6. SHARE-BASED COMPENSATION

9 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

NOTE 6 SHARE-BASED COMPENSATION

Stock Options

On February 11, 2020, the Company granted options to non-employee directors to purchase an aggregate of 248,019 shares of its common stock at an exercise price of $1.13 per share. The options vest one year from the date of grant, expire five years from the date of grant and had an aggregate grant date fair value of $145,000, which is being recognized ratably over the vesting period.

There were no options granted during the three months ended June 30, 2020. The options granted during the nine months ended June 30, 2020 had a weighted average grant date fair value of $0.58 per share.

During the three months ended June 30, 2020, the Company issued 50,000 shares of its common stock pursuant to the exercise of stock options at an exercise price of $0.64 per share for aggregate cash proceeds of $32,000

On February 5, 2019, the Company granted options to three non-employee directors to purchase an aggregate of 150,021 shares of its common stock at an exercise price of $1.54 per share. The options vested one year from the date of grant, expire five years from the date of grant and had an aggregate grant date fair value of $120,000, which was recognized ratably over the vesting period.

On February 5, 2019, the Company granted options to two non-employee directors to purchase an aggregate of 140,460 shares of its common stock at an exercise price of $1.54 per share. The options vested immediately, expire five years from the date of grant and had an aggregate grant date fair value of $108,000, which was fully recognized on the date of grant.

There were no options granted during the three months ended June 30, 2019. The options granted during the nine months ended June 30, 2019 had a weighted average grant date fair value of $0.78 per share.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions in the following table. 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 Three Months Ended				For the Nine Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Expected term (years)		n/a		n/a		3.00		2.50-2.75
Expected volatility		n/a		n/a		79.0%		82.0%
Risk-free interest rate		n/a		n/a		1.39%		2.53%
Expected dividends		n/a		n/a		0%		0%
Estimated annual forfeiture rate		n/a		n/a		0%		0%

The following table summarizes stock option activity during the nine months ended June 30, 2020:

					Weighted
				Weighted	Average
				Average	Remaining
	Number of			Exercise	Life		Intrinsic
	Options			Price	In Years		Value
Outstanding, September 30, 2019		812,879		$1.69
Granted		248,019		$1.13
Exercised		(50,000	)	$0.64
Forfeited		(1,751	)	$1.67
Expired		(55,000	)	$2.43
Outstanding, June 30, 2020		954,147		$1.56		3.6		$ 48,288
Exercisable, June 30, 2020		686,522		$1.76		3.2		$   6,125

The following table provides additional information regarding stock option awards that were outstanding and exercisable at June 30, 2020:

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	$1.12		275,519	$1.08		3.1		27,500
$1.44 to $1.67	$1.51		605,128	$1.51		3.5		585,522
$2.73 to $2.73	$2.73		11,000	$2.73		1.1		11,000
$3.73 to $3.79	$3.74		62,500	$3.74		0.6		62,500
	$1.56		954,147	$1.76		3.2		686,522

The Company recognized compensation expense for stock option awards of $38,000 and $33,000 during the three months ended June 30, 2020 and 2019, respectively, and $107,000 and $178,000 during the nine months ended June 30, 2020 and 2019, respectively, in its condensed consolidated statements of operations.

At June 30, 2020, there was $95,000 of total unrecognized compensation cost related to nonvested stock option awards that is expected to be recognized over a weighted average period of 0.6 years.

Restricted Stock Awards

The Company recognized no compensation expense during the three months ended June 30, 2020 and 2019, and $0 and $3,000 during the nine months ended June 30, 2020 and 2019, respectively, for restricted stock awards in its condensed consolidated statements of operations. At June 30, 2020, there was no unrecognized compensation expense related to nonvested restricted stock awards.