15. STOCK OPTIONS

3 Months Ended

Dec. 31, 2014

Notes to Financial Statements

15. STOCK OPTIONS

Description of Stock Option Plan

On April 29, 2011, the 2011 Stock Incentive Plan was approved at the Annual Stockholder Meeting. The Company was authorized to issue options for, and has reserved for issuance, up to 7,000,000 shares of common stock under the 2011 Stock Incentive Plan. On March 21, 2013, an amendment to the Stock Option Plan was approved by the stockholders of the Company, increasing the number of shares reserved for issuance under the Plan to 14,000,000 shares.

Determining Fair Value under ASC 505

The Company records compensation expense associated with stock options and other equity-based compensation using the Black-Scholes-Merton option valuation model for estimating fair value of stock options granted under our plan. The Company amortizes the fair value of stock options on a ratable basis over the requisite service periods, which are generally the vesting periods. The expected life of awards granted represents the period of time that they are expected to be outstanding.  The Company estimates the volatility of our common stock based on the historical volatility of its own common stock over the most recent period corresponding with the estimated expected life of the award. The Company bases the risk-free interest rate used in the Black Scholes-Merton option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. The Company has not paid any cash dividends on our common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes-Merton option valuation model and adjusts share-based compensation for changes to the estimate of expected equity award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture rate is recognized in the period the forfeiture estimate is changed.

Stock Option Activity

The Company had the following stock option transactions during the three months ended December 31, 2014:

During the three months ended December 31, 2014, two employees of TransTech, forfeited stock option grants for 200,000 shares of common stock at $0.12 per share.

There are currently 12,900,000 options to purchase common stock at an average exercise price of $0.125 per share outstanding as of December 31, 2014 under the 2011 Stock Incentive Plan. The Company recorded $20,835 and $23,503 of compensation expense, net of related tax effects, relative to stock options for the three months ended December 31, 2014 and 2013 in accordance with ASC 505. Net loss per share (basic and diluted) associated with this expense was approximately ($0.00). At December 31, 2014, there is approximately $308,565 of total unrecognized costs related to employee granted stock options that are not vested. These costs are expected to be recognized over a period of approximately 5.09 years. 

Stock option activity for the three months ended December 31, 2014 and the years ended September 30, 2014 and 2013 was as follows:

				Weighted Average
	Options			Exercise Price			$
Outstanding as of September 30, 2012		5,920,000			0.131			776,800
Granted		6,830,000			0.122			836,000
Exercised		-			-			-
Forfeitures		(15,000	)		(0.240	)		(3,600	)
Outstanding as of September 30, 2013		12,735,000			0.126			1,609,200
Granted		395,000			0.100			39,500
Exercised		-			-			-
Forfeitures		(30,000	)		(0.217	)		(6,500	)
Outstanding as of September 30, 2014		13,100,000			0.125			1,642,200
Granted		-			-			-
Exercised		-			-			-
Forfeitures		(200,000	)		(0.120	)		(24,000	)
Outstanding as of December 31, 2014		12,900,000		$	0.125		$	1,618,200

The following table summarizes information about stock options outstanding and exercisable as of December 31, 2014: 

			Weighted	Weighted				Weighted
			Average	Average				Average
Range of	Number		Remaining Life	Exercise Price		Number		Exercise Price
Exercise Prices	Outstanding		In Years	Exerciseable		Exerciseable		Exerciseable
0.090		500,000	5.39 years	$	0.090		500,000	$	0.090
0.100		4,020,000	5.36 years		0.100		2,765,417		0.100
0.130		5,100,000	4.93 years		0.130		4,683,333		0.130
0.150		3,100,000	5.39 years		0.150		3,100,000		0.150
0.240		180,000	.63 years		0.240		180,000		0.240
		12,900,000	5.09 years	$	0.125		11,228,750	$	0.133

There were exercisable options of 3,265,417 as of December 31, 2014 with an aggregate intrinsic value of $37,654.