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STOCK COMPENSATION | 12 Months Ended
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Sep. 30, 2020
STOCK COMPENSATION |
8. STOCK COMPENSATION |
8. | STOCK COMPENSATION
| The Company recognized the following expenses for options issued or vested and restricted stock awarded during the year:
|  | Year Ended September 30, |
|  | 2020 |  |  | 2019 |
Employees |  | $ | 10,112,968 |  |  | $ | 4,428,174 |
Non-employees |  | $ | 862,796 |  |  | $ | 856,025 |
| During the years ended September 30, 2020 and 2019 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.
|  | 2020 |  | 2019
Expected stock price volatility |  | 87.36 – 90.26% |  | 87.67 – 92.84%
Risk-free interest rate |  | 0.62 – 1.87% |  | 1.62 – 2.82%
Expected life of options |  | 9.68 – 9.69 Years |  | 9.67 – 9.68 Years
Expected dividend yield |  | - |  | -
| Non-Qualified Stock Option Plans – During the year ended September 30, 2020, the Company adopted the 2020 Non-Qualified Stock Option Plan, which provides for the issuance of up to 3,600,000options to purchase shares of common stock. On April 20, 2020, the Company granted 1,872,000 performance-based stock options from the 2020 Non-Qualified Stock Option Plan to officers and directors. Each option entitles the holder to purchase one share of the Company’s common stock at a price of $10.93 per share, the fair value on the date of issuance. The stock options vest upon the achievement of the following performance goals: i) 25% of the options will vest when the closing price of the Company’s common stock exceeds $20.00 for ten consecutive trading days; ii) 50% of the options will vest when the closing price of the Company’s common stock exceeds $25.00 for ten consecutive trading days; iii) 75% of the options will vest when the closing price of the Company’s common stock exceeds $30.00 for ten consecutive trading days; and iv) 100% of the options will vest when either (a) the filing of the first marketing application for any pharmaceutical based upon the Company’s Multikine technology, in the US, Canada, UK, Germany, France, Italy, Spain, Japan, or Australia or (b) the closing price of the Company’s common stock exceeds $40.00 for ten consecutive trading days. All Options which have not vested as of April 19, 2030, will be canceled and will no longer be exercisable. The options were recorded as equity in accordance with ASC 718, Compensation – Stock Compensation. On the grant date, the options were valued using a Monte Carlo Simulation approach. Monte Carlo Simulation is a statistical technique that is used to model probabilistic systems and establish the probabilities for a variety of outcomes. That valuation resulted in a per share fair value of $4.21 and an aggregate value of $7,881,120 on the grant date. The aggregate value will be expensed over the implicit life of the options, which was determined to be 1.7 years. This resulted in compensation expense of approximately $2.1 million recorded during the year ended September 30, 2020. The remaining $5.8 million will be expensed over the next 1.25 years.
| At September 30, 2020, the Company has collectively authorized the issuance of 9,987,200 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 were 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, 2020, the Company had collectively authorized the issuance of 138,400 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, 2020 is summarized as follows:
Non-Qualified and Incentive Stock Option Plans
|  | Outstanding |  |  | Exercisable |
|  |  |  |  |  |  |  | Weighted |  |  |  |  |  |  |  |  |  |  |  | Weighted |  |  |  |
|  |  |  |  | Weighted Average |  |  | Ave Remaining Contractual |  |  | Aggregate |  |  |  |  |  | Weighted Average |  |  | Ave Remaining Contractual |  |  | Aggregate |
|  | Number of |  |  | Exercise |  |  | Term |  |  | Intrinsic |  |  | Number of |  |  | Exercise |  |  | Term |  |  | Intrinsic |
|  | Shares |  |  | Price |  |  | (Years) |  |  | Value |  |  | Shares |  |  | Price |  |  | (Years) |  |  | Value |
Outstanding at September 30, 2018 |  |  | 3,160,127 |  |  | $ | 7.30 |  |  |  | 8.88 |  |  | $ | 4,761,973 |  |  |  | 577,694 |  |  | $ | 26.18 |  |  |  | 6.74 |  |  | $ | 604.763 |
Vested |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 945,359 |  |  | $ | 2.56 |  |  |  |  |  |  |  |  |
Granted |  |  | 3,271,362 |  |  | $ | 5.40 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exercised (a) |  |  | 65,997 |  |  | $ | 2.28 |  |  |  |  |  |  |  |  |  |  |  | 65,997 |  |  | $ | 2.28 |  |  |  |  |  |  |  |  |
Forfeited |  |  | 82,461 |  |  | $ | 17.89 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expired (b) |  |  | 64,815 |  |  | $ | 71.86 |  |  |  |  |  |  |  |  |  |  |  | 64,815 |  |  | $ | 71.86 |  |  |  |  |  |  |  |  |
Outstanding at September 30, 2019 |  |  | 6,218,216 |  |  | $ | 5.54 |  |  |  | 8.88 |  |  | $ | 29,562,594 |  |  |  | 1,392,241 |  |  | $ | 9.15 |  |  |  | 7.68 |  |  | $ | 7,869,555 |
Vested |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,014,501 |  |  | $ | 4.06 |  |  |  |  |  |  |  |  |
Granted |  |  | 2,563,000 |  |  | $ | 10.93 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exercised |  |  | 99,740 |  |  | $ | 3.39 |  |  |  |  |  |  |  |  |  |  |  | 99,740 |  |  | $ | 3.39 |  |  |  |  |  |  |  |  |
Forfeited |  |  | 18,000 |  |  | $ | 10.34 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expired |  |  | 9,773 |  |  | $ | 132.75 |  |  |  |  |  |  |  |  |  |  |  | 9,773 |  |  | $ | 132.75 |  |  |  |  |  |  |  |  |
Outstanding at September 30, 2020 |  |  | 8,653,703 |  |  | $ | 7.01 |  |  |  | 8.39 |  |  | $ | 56,193,415 |  |  |  | 3,297,229 |  |  | $ | 5.85 |  |  |  | 7.48 |  |  | $ | 29,090,662 |
| (a) | Includes 10,000 stock options exercised by consultants
| (b) | Includes 10,400 stock options to consultants
| A summary of the status of the Company’s non-vested options for the two years ended September 30, 2020 is presented below:
|  | Number of Options |  |  | Weighted Average Grant Date Fair Value |
Unvested at October 1, 2018 |  |  | 2,582,433 |  |  | $ | 2.48 |
Vested |  |  | (945,359 | ) |  |  |  |
Granted |  |  | 3,271,362 |  |  |  |  |
Forfeited |  |  | (82,461 | ) |  |  |  |
Unvested at September 30, 2019 |  |  | 4,825,975 |  |  | $ | 3.79 |
Vested |  |  | (2,014,501 | ) |  |  |  |
Granted |  |  | 2,563,000 |  |  |  |  |
Forfeited |  |  | (18,000 | ) |  |  |  |
Unvested at September 30, 2020 |  |  | 5,356,474 |  |  | $ | 4.76 |
| Incentive Stock Bonus Plan – Up to 640,000 shares are authorized under the 2014 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, 2020 was 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 each of the years ended September 30, 2020 and 2019, the Company recorded expense relating to the issuance of restricted stock pursuant to the plan of approximately $0.3 million. At September 30, 2020, the Company has unrecognized compensation expense of approximately $0.4 million which is expected to be recognized over a weighted average period of 1.2 years. A summary of the status of the Company’s restricted common stock issued from the Incentive Stock Bonus Plan for the two years ended September 30, 2020 is presented below:
|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |
Unvested at September 30, 2018 |  |  | 312,000 |  |  | $ | 13.75 |
Forfeited |  |  | (7,500 | ) |  |  |  |
Vested |  |  | - |  |  |  |  |
Unvested at September 30, 2019 |  |  | 304,500 |  |  | $ | 13.75 |
Forfeited |  |  | - |  |  |  |  |
Vested |  |  | - |  |  |  |  |
Unvested at September 30, 2020 |  |  | 304,500 |  |  | $ | 13.75 |
| Stock Bonus Plans – As of September 30, 2020, the Company has issued a total of 345,096 shares of common stock from the Stock Bonus Plans and was authorized to issue up to 783,760 shares of common stock under its Stock Bonus Plans. All employees, directors, officers, consultants, and advisors are eligible to be granted shares. Stock Compensation Plans – On September 30, 2020, 634,000 shares were authorized for use in the Company’s Stock Compensation Plans. No shares were issued from the Stock Compensation Plans to consultants for payment of services during the years ended September 30, 2020, and 2019, As of September 30, 2020, the Company has issued 150,695 shares of common stock from the Stock Compensation Plans.

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