Annual report pursuant to Section 13 and 15(d)

STOCK BASED COMPENSATION

v3.8.0.1
STOCK BASED COMPENSATION
12 Months Ended
Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK BASED COMPENSATION

NOTE 8 – STOCK BASED COMPENSATION

 

The Company’s Consolidated 2016 Stock Plan (the “Plan”) provides for granting stock options and restricted stock awards to employees, directors and consultants of the Company. A total of 5,833,334 shares have been authorized for issuance under the Plan. At September 30, 2017, the Company had 3,023,109 shares available for future grant. Upon share option exercise or issuance of restricted stock, the Company issues new shares to fulfill these grants. The Company previously maintained a 2014 Stock Incentive Plan and the 2009 Stock Incentive Plan. The 2016 Plan consolidated the 2014 Plan and the 2009 Plan into a new plan.

 

Common Stock Warrants

For all warrants included within permanent equity, the Company has determined the estimated value of the warrants granted to non-employees in exchange for services and financing expenses using the Black-Scholes pricing model. There were no warrants granted as stock based compensation during the years ended September 30, 2017 and 2016.

 

During the year ended September 30, 2016, 15,278 shares of common stock were issued in connection with the exercise of warrants to purchase the Company’s common stock. The warrants were exercised at prices ranging from $1.50 through $1.95 per share for which $26,041 in cash was received by the Company. An additional 73,334 shares of common stock were also issued in connection with the exercise of warrants to purchase common stock. These warrants were exercised at a price of $1.62 per share and a receivable for $118,801 was recorded as of September 30, 2016 to account for cash proceeds not yet received at September 30, 2016. In October 2016 (during the year ended September 30, 2017), $118,801 in cash proceeds were received related to this receivable.

 

Below is a table summarizing the warrants issued and outstanding as of September 30, 2017 and 2016:

 

    Number
Outstanding
  Weighted-Average
Exercise Price
 
         
Outstanding at September 30, 2015     746,869     $ 4.75  
Granted                
     Investor warrants     —         —    
     Stock-based compensation warrants     —         —    
Exercised                
     Investor warrants     (6,944 )     1.95  
     Stock-based compensation warrants     (81,668 )     1.61  
Forfeited or expired                
     Investor warrants     —         —    
     Stock-based compensation warrants     (43,334 )     6.55  
Outstanding at September 30, 2016     614,923     $ 5.08  
Granted                
     Investor warrants     20,002,560       1.56  
     Stock-based compensation warrants     —         —    
Exercised                
     Investor warrants     —         —    
     Stock-based compensation warrants     —         —    
Forfeited or expired                
     Investor warrants     (4,213,331 )     3.03  
     Stock-based compensation warrants     (226,042 )     7.37  
Outstanding at September 30, 2017     16,178,110     $ 1.23  
Exercisable at September 30, 2017     16,178,110     $ 1.23  

  

The outstanding warrants as of September 30, 2017 have a weighted average remaining term of 4.48 years and no intrinsic value. For the years ended September 30, 2017 and 2016, the Company has not incurred any expense related to the fair value of warrants issued for services.

 

Stock Options

Stock Options are granted for a term not exceeding ten years and the nonvested options are generally forfeited in the event the employee, director or consultant terminates his or her employment or relationship with the Company. Any options that have vested at the time of termination are forfeited to the extent they are not exercised within the applicable post-employment exercise period provided in the option agreements, unless otherwise agreed upon in writing. These options vest over one to five years.

 

The following assumptions were used to calculate the fair value of the Company’s options on the date of grant:

 

    Year Ended September 30,  
    2017     2016  
Expected term   5.75 years     3 to 3.5 years  
Expected volatility     91%       103% - 105%  
Expected dividends     0%       0%  
Risk-free rates     1.49%       1.04% - 1.22%  

 

Below is a table summarizing the options issued and outstanding as of September 30, 2017 (“Price” reflects the weighted average exercise price per share):

 

    Year Ended September 30,  
    2017     2016  
    Options     Price     Options     Price  
Outstanding October 1     2,857,468     $ 6.66       2,761,001     $ 7.27  
Granted     750,000     $ 0.65       669,275     $ 4.11  
Exercised                        
Forfeited or expired     (1,356,968 )   $ 5.13       (572,808 )   $ 6.61  
Outstanding September 30     2,250,500     $ 5.58       2,857,468     $ 6.66  
Exercisable September 30     1,755,247     $ 6.00       1,833,712     $ 6.49  
Weighted average fair value per option granted           $ 0.48             $ 2.68  

 

As of September 30, 2017, the intrinsic value of outstanding options was $30,000 and the intrinsic value of exercisable options was $15,000. There were no options exercised during the years ended September 30, 2017 and 2016. As of September 30, 2017, the outstanding options have a weighted average remaining term of 4.02 years.

 

The Company recognized stock-based compensation expense from stock options of $1,293,932 and $2,913,626 during the years ended September 30, 2017 and 2016, respectively. As of September 30, 2017, there was $471,859 of stock-based compensation cost related to unvested shares of stock options which had not yet been recognized. The Company expects to recognize this compensation cost over a weighted-average period of one year.

 

Restricted Stock

The Company has granted restricted stock awards to its employees, directors and consultants under the 2016 Plan and related restricted stock agreements. The restricted stock-based compensation awards generally vest over a period ranging from zero to three years. These common shares are forfeited in the event the recipient’s employment or relationship with the Company is terminated prior to the lapse of the restriction.

 

Below is a table summarizing nonvested restricted stock shares as of September 30, 2017, and changes during the years ended September 30, 2017, and 2016:

 

      Shares     Weighted Average Grant Date Fair Value  
Nonvested at September 30, 2015       62,680     $ 9.66  
Granted       660,757     $ 4.46  
Vested       (123,079 )   $ 5.45  
Forfeited              
Nonvested at September 30, 2016       600,358     $ 4.80  
Granted              
Vested       (315,179 )   $ 4.79  
Forfeited       (15,000 )   $ 9.78  
Nonvested at September 30, 2017       270,179     $ 4.53  

 

The Company recognized stock-based compensation expense from restricted stock awards of $818,231 and $1,754,814 during the years ended September 30, 2017 and 2016, respectively. As of September 30, 2017, there was $157,001 of stock-based compensation cost related to unvested shares of restricted stock which had not yet been recognized. The Company expects to recognize this compensation cost over a weighted-average period of 0.28 years.