Note 12 - Stock Options

6 Months Ended

Mar. 31, 2015

Notes

Note 12 - Stock Options:

NOTE 12 – STOCK OPTIONS:

We have established the Amended 2005 Equity Incentive Plan (as amended by our shareholders on May 28, 2010) to authorize the granting of up to 833,334 stock options to employees, directors and consultants. Upon exercise of options, shares are issued from the available authorized shares of the Company.  Option awards are granted with an exercise price equal to the fair market value of our stock at the date of grant. 

On December 17, 2014, 365,000 options were granted, with a vesting date of January 1, 2015.  Total compensation cost of options is generally recognized from the grant date through the vesting date.  Total compensation cost of options for employees was $55,500.  These costs are classified under salaries and benefits expense. Total compensation cost of options for directors was $54,000.  These costs are classified as other general and administrative expenses.  The fair value of the option awards was estimated to be $109,500 on the date of grant with a Black-Scholes option-pricing model using the assumptions noted in the following table. 

	December 17, 2014
Expected volatility	100.9%
Stock price on date of grant	$0.48
Expected dividends	0
Expected term (in years)	3
Risk-free rate	1.06%
Expected forfeiture rate	0%

On January 14, 2015, 34,189 options were granted, with a vesting date of January 14, 2015.  Total compensation cost of options for employees was $16,411.  These costs are classified under salaries and benefits expense.  The fair value of the option awards was estimated to be $16,411 on the date of grant with a Black-Scholes option-pricing model using the assumptions noted in the following table.

	January 14, 2015
Expected volatility	110.1%
Stock price on date of grant	$0.74
Expected dividends	0
Expected term (in years)	3
Risk-free rate	0.83%
Expected forfeiture rate	0%

No option awards were granted during the three or six months ended March 31, 2014, and no option awards vested under the plan during those periods.

The following is a summary of our options issued under the Amended 2005 Equity Incentive Plan:

		Options		Weighted  Average  Exercise Price
Outstanding at September 30, 2014			203,334	$	9.09
	Granted		399,189		0.50
	Exercised		-		-
	Expired		(8,334)		12.48
Outstanding at March 31, 2015			594,189	$	3.27
Exercisable at March 31, 2015			594,189	$	3.27
Weighted average fair value of options granted during the six months ended March 31, 2015				$	0.32
Unrecognized compensation expense related to options at March 31, 2015				$	-
Average remaining contractual term of options outstanding and exercisable at March 31, 2015 (years)
Outstanding					3.58
Exercisable					3.58

The aggregate of options exercisable as of March 31, 2015 had an intrinsic value of $62,050 based on the closing price of $0.65 per share of our common stock on March 31, 2015.