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Shareholders' Equity and Share-Based Payments

6 Months Ended

Mar. 31, 2026

Shareholders' Equity and Share-Based Payments

Shareholders' Equity and Share-Based Payments

5. Shareholders’ Equity and Share-Based Payments

At March 31, 2026, the Company’s Amended and Restated Articles of Incorporation provides the Company authority to issue 75,000,000 shares of common stock and 10,000,000 shares of preferred stock.

Share-Based Compensation

The Company accounts for share-based compensation under the provisions of ASC Topic 718, “Compensation – Stock Compensation,” by using the fair value method for expensing stock options, performance-based equity awards and stock awards.

Total share-based compensation expense was approximately $496,294 and $405,042 for the three months ended March 31, 2026 and 2025, respectively. Total share-based compensation expense was approximately $1,412,218 and $801,703 for the six months ended March 31, 2026 and 2025, respectively. Compensation expense related to share-based awards is recorded as a component of cost of sales, research and development expenses and selling, general and administrative expenses.

The following tables show share-based compensation expense by line item within our Consolidated Statement of Operations:


		Three Months Ended March 31,
		2026		2025
Cost of sales		$	18,638	$	18,261
Research and development			28,340		20,722
Selling, general and administrative			449,316		366,059
Total		$	496,294	$	405,042


		Six Months Ended March 31,
		2026		2025
Cost of sales		$	56,180	$	40,260
Research and development			82,493		45,685
Selling, general and administrative			1,273,545		715,758
Total		$	1,412,218	$	801,703

As of March 31, 2026, unrecognized compensation expense of approximately $3,821,832, net of forfeitures, related to non-vested RSU’s, stock options and market based investment instruments under the 2019 Plan, will be recognized in future periods.

As of March 31, 2026, there were 262,264 unvested restricted stock units, 412,085 unvested non-qualified stock options and 145,753 unvested market based instruments outstanding under the 2019 Plan.

Amended and Restated 2019 Stock-Based Incentive Compensation Plan

The Company’s 2019 Stock-Based Incentive Compensation Plan (as amended, the “2019 Plan”) was approved by the Company’s shareholders at the Company’s Annual Meeting of Shareholders held on April 2, 2019. The 2019 Plan authorizes the grant of stock appreciation rights, restricted stock, options, performance-based equity awards, and other equity-based awards. Options granted under the 2019 Plan may be either “incentive stock options” as defined in Section 422 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or non-qualified stock options, as determined by the Compensation Committee.

Subject to an adjustment necessary upon a stock dividend, recapitalization, forward split or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or share exchange, extraordinary or unusual cash distribution, or similar corporate transaction or event, the maximum number of shares of common stock available for awards under the 2019 Plan is 750,000, plus 139,691 shares of common stock that were authorized but unissued under the Company’s 2009 Stock-Based Incentive Compensation Plan as of April 2, 2019, the effective date of the 2019 Plan, all of which may be issued pursuant to awards of incentive stock options. On April 18, 2024, the Company amended the 2019 Plan to include an additional 1,950,000 authorized shares available for issuance. As of March 31, 2026, there were 1,188,674 shares of common stock available for awards under the 2019 Plan.

If any award is forfeited, terminates or otherwise is settled for any reason without an actual distribution of shares to the participant, the related shares of common stock subject to such award will again be available for future grant. Any shares tendered by a participant in payment of the exercise price of an option or the tax liability with respect to an award (including, in any case, shares withheld from any such award) will not be available for future grant under the 2019 Plan. If there is any change in the Company’s corporate capitalization, the Compensation Committee must proportionately and equitably adjust the number and kind of shares of common stock which may be issued in connection with future awards, the number and kind of shares of common stock covered by awards then outstanding under the 2019 Plan, the aggregate number and kind of shares of common stock available under the 2019 Plan, any applicable individual limits on the number of shares of common stock available for awards under the 2019 Plan, the exercise or grant price of any award, or if deemed appropriate, make provision for a cash payment with respect to any outstanding award. In addition, the Compensation Committee may make adjustments in the terms and conditions of any awards, including any performance goals, in recognition of unusual or non-recurring events affecting the Company or any subsidiary, or in response to changes in applicable laws, regulations, or accounting principles. New shares are typically issued upon option exercise, MSO exercise, MSU vesting or RSU vesting.

The 2019 Plan will terminate on April 2, 2029, unless earlier terminated by the Company’s Board of Directors (the “Board”). Termination will not affect awards outstanding at the time of termination. The Board may amend, alter, suspend, discontinue, or terminate the 2019 Plan without shareholder approval, provided that shareholder approval is required for any amendment which (i) would increase the number of shares subject to the 2019 Plan; (ii) would decrease the price at which awards may be granted; or (iii) would require shareholder approval by law, regulation, or the rules of any stock exchange or automated quotation system.

Restricted Stock Units and Stock Options

On February 17, 2026, the Board authorized grants of 39,763 in RSUs to key employees under the terms and conditions of the 2019 Plan as part of the Company’s initiatives to align employee compensation with Total Shareholder Return. The RSUs vest 50% on the one-year anniversary from date of grant and 50% on the twenty second month from date of grant, subject to the terms of the 2019 Plan.

On February 18, 2025, the Board authorized grants of 71,754 in RSUs to key employees under the terms and conditions of the 2019 Plan as part of the Company’s initiatives to align employee compensation with Total Shareholder Return. The RSUs vest 50% on the one-year anniversary from date of grant and 50% on the twenty second month from date of grant, subject to the terms of the 2019 Plan.

During the fiscal years ended September 30, 2026 and September 30, 2025, the Board approved grants of RSUs to the non-employee directors on the Board as compensation for their services. Under the terms of the awards, the RSUs will vest on the first anniversary of the grant date. At the time of vesting, the RSUs will be settled in shares of the Company’s common stock at a rate of one share of stock for each unit, provided that, if a director resigns from the Board prior to the vesting date, such director shall only receive a pro rata portion of such award for time served.

During the fiscal year ended September 30, 2026, and September 30, 2025, the Board approved grants of RSUs to both the Chief Executive Officer and the Chief Financial Officer that vest 25% after one year with the remainder vesting quarterly over a three-year period.

During the fiscal year ended September 30, 2026, the Board approved grants of non-qualified stock options to both the Chief Executive Officer and the Chief Financial Officer that vest 25% after one year with the remainder vesting quarterly over a three-year period.

The compensation expense related to stock options, and restricted stock awards issued to employees under the 2019 Plan was $271,709 and $207,126 for the three months ended March 31, 2026 and 2025, respectively. The compensation expense related to stock options, and restricted stock awards issued to employees under the 2019 Plan was $574,249 and $413,651 for the six months ended March 31, 2026 and 2025, respectively.

The compensation expense under the 2019 Plan related to restricted stock awards issued to non-employee members of the Board was $108,294 and $71,438 for the three months ended March 31, 2026 and 2025, respectively. The compensation expense under the 2019 Plan related to restricted stock awards issued to non-employee members of the Board was $227,689 and $144,464 for the six months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026, unrecognized compensation expense of approximately $2,261,940, net of forfeitures, related to non-vested restricted stock under the 2019 Plan, will be recognized in future periods.

As of March 31, 2026, unrecognized compensation expense of approximately $850,853, net of forfeitures, related to non-vested stock options under the 2019 Plan, will be recognized in future periods.

Market-Based Restricted Stock Units

On February 18, 2026, in a continuing effort to more closely correlate executive compensation with the Company’s Total Shareholder Return, the Board approved a grant of 45,455 MSUs to the Company’s Chief Executive Officer and 21,307 MSUs to the Company’s Chief Financial Officer under the terms and conditions of the 2019 Plan. The MSUs are restricted stock units containing vesting terms conditional upon the attainment of both 1) continued service to vesting and 2) stock price appreciation targets indexed against the Company’s stock price performance during a specified measurement period. Under the terms of the 2019 Plan, no MSUs are eligible

for vesting prior to the first anniversary of the date of grant of the award, with the exception of accelerated vesting permitted under certain conditions subject to the plan provisions. Subject to the terms of the 2019 Plan, under the terms of the grant, 1/3rd of the MSUs will vest on each of the first, second and third anniversaries of the date of grant (each, a “Time Vesting Date”), provided that no MSUs will vest until and unless the shares of the Company’s common stock have traded at a price equal to or greater than twenty five dollars ($25.00) per share for an average of sixty (60) trading days (the “Stock Price Threshold”). If a MSU would have vested upon a Time Vesting Date, but the Stock Price Threshold was not achieved prior to such Time Vesting Date, the MSU will subsequently vest upon achievement of the Stock Price Threshold.

Any MSUs that have not vested on or before the third anniversary of the grant date are immediately forfeited. Compensation expense for MSUs is recognized on a straight-line basis over the requisite service. Forfeitures are recognized when incurred.

With respect to each MSU that becomes vested in accordance with the terms of the award agreement, the Grantee will be entitled to receive one share of common stock upon the settlement of the MSUs.

The Company estimated both the grant-date fair value of the MSUs and the derived vesting periods using a Monte Carlo simulation with the following input assumptions:


Grant Date	2/18/2026
Grant Date Stock Price	$ 19.83
Expected Dividend Rate	0%
Expected Volatility	59%
Weighted average risk-free interest rate	3.72%
Contractual Term	3 years

Utilizing Monte Carlo simulation, the MSUs grant date fair value was estimated to be $587,500 with a $8.80 grant date fair value per award and the derived vesting periods were estimated to be 1.5 years.

During the quarter ended December 31, 2024, to better align executive compensation with the Company’s Total Shareholder Return, the Board approved a special one-time grant of 201,000 MSUs to the Company’s Chief Executive Officer under the terms and conditions of the 2019 Plan. The MSUs are restricted stock units containing vesting terms conditional upon the attainment of both 1) continued service to vesting and 2) stock price appreciation targets indexed against the Company’s actual stock price performance over a specified measurement period. Under the terms of the 2019 Plan, no MSUs are eligible for vesting prior to the first anniversary of the date of grant of the award, with the exception of accelerated vesting permitted under certain conditions subject to the plan provisions. Subject to the terms of the 2019 Plan, under the terms of the grant, the MSU will vest as follows:

an initial one-third (1/3^rd) of the MSUs shall vest on the first trading date after the shares of the Company’s common stock have traded at a price equal to or greater than ten dollars ($10.00) per share for twenty (20) consecutive trading days or as provided in the provisions of the second succeeding paragraph below;

an additional one-third (1/3^rd) of the MSUs shall vest on the first trading date after shares of the Company’s common stock have traded at a price equal to or greater than twelve dollars ($12.00) per share for twenty (20) consecutive trading days; and

the remaining MSUs shall vest on the first trading date after the shares of the Company’s common stock have traded at a price equal to or greater than fourteen dollars ($14.00) per share for twenty (20) consecutive trading days.

Additionally, if the tranche of MSUs subject to vesting pursuant to (1) above does not vest on or before November 20, 2027, then, with respect to such MSUs, the target trading price for the Company’s common stock will be increased to twelve dollars ($12.00) per share, such that the MSUs subject to (1) above will vest on the first trading date after shares of the Company’s common stock have traded at a price equal to or greater than twelve dollars ($12.00) per share for twenty (20) consecutive trading days.

Any MSUs that have not vested on or before the fourth anniversary of the grant date are immediately forfeited. Compensation expense for MSUs is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards using the graded vesting attribution method. Forfeitures are recognized when incurred.

With respect to each MSU that becomes vested in accordance with the terms of the award agreement, the Grantee will be entitled to receive one share of common stock upon the settlement of the MSUs.

The Company estimated both the grant-date fair value of the MSUs and the derived vesting periods using a Monte Carlo simulation with the following input assumptions:


Number of MSUs Granted	201,000
Grant Date	11/20/24
Grant Date Stock Price	$ 7.72
Expected Dividend Rate	0%
Expected Volatility	48%
Weighted average risk-free interest rate	4.27%
Contractual Term	4 years

Utilizing Monte Carlo simulation, the MSUs grant date fair value was estimated to be $1,109,340 with a $5.52 weighted average grant date fair value per award and the derived vesting periods were estimated to be between 1.2 years and 1.7 years.

On each of February 13, 2025, July 10, 2025 and August 8, 2025, the market performance condition for the first, second and third tranches of 67,000 units of MSUs granted November 20, 2024 to the Company’s Chief Executive Officer were met.

On November 20, 2025, the service condition for all 201,000 units of MSUs granted November 20, 2024 to the Company’s Chief Executive Officer was met. Consequently, on November 20, 2025, all 201,000 MSUs vested according to the terms of the 2019 Plan. The unvested compensation expense of $425,157 as of the one-year anniversary date of grant was immediately expensed and recorded as compensation expense for the three months ended December 31, 2025. Of the 201,000 vested MSUs, 87,917 MSUs were withheld by the Company to cover the recipient’s tax obligations resulting in a net settlement of 113,083 MSU’s converting into Common Stock.

For the three months ended March 31, 2026 and 2025, the Company recognized $48,958 and $112,834, respectively, of compensation expense related to MSU awards.

For the six months ended March 31, 2026 and 2025, the Company recognized $474,116 and $229,942, respectively, of compensation expense related to MSU awards.

Time Based Stock Options with market-based exercisability conditions

During the three months ended March 31, 2025, in a continuing effort to more closely correlate executive compensation with the Company’s Total Shareholder Return, the Board approved a grant of 72,062 MSOs to the Company’s Chief Executive Officer and 33,259 MSOs to the Company’s Chief Financial Officer under the terms and conditions of the 2019 Plan.

The MSOs are similar to traditional time vested stock options and vest over four years, with 25% vesting on the first anniversary of the grant date, or February 19, 2026, and the remaining shares vesting quarterly at 6.25% on the last business day of May, August, November and February of calendar years two, three and four from the date of grant. However, the MSOs only become exercisable if the Company's share price reaches or exceeds the date of grant closing stock price of $8.59 plus a targeted market threshold of 15%, or $9.88 for 20 consecutive trading days at any time during the four-year vesting period. Once this market threshold is met, the vested shares can be exercised according to the vesting schedule and the terms and conditions set forth in the 2019 Plan.

On June 16, 2025, the Company’s closing share price exceeded the $9.88 MSOs targeted market threshold condition for 20 consecutive trading days for the MSOs granted February 18, 2025, thus meeting the market condition for exercisability subject to the vesting schedule and terms and conditions set for in the 2019 Plan. During the three and six months ended March 31, 2026, 26,330 MSOs vested and no MSOs were forfeited.

No MSOs are eligible for vesting or exercise prior to the first anniversary of the date of grant of the award, with the exception of accelerated vesting permitted under certain conditions subject to the plan provisions.

With respect to each MSO that becomes exercised in accordance with the terms of the award agreement, the Grantee will be entitled to receive one share of common stock upon the settlement of the MSOs.

Compensation expense for MSOs is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards using the graded vesting attribution method. Forfeitures are recognized when incurred.

The Company estimated the grant-date fair value of the MSOs awards using a Monte Carlo simulation with the following input assumptions:


Number of MSOs granted	105,321
Grant Date	02/18/25
Grant Date Stock Price	$ 8.27
Expected Dividend Rate	0%
Expected Volatility	47%
Weighted average risk-free interest rate	4.29%
Exercise price	$ 8.59
Contractual Term	10 years

Utilizing Monte Carlo simulation, the aggregate MSOs grant date fair value was estimated to be $474,998 with a $4.51 weighted average grant date fair value per option and vesting periods were estimated to be between 1 year and 4 years with a 10 year contractual term.

For the three months ended March 31, 2026 and 2025, the Company recognized $67,334 and $13,646, respectively, of compensation expense related to the MSO awards.

For the six months ended March 31, 2026 and 2025, the Company recognized $136,165 and $13,646, respectively, of compensation expense related to the MSO awards.

As of March 31, 2026, unrecognized compensation expense of $170,499 associated with non-vested MSOs will be recognized in future periods under the 2019 Plan.