Stock-Based Compensation

3 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Plan Information

The 2015 Incentive Stock Plan (the “Plan”) provides for awards of stock options and restricted stock to officers, directors, key employees and consultants. Under the Plan, option prices will be set by the Compensation Committee and may not be less than the fair market value of the stock on the grant date.

At December 31, 2020, 2,100,415 shares of common stock were reserved for stock award grants under the Plan. Of these reserved shares, 483,240 shares were available for future grants.

All share-based payments to employees, including grants of employee stock options, are recognized in the consolidated financial statements based on their grant date fair value over the requisite service period. Compensation expense for stock-based awards is included in the operating, selling, general and administrative expense section of the consolidated statements of operations.

Stock Options

Stock options are valued at the date of the award, which does not precede the approval date, and compensation cost is recognized on a straight-line basis over the vesting period. Stock options granted to employees generally become exercisable over a three, four-year or five-year period from the date of grant and generally expire ten years after the date of grant. Stock options granted to the Board of Directors generally become exercisable on the date of grant and generally expire ten years after the grant.

A summary of the status of the Company's stock options at December 31, 2020 and changes during the three months then ended is presented below:


	Shares	Wtd. Avg. Ex. Price		Aggregate Intrinsic Value
Outstanding at September 30, 2020	100,000	$	1.55
Granted	—	—		—
Exercised	—	—		—
Expired	—	—		—
Forfeited	—	—		—
Outstanding at December 31, 2020	100,000	$	1.55	$	—

Exercisable at December 31, 2020	83,334	$	1.60	$	—

No stock options were granted for the three months ended December 31, 2020. The Company estimates the fair value of the options granted using the Black-Scholes option valuation model. The Company estimates the expected term of options granted based on the historical grants and exercises of the Company’s options, volatility of its common stock at the date of the grant based on both the historical volatility as well as the implied volatility on its common stock, and the risk-free rate is based on the implied yield in effect at the time of the option grant on U.S. Treasury zero-coupon issues with equivalent expected term. The Company has never paid cash dividends on its

common stock and does not anticipate paying cash dividends in the future. The Company uses an expected dividend yield of zero. The Company amortizes the resulting fair value of the options ratably over the vesting period of the awards. The Company recognizes forfeitures as they occur.

Compensation expense related to unvested stock options recorded for the quarters ended December 31, 2020 and 2019 was $1 thousand and $13.9 thousand respectively. The Company records compensation expense over the vesting term of the related options. At December 31, 2020, compensation costs related to these unvested stock options not yet recognized in the consolidated statements of operations was $2 thousand.

Restricted stock awards

In fiscal year 2021, the Company granted a total of 306,390 shares to certain employees, which were valued at market value on the date of the grant. The shares ranged in vesting from one to three years. The fair value of the shares upon issuance was $0.6 million.

A summary of the Company's non-vested restricted share awards (RSA) at December 31, 2020 and changes during the quarter ended December 31, 2020 is presented in the following table (in thousands, except shares):


	Shares	Fair Value
Non-vested at September 30, 2020	475,024	$	1,058
Granted	306,390	628
Vested	(66,158)	(108)
Forfeited	—	—
Non-vested at December 31, 2020	715,256	$	1,578

Compensation expense related to unvested stock grants recorded for the quarters ended December 31, 2020 and 2019, was $0.3 million and $4 thousand respectively. At December 31, 2020, compensation costs related to these unvested restricted share awards not yet recognized in the consolidated statements of operations was approximately $1.0 million.