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10. Stock-based Compensation
 12 Months Ended
Sep. 30, 2015
Share-based Compensation [Abstract]  
Stock-based Compensation

From time to time, the Company grants stock options and restricted stock awards to officers, directors and employees. These awards are valued based on the grant date fair value of the instruments, net of estimated forfeitures. The value of each award is amortized on a straight-line basis over the requisite service period.

 

Stock Options

 

The following table summarizes stock option activity for the years ended September 30, 2015 and 2014:

 

            Weighted     
        Weighted   Average     
        Average   Remaining     
    Number of   Exercise   Contractual   Intrinsic 
    Shares   Price   Life   Value 
Outstanding at September 30, 2013    675,000   $2.82           
Granted     –                
Exercised    –                
Forfeited    (75,000)               
Outstanding at September 30, 2014    600,000   $2.76    4.90   $318,250 
Granted     450,000   $2.53           
Exercised    –                
Forfeited    –                
Outstanding at September 30, 2015    1,050,000   $1.87    4.76   $225,750 
Exercisable at September 30, 2015    675,000   $1.73    4.26   $223,750 
                       

The Company recognized compensation expense of $712,538 and $167,985 during the years ended September 30, 2015 and 2014, respectively, related to stock option awards granted to certain employees and executives based on the grant date fair value of the awards, net of estimated forfeitures.

 

At September 30, 2015, the Company had $259,798 of unrecognized compensation expense (net of estimated forfeitures) associated with stock option awards which the Company expects will be recognized through June 2017.

  

During the year ended September 30, 2015, the Company reduced the exercise price by 50% for the 600,000 options then outstanding. The Company recognized compensation expense of $54,677 related to the re-pricing of the exercise for these options.

 

The exercise price for options outstanding and exercisable at September 30, 2015 is as follows:

 

 Outstanding    Exercisable  
 Number of   Exercise    Number of   Exercise 
 Options   Price    Options   Price 
 187,500   $0.83    187,500   $0.83 
 150,000    1.25    150,000    1.25 
 187,500    1.67    37,500    1.67 
 37,500    2.08    0    2.08 
 37,500    2.50    0    2.50 
 450,000    2.53    300,000    2.53 
 1,050,000         675,000      

 

The following table summarizes information about the Company’s non-vested shares as of September 30, 2015:

 

    Number of   Grant-Date 
Non-vested Shares   Shares   Fair Value 
 Nonvested at September 30, 2013    600,000   $0.73 
 Granted     –      
 Vested    (150,000)     
 Nonvested at September 30, 2014    450,000   $0.73 
 Granted     450,000   $1.92 
 Vested    (525,000)     
 Nonvested at September 30, 2015    375,000   $1.44 

 

For options granted during 2015 where the exercise price equaled the stock price at the date of the grant, the weighted-average fair value of such options was $1.92 and the weighted-average exercise price of such options was $2.53.  No options were granted during 2015, where the exercise price was less than the stock price at the date of grant or where the exercise price was greater than the stock price at the date of grant.

 

The assumptions used in calculating the fair value of options granted using the Black-Scholes option- pricing model for options granted in 2015 are as follows:

 

Risk-free interest rate   1.01%
Expected life of the options   2.5 to 3.5 years
Expected volatility   140%
Expected dividend yield   0%