Arch Therapeutics (ARTH) 10-Q 1 Feb 17 2017 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Dec. 31, 2016	Jan. 31, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Entity Registrant Name	Arch Therapeutics, Inc.
Entity Central Index Key	1,537,561
Current Fiscal Year End Date	--09-30
Entity Filer Category	Smaller Reporting Company
Trading Symbol	ARTH
Entity Common Stock, Shares Outstanding		138,632,075

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Dec. 31, 2016	Sep. 30, 2016
Current assets:
Cash	$ 3,787,737	$ 5,036,476
Prepaid expenses and other current assets	110,070	107,784
Total current assets	3,897,807	5,144,260
Long-term assets:
Property and equipment, net	4,174	0
Total long-term assets	4,174	0
Total assets	3,901,981	5,144,260
Current liabilities:
Accounts payable	272,252	374,896
Accrued expenses and other liabilities	121,036	299,487
Accrued interest	261,570	304,770
Note payable, net of unamortized discount	754,817	899,627
Total current liabilities	1,409,675	1,878,780
Long-term liabilities:
Note payable, net of unamortized discount	0	78,255
Accrued interest, net of current portion	0	26,230
Total long-term liabilities	0	104,485
Total liabilities	1,409,675	1,983,265
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value, 300,000,000 shares authorized, 138,182,075 and 136,657,075 shares issued and outstanding as of December 31, 2016 and September 30, 2016, respectively	136,107	134,432
Additional paid-in capital	25,472,290	24,741,153
Accumulated deficit	(23,116,091)	(21,714,590)
Total stockholders’ equity	2,492,306	3,160,995
Total liabilities and stockholders' equity	$ 3,901,981	$ 5,144,260

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2016	Sep. 30, 2016
Common Stock, Par Value	$ 0.001	$ 0.001
Common Stock, Shares Authorized	300,000,000	300,000,000
Common Stock, Shares Issued	138,182,075	136,657,075
Common Stock, Shares Outstanding	138,182,075	136,657,075

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($)	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Revenues	$ 0	$ 0
Operating expenses:
General and administrative expenses	1,026,644	865,512
Research and development expenses	349,287	414,003
Total operating expenses	1,375,931	1,279,515
Operating loss	(1,375,931)	(1,279,515)
Other income (expense):
Interest expense	(25,570)	(143,747)
Gain on conversion of debt	0	129,461
Decrease to fair value of derivative	0	137,146
Total other income (expense)	(25,570)	122,860
Net loss	$ (1,401,501)	$ (1,156,655)
Earnings per share - basic and diluted
Net loss per common share - basic and diluted	$ (0.01)	$ (0.01)
Weighted common shares - basic and diluted	135,319,847	108,620,575

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities:
Net loss	$ (1,401,501)	$ (1,156,655)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation	119	0
Stock-based compensation	265,662	148,037
Noncash interest expense on notes payable	5,529	143,747
Issuance of restricted stock for services	108,000	52,500
Gain on exercise of warrants and conversion of debt	0	(129,461)
Decrease to fair value of derivative	0	(137,146)
(Increase) decrease in:
Prepaid expenses and other current assets	(2,286)	(10,041)
Increase (decrease) in:
Accounts payable	(102,644)	36,102
Accrued expenses and other liabilities	(178,451)	(91,734)
Accrued interest	(69,430)	0
Net cash used in operating activities	(1,375,002)	(1,144,651)
Cash flows from investing activities:
Purchases of property and equipment	(4,293)	0
Net cash used in investing activities	(4,293)	0
Cash flows from financing activities:
Proceeds from exercise of warrants	359,150	0
Payments on note payable	(228,594)	0
Net cash provided by financing activities	130,556	0
Net (decrease) in cash	(1,248,739)	(1,144,651)
Cash, beginning of year	5,036,476	3,960,100
Cash, end of period	3,787,737	2,815,449
Non-cash financing activities
Conversion of 8% convertible notes and accrued interest to common stock	$ 0	$ 325,896

BASIS OF PRESENTATION AND DESCR

BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS	3 Months Ended
	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS	1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS Organization and Description of Business Arch Therapeutics, Inc., (together with its subsidiary, the “Company” or “Arch”) was incorporated under the laws of the State of Nevada on September 16, 2009, under the name “Almah, Inc.”. Effective June 26, 2013, the Company completed a merger (the “Merger”) with Arch Biosurgery, Inc. (formerly known as Arch Therapeutics, Inc.), a Massachusetts corporation (“ABS”), and Arch Acquisition Corporation (“Merger Sub”), the Company’s wholly owned subsidiary formed for the purpose of the transaction, pursuant to which Merger Sub merged with and into ABS and ABS thereby became the wholly owned subsidiary of the Company. As a result of the acquisition of ABS, the Company abandoned its prior business plan and changed its operations to the business of a biotechnology company. Our principal offices are located in Framingham, Massachusetts. For financial reporting purposes, the Merger represented a “reverse merger”. ABS was deemed to be the accounting acquirer in the transaction and the predecessor of Arch. Consequently, the accumulated deficit and the historical operations that are reflected in the Company’s consolidated financial statements prior to the Merger are those of ABS. All share information has been restated to reflect the effects of the Merger. The Company’s financial information has been consolidated with that of ABS after consummation of the Merger on June 26, 2013, and the historical financial statements of the Company before the Merger have been replaced with the historical financial statements of ABS before the Merger in this report. ABS was incorporated under the laws of the Commonwealth of Massachusetts on March 6, 2006 as Clear Nano Solutions, Inc. On April 7, 2008, ABS changed its name from Clear Nano Solutions, Inc. to Arch Therapeutics, Inc. Effective upon the closing of the Merger, ABS changed its name from Arch Therapeutics, Inc. to Arch Biosurgery, Inc. The Company has generated no operating revenues to date, and is devoting substantially all of its efforts toward product research and development. To date, the Company has principally raised capital through debt borrowings, the issuance of convertible debt, and the issuance of units consisting of common stock and warrants. The Company expects to incur substantial expenses for the foreseeable future relating to research, development and commercialization of its potential products. However, there can be no assurance that the Company will be successful in securing additional resources when needed, on terms acceptable to the Company, if at all. Therefore, there exists substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments related to the recoverability of assets that might be necessary despite this uncertainty.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Dec. 31, 2016
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The interim consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly our results of operations and financial position for the interim periods. Although we believe that the disclosures in these unaudited interim consolidated financial statements are adequate to make the information presented not misleading, certain information normally included in the footnotes prepared in accordance with US GAAP has been omitted as permitted by the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016, filed with the SEC on December 5, 2016. For a complete summary of our significant accounting policies, please refer to Note 2 included in Item 8 of our Form 10-K for the fiscal year ended September 30, 2016. There have been no material changes to our significant accounting policies during the three months ended December 31, 2016. The consolidated financial statements include the accounts of Arch Therapeutics, Inc. and its wholly owned subsidiary, Arch Biosurgery, Inc., a biotechnology company. All intercompany accounts and transactions have been eliminated in consolidation. The Company is in the development stage and is devoting substantially all of its efforts to developing technologies, raising capital, establishing customer and vendor relationships, and recruiting and retaining new employees. Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Accounting Standards Update (ASU) 2016-15, “Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Payments” was issued by the Financial Accounting Standards Board (FASB) in August 2016. The purpose of this amendment is to address eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The Company does not believe that this guidance will have a material impact on its consolidated results of operations, financial position or disclosures. ASU 2016-09, “Compensation—Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting” was issued by the FASB in March 2016. The purpose of this amendment is to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company does not believe that this guidance will have a material impact on its consolidated results of operations, financial position or disclosures. ASU 2016-02, “Leases (Topic 842)” was issued by the FASB in February 2016. The purpose of this amendment requires the recognition of lease assets and lease liabilities by lessees for those leases previously classified as operating leases. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company does not believe that this guidance will have a material impact on its consolidated results of operations, financial position or disclosures. ASU 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” was issued by the FASB in August 2014. The primary purpose of the ASU is to provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments should reduce diversity in the timing and content of footnote disclosure. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for the annual periods and interim periods thereafter. Early adoption is permitted. The Company is currently assessing the impact of this guidance, but does not believe that it will have a material impact on its consolidated results of operations, financial position or disclosures. ASU 2014-12, “Compensation-Stock Compensation (Topic 718) – Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” was issued by the FASB in June 2014. ASU 2014-12 requires that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. ASU 2014-12 is effective for public business entities for annual periods and interim periods within the annual periods beginning after December 15, 2015. Early adoption is permitted. The Company adopted ASU 2014-12 during our first quarter of fiscal year 2017, which had no impact on our financial statements, and will apply the new guidance in future periods. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents as of December 31, 2016 and September 30, 2016. Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash. The Company maintains its cash in bank deposits accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash. Deferred Offering Costs consist of fees and expenses incurred in connection with the public offering and sale of the Company’s common stock, including legal, accounting, printing and other related expenses. These costs are netted against the proceeds received as a reduction to additional paid-in capital Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of the related asset. Upon sale or retirement, the cost and accumulated depreciation are eliminated from their respective accounts, and the resulting gain or loss is included in income or loss for the period. Repair and maintenance expenditures are charged to expense as incurred. Long-lived assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable in accordance with ASC 360, Property, Plant and Equipment The Company records a discount to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized to noncash interest expense using the effective interest rate method over the term of the related debt to their date of maturity. If a security or instrument becomes convertible only upon the occurrence of a future event outside the control of the Company, or, is convertible from inception, but contains conversion terms that change upon the occurrence of a future event, then any contingent beneficial conversion feature is measured and recognized when the triggering event occurs and contingency has been resolved. In accordance with ASC 740, Income Taxes The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions when management determines that it is probable that a loss will be incurred related to these matters and the amount of the loss is reasonably determinable. The Company has no reserves related to uncertain tax positions as of December 31, 2016 and September 30, 2016. The Company expenses internal and external research and development costs, including costs of funded research and development arrangements, in the period incurred. The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation-Stock Compensation Equity In accordance with FASB ASC Topic 718, the Company has elected to use the Black-Scholes option pricing model to determine the fair value of options granted and recognizes the compensation cost of share-based awards on a straight-line basis over the vesting period of the award. The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by the fair value of the common stock and a number of other assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The Company does not have a history of market prices of the common stock, and as such volatility is estimated in accordance with ASC 718-10-S99 Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment The Company measures both financial and nonfinancial assets and liabilities in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures At December 31, 2016 and September 30,2016, the carrying amounts of cash, accounts payable, accrued expenses and other liabilities, and convertible notes approximate fair value because of their short-term nature. The fair value of note payable, which is influenced by interest rates and the Company’s liquidity, approximates carrying value. The Company evaluated all events or transactions that occurred commencing from January 1, 2017 and ending on January 31, 2017 the date which these consolidated financial statements were issued. The Company disclosed material subsequent events in Note 11. As reflected in the consolidated financial statements, the Company has an accumulated deficit, has suffered significant net losses and negative cash flows from operations, has not generated operating revenues, and has limited working capital. The continuation of our business as a going concern is dependent upon raising additional capital and eventually attaining and maintaining profitable operations. In particular, as of December 31, 2016, the Company will be required to raise additional capital, obtain alternative means of financial support, or both, in order to continue to fund operations, and therefore there is substantial doubt about our ability to continue as a going concern. The Company expects to incur substantial expenses for the foreseeable future for the research, development and commercialization of its potential products. In addition, the Company will require additional financing in order to seek to license or acquire new assets, research and develop any potential patents and the related compounds, and obtain any further intellectual property that the Company may seek to acquire. Historically, the Company has principally funded operations through debt borrowings, the issuance of convertible debt, and the issuance of units consisting of common stock and warrants. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The consolidated financial statements do not include any adjustments that might result from this uncertainty.

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT	3 Months Ended
	Dec. 31, 2016
Property, Plant and Equipment [Abstract]
PROPERTY AND EQUIPMENT	PROPERTY AND EQUIPMENT Estimated December 31, September 30, Computer equipment 3 years $ 4,293 $ - Furniture and fixtures 5 years 2,925 1,000 Lab equipment 5 years 1,000 1,000 8,218 3,925 Less - accumulated depreciation 4,044 3,925 Property and equipment, net $ 4,174 $ - Depreciation expense recorded for the three months ended December 31, 2016 and 2015 was $ 119 0

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	3 Months Ended
	Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
STOCK-BASED COMPENSATION	STOCK-BASED COMPENSATION On June 18, 2013, the Company established the 2013 Stock Incentive Plan (the “2013 Plan”). Under the 2013 Plan, during the fiscal year ended September 30, 2016, a maximum number of 16,114,256 3,000,000 3,000,000 19,114,256 As of December 31, 2016, a total of 11,214,212 5,177,500 Share-based awards During the three months ended December 31, 2016, the Company granted options to consultants to purchase 100,000 3 1 0.60 The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period, with the exception of options granted subject to a consulting agreement, whereby the option vesting period and the service period are defined pursuant to the terms of the consulting agreement. Share-based compensation expense for awards granted during the three months ended December 31, 2016 was based on the fair market value at period end or grant date fair value estimated using the Black-Scholes Option Pricing Model. The following assumptions were used to calculate the fair value of share based compensation for the three months ended December 31, 2016; expected volatility, 76.57 119.44 0.64 2.40 0.00 0.00 1 10 Expected price volatility is the measure by which the Company’s stock price is expected to fluctuate during the expected term of an option. The Company exited shell company status on June 26, 2013. In situations where a newly public entity has limited historical data on the price of its publicly traded shares and no other traded financial instruments, authoritative guidance is provided on estimating this assumption by basing its expected volatility on the historical, expected, or implied volatility of similar entities whose share option prices are publicly available. In making the determination as to similarity, the guidance recommends the consideration of industry, stage of life cycle, size and financial leverage of such other entities. The Company’s expected volatility is derived from the historical daily change in the market price of its common stock since it exited shell company status, as well as the historical daily change in the market price for the peer group as determined by the Company. For so called “plain vanilla” options granted to employees, the expected term of the options is based upon the simplified method as defined in ASC 718-10-S99 which averages an award’s weighted-average vesting period and the contractual term for share options. The Company will continue to use the simplified method until it has the historical data necessary to provide a reasonable estimate of expected life in accordance with ASC Topic 718. The Company’s estimation of the expected term for stock options not subject to the simplified method is based upon the contractual term of the option award. For the purposes of estimating the fair value of stock option awards, the risk-free interest rate used in the Black-Scholes calculation is based on the prevailing U.S. Treasury yield. The Company has never paid any dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Stock-based compensation expense recognized in the Company’s consolidated statements of operations is based on awards ultimately expected to vest, reduced for estimated forfeitures. Authoritative guidance requires forfeitures to be estimated at the time of grant, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Prior to the year ended September 30, 2015, the Company did not experience any forfeitures of stock options. During the year ended September 30, 2016 and the three months ended December 31, 2016, the Company experienced an insignificant number of forfeitures of stock options. Since the Company has a limited history of stock option forfeitures it continues to estimate the forfeiture rate of its outstanding stock options as zero, but will continually evaluate its historical data as a basis for determining expected forfeitures. Common Stock Options Option Weighted Weighted Aggregate Outstanding at September 30, 2016 12,379,210 $ 0.33 6.4 $ 4,341,816 Awarded 100,000 $ 0.60 - - Exercised - $ - - - Forfeited (100,000) $ 0.42 - - Outstanding at December 31, 2016 12,379,210 $ 0.33 6.19 $ 3,167,065 Vested 9,710,001 $ 0.32 6.03 $ 2,549,359 Vested and expected to vest at December 31, 2016 12,379,210 $ 0.33 6.19 $ 3,167,065 As of December 31, 2016, 5,447,529 167,000 148,000 16,000 54,000 151,000 94,000 As of December 31, 2016, there is approximately $ 507,000 1.78 Restricted Stock On August 9, 2016, we entered into a consulting agreement with Acorn Management Partners, LLC (“Acorn”). In consideration of the services to be provided under and in accordance with the terms of the consulting agreement, we issued (i) 225,000 0.72 375,000 0.72 75,000 90 75,000 120 75,000 150 125,000 125,000 125,000 2016 Non Vested at October 1 225,000 Awarded - Vested (150,000) Forfeited - Non Vested at December 30 75,000 2016 Non Vested at October 1 $ 0.72 Awarded - Vested 0.72 Forfeited - Non Vested at December 31 $ 0.72 Non-employee restricted shares subject to vesting are revalued at each vesting date and at the end of the reporting period, with all changes in fair value recorded as stock-based compensation expense. For the three months ended December 31, 2016, compensation expense recorded for the restricted stock awards was approximately $ 108,000

Restricted Stock Awarded Outsid

Restricted Stock Awarded Outside the 2013 Stock Incentive Plan	3 Months Ended
	Dec. 31, 2016
RESTRICTED STOCK [Line Items]
Restricted Assets Disclosure	Restricted Stock Awarded Outside the 2013 Stock Incentive Plan On May 3, 2016, the Company awarded 2,000,000 100 On August 6, 2015, we entered into separate consulting agreements with two investor relations firms, Excelsior Global Advisors LLC (“ Excelsior 300,000 0.35 150,000 150,000 75,000 50,000 25,000 2016 2015 Non Vested at October 1 2,000,000 150,000 Awarded - - Vested - (150,000) Forfeited - - Non Vested at December 31 2,000,000 - 2016 2015 Non Vested at October 1 $ 0.39 $ 0.35 Awarded - - Vested - 0.35 Forfeited - - Non Vested at December 31 $ 0.39 $ - For the three months ended December 31, 2016 and 2015, compensation expense recorded for the restricted stock awards was approximately $ 98,000 53,000

8% CONVERTIBLE NOTES

8% CONVERTIBLE NOTES	3 Months Ended
	Dec. 31, 2016
Debt Disclosure [Abstract]
8% CONVERTIBLE NOTES	8% CONVERTIBLE NOTES Beginning March 11, 2015 and through March 13, 2015, the Company entered into a series of substantially similar subscription agreements (each a “Subscription Agreement”) with each of Anson Investments Master Fund, Ltd., Equitec Specialists, LLC and Capital Ventures International (collectively, the “Note Investors”) pursuant to which the Company issued unsecured 8 750,000 250,000 The Notes were originally due and payable on March 13, 2016 (the “Stated Maturity Date”) and could not be prepaid. The Notes bore interest on the unpaid principal balance at a rate equal to eight percent (8.0%) (computed on the basis of the actual number of days elapsed in a 360-day year) per annum until either (a) converted into shares of the Company’s common stock, $0.001 par value per share (“Common Stock”) or (b) the outstanding principal and accrued interest on the Notes is paid in full by the Company. Interest on the Notes became due and payable upon their conversion or the Stated Maturity Date and could become due and payable upon the occurrence of an event of default under the Notes. The Notes contained customary events of default, which include, among other things, (i) the Company’s failure to pay other indebtedness of $100,000 or more within the specified cure period for such breach; (iii) the acceleration of the stated maturity of such indebtedness; (iii) the insolvency of the Company; and (iv) the receipt of final, non-appealable judgments in the aggregate amount of $100,000 or more. On September 8, 2015, we, along with the then current holders of the Convertible Notes, entered into a series of substantially similar subordination agreements with the Massachusetts Life Sciences Center (“ MLSC Subordination Agreements At any time prior to the Stated Maturity Date, the holders of the Notes had the right to convert some or all of such Notes into the number of shares of Common Stock determined by dividing (a) the aggregate sum of the (i) principal amount of the Note to be converted, and (ii) amount of any accrued but unpaid interest with respect to such portion of the Note to be converted; and (b) the conversion price then in effect (the shares of Common Stock issuable upon such conversion, the “Conversion Shares”). The initial conversion price was $ 0.20 4.99 9.99 The issuance and sale of the Notes and Conversion Shares (collectively, the “Securities”) was not, registered under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities may not be offered or sold in the United States absent registration under or exemption from the Securities Act and any applicable state securities laws. The Securities were issued and sold in reliance upon an exemption from registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act. During the three months ended December 31, 2015, $ 310,000 15,896 1,629,479 0 Derivative Liabilities The Company accounted for the conversion feature embedded within the Notes in accordance with ASC 815-10, Derivatives and Hedging On the Closing Date, the derivative liability was recorded at fair value of $ 354,988 395,012 102,151 0 As a result of the conversion of notes we recorded other income of $ 129,461 137,146 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Convertible Beginning balance at September 30, 2015 $ 335,092 Conversion of notes (129,461) Adjustments to estimated fair value (137,146) Ending balance at December 31, 2015 $ 68,485 September 30, October 29, December 31, 2015 2015 2015 Stated interest rate 8.0 % 8.0 % 8.0 % Exercise price per share $ 0.20 $ 0.20 $ 0.20 Expected volatility 80.0 % 85.0 % 110.0 % Risk-free interest rate 0.07 % 0.14 % 0.16 % Credit adjusted discount rate 22.0 % 22.0 % 25.0 % Remaining expected term of underlying securities (years) 0.46 0.38 0.21

NOTE PAYABLE

NOTE PAYABLE	3 Months Ended
	Dec. 31, 2016
Notes Payable [Abstract]
NOTE PAYABLE	NOTE PAYABLE On September 30, 2013, the Company entered into the Life Sciences Accelerator Funding Agreement (the “ MLSC Loan Agreement MLSC 1,000,000 MLSC Loan The loan originally bore interest at a rate of 10% per annum, and was originally scheduled to become fully due and payable on the earlier of (i) September 30, 2018, (ii) the occurrence of an event of default under the MLSC Loan Agreement, or (iii) the completion of a sale of substantially all of our assets, a change-of-control transaction (a “ Qualified Sale Qualified Financing 145,985 0.27 Of the $ 1,000,000 944,707 55,293 5,500 2,800 754,817 977,882 On September 28, 2016, the Company and MLSC entered into that certain Amendment Agreement to Arch Therapeutics, Inc. Accelerator Funding Agreement (the “ Amendment (i) interest on the MLSC Loan decreased from 10% per annum to 7% per annum beginning October 3, 2016; and (ii) the MLSC Loan has now become due and payable on the earlier of October 3, 2017 (the “ Maturity Date Qualified Financing 232,000 7

PRIVATE PLACEMENT FINANCING 201

PRIVATE PLACEMENT FINANCING 2014	3 Months Ended
	Dec. 31, 2016
2014 Private Placement
Private Placement [Line Items]
PRIVATE PLACEMENT FINANCING	2014 PRIVATE PLACEMENT FINANCING On January 30, 2014, the Company entered into a Securities Purchase Agreement (the “ Securities Purchase Agreement 2014 Investors 11,400,000 2014 Shares 0.25 34,200,000 2014 Warrants 2014 Warrant Shares 2,850,000 2014 Private Placement Financing Upon the closing of the 2014 Private Placement Financing on February 4, 2014 (the “ Closing Date 2014 Registration Rights Agreement Securities Act Additional Shares Cutback Provisions 2014 S-1 The 2014 Registration Rights Agreement also obligated the Company to register the resale of all securities covered by the 2014 Registration Rights Agreement on a short-form registration statement on Form S-3 as soon as the Company becomes eligible to use Form S-3. On October 31, 2016, the Company filed a resale registration statement on Form S-3 (the “ 2014 S-3 0.30 0.35 12 2014 Registration Statement Effective Date 0.40 18 11,400,000 Anti-Dilution Provisions The 2014 Warrants are also subject to customary adjustments in the event of stock dividends and splits, subsequent rights offerings and pro rata distributions to the Company’s common stockholders, and provide that they shall not be exercisable in the event and to the extent that the exercise thereof would result in the holder of the Warrant or any of its affiliates beneficially would then own more than 4.9 The Company may be required to make certain payments to the 2014 Investors under certain circumstances in the future pursuant to the terms of the Securities Purchase Agreement and the 2014 Registration Rights Agreement. These potential future payments include: (a) potential partial damages for failure to register the Common Stock issued or issuable upon exercise of 2014 Warrants (in a cash amount equal to 1% of the price paid to the Company by each investor in the 2014 Private Placement Financing on the date of and on each 30-day anniversary of such failure until the cure thereof; (b) amounts payable if the Company and its transfer agent fail to timely remove certain restrictive legends from certificates representing shares of Common Stock issued in the 2014 Private Placement Financing or issuable upon exercise of the 2014 Warrants; (c) expense reimbursement for the lead investor in the 2014 Private Placement Financing; and (d) payments in respect of claims for which the Company provides indemnification. There is no cap to the potential consideration. Cranshire December 2014 Amendment 0.35 0.20 0.40 0.20 1,300,170 As of December 2, 2014, Series B Warrants had been exercised for an aggregate issuance of 4,000,000 800,000 224,000 On March 13, 2015, the Company issued unsecured 8 750,000 0.20 5,700,000 11,400,000 17,100,000 624,016 2,255,000 451,000 75,321 On June 22, 2015 the Company entered into an amendment to the Series A Warrants and Series C Warrants to purchase Common Stock (the “June 2015 Amendment”), with Cranshire, to (i) delete the Anti-Dilution Provisions in the Series A Warrants and Series C Warrants; and (ii) extend the expiration date of the Series C Warrants from to 5:00 p.m., New York time, on July 2, 2015 to 5:00 p.m., New York time, on July 2, 2016. In consideration of Cranshire’s entrance into the June 2015 Amendment (and for no additional consideration), the Company agreed to issue to the holders of the 2014 Warrants up to 570,000 927,373 3,263,753 During the three months ended December 31, 2016, Series A Warrants had been exercised on a cash basis for an aggregate issuance of 1,100,000 220,000

PRIVATE PLACEMENT FINANCING 214

PRIVATE PLACEMENT FINANCING 2015	3 Months Ended
	Dec. 31, 2016
2015 Private Placement Financing [Member]
Private Placement [Line Items]
PRIVATE PLACEMENT FINANCING	2015 PRIVATE PLACEMENT FINANCING Beginning June 22, 2015 and through June 30, 2015, the Company entered into a series of substantially similar subscription agreements (each a “ Subscription Agreement 2015 Investors 14,390,754 Unit 0.22 2015 Private Placement Financing 2015 Shares 0.25 Series D Warrants 3,200,000 The Company’s obligation to issue and sell the 2015 Shares and the Series D Warrants and the corresponding obligation of the 2015 Investors to purchase such 2015 Shares and Series D Warrants were subject to a number of conditions precedent including, but not limited to, the amendment of the Company’s Series A Warrants and Series C Warrants to delete certain of the anti-dilution provisions contained therein, as described in Note 5, 2014 Private Placement Financing, and other customary closing conditions. The conditions precedent were satisfied June 30, 2015 (the “ Initial Closing Date Initial Closing Initial Investors 13,936,367 3,066,000 Second Closing Closings 100,000 On the Initial Closing Date, the Company entered into a registration rights agreement with the Initial Investors (the “ 2015 Registration Rights Agreement Resale Registration Statement 2015 S-1 The 2015 Registration Rights Agreement also obligated the Company to register the resale of all securities covered by the 2015 Registration Rights Agreement on a short-form registration statement on Form S-3 as soon as the Company becomes eligible to use Form S-3. On October 31, 2016, the Company filed a resale registration statement on Form S-3 (the “ 2015 S-3 Following each Closing, each 2015 Investor was also issued Series D Warrants to purchase shares of the Company’s Common Stock up to 100% of the 2015 Shares purchased by such 2015 Investor under such 2015 Investor’s Subscription Agreement. The Series D Warrants have an exercise price of $ 0.25 During the three months ended December 31, 2016, Series D Warrants had been exercised on a cash basis for an aggregate issuance of 250,000 62,500 Common Stock At the June 30, 2015 Initial Closing Date of the 2015 Private Placement Financing, the Company issued 13,936,367 454,387 Equity Value of Warrants The Company accounted for the Series D Warrants relating to the aforementioned 2015 Private Placement Financing in accordance with ASC 815-40, Derivatives and Hedging

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Dec. 31, 2016
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	11. SUBSEQUENT EVENTS During the period commencing January 1, 2017 and ending on January 31, 2017 additional Series D warrants have been exercised for an aggregate issuance of 250,000 shares of the Company’s Common Stock at and exercise price of $ 0.25 200,000 0.438 87,600

SUMMARY OF SIGNIFICANT ACCOUN16

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Dec. 31, 2016
Accounting Policies [Abstract]
Basis of Accounting	Basis of Accounting The consolidated financial statements include the accounts of Arch Therapeutics, Inc. and its wholly owned subsidiary, Arch Biosurgery, Inc., a biotechnology company. All intercompany accounts and transactions have been eliminated in consolidation. The Company is in the development stage and is devoting substantially all of its efforts to developing technologies, raising capital, establishing customer and vendor relationships, and recruiting and retaining new employees.
Use of Estimates	Use of Estimates Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
Recently Issued Accounting Guidance	Recently Issued Accounting Guidance Accounting Standards Update (ASU) 2016-15, “Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Payments” was issued by the Financial Accounting Standards Board (FASB) in August 2016. The purpose of this amendment is to address eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The Company does not believe that this guidance will have a material impact on its consolidated results of operations, financial position or disclosures. ASU 2016-09, “Compensation—Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting” was issued by the FASB in March 2016. The purpose of this amendment is to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company does not believe that this guidance will have a material impact on its consolidated results of operations, financial position or disclosures. ASU 2016-02, “Leases (Topic 842)” was issued by the FASB in February 2016. The purpose of this amendment requires the recognition of lease assets and lease liabilities by lessees for those leases previously classified as operating leases. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company does not believe that this guidance will have a material impact on its consolidated results of operations, financial position or disclosures. ASU 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” was issued by the FASB in August 2014. The primary purpose of the ASU is to provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments should reduce diversity in the timing and content of footnote disclosure. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for the annual periods and interim periods thereafter. Early adoption is permitted. The Company is currently assessing the impact of this guidance, but does not believe that it will have a material impact on its consolidated results of operations, financial position or disclosures. ASU 2014-12, “Compensation-Stock Compensation (Topic 718) – Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” was issued by the FASB in June 2014. ASU 2014-12 requires that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. ASU 2014-12 is effective for public business entities for annual periods and interim periods within the annual periods beginning after December 15, 2015. Early adoption is permitted. The Company adopted ASU 2014-12 during our first quarter of fiscal year 2017, which had no impact on our financial statements, and will apply the new guidance in future periods.
Cash	Cash The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents as of December 31, 2016 and September 30, 2016.
Concentration of Credit Risk	Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash. The Company maintains its cash in bank deposits accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash.
Deferred Oferring Costs	Deferred Offering Costs Deferred Offering Costs consist of fees and expenses incurred in connection with the public offering and sale of the Company’s common stock, including legal, accounting, printing and other related expenses. These costs are netted against the proceeds received as a reduction to additional paid-in capital
Property and Equipment	Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of the related asset. Upon sale or retirement, the cost and accumulated depreciation are eliminated from their respective accounts, and the resulting gain or loss is included in income or loss for the period. Repair and maintenance expenditures are charged to expense as incurred.
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable in accordance with ASC 360, Property, Plant and Equipment
Convertible Debt	Convertible Debt The Company records a discount to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized to noncash interest expense using the effective interest rate method over the term of the related debt to their date of maturity. If a security or instrument becomes convertible only upon the occurrence of a future event outside the control of the Company, or, is convertible from inception, but contains conversion terms that change upon the occurrence of a future event, then any contingent beneficial conversion feature is measured and recognized when the triggering event occurs and contingency has been resolved.
Income Taxes	Income Taxes In accordance with ASC 740, Income Taxes The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions when management determines that it is probable that a loss will be incurred related to these matters and the amount of the loss is reasonably determinable. The Company has no reserves related to uncertain tax positions as of December 31, 2016 and September 30, 2016.
Research and Development	Research and Development The Company expenses internal and external research and development costs, including costs of funded research and development arrangements, in the period incurred.
Accounting for Stock-Based Compensation	Accounting for Stock-Based Compensation The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation-Stock Compensation Equity In accordance with FASB ASC Topic 718, the Company has elected to use the Black-Scholes option pricing model to determine the fair value of options granted and recognizes the compensation cost of share-based awards on a straight-line basis over the vesting period of the award. The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by the fair value of the common stock and a number of other assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The Company does not have a history of market prices of the common stock, and as such volatility is estimated in accordance with ASC 718-10-S99 Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment
Fair Value Measurements	Fair Value Measurements The Company measures both financial and nonfinancial assets and liabilities in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures At December 31, 2016 and September 30,2016, the carrying amounts of cash, accounts payable, accrued expenses and other liabilities, and convertible notes approximate fair value because of their short-term nature. The fair value of note payable, which is influenced by interest rates and the Company’s liquidity, approximates carrying value.
Subsequent Events	The Company evaluated all events or transactions that occurred commencing from January 1, 2017 and ending on January 31, 2017 the date which these consolidated financial statements were issued. The Company disclosed material subsequent events in Note 11.
Going Concern Basis of Accounting	Going Concern Basis of Accounting As reflected in the consolidated financial statements, the Company has an accumulated deficit, has suffered significant net losses and negative cash flows from operations, has not generated operating revenues, and has limited working capital. The continuation of our business as a going concern is dependent upon raising additional capital and eventually attaining and maintaining profitable operations. In particular, as of December 31, 2016, the Company will be required to raise additional capital, obtain alternative means of financial support, or both, in order to continue to fund operations, and therefore there is substantial doubt about our ability to continue as a going concern. The Company expects to incur substantial expenses for the foreseeable future for the research, development and commercialization of its potential products. In addition, the Company will require additional financing in order to seek to license or acquire new assets, research and develop any potential patents and the related compounds, and obtain any further intellectual property that the Company may seek to acquire. Historically, the Company has principally funded operations through debt borrowings, the issuance of convertible debt, and the issuance of units consisting of common stock and warrants. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The consolidated financial statements do not include any adjustments that might result from this uncertainty.

PROPERTY AND EQUIPMENT (Tables)

PROPERTY AND EQUIPMENT (Tables)	3 Months Ended
	Dec. 31, 2016
Property, Plant and Equipment [Abstract]
PROPERTY AND EQUIPMENT	At December 31, 2016 and September 30, 2016, property and equipment consisted of: Estimated December 31, September 30, Computer equipment 3 years $ 4,293 $ - Furniture and fixtures 5 years 2,925 1,000 Lab equipment 5 years 1,000 1,000 8,218 3,925 Less - accumulated depreciation 4,044 3,925 Property and equipment, net $ 4,174 $ -

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables) - 2013 Stock Incentive Plan	3 Months Ended
	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Schedule of Share-based Compensation, Stock Options, Activity	Stock compensation activity under the 2013 Plan for the three months ended December 31, 2016 follows: Option Weighted Weighted Aggregate Outstanding at September 30, 2016 12,379,210 $ 0.33 6.4 $ 4,341,816 Awarded 100,000 $ 0.60 - - Exercised - $ - - - Forfeited (100,000) $ 0.42 - - Outstanding at December 31, 2016 12,379,210 $ 0.33 6.19 $ 3,167,065 Vested 9,710,001 $ 0.32 6.03 $ 2,549,359 Vested and expected to vest at December 31, 2016 12,379,210 $ 0.33 6.19 $ 3,167,065
Nonvested Restricted Stock Shares Activity	Restricted stock activity under the 2013 Plan for the three months ended December 31, 2016 follows: 2016 Non Vested at October 1 225,000 Awarded - Vested (150,000) Forfeited - Non Vested at December 30 75,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	The weighted average restricted stock award date fair value information for the three months ended December 31, 2016 follows: 2016 Non Vested at October 1 $ 0.72 Awarded - Vested 0.72 Forfeited - Non Vested at December 31 $ 0.72

Restricted Stock Awarded Outs19

Restricted Stock Awarded Outside the 2013 Stock Incentive Plan (Tables) - Restricted Stock Units (RSUs) [Member]	3 Months Ended
	Dec. 31, 2016
Nonvested Restricted Stock Shares Activity	Restricted Stock activity for the three months ended December 31, 2016 and 2015 is as follows: 2016 2015 Non Vested at October 1 2,000,000 150,000 Awarded - - Vested - (150,000) Forfeited - - Non Vested at December 31 2,000,000 -
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	The weighted average restricted stock award date fair value information for the three months ended December 31, 2016 and 2015 follows: 2016 2015 Non Vested at October 1 $ 0.39 $ 0.35 Awarded - - Vested - 0.35 Forfeited - - Non Vested at December 31 $ 0.39 $ -

8% CONVERTIBLE NOTES (Tables)

8% CONVERTIBLE NOTES (Tables)	3 Months Ended
	Dec. 31, 2016
Debt Disclosure [Abstract]
Schedule of Derivative Liabilities at Fair Value	As a result of the conversion of notes we recorded other income of $ 129,461 137,146 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Convertible Beginning balance at September 30, 2015 $ 335,092 Conversion of notes (129,461) Adjustments to estimated fair value (137,146) Ending balance at December 31, 2015 $ 68,485
Schedule of Assumptions Used	The derivative liability was valued as of September 30, 2015, October 29, 2015 (weighted average conversion date) and December 31, 2015 using Monte Carlo Simulations with the following assumptions: September 30, October 29, December 31, 2015 2015 2015 Stated interest rate 8.0 % 8.0 % 8.0 % Exercise price per share $ 0.20 $ 0.20 $ 0.20 Expected volatility 80.0 % 85.0 % 110.0 % Risk-free interest rate 0.07 % 0.14 % 0.16 % Credit adjusted discount rate 22.0 % 22.0 % 25.0 % Remaining expected term of underlying securities (years) 0.46 0.38 0.21

PROPERTY AND EQUIPMENT (Details

PROPERTY AND EQUIPMENT (Details) - USD ($)	3 Months Ended
	Dec. 31, 2016	Sep. 30, 2016
Property, plant and equipment, gross, total	$ 8,218	$ 3,925
Less - accumulated depreciation	4,044	3,925
Property, plant and equipment, net, total	$ 4,174	0
Furniture and fixtures
Property, plant and equipment, useful life	5 years
Property, plant and equipment, gross, total	$ 2,925	1,000
Lab equipment
Property, plant and equipment, useful life	5 years
Property, plant and equipment, gross, total	$ 1,000	1,000
Computer equipment
Property, plant and equipment, useful life	3 years
Property, plant and equipment, gross, total	$ 4,293	$ 0

PROPERTY AND EQUIPMENT (Detai22

PROPERTY AND EQUIPMENT (Details Textual) - USD ($)	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Depreciation expense	$ 119	$ 0

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details) - USD ($)	3 Months Ended	12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016
Option Shares Outstanding
Outstanding, Beginning Balance	12,379,210
Awarded	100,000
Exercised	0
Forfeited	(100,000)
Outstanding, Ending Balance	12,379,210	12,379,210
Vested	9,710,001
Vested and expected to vest	12,379,210
Weighted Average Exercise Price
Outstanding, Beginning Balance	$ 0.33
Awarded	0.6
Exercised	0
Forfeited	0.42
Outstanding, Ending Balance	0.33	$ 0.33
Vested	0.32
Vested and expected to vest	$ 0.33
Weighted Average Remaining Contractual Term (years)
Balance	6 years 2 months 8 days	6 years 4 months 24 days
Awarded	0 years
Exercised	0 years
Forfeited	0 years
Vested	6 years 11 days
Vested and expected to vest	6 years 2 months 8 days
Aggregate Intrinsic Value
Outstanding, Beginning Balance	$ 4,341,816
Awarded	0
Exercised	0
Forfeited	0
Outstanding, Ending Balance	3,167,065	$ 4,341,816
Vested	2,549,359
Vested and expected to vest	$ 3,167,065

STOCK-BASED COMPENSATION (Det24

STOCK-BASED COMPENSATION (Detail 1) - Restricted Stock - shares	1 Months Ended	3 Months Ended
	May 03, 2016	Dec. 31, 2016
Weighted Average Grant Date Fair Value
Awarded	2,000,000
2013 Incentive Plan [Member]
Weighted Average Grant Date Fair Value
Non Vested, Beginning Balance		225,000
Awarded		0
Vested		(150,000)
Forfeited		0
Non Vested, Ending Balance		75,000

STOCK-BASED COMPENSATION (Det25

STOCK-BASED COMPENSATION (Detail 2) - 2013 Incentive Plan [Member]	3 Months Ended
	Dec. 31, 2016$ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non Vested, Beginning Balance	$ 0.72
Awarded	0
Vested	0.72
Forfeited	0
Non Vested, Ending Balance	$ 0.72

STOCK-BASED COMPENSATION (Det26

STOCK-BASED COMPENSATION (Details Textual) - USD ($)	Oct. 02, 2016	Aug. 09, 2016	Dec. 31, 2016	Dec. 31, 2015	Sep. 30, 2016	Jun. 18, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase In Aggregate Number Of Shares						3,000,000
Share-based compensation arrangement by share-based payment award, options, outstanding, weighted average remaining contractual term			6 years 2 months 8 days		6 years 4 months 24 days
Share-based compensation arrangements by share-based payment award, options, grants in period, weighted average exercise price			$ 0.6
Share-based compensation arrangement by share-based payment award, fair value assumptions, expected volatility rate, minimum			76.57%
Share-based compensation arrangement by share-based payment award, fair value assumptions, expected volatility rate, maximum			119.44%
Share-based compensation arrangement by share-based payment award, fair value assumptions, risk free interest rate, minimum			0.64%
Share-based compensation arrangement by share-based payment award, fair value assumptions, risk free interest rate, maximum			2.40%
Share based compensation arrangement by share based payment award fair value assumptions expected forfeiture rate			0.00%
Share-based compensation arrangement by share-based payment award, fair value assumptions, expected dividend rate			0.00%
Share-based compensation arrangement by share-based payment award, number of shares available for grant			5,447,529
Common Stock, Shares Authorized			300,000,000		300,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			100,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares			9,710,001
Non-Employee Resricted Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation expense			$ 108,000
Research and Development Expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation expense			16,000	$ 54,000
General and Administrative Expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation expense			$ 151,000	94,000
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, fair value assumptions, expected term			10 years
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, fair value assumptions, expected term			1 year
Employees And Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation expense			$ 167,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			11,214,212
Consultants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation expense				$ 148,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			5,177,500
2013 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period			1 year
Share-based compensation arrangements by share-based payment award, options, grants in period, weighted average exercise price		$ 0.72	$ 0.60
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, total			$ 507,000
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition			1 year 9 months 11 days
Common Stock, Shares Authorized	19,114,256					16,114,256
Share-based compensation arrangement by share-based payment award, number of additional shares authorized	3,000,000
Share Price		$ 0.72
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period		225,000
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Per Employee		375,000
2013 Stock Incentive Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options, outstanding, weighted average remaining contractual term			3 years
2013 Stock Incentive Plan | Chief Executive Officer [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period		90 days
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Per Employee		125,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares		75,000
2013 Stock Incentive Plan | Chief Executive Officer [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period		120 days
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Per Employee		125,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares		75,000
2013 Stock Incentive Plan | Chief Executive Officer [Member] | Share-based Compensation Award, Tranche Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period		150 days
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Per Employee		125,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares		75,000
Plan 2013 [Member] | Consultants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			100,000

Restricted Stock Awarded Outs27

Restricted Stock Awarded Outside the 2013 Stock Incentive Plan (Details) - Restricted Stock Units (RSUs) [Member] - shares	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Non Vested, Beginning Balance	2,000,000	150,000
Awarded	0	0
Vested	0	(150,000)
Forfeited	0	0
Non Vested, Ending Balance	2,000,000	0

Restricted Stock Awarded Outs28

Restricted Stock Awarded Outside the 2013 Stock Incentive Plan (Details 1) - Restricted Stock [Member] - $ / shares	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Non Vested, Beginning Balance	$ 0.39	$ 0.35
Awarded	0	0
Vested	0	0.35
Forfeited	0	0
Non Vested, Ending Balance	$ 0.39	$ 0

Restricted Stock Awarded Outs29

Restricted Stock Awarded Outside the 2013 Stock Incentive Plan (Details Textual) - USD ($)	Aug. 06, 2015	May 03, 2016	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares			9,710,001
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			100,000
General and Administrative Expense [Member]
Allocated Share-based Compensation Expense			$ 151,000	$ 94,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period	300,000
Share Price	$ 0.35
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	150,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		2,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		100.00%
Restricted Stock [Member] | General and Administrative Expense [Member]
Allocated Share-based Compensation Expense			$ 98,000	$ 53,000
September 4, 2015 [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares	75,000
October 2, 2015 [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares	50,000
November 4, 2015 [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares	25,000
Chief Executive Officer [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares	150,000

8% CONVERTIBLE NOTES (Details)

8% CONVERTIBLE NOTES (Details) - Fair Value, Inputs, Level 3 [Member] - Convertible Debt [Member]	3 Months Ended
	Dec. 31, 2015USD ($)
Derivative [Line Items]
Beginning balance	$ 335,092
Conversion of notes	(129,461)
Adjustments to estimated fair value	(137,146)
Ending balance	$ 68,485

8% CONVERTIBLE NOTES (Details 1

8% CONVERTIBLE NOTES (Details 1) - Derivative Liability - $ / shares	12 Months Ended		13 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Oct. 29, 2015
Derivative [Line Items]
Stated interest rate	8.00%	8.00%	8.00%
Exercise price per share	$ 0.2	$ 0.2	$ 0.2
Expected volatility	110.00%	80.00%	85.00%
Risk-free interest rate	0.16%	0.07%	0.14%
Credit adjusted discount rate	25.00%	22.00%	22.00%
Remaining expected term of underlying securities (years)	2 months 16 days	5 months 16 days	4 months 17 days

8% CONVERTIBLE NOTES (Details T

8% CONVERTIBLE NOTES (Details Textual) - USD ($)	Mar. 13, 2016	Mar. 13, 2015	Dec. 31, 2016	Dec. 31, 2015	Sep. 30, 2016
8% Convertible Notes [Line Items]
Debt Instrument, Face Amount			$ 0		$ 0
Debt Instrument, Convertible, Conversion Price		$ 0.20
Derivative Liability, Fair Value, Amount Not Offset Against Collateral			354,988
Proceeds from Issuance of Debt			395,012
Interest Expense, Debt			$ 5,500	$ 2,800
Convertible Notes Payable, Current					$ 0
Common Stock [Member]
8% Convertible Notes [Line Items]
Stock Issued During Period, Shares, Conversion of Convertible Securities				1,629,479
Debt [Member]
8% Convertible Notes [Line Items]
Interest Expense, Debt				$ 102,151
Maximum [Member]
8% Convertible Notes [Line Items]
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger		9.99%
Minimum [Member]
8% Convertible Notes [Line Items]
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger		4.99%
Subscription Agreement [Member]
8% Convertible Notes [Line Items]
Debt Instrument, Face Amount		$ 750,000
Debt Instrument, Interest Rate, Stated Percentage		8.00%
Debt Conversion, Description	either (a) converted into shares of the Companys common stock, $0.001 par value per share (Common Stock) or (b) the outstanding principal and accrued interest on the Notes is paid in full by the Company. Interest on the Notes became due and payable upon their conversion or the Stated Maturity Date and could become due and payable upon the occurrence of an event of default under the Notes. The Notes contained customary events of default, which include, among other things, (i) the Companys failure to pay other indebtedness of $100,000 or more within the specified cure period for such breach; (iii) the acceleration of the stated maturity of such indebtedness; (iii) the insolvency of the Company; and (iv) the receipt of final, non-appealable judgments in the aggregate amount of $100,000 or more.
Other Noncash Expense				129,461
Derivative, Gain on Derivative				137,146
Subscription Agreement [Member] | Investor [Member]
8% Convertible Notes [Line Items]
Debt Instrument, Face Amount		$ 250,000
Convertible Debt [Member]
8% Convertible Notes [Line Items]
Debt Instrument, Periodic Payment, Interest				15,896
Convertible Notes Payable [Member]
8% Convertible Notes [Line Items]
Debt Instrument, Annual Principal Payment				$ 310,000

NOTE PAYABLE (Details Textual)

NOTE PAYABLE (Details Textual) - USD ($)	1 Months Ended	3 Months Ended
	Sep. 28, 2016	Dec. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Sep. 30, 2013
Note Payable [Line Items]
Interest Expense, Debt		$ 5,500	$ 2,800
Debt instrument, unamortized discount		754,817		$ 977,882
Loans
Note Payable [Line Items]
Notes Payable		944,707
2014 Warrant
Note Payable [Line Items]
Notes Payable		55,293
Massachusetts Life Sciences Center
Note Payable [Line Items]
Subordinated Debt		$ 1,000,000			$ 1,000,000
Debt Instrument, Payment Terms	(i) interest on the MLSC Loan decreased from 10% per annum to 7% per annum beginning October 3, 2016; and (ii) the MLSC Loan has now become due and payable on the earlier of October 3, 2017 (the Maturity Date), the occurrence of a Corporate Event (which is defined as the occurrence of either a Qualified Sale or Qualified Financing), or the occurrence of a Default (as defined in the promissory note issued in connection with the MLSC Loan Agreement). In addition, under the terms of the Amendment, (a) beginning October 3, 2016, the Company began amortizing the principal and accrued interest under the MLSC Loan by making the first of 13 monthly payments of approximately $106,022, with the last payment scheduled to occur on the Maturity Date; and (b) the term Qualified Financing is now defined to mean one or more financing transactions in which we receive, in a single transaction or series of transactions, cumulative net proceeds of not less than five million dollars ($5,000,000) at any time after October 3, 2016.	The loan originally bore interest at a rate of 10% per annum, and was originally scheduled to become fully due and payable on the earlier of (i) September 30, 2018, (ii) the occurrence of an event of default under the MLSC Loan Agreement, or (iii) the completion of a sale of substantially all of our assets, a change-of-control transaction (a Qualified Sale) or one or more financing transactions in which we receive from third parties other than our then existing shareholders net proceeds of $5,000,000 or more in a 12-month period (a Qualified Financing)
Warrants Issued To Purchase Of Common Stock					145,985
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.27
Debt Instrument, Increase, Accrued Interest	$ 232,000
Debt Instrument, Interest Rate, Stated Percentage	7.00%

PRIVATE PLACEMENT FINANCING 234

PRIVATE PLACEMENT FINANCING 2014 (Details Textual) - USD ($)	Jul. 02, 2016	Mar. 13, 2015	Jun. 22, 2015	Dec. 02, 2014	Dec. 01, 2014	Jan. 30, 2014	Dec. 31, 2016	Dec. 31, 2015	Sep. 30, 2016
Private Placement [Line Items]
Common Stock, Shares Issued							138,182,075		136,657,075
Gains (Losses) on Extinguishment of Debt				$ 224,000
Gain (Loss) On Warrant Derivative Modification		$ 624,016
Debt Instrument, Face Amount							$ 0		$ 0
Embedded Derivative, No Longer Bifurcated, Amount Reclassified to Stockholders' Equity			$ 3,263,753
Subscription Agreement [Member]
Private Placement [Line Items]
Debt Instrument, Interest Rate, Stated Percentage		8.00%
Debt Instrument, Face Amount		$ 750,000
2014 Private Placement [Member]
Private Placement [Line Items]
Stock issued during period, shares, new issues						11,400,000
Share price						$ 0.25
Common Stock Issuance Upon Exercise Of Warrants						34,200,000
Proceeds from issuance of common stock						$ 2,850,000
Series A Warrants
Private Placement [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights							$ 0.30
Exercises of Warrants								$ 220,000
Reduction In Exercise Price Of Warrants		$ 0.20
Additional Warrants Issued		5,700,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights							1,100,000
Series A Warrants | Minimum [Member]
Private Placement [Line Items]
Class of Warrant or Right, Outstanding		11,400,000
Series A Warrants | Maximum [Member]
Private Placement [Line Items]
Class of Warrant or Right, Outstanding		17,100,000
Series B Warrants
Private Placement [Line Items]
Proceeds from issuance of common stock				$ 800,000
Class of Warrant or Right, Exercise Price of Warrants or Rights							$ 0.35
Common Stock, Shares Issued				4,000,000
Gain On Warrant Derivative Modification					$ 1,300,170
Series B Warrants | Minimum [Member]
Private Placement [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.20
Series B Warrants | Maximum [Member]
Private Placement [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights					0.35
Series B Warrants | After Issuance
Private Placement [Line Items]
Exercise Term Of Warrants							12 years
Series C Warrants
Private Placement [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights							$ 0.40
Percentage Of Exercisability Of Warrants							4.90%
Exercise Term Of Warrants							18 months
Derivative, Fair Value, Net, Total			2,255,000
Exercises of Warrants			451,000
Gains (Losses) on Extinguishment of Debt			$ 75,321
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Exercised	11,400,000
Series C Warrants | Minimum [Member]
Private Placement [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights					0.20
Series C Warrants | Maximum [Member]
Private Placement [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.40
2014 Warrant | 2014 Private Placement [Member]
Private Placement [Line Items]
Stock issued during period, shares, new issues			570,000
Series A And Series C Warrants [Member]
Private Placement [Line Items]
Derivative, Gain (Loss) on Derivative, Net			$ 927,373

PRIVATE PLACEMENT FINANCING 235

PRIVATE PLACEMENT FINANCING 2015 (Details Textual) - USD ($)	Jul. 02, 2015	Jun. 30, 2015	Jun. 30, 2015	Dec. 31, 2016
2015 Investors [Member]
Private Placement [Line Items]
Stock Issued During Period, Shares, New Issues	454,387	13,936,367
Proceeds from Issuance of Common Stock	$ 100,000		$ 3,066,000
Series D Warrants [Member]
Private Placement [Line Items]
Stock Issued During Period, Shares, New Issues				250,000
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 0.25
Proceeds from Issuance of Common Stock				$ 62,500
2015 Private Placement [Member]
Private Placement [Line Items]
Stock Issued During Period, Shares, New Issues		14,390,754	13,936,367
Share Price		$ 0.22	$ 0.22
Proceeds from Issuance of Common Stock		$ 3,200,000
2015 Private Placement [Member] | Series D Warrants [Member]
Private Placement [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.25	$ 0.25

PRIVATE PLACEMENT FINANCING 236

PRIVATE PLACEMENT FINANCING 2016 (Details Textual) - USD ($)	May 26, 2016	May 31, 2016	Dec. 31, 2016
Registration Rights Agreement [Member]
Private Placement [Line Items]
Stock Issued During Period, Shares, New Issues		16,482,082
Investor's Subscription Agreement [Member]
Private Placement [Line Items]
Percentage of shares Purchased by Investors			75.00%
Series E Warrant [Member]
Private Placement [Line Items]
Stock Issued During Period, Shares, New Issues		7,063,748	175,000
Terms Of Warrants			(i) at any time during the term of the Series E Warrants, we may reduce the then-current exercise price to any amount and for any period of time deemed appropriate by our Board of Directors (the Board); and (ii) certain of the Series E Warrants provide that they shall not be exercisable in the event and to the extent that the exercise thereof would result in the holder of the Series E Warrant, together with its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the holders, would be deemed to beneficially own more than 4.99% of the Common Stock; provided, however, the holder, upon notice to us, may increase or decrease the ownership limitation, provided that any increase is limited to a maximum of 9.99% of the Companys Common Stock, and any increase in the ownership limitation will not become effective until the 61st day after delivery of such notice.
Proceeds from Issuance of Common Stock			$ 76,650
Private Placement 2016 [Member]
Private Placement [Line Items]
Stock Issued During Period, Shares, New Issues	9,418,334	9,418,334
Share Price	$ 0.36
Proceeds from Issuance of Common Stock			$ 3,390,600
Private Placement 2016 [Member] | Maxim Group LLC [Member]
Private Placement [Line Items]
Underwriting Fees, Percentage			8.20%
Proceeds from Issuance of Common Stock			$ 2,084,000
Payments of Stock Issuance Costs			$ 170,888
Private Placement 2016 [Member] | Series E Warrant [Member]
Private Placement [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	0.75
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.4380

SUBSEQUENT EVENTS (Details Text

SUBSEQUENT EVENTS (Details Textual) - USD ($)	1 Months Ended
	Feb. 01, 2017	Jan. 31, 2017
Common Stock [Member]
Business Acquisition, Equity Interests Issued Or Issuable [Line Items]
Proceeds from Issuance of Common Stock		$ 62,500
Series D Warrants [Member]
Business Acquisition, Equity Interests Issued Or Issuable [Line Items]
Common Stock Issuance Upon Exercise Of Warrants		250,000
Series E warrants [Member]
Business Acquisition, Equity Interests Issued Or Issuable [Line Items]
Common Stock Issuance Upon Exercise Of Warrants		200,000
Series E warrants [Member] | Common Stock [Member]
Business Acquisition, Equity Interests Issued Or Issuable [Line Items]
Proceeds from Issuance of Common Stock		$ 87,600
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.438
Subsequent Event [Member] | Series A Warrants [Member]
Business Acquisition, Equity Interests Issued Or Issuable [Line Items]
Common Stock Issuance Upon Exercise Of Warrants	0
Subsequent Event [Member] | Series A Warrants [Member] | Common Stock [Member]
Business Acquisition, Equity Interests Issued Or Issuable [Line Items]
Proceeds from Issuance of Common Stock	$ 0
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.25