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STOCK OPTIONS
 9 Months Ended
Jun. 30, 2018
Other Liabilities Disclosure [Abstract]  
STOCK OPTIONS

14. STOCK OPTIONS

The Company sponsors a stock-based incentive compensation plan known as the 2017 Incentive Plan (the “Plan”), which was established by the Board of Directors of the Company on June 19, 2017. A total of 3,000,000 shares were initially reserved for issuance under the Plan.

 

The following is a summary of stock option activity during the nine months ended June 30, 2018 and year ended September 30, 2017. 

 

   Number of Shares  Weighted Average Exercise Price
Balance, September 30, 2016  —  —
Options granted and assumed   6,902   $3.45
Options expired   —      —  
Options canceled   —      —  
Options exercised   —      —  
Balance, September 30, 2017   6,902   $3.45
Options granted and assumed   290,435   $1.01
Options expired   —      —  
Options canceled   —      —  
Options exercised   —      —  
Balance, June 30, 2018   297,337   $1.06

 

As of June 30, 2018, there are options exercisable to purchase 124,049 shares of common stock in the Company. As of June 30, 2018, the outstanding options have an intrinsic value of $533,313. As of June 30, 2018, the weighted average remaining term of the outstanding options was 1.83 years.

 

During the nine months ended June 30, 2018, the Company issued 40,435 options to purchase shares of the common stock to employees, the shares were granted at quoted market prices ranging from $1.57 to $3.45. The shares were valued at issuance using the Black Scholes model and stock compensation expense of $75,001 was recorded as a result of the issuances.

 

On March 10, 2018 the Company issued a total of 250,000 options to four consultants for advisory services. The Options vest evenly 12 months from issuance. The options expire 24 months after issuance and require a cash investment to exercise. The options were valued at issuance using the Black Scholes model at $342,500, as of June 30, 2018 of which $105,096 has vested and been expensed as stock compensation.

 

The Black-Scholes model utilized the following inputs to value the options during the nine months ended June 30, 2018:

 

Fair value assumptions – Options:   June 30, 2018
Risk free interest rate     1.46-2.61%
Expected term (years)     2-3
Expected volatility     120%-182%
Expected dividends     0%

 

The Plan allows the Company to grant incentive stock options, non-qualified stock options, stock appreciation right, or restricted stock. The incentive stock options are exercisable for up to ten years, at an option price per share not less than the fair market value on the date the option is granted. The incentive stock options are limited to persons who are regular full-time employees of the Company at the date of the grant of the option. Non-qualified options may be granted to any person, including, but not limited to, employees, independent agents, consultants and attorneys, who the Company’s Board believes have contributed, or will contribute, to the success of the Company. Non-qualified options may be issued at option prices of less than fair market value on the date of grant and may be exercisable for up to ten years from date of grant. The option vesting schedule for options granted is determined by the Board of Directors at the time of the grant. The Plan provides for accelerated vesting of unvested options if there is a change in control, as defined in the Plan.