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14. STOCK-BASED COMPENSATION | 12 Months Ended
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Sep. 30, 2023
Equity [Abstract] |
STOCK-BASED COMPENSATION | 14. STOCK-BASED COMPENSATION 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. On October 7, 2020, the Company executed a first amendment to the Plan to increase its share pool from 300,000 to 1,500,000 shares of common stock. Effective September 15, 2021, following approval by our stockholders, the Plan was amended to (i) increase the number of shares of common stock authorized for issuance under the Plan by an additional 2,000,000 shares, resulting in an aggregate of 3,500,000 shares of common stock authorized for issuance under the Plan, and (ii) revise Section 19 of the Plan to more closely align with the provisions of Section 422 of the Internal Revenue Code of 1986, as amended, and Section 17.2 of the Plan. In March 2023, the stockholders approved an amendment to the Plan, as amended to date, to (i) increase the number of shares authorized for issuance thereunder from 3,500,000 shares of common stock to 11,512,000 shares and (ii) add an evergreen provision to, on April 1st and October 1st of each year, automatically increase the maximum number of shares of common stock available under the Plan to fifteen percent (15% ) of the Company's outstanding shares of common stock, in each case as of the last day of the immediately preceding month. On March 31, 2023, there were 96,950,555 outstanding shares of common stock, and accordingly on April 1, 2023, the total shares authorized for issuance under the Plan increased to 14,542,583. As of September 30, 2023, there were 715,896 shares available and authorized for issuance under the Plan. The Plan allows the Company to grant incentive stock options, non-qualified stock options, stock appreciation rights, common stock, units of common stock, restricted stock, performance shares and performance units. Other than incentive stock options that are granted to participants who owns more than 10% of the total combined voting power of all classes of the stock of the Company or of its parent or subsidiary corporations (a “Ten Percent Stockholder”), 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 or Ten Percent Stockholders at the date of the grant of the option. Non-qualified stock options and the other types of awards issuable under the Plan may be granted to any person, including, but not limited to, employees, independent agents, consultants and attorneys, who the Company’s Compensation Committee believes have contributed, or will contribute, to the success of the Company. The option vesting schedule for options granted is determined by the Compensation Committee 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 Company granted 24,482 and 89,445 non-qualified options pursuant to the Plan during the years ended September 30, 2023 and 2022. The Company recognized $24,142 and $31,466 for the years ended September 30, 2023 and September 30, 2022, respectively, in stock-based compensation. STOCK OPTIONS The following is a summary of stock option activity during the year ended September 30, 2023 and 2022:
|  | Number of Option Shares |  |  | Weighted Average Exercise Price ($) |
Balance, September 30, 2021 |  |  | 1,547,029 |  |  | $ | 18.35 |
Options granted |  |  | 215,750 |  |  | $ | 14.47 |
Options expired |  |  | — |  |  | $ | - |
Options canceled/forfeited |  |  | (238,418 | ) |  | $ | 15.40 |
Options exercised |  |  | (105,423 | ) |  | $ | 7.43 |
Balance, September 30, 2022 |  |  | 1,418,938 |  |  | $ | 19.11 |
Options granted |  |  | 789,750 |  |  | $ | 5.72 |
Options expired |  |  | (44,600 | ) |  | $ | 6.05 |
Options canceled/forfeited |  |  | (193,630 | ) |  | $ | 10.77 |
Options exercised |  |  | — |  |  | $ | - |
Balance, September 30, 2023 |  |  | 1,970,458 |  |  | $ | 14.86 |
As of September 30, 2023, there are options exercisable to purchase 1,065,882 shares of common stock in the Company and 904,576 unvested options outstanding that cannot be exercised until vesting conditions are met. As of September 30, 2023, the outstanding options have a weighted average remaining term of 5.47 years and an aggregate intrinsic value of $50. Option activity for the year ended September 30, 2023 During the year ended September 30, 2023, no stock options were exercised. For the year ended September 30, 2023, the Company also granted 789,750 options with a total fair value of $4,513 to purchase shares of common stock to employees. The Black-Scholes model utilized the following inputs to value the options granted during year ended September 30, 2023:
Fair value assumptions Options: |  | September 30, 2023 |
Risk free interest rate |  | 2.65% - 4.44% |
Expected term (years) |  | 5.06 - 5.85 |
Expected volatility |  | 157.1% - 194.9% |
Expected dividends |  |  | 0 | %
As of September 30, 2023, the Company expects to recognize $6,923 of stock-based compensation for the non-vested outstanding options over a weighted-average period of 2.17 years. Option activity for the year ended September 30, 2022 During the year ended September 30, 2022, a total of 105,423 shares of the Company’s common stock were issued in connection with the exercise of common stock options at exercise prices ranging from $4.65 to $15.10, for net proceeds of $817. For the year ended September 30, 2022, the Company also granted to employees 215,750 options with a total fair value of $3,121 to purchase shares of common stock. The Black-Scholes model utilized the following inputs to value the options granted during year ended September 30, 2022:
Fair value assumptions Options: |  | September 30, 2022 |
Risk free interest rate |  | 1.04% - 3.65% |
Expected term (years) |  | 4.99 - 7.35 |
Expected volatility |  | 187.2% - 533.0% |
Expected dividends |  |  | 0 | %
RESTRICTED STOCK UNITS The Company grants restricted stock units ("RSU"s) that contain either a) service conditions, b) performance conditions, or c) market performance conditions. RSUs containing service conditions vest monthly or annually. RSUs containing performance conditions generally vest over 1 year, and the number of shares earned depends on the achievement of predetermined Company metrics. RSUs that contain market conditions will vest based on the terms of the agreement and generally are either 1 year or over the employee's term of employment. The Company recognizes the expense equal to the total fair value of the common stock price on the grant date. The expense is recognized ratably over the service period. The following table summarizes the performance-based restricted stock units at the maximum award amounts based upon the respective performance share agreements. Actual shares that will vest depend on the attainment of the performance-based criteria.
|  | Number of Shares |  |  | Weighted Average Fair Value Per Share |  |  | Aggregate Intrinsic Value |
Outstanding at September 30, 2021 |  |  | 10,995 |  |  | $ | 27.73 |  |  | $ | — |
Granted |  |  | 7,306,250 |  |  |  | 7.18 |  |  |  |
Vested |  |  | (1,757,938 | ) |  |  | 13.37 |  |  |  |
Forfeited |  |  | (110,759 | ) |  |  | 15.27 |  |  |  |
Outstanding at September 30, 2022 |  |  | 5,448,548 |  |  | $ | 4.93 |  |  | $ | 17,326 |
Granted |  |  | 3,880,552 |  |  |  | 3.65 |  |  |  |
Vested |  |  | (3,813,617 | ) |  |  | 4.58 |  |  |  |
Cancelled |  |  | (40,000 | ) |  |  | - |  |  |  |
Forfeited |  |  | (4,048 | ) |  |  | 29.34 |  |  |  |
Outstanding at September 30, 2023 |  |  | 5,471,435 |  |  | $ | 4.18 |  |  | $ | 20,846 |
During the year ended September 30, 2023, the Company granted 3,880,552 RSUs, which consisted of 360,552 time-based RSUs, 60,000 performance-based RSUs (of which 40,000 market-based awards were exchanged and reflected in the table above as cancelled). Additionally, on September 29, 2023, the Compensation Committee granted 3,460,000 market-based restricted stock units to senior leadership of the Company. The market-based awards vest 33% each tranche based upon the Company's stock price reaching 200%, 300% and 400% of the stock price on the date of grant. Each tranche will vest upon the target stock price being met for at least 10 of 20 consecutive trading days and the awards are not dependent on a defined service period. The total fair value of the award is approximately $13,160 and is amortized over a weighted average period of less than 1 year. During the year ended September 30, 2022, the Company granted 7,306,250 share of restricted stock awards. Certain of the awards were issued in the first quarter of fiscal year 2022, and comprised of 120,000 service condition based awards, 146,250 that were performance condition-based awards, and 910,000 that were market condition-based awards. The market condition based RSUs consist of 60,000 units that were perpetual in nature, and therefore, were given a derived service period of 5 years. The remaining 810,000 RSUs had a stated service period of 1 year. In the fourth quarter of fiscal year 2022, on September 12, 2022, the Compensation Committee granted additional grants as follows: (1) 2,565,000 service condition based RSUs which vest over a 3-year period beginning on the grant date; (2) 2,565,000 performance based RSUs, of which, 2,381,781 vested in fiscal year 2023; and (3) 760,000 restricted stock units, which vested in March 2023 when approved by our stockholders. The Compensation Committee also modified previously issued awards from the first quarter of fiscal year 2022 as follows: (1) granted immediate vesting of the 810,000 market based awards; and (2) modified the market condition based 60,000 units that were perpetual in nature, and 10,000 unvested service condition RSUs, and were replaced with (2a) 120,000 service condition-based RSUs that vest over a 3-year period, and (2b) 120,000 performance-based RSUs, of which $111,429 vested in fiscal year 2023. The fair value of the market based RSUs were determined using the Monte Carlo simulation and is in the following range: $11.03 - $17.89 per unit. The inputs of market-based RSUs for each of the fiscal years are as follows:
Fair value assumptions - Market-based RSUs granted: |  | September 30, 2023 |  |  | September 30, 2022
Risk free interest rate |  |  | 4.59 | % |  | 0.14% - 1.26%
Expected term (years) |  |  | 10.00 |  |  | 1.00 - 5.00
Expected volatility |  |  | 129.70 | % |  | 111.37% - 172.18%
Cost of equity |  |  | 21.55 | % |  | 20.00% - 21.00%
As of September 30, 2023, the Company had approximately $22,300 unrecognized compensation cost related to restricted stock unit awards that will be recognized over a weighted average period of 1.6 years. The Company recognized stock-based compensation expenses related to restricted stock units, of $17,720 and $23,661 for fiscal years ended 2023 and 2022.

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 505 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//505/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//718/tableOfContent + Details
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