XML 33 R21.htm IDEA: XBRL DOCUMENT

15. STOCK OPTIONS

12 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

The Company adopted 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 300,000 shares were initially reserved for issuance under the Plan. As of September 30, 2020, there were 22,052 shares available for issuance under the plan.

Amendment to 2017 Incentive Plan

On October 7, 2020, the Company executed that certain first amendment to the 2017 Equity Incentive Plan to increase its option pool from 300,000 to 1,500,000 shares of common stock. (See Note 20 for additional details)

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 years ended September 30, 2020 and year ended September 30, 2019.

	Number of Option Shares		Weighted Average Exercise Price
Balance, September 30, 2018		31,920	$	11.80
Options granted		49,324	$	11.80
Options expired		—		—
Options canceled		—		—
Options exercised		—		—
Balance, September 30, 2019		81,254	$	11.82
Options granted		233,233	$	5.28
Options expired		25,692		8.71
Options canceled		10,847		19.04
Options exercised		—		—
Balance, September 30, 2020		277,948	$	6.34

As of September 30, 2020, there are options exercisable to purchase 225,451 shares of common stock in the Company and 52,497 unvested options outstanding that cannot be exercised until vesting conditions are met. As of September 30, 2020, the outstanding options have a weighted average remaining term of 2.37 years and an intrinsic value of $1,808,181.

During the year ended September 30, 2020, the Company recognized $753,923 in stock-based compensation for the outstanding stock options.

Option activity for the year ended September 30, 2020

During the year ended September 30, 2020, the Company issued 233,233 options to purchase shares of common stock to employees, the shares were granted at quoted market prices ranging from $4.50 to $8.50. The options were valued at issuance using the Black Scholes model and stock compensation expense of $716,740 was recorded as a result of the issuances.

The Black-Scholes model utilized the following inputs to value the options granted during year ended September 30, 2020:

Fair value assumptions – Options:	September 30, 2020
Risk free interest rate		0.85-1.73%
Expected term (years)		3-5
Expected volatility		124%-209%
Expected dividends		0%

As of September 30, 2020, the Company expects to recognize $180,334 of stock-based compensation for the non- vested outstanding options over a weighted-average period of 2.37 years.

Option activity for the year ended September 30, 2019

During the year ended September 30, 2019, the Company issued 49,321 options to purchase shares of common stock to employees, the shares were granted at quoted market prices ranging from $8.50 to $59.00. The options were valued at issuance using the Black Scholes model and stock compensation expense of $326,100 was recorded as a result of the issuances.

The Black-Scholes model utilized the following inputs to value the options granted during the year ended September 30, 2019:

Fair value assumptions – Options:	September 30, 2019
Risk free interest rate		1.56% - 2.91%
Expected term (years)		3
Expected volatility		145%- 271%
Expected dividends		0%