Annual report pursuant to Section 13 and 15(d)

STOCKHOLDERS' EQUITY (Tables)

v2.4.0.6
STOCKHOLDERS' EQUITY (Tables)
 12 Months Ended
Sep. 30, 2012
Stockholders' Equity Note [Abstract]  
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The Company estimates the fair value of each option on the grant date using the Black-Scholes model.  The following assumptions were made in estimating the fair value:

    2012     2011  
Annual dividend yield     -       -  
Expected life (years)     5       5  
Risk-free interest rate     1.13 %     2.04 %
Expected volatility     274 %     281 %
Fair value of options granted   $ 3.00     $ 14.10  
Schedule Of Stock Based Compensation Expenses [Table Text Block]

Stock-based compensation expense is recognized over the employees’ or service provider’s requisite service period, generally the vesting period of the award. Stock-based compensation expense included in the accompanying statements of operations for the year ended September 30, 2012 and 2011 is as follows:

 

    For the year ended
September 30, 		 
    2012     2011  
Cost of Neurometric Services revenues   $ 10,200     $ 10,200  
Research     99,200       199,300  
Product Development     72,500       67,700  
Sales and marketing     196,800       209,000  
General and administrative     972,100       1,119,200  
Total   $ 1,350,800     $ 1,605,400
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

A summary of stock option activity is as follows:

 

    Number of
Shares 		    Weighted Average
Exercise Price 		 
Outstanding at September 30, 2010     522,396     $ 18.60  
                 
Granted     15,834       14.10  
Exercised     -       -  
Forfeited     (14,029 )     14.10  
                 
Outstanding at September 30, 2011     524,201     $ 19.88  
                 
Granted     42,670       3.00  
Exercised     -       -  
Forfeited     (20,125 )     24.08  
                 
Outstanding at September 30, 2012     546,746     $ 17.08
Schedule of Share-based Compensation, Activity [Table Text Block]

Following is a summary of the status of options outstanding at September 30, 2012:

 

Exercise
Price 		    Number
of Shares 		    Weighted
Average
Contractual
Life 		    Weighted
Average
Exercise
Price 		    Vested at
September
30, 2012 		    Weighted
Average
Remaining
Life
(Years) 		    Aggregate
Intrinsic
Value at
September
30, 2012 		 
                                       
$ 3.00       42,670     10 years     $ 3.00       5,334       9.5     $ -  
$ 3.60       28,648     10 years       3.60       28,648       3.9       -  
$ 3.96       32,928     10 years       3.96       32,928       3.9       -  
$ 9.00       4,525     10 years       9.00       4,525       4.1       -  
$ 12.00       28,535     10 years       12.00       19,056       7.7       -  
$ 14.10       12,152     10 years       14.10       6,110       8.4       -  
$ 15.30       1,373     10 years       15.30       1,373       6.0       -  
$ 16.50       262,441     10 years       16.50       184,206       7.4       -  
$ 17.70       953     10 years       17.70       953       3.9       -  
$ 24.00       4,667     10 years       24.00       4,667       5.2       -  
$ 26.70       32,297     10 years       26.70       32,297       5.0       -  
$ 28.80       11,767     10 years       28.80       11,767       5.5       -  
$ 32.70       83,790     10 years       32.70       83,790       4.9            -  
                                                     
Total       546,746             $ 17.08       415,654       6.6     $ -  
Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]
The warrant activity for the year ending September 30, 2012 and year ending September 30, 2011 respectively are described as follows:

 

Warrants     Exercise
Price 		    Issued, Surrendered or Expired in Connection With:
  716,810             Warrants outstanding at October 1, 2010
                 
  111,100     $ 9.00     These warrants were issued to eight investors who purchased notes for $2,222,220 pursuant to the October Purchase Agreement described in note 3.  These investors included three directors of the Company, Mr. David Jones, Mr. John Pappajohn and Dr. George Kallins, each of whom purchased notes for $250,000 ($750,000 in aggregate) either directly or through an entity that they control.
                 
  5,558     $ 9.90     These warrants were issued to Monarch Capital who acted as placement agents in raising $500,000 from two investors who purchase notes pursuant to the October Purchase agreement described in note 3.
                 
                These warrants were issued to 12 investors who purchased notes for $2,500,000 pursuant to the January Purchase Agreement described in note 3.  Of the 12 accredited investors during the January 2011 through April 2011 period, eight have previous relationships with the Company as follows:
                 
138,897   $ 9.00 1) A January Note in the principal amount of $50,000, and a warrant to purchase 2,778 shares were issued to the Company’s Chief Financial Officer, Paul Buck.
2) Three January 2011 Notes in aggregate principal amount of $562,500, and warrants to purchase 31,251 shares were issued to SAIL Venture Partners, LP, of which David Jones, a director of the Company, is a senior partner of the general partner.
3) Three January 2011 Notes in aggregate principal amount of $437,500, and warrants to purchase 24,307 shares were issued to SAIL 2010 Co-Investment Partners, L.P., an entity likewise affiliated with Mr. Jones.
4) Two January 2011 Notes in aggregate principal amount of $100,000, and a warrant to purchase 5,556shares were issued to Meyer Proler MD who first invested in 2006 and provides medical consulting services to the Company.
5) A January Note in the principal amount of $400,000 and a warrant to purchase 22,223 shares were issued to Pyxis Long /Short Healthcare fund which first invested in the company in October.
6) A January Note in the principle amount of $150,000 and a warrant to purchase 8,334 shares were issued to Cummings Bay Capital LP which has the same fund manager as the Pyxis Long/Short Healthcare Fund which first invested Company in October 2010.
7) A January Note in the principal amount of $200,000 and a warrant to purchase 11,112 shares were issued to Andy Sassine who had first invested in the Company in October 2010.
8) A January Note in the principal amount of $50,000 and a warrant to purchase 2,778 shares were issued to a trust, the trustee of which is the father-in-law of the Company’s Chief Executive Officer, George Carpenter.
9) Four January 2011 Notes in aggregate amount of $550,000 were issued to new accredited investors together with warrants to purchase 30,558 shares.
                 
  10,002     $ 9.90     These warrants were issued Monarch Capital who acted as placement agents in raising $750,000 from three investors who purchased January 2011 Notes pursuant to the January Purchase Agreement described in Note 3 and Antaeus Capital, Inc. who acted as placement agent in raising $150,000 from one investor who purchased January 2011 Notes pursuant to the Note and Warrant Purchase agreement described in Note 3.
                 
  (1,412 )   $ 0.30     Warrants expired
                 
  (565 )   $ 0.30     Warrants were surrendered in a net issue exercise: 539 shares were issued in lieu of cash.
                 
  980,390             Warrants outstanding at September 30, 2011
                 
  613,782     $ 3.00     As a result of the issuance of October 2011 Notes at a conversion of $3.00 and associated warrants to purchase common stock at an exercise price of $3.00, the ratchet provision in the October and January 2011 Notes was triggered with the resultant adjustment in the number of shares convertible at the lowered conversion price of $3.00 down from $9.00 and the consequential adjustment in the number of warrants issued to the October and January Note Holders.
                 
  31,112     $ 3.00     As mentioned above the ratchet provision in the issued placement agent warrants was also triggered with the resultant adjustment in the number of warrants being issued to the placement agents.
                 
  (2,823 )   $ 0.30     Warrants were surrendered in a cash exercise for 2,823 shares.
                 
  696,673     $ 3.00    

These warrants were issued to 11 investors who purchased notes for $2,000,000 pursuant to the 2011 Bridge Purchase Agreement described in note 4 were as follows:

1)    Three October 2011 Notes in aggregate principal amount of $750,000, and warrants to purchase 250,002 shares were issued to John Pappajohn, a director of the Company.  

2)    Two October 2011 Notes in aggregate amount of $80,000 were issued to accredited investors, who had previously invested in the Company, together with warrants to purchase 26,667 shares.

3)    An October 2011 Note in the principal amount of $250,000, and a warrant to purchase 83,334 shares were issued to the Zanett Opportunity Fund, an entity affiliated with Zachary McAdoo, who was subsequently appointed a director of the Company.     

4)    Three October 2011 Notes in aggregate amount of $180,000 were issued to accredited investors, who had previously invested in the Company, together with warrants to purchase 60,001 shares.  

5)    An October 2011 Note in the principal amount of $40,000, and a warrant to purchase 13,334 shares were issued to the Zanett Opportunity Fund, an entity affiliated with Zachary McAdoo, who is a director of the Company.    

6)    A unsecured Bridge Note in the principal amount of $90,000, and a warrant to purchase 30,000 shares were issued to the Zanett Opportunity Fund, an entity affiliated with Zachary McAdoo, who is a director of the Company.

7)    Four October 2011 Notes in aggregate amount of $700,000 and a warrant to purchase 233,335 shares were issued to four new investors to the company.
                 
  5,334     $ 3.00     These warrants were issued to Monarch Capital who acted as placement agents in raising $80,000 from two investors who purchased October 2011 Notes pursuant to the 2011 Bridge Note January Purchase Agreement described in Note 4.
                 
  15,167     $ 3.00     These warrants were issued to Innerkip Capital Management who acted as placement agents in raising $650,000 from three investors who purchased October 2011 Notes pursuant to the 2011 Bridge Note January Purchase Agreement described in Note 4.    
                 
  (175,195 )     $0.30 to $54.0     Warrants expired
                 
  2,164,440             Warrants outstanding at September 30, 2012