Stock Options and Warrants

3 Months Ended

Dec. 31, 2014

Notes to Financial Statements

Stock Options and Warrants

Stock Incentive Plan

At the annual meeting of shareholders on December 21, 2011, the shareholders approved the 2012 Equity Compensation Plan (the “2012 Plan”).  The 2012 Plan provides for the grant of incentive stock options and nonqualified stock options, restricted stock, stock appreciation rights, performance shares, performance stock units, dividend equivalents, stock payments, deferred stock, restricted stock units, other stock-based awards and performance-based awards to employees and certain non-employees who have important relationships with the Company. A total of 90,000 shares are authorized for issuance pursuant to awards granted under the 2012 Plan.  During the three months ended December 31, 2014 and 2013, respectively, no options were issued under this 2012 Plan.  As of December 31, 2014, 44,657 shares of common stock were available for future grants under the 2012 Plan.

All Options and Warrants

The fair value of each stock option and warrant grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company did not grant options or warrants to purchase common or preferred stock during the three months ended December 31, 2014. During the three months ended December 31, 2013, the Company granted 6,840 shares of common stock.  These warrants vested immediately and expire two years from grant date.  The Company recorded $75,082 and $53,947 of expense for the three months ended December 31, 2014 and 2013, respectively, related to the issuance and vesting of all stock options and warrants. 

The option and warrant grants for three months ended December 31, 2013 were valued using the Black-Scholes model with the following weighted-average assumptions:

	Three Months Ended December 31
	2014		2013
Expected cash dividend yield		N/A(1)		-
Expected stock price volatility		N/A(1)		103	%
Risk-free interest rate		N/A(1)		0.10	%
Expected life of options/warrants			1 Year

(1) This information was deemed not applicable (N/A) since no options or warrants to purchase common stock were granted during the three months ended December 31, 2014.

The expected life of stock options (warrants) represents the period of time that the stock options or warrants are expected to be outstanding based on the simplified method allowed under GAAP. The expected volatility is based on the historical price volatility of the Company’s common stock. The risk-free interest rate represents the U.S. Treasury bill rate for the expected life of the related stock options (warrants). The dividend yield represents the Company’s anticipated cash dividends over the expected life of the stock options (warrants).

A summary of stock option activity for the three months ended December 31, 2014 is presented below:

	Shares Under Option/ Warrant			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding as of September 30, 2014		305,251		$	15.71	1.05 years	487,402
Granted		-		$
Expired / Cancelled		(24,000	)	$	17.50
Exercised		-		$
Outstanding as of December 31, 2014		281,251		$	15.63	0.85 years	$	526,550
Exercisable as of December 31, 2014		255,463		$	15.44	0.79 years	$	526,550

The intrinsic value of options outstanding and exercisable is based on the Company’s share price of $14.99 at December 31, 2014.