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Share-Based Compensation | 12 Months Ended
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Sep. 30, 2024
Notes To Financial Statements [Abstract] |
Share-Based Compensation | 16. SHARE-BASED COMPENSATION The Amended and Restated 2015 Equity Incentive Plan (“2015 Equity Plan”) was adopted by the Company’s Board of Directors on December 6, 2016, and approved by the Company’s stockholders on March 14, 2017. The 2015 Equity Plan was amended by the Company’s Board of Directors on December 8, 2020, to increase the number of shares authorized for issuance from 5,000,000 to 10,000,000. On March 16, 2021, the Company’s stockholders approved the plan amendment. The 2015 Equity Plan authorizes the issuance of stock options, restricted stock, stock appreciation rights, restricted stock units (“RSUs”) and performance awards, to an aggregate of 10,000,000 new shares of common stock to employees, directors, advisors or consultants. As of September 30, 2024, there were options and restricted stock units outstanding covering 3,983,799 shares of common stock under the 2015 Equity Plan, and 1,952,840 shares of common stock available for grant, for a total of 5,936,639 shares of common stock authorized and unissued under the plan. Share-based compensation The Company’s stock options have various restrictions that reduce option value, including vesting provisions and restrictions on transfer and hedging, among others, and are often exercised prior to their contractual maturity. Share-based compensation is accounted for in accordance with ASC Topic 718: Compensation - Stock Compensation. Total compensation expense for all share-based awards is based on the estimated fair market value of the equity instrument issued on the grant date. For share-based awards that vest based solely on a service condition, compensation expense is recognized on a straight-line basis over the total requisite service period for the entire award. For share-based awards that vest based on a market condition, compensation expense is recognized on a straight-line basis over the requisite service period of each separately vesting tranche. For share-based awards that vest based on a performance condition, compensation expense is recognized for the number of awards that are expected to vest based on the probable outcome of the performance condition. Compensation cost for these awards will be adjusted to reflect the number of awards that ultimately vest. Stock Options A summary of the activity in options to purchase the common stock of the Company as of September 30, 2024, is presented below:
|  | Number of Shares |  |  | Weighted Average Exercise Price |
Outstanding September 30, 2023 |  |  | 2,904,522 |  |  | $ | 3.19 |
Granted |  |  | 1,402,250 |  |  | $ | 2.04 |
Forfeited/expired |  |  | (511,032 | ) |  | $ | 2.86 |
Exercised |  |  | (100,000 | ) |  | $ | 1.76 |
Outstanding September 30, 2024 |  |  | 3,695,740 |  |  | $ | 2.84 |
Exercisable September 30, 2024 |  |  | 1,192,593 |  |  | $ | 3.58 |
The aggregate intrinsic value for options outstanding and options exercisable as of September 30, 2024 was $3,085 and $365, respectively. The aggregate intrinsic value represents the difference between the Company’s closing stock price on the last day of trading during the year, which was $3.56 per share, and the exercise price multiplied by the number of applicable options. The total value of stock options exercised during the year ended September 30, 2024, was $300 and no proceeds received from these exercises. The total value of stock options exercised during the year ended September 30, 2023, was $2,980 and proceeds from these exercises was $138. The Company recognized $124 and $815 as a tax benefit in the income tax provision for the years ended September 30, 2024 and 2023, respectively. The following table summarizes information about stock options outstanding as of September 30, 2024:
Range of Exercise Prices |  | Number Outstanding |  |  | Weighted Average Remaining Contractual Term |  |  | Weighted Average Exercise Price |  |  | Number Exercisable |  |  | Weighted Average Exercise Price |
$1.70 - $2.68 |  |  | 920,250 |  |  |  | 6.18 |  |  | $ | 1.83 |  |  |  | 26,209 |  |  | $ | 2.67 |
$2.69 - $2.69 |  |  | 1,000,000 |  |  |  | 5.02 |  |  | $ | 2.69 |  |  |  | 100,000 |  |  | $ | 2.69 |
$2.70 - $3.30 |  |  | 930,125 |  |  |  | 6.09 |  |  | $ | 2.99 |  |  |  | 270,708 |  |  | $ | 2.94 |
$3.39 - $6.87 |  |  | 845,365 |  |  |  | 1.94 |  |  | $ | 3.96 |  |  |  | 795,676 |  |  | $ | 3.94 |
|  |  | 3,695,740 |  |  |  | 4.88 |  |  | $ | 2.84 |  |  |  | 1,192,593 |  |  | $ | 3.58 |
The Company recorded $626 and $656 of stock option compensation expense for employees, directors and consultants for the years ended September 30, 2024 and 2023, respectively. As of September 30, 2024, there was approximately $1,946 of total unrecognized compensation costs related to outstanding stock options. This amount is expected to be recognized over a weighted average period of 1.8 years. To the extent the forfeiture rate is different from what the Company anticipated, share-based compensation related to these awards will be different from the Company’s expectations. Stock options that do not contain market-based vesting conditions are valued using the Black-Scholes option pricing model. The weighted average estimated fair value of employee stock options granted, that vest without a market condition, during the years ended September 30, 2024 and 2023, was calculated with the following weighted average assumptions (annualized percentages):
|  | Years ended |
|  | September 30, |
|  | 2024 |  |  | 2023 |
Volatility |  |  | 58.0 | % |  |  | 52.4 | %
Risk-free interest rate |  |  | 4.2 | % |  |  | 4.0 | %
Dividend yield |  |  | 0.0 | % |  |  | 0.0 | %
Expected term in years |  |  | 4.2 |  |  |  | 5.8 |
Expected volatility is based on the historical volatility of the Company’s common stock over the period commensurate with the expected term of the options. The risk-free interest rate is based on rates published by the Federal Reserve Board. The contractual term of the options was seven years. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla”. The expected forfeiture rate is based on past experience and employee retention data. Forfeitures are estimated at the time of the grant and revised in subsequent periods if actual forfeitures differ from those estimates. Such revision adjustments to expense will be recorded as a cumulative adjustment in the period in which the estimate is changed. The Company did no t pay a dividend in fiscal 2024 or fiscal 2023. For stock options that contain market-based vesting conditions, the fair value of these options was determined using a Monte Carlo valuation approach. A Monte Carlo simulation is used to model the probability of different outcomes in a process that cannot easily be predicted due to the intervention of random variables. It is a technique used to understand the impact of risk and uncertainty and establishes a fair value based on the most likely outcome. Performance-Based Stock Options On October 8, 2022, the Company awarded additional performance-based stock options to purchase 800,000 shares of the Company’s common stock to a key executive, with a contractual term of seven years. Vesting is based upon the achievement of certain performance criteria for each of fiscal 2025 and 2026 including a minimum free cash flow margin and net revenue targets. Additionally, vesting is subject to the executive being employed by the Company at the time the Company achieves such financial targets. The Company did not record compensation expense related to these options for the year ended September 30, 2024 and 2023. On March 20, 2023, the Company granted PVOs to purchase up to 450,000 shares of the Company’s stock to a key member of management with a contractual term of seven years. Vesting is based upon the achievement of certain performance criteria for each of the first three twelve-month periods following the employee’s start date, including targets related to growth in the institutional ownership of the Company’s common stock and growth in the trading volume of the Company’s common stock during such periods. Additionally, vesting is subject to the employee being employed by the Company on each of the first three anniversaries of the employee’s start date. 225,000 of these options contain a market-based vesting condition and accounting principles do not require the market condition to be achieved in order for compensation expense to be recognized. The Company recorded $130 of compensation expense related to these options during the year ended September 30, 2024. The Company recorded $7 of compensation expense related to these options during the year ended September 30, 2023. The Company did no t grant any performance-based stock options during the year ended September 30, 2024. As of September 30, 2024, there was no unrecognized compensation related to PVOs. Restricted Stock Units On March 14, 2023, each non-employee member of the Board of Directors received a grant of 30,000 RSUs that will vest on the first anniversary of the grant date. These RSUs were granted at a market value of $417 and have and will be expensed on a straight-line basis through the March 14, 2024, vest date. On February 14, 2023, 145,600 RSUs were granted to employees that will vest over three years on the anniversary date of the grant. These RSUs were issued at a market value of $582, which have and will be expensed on a straight-line basis over the three-year life of the grants. On March 20, 2023, 20,000 RSUs were granted to an employee with immediate vesting. These were issued at a market value of $66 and were expensed immediately. On November 1, 2023, 10,000 RSUs were granted to a non-employee advisor that vested on the first anniversary of the grant date. These were issued at a market value of $17, which have and will be expensed on a straight-line basis though the November 1, 2024, vest date. On March 14, 2024, each non-employee member of the Board of Directors received a grant of 30,000 RSUs that will vest on the first anniversary of the grant date. These RSUs were granted at a market value of $215 and have and will be expensed on a straight-line basis through the March 14, 2025 vest date. On June 3, 2024, each of the two new non-employee members of the Board of Directors received a grant of 23,654 RSUs that will vest on March 14, 2025. These were issued at a market value of $91 and have and will be expensed on a straight-line basis through the March 14, 2025 vest date. On July 10, 2024, one new non-employee member of the Board of Director received a grant of 20,000 RSUs that will vest on March 14, 2025. These were issued at a market value of $50 and have and will be expensed on a straight-line basis through March 14, 2025. A summary of restricted stock units of the Company as of September 30, 2024, is presented below:
` |  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |
Outstanding September 30, 2023 |  |  | 379,597 |  |  | $ | 3.99 |
Granted |  |  | 331,019 |  |  | $ | 2.10 |
Vested |  |  | (355,024 | ) |  | $ | 3.53 |
Forfeited/cancelled |  |  | (67,533 | ) |  | $ | 2.04 |
Outstanding September 30, 2024 |  |  | 288,059 |  |  | $ | 2.78 |
Compensation expense for RSUs was $896 for the year ended September 30, 2024. Compensation expense for RSUs was $986 for the year ended September 30, 2023. As of September 30, 2024, there was approximately $504 of total unrecognized compensation costs related to outstanding RSUs. This amount is expected to be recognized over a weighted average period of 0.8 years. The Company recorded share-based compensation expense for restricted stock units and stock options are classified in the consolidated statements of operations as follows:
|  | Years ended |
|  | September 30, |
|  | 2024 |  |  | 2023 |
Cost of revenues |  | $ | 67 |  |  | $ | 111 |
Selling, general and administrative |  |  | 1,378 |  |  |  | 1,428 |
Research and development |  |  | 207 |  |  |  | 103 |
|  | $ | 1,652 |  |  | $ | 1,642 |

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