STOCK OPTIONS AND WARRANTS

3 Months Ended

Dec. 31, 2014

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

STOCK OPTIONS AND WARRANTS

NOTE H - STOCK OPTIONS AND WARRANTS

Warrants

The following table summarizes the changes in warrants outstanding and the related prices for the shares of common stock issued to non-employees of the Company. These warrants were granted in lieu of cash compensation for services performed or financing expenses in connection with the sale of common stock.

Transactions involving warrants (see Notes D, E and G) are summarized as follows:

	Number of Shares			Weighted Average Exercise Price Per Share
Balance at October 1, 2014		945,166		$	9.59
Granted		3,912,958			3.51
Exercised		(—	)		(—	)
Cancelled or expired		(387,622	)		(14.06	)
Balance, December 31, 2014		4,470,502		$	3.88

Employee Stock Options

In 2005, the Board of Directors and the holders of a majority of the outstanding shares of common stock approved the 2005 Incentive Stock Plan. In 2007, 2008 and 2012, the Board of Directors and holders of a majority of the outstanding shares of common stock approved various increases in the number of shares of common stock that can be issued as stock awards and stock options thereunder to an aggregate of 5,833,334 shares and the number of shares of common stock that can be covered by awards made to any participant in any calendar year to 833,334 shares.  On January 21, 2015, the Board of Directors approved an amendment to the 2005 Incentive Stock Plan, which is subject to shareholder approval.  The amendment is effective on January 26, 2015 and increases the number of shares of common stock that can be issued as stock awards and stock options thereunder to an aggregate of 8,333,333.  The amendment also extends the Plan’s expiration date to January 25, 2025.

The 2005 Incentive Stock Plan is designed to retain directors, executives, and selected employees and consultants by rewarding them for making contributions to our success with an award of options to purchase shares of common stock. As of December 31, 2014 a total of 211,252 shares have been issued and options to purchase 4,219,622 shares have been granted under the 2005 Incentive Stock Plan.

Transactions involving stock options issued to employees are summarized as follows:

	Number of  Shares		Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value
Outstanding at October 1, 2014		2,909,046	$	4.74
Granted		868,842		2.84
Exercised		—		—
Cancelled or expired		—		—
Outstanding at December 31, 2014		3,777,888	$	4.30
Vested at December 31, 2014		2,797,486	$	3.95	$	0.76
Non-vested at December 31, 2014		980,402			$	0.24

Transactions involving stock options issued to employees and consultants during the three month period ended December 31, 2014 are summarized as follows:

On November 20, 2014 the Company granted 83,334 options to purchase the Company’s common stock at an exercise price of $2.69 per share for five years to a consultant, which vest immediately.

On December 22, 2014 the Company granted an aggregate of 610,000 options to purchase the Company’s common stock at an exercise price of $2.86 per share for ten years to employees, including executive officers, with immediate vesting.

Also on December 22, 2014 the Company granted an aggregate of 175,508 options to purchase the Company’s common stock to non-employee board of director members at an exercise price of $2.86 per share for ten years which, vest in full one year from the grant date.

On January 21, 2015 the Company granted 1,667 options to purchase the Company’s common stock to an employee at an exercise price of $2.85 per share for five years, with vesting at 25% each anniversary for the next four years.

The fair value of options granted during the three month period ended December 31, 2014 was determined using the Black Scholes Option Pricing Model with the following weighted average assumptions:

	Three Months Ended December 31, 2014
Stock price	$	2.84
Exercise price	$	2.84
Dividend yield		—	%
Volatility		132	%
Risk free rate		1.58	%

The Company recorded $1,998,524 and $765,546 as stock compensation expense for the three month periods ended December 31, 2014 and 2013, respectively, for the vesting portion of all options. As of December 31, 2014, unrecorded compensation cost related to non-vested awards was $3,541,616, which is expected to be recognized over a weighted average period of approximately 2.60 years.  The weighted average grant date fair value for options granted during the three month period ended December 31, 2014 was $1,169,277.