Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Dec. 31, 2018 | Jan. 31, 2019 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2018 | |
Document Fiscal Year Focus | 2,019 | |
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 | Non-accelerated Filer | |
Trading Symbol | ARTH | |
Entity Common Stock, Shares Outstanding | 164,961,849 | |
Entity Emerging Growth Company | false | |
Entity Small Business | true |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Current assets: | ||
Cash | $ 3,377,653 | $ 4,667,410 |
Prepaid expenses and other current assets | 240,012 | 151,794 |
Total current assets | 3,617,665 | 4,819,204 |
Long-term assets: | ||
Property and equipment, net | 15,480 | 17,261 |
Other assets | 3,500 | 3,500 |
Total long-term assets | 18,980 | 20,761 |
Total assets | 3,636,645 | 4,839,965 |
Current liabilities: | ||
Accounts payable | 130,632 | 160,946 |
Accrued expenses and other liabilities | 145,920 | 127,439 |
Total current liabilities | 276,552 | 288,385 |
Long-term liabilities: | ||
Long-term derivative liability | 4,024,165 | 3,191,752 |
Total long-term liabilities | 4,024,165 | 3,191,752 |
Total liabilities | 4,300,717 | 3,480,137 |
Commitments and contingencies | ||
Stockholders' equity (deficit): | ||
Common stock, $0.001 par value, 300,000,000 shares authorized, 164,961,849 and 164,297,013 shares issued and outstanding as of December 31, 2018 and September 30, 2018, respectively | 162,197 | 159,815 |
Additional paid-in capital | 36,091,446 | 35,517,491 |
Accumulated deficit | (36,917,715) | (34,317,478) |
Total stockholders' equity (deficit) | (664,072) | 1,359,828 |
Total liabilities and stockholders' equity (deficit) | $ 3,636,645 | $ 4,839,965 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Sep. 30, 2018 |
Statement of Financial Position [Abstract] | ||
Common Stock, Par Value | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 300,000,000 | 300,000,000 |
Common Stock, Shares Issued | 164,961,849 | 164,297,013 |
Common Stock, Shares Outstanding | 164,961,849 | 164,297,013 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Revenues | $ 0 | $ 0 |
Operating expenses: | ||
General and administrative expenses | 1,178,622 | 1,001,511 |
Research and development expenses | 589,202 | 580,862 |
Total operating expenses | 1,767,824 | 1,582,373 |
Operating loss | (1,767,824) | (1,582,373) |
Other income (expense): | ||
(Increase)/decrease to fair value of derivative | (832,413) | 1,971,549 |
Total other income (expense) | (832,413) | 1,971,549 |
Net income (loss) | $ (2,600,237) | $ 389,176 |
Earnings per share - basic | ||
Net income (loss) per common share - basic | $ (0.02) | $ 0 |
Weighted common shares - basic | 161,057,300 | 150,144,575 |
Earnings per share - diluted | ||
Net income (loss) per common share - diluted | $ (0.02) | $ 0 |
Weighted common shares - diluted | 161,057,300 | 163,527,032 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (2,600,237) | $ 389,176 |
Adjustments to reconcile net (loss) income loss to cash used in operating activities: | ||
Depreciation | 1,781 | 724 |
Stock-based compensation | 522,437 | 434,820 |
Issuance of restricted stock for services | 21,500 | 0 |
Increase (decrease) to fair value of derivative | 832,413 | (1,971,549) |
(Increase) decrease in: | ||
Prepaid expenses and other current assets | (88,218) | 13,939 |
Increase (decrease) in: | ||
Accounts payable | (30,314) | 24,400 |
Accrued expenses and other liabilities | 18,481 | 12,586 |
Net cash used in operating activities | (1,322,157) | (1,095,904) |
Cash flows from investing activities: | ||
Purchases of property and equipment | 0 | (3,463) |
Net cash used in investing activities | 0 | (3,463) |
Cash flows from financing activities: | ||
Proceeds from exercise of warrants | 0 | 63,388 |
Proceeds from exercise of stock options | 32,400 | 0 |
Net cash provided by financing activities | 32,400 | 63,388 |
Net (decrease) in cash | (1,289,757) | (1,035,979) |
Cash, beginning of year | 4,667,410 | 5,994,052 |
Cash, end of period | 3,377,653 | 4,958,073 |
Non-cash financing activities: | ||
Exercise of stock options - cashless | 477 | 117 |
Restricted stock - vested | $ 1,817 | $ 0 |
BASIS OF PRESENTATION AND DESCR
BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS | 3 Months Ended |
Dec. 31, 2018 | |
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, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. 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, 2018, filed with the SEC on December 18, 2018. 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, 2018. There have been no material changes to our significant accounting policies during the three months ended December 31, 2018. Basis of Presentation 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 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 Accounting Standards Update (ASU) 2018-07, “Compensation—Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based Payment Accounting” was issued by the Financial Accounting Standards Board (FASB) in June 2018. The purpose of this amendment is to address aspects of the accounting for nonemployee share-based payment transactions. 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 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 adopted ASU 2016-15 during our first quarter of fiscal year 2019, which had no impact on our consolidated financial statements, and will apply the new guidance in future periods. 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 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, 2018 and September 30, 2018. 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 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 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 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 Income Taxes In accordance with FASB ASC 740, Income Taxes , we recognize deferred tax assets and liabilities for the expected future tax consequences or events that have been included in our consolidated financial statements and/or tax returns. Deferred tax assets and liabilities are based upon the differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and for loss and credit carryforwards using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. We provide 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. On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was signed into United States law. The TCJA includes a number of changes to existing tax law, including, among other things, a permanent reduction in the federal corporate income tax rate to a flat rate of 21%, effective January 1, 2018, as well as the elimination of net operating loss carrybacks for losses arising in taxable years beginning after December 31, 2017. Further, operating losses arising in tax years after December 31, 2017, are carried forward indefinitely. Due to the TCJA, the Company’s deferred tax assets and liabilities recognized prior to 2017 were revalued at the newly enacted tax rates, which resulted in a corresponding adjustment in the valuation allowance. 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 The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation-Stock Compensation (“FASB ASC Topic 718”), which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the consolidated financial statements based on their fair values. The Company accounts for non-employee stock-based compensation in accordance with the guidance of FASB ASC Topic 505, Equity (“FASB ASC Topic 505”), which requires that companies recognize compensation expense based on the estimated fair value of options granted to non-employees over their vesting period, which is generally the period during which services are rendered by such non-employees. FASB ASC Topic 505 requires the Company to re-measure the fair value of stock options issued to non-employee at each reporting period during the vesting period or until services are complete. 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. Prior to January 1, 2018, the Company did not have a sufficient history of market prices of the common stock, and as such volatility was estimated in accordance with ASC 718-10-S99 Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment (“SAB No. 107”), using historical volatilities of similar public entities. Effective January 1, 2018, the Company is using its historical market prices to calculate the volatility of its common stock. The life term for awards uses simplified method for all “plain vanilla” options, as defined in ASC 718-10-S99 and the contractual term for all other employee and non-employee awards. The risk-free interest rate assumption is based on observed interest rates appropriate for the terms of our awards. The dividend yield assumption is based on history and the expectation of paying no dividends. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation expense, when recognized in the consolidated financial statements, is based on awards that are ultimately expected to vest. 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 , including those that are recognized or disclosed in the consolidated financial statements at fair value on a recurring basis. The standard created a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs that reflect the Company’s own views about the assumptions market participants would use in pricing the asset or liability. At December 31, 2018 and September 30, 2018, Derivative Liabilities The Company accounts for its warrants and other derivative financial instruments as either equity or liabilities based upon the characteristics and provisions of each instrument, in accordance with FASB ASC Topic 815, Derivatives and Hedging . Warrants classified as equity are recorded at fair value as of the date of issuance on the Company’s consolidated balance sheets and no further adjustments to their valuation are made. Warrants classified as derivative liabilities and other derivative financial instruments that require separate accounting as liabilities are recorded on the Company’s consolidated balance sheets at their fair value on the date of issuance and will be revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. Management estimates the fair value of these liabilities using option pricing models and assumptions that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life, yield, and risk-free interest rate. Subsequent Events The Company evaluated all events or transactions that occurred commencing from January 1, 2019 and ending on January 31, 2019 the date which these consolidated financial statements were issued. The Company disclosed material subsequent events in Note 10. 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, 2018, 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 into 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. Provisions in the Securities Purchase Agreements that the Company entered into on February 20, 2017 (“2017 SPA”) and on June 28, 2018 (“2018 SPA”) restrict the Company’s ability to effect or enter into an agreement to effect any issuance by the Company or any of its subsidiaries of Common Stock or securities convertible, exercisable or exchangeable for Common Stock (or a combination of units thereof) involving a Variable Rate Transaction (as defined in the 2017 SPA and 2018 SPA) including, but not limited to, an equity line of credit or “At-the-Market” financing facility until the three lead investors in the 2017 Financing and the institutional investors in the 2018 SPA collectively own less than 20% of the Series F Warrants and the Series G Warrants purchased by them pursuant to the 2017 SPA and 2018 SPA, respectively. In addition, the 2018 SPA restricted, subject to certain customary exemptions, from June 28, 2018 until 90 days after July 2, 2018 (i.e., September 30, 2018), the Company and its subsidiaries from entering into any agreement to issue or announcing the issuance or proposed issuance of any shares of Common Stock or securities convertible, exercisable or exchangeable for Common Stock. 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, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 3. PROPERTY AND EQUIPMENT At December 31, 2018 and September 30, 2018, property and equipment consisted of: Estimated Useful Life December 31, 2018 September 30, 2018 Furniture and fixtures 5 years $ 9,357 $ 9,357 Leasehold improvements 3 years 8,983 8,983 Computer equipment 3 years 8,686 8,686 Lab equipment 5 years 1,000 1,000 28,026 28,026 Less – accumulated depreciation 12,546 10,765 Property and equipment, net $ 15,480 $ 17,261 For the three months ended December 31, 2018 and 2017 depreciation expense recorded was $1,781 and $724, respectively. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | 4. STOCK-BASED COMPENSATION 2013 Stock Incentive Plan On June 18, 2013, the Company established the 2013 Stock Incentive Plan (“2013 Plan”). Under the 2013 Plan, during the fiscal year ended September 30, 2018, a maximum number of 22,114,256 shares of the Company’s authorized and available common stock could be issued in the form of options, stock appreciation rights, sales or bonuses of restricted stock, restricted stock units or dividend equivalent rights, and an award may consist of one such security or benefit, or two or more of them in any combination or alternative. The 2013 Plan provides that on the first business day of each fiscal year commencing with fiscal year 2014, the number of shares of our common stock reserved for issuance under the 2013 Plan for all awards except for incentive stock option awards will be subject to increase by an amount equal to the lesser of (A) 3,000,000 Shares, (B) four (4) percent of the number of shares outstanding on the last day of the immediately preceding fiscal year of the Company, or (C) such lesser number of shares as determined by the Company’s Board of Directors (“Board”). The exercise price of each option shall be the fair value as determined in good faith by the Board at the time each option is granted. On October 1, 2018, the aggregate number of authorized shares under the Plan was further increased by 3,000,000 shares to a total of 25,114,256 shares. As of December 31, 2018, a total of 15,669,212 options had been issued to employees and directors and 6,127,500 options had been issued to consultants. The exercise price of each option has either been equal to the closing price of a share of our common stock on the date of grant or has been determined to be in compliance with Internal Revenue Section 409A. Share-based awards During the three months ended December 31, 2018, the Company granted 100,000 options to employees and directors, and 100,000 options to consultants, to purchase shares of common stock under the 2013 Plan . 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, 2018 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, 2018; expected volatility, 93.15% - 119.44%, risk-free interest rate, 1.38% - 3.23%, expected forfeiture rate, 0%, expected dividend yield, 0%, expected term, 5.75 years. 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. Prior to January 1, 2018, 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 groups as determined by the Company. Effective January 1, 2018, 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. 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. Since the Company has a limited history of occurrences of stock option forfeitures and a small number of employees 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 Stock compensation activity under the 2013 Plan for the three months ended December 31, 2018 follows: Option Shares Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value Outstanding at September 30, 2018 15,684,210 $ 0.40 3.89 $ 1,142,521 Awarded 200,000 $ 0.39 - - Exercised (1,525,000 ) $ 0.37 - - Forfeited/Cancelled (104,212 ) $ 0.37 - - Outstanding at December 31, 2018 14,254,998 $ 0.40 3.75 $ 2,237,885 Exercisable at December 31, 2018 11,720,960 $ 0.38 4.14 $ 2,040,184 Vested and expected to vest at December 31, 2018 14,254,998 $ 0.40 3.75 $ 2,237,885 As of December 31, 2018, 5,743,356 shares are available for future grants under the 2013 Plan. Share-based compensation expense recorded in the Company’s Consolidated Statements of Operations for the three months ended December 31, 2018 and 2017 resulting from stock options awarded to the Company’s employees, directors and consultants was approximately $339,000 and $193,000, respectively. Of this amount during the three months ended December 31, 2018 and 2017, $66,000 and $62,000, respectively, was recorded to research and development expenses, and $273,000 and $131,000, respectively was recorded in general and administrative expenses in the Company’s Consolidated Statements of Operations. During the three months ended December 31, 2018, 87,567 stock options awarded under the 2013 Stock Incentive Plan were exercised for cash resulting in proceeds to the Company of $32,400. During the three months ended December 31, 2018, 1,437,433 stock options awarded under the 2013 Stock Incentive Plan were exercised on a cashless basis for an aggregate issuance of 477,269 shares of the Company’s Common Stock. As of December 31, 2018, there is approximately $540,000 of unrecognized compensation expense related to unvested stock-based compensation arrangements granted under the 2013 Plan. That cost is expected to be recognized over a weighted average period of 1.32 years. Restricted Stock On February 3, 2017, the Company awarded 1,750,000 shares of Restricted Stock to members of the Board of Directors and management. The shares subject to this grant are awarded under the 2013 Plan and 100% shall fully vest on the second anniversary of the date of grant. In addition, in the event of a Change of Control (as such term is defined in the 2013 Plan), 100% of the grants will immediately vest. On July 19, 2018, the Company awarded 745,000 shares of Restricted Stock to members of the Board of Directors and management and 220,000 shares of Restricted Stock to Dr. Dhillon in his capacity as a consultant. The shares subject to this grant are awarded under the 2013 Plan and 100% shall fully vest on the second anniversary of the date of grant. In addition, in the event of a Change of Control (as such term is defined in the 2013 Plan), 100% of the grants will immediately vest. On September 5, 2018, the Company awarded 100,000 shares of Restricted Stock to a consultant. The shares subject to this grant are awarded under the 2013 Plan and 50,000 vest 90 days from the date of the award and 50,000 vest 365 days from the date of the award. In addition, in the event of a Change of Control (as such term is defined in the 2013 Plan), 100% of the grants will immediately vest. Restricted stock activity under the 2013 Plan for the three months ended December 31, 2018 and 2017 follows: 2018 2017 Non Vested at September 30, 2018 and 2017 2,815,000 1,750,000 Awarded - - Vested (50,000 ) - Forfeited - - Non Vested at December 31, 2018 and 2017 2,765,000 1,750,000 The weighted average restricted stock award date fair value information for the three months ended December 31, 2018 and 2017 follows: 2018 2017 Non Vested at September 30, 2018 and 2017 $ 0.57 $ 0.39 Awarded - - Vested (0.43 ) - Forfeited - - Non Vested at December 31, 2018 and 2017 $ 0.57 $ 0.39 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, 2018 and 2017 compensation expense recorded for the restricted stock awards was approximately $205,000 and $143,000, respectively. |
Restricted Stock Awarded Outsid
Restricted Stock Awarded Outside the 2013 Stock Incentive Plan | 3 Months Ended |
Dec. 31, 2018 | |
Restricted Stock [Abstract] | |
Restricted Stock Awarded Outside the 2013 Stock Incentive Plan | 5. Restricted Stock Awarded Outside the 2013 Stock Incentive Plan On May 3, 2016, the Company awarded 2,000,000 shares of Restricted Stock to members of the Board of Directors and management in a private placement in reliance upon an exemption from registration afforded by Section 4(a)(2) of the Securities Act. The shares subject to this grant are outside the 2013 Plan and 100% shall fully vest on the second anniversary of the date of grant. On May 1, 2018, the vesting date for 1,767,000 shares was amended to November 2018. In addition, in the event of a Change of Control (as such term is defined in the 2013 Plan), 100% of the grants will immediately vest. During the three months ended December 31, 2018, 1,767,000 shares of restricted stock awarded outside the 2013 Plan vested. Restricted Stock activity for the three months ended December 31, 2018 and 2017 is as follows: 2018 2017 Non Vested at September 30, 2018 and 2017 1,767,000 2,000,000 Awarded - - Vested (1,767,000 ) - Forfeited - - Non Vested at December 31, 2018 and 2017 - 2,000,000 The weighted average restricted stock award date fair value information for the three months ended December 31, 2018 and 2017 follows: 2018 2017 Non Vested at September 30, 2018 and 2017 $ 0.39 $ 0.39 Awarded - - Vested 0.39 - Forfeited - - Non Vested at December 31, 2018 and 2017 $ - $ 0.39 For the three months ended December 31, 2018 and 2017, compensation expense recorded for the restricted stock awards was approximately $0 and $98,000, respectively. |
PRIVATE PLACEMENT FINANCING 201
PRIVATE PLACEMENT FINANCING 2015 | 3 Months Ended |
Dec. 31, 2018 | |
2015 Private Placement Financing [Member] | |
Private Placement [Line Items] | |
PRIVATE PLACEMENT FINANCING | 6. 2015 PRIVATE PLACEMENT FINANCING Beginning June 22, 2015 and through June 30, 2015, the Company entered into a series of substantially similar subscription agreements (“Subscription Agreement”) with 20 accredited investors (“2015 Investors”) providing for the issuance and sale by the Company to the 2015 Investors, in a private placement, of an aggregate of 14,390,754 Units (“Unit”) at a purchase price of $0.22 per Unit (“2015 Private Placement Financing”). Each Unit consisted of a share of Common Stock (“2015 Shares”) and a Series D Warrant to purchase a share of Common Stock at an exercise price of $0.25 per share at any time prior to the fifth anniversary of the issuance date of the Series D Warrant (“Series D Warrants”) and the shares issuable upon exercise of the Series D Warrants, (“2015 Warrant Shares”). The Company did not engage any underwriter or placement agent in connection with the 2015 Private Placement Financing, and the aggregate gross proceeds raised by the Company in the 2015 Private Placement Financing totaled approximately $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, and other customary closing conditions. The conditions precedent were satisfied June 30, 2015 (“Initial Closing Date”), and the Company conducted an initial closing (“Initial Closing”) pursuant to which it sold and 19 of the 2015 Investors (“Initial Investors”) purchased 13,936,367 Units at an aggregate purchase price of $3,066,000. On July 2, 2015, the Company conducted a second closing (“Second Closing”) and together with the Initial Closing, (“Closings”) pursuant to which it sold and one of the 2015 Investors purchased 454,387 Units at an aggregate purchase price of $100,000. On the Initial Closing Date, the Company entered into a registration rights agreement with the Initial Investors (“2015 Registration Rights Agreement”), pursuant to which the Company was obligated, subject to certain conditions, to file with the Securities and Exchange Commission within 90 days after the closing of the 2015 Private Placement Financing one or more registration statements (any such registration statement, a “Resale Registration Statement”) to register the 2015 Shares and the 2015 Warrant Shares for resale under the Securities Act. The remaining 2015 Investor became a party to the 2015 Registration Rights Agreement upon the consummation of the Second Closing. The Company’s failure to satisfy certain filing and effectiveness deadlines with respect to a Resale Registration Statement and certain other requirements set forth in the 2015 Registration Rights Agreement may subject the Company to payment of monetary penalties. On October 27, 2015, we received from the SEC a Notice of Effectiveness of our Registration Statement related to the 2015 Private Placement Financing (“2015 S-1”) which satisfied some of our obligation to register these securities with the SEC. 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 (“2015 S-3”) to register the remaining securities covered by the 2015 Registration Rights Agreement, and the 2015 S-3 was declared effective on November 23, 2016. Pursuant to Rule 429 promulgated under the Securities Act, the 2015 S-3 contained a combined prospectus that covered the securities that remained unsold under the 2015 S-1 and also registered those same securities under the 2015 S-3. Under Rule 429, the 2015 S-3 also constituted a post-effective amendment to the 2015 S-1, which became effective on the date that the 2015 S-3 was declared effective. 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 per share, are exercisable immediately after their issuance and have a term of exercise equal to five years after their issuance date. The number of shares of the Company’s Common Stock into which each of the Series D Warrants is exercisable and the exercise price therefore are subject to adjustment, as set forth in the Series D Warrants, including adjustments for stock subdivisions or combinations (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise). In addition, at any time during the term of the Series D Warrants, the Company may reduce the then-current exercise price to any amount and for any period of time deemed appropriate by the Board of the Company. During the three months ended December 31, 2018 and 2017, Series D Warrants had been exercised on a cash basis for an aggregate issuance of 0 and 227,273 shares respectively of the Company’s Common stock resulting in gross proceeds to the Company of $0 and $56,818, respectively. As of December 31, 2018, up to 8,974389 shares may be acquired upon the exercise of the Series D Warrants. Common Stock At the June 30, 2015 Initial Closing Date of the 2015 Private Placement Financing, the Company issued 13,936,367 shares of Common Stock. On July 2, 2015, the Company conducted the Second Closing pursuant to which it sold and one of the 2015 Investors purchased 454,387 shares of Common Stock. 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 . Because the Series D Warrants are indexed to the Company’s stock, they are classified within stockholders’ equity (deficit) in the accompanying consolidated financial statements. |
PRIVATE PLACEMENT FINANCING 2_2
PRIVATE PLACEMENT FINANCING 2016 | 3 Months Ended |
Dec. 31, 2018 | |
2016 Private Placement Financing [Member] | |
Private Placement [Line Items] | |
PRIVATE PLACEMENT FINANCING | 7. 2016 PRIVATE PLACEMENT FINANCING Beginning May 24, 2016 and through May 26, 2016, we entered into a series of substantially similar subscription agreements (each a “2016 Subscription Agreement”) with 18 accredited investors (“2016 Investors”) providing for the issuance and sale by the Company to the 2016 Investors, in a private placement, of an aggregate of 9,418,334 Units at a purchase price of $0.36 per Unit (“2016 Private Placement Financing”). Each Unit consisted of a share of Common Stock, and a Series E Warrant to purchase 0.75 shares of Common Stock at an exercise price of $0.4380 per share at any time prior to the fifth anniversary of the issuance date of the Series E Warrant (“Series E Warrants”) and the shares issuable upon exercise of the Series E Warrants, (“Series E Warrant Shares”). The exercise price of the Series E Warrants was set to equal the closing price of our Common Stock on the date of their issuance (May 26, 2016), which was $0.4380, and therefore the Series E Warrants were not issued at a discount to the market price of our Common Stock as of such date. The gross proceeds to Arch were approximately $3.4 million before deducting financing costs of approximately $281,000.The number of shares of Common Stock into which each of the Series E Warrants is exercisable and the exercise price therefor are subject to adjustment as set forth in the Series E Warrants, including adjustments for stock subdivisions or combinations (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise). In addition, (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 (“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 holder’s, 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 st We engaged Maxim Group LLC (“Maxim”) as our exclusive institutional investor placement agent in connection with the 2016 Private Placement Financing, and in consideration for the services provided by it, Maxim was entitled to receive cash fees equal to 8.2% of the gross proceeds received by us from certain institutional investors participating in the 2016 Private Placement Financing (“Maxim Investors”), as well as reimbursement for all reasonable expenses incurred by it in connection with its engagement. We received gross proceeds of approximately $3,390,600 in the aggregate, of which approximately $2,084,000 was attributable to the Maxim Investors, resulting in a fee of approximately $171,000. On May 26, 2016, we entered into a registration rights agreement with the 2016 Investors (“2016 Registration Rights Agreement”), pursuant to which we became obligated, subject to certain conditions, to file with the Securities and Exchange Commission (“SEC”) within 45 days after the closing of the 2016 Private Placement Financing one or more registration statements (the “2016 S-1”) to register the shares of Common Stock issued in the Closings and the Series E Warrant Shares for resale under the Securities Act of 1933, as amended (“Securities Act”). As a result, we registered for resale under the 2016 S-1 an aggregate of 16,482,082 shares of Common Stock, representing the 9,418,334 shares issued at the closing of the 2016 Private Placement Financing and the 7,063,748 shares underlying the Series E Warrants. On July 13, 2016, we received from the SEC a Notice of Effectiveness of the 2016 S-1, which satisfied some of our obligation to register these securities with the SEC. The 2016 Registration Rights Agreement also obligated the Company to register the resale of all securities covered by the 2016 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 (“2016 S-3”) to register the remaining securities covered by the 2016 Registration Rights Agreement, and the 2016 S-3 was declared effective on November 23, 2016. Pursuant to Rule 429 promulgated under the Securities Act, the 2016 S-3 contained a combined prospectus that covered the securities that remained unsold under the 2016 S-1 and also registered those same securities under the 2016 S-3. Under Rule 429, the 2016 S-3 also constituted a post-effective amendment to the 2016 S-1, which became effective on the date that the 2016 S-3 was declared effective. Following the Closing, each 2016 Investor was also issued Series E Warrants to purchase shares of the Company’s Common Stock up to 75% of the 2016 Shares purchased by such 2016 Investor under such 2016 Investor’s Subscription Agreement. The Series E Warrants have an exercise price of $0.438 per share, are exercisable immediately after their issuance and have a term of exercise equal to five years after their issuance date. The number of shares of the Company’s Common Stock into which each of the Series E Warrants is exercisable and the exercise price therefore are subject to adjustment, as set forth in the Series E Warrants, including adjustments for stock subdivisions or combinations (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise). In addition, at any time during the term of the Series E Warrants, the Company may reduce the then-current exercise price to any amount and for any period of time deemed appropriate by the Board of the Company. During the three months ended December 31, 2018 and 2017, Series E Warrants had been exercised on a cash basis for an aggregate issuance of 0 and 15,000 shares, respectively of the Company’s Common stock resulting in gross proceeds to the Company of $0 and $6,570, respectively. As of December 31, 2018, up to 4,214,582 shares may be acquired upon the exercise of the Series E Warrants. Common Stock At May 26, 2016, the Closing Date of the 2016 Private Placement Financing, the Company issued 9,418,334 shares of Common Stock. Equity Value of Warrants The Company accounted for the Series E Warrants relating to the aforementioned 2016 Private Placement Financing in accordance with ASC 815-40, Derivatives and Hedging in the accompanying consolidated financial statements. |
REGISTERED DIRECT OFFERING 2017
REGISTERED DIRECT OFFERING 2017 | 3 Months Ended |
Dec. 31, 2018 | |
2017 Registered Direct Offering [Member] | |
REGISTERED DIRECT OFFERING [Line Items] | |
REGISTERED DIRECT OFFERING | 8. 2017 REGISTERED DIRECT OFFERING On September 30, 2016, the Company filed a registration statement with the SEC utilizing a “shelf” registration process, which was subsequently declared effective by the SEC on October 20, 2016 (such registration statement, the “Shelf Registration Statement”). Under the Shelf Registration Statement, the Company may offer and sell any combination of its Common Stock, warrants, debt securities, subscription rights, and/or units comprised of the foregoing to raise up to $50,000,000 in gross proceeds. On February 20, 2017, the Company entered into Securities Purchase Agreement with 6 accredited investors (“2017 Investors”) providing for the issuance and sale by the Company to the 2017 Investors of an aggregate of 10,166,664 units at a purchase price of $0.60 per Unit in a registered offering (“2017 Financing”). The securities comprising the units sold in the 2017 Financing were issued under the Shelf Registration Statement, and consisted of a share of Common Stock, and 0.55 of a Series F Warrant to purchase one share of Common Stock at an exercise price of $0.75 per share at any time prior to the fifth anniversary of the issuance date of the Series F Warrant subject to certain restrictions on exercise (“2017 Warrants”) and the shares issuable upon exercise of the 2017 Warrants, (“2017 Warrant Shares”). Provisions in the 2017 SPA restrict the Company’s ability to effect or enter into an agreement to effect any issuance by the Company or any of its subsidiaries of Common Stock or securities convertible, exercisable or exchangeable for Common Stock (or a combination of units thereof) involving a Variable Rate Transaction (as defined in the 2017 SPA) including, but not limited to, an equity line of credit or “At-the-Market” financing facility until the three lead investors in the 2017 Financing collectively own less than 20% of the Series F Warrants purchased by them pursuant to the 2017 SPA. The gross proceeds to Arch from the 2017 Financing, which closed on February 24, 2017, were approximately $6.1 million before deducting financing costs of approximately $112,000. The number of shares of the Company’s Common Stock into which each of the Series F Warrants is exercisable and the exercise price therefore are subject to adjustment, as set forth in the Series F Warrants, including adjustments for stock subdivisions or combinations (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise). In addition, if the Company undergoes a change of control or is involved in a similar transaction, the holder may cause the Company or any successor entity to purchase its Series F Warrant for an amount of cash equal to $0.18 for each share of Common Stock underlying the Series F Warrant. As of December 31, 2018, no Series F Warrants have been exercised. As of December 31, 2018, up to 5,591,664 shares may be acquired upon the exercise of the Series F Warrants. Common Stock At February 24, 2017, the Closing Date of the 2017 Financing, the Company issued 10,166,664 shares of Common Stock. Derivative Liabilities The Company accounted for the Series F Warrants relating to the aforementioned 2017 Financing in accordance with ASC 815-10, Derivatives and Hedging . Since the Company may be required to purchase its Series F Warrants for an amount of cash equal to $0.18 for each share of Common Stock the underlying Series F Warrants are not classified within stockholders’ equity, they are recorded as liabilities at fair value. They are marked to market each reporting period through the consolidated statement of operations. On the Closing Date, February 24, 2017 the derivative liabilities were recorded at fair value of $2,996,110. Given that the fair value of the derivative liabilities were less than the net proceeds of the 2017 Financing of $5,987,122, the remaining proceeds of $2,991,012 were allocated to the Common Stock and additional paid in capital. During the three months ended December 31, 2018 and 2017, $(385,106) and $1,971,549 was recorded to (increase)/decrease the fair value of derivative, respectively. Fair Value Measurements Using Significant Unobservable Inputs (Level 3) December 31, 2018 September 30, 2018 Balance at September 30, 2018 and 2017 $ 1,274,404 $ 3,430,033 Adjustments to estimated fair value 385,106 (2,155,629 ) Ending balance at December 31, 2018 and September 30, 2018 $ 1,659,510 $ 1,274,404 The derivative liabilities were valued as of December 31, 2018 and September 30, 2018 using the Black Scholes Model with the following assumptions: December 31, 2018 September 30, 2018 Closing price per share of common stock $ 0.53 $ 0.42 Exercise price per share $ 0.75 $ 0.75 Expected volatility 97.96 % 98.43 % Risk-free interest rate 2.46 % 2.88 % Dividend yield — — Remaining expected term of underlying securities (years) 3.13 3.38 |
REGISTERED DIRECT OFFERING 2018
REGISTERED DIRECT OFFERING 2018 | 3 Months Ended |
Dec. 31, 2018 | |
2018 Registered Direct Offering [Member] | |
REGISTERED DIRECT OFFERING 2018 [Line Items] | |
REGISTERED DIRECT OFFERING | 9. 2018 REGISTERED DIRECT OFFERING On June 28, 2018, the Company entered into a Securities Purchase Agreement (“2018 SPA”) with 8 accredited investors (“2018 Investors”) providing for the issuance and sale by the Company to the 2018 Investors of an aggregate of 9,070,000 units at a purchase price of $0.50 per Unit in a registered offering (“2018 Financing”). The securities comprising the units sold in the 2018 Financing were issued under the Shelf Registration Statement, and consisted of a share of Common Stock, and 0.75 of a Series G Warrant to purchase one share of Common Stock at an exercise price of $0.70 per share at any time prior to the fifth anniversary of the issuance date of the Series G Warrant subject to certain restrictions on exercise (“2018 Warrants”) and the shares issuable upon exercise of the 2018 Warrants, (“2018 Warrant Shares”). As of June 30, 2018, the Company recorded the 9,070,000 shares as Common Stock Subscribed but Unissued. At July 2, 2018, the Closing Date of the 2018 Financing, the Company issued 9,070,000 shares of Common Stock. The 2018 SPA contains certain restrictions in the Company’s ability to conduct subsequent sales of its equity securities. In particular, subject to certain customary exemptions, from June 28, 2018 until 90 days after July 2, 2018 (i.e., September 30, 2018), neither the Company nor any subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or securities convertible, exercisable or exchangeable for Common Stock. Similarly, until such time the three lead investors collectively own less than 20% of the Series G Warrants purchased by them pursuant to the 2018 SPA, the Company is prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its subsidiaries of Common Stock or securities convertible, exercisable or exchangeable for Common Stock (or a combination of units thereof) involving a Variable Rate Transaction (as defined in the 2018 SPA) including, but not limited to, an equity line of credit or “At-the-Market” financing facility. The gross proceeds to Arch from the 2018 Financing, which were received as of June 29, 2018, were approximately $4.5 million before deducting financing costs of approximately $74,000. The number of shares of the Company’s Common Stock into which each of the Series G Warrants is exercisable and the exercise price therefore are subject to adjustment, as set forth in the Series G Warrants, including adjustments for stock subdivisions or combinations (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise). In addition, if the Company undergoes a change of control or is involved in a similar transaction, the holder may cause the Company or any successor entity to purchase its Series G Warrant for an amount of cash equal to $0.11 for each share of Common Stock underlying the Series G Warrant. As of December 31, 2018, no Series G Warrants have been exercised. As of December 31, 2018, up to 6,802,500 shares may be acquired upon the exercise of the Series G Warrants. Common Stock At July 2, 2018, the Closing Date of the 2018 Financing, the Company issued 9,070,000 shares of Common Stock. Derivative Liabilities The Company accounted for the Series G Warrants relating to the aforementioned 2018 Financing in accordance with ASC 815-10, Derivatives and Hedging . Since the Company may be required to purchase its Series G Warrants for an amount of cash equal to $0.11 for each share of Common Stock and the underlying Series G Warrants are not classified within stockholders’ equity, they are recorded as liabilities at fair value. They are marked to market each reporting period through the consolidated statement of operations. On June 30, 2018 the derivative liabilities were recorded at fair value of $2,397,454. Given that the fair value of the derivative liabilities were less than the net proceeds of the 2018 Financing of $4,535,000, the remaining proceeds of $2,137,546 were allocated to the Common Stock Subscribed but Unissued. During the three months ended December 31, 2018 and 2017, $447,307 and $0, r Fair Value Measurements Using Significant Unobservable Inputs (Level 3) December 31, 2018 September 30, 2018 Balance at September 30, 2018 and 2017 $ 1,917,348 $ - Issuances - 2,397,454 Adjustments to estimated fair value 447,307 (480,106 ) Ending balance at December 31, 2018 and September 30, 2018 $ 2,364,655 $ 1,917,348 The derivative liabilities were valued as of December 31, 2018 using the Black Scholes Model with the following assumptions: December 31, 2018 September 30, 2018 Closing price per share of common stock $ 0.53 $ 0.42 Exercise price per share $ 0.70 $ 0.70 Expected volatility 94.41 % 100.18 % Risk-free interest rate 2.51 % 2.94 % Dividend yield — — Remaining expected term of underlying securities (years) 4.49 4.74 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 10. SUBSEQUENT EVENTS The Company evaluated subsequent events from January 1, 2019 through January 31, 2019, and concluded that no subsequent events have occurred that would require recognition or disclosure in the consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation 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) 2018-07, “Compensation—Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based Payment Accounting” was issued by the Financial Accounting Standards Board (FASB) in June 2018. The purpose of this amendment is to address aspects of the accounting for nonemployee share-based payment transactions. 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 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 adopted ASU 2016-15 during our first quarter of fiscal year 2019, which had no impact on our consolidated financial statements, and will apply the new guidance in future periods. 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 |
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, 2018 and September 30, 2018. |
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 Offering 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 |
Income Taxes | Income Taxes In accordance with FASB ASC 740, Income Taxes , we recognize deferred tax assets and liabilities for the expected future tax consequences or events that have been included in our consolidated financial statements and/or tax returns. Deferred tax assets and liabilities are based upon the differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and for loss and credit carryforwards using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. We provide 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. On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was signed into United States law. The TCJA includes a number of changes to existing tax law, including, among other things, a permanent reduction in the federal corporate income tax rate to a flat rate of 21%, effective January 1, 2018, as well as the elimination of net operating loss carrybacks for losses arising in taxable years beginning after December 31, 2017. Further, operating losses arising in tax years after December 31, 2017, are carried forward indefinitely. Due to the TCJA, the Company’s deferred tax assets and liabilities recognized prior to 2017 were revalued at the newly enacted tax rates, which resulted in a corresponding adjustment in the valuation allowance. |
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 (“FASB ASC Topic 718”), which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the consolidated financial statements based on their fair values. The Company accounts for non-employee stock-based compensation in accordance with the guidance of FASB ASC Topic 505, Equity (“FASB ASC Topic 505”), which requires that companies recognize compensation expense based on the estimated fair value of options granted to non-employees over their vesting period, which is generally the period during which services are rendered by such non-employees. FASB ASC Topic 505 requires the Company to re-measure the fair value of stock options issued to non-employee at each reporting period during the vesting period or until services are complete. 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. Prior to January 1, 2018, the Company did not have a sufficient history of market prices of the common stock, and as such volatility was estimated in accordance with ASC 718-10-S99 Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment (“SAB No. 107”), using historical volatilities of similar public entities. Effective January 1, 2018, the Company is using its historical market prices to calculate the volatility of its common stock. The life term for awards uses simplified method for all “plain vanilla” options, as defined in ASC 718-10-S99 and the contractual term for all other employee and non-employee awards. The risk-free interest rate assumption is based on observed interest rates appropriate for the terms of our awards. The dividend yield assumption is based on history and the expectation of paying no dividends. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation expense, when recognized in the consolidated financial statements, is based on awards that are ultimately expected to vest. |
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 , including those that are recognized or disclosed in the consolidated financial statements at fair value on a recurring basis. The standard created a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs that reflect the Company’s own views about the assumptions market participants would use in pricing the asset or liability. At December 31, 2018 and September 30, 2018, |
Derivative Liabilities | Derivative Liabilities The Company accounts for its warrants and other derivative financial instruments as either equity or liabilities based upon the characteristics and provisions of each instrument, in accordance with FASB ASC Topic 815, Derivatives and Hedging . Warrants classified as equity are recorded at fair value as of the date of issuance on the Company’s consolidated balance sheets and no further adjustments to their valuation are made. Warrants classified as derivative liabilities and other derivative financial instruments that require separate accounting as liabilities are recorded on the Company’s consolidated balance sheets at their fair value on the date of issuance and will be revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. Management estimates the fair value of these liabilities using option pricing models and assumptions that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life, yield, and risk-free interest rate. |
Subsequent Events | Subsequent Events The Company evaluated all events or transactions that occurred commencing from January 1, 2019 and ending on January 31, 2019 the date which these consolidated financial statements were issued. The Company disclosed material subsequent events in Note 10. |
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, 2018, 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 into 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. Provisions in the Securities Purchase Agreements that the Company entered into on February 20, 2017 (“2017 SPA”) and on June 28, 2018 (“2018 SPA”) restrict the Company’s ability to effect or enter into an agreement to effect any issuance by the Company or any of its subsidiaries of Common Stock or securities convertible, exercisable or exchangeable for Common Stock (or a combination of units thereof) involving a Variable Rate Transaction (as defined in the 2017 SPA and 2018 SPA) including, but not limited to, an equity line of credit or “At-the-Market” financing facility until the three lead investors in the 2017 Financing and the institutional investors in the 2018 SPA collectively own less than 20% of the Series F Warrants and the Series G Warrants purchased by them pursuant to the 2017 SPA and 2018 SPA, respectively. In addition, the 2018 SPA restricted, subject to certain customary exemptions, from June 28, 2018 until 90 days after July 2, 2018 (i.e., September 30, 2018), the Company and its subsidiaries from entering into any agreement to issue or announcing the issuance or proposed issuance of any shares of Common Stock or securities convertible, exercisable or exchangeable for Common Stock. 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, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | At December 31, 2018 and September 30, 2018, property and equipment consisted of: Estimated Useful Life December 31, 2018 September 30, 2018 Furniture and fixtures 5 years $ 9,357 $ 9,357 Leasehold improvements 3 years 8,983 8,983 Computer equipment 3 years 8,686 8,686 Lab equipment 5 years 1,000 1,000 28,026 28,026 Less – accumulated depreciation 12,546 10,765 Property and equipment, net $ 15,480 $ 17,261 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) - 2013 Stock Incentive Plan [Member] | 3 Months Ended |
Dec. 31, 2018 | |
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, 2018 follows: Option Shares Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value Outstanding at September 30, 2018 15,684,210 $ 0.40 3.89 $ 1,142,521 Awarded 200,000 $ 0.39 - - Exercised (1,525,000 ) $ 0.37 - - Forfeited/Cancelled (104,212 ) $ 0.37 - - Outstanding at December 31, 2018 14,254,998 $ 0.40 3.75 $ 2,237,885 Exercisable at December 31, 2018 11,720,960 $ 0.38 4.14 $ 2,040,184 Vested and expected to vest at December 31, 2018 14,254,998 $ 0.40 3.75 $ 2,237,885 |
Nonvested Restricted Stock Shares Activity | Restricted stock activity under the 2013 Plan for the three months ended December 31, 2018 and 2017 follows: 2018 2017 Non Vested at September 30, 2018 and 2017 2,815,000 1,750,000 Awarded - - Vested (50,000 ) - Forfeited - - Non Vested at December 31, 2018 and 2017 2,765,000 1,750,000 |
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, 2018 and 2017 follows: 2018 2017 Non Vested at September 30, 2018 and 2017 $ 0.57 $ 0.39 Awarded - - Vested (0.43 ) - Forfeited - - Non Vested at December 31, 2018 and 2017 $ 0.57 $ 0.39 |
Restricted Stock Awarded Outs_2
Restricted Stock Awarded Outside the 2013 Stock Incentive Plan (Tables) - Restricted Stock Units (RSUs) [Member] | 3 Months Ended |
Dec. 31, 2018 | |
Nonvested Restricted Stock Shares Activity | Restricted Stock activity for the three months ended December 31, 2018 and 2017 is as follows: 2018 2017 Non Vested at September 30, 2018 and 2017 1,767,000 2,000,000 Awarded - - Vested (1,767,000 ) - Forfeited - - Non Vested at December 31, 2018 and 2017 - 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, 2018 and 2017 follows: 2018 2017 Non Vested at September 30, 2018 and 2017 $ 0.39 $ 0.39 Awarded - - Vested 0.39 - Forfeited - - Non Vested at December 31, 2018 and 2017 $ - $ 0.39 |
REGISTERED DIRECT OFFERING 20_2
REGISTERED DIRECT OFFERING 2017 (Tables) - 2017 Registered Direct Offering [Member] | 3 Months Ended |
Dec. 31, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | Fair Value Measurements Using Significant Unobservable Inputs (Level 3) December 31, 2018 September 30, 2018 Balance at September 30, 2018 and 2017 $ 1,274,404 $ 3,430,033 Adjustments to estimated fair value 385,106 (2,155,629 ) Ending balance at December 31, 2018 and September 30, 2018 $ 1,659,510 $ 1,274,404 |
Schedule of Assumptions Used to Value Derivative Liability | The derivative liabilities were valued as of December 31, 2018 and September 30, 2018 using the Black Scholes Model with the following assumptions: December 31, 2018 September 30, 2018 Closing price per share of common stock $ 0.53 $ 0.42 Exercise price per share $ 0.75 $ 0.75 Expected volatility 97.96 % 98.43 % Risk-free interest rate 2.46 % 2.88 % Dividend yield — — Remaining expected term of underlying securities (years) 3.13 3.38 |
REGISTERED DIRECT OFFERING 20_3
REGISTERED DIRECT OFFERING 2018 (Tables) - 2018 Registered Direct Offering [Member] | 3 Months Ended |
Dec. 31, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | Fair Value Measurements Using Significant Unobservable Inputs (Level 3) December 31, 2018 September 30, 2018 Balance at September 30, 2018 and 2017 $ 1,917,348 $ - Issuances - 2,397,454 Adjustments to estimated fair value 447,307 (480,106 ) Ending balance at December 31, 2018 and September 30, 2018 $ 2,364,655 $ 1,917,348 |
Schedule of Assumptions Used to Value Derivative Liability | The derivative liabilities were valued as of December 31, 2018 using the Black Scholes Model with the following assumptions: December 31, 2018 September 30, 2018 Closing price per share of common stock $ 0.53 $ 0.42 Exercise price per share $ 0.70 $ 0.70 Expected volatility 94.41 % 100.18 % Risk-free interest rate 2.51 % 2.94 % Dividend yield — — Remaining expected term of underlying securities (years) 4.49 4.74 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) | 3 Months Ended |
Dec. 31, 2018 | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Sep. 30, 2018 | |
Property, and equipment, gross, total | $ 28,026 | $ 28,026 |
Less – accumulated depreciation | 12,546 | 10,765 |
Property and equipment, net | $ 15,480 | 17,261 |
Furniture and fixtures | ||
Property, and equipment, useful life | 5 years | |
Property, and equipment, gross, total | $ 9,357 | 9,357 |
Leasehold improvements | ||
Property, and equipment, useful life | 3 years | |
Property, and equipment, gross, total | $ 8,983 | 8,983 |
Computer equipment | ||
Property, and equipment, useful life | 3 years | |
Property, and equipment, gross, total | $ 8,686 | 8,686 |
Lab equipment | ||
Property, and equipment, useful life | 5 years | |
Property, and equipment, gross, total | $ 1,000 | $ 1,000 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Textual) - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Depreciation expense | $ 1,781 | $ 724 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) | 3 Months Ended |
Dec. 31, 2018USD ($)$ / sharesshares | |
Option Shares Outstanding | |
Outstanding at September 30, 2018 | shares | 15,684,210 |
Awarded | shares | 200,000 |
Exercised | shares | (1,525,000) |
Forfeited/Cancelled | shares | (104,212) |
Outstanding at December 31, 2018 | shares | 14,254,998 |
Exercisable at December 31, 2018 | shares | 11,720,960 |
Vested and expected to vest at December 31, 2018 | shares | 14,254,998 |
Weighted Average Exercise Price | |
Outstanding at September 30, 2018 | $ / shares | $ 0.40 |
Awarded | $ / shares | 0.39 |
Exercised | $ / shares | 0.37 |
Forfeited/Cancelled | $ / shares | 0.37 |
Outstanding, Ending Balance | $ / shares | 0.40 |
Exercisable at December 31, 2018 | $ / shares | 0.38 |
Vested and expected to vest at December 31, 2018 | $ / shares | $ 0.40 |
Weighted Average Remaining Contractual Term (years) | |
Outstanding at September 30, 2018 | 3 years 10 months 20 days |
Awarded | 0 years |
Exercised | 0 years |
Forfeited/Cancelled | 0 years |
Outstanding at December 31, 2018 | 3 years 9 months |
Exercisable at December 31, 2018 | 4 years 1 month 20 days |
Vested and expected to vest at December 31, 2018 | 3 years 9 months |
Aggregate Intrinsic Value | |
Outstanding at September 30, 2018 | $ | $ 1,142,521 |
Awarded | $ | 0 |
Exercised | $ | 0 |
Forfeited/Cancelled | $ | 0 |
Outstanding at December 31, 2018 | $ | 2,237,885 |
Exercisable at December 31, 2018 | $ | 2,040,184 |
Vested and expected to vest at December 31, 2018 | $ | $ 2,237,885 |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details 1) - 2013 Incentive Plan [Member] - shares | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Non Vested, Beginning Balance | 2,815,000 | 1,750,000 |
Awarded | 0 | 0 |
Vested | (50,000) | 0 |
Forfeited | 0 | 0 |
Non Vested, Ending Balance | 2,765,000 | 1,750,000 |
STOCK-BASED COMPENSATION (Det_3
STOCK-BASED COMPENSATION (Details 2) - 2013 Incentive Plan [Member] - $ / shares | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Non Vested, Beginning Balance | $ 0.57 | $ 0.39 |
Awarded | 0 | 0 |
Vested | (0.43) | 0 |
Forfeited | 0 | 0 |
Non Vested, Ending Balance | $ 0.57 | $ 0.39 |
STOCK-BASED COMPENSATION (Det_4
STOCK-BASED COMPENSATION (Details Textual) - USD ($) | Jul. 19, 2018 | Feb. 03, 2017 | May 03, 2016 | Jun. 18, 2013 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 02, 2018 | Sep. 30, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based compensation arrangement by share-based payment award, fair value assumptions, expected volatility rate, minimum | 93.15% | |||||||
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 | 1.38% | |||||||
Share-based compensation arrangement by share-based payment award, fair value assumptions, risk free interest rate, maximum | 3.23% | |||||||
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, fair value assumptions, expected term | 5 years 9 months | |||||||
Common Stock, Shares Authorized | 300,000,000 | 300,000,000 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 200,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted | 100,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 100.00% | 100.00% | ||||||
Proceeds from Stock Options Exercised | $ 32,400 | $ 0 | ||||||
Restricted Stock | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 100.00% | |||||||
Non-Employee Resricted Shares [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Allocated share-based compensation expense | 205,000 | 143,000 | ||||||
Research and Development Expense | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Allocated share-based compensation expense | 66,000 | 62,000 | ||||||
General and Administrative Expense | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Allocated share-based compensation expense | 273,000 | 131,000 | ||||||
General and Administrative Expense | Restricted Stock | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Allocated share-based compensation expense | $ 0 | 98,000 | ||||||
Employees And Directors | ||||||||
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 | 15,669,212 | |||||||
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 | 6,127,500 | |||||||
Employees, Directors And Consultants [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Allocated share-based compensation expense | $ 339,000 | $ 193,000 | ||||||
2013 Stock Incentive Plan | ||||||||
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, award vesting period | 90 days | |||||||
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition | 1 year 3 months 25 days | |||||||
Common Stock, Shares Authorized | 25,114,256 | 22,114,256 | ||||||
Share-based compensation arrangement by share-based payment award, number of additional shares authorized | 3,000,000 | |||||||
Stock Issued During Period, Shares, New Issues | 477,269 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 87,567 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period | 1,437,433 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Per Employee | 50,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 50,000 | |||||||
Proceeds from Stock Options Exercised | $ 32,400 | |||||||
2013 Stock Incentive Plan | Restricted Stock | 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 Rights, Percentage | 100.00% | 100.00% | ||||||
Plan 2013 [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based compensation arrangement by share-based payment award, number of shares available for grant | 5,743,356 | |||||||
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, total | $ 540,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 100.00% | 100.00% | ||||||
Plan 2013 [Member] | Employees And Directors | ||||||||
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 | |||||||
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 | |||||||
Plan 2013 [Member] | Consultants | Restricted Stock | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted | 220,000 | |||||||
Plan 2013 [Member] | Board of Directors And Management [Member] | Restricted Stock | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted | 745,000 | 1,750,000 |
Restricted Stock Awarded Outs_3
Restricted Stock Awarded Outside the 2013 Stock Incentive Plan (Details) - Restricted Stock Units (RSUs) [Member] - shares | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Non Vested, Beginning Balance | 1,767,000 | 2,000,000 |
Awarded | 0 | 0 |
Vested | (1,767,000) | 0 |
Forfeited | 0 | 0 |
Non Vested, Ending Balance | 0 | 2,000,000 |
Restricted Stock Awarded Outs_4
Restricted Stock Awarded Outside the 2013 Stock Incentive Plan (Details 1) - Restricted Stock [Member] - $ / shares | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Non Vested, Beginning Balance | $ 0.39 | $ 0.39 |
Awarded | 0 | 0 |
Vested | 0.39 | 0 |
Forfeited | 0 | 0 |
Non Vested, Ending Balance | $ 0 | $ 0.39 |
Restricted Stock Awarded Outs_5
Restricted Stock Awarded Outside the 2013 Stock Incentive Plan (Details Textual) - USD ($) | Feb. 03, 2017 | May 03, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | May 01, 2018 | Sep. 30, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 100.00% | 100.00% | |||||
General and Administrative Expense [Member] | |||||||
Allocated Share-based Compensation Expense | $ 273,000 | $ 131,000 | |||||
Restricted Stock [Member] | |||||||
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 | $ 0 | $ 98,000 | |||||
Restricted Stock Units (RSUs) [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 0 | 0 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 0 | 2,000,000 | 1,767,000 | 1,767,000 | 2,000,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 1,767,000 | 0 |
PRIVATE PLACEMENT FINANCING 2_3
PRIVATE PLACEMENT FINANCING 2015 (Details Textual) - USD ($) | Jul. 02, 2015 | Jun. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2018 | Dec. 31, 2017 |
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 | 0 | 227,273 | |||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.25 | ||||
Proceeds from Issuance of Common Stock | $ 0 | $ 56,818 | |||
Common Stock, Capital Shares Reserved for Future Issuance | 8,974,389 | ||||
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 2_4
PRIVATE PLACEMENT FINANCING 2016 (Details Textual) - USD ($) | May 26, 2016 | May 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 |
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 | 0 | 15,000 | |
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 (“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 holder’s, 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 Company’s 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 | $ 0 | $ 6,570 | ||
Common Stock, Capital Shares Reserved for Future Issuance | 4,214,582 | |||
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 | $ 171,000 | |||
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 | |||
Payments of Stock Issuance Costs | $ 281,000 | |||
Stock Issued During Period, Value, New Issues | $ 3,400,000 |
REGISTERED DIRECT OFFERING 20_4
REGISTERED DIRECT OFFERING 2017 (Details) - Fair Value, Inputs, Level 3 [Member] - 2017 Registered Direct Offering [Member] - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Sep. 30, 2018 | |
Balance | $ 1,274,404 | $ 3,430,033 |
Adjustments to estimated fair value | 385,106 | (2,155,629) |
Balance | $ 1,659,510 | $ 1,274,404 |
REGISTERED DIRECT OFFERING 20_5
REGISTERED DIRECT OFFERING 2017 (Details 1) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2018$ / shares | Sep. 30, 2018$ / shares | |
Closing price per share of common stock | $ 0.001 | $ 0.001 |
Derivative Financial Instruments, Liabilities [Member] | 2017 Registered Direct Offering [Member] | ||
Closing price per share of common stock | $ 0.53 | $ 0.42 |
Derivative Financial Instruments, Liabilities [Member] | 2017 Registered Direct Offering [Member] | Measurement Input, Exercise Price [Member] | ||
Derivative Liability, Measurement Input | 0.75 | 0.75 |
Derivative Financial Instruments, Liabilities [Member] | 2017 Registered Direct Offering [Member] | Measurement Input, Price Volatility [Member] | ||
Derivative Liability, Measurement Input | 97.96 | 98.43 |
Derivative Financial Instruments, Liabilities [Member] | 2017 Registered Direct Offering [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
Derivative Liability, Measurement Input | 2.46 | 2.88 |
Derivative Financial Instruments, Liabilities [Member] | 2017 Registered Direct Offering [Member] | Measurement Input, Expected Dividend Rate [Member] | ||
Derivative Liability, Measurement Input | 0 | 0 |
Derivative Financial Instruments, Liabilities [Member] | 2017 Registered Direct Offering [Member] | Measurement Input, Expected Term [Member] | ||
Remaining expected term of underlying securities (years) | 3 years 1 month 17 days | 3 years 4 months 17 days |
REGISTERED DIRECT OFFERING 20_6
REGISTERED DIRECT OFFERING 2017 (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Feb. 24, 2017 | Feb. 20, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | Sep. 30, 2016 | |
Derivative Liability | $ 2,397,454 | |||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Period Increase (Decrease) | $ (832,413) | $ 1,971,549 | ||||
Common Stock [Member] | ||||||
Stock Issued During Period, Shares, New Issues | 10,166,664 | |||||
Series F Warrant [Member] | ||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 5,591,664 | |||||
REGISTERED DIRECT OFFERING 2017 [Member] | ||||||
Shelf Registration Statement, Maximum Amount Authorized | $ 50,000,000 | |||||
Stock Issued During Period, Shares, New Issues | 10,166,664 | |||||
Shares Issued, Price Per Share | $ 0.60 | |||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.75 | |||||
Stock Issued During Period, Value, New Issues | $ 6,100,000 | |||||
Number Of Warrants Per Unit | 0.55 | |||||
Cash Price Per Each Common Stock Underlying Warrants | 0.18 | |||||
Allocation Of Remaining Proceeds To Common Stock And Additional Paid In Capital | 2,991,012 | |||||
Derivative Liability | 2,996,110 | |||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Period Increase (Decrease) | $ (385,106) | $ 1,971,549 | ||||
Payments of Stock Issuance Costs | 112,000 | |||||
REGISTERED DIRECT OFFERING 2017 [Member] | Series F Warrant [Member] | ||||||
Stock Issued During Period, Value, New Issues | $ 5,987,122 | |||||
Percentage Of Class Of Warrant Or Right Held | 20.00% |
REGISTERED DIRECT OFFERING 20_7
REGISTERED DIRECT OFFERING 2018 (Details) - Fair Value, Inputs, Level 3 [Member] - Registered Direct Offering 2018 [Member] - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Sep. 30, 2018 | |
Balance | $ 1,917,348 | $ 0 |
Issuances | 0 | 2,397,454 |
Adjustments to estimated fair value | 447,307 | (480,106) |
Balance | $ 2,364,655 | $ 1,917,348 |
REGISTERED DIRECT OFFERING 20_8
REGISTERED DIRECT OFFERING 2018 (Details 1) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2018$ / shares | Sep. 30, 2018$ / shares | |
Closing price per share of common stock | $ 0.001 | $ 0.001 |
Registered Direct Offering 2018 [Member] | Derivative Financial Instruments, Liabilities [Member] | ||
Closing price per share of common stock | $ 0.53 | $ 0.42 |
Registered Direct Offering 2018 [Member] | Derivative Financial Instruments, Liabilities [Member] | Measurement Input, Exercise Price [Member] | ||
Derivative Liability, Measurement Input | 0.70 | 0.70 |
Registered Direct Offering 2018 [Member] | Derivative Financial Instruments, Liabilities [Member] | Measurement Input, Price Volatility [Member] | ||
Derivative Liability, Measurement Input | 94.41 | 100.18 |
Registered Direct Offering 2018 [Member] | Derivative Financial Instruments, Liabilities [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
Derivative Liability, Measurement Input | 2.51 | 2.94 |
Registered Direct Offering 2018 [Member] | Derivative Financial Instruments, Liabilities [Member] | Measurement Input, Expected Dividend Rate [Member] | ||
Derivative Liability, Measurement Input | 0 | 0 |
Registered Direct Offering 2018 [Member] | Derivative Financial Instruments, Liabilities [Member] | Measurement Input, Expected Term [Member] | ||
Remaining expected term of underlying securities (years) | 4 years 5 months 26 days | 4 years 8 months 26 days |
REGISTERED DIRECT OFFERING 20_9
REGISTERED DIRECT OFFERING 2018 (Details Textual) - USD ($) | Jul. 02, 2018 | Jun. 30, 2018 | Jun. 29, 2018 | Jun. 28, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 |
Common Stock, Shares, Issued | 164,961,849 | 164,297,013 | |||||
Derivative Liability | $ 2,397,454 | ||||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Period Increase (Decrease) | $ (832,413) | $ 1,971,549 | |||||
Class Of Series G Warrant [Member] | |||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 6,802,500 | ||||||
Registered Direct Offering 2018 [Member] | |||||||
Stock Issued During Period, Shares, New Issues | 9,070,000 | 9,070,000 | 9,070,000 | ||||
Shares Issued, Price Per Share | $ 0.50 | ||||||
Number Of Warrants Per Unit | 0.75 | ||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.70 | ||||||
Common Stock, Shares, Issued | 9,070,000 | ||||||
Proceeds from Subscribed but Unissued Common Stock and Warrants | $ 4,535,000 | $ 4,500,000 | |||||
Payments of Stock Issuance Costs | 74,000 | ||||||
Cash Price Per Each Common Stock Underlying Warrants | $ 0.11 | $ 0.11 | |||||
Allocation Of Remaining Proceeds To Common Stock Subscribed and Unissued | $ 2,137,546 | ||||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Period Increase (Decrease) | $ 447,307 | $ 0 | |||||
Registered Direct Offering 2018 [Member] | Class Of Series G Warrant [Member] | |||||||
Percentage Of Class Of Warrant Or Right Held | 20.00% |