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17. STOCK OPTIONS
 3 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
17. STOCK OPTIONS

Description of Stock Option Plan

 

On April 29, 2011, the Company’s 2011 Stock Incentive Plan was approved at the Annual Stockholder Meeting. The Company was authorized to issue options for, and has reserved for issuance, up to 46,667 shares of common stock under the 2011 Stock Incentive Plan. On March 21, 2013, an amendment to the Stock Option Plan was approved by the stockholders of the Company, increasing the number of shares reserved for issuance under the Plan to 93,333 shares.

 

Determining Fair Value under ASC 505

 

The Company records compensation expense associated with stock options and other equity-based compensation using the Black-Scholes-Merton option valuation model for estimating fair value of stock options granted under our plan. The Company amortizes the fair value of stock options on a ratable basis over the requisite service periods, which are generally the vesting periods. The expected life of awards granted represents the period of time that they are expected to be outstanding.  The Company estimates the volatility of our common stock based on the historical volatility of its own common stock over the most recent period corresponding with the estimated expected life of the award. The Company bases the risk-free interest rate used in the Black Scholes-Merton option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. The Company has not paid any cash dividends on our common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes-Merton option valuation model and adjusts share-based compensation for changes to the estimate of expected equity award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture rate is recognized in the period the forfeiture estimate is changed.

 

Stock Option Activity

 

The Company had no stock option transactions during the three months ended December 31, 2016:

 

There are currently 50,908 options to purchase common stock at an average exercise price of $18.05 per share outstanding as of December 31, 2016 under the 2011 Stock Incentive Plan. The Company recorded $10,887 and $11,837 of compensation expense, net of related tax effects, relative to stock options for the three months ended December 31, 2016 and 2015 in accordance with ASC 505. Net loss per share (basic and diluted) associated with this expense was approximately ($0.00) and ($0.01) per share, respectively. As of December 31, 2016, there is approximately $102,276 of total unrecognized costs related to employee granted stock options that are not vested. These costs are expected to be recognized over a period of approximately 2.78 years. 

 

Stock option activity for the three months ended December 31, 2016 and the years ended September 30, 2016 and 2015 was as follows:

 

      Weighted Average      
      Options     Exercise Price       $   
Outstanding as of September 30, 2014     87,333       18.80       1,642,200  
Granted     11,335       15.00       170,025  
Exercised     -       -       -  
Forfeitures     (41,261 )     (18.29 )     (754,500 )
Outstanding as of September 30, 2015     57,407       18.43       1,057,725  
Granted     -       -       -  
Exercised     -       -       -  
Forfeitures     (6,499 )     (21.40 )     (139,098 )
Outstanding as of September 30, 2016     50,908       18.04       918,627  
Granted     -       -       -  
Exercised     -       -       -  
Forfeitures     -       -       -  
Outstanding as of December 31, 2016     50,908     $ 18.045     $ 918,627  

 

The following table summarizes information about stock options outstanding and exercisable as of December 31, 2016:

 

 

              Weighted     Weighted           Weighted  
              Average     Average           Average  
  Range of     Number     Remaining Life     Exercise Price     Number     Exercise Price  
  Exercise Prices     Outstanding     In Years     Exerciseable     Exerciseable     Exerciseable  
      13.500     3,334     1.75   $   13.50     3,334   $  13.50  
    15.000     20,906     2.58      15.00     9,514      15.00  
         19.500      13,334     2.67      19.50     13,334      19.50  
    22.500     13,334     3.38      22.50     13,334      22.50  
            50,908       2.87     $ 18.04       39,516     $ 18.92  

 

There were exercisable options of 50,908 as of December 31, 2016 with an aggregate intrinsic value of $0.