SHARE-BASED COMPENSATION

12 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

NOTE 9         SHARE-BASED COMPENSATION

2021 Equity Incentive Plan

In February 2021, shareholders of the Company approved the 2021 Equity Incentive Plan (the “2021 Plan”), which is administered by the Compensation Committee of the Board of Directors and authorizes 1,291,000 shares of common stock for grants of various types of equity awards to officers, directors, employees and consultants. Upon approval of the 2021 Plan, no additional awards were granted under the 2011 Long Term Incentive Plan (the “2011 Plan”), which expired according to its terms in March 2021. Shares authorized under the 2021 Plan include 1,000,000 new shares and 291,000 shares that remained available under the 2011 Plan. Awards which are forfeited or expire are eligible for regrant under the 2021 Plan. The exercise prices of stock options granted may not be less than the fair market value of the common stock as quoted on the Nasdaq stock market on the grant date and the expiration date of option awards may not exceed 10 years. At September 30, 2021, there were 1,291,000 shares of common stock available for grants of equity awards under the 2021 Plan.

2011 Long Term Incentive Plan

In March 2011, shareholders of the Company approved 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. In February 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 were 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 administered the 2011 Plan. Options generally expire five to ten years after the date of grant. Upon approval of the 2021 Plan, no additional awards were granted under the 2011 Plan, which expired according to its terms in March 2021.

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 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” 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 Company accounts for forfeitures in the period they occur.

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

	Fiscal 2021	Fiscal 2020
Expected term (years)	–	2.5-3.0
Expected volatility	–	65%-79%
Risk free interest rate	–	0.15%-1.39%
Expected dividends	–	–

The Company made no grants of stock options or other equity awards in Fiscal 2021. In Fiscal 2020, the Company made the following option grants:

· 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 were granted in February 2020, 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 $145,000, which was recognized ratably over the vesting period.

· Options to its Chief Executive Officer to purchase 180,395 shares of its common stock at an exercise price of $1.40 per share. These options were granted in September 2020, vested immediately, expire five years from the date of grant and had an aggregate grant date fair value of $100,000, which was fully recognized on the date of grant.

· Options to an employee to purchase 27,329 shares of its common stock at an exercise price of $1.42 per share. These options were granted in August 2020, vest ratably over two years, expire five years from the date of grant and had an aggregate grant date fair value of $20,000, which is being recognized ratably over the vesting period.

The options granted during Fiscal 2020 had a weighted average grant date fair value of $0.58 per share. The Company recognized compensation expense for stock option awards of $69,000 and $245,000 during Fiscal 2021 and Fiscal 2020, respectively, in its consolidated statements of operations.

During Fiscal 2021 and 2020, respectively, the Company issued 177,000 and 50,000 shares of its common stock pursuant to the exercise of stock options for aggregate cash proceeds of $268,000 and $32,000, which had an aggregate intrinsic value of $306,000 and $33,000.

At September 30, 2021, there was $4,000 of unrecognized compensation cost related to nonvested stock option awards that is expected to be recognized over a weighted average period of 0.9 years.

The following table summarizes stock option activity during Fiscal 2021: 

				Weighted		Weighted
				Average		Average		Aggregate
	Number of			Exercise		Remaining		Intrinsic
	Options			Price		Life (Yrs.)		Value
Outstanding at September 30, 2020		1,138,000		$	1.49
Granted		–		$	–
Exercised		(177,000	)	$	1.51
Forfeited		(1,000	)	$	1.67
Expired		(32,000	)	$	3.30
Outstanding at September 30, 2021		928,000		$	1.43		2.8	$	895,000
Exercisable at September 30, 2021		915,000		$	1.43		2.8	$	881,000

Options outstanding at September 30, 2021 have an exercise price between $1.13 and $1.67 per share.