Stock-based Compensation, Equity Grants, and Warrants (Tables)

12 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based compensation expense, shown in the table below, is recorded in general and administrative expenses included in our statement of operations:



		(in thousands)
		Year Ended
	Ref	September 30,
		2015		2014
DLH employees		$	302	$	363
Non-employee directors	(a)	177		109
Total compensation expense		$	479	$	472

Ref (a): Equity grants of restricted stock to non-employee directors, in accordance with DLH compensation policy for non-employee directors. The shares vested immediately and stock expense was recognized accordingly.

Unrecognized stock-based compensation expense



		(in thousands)
		Period Ended
		September 30,
	Ref	2015		2014
Unrecognized expense for DLH employees	(a)	$	44	$	346
Unrecognized expense for non-employee directors	(b)	96		125
Total unrecognized expense		$	140	$	471

Ref (a): Compensation expense for the portion of equity awards for which the requisite service has not been rendered is recognized as the requisite service is rendered. The compensation expense for that portion of awards has been based on the grant-date fair value of those awards as calculated for recognition purposes under applicable guidance. For options that vest based on the Company’s common stock achieving and maintaining defined market prices, the Company values the awards with a binomial model that utilizes various probability factors and other criterion in establishing fair value of the grant. The related compensation expense is recognized over the derived service period determined in the valuation. This expense is expected to be recognized over the next 1.8 years, with a weighted average life of 1.2 years.

Ref (b): Unrecognized stock expense related to prior years equity grants of restricted stock to non-employee directors, based on performance criteria, in accordance with DLH compensation policy for non-employee directors. The shares will vest and expense will be recorded upon future satisfaction of specified performance.

Stock Option Activity

This amount will change based on the fair market value of the Company’s stock.



					(in years)
					Weighted
				Weighted	Average	(in thousands)
		(in thousands)		Average	Remaining	Aggregate
		Number of		Exercise	Contractual	Intrinsic
	Ref	Shares		Price	Term	Value
Options outstanding, September 30, 2013		1,613		$1.15	7.9	$	388
Granted	(a)	830		$1.52
Canceled		(63	)	$1.40
Options outstanding, September 30, 2014		2,380		$1.40	7.8	$	1,589
Canceled		(56	)	$1.40
Options outstanding, September 30, 2015		2,324		$1.40	6.8	$	3,649

Ref (a): Option grants to DLH employees were valued using a binomial model, under the following criteria:


•	average risk free interest rates of 2.55% for 2014;


•	expected volatility of 65.8% for 2014;


•	contractual lives and expected lives were 10 years for 2014; and


•	no dividend yield was contemplated for either period.

The resulting average fair values were $0.76 for 2014.

Stock Option Shares Outstanding, Vested and Expected to Vest

Stock options shares outstanding, vested and unvested for the period ended:



		(in thousands)
		Number of Shares
		September 30,
	Ref	2015	2014
Vested and exercisable	(a)	1,093	896
Unvested	(b)	1,231	1,484
Options outstanding		2,324	2,380

Ref (a): Weighted average exercise price of vested and exercisable shares was $1.40 and $1.41 at September 30, 2015 and 2014, respectively. Aggregate intrinsic value was $1.6 million and $0.6 million at September 30, 2015 and 2014, respectively. Weighted average contractual term was 7.3 years and 8.0 years at September 30, 2015 and 2014, respectively.

Ref (b): Certain awards vest upon satisfaction of certain performance criteria.