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9. SHARE-BASED COMPENSATION

12 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

NOTE 9 SHARE-BASED COMPENSATION

2011 Long Term Incentive Plan

In March 2011, shareholders of the Company approved the 2011 Long Term Incentive Plan (the "2011 Plan"), which originally authorized 850,000 shares of common stock for grants of various types of equity awards to officers, directors, employees, consultants, and independent contractors. On February 13, 2018, the shareholders of the Company approved an amendment to the 2011 Plan to increase the aggregate number of shares of the Company's common stock authorized for issuance under the 2011 Plan by 1,000,000 shares of common stock, from 850,000 shares of common stock to 1,850,000 shares of common stock. Forfeited awards are eligible for re-grant under the 2011 Plan. The exercise prices of stock options granted may not be less than the fair market value of the common stock as quoted at the close on the Nasdaq Stock Market on the grant date. The Compensation Committee administers the 2011 Plan. Options generally expire ten years after the date of grant. The total shares of common stock available for grants of equity awards under the 2011 Plan was 730,972 as of September 30, 2019.

2007 Equity Incentive Plan

The 2007 Equity Incentive Plan (the "2007 Plan"), which was approved by shareholders of the Company in May 2007, and, as amended in February 2010, expired in accordance with its terms in May 2017. However, there remained 67,500 shares associated with unexercised options as of September 30, 2019. The exercise price of stock options granted may not be less than the fair market value of the common stock as quoted at the close on the Nasdaq Stock Market on the grant date. There are no unvested restricted stock awards related to the 2007 Plan. The Compensation Committee administers the 2007 Plan. Options generally expire ten years after the date of grant.

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.

In applying the Black-Scholes option pricing model to options granted, the Company used the following assumptions:

	For the Years Ended September 30,
	2019	2018
Expected term (years)	2.50-2.75	2.50-5.00
Expected volatility	82.0%	80.0%-103.1%
Risk free interest rate	2.53%	2.45%-2.84%
Expected dividends	0.00%	0.00%
Estimated annual forfeiture rate	0%	10%

On February 5, 2019, the Company granted five-year options to directors to purchase an aggregate of 150,021 shares of common stock at an exercise price of $1.54 per share. The shares vest one year from the grant date. The options had an aggregate grant date fair value of $120,000, which is being amortized over the vesting period of the options.

On February 5, 2019, the Company granted five-year immediately vested options to directors to purchase an aggregate of 140,460 shares of common stock at an exercise price of $1.54 per share. The options had an aggregate grant date fair value of $107,800, which was recognized immediately.

On February 23, 2018, the Company granted five-year options to employees to purchase an aggregate of 68,000 shares of common stock at an exercise price of $1.67 per share. The shares vest ratably over three years on the grant date anniversaries. The options had an aggregate grant date fair value of $77,128, which is being amortized over the vesting period of the options.

On April 25, 2018, the Company granted immediately vested ten-year options to purchase an aggregate of 40,816 shares of common stock to two former directors and immediately vested five-year options to purchase 214,000 shares of common stock to a director, all at an exercise price of $1.44 per share. The options had an aggregate grant date fair value of $190,890, which was recognized immediately.

The options granted during the years ended September 30, 2019 and 2018 had a weighted average grant date value of $0.78 and $0.83 per share, respectively.

The Company recognized compensation expense of approximately $212,000 and $218,000 during the years ended September 30, 2019 and 2018, respectively, for stock option awards in its consolidated statements of operations.

As of September 30, 2019, there was approximately $61,000 of unrecognized compensation cost related to nonvested stock option awards that is expected to be recognized over a weighted average period of 0.6 years.

The following table summarizes stock option activity during the year ended September 30, 2019:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Life In Years		Intrinsic Value
Outstanding, September 30, 2018		545,066		$	1.78
Granted		290,481			1.54
Exercised		–			–
Forfeited		(22,668	)		1.78
Expired		–
Outstanding, September 30, 2019		812,879		$	1.69		3.8	$	18,750
Exercisable, September 30, 2019		622,007		$	1.73		3.7	$	18,750

The following table provides additional information regarding stock option awards that were outstanding and exercisable at September 30, 2019:

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 $1.23	$	0.80		77,500	$	0.80		5.1		77,500
	$1.44 to $1.67		1.51		606,879		1.49		4.3		416,007
	$2.20 to $2.85		2.48		66,000		2.48		0.6		66,000
	$3.73 to $3.79		3.74		62,500		3.74		1.4		62,500
					812,879				3.7		622,007

Restricted Stock Awards

On January 18, 2018, the Company granted 40,184 shares of restricted stock to two employees, of which 12,056 shares were forfeited upon an employee resignation, pursuant to the 2011 Plan. The shares vest as follows: 16,072 shares vested immediately, 12,056 shares vest on July 18, 2018 and 12,056 shares vest on January 18, 2019. The awards had an aggregate grant date value of $49,828, which is being recognized over the vesting period of the awards.

On April 25, 2018, the Company granted 20,832 shares of immediately vested restricted stock to two former directors, pursuant to the 2011 Plan. The awards had an aggregate grant date value of $29,998, which was recognized immediately.

The Company recognized compensation expense of approximately $3,000 and $72,000 during the years ended September 30, 2019 and 2018, respectively, for restricted stock awards in its consolidated statements of operations. As of September 30, 2019, there was no unrecognized compensation expense related to nonvested restricted stock awards.

The following table summarizes restricted stock activity during the year ended September 30, 2019:

Weighted

Average

Total

Number of

Grant Date

Fair Value

Non-vested, September 30, 2018

6,028

1.24

7,475

Granted

–

Vested

(6,028

)

1.24

(7,475

)

Forfeited

–

Non-vested, September 30, 2019

–