SHARE-BASED COMPENSATION

12 Months Ended

Sep. 30, 2025

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 authorized 129,100 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 included 100,000 new shares and 29,100 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 from the date of grant. On August 8, 2025, shareholders of the Company approved an increase of 300,000 authorized shares under the 2021 Plan. At September 30, 2025, there were approximately 53,000 shares of common stock available for grants under the 2021 Plan.

Stock Options

The fair value of option awards 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 has not historically 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 2025	Fiscal 2024
Expected term (years)	2.5 - 3.0	3.0
Expected volatility	63.2% - 84.2%	66.4%
Risk free interest rate	3.5% - 4.2%	4.8%
Expected dividends	–	–

In Fiscal 2025, the Company made the following option grants:

· In October 2024, options to non-employee directors to purchase an aggregate of 48,020 shares of its common stock at an exercise price of $3.73 per share. The options vest one year from the date of grant, expire five years from the date of grant and have an aggregate grant-date fair value of $80,000, which will be recognized, net of forfeitures, ratably over the vesting period.

· In February 2025, options to its Chief Executive Officer to purchase 13,779 shares of its common stock at an exercise price of $6.01 per share. The options vest one year from the date of grant, expire five years from the date of grant, have an aggregate grant-date fair value of $40,000, which will be recognized, net of forfeitures, ratably over the vesting period.

· In June 2025, options to non-employee directors to purchase 36,441 shares of its common stock at an exercise price of $6.37 per share. The options vest one year from the date of grant, expire five years from the date of grant, have an aggregate grant-date fair value of $120,000, which will be recognized, net of forfeitures, ratably over the vesting period.

· In September 2025, options to non-employee directors and management to purchase an aggregate of 180,000 shares of its common stock at an exercise price of $18.50 per share. The options vested upon grant, expire five years from the date of grant, and had an aggregate grant-date fair value of $1,428,000, which was fully recognized on the date of grant.

In Fiscal 2024, the Company granted options to three of its non-employee directors to purchase an aggregate of 33,243 shares of its common stock at an exercise price of $7.60 per share. The options vested one year from the date of grant, expire five years from the date of grant and 11,081 were forfeited prior to vesting. The options had a weighted average grant-date fair value of $3.60 per share and an aggregate grant-date fair value of $120,000, which was recognized, net of forfeitures, ratably over the vesting period.

The options granted in Fiscal 2025 had a weighted average grant-date fair value of $5.99 per share. The Company recognized compensation expense for stock option awards of $1,574,000 and $101,000 during Fiscal 2025 and Fiscal 2024, respectively, which was recorded as a component of general and administrative expenses in its consolidated statements of operations.

During Fiscal 2025, the Company issued 3,907 shares of its common stock pursuant to the exercise of stock options for aggregate cash proceeds of $61,000, which had an aggregate intrinsic value of $75,000. No options were exercised in Fiscal 2024.

At September 30, 2025, there was $94,000 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. In connection with the Securities Purchase Agreement (see Note 8), certain stock options are subject to a lockup period, which prohibits the sale of the underlying common stock until March 2026, without prior written consent from the Company.

The following table summarizes stock option activity during Fiscal 2025: 

				Weighted		Weighted
				Average		Average		Aggregate
	Number of			Exercise		Remaining		Intrinsic
	Options			Price		Life (Yrs.)		Value
Outstanding at September 30, 2024		81,000		$	12.15
Granted		278,000		$	13.74
Exercised		(4,000	)	$	15.55
Expired		(29,000	)	$	12.97
Outstanding at September 30, 2025		326,000		$	13.39		4.4	$	3,977,000
Exercisable at September 30, 2025		228,000		$	16.99		4.4	$	1,959,000

Options outstanding at September 30, 2025 have an exercise price between $3.73 and $23.90 per share.

Restricted Stock Awards

In Fiscal 2025, the Company granted 50,000 shares of restricted stock to one of its non-employee directors. These shares are fully vested and had an aggregate grant date fair value of $1,298,000 based on the closing price of the Company’s common stock on the date of grant, which was recorded as compensation expense on the date of grant and included as a component of general and administrative expenses on the consolidated financial statements. In connection with the Securities Purchase Agreement (see Note 8), these shares are subject to a lockup period, which prohibits their sale until March 2026 without prior written consent from the Company.