Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2017 | Dec. 22, 2017 | Mar. 31, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | APPLIED DNA SCIENCES INC | ||
Entity Central Index Key | 744,452 | ||
Trading Symbol | apdn | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Common Stock, Shares Outstanding | 30,112,057 | ||
Entity Public Float | $ 38 | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2017 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 2,959,781 | $ 4,479,274 |
Accounts receivable, net of allowance of $10,000 and $32,965 at September 30, 2017 and 2016, respectively | 2,587,969 | 6,374,895 |
Inventories | 326,468 | 297,759 |
Prepaid expenses and other current assets | 366,954 | 200,006 |
Total current assets | 6,241,172 | 11,351,934 |
Property and equipment, net | 523,688 | 792,499 |
Other assets: | ||
Long term accounts receivables | 1,535,000 | |
Deposits | 61,626 | 61,126 |
Deferred offering costs | 13,986 | |
Goodwill | 285,386 | 285,386 |
Intangible assets, net | 1,042,076 | 1,525,900 |
Total Assets | 8,153,948 | 15,565,831 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 944,133 | 2,247,341 |
Deferred revenue | 351,735 | 1,837,588 |
Total current liabilities | 1,295,868 | 4,084,929 |
Long term accounts payable | 215,500 | |
Long term deferred revenue | 900,000 | |
Total liabilities | 1,295,868 | 5,200,429 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Preferred stock, value | ||
Common stock, par value $0.001 per share; 500,000,000 shares authorized; 27,377,057 and 24,078,756 shares issued and outstanding as of September 30, 2017 and 2016, respectively | 27,377 | 24,079 |
Additional paid in capital | 243,503,858 | 234,158,711 |
Accumulated deficit | (236,673,155) | (223,817,388) |
Total stockholders' equity | 6,858,080 | 10,365,402 |
Total Liabilities and Stockholders' Equity | 8,153,948 | 15,565,831 |
Series A Preferred stock | ||
Stockholders' Equity | ||
Preferred stock, value | ||
Series B Preferred stock | ||
Stockholders' Equity | ||
Preferred stock, value |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Allowance on accounts receivable (in dollars) | $ 10,000 | $ 32,965 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 27,377,057 | 24,078,756 |
Common stock, shares outstanding | 27,377,057 | 24,078,756 |
Series A Preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series B Preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues: | ||
Product revenues | $ 3,733,995 | $ 2,538,202 |
Service revenues | 1,017,265 | 1,648,225 |
Total revenues | 4,751,260 | 4,186,427 |
Cost of revenues | 1,077,232 | 1,170,653 |
Operating expenses: | ||
Selling, general and administrative | 13,324,503 | 10,808,299 |
Research and development | 2,282,362 | 3,700,837 |
Depreciation and amortization | 887,305 | 706,496 |
Total operating expenses | 16,494,170 | 15,215,632 |
LOSS FROM OPERATIONS | (12,820,142) | (12,199,858) |
Other (expense) income: | ||
Interest income (expense), net | 2,763 | 11,004 |
Other (expense) income, net | (38,388) | 12,875 |
Loss before provision for income taxes | (12,855,767) | (12,175,979) |
Provision for income taxes | 0 | 0 |
NET LOSS | $ (12,855,767) | $ (12,175,979) |
Net loss per share-basic and diluted (in dollars per share) | $ (0.49) | $ (0.51) |
Weighted average shares outstanding - basic and diluted (in shares) | 26,378,991 | 23,693,096 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Balance at Sep. 30, 2015 | $ 21,505 | $ 224,186,760 | $ (211,641,409) | $ 12,566,856 |
Balance (in shares) at Sep. 30, 2015 | 21,504,578 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Exercise of warrants and options cashlessly | $ 49 | (49) | ||
Exercise of warrants and options cashlessly (in shares) | 48,918 | |||
Common stock issued for consulting services | $ 24 | 78,106 | 78,130 | |
Common stock issued for consulting services (in shares) | 24,000 | |||
Shares issued in underwritten public offerings, net of offering costs | $ 2,500 | 7,850,655 | 7,853,155 | |
Shares issued in underwritten public offerings, net of offering costs (in shares) | 2,500,000 | |||
Exercise of warrants for cash | $ 1 | 4,409 | 4,410 | |
Exercise of warrants for cash (in shares) | 1,260 | |||
Stock based compensation expense | 2,038,830 | 2,038,830 | ||
Net loss | (12,175,979) | (12,175,979) | ||
Balance at Sep. 30, 2016 | $ 24,079 | 234,158,711 | (223,817,388) | $ 10,365,402 |
Balance (in shares) at Sep. 30, 2016 | 24,078,756 | 24,078,756 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued in private placement, net of offering costs | $ 1,025 | 1,770,252 | $ 1,771,277 | |
Common stock issued in private placement, net of offering costs (in shares) | 1,025,574 | |||
Common stock and warrants issued in private placement, net of offering costs | $ 2,273 | 4,317,590 | 4,319,863 | |
Common stock and warrants issued in private placement, net of offering costs (in shares) | 2,272,727 | |||
Stock based compensation expense | 3,257,305 | 3,257,305 | ||
Net loss | (12,855,767) | (12,855,767) | ||
Balance at Sep. 30, 2017 | $ 27,377 | $ 243,503,858 | $ (236,673,155) | $ 6,858,080 |
Balance (in shares) at Sep. 30, 2017 | 27,377,057 | 27,377,057 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (12,855,767) | $ (12,175,979) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 633,328 | 706,496 |
Impairment expense | 253,977 | |
Stock based compensation expense | 3,257,305 | 2,038,830 |
Loss on sale of property and equipment | 5,520 | |
Common stock issued for consulting services | 78,130 | |
Security deposit write-off | 10,000 | |
Provision for bad debts | 423,920 | 116,825 |
Change in operating assets and liabilities: | ||
Accounts receivable | 3,084,311 | (2,597,203) |
Inventories | (28,709) | 16,209 |
Prepaid expenses, other current assets and deposits | (167,448) | (297,759) |
Accounts payable and accrued liabilities | (610,504) | (253,333) |
Deferred revenue | (1,469,597) | 2,455,537 |
Net cash used in operating activities | (7,479,184) | (9,896,727) |
Cash flows from investing activities: | ||
Proceeds from sale of property and equipment | 5,500 | |
Purchases of intangible assets | (112,403) | |
Purchases of property and equipment | (145,436) | (672,859) |
Net cash used in investing activities | (145,436) | (779,762) |
Cash flows from financing activities: | ||
Net proceeds from sale of common stock and warrants | 6,105,127 | 7,853,155 |
Proceeds from exercise of warrants | 4,410 | |
Deferred offering costs | (13,986) | |
Purchase and cancellation of previously issued warrants | 0 | 0 |
Net cash provided by financing activities | 6,105,127 | 7,843,579 |
Net decrease in cash and cash equivalents | (1,519,493) | (2,832,910) |
Cash and cash equivalents at beginning of year | 4,479,274 | 7,312,184 |
Cash and cash equivalents at end of year | 2,959,781 | 4,479,274 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid during year for interest | 0 | 0 |
Cash paid during year for income taxes | 0 | 0 |
Non-cash investing and financing transactions: | ||
Property and equipment acquired, and included in accounts payable | 10,767 | |
Common stock issued for cashless exercise of options | $ 49 | |
Reclassification of deferred offering costs to additional paid in capital | $ 13,986 |
LIQUIDITY AND MANAGEMENT'S PLAN
LIQUIDITY AND MANAGEMENT'S PLAN | 12 Months Ended |
Sep. 30, 2017 | |
Liquidity And Management Plan [Abstract] | |
LIQUIDITY AND MANAGEMENT'S PLAN | NOTE A – LIQUIDITY AND MANAGEMENT’S PLAN The Company has recurring net losses, which have resulted in an accumulated deficit of $236,673,155 as of September 30, 2017. The Company incurred a net loss of $12,855,767 and generated negative operating cash flow of $7,479,184 for the fiscal year ended September 30, 2017. At September 30, 2017 the Company had cash and cash equivalents of $2,959,781 and working capital of $4,945,304. The Company’s current capital resources include cash and cash equivalents, accounts receivable and inventories. Historically, the Company has financed its operations principally from the sale of equity securities. As discussed in Note G, The Company expects to finance operations and capital expenditures primarily through cash received from June 2017 private placements and the December 2017 registered direct offering, and the collection of its accounts receivables. The Company estimates that it will have sufficient cash and cash equivalents to fund operations for the next twelve months from the date of filing of the annual report. The Company may require additional funds to expand the marketing and complete the continued development of its products, product manufacturing, and to fund expected additional losses from operations, until revenues are sufficient to cover the Company’s operating expenses. If revenues are not sufficient to cover the Company's operating expenses, and if the Company is not successful in obtaining necessary additional financing, it will most likely be forced to reduce operations. |
SUMMARY OF ACCOUNTING POLICIES
SUMMARY OF ACCOUNTING POLICIES | 12 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF ACCOUNTING POLICIES | NOTE B – SUMMARY OF ACCOUNTING POLICIES Business and Basis of Presentation On September 16, 2002, the Company was incorporated under the laws of the State of Nevada. Effective December 17, 2008, the Company reincorporated from the State of Nevada to the State of Delaware. The Company is principally devoted to developing and marketing plant-based or other DNA technology solutions in the United States, Europe and Asia. To date, the Company has produced limited recurring revenues from its products and services; it has incurred expenses and has sustained losses. Consequently, its operations are subject to all the risks inherent in the establishment of a biotechnology company. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, APDN (B.V.I.) Inc., Applied DNA Sciences Europe Limited, and Applied DNA Sciences India Private Limited which currently have no operations or activity. Applied DNA Sciences India Private Limited was incorporated in India on June 22, 2017. Significant inter-company transactions and balances have been eliminated in consolidation. To facilitate comparison of information across periods, certain reclassifications have been made to prior year amounts to conform to the current year’s presentation. Use of Estimates The preparation of the financial statements in conformity with Accounting Principles Generally Accepted in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The most complex and subjective estimates include recoverability of long-lived assets, including the values assigned to goodwill, intangible assets and property, plant and equipment, fair value calculations for stock based compensation, contingencies, allowance for doubtful accounts and management’s anticipated liquidity. Management reviews its estimates on a regular basis and the effects of any material revisions are reflected in the consolidated financial statements in the period they are deemed necessary. Accordingly, actual results could differ from those estimates. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 605, Revenue Recognition (“ASC 605”). ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred and/or service has been performed; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered or services provided and the collectability of those amounts. Provisions for allowances and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered, service has not been provided, or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered, the service has been provided, or no refund will be required. At September 30, 2017 and 2016, the Company recorded total deferred revenue of $351,735 and $2,737,588, respectively. Revenue arrangements with multiple components are divided into separate units of accounting if certain criteria are met, including whether the delivered component has stand-alone value to the customer. Consideration received is allocated among the separate units of accounting based on their respective selling prices. The selling price for each unit is based on vendor-specific objective evidence, or VSOE, if available, third party evidence if VSOE is not available, or estimated selling price if neither VSOE nor third party is available. The applicable revenue recognition criteria are then applied to each of the units. Revenue for government contract awards, which supports the Company’s development efforts on specific projects, is recognized as firm fixed price contract awards and are recognized over the period of the contract. The Company recognized revenue of approximately $249,348 and $1,064,105 from these contract awards during the fiscal years ended September 30, 2017 and 2016, respectively. The Company recognized the revenue under its memorandum of understanding ("MOU"), which expired on May 30, 2017, with LD Commodities Cotton LLC ("Dreyfus") when the product has been shipped, as there is no right of return under this arrangement and there is a commitment from their customer to purchase the marked cotton. The Company has evaluated the other indicators of gross and net revenue recognition, including whether or not the Company is the primary obligor and if it has general inventory risk. The Company did not have any general inventory risk and was not the primary obligor as it relates to the marketing portion of the cotton tagging fee. With respect to the Company’s former Mutual License Agreement with Himatsingka America Inc. (formerly known as Divatex Home Fashion, Inc.) (“Himatsingka”), the Company has evaluated all of the key gross and net revenue recognition indicators and has concluded that the circumstances as they relate to Himatsingka’s portion of the tagging fee are more consistent with those key indicators that support net revenue reporting. In addition, the nature of some of the Company’s cotton contracts includes extended payment terms that will result in a longer collection period and slower cash inflows. On June 23, 2017, the Company entered into a new licensing agreement (the “Licensing Agreement”) with Himatsingka, which replaces the terms of the Mutual License Agreement and its former MOU with Dreyfus. Under the terms of the Licensing Agreement, Himatsingka is solely responsible for promoting, marketing and selling on a worldwide basis the Company’s technology with respect to finished and unfinished cotton products. The Licensing Agreement grants Himatsingka an exclusive license to use the Company’s technology in respect of cotton, subject to certain carve-outs including governmental users, non-commercial trade associations and others. The Licensing Agreement has a term that continues until June 23, 2042, except in the case of patents, in which case the term continues with respect to a patent until such patent is no longer in effect. As a result, the Company will no longer ship taggant to mark cotton pursuant to the terms of the MOU with Dreyfus. Instead, the Company will ship taggant to mark cotton to locations designated by Himatsingka, and Himatsingka will take possession of inventory upon shipment. The Licensing Agreement provides that Himatsingka will make payments for the use of the Company’s taggant technology on a net 60 days basis (with the exception of the first delivery which was on a 180 day basis). In addition, Himatsingka will make royalty payments on a quarterly basis in arrears in the event the Company’s technology is used on non-home products, as defined in the Licensing Agreement. Himatsingka is responsible for the inspection and compliance within the supply chain. Himatsingka is generally required to use the Company’s technology during the term of the Licensing Agreement, subject, among other things, to their customers’ requirements. As part of the Licensing Agreement, the Company will establish an independent testing laboratory in Ahmedabad, India. The Licensing Agreement includes customary mutual indemnification provisions. The cotton ginning season in the United States takes place between September and March each year, therefore, revenues from these customer contracts may be seasonal. Cash Equivalents For the purpose of the accompanying consolidated financial statements, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents. Accounts Receivable The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company classifies receivable amounts as current or long-term based on expected payment and records long-term accounts receivable when the collection period is expected to be greater than one year. At September 30, 2017 and 2016, the Company has an allowance for doubtful accounts of $10,000 and $32,965, respectively. The Company writes-off receivables that are deemed uncollectible. Inventories Inventories, which consist primarily of raw materials and finished goods, are stated at the lower of cost or market, which cost determined by using the first-in, first-out (FIFO) method. Income Taxes The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes include, but not limited to, accounting for intangibles, equity based compensation and depreciation and amortization. The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all of the deferred tax asset will not be realized. During the fiscal years ended September 30, 2017 and 2016, the Company incurred losses from operations. Based upon these results and the trends in the Company’s performance projected for fiscal year 2018, it is more likely than not that the Company will not realize any benefit from the deferred tax assets recorded by the Company in previous periods. Management makes judgments as to the interpretation of tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. The Company has identified its federal tax return and its state tax return in New York as “major” tax jurisdictions. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s consolidated financial statements. The Company believes that its income tax positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. It is the Company’s policy to accrue interest and penalties on unrecognized tax benefits as components of income tax provision. The Company did not have any accrued interest or penalties as of September 30, 2017 and 2016. Tax years 2013 through 2016 remain subject to future examination by the applicable taxing authorities. Property and Equipment Property and equipment are stated at cost and depreciated using the straight line method over their estimated useful lives. The estimated useful life for computer equipment, lab equipment and furniture is 3 years and leasehold improvements are amortized over the shorter of their useful life or the lease terms. Property and equipment consist of: September 30, 2017 2016 Computer equipment $ 85,413 $ 70,134 Lab equipment 1,770,407 1,651,400 Furniture 44,592 44,592 Leasehold improvements 289,573 289,573 Total 2,189,985 2,055,699 Accumulated depreciation 1,666,297 1,263,200 Property and equipment, net $ 523,688 $ 792,499 Depreciation expense for the fiscal years ended September 30, 2017 and 2016 were $403,482 and $452,212, respectively. Impairment of Long-Lived Assets The Company evaluates its long lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of long-lived assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. For the fiscal year ended September 30, 2017, the Company recorded impairment expense of $253,977, as determined by non-recurring Level 3 inputs, related to capitalized software which is included in depreciation and amortization expense which is included in the consolidated statements of operations. Net Loss per Share The Company presents loss per share utilizing a dual presentation of basic and diluted loss per share. Basic loss per share includes no dilution and has been calculated based upon the weighted average number of common shares outstanding during the period. Dilutive common stock equivalents consist of shares issuable upon the exercise of the Company’s stock options and warrants. For the fiscal years ended September 30, 2017 and 2016, common stock equivalent shares are excluded from the computation of the diluted loss per share as their effect would be anti-dilutive. Securities that could potentially dilute basic net income per share in the future that were not included in the computation of diluted net loss per share because to do so would have been antidilutive for the fiscal years ended September 30, 2017 and 2016 are as follows: 2017 2016 Warrants 9,540,455 7,208,060 Employee options 5,333,227 4,403,234 14,873,682 11,611,294 Stock Based Compensation The Company accounts for stock-based compensation for employees and directors in accordance with ASC 718, Compensation (“ASC 718”). ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Under the provisions of ASC 718, stock-based compensation costs are measured at the grant date, based on the fair value of the award, and are recognized as expense over the employee’s requisite service period (generally the vesting period of the equity grant). The fair value of the Company’s common stock options is estimated using the Black Scholes option-pricing model with the following assumptions: expected volatility, dividend rate, risk free interest rate and the expected life. The Company expenses stock-based compensation by using the straight-line method. In accordance with ASC 718, excess tax benefits realized from the exercise of stock-based awards are classified in cash flows from financing activities. The future realization of the reserved deferred tax assets related to these tax benefits associated with the exercise of stock options will result in a credit to additional paid in capital if the related tax deduction reduces taxes payable. The Company has elected the “with and without approach” regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year. Under this approach, the windfall tax benefit would be recognized in additional paid-in-capital only if an incremental tax benefit is realized after considering all other benefits presently available. The Company accounts for stock based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASC 505-50. Concentrations Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. The Company’s revenues earned from sale of products and services for the fiscal years ended September 30, 2017 include 29%, 26%, 13% and 10%, respectively from four customers of the Company’s total revenues. These customers accounted for approximately 97% of the Company’s total accounts receivable at September 30, 2017. At September 30, 2017, one customer accounted for an aggregate of 80% of the Company’s total accounts receivable. The Company’s revenues earned from sale of products and services for the fiscal years ended September 30, 2016 include 33%, 29% and 13%, respectively, from three customers of the Company’s total revenues. These three customers accounted for approximately 20% of the Company’s total accounts receivable at September 30, 2016. At September 30, 2016, one customer accounted for an aggregate of 78% of the Company’s total accounts receivable. Research and Development The Company accounts for research and development costs in accordance with the ASC 730, Research and Development (“ASC 730”). Under ASC 730, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. During the fiscal years ended September 30, 2017 and 2016, the Company incurred research and development expenses of $2,282,362 and $3,700,837, respectively. Advertising The Company follows the policy of charging the costs of advertising to expense as incurred. The Company charged to operations $315,266 and $245,281, as advertising costs for the fiscal years ended September 30, 2017 and 2016, respectively. Goodwill and Other Intangible Assets The Company amortizes its intangible assets using the straight-line method over their estimated period of benefit. All of the Company’s intangible assets, except for goodwill are subject to amortization. Goodwill arises as a result of business acquisitions. Goodwill consists of the excess of the cost of the acquisitions over the tangible and intangible assets acquired and liabilities assumed. The Company evaluates goodwill for impairment at least annually. The Company qualitatively and quantitatively determines whether, more likely than not, the fair value exceeds the carrying amount of a reporting unit. There are numerous assumptions and estimates underlying the quantitative assessments including future earnings, long-term strategies, and the Company’s annual planning and forecasts. If these planned initiatives do not accomplish the targeted objectives, the assumptions and estimates underlying the quantitative assessments could be adversely affected and have a material effect upon the Company’s financial condition and results of operations. As of September 30, 2017 and 2016 goodwill and other intangible impairment assessments indicated that there was no impairment. Internally Developed Software Internally developed software products, consist of capitalized costs associated with the development of computer software to be sold, leased or otherwise marketed. Software development costs associated with new products are expensed as incurred until technological feasibility, as defined in FASB ASC Topic 985-20, has been established. Costs incurred thereafter are capitalized until the product is made generally available. The stage during the Company’s development process for a new product or new release at which technological feasibility requirements are established affects the amount of costs capitalized. Annual amortization of internally developed software products is the greater of the amount computed using the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or the straight-line method over the remaining estimated economic life of the software product, generally estimated to be 5 years from the date the product became available for general release to customers. The Company generally recognizes amortization expense for capitalized software costs using the straight-line method. Internally developed software products are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and its carrying amount exceeds its fair value. As of September 30, 2017 the Company recorded $253,977 of impairment expense relating to the capitalized software project which the Company does not forecast will have significant cash inflows. Fair Value of Financial Instruments The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related asset or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities. The Company utilizes observable market inputs (quoted market prices) when measuring fair value whenever possible. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting and finance department, who report to the Chief Financial Officer, determine its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting and finance department and are approved by the Chief Financial Officer. Recently Issued Accounting Principles In July 2017, the Financial Accounting Standards Board (“FASB”) issued a two-part Accounting Standards Update (“ASU”) No. 2017-11, I. Accounting for Certain Financial Instruments With Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests With a Scope Exception (“ASU 2017-11”). ASU 2017-11 amends guidance in FASB ASC 260, Earnings Per Share, FASB ASC 480, Distinguishing Liabilities from Equity, and FASB ASC 815, Derivatives and Hedging. The amendments in Part I of ASU 2017-11 change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. The amendments in Part II of ASU 2017-11 re-characterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. ASU 2017-11 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance. In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”) 2017-09, Compensation – “Stock Compensation (Topic 718): Scope of Modification Accounting” , In January 2017, the FASB ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”). The amendments in this update are to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company is currently evaluating the impact of adopting this guidance. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). The purpose of the amendment is to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. For public entities, the amendments in ASU 2017-04 are effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently assessing the impact of ASU 2017-04 on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, "Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." The objective of this update is to simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company does not believe this will have a material impact on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods and is to be applied utilizing a modified retrospective approach. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17"). This update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. ASU 2015-17 is effective for annual and interim reporting periods beginning after December 15, 2016. This update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. Early application is permitted as of the beginning of the interim or annual reporting period. The Company expects the impact of the adoption of this pronouncement on its consolidated balance sheet to be a reclassification only, and does not expect the pronouncement to have a significant impact. In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory (Topic 330)” ("ASU 2015-11"). ASU 2015-11 simplifies the accounting for the valuation of all inventory not accounted for using the last-in, first-out ("LIFO") method by prescribing that inventory be valued at the lower of cost and net realizable value. ASU 2015-11 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis. The Company does not expect the adoption of ASU 2015-11 to have a material effect on its consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which was subsequently modified in August 2015 by ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date. This guidance will be effective for fiscal years (and interim reporting periods within those years) beginning after December 15, 2017. The core principle of ASU No. 2014-09 is that companies should recognize revenue when the transfer of promised goods or services to customers occurs in an amount that reflects what the company expects to receive. It requires additional disclosures to describe the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers. In 2016 and 2017, the FASB issued additional ASUs that clarify the implementation guidance on principal versus agent considerations (ASU 2016-08), on identifying performance obligations and licensing (ASU 2016-10), and on narrow-scope improvements and practical expedients (ASU 2016-12), revenue recognition criteria and other technical corrections (ASU 2016-20) as well as clarifying the scope of asset derecognition guidance and accounting for partial sales of nonfinancial assets (ASU 2017-05). The Company is in the process of evaluating the provisions of these ASU’s and assessing the potential effect on the Company’s consolidated financial position or results of operations. However, based upon the revenue recognized for the current contracts in place as of September 30, 2017, we expect to identify similar performance obligations under these ASUs as compared with the deliverables and separate units of accounting previously identified. The Company is also evaluating the transition guidance under ASU 2014-09 to determine if it will apply the full retrospective or modified retrospective approach. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE C – INVENTORIES Inventories consist of the following at September 30, 2017 and 2016: 2017 2016 Raw materials $ 193,069 $ 100,420 Finished goods 133,399 197,339 Total $ 326,468 $ 297,759 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Sep. 30, 2017 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
INTANGIBLE ASSETS | NOTE D – INTANGIBLE ASSETS Intangible assets at September 30, 2017 and 2016 are as follows: 2017 2016 Internally developed software (5-year useful life) $ 157,221 $ 411,199 Customer relationships (10-year useful life) 621,000 621,000 Intellectual property (5-15 years) 917,350 917,350 1,695,571 1,949,549 Less: Accumulated amortization 653,495 423,649 Intangible assets, net $ 1,042,076 $ 1,525,900 Total amortization expense charged to operations for the fiscal years ended September 30, 2017 and 2016 were $483,823 and $254,284, respectively. Impairment expense of $253,977 relating to internally developed software was included in amortization expense included in depreciation and amortization within the consolidated statements of operations for the fiscal year ended September 30, 2017. The following table presents the estimated amortization expense of the intangible assets for each of the five succeeding years as of September 30, 2017: Amount 2018 $ 139,641 2019 91,967 2020 114,448 2021 114,448 2022 114,448 Thereafter 467,124 Total $ 1,042,076 |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 12 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | NOTE F – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities at September 30, 2017 and 2016 are as follows: 2017 2016 Accounts payable $ 382,984 $ 1,530,258 Accrued salaries payable 446,012 678,982 Other accrued expenses 115,137 38,101 Total $ 944,133 $ 2,247,341 |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
CAPITAL STOCK | NOTE G – CAPITAL STOCK Common Stock Transactions during and subsequent to the Fiscal Year Ended September 30, 2017: On November 2, 2016, the Company entered into a securities purchase agreement with an institutional investor providing for the purchase of $5 million of common stock and warrants at a combined price of $2.20 per share of common stock and warrant (the “Private Placement”). In the Private Placement, the Company sold 2,272,727 shares of its common stock and warrants to purchase 2,272,727 shares of its common stock. The warrants have the same terms as the Company’s existing publicly traded warrants (APDNW) with an exercise price of $3.50 per share and an expiration date of November 20, 2019. The offering closed on November 7, 2016. The Company filed a registration statement providing for the resale of these securities on Form S-3 by December 7, 2016. Upon effectiveness of the registration statement, it is expected that the common stock and warrants issued in the Private Placement will be freely tradeable on The NASDAQ Capital Market under the symbols “APDN” and “APDNW”, respectively. The aggregate gross proceeds to the Company from the Private Placement were $5 million before deducting the placement agents’ fee and other offering expenses. In connection with the closing of this Private Placement, as partial compensation, on November 7, 2016, the Company granted warrants to purchase an aggregate of 68,182 shares of its common stock to the Company’s placement agents, Maxim Group LLC and Imperial Capital LLC (the “Placement Agent Warrants”) at an exercise price of $2.53 (115% of the public offering price), subject to adjustment as set forth therein (including for stock dividends and splits and certain other distributions and “Fundamental Transactions,” as defined therein). The Placement Agent Warrants will be exercisable beginning six months following the closing date of the Private Placement and terminate at 5:00 P.M. (Eastern Standard Time) on November 7, 2021. In addition, the Placement Agent Warrants provide for cashless exercise, which the Placement Agents may elect if there is no effective registration statement registering the resale of the shares issuable upon exercise of the Placement Agent Warrants. The number of shares of common stock that may be acquired by the Placement Agents upon any exercise of the Placement Agent Warrants (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise, the total number of shares of common stock then beneficially owned by the Placement Agent and its Affiliates (as defined therein) and any other Persons whose beneficial ownership of common stock would be aggregated with the Placement Agent pursuant to the Exchange Act, does not exceed 9.99% of the total number of issued and outstanding shares of common stock. On June 28, 2017 the Company entered into subscription agreements for a private placement of its common stock, with a group of investors, including a strategic investor which is also a key customer and intellectual property licensee of the Company as well as all of the Company’s executive officers and all members of the Board of Directors (the “June Private Placement”). As a result of the June Private Placement, the Company issued 1,025,574 shares of common stock at a price of $1.76 per share for total gross proceeds of $1,805,000. As part of the June Private Placement, the Company’s management and Board of Directors purchased 315,346 shares of common stock for gross proceeds of $555,000. The issuance of the Common Stock was exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) of such Securities Act and Regulation D promulgated thereunder and such Common Stock therefore is restricted. Each investor gave representations that he, she or it was an “accredited investor” (as defined under Rule 501 of Regulation D) and that he, she or it is purchasing such securities without a present view toward a distribution of the securities. In addition, there was no general solicitation conducted in connection with the offer and sale of the securities. On December 22, 2017, the Company entered into a securities purchase agreement with certain institutional investors for the purchase and sale of 2,735,000 shares of our common stock and warrants to purchase an aggregate of 2,735,000 shares of common stock in a registered direct offering with aggregate gross proceeds of $4,786,250, at a combined purchase price of $1.75 per share. The warrants will be immediately exercisable at a price of $2.00 per share of common stock and will expire five years from the date of issuance. A fter deducting placement agent fees and other estimated expenses related to the registered direct offering, the company estimates the aggregate net proceeds to be approximately $4,200,000. The warrants will be exercisable for five years from the Initial Exercise Date, but not thereafter. The Purchase Warrants include an adjustment provision that, subject to certain exceptions, reduces their exercise price if the Company issues Common Stock or Common Stock equivalents at a price lower than the then-current exercise price of the Purchase Warrants, subject to a minimum exercise price of $0.44. The exercise price and number of the shares of our Common Stock issuable upon the exercise of the warrants will be subject to adjustment as set forth therein (including for stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction). In addition, if and only if there is no effective registration statement registering, or no current prospectus available for, the resale of the Purchase Warrants, the Purchasers may exercise the Purchase Warrants by means of a “cashless exercise.” Common Stock Transactions during the Fiscal Year Ended September 30, 2016: On November 23, 2015, the Company entered into a securities purchase agreement with certain institutional investors providing for the purchase and sale of 2,500,000 shares of common stock at a price of $3.49 per share in a registered direct public offering. In a concurrent private placement, the Company sold warrants to purchase 1,250,000 shares of its common stock at a price of $0.01 per warrant, with an exercise price of $4.30 per share. The warrants were exercisable beginning six months following the closing date of the private placement and will expire five years from the date on which they become exercisable. The gross proceeds to the Company from this registered direct offering and private placement before deducting the placement agent fees and offering expenses, is $8.75 million. In connection with the closing of the registered direct offering and the concurrent private placement, as partial compensation, on November 25, 2015, the Company granted warrants to purchase 50,000 shares of common stock to its placement agent. These warrants have an exercise price of $4.03 (115% of the public offering price), subject to adjustment as set forth therein, will be exercisable beginning six months following the closing date of the Private Placement and expire at 5:00 PM (Eastern Standard Time) on November 25, 2020. During the fiscal year ended September 30, 2016, the Company granted 24,000 shares of common stock to consultants for a total expense of approximately $78,130 pursuant to the Company’s 2005 Incentive Stock Plan (the “Incentive Plan”). |
STOCK OPTIONS AND WARRANTS
STOCK OPTIONS AND WARRANTS | 12 Months Ended |
Sep. 30, 2017 | |
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | |
STOCK OPTIONS AND WARRANTS | NOTE H– STOCK OPTIONS AND WARRANTS Warrants The following table summarizes the changes in warrants outstanding. These warrants were granted in lieu of cash compensation for services performed or financing expenses in connection with the sales of the Company’s common stock. Transactions involving warrants (see Note G) are summarized as follows: Number of Weighted Average Balance at October 1, 2016 7,208,060 $ 3.64 Granted 2,340,909 3.47 Exercised (- ) (- ) Cancelled or expired (8,514 ) (2.64 ) Balance, September 30, 2017 9,540,455 $ 3.60 Stock Options In 2005, the Board of Directors and the holders of a majority of the outstanding shares of common stock approved the Incentive Plan. In 2007, 2008, 2012 and 2015, the Board of Directors and holders of a majority of the outstanding shares of common stock approved various increases in the number of shares of common stock that can be issued as stock awards and stock options thereunder to an aggregate of 8,333,333 shares and the number of shares of common stock that can be covered by awards made to any participant in any calendar year to 833,334 shares. The Incentive Plan’s expiration date is January 25, 2025. The Incentive Plan is designed to retain directors, executives, and selected employees and consultants by rewarding them for making contributions to our success with an award of options to purchase shares of common stock. As of September 30, 2017, a total of 275,752 shares have been issued and options to purchase 5,855,795 shares have been granted under the Incentive Plan. Transactions involving stock options issued are summarized as follows: Number of Weighted Average Aggregate Weighted Outstanding at October 1, 2016 4,403,234 $ 4.08 Granted 1,099,844 2.28 Exercised - - Cancelled or expired (169,851 ) 4.17 Outstanding at September 30, 2017 5,333,227 $ 3.71 Vested at September 30, 2017 3,884,600 3.91 $ 0 4.09 Non-vested at September 30, 2017 1,448,627 $ 14,646 7.38 The aggregate intrinsic value for options exercised during the fiscal years ended September 30, 2017 and 2016 was zero and $50,110. For the fiscal year ended September 30, 2017, the Company issued 1,099,844 (including award modifications of 119,182 options) options to employees, consultants, members of the strategic advisory board and non-employee board of director members. Included in these grants was 280,000 options granted to executives and 5,000 performance based options issued to a consultant. These performance based options vest when a certain performance condition is met by the consultant. For the fiscal year ended September 30, 2016, the Company issued an aggregate of 1,115,941 options to employees, non-employee board of director members, members of the strategic advisory board and consultants. Included in these grants was 160,000 options granted to executives and 500,000 performance based options granted to an employee during May 2016. The performance based options vest in tranches as certain performance conditions are met by the employee. None of these performance based options were vested as of September 30, 2017. The fair value of options granted during the fiscal years ended September 30, 2017 and 2016 was determined using the Black Scholes Option Pricing Model. For the purposes of the valuation model, the Company used the simplified method for determining the granted options expected lives. The simplified method is used since the Company does not have adequate historical data to utilize in calculating the expected term of options. The fair value for options granted was calculated using the following weighted average assumptions: 2017 2016 Stock price $ 2.11 $ 3.05 Exercise price $ 2.31 $ 2.93 Expected term 5.38 7.89 Dividend yield - - Volatility 111 % 135 % Risk free rate 2.0 % 1.8 % The Company recorded $3,257,305 and $2,038,830 as stock compensation expense within selling, general and administrative for fiscal years ended September 30, 2017 and 2016, respectively. Included in this amount is $89,951 and $37,342 for the fiscal years ended September 30, 2017 and 2016, respectively for employee stock option modifications. These modifications extended the term of the option for an employee and nonemployee board of director members in fiscal 2017 and extended the terms of the options for a former employee in fiscal 2016. As of September 30, 2017, unrecorded compensation cost related to non-vested awards was $2,036,222, which is expected to be recognized over a weighted average period of approximately 3.67 years. The weighted average grant date fair value per share for options granted during the fiscal years ended September 30, 2017 and 2016 was $1.58 and $2.84, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE I– INCOME TAXES The income tax provision (benefit) for the fiscal years ended September 30, 2017 and 2016 consists of the following: 2017 2016 Federal: Current $ - - Deferred (4,303,000 ) (3,780,000 ) (4,303,000 ) (3,780,000 ) State and local: Current - - Deferred (376,000 ) (1,302,000 ) (376,000 ) (1,302,000 ) Change in valuation allowance 4,679,000 5,082,000 Income tax provision (benefit) $ - - The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S statutory rate to losses before income tax expense for the years ended September 30, 2017 and 2016 as follows: 2017 2016 Statutory federal income tax rate 34.00 % 34.00 % Statutory state and local income tax rate (1%, as of September 30, 2017 and 2016), net of federal benefit 1.62 % 7.72 % Stock based compensation (2.65 )% (2.33 )% Other permanent differences (0.03 )% 0.72 % Effect of change in deferred tax rate 2.37 % 2.01 % Adjustment of prior years’ NOLs 0.38 % 0.41 % Adjustment to depreciation and amortization - 1.09 % Adjustment to stock based compensation - (2.43 )% Adjustment to state tax credits 0.70 % 0.55 % Change in valuation allowance (36.39 )% (41.74 )% Effective tax rate 0.00 % 0.00 % Deferred income taxes result from temporary differences in the recognition of income and expenses for financial reporting purposes and for tax purposes. The tax effect of these temporary differences representing deferred tax asset and liabilities result principally from the following: September 30, 2017 2016 Deferred tax assets (liabilities): Stock based compensation $ 2,836,000 $ 2,025,000 Depreciation and amortization 500,000 351,000 Amortization of debt discount 16,311,000 16,269,000 Net operating loss carry forward 16,143,000 12,713,000 Tax credits 521,000 221,000 Other 52,000 105,000 Less: valuation allowance (36,363,000 ) (31,684,000 ) Net deferred tax asset $ - $ - As of September 30, 2017, the Company has approximately $43,440,000 of Federal and $57,896,000 of State net operating loss “NOL” carryforwards available which begin to expire after 2022. Pursuant to Internal Revenue Code Section 382, the Company’s ability to utilize the NOLs is subject to certain limitations due to changes in stock ownership in prior years. The annual limitation ranges between $786,000 and $1,103,000 and any unused amounts can be carried forward to subsequent years. The Company has provided a full valuation allowance against all of the net deferred tax assets based on management’s determination that it is more likely than not that the net deferred tax assets will not be realized in the future. The valuation allowance increased by $4,679,000. The Company has Federal research and development credits of approximately $381,000 that will expire after 2034. The Company also has state investment tax credits of $140,000 that will expire after 2029. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE J – COMMITMENTS AND CONTINGENCIES Operating leases The Company leases office space under an operating lease in Stony Brook, New York for its corporate headquarters. The lease is for a 30,000 square foot building. The term of the lease commenced on June 15, 2013 and expired on May 31, 2016, with the option to extend the lease for two additional three-year periods. The Company has exercised its option to extend the lease for one additional three-year period ending May 31, 2019. The base rent during the additional three-year period is $458,098 per annum. In addition to the office space, the Company also has 1,500 square feet of laboratory space. The term of the lease commenced on November 1, 2015 and expired on October 31, 2017. Effective November 20, 2017, the Company renewed this lease for one additional year, ending October 31, 2018. The Company set up a satellite testing facility in Ahmedabad, India during fiscal 2017. On November 17, 2017, it leased 1,108 square feet for a three-year term beginning November 1, 2017. The base rent is approximately $6,500 per annum. Total rent expense for the fiscal years ended September 30, 2017 and 2016 were $552,240 and $490,745, respectively. Future minimum rental payments (excluding real estate tax and maintenance costs) as of September 30, 2017 are as follows: For the fiscal year ending September 30, 2018 528,123 2019 316,457 2020 7,104 2021 595 Total $ 852,279 Employment and Consulting Agreements Employment agreements On July 11, 2011, the Company’s Board of Directors approved the terms of employment for Dr. James A. Hayward, the Company’s Chief Executive Officer (“CEO”). Dr. Hayward’s employment agreement provides that Dr. Hayward will be the Company’s CEO, and will continue to serve on the Company’s Board of Directors. On July 28, 2016, a new employment agreement was entered into with the Chief Executive Officer effective July 1, 2016. The initial term is from July 1, 2016 through June 30, 2017, with automatic one-year renewal periods. As of June 30, 2017, the employment contract renewed for an additional year. Under the new agreement, Dr. Hayward will be eligible for a special cash incentive bonus of up to $800,000, $300,000 of which is payable if and when annual revenue reaches $8 million and $100,000 of which would be payable for each $2 million of annual revenue in excess of $8 million. Pursuant to the contract, Dr. Hayward’s annual salary is $400,000. The Board of Directors, acting in its discretion, may grant annual bonuses to Dr. Hayward. Dr. Hayward will be entitled to certain benefits and perquisites and will be eligible to participate in retirement, welfare and incentive plans available to the Company’s other employees. The agreement with Dr. Hayward also provides that if he is terminated before the end of the initial or a renewal term by us without cause or if Dr. Hayward terminates his employment for good reason, then, in addition to previously earned and unpaid salary, bonus and benefits, and subject to the delivery of a general release and continuing compliance with restrictive covenants, Dr. Hayward will be entitled to receive a pro rata portion of the greater of either (X) the annual bonus he would have received if employment had continued through the end of the year of termination or (Y) the prior year’s bonus; salary continuation payments for two years following termination equal to the greater of (i) three times base salary or (ii) two times base salary plus bonus; company-paid COBRA continuation coverage for 18 months post-termination; continuing life insurance benefits (if any) for two years; and extended exercisability of outstanding vested options (for three years from termination date or, if earlier, the expiration of the fixed option term). If termination of employment as described above occurs within six months before or two years after a change in control of the Company, then, in addition to the above payments and benefits, all of Dr. Hayward’s outstanding options and other equity incentive awards will become fully vested and Dr. Hayward will receive a lump sum payment of the amounts that would otherwise be paid as salary continuation. In general, a change in control will include a 30% or more change in ownership of the Company. Upon termination due to death or disability, Dr. Hayward will generally be entitled to receive the same payments and benefits he would have received if his employment had been terminated by the Company without cause (as described in the preceding paragraph), other than salary continuation payments. Effective May 7, 2016, the Chief Executive Officer's annual salary was voluntarily reduced by $100,000. Effective May 20, 2017, the Chief Executive’s annual salary was voluntarily reduced by an additional $50,000. Accordingly, his current annual base salary as of September 30, 2017 is $250,000. Litigation From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. In addition to the estimated loss, the recorded liability includes probable and estimable legal costs associated with the claim or potential claim. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business. There is no pending litigation involving the Company at this time. |
GEOGRAPHIC AREA INFORMATION
GEOGRAPHIC AREA INFORMATION | 12 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
GEOGRAPHIC AREA INFORMATION | NOTE K– GEOGRAPHIC AREA INFORMATION Net revenues by geographic location of customers are as follows: Year Ended September 30, 2017 2016 United States $ 3,485,691 $ 3,177,792 Europe 1,055,125 876,790 Asia and other 210,444 131,845 Total $ 4,751,260 $ 4,186,427 |
SUMMARY OF ACCOUNTING POLICIES
SUMMARY OF ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Business and Basis of Presentation | Business and Basis of Presentation On September 16, 2002, the Company was incorporated under the laws of the State of Nevada. Effective December 17, 2008, the Company reincorporated from the State of Nevada to the State of Delaware. The Company is principally devoted to developing and marketing plant-based or other DNA technology solutions in the United States, Europe and Asia. To date, the Company has produced limited recurring revenues from its products and services; it has incurred expenses and has sustained losses. Consequently, its operations are subject to all the risks inherent in the establishment of a biotechnology company. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, APDN (B.V.I.) Inc., Applied DNA Sciences Europe Limited, and Applied DNA Sciences India Private Limited which currently have no operations or activity. Applied DNA Sciences India Private Limited was incorporated in India on June 22, 2017. Significant inter-company transactions and balances have been eliminated in consolidation. To facilitate comparison of information across periods, certain reclassifications have been made to prior year amounts to conform to the current year’s presentation. |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with Accounting Principles Generally Accepted in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The most complex and subjective estimates include recoverability of long-lived assets, including the values assigned to goodwill, intangible assets and property, plant and equipment, fair value calculations for stock based compensation, contingencies, allowance for doubtful accounts and management’s anticipated liquidity. Management reviews its estimates on a regular basis and the effects of any material revisions are reflected in the consolidated financial statements in the period they are deemed necessary. Accordingly, actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 605, Revenue Recognition (“ASC 605”). ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred and/or service has been performed; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered or services provided and the collectability of those amounts. Provisions for allowances and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered, service has not been provided, or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered, the service has been provided, or no refund will be required. At September 30, 2017 and 2016, the Company recorded total deferred revenue of $351,735 and $2,737,588, respectively. Revenue arrangements with multiple components are divided into separate units of accounting if certain criteria are met, including whether the delivered component has stand-alone value to the customer. Consideration received is allocated among the separate units of accounting based on their respective selling prices. The selling price for each unit is based on vendor-specific objective evidence, or VSOE, if available, third party evidence if VSOE is not available, or estimated selling price if neither VSOE nor third party is available. The applicable revenue recognition criteria are then applied to each of the units. Revenue for government contract awards, which supports the Company’s development efforts on specific projects, is recognized as firm fixed price contract awards and are recognized over the period of the contract. The Company recognized revenue of approximately $249,348 and $1,064,105 from these contract awards during the fiscal years ended September 30, 2017 and 2016, respectively. The Company recognized the revenue under its memorandum of understanding ("MOU"), which expired on May 30, 2017, with LD Commodities Cotton LLC ("Dreyfus") when the product has been shipped, as there is no right of return under this arrangement and there is a commitment from their customer to purchase the marked cotton. The Company has evaluated the other indicators of gross and net revenue recognition, including whether or not the Company is the primary obligor and if it has general inventory risk. The Company did not have any general inventory risk and was not the primary obligor as it relates to the marketing portion of the cotton tagging fee. With respect to the Company’s former Mutual License Agreement with Himatsingka America Inc. (formerly known as Divatex Home Fashion, Inc.) (“Himatsingka”), the Company has evaluated all of the key gross and net revenue recognition indicators and has concluded that the circumstances as they relate to Himatsingka’s portion of the tagging fee are more consistent with those key indicators that support net revenue reporting. In addition, the nature of some of the Company’s cotton contracts includes extended payment terms that will result in a longer collection period and slower cash inflows. On June 23, 2017, the Company entered into a new licensing agreement (the “Licensing Agreement”) with Himatsingka, which replaces the terms of the Mutual License Agreement and its former MOU with Dreyfus. Under the terms of the Licensing Agreement, Himatsingka is solely responsible for promoting, marketing and selling on a worldwide basis the Company’s technology with respect to finished and unfinished cotton products. The Licensing Agreement grants Himatsingka an exclusive license to use the Company’s technology in respect of cotton, subject to certain carve-outs including governmental users, non-commercial trade associations and others. The Licensing Agreement has a term that continues until June 23, 2042, except in the case of patents, in which case the term continues with respect to a patent until such patent is no longer in effect. As a result, the Company will no longer ship taggant to mark cotton pursuant to the terms of the MOU with Dreyfus. Instead, the Company will ship taggant to mark cotton to locations designated by Himatsingka, and Himatsingka will take possession of inventory upon shipment. The Licensing Agreement provides that Himatsingka will make payments for the use of the Company’s taggant technology on a net 60 days basis (with the exception of the first delivery which was on a 180 day basis). In addition, Himatsingka will make royalty payments on a quarterly basis in arrears in the event the Company’s technology is used on non-home products, as defined in the Licensing Agreement. Himatsingka is responsible for the inspection and compliance within the supply chain. Himatsingka is generally required to use the Company’s technology during the term of the Licensing Agreement, subject, among other things, to their customers’ requirements. As part of the Licensing Agreement, the Company will establish an independent testing laboratory in Ahmedabad, India. The Licensing Agreement includes customary mutual indemnification provisions. The cotton ginning season in the United States takes place between September and March each year, therefore, revenues from these customer contracts may be seasonal. |
Cash Equivalents | Cash Equivalents For the purpose of the accompanying consolidated financial statements, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents. |
Accounts Receivable | Accounts Receivable The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company classifies receivable amounts as current or long-term based on expected payment and records long-term accounts receivable when the collection period is expected to be greater than one year. At September 30, 2017 and 2016, the Company has an allowance for doubtful accounts of $10,000 and $32,965, respectively. The Company writes-off receivables that are deemed uncollectible. |
Inventories | Inventories Inventories, which consist primarily of raw materials and finished goods, are stated at the lower of cost or market, which cost determined by using the first-in, first-out (FIFO) method. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes include, but not limited to, accounting for intangibles, equity based compensation and depreciation and amortization. The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all of the deferred tax asset will not be realized. During the fiscal years ended September 30, 2017 and 2016, the Company incurred losses from operations. Based upon these results and the trends in the Company’s performance projected for fiscal year 2018, it is more likely than not that the Company will not realize any benefit from the deferred tax assets recorded by the Company in previous periods. Management makes judgments as to the interpretation of tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. The Company has identified its federal tax return and its state tax return in New York as “major” tax jurisdictions. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s consolidated financial statements. The Company believes that its income tax positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. It is the Company’s policy to accrue interest and penalties on unrecognized tax benefits as components of income tax provision. The Company did not have any accrued interest or penalties as of September 30, 2017 and 2016. Tax years 2013 through 2016 remain subject to future examination by the applicable taxing authorities. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost and depreciated using the straight line method over their estimated useful lives. The estimated useful life for computer equipment, lab equipment and furniture is 3 years and leasehold improvements are amortized over the shorter of their useful life or the lease terms. Property and equipment consist of: September 30, 2017 2016 Computer equipment $ 85,413 $ 70,134 Lab equipment 1,770,407 1,651,400 Furniture 44,592 44,592 Leasehold improvements 289,573 289,573 Total 2,189,985 2,055,699 Accumulated depreciation 1,666,297 1,263,200 Property and equipment, net $ 523,688 $ 792,499 Depreciation expense for the fiscal years ended September 30, 2017 and 2016 were $403,482 and $452,212, respectively. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company evaluates its long lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of long-lived assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. For the fiscal year ended September 30, 2017, the Company recorded impairment expense of $253,977, as determined by non-recurring Level 3 inputs, related to capitalized software which is included in depreciation and amortization expense which is included in the consolidated statements of operations. |
Net Loss per Share | Net Loss per Share The Company presents loss per share utilizing a dual presentation of basic and diluted loss per share. Basic loss per share includes no dilution and has been calculated based upon the weighted average number of common shares outstanding during the period. Dilutive common stock equivalents consist of shares issuable upon the exercise of the Company’s stock options and warrants. For the fiscal years ended September 30, 2017 and 2016, common stock equivalent shares are excluded from the computation of the diluted loss per share as their effect would be anti-dilutive. Securities that could potentially dilute basic net income per share in the future that were not included in the computation of diluted net loss per share because to do so would have been antidilutive for the fiscal years ended September 30, 2017 and 2016 are as follows: 2017 2016 Warrants 9,540,455 7,208,060 Employee options 5,333,227 4,403,234 14,873,682 11,611,294 |
Stock Based Compensation | Stock Based Compensation The Company accounts for stock-based compensation for employees and directors in accordance with ASC 718, Compensation (“ASC 718”). ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Under the provisions of ASC 718, stock-based compensation costs are measured at the grant date, based on the fair value of the award, and are recognized as expense over the employee’s requisite service period (generally the vesting period of the equity grant). The fair value of the Company’s common stock options is estimated using the Black Scholes option-pricing model with the following assumptions: expected volatility, dividend rate, risk free interest rate and the expected life. The Company expenses stock-based compensation by using the straight-line method. In accordance with ASC 718, excess tax benefits realized from the exercise of stock-based awards are classified in cash flows from financing activities. The future realization of the reserved deferred tax assets related to these tax benefits associated with the exercise of stock options will result in a credit to additional paid in capital if the related tax deduction reduces taxes payable. The Company has elected the “with and without approach” regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year. Under this approach, the windfall tax benefit would be recognized in additional paid-in-capital only if an incremental tax benefit is realized after considering all other benefits presently available. The Company accounts for stock based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASC 505-50. |
Concentrations | Concentrations Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. The Company’s revenues earned from sale of products and services for the fiscal years ended September 30, 2017 include 29%, 26%, 13% and 10%, respectively from four customers of the Company’s total revenues. These customers accounted for approximately 97% of the Company’s total accounts receivable at September 30, 2017. At September 30, 2017, one customer accounted for an aggregate of 80% of the Company’s total accounts receivable. The Company’s revenues earned from sale of products and services for the fiscal years ended September 30, 2016 include 33%, 29% and 13%, respectively, from three customers of the Company’s total revenues. These three customers accounted for approximately 20% of the Company’s total accounts receivable at September 30, 2016. At September 30, 2016, one customer accounted for an aggregate of 78% of the Company’s total accounts receivable. |
Research and Development | Research and Development The Company accounts for research and development costs in accordance with the ASC 730, Research and Development (“ASC 730”). Under ASC 730, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. During the fiscal years ended September 30, 2017 and 2016, the Company incurred research and development expenses of $2,282,362 and $3,700,837, respectively. |
Advertising | Advertising The Company follows the policy of charging the costs of advertising to expense as incurred. The Company charged to operations $315,266 and $245,281, as advertising costs for the fiscal years ended September 30, 2017 and 2016, respectively. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The Company amortizes its intangible assets using the straight-line method over their estimated period of benefit. All of the Company’s intangible assets, except for goodwill are subject to amortization. Goodwill arises as a result of business acquisitions. Goodwill consists of the excess of the cost of the acquisitions over the tangible and intangible assets acquired and liabilities assumed. The Company evaluates goodwill for impairment at least annually. The Company qualitatively and quantitatively determines whether, more likely than not, the fair value exceeds the carrying amount of a reporting unit. There are numerous assumptions and estimates underlying the quantitative assessments including future earnings, long-term strategies, and the Company’s annual planning and forecasts. If these planned initiatives do not accomplish the targeted objectives, the assumptions and estimates underlying the quantitative assessments could be adversely affected and have a material effect upon the Company’s financial condition and results of operations. As of September 30, 2017 and 2016 goodwill and other intangible impairment assessments indicated that there was no impairment. |
Internally Developed Software | Internally Developed Software Internally developed software products, consist of capitalized costs associated with the development of computer software to be sold, leased or otherwise marketed. Software development costs associated with new products are expensed as incurred until technological feasibility, as defined in FASB ASC Topic 985-20, has been established. Costs incurred thereafter are capitalized until the product is made generally available. The stage during the Company’s development process for a new product or new release at which technological feasibility requirements are established affects the amount of costs capitalized. Annual amortization of internally developed software products is the greater of the amount computed using the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or the straight-line method over the remaining estimated economic life of the software product, generally estimated to be 5 years from the date the product became available for general release to customers. The Company generally recognizes amortization expense for capitalized software costs using the straight-line method. Internally developed software products are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and its carrying amount exceeds its fair value. As of September 30, 2017 the Company recorded $253,977 of impairment expense relating to the capitalized software project which the Company does not forecast will have significant cash inflows. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related asset or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities. The Company utilizes observable market inputs (quoted market prices) when measuring fair value whenever possible. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting and finance department, who report to the Chief Financial Officer, determine its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting and finance department and are approved by the Chief Financial Officer. |
Recently Issued Accounting Principles | Recently Issued Accounting Principles In July 2017, the Financial Accounting Standards Board (“FASB”) issued a two-part Accounting Standards Update (“ASU”) No. 2017-11, I. Accounting for Certain Financial Instruments With Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests With a Scope Exception (“ASU 2017-11”). ASU 2017-11 amends guidance in FASB ASC 260, Earnings Per Share, FASB ASC 480, Distinguishing Liabilities from Equity, and FASB ASC 815, Derivatives and Hedging. The amendments in Part I of ASU 2017-11 change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. The amendments in Part II of ASU 2017-11 re-characterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. ASU 2017-11 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance. In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”) 2017-09, Compensation – “Stock Compensation (Topic 718): Scope of Modification Accounting” , In January 2017, the FASB ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”). The amendments in this update are to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company is currently evaluating the impact of adopting this guidance. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). The purpose of the amendment is to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. For public entities, the amendments in ASU 2017-04 are effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently assessing the impact of ASU 2017-04 on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, "Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." The objective of this update is to simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company does not believe this will have a material impact on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods and is to be applied utilizing a modified retrospective approach. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17"). This update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. ASU 2015-17 is effective for annual and interim reporting periods beginning after December 15, 2016. This update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. Early application is permitted as of the beginning of the interim or annual reporting period. The Company expects the impact of the adoption of this pronouncement on its consolidated balance sheet to be a reclassification only, and does not expect the pronouncement to have a significant impact. In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory (Topic 330)” ("ASU 2015-11"). ASU 2015-11 simplifies the accounting for the valuation of all inventory not accounted for using the last-in, first-out ("LIFO") method by prescribing that inventory be valued at the lower of cost and net realizable value. ASU 2015-11 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis. The Company does not expect the adoption of ASU 2015-11 to have a material effect on its consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which was subsequently modified in August 2015 by ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date. This guidance will be effective for fiscal years (and interim reporting periods within those years) beginning after December 15, 2017. The core principle of ASU No. 2014-09 is that companies should recognize revenue when the transfer of promised goods or services to customers occurs in an amount that reflects what the company expects to receive. It requires additional disclosures to describe the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers. In 2016 and 2017, the FASB issued additional ASUs that clarify the implementation guidance on principal versus agent considerations (ASU 2016-08), on identifying performance obligations and licensing (ASU 2016-10), and on narrow-scope improvements and practical expedients (ASU 2016-12), revenue recognition criteria and other technical corrections (ASU 2016-20) as well as clarifying the scope of asset derecognition guidance and accounting for partial sales of nonfinancial assets (ASU 2017-05). The Company is in the process of evaluating the provisions of these ASU’s and assessing the potential effect on the Company’s consolidated financial position or results of operations. However, based upon the revenue recognized for the current contracts in place as of September 30, 2017, we expect to identify similar performance obligations under these ASUs as compared with the deliverables and separate units of accounting previously identified. The Company is also evaluating the transition guidance under ASU 2014-09 to determine if it will apply the full retrospective or modified retrospective approach. |
SUMMARY OF ACCOUNTING POLICIE18
SUMMARY OF ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of property, plant and equipment | September 30, 2017 2016 Computer equipment $ 85,413 $ 70,134 Lab equipment 1,770,407 1,651,400 Furniture 44,592 44,592 Leasehold improvements 289,573 289,573 Total 2,189,985 2,055,699 Accumulated depreciation 1,666,297 1,263,200 Property and equipment, net $ 523,688 $ 792,499 |
Schedule of summary of potential stock issuances under various options, and warrants that could have a dilutive effect on the shares outstanding | 2017 2016 Warrants 9,540,455 7,208,060 Employee options 5,333,227 4,403,234 14,873,682 11,611,294 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | 2017 2016 Raw materials $ 193,069 $ 100,420 Finished goods 133,399 197,339 Total $ 326,468 $ 297,759 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of intangible assets acquired and their carrying values | 2017 2016 Internally developed software (5-year useful life) $ 157,221 $ 411,199 Customer relationships (10-year useful life) 621,000 621,000 Intellectual property (5-15 years) 917,350 917,350 1,695,571 1,949,549 Less: Accumulated amortization 653,495 423,649 Intangible assets, net $ 1,042,076 $ 1,525,900 |
Schedule of estimated amortization expense of the intangible assets for each of the five succeeding years | Amount 2018 $ 139,641 2019 91,967 2020 114,448 2021 114,448 2022 114,448 Thereafter 467,124 Total $ 1,042,076 |
ACCOUNTS PAYABLE AND ACCRUED 21
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued liabilities | 2017 2016 Accounts payable $ 382,984 $ 1,530,258 Accrued salaries payable 446,012 678,982 Other accrued expenses 115,137 38,101 Total $ 944,133 $ 2,247,341 |
STOCK OPTIONS AND WARRANTS (Tab
STOCK OPTIONS AND WARRANTS (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | |
Schedule of transactions involving warrants | Number of Weighted Average Balance at October 1, 2016 7,208,060 $ 3.64 Granted 2,340,909 3.47 Exercised (- ) (- ) Cancelled or expired (8,514 ) (2.64 ) Balance, September 30, 2017 9,540,455 $ 3.60 |
Schedule of summary of transactions involving stock options issued to employees | Number of Weighted Average Aggregate Weighted Outstanding at October 1, 2016 4,403,234 $ 4.08 Granted 1,099,844 2.28 Exercised - - Cancelled or expired (169,851 ) 4.17 Outstanding at September 30, 2017 5,333,227 $ 3.71 Vested at September 30, 2017 3,884,600 3.91 $ 0 4.09 Non-vested at September 30, 2017 1,448,627 $ 14,646 7.38 |
Schedule of fair value of options granted | 2017 2016 Stock price $ 2.11 $ 3.05 Exercise price $ 2.31 $ 2.93 Expected term 5.38 7.89 Dividend yield - - Volatility 111 % 135 % Risk free rate 2.0 % 1.8 % |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax provision (benefit) | 2017 2016 Federal: Current $ - - Deferred (4,303,000 ) (3,780,000 ) (4,303,000 ) (3,780,000 ) State and local: Current - - Deferred (376,000 ) (1,302,000 ) (376,000 ) (1,302,000 ) Change in valuation allowance 4,679,000 5,082,000 Income tax provision (benefit) $ - - |
Schedule of effective income tax rate reconciliation | 2017 2016 Statutory federal income tax rate 34.00 % 34.00 % Statutory state and local income tax rate (1%, as of September 30, 2017 and 2016), net of federal benefit 1.62 % 7.72 % Stock based compensation (2.65 )% (2.33 )% Other permanent differences (0.03 )% 0.72 % Effect of change in deferred tax rate 2.37 % 2.01 % Adjustment of prior years’ NOLs 0.38 % 0.41 % Adjustment to depreciation and amortization - 1.09 % Adjustment to stock based compensation - (2.43 )% Adjustment to state tax credits 0.70 % 0.55 % Change in valuation allowance (36.39 )% (41.74 )% Effective tax rate 0.00 % 0.00 % |
Schedule of components of deferred tax assets | September 30, 2017 2016 Deferred tax assets (liabilities): Stock based compensation $ 2,836,000 $ 2,025,000 Depreciation and amortization 500,000 351,000 Amortization of debt discount 16,311,000 16,269,000 Net operating loss carry forward 16,143,000 12,713,000 Tax credits 521,000 221,000 Other 52,000 105,000 Less: valuation allowance (36,363,000 ) (31,684,000 ) Net deferred tax asset $ - $ - |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum rental payments | For the fiscal year ending September 30, 2018 528,123 2019 316,457 2020 7,104 2021 595 Total $ 852,279 |
GEOGRAPHIC AREA INFORMATION (Ta
GEOGRAPHIC AREA INFORMATION (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of net sales by geographic location of customers | Year Ended September 30, 2017 2016 United States $ 3,485,691 $ 3,177,792 Europe 1,055,125 876,790 Asia and other 210,444 131,845 Total $ 4,751,260 $ 4,186,427 |
LIQUIDITY AND MANAGEMENT'S PL26
LIQUIDITY AND MANAGEMENT'S PLAN (Detail Textuals) - USD ($) | Nov. 02, 2016 | Jun. 28, 2017 | Nov. 23, 2015 | Dec. 22, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Nov. 07, 2016 | Nov. 25, 2015 | Sep. 30, 2015 |
Liquidity And Management Plan [Line Items] | |||||||||
Aggregate gross proceeds from Registered Direct Offering | $ 1,805,000 | ||||||||
Accumulated deficit | $ (236,673,155) | $ (223,817,388) | |||||||
Net loss | (12,855,767) | (12,175,979) | |||||||
Operating cash flow | (7,479,184) | (9,896,727) | |||||||
Cash and cash equivalents | 2,959,781 | $ 4,479,274 | $ 7,312,184 | ||||||
Working capital | $ 4,945,304 | ||||||||
Private Placement | |||||||||
Liquidity And Management Plan [Line Items] | |||||||||
Common stock issued in private placement, net of offering costs (in shares) | 2,272,727 | ||||||||
Number of common stock called by warrants | 2,272,727 | 68,182 | 50,000 | ||||||
Aggregate gross proceeds from Registered Direct Offering | $ 5,000,000 | ||||||||
Securities Purchase Agreement | |||||||||
Liquidity And Management Plan [Line Items] | |||||||||
Common stock issued in private placement, net of offering costs (in shares) | 2,500,000 | ||||||||
Share price (in dollars per share) | $ 2.20 | $ 3.49 | |||||||
Number of common stock called by warrants | 1,250,000 | ||||||||
Aggregate gross proceeds from Registered Direct Offering | $ 8,750,000 | ||||||||
Subsequent Event | Securities Purchase Agreement | Private Placement | |||||||||
Liquidity And Management Plan [Line Items] | |||||||||
Common stock issued in private placement, net of offering costs (in shares) | 2,735,000 | ||||||||
Share price (in dollars per share) | $ 1.75 | ||||||||
Number of common stock called by warrants | 2,735,000 | ||||||||
Aggregate gross proceeds from Registered Direct Offering | $ 4,786,250 | ||||||||
Net proceeds from sale of Registered Direct Offering | $ 4,200,000 |
SUMMARY OF ACCOUNTING POLICIE27
SUMMARY OF ACCOUNTING POLICIES - Property, plant and equipment (Details) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Property, Plant and Equipment [Line Items] | ||
Total | $ 2,189,985 | $ 2,055,699 |
Accumulated depreciation | 1,666,297 | 1,263,200 |
Property, plant and equipment, net | 523,688 | 792,499 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 85,413 | 70,134 |
Lab equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 1,770,407 | 1,651,400 |
Furniture | ||
Property, Plant and Equipment [Line Items] | ||
Total | 44,592 | 44,592 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 289,573 | $ 289,573 |
SUMMARY OF ACCOUNTING POLICIE28
SUMMARY OF ACCOUNTING POLICIES - Summary of potential stock issuances under various options, and warrants (Details 1) - shares | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the computation of diluted net loss per share | 14,873,682 | 11,611,294 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the computation of diluted net loss per share | 9,540,455 | 7,208,060 |
Employee options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the computation of diluted net loss per share | 5,333,227 | 4,403,234 |
SUMMARY OF ACCOUNTING POLICIE29
SUMMARY OF ACCOUNTING POLICIES (Detail Textuals) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Accounting Policies [Abstract] | ||
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Deferred revenue | $ 351,735 | $ 2,737,588 |
Revenue recognized for government contract awards | 249,348 | 1,064,105 |
Impairment expense | 253,977 | |
Long-term accounts receivable revenue recognized | 1,535,000 | |
Allowance on accounts receivable (in dollars) | 10,000 | 32,965 |
Deferred offering costs | $ 13,986 | |
Depreciation method | Straight line method | |
Estimated useful life for computer equipment, lab equipment and furniture | 3 years | |
Depreciation expenses | 403,482 | $ 452,212 |
Research and development | 2,282,362 | 3,700,837 |
Advertising expense | $ 315,266 | $ 245,281 |
SUMMARY OF ACCOUNTING POLICIE30
SUMMARY OF ACCOUNTING POLICIES (Detail Textuals 1) - Customer Concentration Risk - Customer | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Total Revenue | ||
Concentration Risk [Line Items] | ||
Number of customers | 4 | 3 |
Total Revenue | One customer | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 29.00% | 33.00% |
Total Revenue | Two customers | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 26.00% | 29.00% |
Total Revenue | Three customers | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 13.00% | 13.00% |
Total Revenue | Four customers | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 10.00% | |
Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 97.00% | |
Accounts Receivable | One customer | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 80.00% | 78.00% |
Number of customers | 1 | 1 |
Accounts Receivable | Three customers | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 20.00% | |
Number of customers | 3 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 193,069 | $ 100,420 |
Finished goods | 133,399 | 197,339 |
Total | $ 326,468 | $ 297,759 |
INTANGIBLE ASSETS - Summary of
INTANGIBLE ASSETS - Summary of intangible assets (Details) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Internally developed software (5-year useful life) | $ 157,221 | $ 411,199 |
Customer relationships (10-year useful life) | 621,000 | 621,000 |
Intellectual property (5-15 years) | 917,350 | 917,350 |
Intangible assets, gross | 1,695,571 | 1,949,549 |
Less: Accumulated amortization | 653,495 | 423,649 |
Intangible assets, net | $ 1,042,076 | $ 1,525,900 |
INTANGIBLE ASSETS - Summary o33
INTANGIBLE ASSETS - Summary of intangible assets (Parentheticals) (Details) | 12 Months Ended |
Sep. 30, 2017 | |
Internally developed software | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, estimated useful life (in years) | 5 years |
Customer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, estimated useful life (in years) | 10 years |
Intellectual property | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, estimated useful life (in years) | 5 years |
Intellectual property | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, estimated useful life (in years) | 15 years |
INTANGIBLE ASSETS - Estimated a
INTANGIBLE ASSETS - Estimated amortization expense of intangible assets (Details 1) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
2,018 | $ 139,641 | |
2,019 | 91,967 | |
2,020 | 114,448 | |
2,021 | 114,448 | |
2,022 | 114,448 | |
Thereafter | 467,124 | |
Intangible assets, net | $ 1,042,076 | $ 1,525,900 |
INTANGIBLE ASSETS (Detail Textu
INTANGIBLE ASSETS (Detail Textuals) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Total amortization expense charged to operations | $ 483,823 | $ 254,284 |
Impairment expense | $ 253,977 |
ACCOUNTS PAYABLE AND ACCRUED 36
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES - Summary of accounts payable and accrued liabilities (Details) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 382,984 | $ 1,530,258 |
Accrued salaries payable | 446,012 | 678,982 |
Other accrued expenses | 115,137 | 38,101 |
Total | $ 944,133 | $ 2,247,341 |
CAPITAL STOCK (Detail Textual)
CAPITAL STOCK (Detail Textual) - USD ($) | Nov. 07, 2016 | Nov. 02, 2016 | Jun. 28, 2017 | Nov. 25, 2015 | Nov. 23, 2015 | Dec. 22, 2017 | Sep. 30, 2017 | Sep. 30, 2016 |
Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items] | ||||||||
Value of common stock and warrants purchased | $ 1,771,277 | |||||||
Aggregate gross proceeds from private placement | $ 1,805,000 | |||||||
Value of shares issued for services | $ 78,130 | |||||||
2005 Incentive Stock Plan (the "Incentive Plan") | ||||||||
Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items] | ||||||||
Number of shares issued for services | 24,000 | |||||||
Value of shares issued for services | $ 78,130 | |||||||
Private Placement | ||||||||
Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items] | ||||||||
Common stock issued in private placement, net of offering costs (in shares) | 2,272,727 | |||||||
Number of common stock called by warrants | 68,182 | 2,272,727 | 50,000 | |||||
Exercise price of warrants (in dollars per share) | $ 2.53 | $ 3.50 | $ 4.03 | |||||
Aggregate gross proceeds from private placement | $ 5,000,000 | |||||||
Exercise price percentage of public offering price | 115.00% | 115.00% | ||||||
Maximum total number issued and outstanding shares of common stock | 9.99% | |||||||
Private Placement | Board of Directors Chairman | ||||||||
Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items] | ||||||||
Common stock issued in private placement, net of offering costs (in shares) | 315,346 | |||||||
Aggregate gross proceeds from private placement | $ 555,000 | |||||||
Securities Purchase Agreement | ||||||||
Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items] | ||||||||
Common stock issued in private placement, net of offering costs (in shares) | 2,500,000 | |||||||
Value of common stock and warrants purchased | $ 5,000,000 | |||||||
Share price (in dollars per share) | $ 2.20 | $ 3.49 | ||||||
Number of common stock called by warrants | 1,250,000 | |||||||
Exercise price of warrants (in dollars per share) | $ 0.01 | |||||||
Aggregate gross proceeds from private placement | $ 8,750,000 | |||||||
Exercise price per share | $ 4.30 | |||||||
Private Placement Subscription Agreements | ||||||||
Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items] | ||||||||
Common stock issued in private placement, net of offering costs (in shares) | 1,025,574 | |||||||
Share price (in dollars per share) | $ 1.76 | |||||||
Aggregate gross proceeds from private placement | $ 1,805,000 | |||||||
Subsequent Event | Securities Purchase Agreement | Private Placement | ||||||||
Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items] | ||||||||
Common stock issued in private placement, net of offering costs (in shares) | 2,735,000 | |||||||
Share price (in dollars per share) | $ 1.75 | |||||||
Number of common stock called by warrants | 2,735,000 | |||||||
Exercise price of warrants (in dollars per share) | $ 2 | |||||||
Aggregate gross proceeds from private placement | $ 4,786,250 | |||||||
Net proceeds from sale of Registered Direct Offering | $ 4,200,000 | |||||||
Warrants exercisable expiration period | 5 years | |||||||
Purchase warrants minimum exercise price | $ 0.44 |
STOCK OPTIONS AND WARRANTS - Tr
STOCK OPTIONS AND WARRANTS - Transactions involving warrants (Details) | 12 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Number of Shares | |
Balance at October 1, 2016 | shares | 7,208,060 |
Granted | shares | 2,340,909 |
Exercised | shares | 0 |
Cancelled or expired | shares | (8,514) |
Balance, September 30, 2017 | shares | 9,540,455 |
Weighted Average Exercise Price Per Share | |
Balance at October 1, 2016 | $ / shares | $ 3.64 |
Granted | $ / shares | 3.47 |
Exercised | $ / shares | 0 |
Cancelled or expired | $ / shares | (2.64) |
Balance, September 30, 2017 | $ / shares | $ 3.60 |
STOCK OPTIONS AND WARRANTS - 39
STOCK OPTIONS AND WARRANTS - Transactions involving stock options issued to employees (Details 1) | 12 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Weighted Average Exercise Price Per Share | |
Weighted Average Contractual Life (years), Vested | 3 years 8 months 1 day |
Employee Stock Option | Incentive Stock Plan 2005 | |
Number of Shares | |
Outstanding at October 1, 2016 | 4,403,234 |
Granted | 1,099,844 |
Exercised | 0 |
Cancelled or expired | (169,851) |
Outstanding at September 30, 2017 | 5,333,227 |
Vested at September 30, 2017 | 3,884,600 |
Non-vested at September 30, 2017 | 1,448,627 |
Weighted Average Exercise Price Per Share | |
Outstanding at October 1, 2016 | $ / shares | $ 4.08 |
Granted | $ / shares | 2.28 |
Exercised | $ / shares | 0 |
Cancelled or expired | $ / shares | 4.17 |
Outstanding at September 30, 2017 | $ / shares | 3.71 |
Vested at September 30, 2017 | $ / shares | $ 3.91 |
Aggregate Intrinsic Value, Vested | $ | $ 0 |
Aggregate Intrinsic Value, Non-vested | $ | $ 14,646 |
Weighted Average Contractual Life (years), Vested | 4 years 1 month 2 days |
Weighted Average Contractual Life (years), Non-vested | 7 years 4 months 17 days |
STOCK OPTIONS AND WARRANTS - Su
STOCK OPTIONS AND WARRANTS - Summary of value of options granted using Black Scholes Option Pricing Model with weighted average assumptions (Details 2) - $ / shares | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | ||
Stock price | $ 2.11 | $ 3.05 |
Exercise price | $ 2.31 | $ 2.93 |
Expected term | 5 years 4 months 17 days | 7 years 10 months 21 days |
Dividend yield | 0.00% | 0.00% |
Volatility | 111.00% | 135.00% |
Risk free rate | 2.00% | 1.80% |
STOCK OPTIONS AND WARRANTS - Em
STOCK OPTIONS AND WARRANTS - Employee Stock Options (Detail Textuals) - Employee Stock Option - Incentive Stock Plan 2005 | 12 Months Ended |
Sep. 30, 2017shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Issuance of common stock as stock awards and stock options | 8,333,333 |
Issuance of additional common stock as stock awards and stock options | 833,334 |
Cumulative number of shares issued | 275,752 |
Options to purchase shares under the 2005 Incentive stock plan | 5,855,795 |
STOCK OPTIONS AND WARRANTS - 42
STOCK OPTIONS AND WARRANTS - Employee Stock Options (Detail Textuals 1) | 12 Months Ended | |
Sep. 30, 2017USD ($)StockOption$ / sharesshares | Sep. 30, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Aggregate intrinsic value for options exercised | $ 0 | $ 50,110 |
Stock based compensation expense | $ 3,257,305 | $ 2,038,830 |
Expected term | 5 years 4 months 17 days | 7 years 10 months 21 days |
Unrecorded compensation cost related to non-vested awards | $ 2,036,222 | |
Weighted average period of non-vested awards options | 3 years 8 months 1 day | |
Weighted average grant date fair value for options granted | $ / shares | $ 1.58 | $ 2.84 |
Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock based compensation expense | $ 89,951 | $ 37,342 |
Employee Stock Option | Employees, consultants and non-employee board of director members | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares granted | shares | 1,099,844 | 1,115,941 |
Number of stock option modified | StockOption | 119,182 | |
Employee Stock Option | Executives | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares granted | shares | 280,000 | 160,000 |
Performance based options to employees | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares granted | shares | 5,000 | 500,000 |
INCOME TAXES - Provision (Benef
INCOME TAXES - Provision (Benefit) (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Federal: | ||
Current | $ 0 | $ 0 |
Deferred | (4,303,000) | (3,780,000) |
Federal income tax expense benefit, total | (4,303,000) | (3,780,000) |
State and local: | ||
Current | 0 | 0 |
Deferred | (376,000) | (1,302,000) |
State and local income tax expense benefit, total | (376,000) | (1,302,000) |
Change in valuation allowance | 4,679,000 | 5,082,000 |
Income tax provision (benefit) | $ 0 | $ 0 |
INCOME TAXES - Provision for in
INCOME TAXES - Provision for income taxes differ from amount of income tax determined (Details 1) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal income tax rate | 34.00% | 34.00% |
Statutory state and local income tax rate (1%, as of September 30, 2017 and 2016), net of federal benefit | 1.62% | 7.72% |
Stock based compensation | (2.65%) | (2.33%) |
Other permanent differences | (0.03%) | 0.72% |
Effect of change in deferred tax rate | 2.37% | 2.01% |
Adjustment of prior years' NOLs | 0.38% | 0.41% |
Adjustment to depreciation and amortization | 0.00% | 1.09% |
Adjustment to stock based compensation | 0.00% | (2.43%) |
Adjustment to state tax credits | 0.70% | 0.55% |
Change in valuation allowance | (36.39%) | (41.74%) |
Effective tax rate | 0.00% | 0.00% |
INCOME TAXES (Parentheticals)
INCOME TAXES (Parentheticals) (Details 1) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||
Federal benefit | 1.00% | 1.00% |
INCOME TAXES - Components of de
INCOME TAXES - Components of deferred tax assets (Details 2) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Deferred tax assets (liabilities): | ||
Stock based compensation | $ 2,836,000 | $ 2,025,000 |
Depreciation and amortization | 500,000 | 351,000 |
Amortization of debt discount | 16,311,000 | 16,269,000 |
Net operating loss carry forward | 16,143,000 | 12,713,000 |
Tax credits | 521,000 | 221,000 |
Other | 52,000 | 105,000 |
Less: valuation allowance | (36,363,000) | (31,684,000) |
Net deferred tax asset | $ 0 | $ 0 |
INCOME TAXES (Detail Textuals)
INCOME TAXES (Detail Textuals) | 12 Months Ended |
Sep. 30, 2017USD ($) | |
Deferred Income Taxes [Line Items] | |
Federal and net operating loss carryforward | $ 43,440,000 |
State net operating loss carryforward | 57,896,000 |
Federal research and development credits | 381,000 |
State investment tax credits | 140,000 |
Increase in valuation allowance | 4,679,000 |
Maximum | |
Deferred Income Taxes [Line Items] | |
Operating loss carryforwards limitations on use amount | 1,103,000 |
Minimum | |
Deferred Income Taxes [Line Items] | |
Operating loss carryforwards limitations on use amount | $ 786,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Future minimum rental payments (Details) | Sep. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 528,123 |
2,019 | 316,457 |
2,020 | 7,104 |
2,021 | 595 |
Total | $ 852,279 |
COMMITMENTS AND CONTINGENCIES49
COMMITMENTS AND CONTINGENCIES (Detail Textuals) | 2 Months Ended | 12 Months Ended | |
Nov. 17, 2017USD ($)ft² | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($)ft² | |
Commitments and Contingencies [Line Items] | |||
Area of property under operating lease | 30,000 | ||
Extended operating lease for additional period | 3 years | ||
Base rent during initial lease term per annum | $ | $ 458,098 | ||
Area of laboratory space | 1,500 | ||
Total lease rental expenses | $ | $ 552,240 | $ 490,745 | |
Satellite testing facility | |||
Commitments and Contingencies [Line Items] | |||
Area of property under operating lease | 1,108 | ||
Subsequent Event | Satellite testing facility | |||
Commitments and Contingencies [Line Items] | |||
Operating lease, term of contract | 3 years | ||
Area of Land | 1,108 | ||
Monthly rent | $ | $ 6,500 |
COMMITMENTS AND CONTINGENCIES50
COMMITMENTS AND CONTINGENCIES (Detail Textuals 1) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Jul. 28, 2016 | Sep. 30, 2017 | May 20, 2017 | May 07, 2016 | |
Commitments and Contingencies [Line Items] | ||||
Agreement renewal period | 1 year | |||
Special cash incentive bonus | $ 800,000 | |||
Special cash incentive bonus payable on completing threshold annual revenue | 300,000 | |||
Threshold annual revenue | 8,000,000 | |||
Special cash incentive bonus payable on completing threshold annual revenue in excess of first threshold | 100,000 | |||
Threshold annual revenue in excess of first threshold | 2,000,000 | |||
Annual base salary | $ 400,000 | |||
Compensation description | The agreement with Dr. Hayward also provides that if he is terminated before the end of the initial or a renewal term by us without cause or if Dr. Hayward terminates his employment for good reason, then, in addition to previously earned and unpaid salary, bonus and benefits, and subject to the delivery of a general release and continuing compliance with restrictive covenants, Dr. Hayward will be entitled to receive a pro rata portion of the greater of either (X) the annual bonus he would have received if employment had continued through the end of the year of termination or (Y) the prior year's bonus; salary continuation payments for two years following termination equal to the greater of (i) three times base salary or (ii) two times base salary plus bonus; company-paid COBRA continuation coverage for 18 months post-termination; continuing life insurance benefits (if any) for two years; and extended exercisability of outstanding vested options (for three years from termination date or, if earlier, the expiration of the fixed option term). If termination of employment as described above occurs within six months before or two years after a change in control of the Company, then, in addition to the above payments and benefits, all of Dr. Hayward's outstanding options and other equity incentive awards will become fully vested and Dr. Hayward will receive a lump sum payment of the amounts that would otherwise be paid as salary continuation. In general, a change in control will include a 30% or more change in ownership of the Company. | |||
New Employment Agreement | Dr. James Hayward - Chief Executive Officer | ||||
Commitments and Contingencies [Line Items] | ||||
Annual base salary | $ 250,000 | |||
Decrease in amount of salary | $ 50,000 | $ 100,000 |
GEOGRAPHIC AREA INFORMATION (De
GEOGRAPHIC AREA INFORMATION (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||
Net sales | $ 4,751,260 | $ 4,186,427 |
United States | ||
Segment Reporting Information [Line Items] | ||
Net sales | 3,485,691 | 3,177,792 |
Europe | ||
Segment Reporting Information [Line Items] | ||
Net sales | 1,055,125 | 876,790 |
Asia and other | ||
Segment Reporting Information [Line Items] | ||
Net sales | $ 210,444 | $ 131,845 |