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STOCK OPTIONS
 6 Months Ended
Mar. 31, 2019
Other Liabilities Disclosure [Abstract]  
STOCK OPTIONS

12. 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. As of March 31, 2019, there were 2,622,379 shares available for issuance under the plan.

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.

The following is a summary of stock option activity during the six months ended March 31, 2019. 

 

   Number of Option Shares  Weighted Average Exercise Price
Balance, September 30, 2018   319,206   $1.18
Options granted   117,365   $1.91
Options expired   —      —  
Options canceled   —      —  
Options exercised   —      —  
Balance, March 31, 2019   436,571   $1.38

 

As of March 31, 2019, there are options exercisable to purchase 436,571 shares of common stock in the Company. As of March 31, 2019, the outstanding options have a weighted average remaining term of was 2.63 years and an intrinsic value of $1,700,174.

 

Option activity for the six months ended March 31, 2019

 

During the six months ended March 31, 2019, the Company issued 117,365 options to purchase shares of common stock to employees, the shares were granted at quoted market prices ranging from $1.51 to $5.90. The options were valued at issuance using the Black Scholes model and stock compensation expense of $220,000 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 and amortized of the term of the agreement. During the six months ended March 31, 2019, $191,425 was been expensed as stock-based compensation.

 

The Black-Scholes model utilized the following inputs to value the options granted during the six months ended March 31, 2019:

 

Fair value assumptions – Options:   March 31, 2019
Risk free interest rate     2.21-2.91%
Expected term (years)     3
Expected volatility     256%-271%
Expected dividends     0%

 

Option activity for the six months ended March 31, 2018

 

During the six months ended March 31, 2018, the Company issued 25,794 options to purchase shares of the common stock to employees, the shares were granted at quoted market prices between $1.59 and $3.45. The options were valued at issuance using the Black Scholes model and stock compensation expense of $50,000 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 March 31, 2018, $19,705 had been expenses as stock compensation.

 

The Black-Scholes model utilized the following inputs to value the options granted during the six months ended March 31, 2018:

 

Fair value assumptions – Options:   March 31, 2018
Risk free interest rate     1.46-2.36%
Expected term (years)     2-3
Expected volatility     120%-179%
Expected dividends     0%

 

As of March 31, 2019, the Company expects to recognize $0 of stock-based compensation for the non-vested outstanding options over a weighted-average period of 0 years.