
	Stock-based compensation expense recognized in the statement of operations is as follows (in thousands):
		For the three months ended								For the six months ended
		March 31,								March 31,
		2014				2013				2014			2013
	Research and Development Expenses	$	5			$	5			$	11		$	9
	General and Administrative Expenses		190				232				452			300
		$	195			$	237			$	463		$	309
Assumptions Of Stock Based Compensation	'
		For the three months ended								For the six months ended
		March 31,								March 31,
		2014				2013				2014			2013
	Dividend yield		—	*			0	%			—	*		0	%
	Expected volatility		—	*			154.91	%			—	*		154.61	%
	Risk-free interest rate		—	*			0.86	%			—	*		0.86	%
	Expected term		—	*		5.27 years					—	*	5.27 years
	* No stock options were granted for the three and six months ended March 31, 2014

D_Net_Income_Loss_Per_Common_S1

D. Net Income (Loss) Per Common Share (Tables)	6 Months Ended
	Mar. 31, 2014
D. Net Income Loss Per Common Share Tables	'
Schedule of Earnings Per Share, Basic and Diluted	'
		For the three months						For the six months
		ended March 31,						ended March 31,
		2014			2013			2014			2013
		(in thousands, except per share data)
	Numerator:
	Net income (loss)	$	(437	)	$	(5,782	)	$	(1,132	)	$	(1,755	)
	Less net income (loss) attributable to participating securities		-			-			-			-
	Net income (loss) attributable to common stockholders – basic	$	(437	)	$	(5,782	)	$	(1,132	)	$	(1,755	)
	Net income (loss)	$	(437	)	$	(5,782	)	$	(1,132	)	$	(1,755	)
	Less gain (loss) on warrant liability for participating
	common warrants		-			-			-			-
	Net loss attributable to common stockholders – diluted	$	(437	)	$	(5,782	)	$	(1,132	)	$	(1,755	)
	Denominator:
	Weighted-average shares used in computing net income per
	share attributable to common stockholders – basic		134,550			94,425			134,550			69,664
	Effect of potentially dilutive securities:
	Common stock warrants		-			-			-			-
	Convertible preferred warrants		-			-			-			-
	Convertible preferred stock		-			-			-			-
	Common stock options		-			-			-			-
	Non-participating common stock warrants		-			-			-			-
	Weighted-average shares used in computing net income
	(loss) per share attributable to common stockholders - diluted		134,550			94,425			134,550			69,664
	Basic net income per common share	$	0		$	(0.06	)	$	(0.01	)	$	(0.03	)
	Diluted net income (loss) per common share	$	0		$	(0.06	)	$	(0.01	)	$	(0.03	)

A_Organization_Business_and_Su2

A. Organization, Business and Summary of Significant Accounting Policies (Details Narrative) (USD $)	6 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Fair Value Measurements	'	'
Pecentage representation in revenues	100.00%	'
Pecentage representation in receivables	100.00%	'
Unbilled accounts receivable	'	$195,000
Rent expense	$21,000	$20,000

B_Stockholders_Equity_Details

B. Stockholders' Equity (Details)	6 Months Ended
	Mar. 31, 2014
Number of Shares	17,879,627
$0.50	'
Number of Shares	100,000
Expiration Date	'May 2014
$1.00	'
Number of Shares	100,000
Expiration Date	'May 2014
$1.50	'
Number of Shares	100,000
Expiration Date	'May 2014
$0.51	'
Number of Shares	125,000
Expiration Date	'June 2014
$1.00	'
Number of Shares	125,000
Expiration Date	'June 2014
$0.39	'
Number of Shares	20,000
Expiration Date	'September 2014
$0.50	'
Number of Shares	15,000
Expiration Date	'September 2014
$0.60	'
Number of Shares	15,000
Expiration Date	'September 2014
$0.38	'
Number of Shares	50,000
Expiration Date	'April 2015
$0.50	'
Number of Shares	50,000
Expiration Date	'May 2016
$0.50	'
Number of Shares	50,000
Expiration Date	'July 2016
$1.00	'
Number of Shares	50,000
Expiration Date	'July 2016
$1.50	'
Number of Shares	50,000
Expiration Date	'July 2016
$2.00	'
Number of Shares	50,000
Expiration Date	'July 2016
$2.50	'
Number of Shares	50,000
Expiration Date	'July 2016
$0.40	'
Number of Shares	1,337,627
Expiration Date	'March 2017
$0.40	'
Number of Shares	325,000
Expiration Date	'April 2017
$0.26	'
Number of Shares	300,000
Expiration Date	'June 2017
$0.35	'
Number of Shares	140,000
Expiration Date	'October 2017
$0.25	'
Number of Shares	13,085,000
Expiration Date	'March 2018
$0.25	'
Number of Shares	1,742,000
Expiration Date	'March 2018

B_Stockholders_Equity_Details_

B. Stockholders' Equity (Details 1) (Warrant [Member], USD $)	6 Months Ended
In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Warrant [Member]	'	'
Number of Shares	'	'
Outstanding beginning balance	18,775,664	62,993,663
Granted	'	14,932,000
Exercised	'	-59,149,999
Expired or Canceled	'	'
Forfeited	'	'
Vested	'	'
Outstanding ending balance	18,775,664	18,775,664
Exercise Price	'	'
Outstanding beginning balance	$0.29	$0.30
Granted	'	$0.25
Exercised	'	$0.01
Expired or Canceled	'	'
Forfeited	'	'
Vested	'	'
Outstanding ending balance	$0.29	$0.29
Remaining Contractual Term (in years)	'	'
Outstanding beginning balance	'4 years 18 days	'4 years 2 months 12 days
Granted	'	'4 years 10 months 20 days
Exercised	'	'3 years 9 months
Outstanding ending balance	'3 years 6 months 18 days	'4 years 6 months 18 days
Aggregate Intrinsic Value	'	'
Outstanding beginning balance	$693,340	$5,344,623
Granted	'	1,039,373
Exercised	'	19,519,500
Outstanding ending balance	$215,048	$1,335,864

B_Stockholders_Equity_Deficit_

B. Stockholders' Equity (Deficit) (Details Narrative) (USD $)	6 Months Ended
	Mar. 31, 2014	Sep. 30, 2013
Common stock shares outstanding	134,550,068	134,550,068
Covertible Warrants to purchase common stock shares	17,879,627	'
Weighted average exercise price	$0.30	'
Preferred Stock [Member]	'	'
Covertible Warrants to purchase common stock shares	896,037	'
Weighted average exercise price	$0.01	'
Series B [Member]	'	'
Common stock shares outstanding	526,080	'

C_StockBased_Compensation_Deta

C. Stock-Based Compensation (Details) (Employee Stock Option [Member], USD $)	6 Months Ended
In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Employee Stock Option [Member]	'	'
Number of Shares	'	'
Outstanding beginning balance	11,214,898	9,473,661
Granted	'	2,745,000
Exercised	'	'
Expired or Canceled	-62,890	-72,744
Forfeited	'	'
Vested (RSAs)	'	'
Outstanding ending balance	11,152,008	12,145,917
Exercise Price	'	'
Outstanding beginning balance	$0.52	$0.70
Granted	'	$0.39
Exercised	'	'
Expired or Canceled	$2.93	$0.85
Forfeited	'	'
Vested (RSAs)	'	'
Outstanding ending balance	$0.51	$0.63
Remaining Contractual Term (in years)	'	'
Outstanding beginning balance	'6 years 8 months 1 day	'5 years 9 months 22 days
Granted	'	'9 years 11 months 1 day
Outstanding ending balance	'6 years 2 months 16 days	'6 years 4 months 19 days
Aggregate Intrinsic Value	'	'
Outstanding beginning balance	$3,825	$153,850
Granted	'	901
Outstanding ending balance	$1,463	$45,084

C_StockBased_Compensation_Deta1

C. Stock-Based Compensation (Details 1) (USD $)	6 Months Ended
	Mar. 31, 2014
0.23-$0.30	'
Options Outstanding	'
Number Outstanding at December 31	1,612,500
Weighted Average Exercise Price	$0.29
Weighted Average Remaining Contractual Life (in years)	'5 years 9 months 22 days
Options Exercisable	'
Number Exercisable at December 31	1,612,500
Weighted Average Exercise Price	$0.29
Weighted Average Remaining Contractual Life )in years)	'5 years 9 months 22 days
0.31-$0.40	'
Options Outstanding	'
Number Outstanding at December 31	6,501,500
Weighted Average Exercise Price	$0.39
Weighted Average Remaining Contractual Life (in years)	'7 years 3 months 25 days
Options Exercisable	'
Number Exercisable at December 31	6,501,500
Weighted Average Exercise Price	$0.39
Weighted Average Remaining Contractual Life )in years)	'7 years 3 months 25 days
0.41-$0.50	'
Options Outstanding	'
Number Outstanding at December 31	502,000
Weighted Average Exercise Price	$0.45
Weighted Average Remaining Contractual Life (in years)	'7 years 6 months 29 days
Options Exercisable	'
Number Exercisable at December 31	447,833
Weighted Average Exercise Price	$0.45
Weighted Average Remaining Contractual Life )in years)	'7 years 6 months 29 days
0.51-$0.60	'
Options Outstanding	'
Number Outstanding at December 31	963,750
Weighted Average Exercise Price	$0.59
Weighted Average Remaining Contractual Life (in years)	'5 years 1 month 20 days
Options Exercisable	'
Number Exercisable at December 31	963,750
Weighted Average Exercise Price	$0.59
Weighted Average Remaining Contractual Life )in years)	'5 years 1 month 20 days
0.61-$0.70	'
Options Outstanding	'
Number Outstanding at December 31	66,500
Weighted Average Exercise Price	$0.68
Weighted Average Remaining Contractual Life (in years)	'2 years 4 months 17 days
Options Exercisable	'
Number Exercisable at December 31	66,500
Weighted Average Exercise Price	$0.68
Weighted Average Remaining Contractual Life )in years)	'2 years 4 months 17 days
0.71-$0.80	'
Options Outstanding	'
Number Outstanding at December 31	382,250
Weighted Average Exercise Price	$0.75
Weighted Average Remaining Contractual Life (in years)	'3 years 2 months 1 day
Options Exercisable	'
Number Exercisable at December 31	382,250
Weighted Average Exercise Price	$0.75
Weighted Average Remaining Contractual Life )in years)	'3 years 2 months 1 day
0.81-$0.90	'
Options Outstanding	'
Number Outstanding at December 31	697,091
Weighted Average Exercise Price	$0.88
Weighted Average Remaining Contractual Life (in years)	'2 years 6 months 4 days
Options Exercisable	'
Number Exercisable at December 31	697,091
Weighted Average Exercise Price	$0.88
Weighted Average Remaining Contractual Life )in years)	'2 years 6 months 4 days
0.91-$1.00	'
Options Outstanding	'
Number Outstanding at December 31	44,500
Weighted Average Exercise Price	$0.94
Weighted Average Remaining Contractual Life (in years)	'1 year 5 months 26 days
Options Exercisable	'
Number Exercisable at December 31	44,500
Weighted Average Exercise Price	$0.94
Weighted Average Remaining Contractual Life )in years)	'1 year 5 months 26 days
1.01-$1.50	'
Options Outstanding	'
Number Outstanding at December 31	81,500
Weighted Average Exercise Price	$1.13
Weighted Average Remaining Contractual Life (in years)	'1 year 22 days
Options Exercisable	'
Number Exercisable at December 31	81,500
Weighted Average Exercise Price	$1.13
Weighted Average Remaining Contractual Life )in years)	'1 year 22 days
1.51 - $5.00	'
Options Outstanding	'
Number Outstanding at December 31	300,417
Weighted Average Exercise Price	$2.73
Weighted Average Remaining Contractual Life (in years)	'4 months 24 days
Options Exercisable	'
Number Exercisable at December 31	300,417
Weighted Average Exercise Price	$2.73
Weighted Average Remaining Contractual Life )in years)	'4 months 24 days

C_StockBased_Compensation_Deta2

C. Stock-Based Compensation (Details 2) (USD $)	3 Months Ended		6 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Stock-based compensation expense recognized in the statement of operations	'	'	'	'
Research and Development Expenses	$5	$5	$11	$9
General and Administrative Expenses	190	232	452	300
Stock-based compensation expense	$195	$237	$463	$309

C_StockBased_Compensation_Deta3

C. Stock-Based Compensation (Details 3)	3 Months Ended	6 Months Ended
	Mar. 31, 2013	Mar. 31, 2013
Notes to Financial Statements	'	'
Dividend yield	0.00%	0.00%
Expected volatility	154.91%	154.61%
Risk-free interest rate	0.86%	0.86%
Expected term	'5 years 3 months 7 days	'5 years 3 months 7 days

D_Net_Income_Loss_Per_Common_S2

D. Net Income (Loss) Per Common Share (Details) (USD $)	3 Months Ended		6 Months Ended
In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Numerator:	'	'	'	'
Net income (loss)	($437)	($5,782)	($1,132)	($1,755)
Less net income (loss) attributable to participating securities	'	'	'	'
Net income (loss) attributable to common stockholders - basic	-437	-5,782	-1,132	-1,755
Net income (loss)	-437	-5,782	-1,132	-1,755
Less gain (loss) on warrant liability for participating common warrants	'	'	'	'
Net loss attributable to common stockholders b diluted	($437)	($5,782)	($1,132)	($1,755)
Denominator:	'	'	'	'
Weighted-average shares used in computing net income per share attributable to common stockholders b basic	134,550	94,425	134,550	69,664
Effect of potentially dilutive securities: Common stock warrants	'	'	'	'
Effect of potentially dilutive securities: Convertible preferred warrants	'	'	'	'
Effect of potentially dilutive securities: Convertible preferred stock	'	'	'	'
Effect of potentially dilutive securities: Common stock options	'	'	'	'
Effect of potentially dilutive securities: Non-participating common stock warrants	'	'	'	'
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - diluted	134,550	94,425	134,550	69,664
Basic net income per common share	$0	($0.06)	($0.01)	($0.03)
Diluted net income (loss) per common share	$0	($0.06)	($0.01)	($0.03)

D_Net_Income_Loss_Per_Common_S3

D. Net Income (Loss) Per Common Share (Details Narrative)	6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
D. Net Income Loss Per Common Share Details Narrative	'	'
Diluted weighted average common shares excluded incremental shares due to their anti-dilutive effect	2,294,000	5,069,000