3. SHARE-BASED COMPENSATION

3 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

SHARE-BASED COMPENSATION

Stock Options

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model that uses the following assumptions. The expected term represents the period over which the stock option awards are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The expected volatility used is based on the historical price of the Company’s stock over the most recent period commensurate with the expected term of the award. The risk-free interest rate used is based on the implied yield of U.S. Treasury zero-coupon issues with a remaining term equivalent to the award’s expected term. The Company historically has not paid any dividends on its common stock and had no intention to do so on the date the share-based awards were granted. The estimated annual forfeiture rate is based on management’s expectations and will reduce expense ratably over the vesting period. The forfeiture rate will be adjusted periodically based on the extent to which actual option forfeitures differ, or are expected to differ, from the previous estimate, when it is material.

There were no options granted during the three months ended December 31, 2017 and 2016.

The following table summarizes stock option activity during the three months ended December 31, 2017:

					Weighted
			Weighted		Average
			Average		Remaining
	Number of		Exercise		Life		Intrinsic
	Options		Price		In Years		Value
Outstanding, September 30, 2017		246,000	$	2.19
Granted		–
Exercised		–
Forfeited		–
Expired		–
Outstanding, December 31, 2017		246,000	$	2.19		3.7	$	33,700
Exercisable, December 31, 2017		223,498	$	2.35		3.3	$	20,499

The Company recognized compensation expense of approximately $1,000 and $2,000 during the three months ended December 31, 2017 and 2016, respectively, for stock option awards in its condensed consolidated statements of operations and comprehensive income.

As of December 31, 2017, there was approximately $2,000 of total unrecognized compensation cost related to nonvested stock option awards. That cost is expected to be recognized over a weighted average period of 0.5 years.

The following table provides additional information regarding stock option awards that were outstanding and exercisable at December 31, 2017:

Options Outstanding					Options Exercisable
		Weighted			Weighted	Weighted
		Average	Outstanding		Average	Average	Exercisable
Exercise		Exercise	Number of		Exercise	Remaining Life	Number of
Price		Price	Options		Price	In Years	Options
$0.64 to $1.80	$	1.00	97,500	$	1.11	5.1	74,998
$2.20 to $2.85		2.41	86,000		2.41	1.8	86,000
$3.73 to $3.79		3.74	62,500		3.74	3.1	62,500
			246,000			3.3	223,498

Restricted Stock Awards

The Company recognized compensation expense of approximately $(5,000) and $48,000 during the three months ended December 31, 2017 and 2016, respectively, for restricted stock awards in its condensed consolidated statements of operations and comprehensive income.

As of December 31, 2017, there was approximately $15,000 of total unrecognized compensation cost related to nonvested restricted stock awards. That cost is expected to be recognized over a weighted average period of 0.2 years.

The following table summarizes restricted stock activity during the three months ended December 31, 2017:

				Weighted
				Average		Total
	Number of			Grant Date		Grant Date
	Shares			Fair Value		Fair Value
Non-vested, September 30, 2017		160,000		$	1.02	$	162,600
Granted		–
Vested		–
Forfeited		(70,000	)		1.07		(74,900	)
Non-vested, December 31, 2017		90,000		$	0.97	$	87,700