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6. SHARE-BASED COMPENSATION

6 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

NOTE 6 SHARE-BASED COMPENSATION

Stock Options

On February 11, 2020, the Company granted five-year options to directors to purchase an aggregate of 248,019 shares of common stock at an exercise price of $1.13 per share. The shares vest one year from the grant date. The options had an aggregate grant date fair value of $144,999, which is being amortized over the vesting period of the options.

The options granted during the period ended March 31, 2020 had a weighted average grant date value of $0.58 per share.

On February 5, 2019, the Company granted five-year options to three non-employee directors to purchase an aggregate of 150,021 shares of common stock at an exercise price of $1.54 per share. The shares vested one year from the grant date. The options had an aggregate grant date fair value of $120,000, which was amortized over the vesting period of the options.

On February 5, 2019, the Company granted five-year immediately vesting options to two non-employee directors to purchase an aggregate of 140,460 shares of common stock at an exercise price of $1.54 per share. The options had an aggregate grant date fair value of $107,800, which was recognized immediately.

The options granted during the period ended March 31, 2019 had a weighted average grant date value of $0.78 per share.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model that uses the following assumptions. The expected term represents the period over which the stock option awards are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The expected volatility used is based on the historical price of the Company’s stock over the most recent period commensurate with the expected term of the award. The risk-free interest rate used is based on the implied yield of U.S. Treasury zero-coupon issues with a remaining term equivalent to the award’s expected term. The Company historically has not paid any dividends on its common stock and had no intention to do so on the date the share-based awards were granted. The estimated annual forfeiture rate is based on management’s expectations and will reduce expense ratably over the vesting period. The forfeiture rate will be adjusted periodically based on the extent to which actual option forfeitures differ, or are expected to differ, from the previous estimate, when it is material.

In applying the Black-Scholes option pricing model to options granted, the Company used the following assumptions:

	For the Three Months Ended March 31,		For the Six Months Ended March 31,
	2020	2020	2019	2020
Expected term (years)	3.00	2.50-2.75	3.00	2.50-2.75
Expected volatility	79.0%	82.0%	79.0%	82.0%
Risk-free interest rate	1.39%	2.53%	1.39%	2.53%
Expected dividends	0.00%	0.00%	0.00%	0.00%
Estimated annual forfeiture rate	0%	0%	0%	0%

The following table summarizes stock option activity during the six months ended March 31, 2020:

						Weighted
				Weighted		Average
				Average		Remaining
	Number of			Exercise		Life		Intrinsic
	Options			Price		In Years		Value
Outstanding, September 30, 2019		812,879		$	1.69
Granted		248,019			1.13
Exercised		–			–
Forfeited		(56,501	)		2.41
Expired		–			–
Outstanding, March 31, 2020		1,004,397		$	1.51		3.9	$	26,800

Exercisable, March 31, 2020		736,688		$	1.64		3.6	$	26,800

The following table provides additional information regarding stock option awards that were outstanding and exercisable at March 31, 2020:

Options Outstanding					Options Exercisable
Exercise Price	Weighted Average Exercise Price		Outstanding Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Life In Years		Exercisable Number of Options
$0.64 to $1.23	$	1.05		325,519	$	0.80		4.6		77,500
$1.44 to $1.67		1.51		605,378		1.49		3.8		585,688
$2.73 to $2.73		2.73		11,000		2.48		1.4		11,000
$3.73 to $3.79		3.74		62,500		3.74		0.9		62,500
				1,004,397				3.6		736,688

The Company recognized compensation expense of approximately $36,000 and $135,000 during the three months ended March 31, 2020 and 2019, respectively, and approximately $69,000 and $145,000 during the six months ended March 31, 2020 and 2019, respectively, for stock option awards in its condensed consolidated statements of operations and comprehensive loss.

As of March 31, 2020, there was approximately $133,000 of total unrecognized compensation cost related to nonvested stock option awards that is expected to be recognized over a weighted average period of 0.9 years.

Restricted Stock Awards

The Company recognized compensation expense of approximately $0 and $1,000 during the three months ended March 31, 2020 and 2019, respectively, and approximately $0 and $3,000 during the six months ended March 31, 2020 and 2019, respectively, for restricted stock awards in its condensed consolidated statements of operations and comprehensive loss. As of March 31, 2020, there was no unrecognized compensation expense related to nonvested restricted stock awards.