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8. STOCK COMPENSATION

12 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

The Company recognized the following expenses for options issued or vested and restricted stock awarded during the year:

	Year Ended September 30,
	2016		2015		2014
Employees	$	2,113,433	$	5,105,827	$	3,958,637
Non-employees	$	751,651	$	565,915	$	771,946

These expenses were recorded as general and administrative expense. During the years ended September 30, 2016, 2015 and 2014, non-employee stock compensation excluded approximately $48,000, $30,000 and $26,000, respectively, for future services to be performed (Note 12).

During the years ended September 30, the fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions.

	2016	2015	2014
Expected stock price volatility	75.58 – 80.9%	73.38 – 86.19%	72.81 – 86.87%
Risk-free interest rate	0.71 – 1.56%	0.93 – 2.35%	0.59 – 2.65%
Expected life of options	3.0 – 9.69 Years	3.0 – 9.76 Years	3.0 – 9.76 Years
Expected dividend yield	-	-	-

Non-Qualified Stock Option Plans--At September 30, 2016, the Company has collectively authorized the issuance of 9,680,000 shares of common stock under its Non-Qualified Stock Option Plans. Options typically vest over a three-year period and expire no later than ten years after the grant date. Terms of the options are to be determined by the Company’s Compensation Committee, which administers the plans. The Company’s employees, directors, officers, and consultants or advisors are eligible to be granted options under the Non-Qualified Stock Option Plans.

Incentive Stock Option Plans--At September 30, 2016, the Company had collectively authorized the issuance of 3,460,000 shares of common stock under its Incentive Stock Option Plans. Options typically vest over a three-year period and expire no later than ten years after the grant date. Terms of the options were determined by the Company’s Compensation Committee, which administers the plans. Only the Company’s employees are eligible to be granted options under the Incentive Stock Option Plans.

Activity in the Company’s Non-Qualified and Incentive Stock Option Plans for the two years ended September 30, 2016 is summarized as follows:

Non-Qualified and Incentive Stock Option Plans

		Outstanding								Exercisable
						Weighted								Weighted
						Ave								Ave
		Number of		Weighted Average		Remaining Contractual		Aggregate Intrinsic		Number of		Weighted Average		Remaining Contractual		Aggregate Intrinsic
		Shares		Exercise Price		Term (Years)		Value		Shares		Exercise Price		Term (Years)		Value
Outstanding at October 1, 2014			6,831,149	$	2.98		6.55	$	3,600		3,443,884	$	3.40		5.49	$	3,600

Vested											1,153,357	$	2.48
Granted (a)			893,700	$	0.66
Forfeited			116,665	$	1.87
Expired			70,499	$	4.15						70,499	$	4.15

Outstanding at September 30, 2015			7,537,685	$	2.71		5.98	$	50		4,526,742	$	3.15		5.01	$	0
Vested											1,401,716	$	1.27
Granted (b)			1,213,600	$	0.48
Forfeited			55,998	$	0.86
Expired			106,000	$	5.80						106,000	$	5.80

Outstanding at September 30, 2016			8,589,287	$	2.37		5.35	$	0		5,822,458	$	2.65		4.76	$	0
(a)	Includes 90,000 stock options granted to consultants

(b)	Includes 410,000 stock options granted to consultants

A summary of the status of the Company’s non-vested options for the two years ended September 30, 2016 is presented below:

				Weighted Average
	Number of			Grant Date
	Options			Fair Value

Unvested at October 1, 2014		3,387,265		$	2.15
Vested		(1,153,357	)
Granted		893,700
Forfeited		(116,665	)
Unvested at September 30, 2015		3,010,943		$	1.72
Vested		(1,401,716	)
Granted		1,213,600
Forfeited		(55,998	)
Unvested at September 30, 2016		2,766,829		$	1.48

Incentive Stock Bonus Plan-- On July 22, 2014 the Company's shareholders approved the 2014 Incentive Stock Bonus Plan, authorizing the issuance of up to 16,000,000 shares in the Company’s Incentive Stock Bonus Plan. The shares will only be earned upon the achievement of certain milestones leading to the commercialization of the Company’s Multikine technology, or specified increases in the market price of the Company’s stock. If the performance or market criteria are not met as specified in the Incentive Stock Bonus Plan, all or a portion of the awarded shares will be forfeited. The fair value of the shares on the grant date was calculated using the market value on the grant-date for issuances where the attainment of performance criteria is likely and using a Monte Carlo simulation for issuances where the attainment of performance criteria is uncertain. The grant date fair value of shares issued that remain outstanding as of September 30, 2016 is approximately $8.6 million. The total value of the shares, if earned, is being expensed over the requisite service periods for each milestone, provided the requisite service periods are rendered, regardless of whether the market conditions are met. No compensation cost is recognized for awards where the requisite service period is not rendered. During the years ended September 30, 2016 and 2015, the Company recorded expense relating to the issuance of restricted stock pursuant to the plan of approximately $634,000 and $3.4 million, respectively. At September 30, 2016, the Company has unrecognized compensation expense of approximately $3.1 million which is expected to be recognized over a weighted average period of 5.03 years.

A summary of the status of the Company’s restricted stock units issued from the Incentive Stock Bonus Plan for the two years in the period ended September 30, 2016 is presented below:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at October 1, 2014		15,700,000		$	0.55
Vested		(500,000	)
Granted		-
Forfeited		(100,000	)
Unvested at September 30, 2015		15,100,000		$	0.55
Vested		-
Unvested at September 30, 2016		15,100,000		$	0.55

Stock Bonus Plans -- At September 30, 2016, the Company was authorized to issue up to 5,594,000 shares of common stock under its Stock Bonus Plans. All employees, directors, officers, consultants, and advisors are eligible to be granted shares. During the year ended September 30, 2016, 408,497 shares were issued to the Company’s 401(k) plan for a cost of approximately $162,000. During the year ended September 30, 2015, 243,178 shares were issued to the Company’s 401(k) plan for a cost of approximately $166,000. During the year ended September 30, 2014, 164,787 shares were issued to the Company’s 401(k) plan for a cost of approximately $155,000. As of September 30, 2016, the Company has issued a total of 3,161,211 shares of common stock from the Stock Bonus Plans.

Stock Compensation Plans-- At September 30, 2016, 3,350,000 shares were authorized for use in the Company’s stock compensation plans. During the years ended September 30, 2016, 2015 and 2014, 464,831, 218,328 and 409,968 shares, respectively, were issued from the Stock Compensation Plans to consultants for payment of services at a cost of approximately $234,000, $147,000 and $439,000, respectively. During the year ended September 30, 2016 and 2015, 95,935 and 107,050 shares, respectively, were issued to employees from the Stock Compensation Plans as part of their compensation at a cost of approximately $45,000 and $58,000, respectively. No shares were issued to employees from the Stock Compensation Plans during the year ended September 30, 2014. As of September 30, 2016, the Company has issued 1,984,765 shares of common stock from the Stock Compensation Plans.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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