Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2021 | Dec. 02, 2021 | Mar. 31, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Sep. 30, 2021 | ||
Entity File Number | 001-36745 | ||
Entity Registrant Name | APPLIED DNA SCIENCES INC | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 59-2262718 | ||
Entity Address, Address Line One | 50 Health Sciences Drive | ||
Entity Address, City or Town | Stony Brook | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 11790 | ||
City Area Code | 631 | ||
Local Phone Number | 240-8800 | ||
Title of 12(b) Security | Common Stock, $0.001 par value | ||
Trading Symbol | APDN | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 45.8 | ||
Entity Common Stock, Shares Outstanding | 7,486,120 | ||
Entity Central Index Key | 0000744452 | ||
Current Fiscal Year End Date | --09-30 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 6,554,948 | $ 7,786,743 |
Accounts receivable, net of allowance of $29,821 and $11,968 at September 30, 2021 and 2020, respectively | 2,804,039 | 194,319 |
Inventories | 1,369,933 | 497,367 |
Prepaid expenses and other current assets | 568,881 | 599,296 |
Total current assets | 11,297,801 | 9,077,725 |
Property and equipment, net | 3,023,915 | 1,277,655 |
Other assets: | ||
Deposits | 95,040 | 95,083 |
Goodwill | 285,386 | |
Intangible assets, net | 605,330 | |
Total Assets | 14,416,756 | 11,341,179 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 2,991,343 | 1,926,427 |
Promissory notes payable-current portion | 329,299 | |
Secured convertible notes payable, net of debt issuance costs | 1,499,116 | |
Deferred revenue | 281,000 | 511,036 |
Total current liabilities | 3,272,343 | 4,265,878 |
Long term accrued liabilities | 31,467 | 848,307 |
Promissory notes payable-long term portion | 517,488 | |
Total liabilities | 3,303,810 | 5,631,673 |
Commitments and contingencies (Note K) | ||
Applied DNA Sciences, Inc. stockholders' equity: | ||
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; -0- shares issued and outstanding as of September 30, 2021 and 2020, respectively | 0 | 0 |
Common stock, par value $0.001 per share; 200,000,000 shares authorized as of September 30, 2021 and 2020, 7,486,120 and 5,142,779 shares issued and outstanding as of September 30, 2021 and 2020, respectively | 7,488 | 5,144 |
Additional paid in capital | 295,228,272 | 275,548,737 |
Accumulated deficit | (284,122,092) | (269,835,650) |
Applied DNA Sciences, Inc. stockholders' equity: | 11,113,668 | 5,718,231 |
Noncontrolling interest | (722) | (8,725) |
Total equity | 11,112,946 | 5,709,506 |
Total liabilities and equity | 14,416,756 | 11,341,179 |
Series A Preferred Stock [Member] | ||
Applied DNA Sciences, Inc. stockholders' equity: | ||
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; -0- shares issued and outstanding as of September 30, 2021 and 2020, respectively | 0 | 0 |
Series B Preferred Stock [Member] | ||
Applied DNA Sciences, Inc. stockholders' equity: | ||
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; -0- shares issued and outstanding as of September 30, 2021 and 2020, respectively | $ 0 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
Allowance on accounts receivable (in dollars) | $ 29,821 | $ 11,968 |
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 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 7,486,120 | 5,142,779 |
Common stock, shares outstanding | 7,486,120 | 5,142,779 |
Series A Preferred Stock [Member] | ||
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 [Member] | ||
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, 2021 | Sep. 30, 2020 | |
Revenues: | ||
Total revenues | $ 9,027,738 | $ 1,931,497 |
Operating expenses: | ||
Selling, general and administrative | 12,610,552 | 10,031,180 |
Research and development | 3,765,440 | 3,321,763 |
Depreciation and amortization | 844,438 | 285,730 |
Impairment losses | 821,741 | 0 |
Total operating expenses | 18,042,171 | 13,638,673 |
LOSS FROM OPERATIONS | (13,113,821) | (12,534,999) |
Other (expense) income: | ||
Interest income (expense), net | 13,675 | (115,830) |
Loss on extinguishment of convertible notes payable | (1,774,662) | 0 |
Gain on extinguishment of notes payable | 839,945 | 0 |
Other expense, net | (243,576) | (378,075) |
Loss before provision for income taxes | (14,278,439) | (13,028,904) |
Provision for income taxes | 0 | 0 |
NET LOSS | (14,278,439) | (13,028,904) |
Less: Net (income) loss attributable to noncontrolling interest | (8,003) | 1,685 |
NET LOSS attributable to Applied DNA Sciences, Inc. | (14,286,442) | (13,027,219) |
Deemed dividend related to warrant modifications | (2,842) | |
NET LOSS attributable to common stockholders | $ (14,286,442) | $ (13,030,061) |
Net loss per share attributable to common stockholders - basic | $ (2.07) | $ (3.32) |
Net loss per share attributable to common stockholders - diluted | $ (2.07) | $ (3.32) |
Weighted average shares outstanding - basic | 6,916,999 | 3,919,072 |
Weighted average shares outstanding - diluted | 6,916,999 | 3,919,072 |
Product revenues | ||
Revenues: | ||
Total revenues | $ 3,295,849 | $ 615,430 |
Cost of revenues | 1,496,659 | 720,900 |
Service revenues | ||
Revenues: | ||
Total revenues | 937,735 | 1,238,517 |
Clinical laboratory service revenues | ||
Revenues: | ||
Total revenues | 4,794,154 | 77,550 |
Cost of revenues | $ 2,602,729 | $ 106,923 |
CONSOLIDATED STATEMENTS OF (DEF
CONSOLIDATED STATEMENTS OF (DEFICIT) EQUITY - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Noncontrolling Interest [Member] | Total |
Balance at Sep. 30, 2019 | $ 1,208 | $ 255,962,922 | $ (256,805,589) | $ (7,040) | $ (848,499) |
Balance (in shares) at Sep. 30, 2019 | 1,207,993 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock issued in public offering, net of offering costs | $ 2,285 | 10,527,745 | 10,530,030 | ||
Common stock issued in public offering, net of offering costs (in shares) | 2,285,000 | ||||
Deemed dividend - warrant repricing | 2,842 | (2,842) | |||
Exercise of warrants | $ 1,651 | 8,054,146 | 8,055,797 | ||
Exercise of warrants (in shares) | 1,649,786 | ||||
Stock based compensation expense | 1,001,082 | 1,001,082 | |||
Net loss | (13,027,219) | (1,685) | (13,028,904) | ||
Balance at Sep. 30, 2020 | $ 5,144 | 275,548,737 | (269,835,650) | (8,725) | $ 5,709,506 |
Balance (in shares) at Sep. 30, 2020 | 5,142,779 | 5,142,779 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock issued in public offering, net of offering costs | $ 1,810 | 13,754,697 | $ 13,756,507 | ||
Common stock issued in public offering, net of offering costs (in shares) | 1,810,000 | ||||
Exercise of warrants | $ 521 | 2,613,408 | 2,613,929 | ||
Exercise of warrants (in shares) | 520,151 | ||||
Fair value of warrants issued in connection with convertible note repayment | 1,643,440 | 1,643,440 | |||
Exercise of options cashlessly | $ 13 | (13) | |||
Exercise of options cashlessly (in shares) | 13,190 | ||||
Stock based compensation expense | 1,668,003 | 1,668,003 | |||
Net loss | (14,286,442) | 8,003 | (14,278,439) | ||
Balance at Sep. 30, 2021 | $ 7,488 | $ 295,228,272 | $ (284,122,092) | $ (722) | $ 11,112,946 |
Balance (in shares) at Sep. 30, 2021 | 7,486,120 | 7,486,120 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows from operating activities: | ||
Net loss | $ (14,278,439) | $ (13,028,904) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 844,438 | 285,730 |
Loss on disposal of property and equipment | 208,782 | 0 |
Impairment of goodwill and intangible assets | 821,741 | 0 |
Loss on extinguishment of convertible notes payable | 1,774,662 | 0 |
Gain on extinguishment of notes payable | (839,945) | 0 |
Stock-based compensation | 1,668,003 | 1,001,082 |
Amortization of debt issuance costs | 0 | 26,019 |
Provision for bad debts | 28,629 | 45,280 |
Change in operating assets and liabilities: | ||
Accounts receivable | (2,638,350) | 600,352 |
Inventories | (872,566) | (354,738) |
Prepaid expenses and other current assets and deposits | 30,415 | (27,288) |
Accounts payable and accrued liabilities | 94,711 | 427,365 |
Deferred revenue | (230,036) | (117,957) |
Net cash used in operating activities | (13,387,955) | (11,143,059) |
Cash flows from investing activities: | ||
Purchase of intangible asset | 0 | 0 |
Purchase of property and equipment | (2,548,695) | (1,063,698) |
Net cash used in investing activities | (2,548,695) | (1,063,698) |
Cash flows from financing activities: | ||
Net proceeds from exercise of warrants | 2,613,929 | 8,055,797 |
Net proceeds from sale of common stock | 13,756,507 | 0 |
Net proceeds from sale of common stock and warrants | 0 | 10,639,728 |
Repayment of convertible notes | (1,665,581) | (107,802) |
Proceeds from promissory notes | 0 | 846,789 |
Net cash provided by financing activities | 14,704,855 | 19,434,512 |
Net increase in cash and cash equivalents | (1,231,795) | 7,227,755 |
Cash and cash equivalents at beginning of period | 7,786,743 | 558,988 |
Cash and cash equivalents at end of period | 6,554,948 | 7,786,743 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid during period for interest | 0 | 45,354 |
Cash paid during period for income taxes | 0 | 0 |
Non-cash investing and financing activities: | ||
Interest paid in kind | 28,329 | 35,625 |
Property and equipment acquired, and included in accounts payable | 181,807 | 144,025 |
Deemed dividend-warrant repricing | 0 | 2,842 |
Deferred offering costs reclassified to additional paid in capital | 0 | 109,698 |
Issuance of warrants in settlement of convertible notes payable | $ 1,074,118 | $ 0 |
NATURE OF THE BUSINESS
NATURE OF THE BUSINESS | 12 Months Ended |
Sep. 30, 2021 | |
NATURE OF THE BUSINESS | |
NATURE OF THE BUSINESS | NOTE A – NATURE OF THE BUSINESS Applied DNA Sciences, Inc. (“Applied DNA” or the “Company”) develops and markets DNA-based technology solutions utilizing its LinearDNA TM TM TM Biotherapeutic Contract Research and Manufacturing The Company’s patented continuous flow PCR systems and other proprietary PCR-based production technology and post-processing systems that comprise the LinearDNA TM TM The Company provides preclinical contract research and manufacturing services for the nucleic acid-based therapeutic markets. It works with biotech and pharmaceutical companies to convert conventional nucleic-acid based preclinical biotherapeutics into PCR-produced linear DNA-based forms that can be produced on the Company’s LinearDNA TM TM The Company is currently directly engaged in preclinical drug candidate development activities focusing on therapeutically relevant DNA constructs manufactured via its LinearDNA TM NOTE A – NATURE OF THE BUSINESS, continued Biotherapeutic Contract Research and Manufacturing, continued The Company is also engaged in preclinical and animal drug candidate development activities focusing on therapeutically relevant DNA constructs manufactured via its LinearDNA production platform. The Company seeks to develop, acquire and commercialize, alone or with partners, a diverse pipeline of nucleic acid-based therapeutics based on PCR-produced linear DNA. To this end, the Company is currently working with its development partners Takis S.R.L. and Evvivax S.R.L. ("Takis/Evvivax") to develop an amplicon-based linear DNA vaccine for COVID-19 that would be manufactured on the Company's LinearDNA TM COVID-19 Diagnostic Test Kit On May 13, 2020 the Company received an EUA from the FDA for the clinical use of the Linea TM TM TM TM TM NOTE A – NATURE OF THE BUSINESS, continued The Company currently manufactures the Linea TM COVID-19 Testing Services The Company under its wholly owned subsidiary, ADCL, offers a high throughput COVID-19 testing program to customers as a Testing-as-a-Service (TaaS) offering branded under the safeCircle TM The Company currently provides safeCircle TM In addition, starting in February 2021, the Company began the development of its Linea SARS-CoV-2 Mutation Panel (formally the Selective Genomic Surveillance Mutation Panel) for the qPCR-based detection of certain SARS-CoV-2 genetic mutations (the “Mutation Panel”). In May 2021, the Company announced that it had completed technical validation of the Mutation Panel. In October 2021, the Company announced that an EUA request for the Mutation Panel had been filed with FDA. Use of the Mutation Panel is currently limited to Research Use Only (RUO). Clinical Testing Laboratory Under the Company’s ADCL subsidiary, on May 10, 2021 the Company received its New York clinical laboratory permit and its CLIA certification from the New York State Department of Health, CLEP, which is currently permitted for virology. As part of the Company’s COVID-19 Testing Services its laboratory provides individual COVID-19 testing utilizing the Company’s EUA-authorized Linea COVID-19 Assay Kit, pooled screening testing under its July 13, 2021 LDT submission to NYSDOH and pooled surveillance testing that is not regulated by FDA, CDC or CMS. On November 15, 2021 FDA revised its guidance document titled “Policy for Coronavirus Disease-2019 Tests During the Public Health Emergency (Revised)” (“FDA COVID-19 Testing Guidance”) to require all COVID-19 diagnostic assays conducted as Laboratory-Developed Tests (“LDTs”) to apply for EUA authorization within a 60-day period from the revised guidance’s issuance date. The FDA Guidance provides an exception for certain notified states, who can authorize in-state laboratories to develop and perform COVID-19 tests under the authority of their own State law in instances where the laboratory did not otherwise submit an EUA request to FDA. On July 13, 2021, ADCL submitted data supporting the validation of a high-throughput robotic 5-sample pooling workflow utilizing the Linea COVID-19 Assay Kit to the New York State Department of Health (“NYSDOH”), which is currently pending. New York State falls within the exemption contemplated by FDA’s revised COVID-19 Testing Guidance, meaning ADCL can obtain NYSDOH authorization for conducting the test in lieu of an EUA from FDA. Pursuant to current NYSDOH guidance, ADCL is currently performing the validated workflow in its COVID-19 testing during the pendency of the NYSDOH review. NOTE A – NATURE OF THE BUSINESS, continued In the event that NYSDOH declines to authorize ADCL’s performance of the Linea COVID-19 assay on pooled samples, ADCL will be required to submit an EUA to FDA in order to continue performing the validated pooling workflow in its COVID-19 testing. Pursuant to the revised FDA COVID-19 Testing Guidance, laboratories can continue performing validated assays during the pendency of the EUA review by FDA. It is important to note that FDA retains the authority to review, or decline to review, as well as authorize, or decline to authorize, any EUA request for any product. ADCL cannot, therefore, guarantee that it will ultimately obtain authorization to perform its Linea COVID-19 assay on pooled samples if it is required to submit an EUA. iCTC Technology The Company’s iCTC Technology uses a patented functional assay to capture live invasive circulating tumor cell and associated lymphocytes that can be identified and expanded for further analysis, including genetic sequencing. The Company’s iCTC Technology has been used and is currently being used in a human cancer drug candidate clinical trial to monitor cancer disease progression in the trial subjects as a Research Use Only diagnostic assay. The Company seeks to further develop and commercialize this technology and to potentially integrate aspects of the iCTC Technology with its PCR know-how and with the LinearDNA TM Non-Biological Tagging and Related Services The Company’s supply chain security business allows its customers to use non-biologic DNA (molecular) tags, manufactured via its LinearDNA TM ● SigNature® Molecular Tags produced by the Company’s LinearDNA TM platform, provide an approach to authenticate goods within large and complex supply chains for materials such as cotton, and leather, in-home textiles and apparel, pharmaceuticals and nutraceuticals, cannabis and other products. ● SigNify® IF portable DNA readers and SigNify consumable reagent test kits provide definitive real-time authentication of molecular tags in the field, providing a front-line solution for supply chain integrity backed with forensic-level molecular tag authentication. Applied DNA’s software platform enables customers to track materials throughout a supply chain or product life. ● CertainT trademark indicates the use of Applied DNA’s tagging, testing and tracking platforms and solutions, enabling manufacturers, brands and trade organizations to convey proof of their product claims. |
GOING CONCERN AND MANAGEMENT'S
GOING CONCERN AND MANAGEMENT'S PLAN | 12 Months Ended |
Sep. 30, 2021 | |
GOING CONCERN AND MANAGEMENT'S PLAN | |
GOING CONCERN AND MANAGEMENT'S PLAN | NOTE B – GOING CONCERN AND MANAGEMENT’S PLAN The Company has recurring net losses. The Company incurred a net loss of $14,278,439 and generated negative operating cash flow of $13,387,955 for the fiscal year ended September 30, 2021. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one 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 and equity-linked securities. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES | 12 Months Ended |
Sep. 30, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES | |
BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES | NOTE C – BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES On September 16, 2002, the Company was incorporated under the laws of the State of Nevada. Effective December 2008, the Company reincorporated from the State of Nevada to the State of Delaware. The Company is principally devoted to developing and marketing linear 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 and development of a biotechnology company. Principles of Consolidation 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, Applied DNA Sciences India Private Limited, ADCL and its majority–owned subsidiary, LineaRx, Inc. (“LRx”). 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 United States of America (“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 significant estimates include revenue recognition, allowance for doubtful accounts, recoverability of long-lived assets, including the values assigned to goodwill, intangible assets and property and equipment, fair value calculations for stock-based compensation and warrants, contingencies, 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 follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codifications (“ASC”), Revenue Recognition (“ASC 606” or “Topic 606”). The Company measures revenue at the amounts that reflect the consideration to which it is expected to be entitled in exchange for transferring control of goods and services to customers. The Company recognizes revenue either at the point in time or over the period of time that performance obligations to customers are satisfied. The Company's contracts with customers may include multiple performance obligations (e.g. taggants, maintenance, authentication services, research and development services, etc.). For such arrangements, the Company allocates revenues to each performance obligation based on their relative standalone selling price. Due to the short-term nature of the Company's contracts with customers, it has elected to apply the practical expedients under Topic 606 to: (1) expense as incurred, incremental costs of obtaining a contract and (2) not adjust the consideration for the effects of a significant financing component for contracts with an original expected duration of one year or less. Product Revenues and Authentication Services The Company’s PCR-produced linear DNA products are manufactured in accordance with contracts with customers. The Company recognizes revenue upon satisfying its promises to transfer goods or services to customers under the terms of its contracts. These performance obligations are satisfied at the point in time the Company transfers control of the goods to the customer, which in nearly all cases is when title to and risk of loss of the goods transfer to the customer. The timing of transfer of title and risk of loss is dictated by customary or explicitly stated contract terms. The Company invoices customers upon shipment, and its collection terms range, on average, from 30 to 60 days. NOTE C – BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES, continued Revenue Recognition, continued Authentication Services The Company recognizes revenue for authentication services upon satisfying its promises to provide services to customers under the terms of its contracts. These performance obligations are satisfied at the point in time the Company services are complete, which in nearly all cases is when the authentication report is released to the customer. Clinical Laboratory Testing Services The Company records revenue for its clinical laboratory testing service contracts, which includes its COVID-19 Testing Services, upon satisfying its promise to provide services to customers under the terms of its contracts. These performance obligations are satisfied at the point in time that Company services are complete, which in nearly all cases is when the testing results are released to the customer. Research and Development Services The Company records revenue for its research and development contracts using the over-time revenue recognition model. Revenue is primarily measured using the cost-to-cost method, which the Company believes best depicts the transfer of control to the customer. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the identified performance obligation. Revenues are recorded proportionally as costs are incurred. For contracts where the total costs cannot be estimated, revenues are recognized for the actual costs incurred during a period until the remaining costs to complete a contract can be estimated. The Company has elected not to disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. NOTE C – BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES, continued Revenue Recognition, continued Disaggregation of Revenue The following table presents revenues disaggregated by our business operations and timing of revenue recognition: Fiscal Years Ended: September 30, 2021 2020 Research and development services (over-time) $ 799,718 $ 1,128,511 Clinical laboratory testing services (point-in-time) 4,794,154 77,550 Product and authentication services (point-in-time): Supply chain 1,003,248 38,577 Asset marking 458,409 404,888 Large scale DNA production — 281,971 Diagnostic test kits 1,972,209 — Total $ 9,027,738 $ 1,931,497 Contract balances As of September 30, 2021, the Company has entered into contracts with customers for which revenue has not yet been recognized. Consideration received from a customer prior to revenue recognition is recorded to a contract liability and is recognized as revenue when the Company satisfies the related performance obligations under the terms of the contract. The Company’s contract liabilities, which are reported as deferred revenue on the consolidated balance sheet, consist almost entirely of research and development contracts where consideration has been received and the development services have not yet been fully performed. The opening and closing balances of the Company’s contract balances are as follows: October 1, September 30, $ Balance sheet classification 2020 2021 change Contract liabilities Deferred revenue $ 511,036 $ 281,000 $ (230,036) October 1, September 30, $ Balance sheet classification 2019 2020 change Contract liabilities Deferred revenue $ 628,993 $ 511,036 $ (117,957) For the fiscal year ended September 30, 2020, the Company recognized $591,360 of revenue that was included in Contract liabilities as of October 1, 2019. For the fiscal year ended September 30, 2021, the Company recognized $277,331 of revenue that was included in Contract liabilities as of October 1, 2020. 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. As of September 30, 2021 and 2020, cash equivalents were $4,417,906 and $5,504,826, respectively. NOTE C – BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES, continued 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 may 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, 2021 and 2020, the Company has an allowance for doubtful accounts of $29,821 and $11,968, respectively. The Company writes-off receivables that are deemed uncollectible. Inventories Inventories, which consist primarily of raw materials, work in progress and finished goods, are stated at the lower of cost or net realizable value, with 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, 2021 and 2020, the Company incurred losses from operations. Based upon these results and the trends in the Company’s performance projected for fiscal year 2021, 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, 2021 and 2020. Tax years 2016 through 2019 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 computer equipment furniture 3 leasehold improvements NOTE C – BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES, continued September 30, 2021 2020 Computer equipment $ — $ 90,509 Lab equipment 3,565,057 3,036,397 Furniture — 74,781 Vehicles 108,361 — Leasehold improvements 124,825 524,485 Total 3,798,243 3,726,172 Accumulated depreciation 774,328 2,448,517 Property and equipment, net $ 3,023,915 $ 1,277,655 As of September 30, 2021, there was $6,580 of construction in progress that was included in lab equipment. Depreciation expense for the fiscal years ended September 30, 2021 and 2020 were $767,025 and $156,290, 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. Based on the qualitative analysis performed by management, as of September 30, 2021, the Company has recorded a non-cash impairment charge of $285,386 and 536,355 to write-off the goodwill and remaining net book value of the intangible assets, respectively. The goodwill, intellectual property and customer lists were from the Vandalia Asset Acquisition and related to the right to produce, sell and have sold, market and develop the Triathlon DNA production system. Since the Company is no longer utilizing this technology, as the Company is now using a different technology to produce these products, the impairment assessment concluded that the asset group was not recoverable and resulted in the full impairment and write-off of the goodwill and intangible assets as of September 30, 2021. See Note E below for further details. 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, warrants, and secured convertible notes. For the fiscal years ended September 30, 2021 and 2020, 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, 2021 and 2020 are as follows: 2021 2020 Warrants 745,268 1,038,919 Options 487,377 291,035 Secured convertible note — 70,962 1,232,645 1,400,916 NOTE C – BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES, continued Stock-Based Compensation The Company accounts for stock-based compensation for employees, directors, and nonemployees in accordance with ASC 718, Compensation (“ASC 718”). ASC 718 requires all share-based payments, 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 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 740, excess tax benefits realized from the exercise of stock-based awards are classified as cash flows from operating activities. All excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) are recognized as income tax expense or benefit in the consolidated statements of operations. 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 cash equivalents with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. As of September 30, 2021, the Company had cash and cash equivalents of approximately $6.0 million in excess of the FDIC insurance limit. The Company's revenues earned from sale of products and services for the fiscal year ended September 30, 2021 included an aggregate of 18%, and 13%, respectively from two customers. The Company’s revenues earned from sale of products and services for the fiscal year ended September 30, 2020 included an aggregate of 13%, 12%, 11% and 10% respectively from four customers. Two customers accounted for 67% of the Company's accounts receivable at September 30, 2021 and four customers accounted for an aggregate of 74% of the Company’s total accounts receivable at September 30, 2020. 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. 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, 2021 and 2020, the Company incurred research and development expenses of $3,765,440 and $3,321,763, respectively. Advertising The Company follows the policy of charging the costs of advertising to expense as incurred. The Company charged to operations $283,621 and $55,558, as advertising costs for the fiscal years ended September 30, 2021 and 2020, 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. NOTE C – BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES, continued 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, 2021, as a result of the qualitative analysis performed, the Company has recorded a non-cash impairment charge of $821,740 Convertible Instruments The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20, Debt with Conversion and Other Options. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption and are included in interest expense in the consolidated financial statements. 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. As of September 30, 2021, there were no transfers between Levels 1 2 3 NOTE C – BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES, continued Recent Accounting Standards In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40).” The objective of this update is to simplify the accounting for convertible preferred stock by removing the existing guidance in ASC 470-20, “Debt: Debt with Conversion and Other Options,”, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives. In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract. This amendment also further revises the guidance in ASU 260, “Earnings per Share,” to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. The amendments in ASU 2020-06 are effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company does not expect the adoption of ASU 2020-06 to have a significant impact on its consolidated financial statements. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Sep. 30, 2021 | |
INVENTORIES | |
INVENTORIES | NOTE D – INVENTORIES Inventories consist of the following at September 30, 2021 and 2020: 2021 2020 Raw materials $ 786,938 $ 387,815 Work in progress — 77,667 Finished goods 582,995 31,885 Total $ 1,369,933 $ 497,367 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Sep. 30, 2021 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE E – INTANGIBLE ASSETS Intangible assets at September 30, 2021 and 2020 are as follows: 2021 2020 Internally developed software ( 5 ‑ year $ — $ 157,221 Customer relationships ( 10 ‑ year 621,000 621,000 Intellectual property (5‑15 years) 917,350 917,350 1,538,350 1,695,571 Less: Accumulated amortization 1,001,995 933,020 Impairment losses 536,355 157,221 Intangible assets, net $ — $ 605,330 Total amortization expense charged to operations for the fiscal years ended September 30, 2021 and 2020 were $68,976 and $129,441, respectively. NOTE E – INTANGIBLE ASSETS, continued During the fourth quarter of 2021, the Company performed an impairment assessment of its customer relationships and intellectual property as a result of the Company no longer using the acquired technology, as well as a reduction in demand and future demand from certain customers impacting projected net sales and cash flows. The Company is now using a different technology to produce these products. The intellectual property and customer lists were purchased as part of the Vandalia Asset Acquisition and related to the right to produce, sell and have sold, market and develop the Triathlon DNA production system, The qualitative impairment assessment concluded that the asset group was not recoverable and resulted in the full impairment of the remaining book value of these intangible assets of $536,355 . See Note C above for further details. |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 12 Months Ended |
Sep. 30, 2021 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | NOTE F – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities at September 30, 2021 and 2020 are as follows: 2021 2020 Accounts payable $ 2,010,410 $ 1,250,021 Accrued salaries payable 655,240 525,602 Other accrued expenses 325,693 150,804 Total $ 2,991,343 $ 1,926,427 |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Sep. 30, 2021 | |
NOTES PAYABLE | |
NOTES PAYABLE | NOTE G – NOTES PAYABLE CARES Act Loan The Company received a loan of approximately $847,000 on May 1, 2020 from Bank of America as lender pursuant to the PPP of the CARES Act. All or a portion of the loan may be forgiven by the U.S. Small Business Administration (“SBA”) upon application by the Company beginning 60 days but not later than 130 days after loan approval and upon documentation of expenditures in accordance with the SBA requirements. Under the CARES Act, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, covered mortgage interest, and covered utilities during the covered period as defined by the CARES Act. The Company used the proceeds from the loan to retain employees, maintain payroll and make lease and utility payments. For purposes of the CARES Act, payroll costs exclude compensation of an individual employee in excess of $100,000, prorated annually. Not more than 40% of the forgiven amount may be for non-payroll costs. Forgiveness is reduced if full-time headcount declines, or if salaries and wages for employees with salaries of $100,000 or less annually are reduced by more than 25%. In the event the loan, or any portion thereof, is forgiven pursuant to the PPP, the amount forgiven is applied to outstanding principal. The Company’s PPP loan, including accrued interest was fully forgiven on February 26, 2021. The forgiveness of the loan resulted in a gain on extinguishment of debt of $839,945 for the fiscal year ended September 30, 2021. Repayment of the July 2019 Notes On October 9, 2020, the Company entered into a letter agreement (the “Letter Agreement”) with Dillon Hill Capital, LLC (“Dillon Hill”), as sole holder of the $1.5 million of secured convertible notes issued in July 2019 (the “July 2019 Notes”), providing for the repayment in full of the July 2019 Notes, in an aggregate amount of $1,665,581 (the “Payoff Amount”), representing the outstanding principal amount of the July 2019 Notes plus accrued but unpaid interest through the scheduled maturity of the July 2019 Notes. The Company paid the Payoff Amount to Dillon Hill on October 9, 2020. As of October 9, 2020, all of the obligations and liabilities of the Company and its affiliates under the July 2019 Notes, the Purchase Agreement, and the Security Agreements, and any other related documents and instruments, were satisfied in full, and all related liens, mortgages or other security interests were automatically released. Based solely on a review of Schedule 13G filings with the SEC, Dillon Hill at the time of the repayment of the July 2019 Notes and thereafter has been a greater than 5% shareholder in the Company’s common stock. NOTE G – NOTES PAYABLE, continued Warrant Exercise Agreement In conjunction with the Letter Agreement discussed above, on October 7, 2020, the Company entered into Warrant Exercise Agreements with Dillon Hill and its affiliate, Dillon Hill Investment Company LLC (together, the “Investors”), whereby 318,000 of the warrants issued to the Investors in the Company’s November 2019 underwritten public offering (the “2019 Warrants”) with an exercise price of $5.25 per share were exercised. The gross proceeds to the Company from this partial exercise of the 2019 Warrants is $1,669,500. In consideration of this partial exercise of the 2019 Warrants and of the consent to repayment of the July 2019 Notes, as described above, the Company agreed to issue 159,000 replacement warrants (the “Replacement Warrants”) to the Investors, which is an amount equal to one-half the amount of the 2019 Warrants exercised pursuant to the Warrant Exercise Agreements. The Replacement Warrants have an exercise price of $7.54. The Warrant Exercise Agreements expired on January 5, 2021. Each Replacement Warrant is exercisable beginning on the date of issuance thereof and ending on the five-year anniversary of such date. The exercise price and number of shares of common stock issuable upon exercise of the Replacement Warrants will be subject to adjustment in the event of any stock dividend, split, recapitalization, reorganization, or similar transaction, as described in the Replacement Warrant. On each of December 9 and 10, 2020, the Investors exercised 100,000 of their 2019 Warrants, for an aggregate exercise of 200,000 of their 2019 Warrants, resulting in total net proceeds to the Company of approximately $1.1 million. As a result of these exercises, pursuant to the Warrant Exercise Agreements the Company issued to the Investors an aggregate of 100,000 additional replacement warrants, which are substantially similar to the Replacement Warrants described above except that 50,000 of the newly-issued replacement warrants have an exercise price of $6.57 and 50,000 of such replacement warrants have an exercise price of $6.46. No additional 2019 Warrants were exercised by January 5, 2021 and no additional replacement warrants were issued. The repayment of the July 2019 Notes resulted in a loss on extinguishment of debt of $1,774,662 for the fiscal year ended September 30, 2021. Included in the loss on extinguishment of debt is $1,643,440 for the fair value of the Replacement Warrants (described above) that were issued in conjunction with the payoff of the July 2019 Notes. |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Sep. 30, 2021 | |
CAPITAL STOCK | |
CAPITAL STOCK | NOTE H – CAPITAL STOCK On October 31, 2019, the Company filed a Certificate of Amendment of its Certificate of Incorporation with the Secretary of State of the State of Delaware that effected a one-for-forty ( 1 Common Stock Transactions during the Fiscal Year Ended September 30, 2021: On January 13, 2021, the Company closed on a registered direct public offering (the “Offering) of 1,810,000 shares (the “Shares”) of the Company’s common stock, pursuant to (i) the securities purchase agreement, dated January 10, 2021, by and between the Company and certain institutional investors(the “Purchasers”) whereby the Company agreed to issue and sell the Shares directly to the Purchasers at a price of $8.30 per share of Common Stock and (ii) the placement agency agreement, dated January 10, 2021, by and between the Company and Roth Capital Partners, LLC (the “Placement Agent”). Net proceeds, after deducting underwriting discounts and commissions, and other offering expenses, were approximately $13.8 million. NOTE H – CAPITAL STOCK, continued Common Stock Transactions during the Fiscal Year Ended September 30, 2020: On November 15, 2019, the Company closed an underwritten public offering (the “Offering”) in which, pursuant to the Underwriting Agreement dated November 13, 2019 by and between the Company and Maxim Group LLC (“Maxim”), as Representative of the Underwriters, the Company issued and sold 2,285,000 shares of the Company’s common stock and 2,285,000 accompanying warrants each with the right to purchase one share of common stock at an exercise price of $5.25 per share (the “Common Warrants”). The shares of common stock and accompanying Common Warrants were sold at a combined offering price of $5.25 before underwriting discounts. The common stock and the 2019 Warrants are collectively referred to herein as the “Securities.” As part of the Offering, the Company granted Maxim a 45-day option to purchase an additional 342,750 shares of common stock and/or additional Common Warrants to purchase 342,750 shares of common stock (the “Option Warrants”, together with the 2019 Warrants, the “Warrants”) at the public offering price, less discounts and commissions, to cover any over-allotments made by the Underwriters in the sale and distribution of the Securities. The exercise price and number of the shares of common stock issuable upon the exercise of the Common Warrant will be subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Warrant Agreement. As a result of this financing, the exercise price of the 8,375 remaining warrants issued during December 2018 was reduced to an exercise price of $5.60 per share in accordance with the adjustment provision contained in the Warrant Agreement. The incremental change in fair value of these warrants as a result of the triggering event was $2,842 and was recorded as a deemed dividend. During the fiscal year ended September 30, 2021, 520,151 of the 2019 Warrants were exercised, resulting in net proceeds to the Company of approximately $2.7 million. During the fiscal year ended September 30, 2020, 1,649,786 of the 2019 Warrants were exercised, resulting in net proceeds to the Company of approximately $8.1 million. |
STOCK OPTIONS AND WARRANTS
STOCK OPTIONS AND WARRANTS | 12 Months Ended |
Sep. 30, 2021 | |
STOCK OPTIONS AND WARRANTS | |
STOCK OPTIONS AND WARRANTS | NOTE I – STOCK OPTIONS AND WARRANTS Warrants Transactions involving warrants (see Note H) are summarized as follows: Weighted Average Number of Exercise Price Per Shares Share Balance at October 1, 2020 1,038,919 $ 10.83 Granted 259,000 7.14 Exercised (520,151) (5.25) Cancelled or expired (32,500) (171.56) Balance, September 30, 2021 745,268 $ 6.44 Stock Options During June 2020, the Board of Directors and subsequently during September 2020, the holders of a majority of the outstanding shares of common stock approved the 2020 Equity Incentive Plan (the “2020 Incentive Plan”). The 2020 Incentive Plan, among other things, reserves an additional 3,500,000 shares of the Company’s common stock for issuance in the form of equity-based awards to employees, directors, consultants, and other service providers, and those of the Company’s affiliates. The maximum total grant date fair value of awards granted under the 2020 Incentive Plan to individuals in their capacity as non-employee directors may not exceed $250,000 in any single calendar year. The 2020 Incentive Plan’s expiration date is September 15, 2030. NOTE I – STOCK OPTIONS AND WARRANTS, continued Stock Options, continued The 2020 Incentive Plan is designed to retain directors, executives, and selected employees and consultants by rewarding them for making contributions to the Company's success with an award of options to purchase shares of common stock. As of September 30, 2021, a total of 6,894 shares have been issued and options to purchase 501,240 shares have been granted under the Company’s Incentive Plans. In 2005, the Board of Directors and the holders of a majority of the outstanding shares of common stock approved the 2005 Incentive Stock Plan, as amended and restated as of January 21, 2015 (the “2005 Incentive Plan”, collectively with the 2020 Incentive Plan, the “Company’s Incentive Plans”). Effective as of September 16, 2020, no further awards will be made under the Company’s 2005 Incentive Stock Plan, as amended and restated. Transactions involving stock options issued are summarized as follows: Weighted Weighted Average Aggregate Average Number of Exercise Price Per Intrinsic Contractual Shares Share Value Life (years) Outstanding at October 1, 2020 320,990 $ 57.75 Granted 203,405 6.15 Exercised 30,955 4.39 Cancelled or expired 6,063 5.01 Outstanding at September 30, 2021 487,377 40.26 Vested at September 30, 2021 478,627 40.90 — 7.54 Non-vested at September 30, 2021 8,750 5.46 — 8.71 For the fiscal year ended September 30, 2021, the Company issued an aggregate of 203,405 options to employees and non-employee board of director members and consultants. For the fiscal year ended September 30, 2020, the Company issued an aggregate of 155,395 options to employees and non-employee board of director members and consultants. During November 2021, the Company granted 361,552 options to officers of the Company. These options have a ten year term and vested immediately. Also during November 2021, the Company granted 213,889 options to non-employee board of director members. The options granted to the non-employee board of directors have a ten year term and vest on the one-year anniversary of the date of grant. The fair value of options granted during the fiscal years ended September 30, 2021 and 2020 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: 2021 2020 Stock price $ 6.43 $ 8.40 Exercise price $ 6.43 $ 8.45 Expected term 5.10 6.85 Dividend yield — — Volatility 141 % 136 % Risk free rate 0.47 % 0.86 % NOTE I – STOCK OPTIONS AND WARRANTS, continued Stock Options, continued The Company recorded $1,668,003 and $1,001,082 as stock compensation expense within selling, general and administrative for fiscal years ended September 30, 2021 and 2020, respectively. As of September 30, 2021, unrecorded compensation cost related to non-vested awards was $20,485 which is expected to be recognized over a weighted average period of approximately 2.6 years. The weighted average grant date fair value per share for options granted during the fiscal years ended September 30, 2021 and 2020 was $5.72 and $7.49, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Sep. 30, 2021 | |
INCOME TAXES | |
INCOME TAXES | NOTE J – INCOME TAXES The income tax provision (benefit) for the fiscal years ended September 30, 2021 and 2020 consists of the following: 2021 2020 Federal: Current $ — $ — Deferred (1,423,000) (2,914,000) (1,423,000) (2,914,000) State and local: Current — — Deferred (26,000) (591,000) (26,000) (591,000) Foreign: Current — — Deferred 18,000 — — — Change in valuation allowance 1,431,000 3,505,000 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, 2021 and 2020 as follows: 2021 2020 Statutory federal income tax rate 21.00 % 21.00 % Statutory state and local income tax rate (1%, as of September 30, 2020 and 2019), net of federal benefit 1.52 % 2.26 % Stock based compensation (11.54) % (1.60) % Other permanent differences (0.56) % 3.83 % Change in deferred tax rate (0.41) % 1.66 % Change in valuation allowance (10.01) % (27.15) % Effective tax rate 0.00 % 0.00 % NOTE J– INCOME TAXES, continued 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, 2021 2020 Deferred tax assets (liabilities): Stock based compensation $ 650,000 $ 2,120,000 Depreciation and amortization 247,000 232,000 Net operating loss carry forward 20,115,000 17,499,000 Impairment of intangibles 187,000 — Tax credits 1,566,000 1,227,000 Other 99,000 355,000 Less: valuation allowance (22,864,000) (21,433,000) Net deferred tax asset $ — $ — As of September 30, 2021, the Company has approximately $84,283,000 of Federal and $35,836,000 of State net operating loss “NOL” carryforwards available which begin to expire after 2022. The Federal NOLs generated in tax years beginning after December 31, 2017 have no expiration period due to the Tax Cuts and Jobs Act that was enacted in 2017. 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 $94,000 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 $1,431,000. The Company has Federal research and development credits of approximately $1,104,000 that will begin to expire after 2034. The Company also has state investment tax credits of $416,000 that will begin to expire after 2029. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Sep. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE K – 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, 2017, 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 three Total rent expense for the fiscal years ended September 30, 2021 and 2020 were $565,597 and $585,189, respectively. NOTE K – COMMITMENTS AND CONTINGENCIES, continued Future minimum rental payments (excluding real estate tax and maintenance costs) as of September 30, 2021 are as follows: For the fiscal year ending September 30, 2022 $ 197,955 Employment and Consulting Agreements Employment agreements The employment agreement with Dr. James Hayward, the Company’s President and Chief Executive Officer (“CEO”), entered into in July 2016 provides that he will be the Company’s CEO and will continue to serve on the Company’s Board of Directors. On July 28, 2017, a new employment agreement was entered into with the CEO effective July 1, 2017. The initial term was from July 1, 2017 through June 30, 2018, with automatic one The employment agreement with the CEO also provides that if he is terminated before the end of the initial or a renewal term by the Company without cause or if the CEO 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, the CEO 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 the CEO’s outstanding options and other equity incentive awards will become fully vested and the CEO 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, the CEO 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 March 15, 2018, the Compensation Committee of the Company’s Board of Directors (the "Compensation Committee"), approved a bonus of $121,125 that would be payable to the CEO when the Company reaches $3,000,000 in revenues for two consecutive quarters or $12,000,000 in revenues for a fiscal year, provided that the CEO is still employed by the Company on such date (the “Revenue Bonus”). Effective May 2, 2018, the Compensation Committee, increased the amount of the Revenue Bonus to $403,623; effective December 27, 2018, to $553,623; and effective December 5, 2019 to $803,623. The revenue targets underlying the Revenue Bonus have not yet been achieved. The Revenue Bonus has no expiration date and may be earned at any time during the CEO’s employment if the Revenue Goals are achieved. On March 2, 2021, the Company entered into an agreement with the CEO, pursuant to which the Company agreed to accelerate the payment of $556,840 of the Revenue Bonus to the CEO in recognition of his contributions to the Company. In exchange for the payment of the Revenue Bonus, the CEO agreed to waive his right to earn any remaining portions of the Revenue Bonus. NOTE K – COMMITMENTS AND CONTINGENCIES, continued The CEO voluntarily reduced his salary for the fiscal years ended September 30, 2020 and 2019. As of October 3, 2020, the Company has re-affirmed the employment agreement’s annual salary of $400,000, and from that date the CEO’s salary will be paid at such rate. On October 19, 2020, the Company awarded the CEO, a one-time discretionary bonus, to be paid in cash, of $250,000, in recognition of his contributions to the Company. For the fiscal year ended September 30, 2021, the CEO earned a $300,000 bonus as the Company’s annual revenue was greater than $8 million. On November 1, 2021, this $300,000 bonus was paid to the CEO by granting stock options with a fair value of $300,000 calculated using the Black Scholes Option Pricing Model. Subsequently, during October 2021, the Board of Directors amended the existing compensatory arrangement with the CEO to increase his salary to $450,000, effective November 1, 2021. 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, 2021 | |
GEOGRAPHIC AREA INFORMATION | |
GEOGRAPHIC AREA INFORMATION | NOTE L – GEOGRAPHIC AREA INFORMATION The Company attributes net revenues from external customers according to the geographic location of the customer. Net revenues by geographic location of customers are as follows: Year Ended September 30, 2021 2020 Americas $ 8,520,336 $ 1,165,320 Europe 359,509 266,701 Asia and other 147,893 499,476 Total $ 9,027,738 $ 1,931,497 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Sep. 30, 2021 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE M — RELATED PARTY TRANSACTIONS On December 12, 2019, the Company entered into a consulting agreement, with Meadow Hill Place, LLC (“Meadow Hill”), a company wholly owned by Scott L. Anchin (“Mr. Anchin”), a board member, whereby Meadow Hill will provide certain advisory services to the Company. The initial term of the agreement ended on June 12, 2020. The agreement provided for compensation in the form of both cash and equity. Meadow Hill was eligible to receive $125,000 for the initial six month term. In addition, in satisfaction of the equity compensation portion of the agreement, (i) the Company granted an option to purchase 20,834 shares of its common stock to Mr. Anchin on December 12, 2019 at an exercise price equal to $4.26 per share, which vested on June 12, 2020, and (ii) the Company granted an option to purchase 20,786 shares of its common stock to Mr. Anchin on January 2, 2020 at an exercise price equal to $4.43 per share, of which 9,121 vested on July 2, 2020. The consulting agreement was completed on June 12, 2020 in full satisfaction of all obligations. As a result, the agreement was not extended and therefore expired on June 12, 2020. As a result, 11,665 of the options granted on January 2, 2020, which were related to the extension period, did not vest and were cancelled on June 12, 2020. On each of December 9 and 10, 2020, Dillon Hill Capital, LLC and its affiliate, Dillon Hill Investment Company LLC., a greater than 5% shareholder, exercised 100,000 of their 2019 Warrants, for an aggregate exercise of 200,000 of their 2019 Warrants, resulting in total net proceeds to the Company of approximately $1.1 million. As a result of these exercises, the Company issued to the Investors an aggregate of 100,000 additional replacement warrants, which are substantially similar to the Replacement Warrants described above except that 50,000 of the newly-issued replacement warrants have an exercise price of $6.57 and 50,000 of such replacement warrants have an exercise price of $6.46. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Sep. 30, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation 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, Applied DNA Sciences India Private Limited, ADCL and its majority–owned subsidiary, LineaRx, Inc. (“LRx”). 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 United States of America (“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 significant estimates include revenue recognition, allowance for doubtful accounts, recoverability of long-lived assets, including the values assigned to goodwill, intangible assets and property and equipment, fair value calculations for stock-based compensation and warrants, contingencies, 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 follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codifications (“ASC”), Revenue Recognition (“ASC 606” or “Topic 606”). The Company measures revenue at the amounts that reflect the consideration to which it is expected to be entitled in exchange for transferring control of goods and services to customers. The Company recognizes revenue either at the point in time or over the period of time that performance obligations to customers are satisfied. The Company's contracts with customers may include multiple performance obligations (e.g. taggants, maintenance, authentication services, research and development services, etc.). For such arrangements, the Company allocates revenues to each performance obligation based on their relative standalone selling price. Due to the short-term nature of the Company's contracts with customers, it has elected to apply the practical expedients under Topic 606 to: (1) expense as incurred, incremental costs of obtaining a contract and (2) not adjust the consideration for the effects of a significant financing component for contracts with an original expected duration of one year or less. Product Revenues and Authentication Services The Company’s PCR-produced linear DNA products are manufactured in accordance with contracts with customers. The Company recognizes revenue upon satisfying its promises to transfer goods or services to customers under the terms of its contracts. These performance obligations are satisfied at the point in time the Company transfers control of the goods to the customer, which in nearly all cases is when title to and risk of loss of the goods transfer to the customer. The timing of transfer of title and risk of loss is dictated by customary or explicitly stated contract terms. The Company invoices customers upon shipment, and its collection terms range, on average, from 30 to 60 days. NOTE C – BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES, continued Revenue Recognition, continued Authentication Services The Company recognizes revenue for authentication services upon satisfying its promises to provide services to customers under the terms of its contracts. These performance obligations are satisfied at the point in time the Company services are complete, which in nearly all cases is when the authentication report is released to the customer. Clinical Laboratory Testing Services The Company records revenue for its clinical laboratory testing service contracts, which includes its COVID-19 Testing Services, upon satisfying its promise to provide services to customers under the terms of its contracts. These performance obligations are satisfied at the point in time that Company services are complete, which in nearly all cases is when the testing results are released to the customer. Research and Development Services The Company records revenue for its research and development contracts using the over-time revenue recognition model. Revenue is primarily measured using the cost-to-cost method, which the Company believes best depicts the transfer of control to the customer. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the identified performance obligation. Revenues are recorded proportionally as costs are incurred. For contracts where the total costs cannot be estimated, revenues are recognized for the actual costs incurred during a period until the remaining costs to complete a contract can be estimated. The Company has elected not to disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. NOTE C – BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES, continued Revenue Recognition, continued Disaggregation of Revenue The following table presents revenues disaggregated by our business operations and timing of revenue recognition: Fiscal Years Ended: September 30, 2021 2020 Research and development services (over-time) $ 799,718 $ 1,128,511 Clinical laboratory testing services (point-in-time) 4,794,154 77,550 Product and authentication services (point-in-time): Supply chain 1,003,248 38,577 Asset marking 458,409 404,888 Large scale DNA production — 281,971 Diagnostic test kits 1,972,209 — Total $ 9,027,738 $ 1,931,497 Contract balances As of September 30, 2021, the Company has entered into contracts with customers for which revenue has not yet been recognized. Consideration received from a customer prior to revenue recognition is recorded to a contract liability and is recognized as revenue when the Company satisfies the related performance obligations under the terms of the contract. The Company’s contract liabilities, which are reported as deferred revenue on the consolidated balance sheet, consist almost entirely of research and development contracts where consideration has been received and the development services have not yet been fully performed. The opening and closing balances of the Company’s contract balances are as follows: October 1, September 30, $ Balance sheet classification 2020 2021 change Contract liabilities Deferred revenue $ 511,036 $ 281,000 $ (230,036) October 1, September 30, $ Balance sheet classification 2019 2020 change Contract liabilities Deferred revenue $ 628,993 $ 511,036 $ (117,957) For the fiscal year ended September 30, 2020, the Company recognized $591,360 of revenue that was included in Contract liabilities as of October 1, 2019. For the fiscal year ended September 30, 2021, the Company recognized $277,331 of revenue that was included in Contract liabilities as of October 1, 2020. |
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. As of September 30, 2021 and 2020, cash equivalents were $4,417,906 and $5,504,826, respectively. |
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 may 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, 2021 and 2020, the Company has an allowance for doubtful accounts of $29,821 and $11,968, respectively. The Company writes-off receivables that are deemed uncollectible. |
Inventories | Inventories Inventories, which consist primarily of raw materials, work in progress and finished goods, are stated at the lower of cost or net realizable value, with 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, 2021 and 2020, the Company incurred losses from operations. Based upon these results and the trends in the Company’s performance projected for fiscal year 2021, 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, 2021 and 2020. Tax years 2016 through 2019 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 computer equipment furniture 3 leasehold improvements NOTE C – BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES, continued September 30, 2021 2020 Computer equipment $ — $ 90,509 Lab equipment 3,565,057 3,036,397 Furniture — 74,781 Vehicles 108,361 — Leasehold improvements 124,825 524,485 Total 3,798,243 3,726,172 Accumulated depreciation 774,328 2,448,517 Property and equipment, net $ 3,023,915 $ 1,277,655 As of September 30, 2021, there was $6,580 of construction in progress that was included in lab equipment. Depreciation expense for the fiscal years ended September 30, 2021 and 2020 were $767,025 and $156,290, 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. Based on the qualitative analysis performed by management, as of September 30, 2021, the Company has recorded a non-cash impairment charge of $285,386 and 536,355 to write-off the goodwill and remaining net book value of the intangible assets, respectively. The goodwill, intellectual property and customer lists were from the Vandalia Asset Acquisition and related to the right to produce, sell and have sold, market and develop the Triathlon DNA production system. Since the Company is no longer utilizing this technology, as the Company is now using a different technology to produce these products, the impairment assessment concluded that the asset group was not recoverable and resulted in the full impairment and write-off of the goodwill and intangible assets as of September 30, 2021. See Note E below for further details. |
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, warrants, and secured convertible notes. For the fiscal years ended September 30, 2021 and 2020, 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, 2021 and 2020 are as follows: 2021 2020 Warrants 745,268 1,038,919 Options 487,377 291,035 Secured convertible note — 70,962 1,232,645 1,400,916 |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation for employees, directors, and nonemployees in accordance with ASC 718, Compensation (“ASC 718”). ASC 718 requires all share-based payments, 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 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 740, excess tax benefits realized from the exercise of stock-based awards are classified as cash flows from operating activities. All excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) are recognized as income tax expense or benefit in the consolidated statements of operations. |
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 cash equivalents with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. As of September 30, 2021, the Company had cash and cash equivalents of approximately $6.0 million in excess of the FDIC insurance limit. The Company's revenues earned from sale of products and services for the fiscal year ended September 30, 2021 included an aggregate of 18%, and 13%, respectively from two customers. The Company’s revenues earned from sale of products and services for the fiscal year ended September 30, 2020 included an aggregate of 13%, 12%, 11% and 10% respectively from four customers. Two customers accounted for 67% of the Company's accounts receivable at September 30, 2021 and four customers accounted for an aggregate of 74% of the Company’s total accounts receivable at September 30, 2020. |
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. 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, 2021 and 2020, the Company incurred research and development expenses of $3,765,440 and $3,321,763, respectively. |
Advertising | Advertising The Company follows the policy of charging the costs of advertising to expense as incurred. The Company charged to operations $283,621 and $55,558, as advertising costs for the fiscal years ended September 30, 2021 and 2020, 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. NOTE C – BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES, continued 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, 2021, as a result of the qualitative analysis performed, the Company has recorded a non-cash impairment charge of $821,740 |
Convertible Instruments | Convertible Instruments The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20, Debt with Conversion and Other Options. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption and are included in interest expense in the consolidated financial statements. |
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. As of September 30, 2021, there were no transfers between Levels 1 2 3 |
Recent Accounting Standards | Recent Accounting Standards In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40).” The objective of this update is to simplify the accounting for convertible preferred stock by removing the existing guidance in ASC 470-20, “Debt: Debt with Conversion and Other Options,”, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives. In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract. This amendment also further revises the guidance in ASU 260, “Earnings per Share,” to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. The amendments in ASU 2020-06 are effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company does not expect the adoption of ASU 2020-06 to have a significant impact on its consolidated financial statements. |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES | |
Schedule of operations and timing of revenue recognition | The following table presents revenues disaggregated by our business operations and timing of revenue recognition: Fiscal Years Ended: September 30, 2021 2020 Research and development services (over-time) $ 799,718 $ 1,128,511 Clinical laboratory testing services (point-in-time) 4,794,154 77,550 Product and authentication services (point-in-time): Supply chain 1,003,248 38,577 Asset marking 458,409 404,888 Large scale DNA production — 281,971 Diagnostic test kits 1,972,209 — Total $ 9,027,738 $ 1,931,497 |
Schedule of opening and closing contract balances | The opening and closing balances of the Company’s contract balances are as follows: October 1, September 30, $ Balance sheet classification 2020 2021 change Contract liabilities Deferred revenue $ 511,036 $ 281,000 $ (230,036) October 1, September 30, $ Balance sheet classification 2019 2020 change Contract liabilities Deferred revenue $ 628,993 $ 511,036 $ (117,957) |
Schedule of property, plant and equipment | NOTE C – BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES, continued September 30, 2021 2020 Computer equipment $ — $ 90,509 Lab equipment 3,565,057 3,036,397 Furniture — 74,781 Vehicles 108,361 — Leasehold improvements 124,825 524,485 Total 3,798,243 3,726,172 Accumulated depreciation 774,328 2,448,517 Property and equipment, net $ 3,023,915 $ 1,277,655 |
Schedule of anti-dilutive securities not included computation of net loss per share | 2021 2020 Warrants 745,268 1,038,919 Options 487,377 291,035 Secured convertible note — 70,962 1,232,645 1,400,916 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
INVENTORIES | |
Schedule of inventories | 2021 2020 Raw materials $ 786,938 $ 387,815 Work in progress — 77,667 Finished goods 582,995 31,885 Total $ 1,369,933 $ 497,367 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets acquired and their carrying values | 2021 2020 Internally developed software ( 5 ‑ year $ — $ 157,221 Customer relationships ( 10 ‑ year 621,000 621,000 Intellectual property (5‑15 years) 917,350 917,350 1,538,350 1,695,571 Less: Accumulated amortization 1,001,995 933,020 Impairment losses 536,355 157,221 Intangible assets, net $ — $ 605,330 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
Schedule of accounts payable and accrued liabilities | 2021 2020 Accounts payable $ 2,010,410 $ 1,250,021 Accrued salaries payable 655,240 525,602 Other accrued expenses 325,693 150,804 Total $ 2,991,343 $ 1,926,427 |
STOCK OPTIONS AND WARRANTS (Tab
STOCK OPTIONS AND WARRANTS (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
STOCK OPTIONS AND WARRANTS | |
Schedule of transactions involving warrants | Weighted Average Number of Exercise Price Per Shares Share Balance at October 1, 2020 1,038,919 $ 10.83 Granted 259,000 7.14 Exercised (520,151) (5.25) Cancelled or expired (32,500) (171.56) Balance, September 30, 2021 745,268 $ 6.44 |
Schedule of summary of transactions involving stock options issued to employees | Weighted Weighted Average Aggregate Average Number of Exercise Price Per Intrinsic Contractual Shares Share Value Life (years) Outstanding at October 1, 2020 320,990 $ 57.75 Granted 203,405 6.15 Exercised 30,955 4.39 Cancelled or expired 6,063 5.01 Outstanding at September 30, 2021 487,377 40.26 Vested at September 30, 2021 478,627 40.90 — 7.54 Non-vested at September 30, 2021 8,750 5.46 — 8.71 |
Schedule of fair value of options granted | 2021 2020 Stock price $ 6.43 $ 8.40 Exercise price $ 6.43 $ 8.45 Expected term 5.10 6.85 Dividend yield — — Volatility 141 % 136 % Risk free rate 0.47 % 0.86 % |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
INCOME TAXES | |
Schedule of income tax provision (benefit) | 2021 2020 Federal: Current $ — $ — Deferred (1,423,000) (2,914,000) (1,423,000) (2,914,000) State and local: Current — — Deferred (26,000) (591,000) (26,000) (591,000) Foreign: Current — — Deferred 18,000 — — — Change in valuation allowance 1,431,000 3,505,000 Income tax provision (benefit) $ — $ — |
Schedule of effective income tax rate reconciliation | 2021 2020 Statutory federal income tax rate 21.00 % 21.00 % Statutory state and local income tax rate (1%, as of September 30, 2020 and 2019), net of federal benefit 1.52 % 2.26 % Stock based compensation (11.54) % (1.60) % Other permanent differences (0.56) % 3.83 % Change in deferred tax rate (0.41) % 1.66 % Change in valuation allowance (10.01) % (27.15) % Effective tax rate 0.00 % 0.00 % |
Schedule of components of deferred tax assets | September 30, 2021 2020 Deferred tax assets (liabilities): Stock based compensation $ 650,000 $ 2,120,000 Depreciation and amortization 247,000 232,000 Net operating loss carry forward 20,115,000 17,499,000 Impairment of intangibles 187,000 — Tax credits 1,566,000 1,227,000 Other 99,000 355,000 Less: valuation allowance (22,864,000) (21,433,000) Net deferred tax asset $ — $ — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum rental payments | For the fiscal year ending September 30, 2022 $ 197,955 |
GEOGRAPHIC AREA INFORMATION (Ta
GEOGRAPHIC AREA INFORMATION (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
GEOGRAPHIC AREA INFORMATION | |
Schedule of net sales by geographic location of customers | Year Ended September 30, 2021 2020 Americas $ 8,520,336 $ 1,165,320 Europe 359,509 266,701 Asia and other 147,893 499,476 Total $ 9,027,738 $ 1,931,497 |
GOING CONCERN AND MANAGEMENT'_2
GOING CONCERN AND MANAGEMENT'S PLAN (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
GOING CONCERN AND MANAGEMENT'S PLAN | ||
Accumulated deficit | $ 284,122,092 | $ 269,835,650 |
Net loss | (14,278,439) | |
Negative operating cash flow | (13,387,955) | |
Cash and cash equivalents | $ 6,554,948 | $ 7,786,743 |
Substantial Doubt about Going Concern, within One Year [true false] | true |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES - Summary of revenues disaggregated by our business operations and timing of revenue recognition (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Disaggregation of Revenue | ||
Total | $ 9,027,738 | $ 1,931,497 |
Research and development services (over-time) | ||
Disaggregation of Revenue | ||
Total | 799,718 | 1,128,511 |
Clinical laboratory testing services (point-in-time) | ||
Disaggregation of Revenue | ||
Total | 4,794,154 | 77,550 |
Supply chain | ||
Disaggregation of Revenue | ||
Total | 1,003,248 | 38,577 |
Asset marking | ||
Disaggregation of Revenue | ||
Total | 458,409 | 404,888 |
Large scale DNA production | ||
Disaggregation of Revenue | ||
Total | $ 281,971 | |
Diagnostic kits | ||
Disaggregation of Revenue | ||
Total | $ 1,972,209 |
BASIS OF PRESENTATION AND SUM_5
BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES - Summary of opening and closing balances of the Company's contract balances (Details) - USD ($) | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Oct. 01, 2020 | Oct. 01, 2019 | |
Schedule Of Contract Balances [Line Items] | ||||
Contract with Customer, Liability, Revenue Recognized | $ 277,331 | $ 591,360 | ||
Contract liabilities | ||||
Schedule Of Contract Balances [Line Items] | ||||
Deferred Revenue | 281,000 | 511,036 | $ 511,036 | $ 628,993 |
Change in contract liabilities | $ (230,036) | $ (117,957) |
BASIS OF PRESENTATION AND SUM_6
BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES - Property and equipment (Details) - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
Property, Plant and Equipment [Line Items] | ||
Total | $ 3,798,243 | $ 3,726,172 |
Accumulated depreciation | 774,328 | 2,448,517 |
Property, Plant and Equipment, Net | 3,023,915 | 1,277,655 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 90,509 | |
Lab equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 3,565,057 | 3,036,397 |
Furniture | ||
Property, Plant and Equipment [Line Items] | ||
Total | 74,781 | |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Total | 108,361 | |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 124,825 | $ 524,485 |
BASIS OF PRESENTATION AND SUM_7
BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES - Summary of potential stock issuances under various options, and warrants (Details) - shares | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the computation of diluted net loss per share | 1,232,645 | 1,400,916 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the computation of diluted net loss per share | 745,268 | 1,038,919 |
Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the computation of diluted net loss per share | 487,377 | 291,035 |
Secured convertible note | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the computation of diluted net loss per share | 70,962 |
BASIS OF PRESENTATION AND SUM_8
BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES - Additional information (Details) | 12 Months Ended | |
Sep. 30, 2021USD ($)customer | Sep. 30, 2020USD ($)customer | |
Concentration Risk [Line Items] | ||
Cash and cash equivalents | $ 6,554,948 | $ 7,786,743 |
Non-cash impairment charge, Goodwill | 285,386 | |
Non-cash impairment charge, Intangible asets | 536,355 | 157,221 |
Impairment losses | 821,741 | 0 |
Advertising expense | 283,621 | 55,558 |
Research and development | 3,765,440 | 3,321,763 |
Allowance on accounts receivable (in dollars) | $ 29,821 | 11,968 |
Depreciation method | Straight line method | |
Depreciation expenses | $ 767,025 | 156,290 |
Transfers from Level 1 to Level 2, Assets | 0 | |
Transfers from Level 2 to Level 1, Assets | 0 | |
Transfers from Level 1 to Level 2, Liabilities | 0 | |
Transfers from Level 2 to Level 1, Liabilities | 0 | |
Transfers Into Level 3, Assets | 0 | |
Transfers out of Level 3, Assets | 0 | |
Transfers Into Level 3, Liabilities | 0 | |
Transfers out of Level 3, Liabilities | 0 | |
Cash Equivalents | $ 4,417,906 | $ 5,504,826 |
Computer equipment | ||
Concentration Risk [Line Items] | ||
Estimated useful life for computer equipment, lab equipment and furniture | 3 years | |
Lab equipment | ||
Concentration Risk [Line Items] | ||
Estimated useful life for computer equipment, lab equipment and furniture | 3 years | |
Construction in progress | $ 6,580 | |
Vehicles | ||
Concentration Risk [Line Items] | ||
Estimated useful life for computer equipment, lab equipment and furniture | P5Y | |
Furniture | ||
Concentration Risk [Line Items] | ||
Estimated useful life for computer equipment, lab equipment and furniture | 3 years | |
Leasehold improvements | ||
Concentration Risk [Line Items] | ||
Estimated useful life for computer equipment, lab equipment and furniture | P5Y | |
Customer Concentration Risk | ||
Concentration Risk [Line Items] | ||
Cash and cash equivalents | $ 6,000,000 | |
Customer Concentration Risk | Total Revenue | ||
Concentration Risk [Line Items] | ||
Number of customers | customer | 2 | 4 |
Customer Concentration Risk | Total Revenue | One customer | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 18.00% | 13.00% |
Customer Concentration Risk | Total Revenue | Two customer | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 13.00% | 12.00% |
Customer Concentration Risk | Total Revenue | Three customers | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 11.00% | |
Customer Concentration Risk | Total Revenue | Four customer | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 10.00% | |
Customer Concentration Risk | Accounts Receivable | Two customer | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 67.00% | |
Number of customers | customer | 2 | |
Customer Concentration Risk | Accounts Receivable | Four customer | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 74.00% | |
Number of customers | customer | 4 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
INVENTORIES | ||
Raw materials | $ 786,938 | $ 387,815 |
Work-in-progress | 77,667 | |
Finished goods | 582,995 | 31,885 |
Total | $ 1,369,933 | $ 497,367 |
INTANGIBLE ASSETS - Summary of
INTANGIBLE ASSETS - Summary of intangible assets (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
INTANGIBLE ASSETS | ||
Internally developed software (5-year useful life) | $ 157,221 | |
Customer relationships (10-year useful life) | $ 621,000 | 621,000 |
Intellectual property (5-15 years) | 917,350 | 917,350 |
Intangible assets, gross | 1,538,350 | 1,695,571 |
Less: Accumulated amortization | 1,001,995 | 933,020 |
Impairment losses | $ 536,355 | 157,221 |
Intangible assets, net | $ 605,330 |
INTANGIBLE ASSETS - Summary o_2
INTANGIBLE ASSETS - Summary of intangible assets - Useful life (Details) | 12 Months Ended |
Sep. 30, 2021 | |
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 - Additional
INTANGIBLE ASSETS - Additional Information (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
INTANGIBLE ASSETS | ||
Total amortization expense charged to operations | $ 68,976 | $ 129,441 |
Non-cash impairment charge, Intangible asets | $ 536,355 | $ 157,221 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | ||
Accounts payable | $ 2,010,410 | $ 1,250,021 |
Accrued salaries payable | 655,240 | 525,602 |
Other accrued expenses | 325,693 | 150,804 |
Total | $ 2,991,343 | $ 1,926,427 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Dec. 11, 2020 | Dec. 10, 2020 | Dec. 09, 2020 | Oct. 09, 2020 | Oct. 07, 2020 | May 01, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Nov. 15, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||||||||||
Interest rate (as a percent) | 40.00% | |||||||||
Gain on extinguishment of debt | $ (1,774,662) | $ 0 | ||||||||
Payroll costs exclude compensation | 100,000 | |||||||||
Proceeds from exercise of warrants | $ 1,100,000 | $ 1,100,000 | $ 2,613,929 | 8,055,797 | ||||||
Term of the warrants | 5 years | |||||||||
Investors exercised warrants | 100,000 | 100,000 | ||||||||
Aggregate exercised of warrants | 200,000 | 200,000 | ||||||||
Number of warrants exercised | 520,151 | |||||||||
Amortization of debt issuance costs | $ 0 | 26,019 | ||||||||
Secured notes payable | 1,499,116 | |||||||||
PPP Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Proceeds from Notes Payable | $ 847,000,000 | $ 100,000 | ||||||||
Interest rate (as a percent) | 0.25% | |||||||||
Public Offering | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Exercise Price | $ 5.25 | $ 5.25 | $ 5.60 | |||||||
Proceeds from exercise of warrants | $ 1,669,500 | $ 2,700,000 | $ 8,100,000 | |||||||
Number of warrants exercised | 318,000 | 520,151 | 1,649,786 | |||||||
Secured Convertible Notes ("July 2019 Notes") | Dillon Hill Capital, LLC | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Payoff Amount | $ 1,665,581 | |||||||||
Minimum percentage of shareholding in the Company's common stock | 0.05% | |||||||||
Secured notes payable | $ 1,500,000 | |||||||||
Replacement Warrants | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Gain on extinguishment of debt | $ 1,643,440 | |||||||||
Exercise Price | $ 7.54 | |||||||||
Number of warrants agreed to be issued | 100,000 | 100,000 | 100,000 | 159,000 | ||||||
Replacement warrants of $6.57 exercise price | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Exercise Price | $ 6.57 | $ 6.57 | $ 6.57 | |||||||
Number of warrants agreed to be issued | 50,000 | 50,000 | 50,000 | |||||||
Replacement warrants of $6.46 exercise price | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Exercise Price | $ 6.46 | $ 6.46 | $ 6.46 | |||||||
Number of warrants agreed to be issued | 50,000 | 50,000 | 50,000 |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) | Jan. 13, 2021USD ($)$ / sharesshares | Dec. 10, 2020USD ($) | Dec. 09, 2020USD ($) | Oct. 07, 2020USD ($)$ / sharesshares | Nov. 15, 2019$ / sharesshares | Oct. 31, 2019 | Dec. 31, 2018USD ($)$ / sharesshares | Sep. 30, 2021USD ($)$ / sharesshares | Sep. 30, 2020USD ($)$ / sharesshares | Sep. 16, 2020shares | Sep. 15, 2020shares | Nov. 01, 2019$ / shares |
Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items] | ||||||||||||
Reverse stock split | 0.025 | |||||||||||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||
Common stock, shares authorized | 200,000,000 | 200,000,000 | 200,000,000 | 500,000,000 | ||||||||
Total Gross Proceeds | $ | $ 13,756,507 | $ 0 | ||||||||||
Number of warrants outstanding | 745,268 | 1,038,919 | ||||||||||
Number of warrants exercised | 520,151 | |||||||||||
Net proceeds from exercise of warrants | $ | $ 1,100,000 | $ 1,100,000 | $ 2,613,929 | $ 8,055,797 | ||||||||
Public Offering | ||||||||||||
Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items] | ||||||||||||
Common stock issued in private placement, net of offering costs (in shares) | 1,810,000 | 2,285,000 | ||||||||||
Number of common stock called by warrants | 2,285,000 | |||||||||||
Number of common shares that each warrant has right to purchase | 1 | |||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 5.25 | $ 5.25 | $ 5.60 | |||||||||
Public offering price for each share together with warrant | $ / shares | $ 8.30 | $ 5.25 | ||||||||||
Additional number of common stock called by warrants | 342,750 | |||||||||||
Number of warrants outstanding | 8,375 | |||||||||||
Incremental change in fair value of warrants | $ | $ 2,842 | |||||||||||
Number of warrants exercised | 318,000 | 520,151 | 1,649,786 | |||||||||
Net proceeds of offering after underwriter discounts, commissions and other offering expenses | $ | $ 13,800,000 | |||||||||||
Net proceeds from exercise of warrants | $ | $ 1,669,500 | $ 2,700,000 | $ 8,100,000 |
STOCK OPTIONS AND WARRANTS (Det
STOCK OPTIONS AND WARRANTS (Details) | 12 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Number of Shares | |
Balance at October 1, 2020 | shares | 1,038,919 |
Granted | shares | 259,000 |
Exercised | shares | (520,151) |
Cancelled or expired | shares | (32,500) |
Balance, September 30, 2021 | shares | 745,268 |
Weighted Average Exercise Price Per Share | |
Balance at October 1, 2020 | $ / shares | $ 10.83 |
Granted | $ / shares | 7.14 |
Exercised | $ / shares | 5.25 |
Cancelled or expired | $ / shares | 171.56 |
Balance, September 30, 2021 | $ / shares | $ 6.44 |
STOCK OPTIONS AND WARRANTS - Tr
STOCK OPTIONS AND WARRANTS - Transactions involving stock options issued to employees (Details) - Options - Incentive Stock Plan 2005 [Member] | 12 Months Ended |
Sep. 30, 2021USD ($)$ / sharesshares | |
Number of Shares | |
Outstanding at October 1, 2020 | shares | 320,990 |
Granted | shares | 203,405 |
Exercised | shares | 30,955 |
Cancelled or expired | shares | 6,063 |
Outstanding at September 30, 2021 | shares | 487,377 |
Vested at September 30, 2021 | shares | 478,627 |
Non-vested at September 30, 2021 | shares | 8,750 |
Weighted Average Exercise Price Per Share | |
Outstanding at October 1, 2020 | $ / shares | $ 57.75 |
Granted | $ / shares | 6.15 |
Exercised | $ / shares | 4.39 |
Cancelled or expired | $ / shares | (5.01) |
Outstanding at September 30, 2021 | $ / shares | 40.26 |
Vested at September 30, 2021 | $ / shares | 40.90 |
Non-vested at September 30, 2021 | $ / shares | $ 5.46 |
Aggregate Intrinsic Value, Vested | $ | $ 0 |
Aggregate Intrinsic Value, Non-vested | $ | $ 0 |
Weighted Average Contractual Life (years), Vested | 7 years 6 months 14 days |
Weighted Average Contractual Life (years), Non -vested | 8 years 8 months 15 days |
STOCK OPTIONS AND WARRANTS - St
STOCK OPTIONS AND WARRANTS - Stock Options (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2021 | Jun. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation | $ 1,668,003 | $ 1,001,082 | ||
Unrecorded compensation cost related to non-vested awards | $ 20,485 | |||
Weighted average period of non-vested awards options | 2 years 7 months 6 days | |||
Weighted average grant date fair value for options granted | $ 5.72 | $ 7.49 | ||
Incentive Stock Plan 2020 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Issuance of common stock as stock awards and stock options | 3,500,000 | |||
Incentive Stock Plan 2020 | Employees, consultants and non-employee board of director members | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation | $ 250,000 | |||
Options | Employees, consultants and non-employee board of director members | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares granted | 213,889 | 203,405 | 155,395 | |
Options | Officer [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares granted | 361,552 | |||
Options | Incentive Stock Plan 2005 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares granted | 203,405 | |||
Options | Incentive Stock Plan 2020 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cumulative number of shares issued | 6,894 | |||
Options to purchase shares under the 2005 Incentive stock plan | 501,240 |
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) - $ / shares | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
STOCK OPTIONS AND WARRANTS | ||
Stock price | $ 6.43 | $ 8.40 |
Exercise price | $ 6.43 | $ 8.45 |
Expected term, years | 5 years 1 month 6 days | 6 years 10 months 6 days |
Dividend yield | 0.00% | 0.00% |
Volatility | 141.00% | 136.00% |
Risk free rate | 0.47% | 0.86% |
INCOME TAXES - Provision (Benef
INCOME TAXES - Provision (Benefit) (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Federal: | ||
Current | $ 0 | $ 0 |
Deferred | (1,423,000) | (2,914,000) |
Federal income tax expense benefit, total | (1,423,000) | (2,914,000) |
State and local: | ||
Current | 0 | 0 |
Deferred | (26,000) | (591,000) |
State and local income tax expense benefit, total | (26,000) | (591,000) |
Foreign: | ||
Current | 0 | 0 |
Deferred | 18,000 | 0 |
Foreign income tax expense benefit, total | 0 | 0 |
Change in valuation allowance | (1,431,000) | (3,505,000) |
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) | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
INCOME TAXES | ||
Statutory federal income tax rate | 21.00% | 21.00% |
Statutory state and local income tax rate (1%, as of September 30, 2020 and 2019), net of federal benefit | 1.52% | 2.26% |
Stock based compensation | (11.54%) | (1.60%) |
Other permanent differences | (0.56%) | 3.83% |
Change in deferred tax rate | (0.41%) | 1.66% |
Change in valuation allowance | (10.01%) | (27.15%) |
Effective tax rate | 0.00% | 0.00% |
INCOME TAXES (Details)
INCOME TAXES (Details) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
INCOME TAXES | ||
Federal benefit | 1.00% | 1.00% |
INCOME TAXES - Components of de
INCOME TAXES - Components of deferred tax assets (Details) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Deferred tax assets (liabilities): | ||
Stock based compensation | $ 650,000 | $ 2,120,000 |
Depreciation and amortization | 247,000 | 232,000 |
Net operating loss carry forward | 20,115,000 | 17,499,000 |
Impairment of intangibles | 187,000 | 0 |
Tax credits | 1,566,000 | 1,227,000 |
Other | 99,000 | 355,000 |
Less: valuation allowance | (22,864,000) | (21,433,000) |
Net deferred tax asset | $ 0 | $ 0 |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Deferred Income Taxes [Line Items] | ||
Federal and net operating loss carryforward | $ 84,283,000 | |
State net operating loss carryforward | 35,836,000 | |
Federal research and development credits | 1,104,000 | |
State investment tax credits | 416,000 | |
Increased in valuation allowance | 1,431,000 | $ 3,505,000 |
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 | $ 94,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Operating Leases (Details) | Nov. 01, 2017USD ($)ft² | Jun. 15, 2013USD ($)ft² | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Oct. 31, 2020 |
COMMITMENTS AND CONTINGENCIES | |||||
Area of property under operating lease | ft² | 30,000 | ||||
Extended operating lease for additional period | 3 years | 1 year | |||
Base rent during initial lease term per annum | $ 458,098 | ||||
Area of laboratory space | ft² | 2,200 | ||||
Lease for satellite testing | ft² | 1,108 | ||||
Term lease | 3 years | ||||
Base rent | $ 6,500 | ||||
Short-term lease obligation | $ 197,955 | ||||
Total lease rental expenses | $ 565,597 | $ 585,189 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Employment Agreement (Details) - USD ($) | Nov. 01, 2021 | Oct. 03, 2020 | Dec. 05, 2019 | Dec. 27, 2018 | Jul. 28, 2018 | May 02, 2018 | Mar. 15, 2018 | Jul. 28, 2017 | Oct. 31, 2021 | Sep. 30, 2019 | Jul. 28, 2017 | Sep. 30, 2021 | Mar. 02, 2021 | Oct. 19, 2020 |
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
Revenue bonus recorded to long term accrued liabilities | $ 556,840 | |||||||||||||
Employment Agreement [Member] | CEO | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
Annual base salary | $ 400,000 | |||||||||||||
One-time discretionary bonus awarded | $ 250,000 | |||||||||||||
Approved bonus | $ 803,623 | $ 553,623 | $ 403,623 | $ 121,125 | ||||||||||
Threshold revenue for two consecutive quarters | 3,000,000 | |||||||||||||
Threshold revenue for fiscal year | $ 12,000,000 | |||||||||||||
Number of shares granted | 300,000 | |||||||||||||
Revenue bonus recorded to long term accrued liabilities | $ 300,000 | |||||||||||||
Employment Agreement [Member] | CEO | Minimum | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
Threshold annual revenue | $ 300,000 | |||||||||||||
Employment Agreement [Member] | CEO | Maximum | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
Threshold annual revenue | $ 8,000,000 | |||||||||||||
Employment Agreement [Member] | CEO | Subsequent event | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
Annual base salary | $ 450,000 | |||||||||||||
New Employment Agreement | CEO | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
Agreement renewal period | 1 year | |||||||||||||
Special cash incentive bonus | $ 800,000 | |||||||||||||
Special cash incentive bonus payable on completing threshold annual revenue | $ 300,000 | 300,000 | ||||||||||||
Threshold annual revenue | 8,000,000 | 8,000,000 | ||||||||||||
Special cash incentive bonus payable on completing threshold annual revenue in excess of first threshold | $ 100,000 | 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 the Company 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. |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Future minimum rental payments (Details) | Sep. 30, 2021USD ($) |
COMMITMENTS AND CONTINGENCIES | |
2022 | $ 197,955 |
GEOGRAPHIC AREA INFORMATION (De
GEOGRAPHIC AREA INFORMATION (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
GEOGRAPHIC AREA INFORMATION | ||
Total | $ 9,027,738 | $ 1,931,497 |
United States | ||
GEOGRAPHIC AREA INFORMATION | ||
Total | 8,520,336 | 1,165,320 |
Europe | ||
GEOGRAPHIC AREA INFORMATION | ||
Total | 359,509 | 266,701 |
Asia and other | ||
GEOGRAPHIC AREA INFORMATION | ||
Total | $ 147,893 | $ 499,476 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | Dec. 11, 2020 | Dec. 10, 2020 | Dec. 09, 2020 | Oct. 07, 2020 | Jul. 02, 2020 | Jun. 12, 2020 | Jan. 02, 2020 | Dec. 12, 2019 | Dec. 10, 2019 | Dec. 09, 2019 | Sep. 30, 2021 | Sep. 30, 2020 |
Related Party Transaction [Line Items] | ||||||||||||
Investors exercised warrants | 100,000 | 100,000 | ||||||||||
Threshold percentage of shareholder exercising warrants | 5.00% | 5.00% | ||||||||||
Aggregate exercised of warrants | 200,000 | 200,000 | ||||||||||
Net proceeds from exercise of warrants | $ 1,100,000 | $ 1,100,000 | $ 2,613,929 | $ 8,055,797 | ||||||||
Meadow Hill | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Eligible amount receivable by related party for the first month of the term | $ 125,000 | |||||||||||
Stock options granted (in shares) | 20,834 | |||||||||||
Exercise price per share of options granted | $ 4.26 | |||||||||||
Mr. Scott L. Anchin | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Stock options granted (in shares) | 20,786 | |||||||||||
Exercise price per share of options granted | $ 4.43 | |||||||||||
Stock options vested | 9,121 | |||||||||||
Stock options cancelled | 11,665 | |||||||||||
Replacement Warrants | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of warrants issued the investors | 100,000 | 100,000 | 100,000 | 159,000 | ||||||||
Exercise price of warrants (in dollars per share) | $ 7.54 | |||||||||||
Replacement warrants of $6.57 exercise price | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of warrants issued the investors | 50,000 | 50,000 | 50,000 | |||||||||
Exercise price of warrants (in dollars per share) | $ 6.57 | $ 6.57 | $ 6.57 | |||||||||
Replacement warrants of $6.46 exercise price | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of warrants issued the investors | 50,000 | 50,000 | 50,000 | |||||||||
Exercise price of warrants (in dollars per share) | $ 6.46 | $ 6.46 | $ 6.46 |