Stock Options and Warrants

12 Months Ended

Sep. 30, 2015

Notes to Financial Statements

Stock Options and Warrants

(9) 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”), and at the Annual Meeting of Shareholders on May 19, 2015, the Company’s shareholders approved an amendment increasing the number of shares of Common Stock available for issuance under 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 803,262 shares are authorized for issuance pursuant to awards granted under the 2012 Plan.  During the fiscal years ended September 30, 2015 and 2014, there were options to purchase 137,166 and 84,355 shares of Common Stock were issued under this 2012 Plan. During the year ended September 30, 2015, we issued 59,381 shares of Common Stock under this plan. Of the 59,381 shares of Common Stock issued during 2015, 25,254 shares valued at $257,591 were issued in accordance with an employee long term incentive plan. Over the course of the next year, the Company will recognize approximately $445,400 in compensation expense associated with unvested stock awards under this employee long term incentive plan. All shares issued under this employee long term incentive plan are issued from the 2012 Plan. As of September 30, 2015, 502,147 shares of Common Stock were available for future grants under the 2012 Plan.

 All Options and Warrants

During the fiscal year ended September 30, 2015, the Company granted 137,166 warrants to a member of its Board of Directors, valued at $389,380. As of September 30, 2015, $266,396 of compensation expense associated with unvested stock options and warrants issued previously to members of the Board of Directors will be recognized over the next year.

During the fiscal year ended September 30, 2014, the Company granted 69,356 warrants to members of its Board of Directors, valued at $391,578. The Company also granted 15,000 warrants to an employee valued at $76,880. As of September 30, 2014, $200,218 of compensation expense associated with unvested stock options and warrants issued previously to members of the Board of Directors will be recognized over the next year.

The following are the weighted-average assumptions used for options granted during the fiscal years ended September 30, 2015 and 2014 using the Black-Scholes model, respectively:

	Fiscal Years Ended
	September 30,
	2015			2014
Expected stock price volatility		51	%		73	%
Risk-free interest rate		0.30	%		0.68	%
Expected life of options	2 Years			1.31 Years

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 expected life of stock options and 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. In fiscal year 2014, the Company changed from a daily to weekly volatility. The risk-free interest rate represents the U.S. Treasury bill rate for the expected life of the related stock options and warrants. The dividend yield represents the Company’s anticipated cash dividends over the expected life of the stock option and warrants.

A summary of the compensation-based options and warrants activity for the fiscal years ended September 30, 2015 and 2014 is presented below:

	Shares Under Option			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding as of September 30, 2013		427,965		$	18.04
Granted		84,356		$	17.50
Expired		(141,177	)	$	18.04
Exercised		(65,893	)
Outstanding as of September 30, 2014		305,251		$	15.71	1.05 years	$	487,402
Granted		137,166		$	11.17
Expired		(60,761)		$	24.75
Exercised		-		$	-
Outstanding as of September 30, 2015		381,656		$	13.28
Exercisable as of September 30, 2015		381,656		$	13.28	1.38 years	$	-

The fiscal year end intrinsic values are based on a September 30, 2015 closing price of $7.10 per share.