STOCK-BASED COMPENSATION

12 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 15 – STOCK-BASED COMPENSATION

As of September 30, 2024, we had unvested restricted stock awards (“RSUs”) and stock options granted under the 2021 Omnibus Equity Compensation Plan (the “2021 Equity Incentive Plan”) approved by stockholders on September 13, 2021.

The stockholder approval of the 2021 Equity Incentive Plan included a reserve of 8.0 million shares for awards. The 2021 Equity Incentive Plan also allows for an annual increase in the reserve up to an amount approximately equal to five percent (5%) of the fully diluted outstanding shares at the end of the prior calendar year. On June 29, 2022, the Board of Directors authorized an 8,186,106 increase in the shares reserved for the 2021 Equity Incentive Plan. On February 15, 2024, the Board of Directors authorized an increase of 13,599,834 in the shares reserved for the 2021 Equity Incentive Plan. Awards granted under the 2021 Equity Incentive Plan in lieu of compensation are exempt from counting against the reserve.

2021 Omnibus Equity Incentive Plan Reserve
(In thousands)
Initial Reserve at September 13, 2021	8,000
Non-exempt Awards	(24,783	)
Forfeitures	3,036
Annual Reserve Increases	21,786
Reserve at September 30, 2024	8,039
Reserve percent of outstanding shares at September 30, 2024	3.6	%

We typically have granted RSUs and stock options with a 3-year, service-based vesting period. Our unvested RSUs and stock options are accounted for based on their grant date fair value. As of September 30, 2024, total compensation expense to be recognized in future periods was $667 thousand. That cost is expected to be recognized over the remaining vesting period.

Our total stock-based compensation expense for the year ended September 30, 2024, was $682 thousand, comprised of $20 thousand for shares issued for services and $662 thousand for the amortization of outstanding equity compensation grants.

Certain employees opted to sell RSUs back to the Company at the fair market value on the vesting date to fund their portion of payroll taxes due on the taxable income generated by the vested RSUs. For the year ended September 30, 2024, we purchased RSUs with a vesting date value of $119 thousand. Our Statement of Stockholders Equity reflects the net increase of $543 thousand as of September 30, 2024, or $662 thousand of total stock-based compensation expense, less the $119 thousand of RSUs purchased.

We incurred stock-based compensation expense of $485 thousand for the year ended September 30, 2023, which is comprised of $66 thousand for shares issued for services and $419 thousand for the amortization of outstanding equity compensation grants. For the year ended September 30, 2023, we purchased RSUs with a vesting date value of $59 thousand.

Stock-based compensation of $568 thousand, $22 thousand, and $92 thousand was included in general and administrative expense, selling and marketing expense, and research and development expense respectively in our accompanying Consolidated Statements of Operations for the year ended September 30, 2024.

Restricted Stock Units

We record compensation expense for RSUs based on the closing market price of our stock at the grant date and amortize the expense over the vesting period which is typically three years. For RSUs, the Company recognizes compensation cost for unvested share-based awards on a straight-line basis over the requisite service period. The fair value of stock awards is based on the quoted price of our common stock on the grant date.

The following table summarizes the activity of our RSUs granted under the 2021 Equity Incentive Plan during the years ended September 30, 2024, and September 30, 2023.

Outstanding Restricted Stock Unit Grants	Number of RSU’s			Weighted Average Grant Date Value Per RSU
(In thousands)
Outstanding Grants at September 30, 2022		4,309		$	0.11
Granted		8,174			0.10
Vested		(2,988	)		0.12
Canceled/Forfeited		(858	)		0.12
Outstanding Grants at September 30, 2023		8,637			0.10
Outstanding Grants at September 30, 2023		8,637			0.10
Granted		11,048			0.05
Vested		(6,537	)		0.08
Canceled/Forfeited		(2,000	)		0.10
Outstanding Grants at September 30, 2024		11,148		$	0.06

The weighted-average remaining vesting period of RSUs at September 30, 2024 was 1.92 years.

The total grant-date fair value of RSUs vested during 2024 and 2023, was $190 thousand, and $353 thousand, respectively. The approximate aggregate intrinsic value of RSUs outstanding at September 30, 2024 was $479 thousand. The approximate aggregate intrinsic values of RSUs awarded during 2024 and 2023 were $475 thousand and $572 thousand, respectively. Aggregate intrinsic value of RSUs represents the applicable number of awards multiplied by the Company’s closing share price on the last trading day of the relevant fiscal period. The Company’s closing share price was $0.04 on September 30, 2024, and $0.07 on September 30, 2023.

Stock Options

We record compensation expense for the stock options based on the fair market value of the options as of the grant date.

The fair value for stock options granted during the twelve months ended September 30, 2024, was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	2024
Risk-free interest rate		4.36	%
Dividend yield		0.00	%
Expected common stock market price volatility factor		182.97	%
Weighted average expected live of stock options (years)		10.00

The following table summarizes the activity of our stock options granted under the 2021 Plan during the year ended September 30, 2024. We did not grant stock options during the year ended September 30, 2023.

Outstanding Stock Option Grants	Number of
(In thousands)	Stock Options
Outstanding grants at September 30, 2023		—
Granted		4,400
Vested		—
Canceled/forfeited		(1,100	)
Outstanding grants at September 30, 2024		3,300

Stock options were issued to our independent directors on June 10, 2024. Each of our four independent directors received 1.1 million stock options priced at $0.18 with a 3-year vesting period, expiring on June 10, 2034. One independent director resigned from our Board on June 18, 2024, resulting in the forfeiture of 1.1 million stock options.

The weighted-average remaining vesting period of stock options at September 30, 2024, was 2.67 years.