Quarterly report pursuant to Section 13 or 15(d)

10. Series B Convertible Preferred Stock Warrants

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10. Series B Convertible Preferred Stock Warrants
 3 Months Ended
Dec. 31, 2016
Warrants and Rights Note Disclosure [Abstract]  
Series B Convertible Preferred Stock Warrants

The Company issued several notes in prior periods and converted them resulting in the issuance of warrants. The following table summarizes information about the Company’s warrants at December 31, 2016:

 

  Number of
units - Series B
Convertible
preferred
warrants		     Weighted
Average
Exercise
Price		     Weighted
Average
Remaining
Contractual
Term (in years)		     Intrinsic Value  
Outstanding at September 30, 2016     118,029     $ 20.80       1.73     $ 4,307,493  
Granted     –                          
Exercised     –                          
Outstanding at December 31, 2016     118,029     $ 20.80       1.48     $ 11,719,727  
Exercisable at December 31, 2016     118,029     $ 20.80       1.48     $ 11,719,727  

 

Most of the above warrants were issued in connection with the conversion of convertible notes from Isaac Capital Group. When the debts were converted and warrants were issued; the Company determined the fair value of the warrants using the Black-Scholes-Merton model and took a charge to interest expense at the date of issuance.

 

On December 27, 2016, ICG and the Company agreed to amend and exchange the common stock warrants for warrants of series B convertible preferred shares, and the number of warrants held adjusted by an exchange ratio of 5:1 common shares for series B convertible shares. ICG, the holder of the warrants outstanding, is not permitted to sell, transfer, assign, hypothecate, pledge, margin, hedge, trade or otherwise obtain or attempt to obtain any economic value from the series B convertible preferred shares should the warrants be exercised prior to December 31, 2021. All warrant related information presented in these condensed consolidated financial statements and accompanying footnotes has been retroactively adjusted to reflect the conversion of all common stock warrants outstanding to series B convertible preferred share warrants resulting in this action.

  

The exercise price for the warrants outstanding and exercisable into series B convertible preferred shares at December 31, 2016 is as follows:

 

Series B Convertible Preferred  
Outstanding     Exercisable  
Number of     Exercise     Number of     Exercise  
Warrants     Price     Warrants     Price  
  54,396     $ 16.60       54,396     $ 16.60  
  17,857       16.80       17,857       16.80  
  12,383       24.30       12,383       24.30  
  33,393       28.50       33,393       28.50  
  118,029               118,029