During the year ended September 30, 2015, the Company’s Board of Directors adopted and the Company’s stockholders approved the adoption of the Company’s 2015 Stock and Incentive Plan. This plan replaced the Company’s 2005 Equity Incentive Plan, as amended. The aggregate number of shares that may be issued to employees, directors, and consultants under all stock-based awards made under the 2015 Stock and Incentive Plan is 4 million shares of the Company’s common stock. Upon exercise of options or other awards, shares are issued from the available authorized shares of the Company. Option awards are granted with an exercise price equal to the fair value of the Company’s stock at the date of grant.

The 2005 Equity Incentive Plan, as amended, terminated on May 28, 2015 and no stock or option awards may be granted under this plan after it was terminated. At September 30, 2018, 233,334 stock options remain outstanding, at a weighted average exercise price of $0.56 and a weighted average term of 1.4 years, that may be exercised under the 2005 Equity Incentive Plan, as amended.

During the year ended September 30, 2017, 250,000 stock options were granted to a consultant by the Company’s Board of Directors. These options vested 25% each quarter beginning on March 15, 2017. As of September 30, 2017, 75% of these options had vested, and the remaining 25% (62,500 options) vested on December 15, 2017, resulting in $15,000 expense being recognized for this consultant during the year ended September 30, 2018.

The fair value of the option awards granted during the year ended September 30, 2017 that vested in 2018 was estimated on the date of grant with a Black-Scholes option-pricing model using the assumptions noted in the following table:

	Options Granted During Fiscal Year Ended
	September 30, 2017
Expected volatility	128.2%
Stock price on date of grant	$0.33
Expected dividends	0
Expected term (in years)	3
Risk-free rate	1.68%
Expected forfeiture rate	0%

During the fiscal year ended September 30, 2018, 300,000 stock options with an exercise price of $0.10 and a five-year term where granted to new directors. All of the awarded stock options vested immediately. The fair value of all of the options that were granted and vested during the fiscal year ended September 30, 2018 was $24,000 ($0.08 per option). The Company also granted 1,600,000 stock options with an average weighted exercise price of $0.16 and a five-year term to employees and directors. All of the awarded stock options vested immediately. The fair value of these options was $192,000.

The values of the options granted during the fiscal year ended September 30, 2018 was estimated on the date of grant with a Black-Scholes option-pricing model using the assumptions noted in the following table:

	Options Granted During Fiscal Year Ended
	September 30, 2018
Expected volatility	121.6% - 134.8%
Stock price on date of grant	$0.10 - $0.17
Expected dividends	0
Expected term (in years)	3
Risk-free rate	2.33% - 2.69%
Expected forfeiture rate	0%

Total compensation expense recognized for option awards was $231,000 and $45,000 for the years ended September 30, 2018 and 2017, respectively. The cost of options granted to employees is recorded as salaries and benefits, and the cost of options granted to directors and consultants is recorded as other general and administrative expenses. The total compensation cost of options vested under the plan, charged against operations, is included in the consolidated statements of operations as follows:

		Fiscal year ended September 30,
		2018		2017
Salaries and benefits	$	120,000	$	-
Other general and administrative expenses		111,000		45,000
Total	$	231,000	$	45,000

The following is a summary of the Company’s options issued under the Amended 2005 Equity Incentive Plan and the 2015 Stock and Incentive Plan:

		Options		Weighted Average Exercise Price
Outstanding at September 30, 2016			2,055,419	$	0.56
Granted			250,000		0.33
Expired			(72,085)		(4.45)
Outstanding at September 30, 2017			2,233,334		0.41
	Granted		1,900,000		0.16
	Expired		(853,334)		(0.43)
Outstanding and exercisable at September 30, 2018			3,280,000	$	0.26

Weighted average fair value of options granted during the fiscal year ended September 30, 2018				$	0.11

Average remaining contractual term of options outstanding and exercisable at September 30, 2018 (years)					3.53
Intrinsic value of options outstanding and exercisable at September 30, 2018				$	0.00

Options forfeited or expired are returned to the option pool and are available for grant. The Company considers forfeitures in connection with its estimate of expected option term.