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9. STOCK OPTIONS | 12 Months Ended
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Sep. 30, 2018
Notes |
9. STOCK OPTIONS | 9. STOCK OPTIONS During July 2016, the Company issued 320,000 options to an employee. The right to exercise these options shall vest and become exercisable on December 31, 2021. The exercise price is $0.88 per share and will expire ten years from the grant date, unless terminated earlier as provided by the option agreements. During January 2017, the Company issued 84,000 options to employees. The right to exercise these options shall vest and become exercisable on January 2018. The exercise price is $0.40-$0.51 per share and will expire ten years from the grant date, unless terminated earlier as provided by the option agreements. During July 2017, the Company issued 2,170,000 options to employees and 430,000 options to non-employees. The right to exercise these options shall vest and become exercisable on January 2018. The exercise price is $0.51-$0.56 per share and will expire ten years from the grant date, unless terminated earlier as provided by the option agreements. During June 2018, the Company issued 400,000 options to an employee. The right to excise these options shall vest and become exercisable on July 2019 over a period of 5 years. The exercise price is $1.32 per share and will expire ten years from the grant date, unless terminated earlier as provided by the option agreements. During August 2018, the Company issued 150,000 options to employees and 600,000 options to non-employees. The right to excise these options shall vest and become exercisable on September 2019 over a period of 5 years. The exercise price is $1.20 per share for the non-employee options and $1.32 per share for the employee options. The options will expire ten years from the grant date for non-employee and 6.5 years for employee, unless terminated earlier as provided by the option agreements. The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model using the assumptions noted as follows: expected volatility was based on a representative peer group of small public companies in their industry segment as the Company has a limited stock history. The expected term of options granted was determined using the simplified method under SAB 107 and represents the mid-point between the vesting term and the contractual term. The risk-free rate is calculated using the U.S. Treasury yield curve, and is based on the expected term of the option. The Black-Scholes option pricing model was used with the following weighted average assumptions for options granted during the twelve months ended September 30, 2018 and 2017, respectively:
For employees |  | September 30, 2018 |  | September 30, 2017
Risk-free interest rate |  | 2.58% - 2.61% |  | 1.43% - 1.75%
Expected option life |  | 6.5 years |  | 5.5 - 6.5 years
Expected volatility |  | 94.2% - 95.1% |  | 97.6% - 99.1%
Expected dividend yield |  | 0.00% |  | 0.00%
Exercise price |  | $1.32 |  | $0.40 - $0.56
For non-employees |  | September 30, 2018 |  | September 30, 2017
Risk-free interest rate |  | 2.27 – 2.82% |  | 2.27%
Expected option life |  | 10 years |  | 10 years
Expected volatility |  | 115.70% - 120.6% |  | 115.70%
Expected dividend yield |  | 0.00% |  | 0.00%
Exercise price |  | $1.20 |  | $0.51
The Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized stock option expense of $838,779 and $138,098 for the years ended September 30, 2018 and 2017. Unamortized option expense as of September 30, 2018, for all options outstanding amounted to approximately $2,250,000. These costs are expected to be recognized over a weighted-average period of 3 years. The following table summarizes stock option activity for the year ended September 30, 2018.
|  |  |  | Weighted |  | Weighted |  |
|  |  |  | Average |  | Average |  |
|  | Number of |  | Exercise |  | Remaining |  | Aggregate
|  | Shares |  | Price |  | Contractual Life (years) |  | Intrinsic Value
Outstanding at September 30, 2017 |  | 3,064,500 |  | $ 0.58 |  | 9.6 |  | 17,425
Granted |  | 1,150,000 |  | 1.27 |  |  |  |
Exercised |  | - |  | - |  |  |  |
Expired |  | - |  | - |  |  |  |
Forfeited |  | (272,500) |  | 0.47 |  |  |  |
Outstanding at September 30, 2018 |  | 3,942,000 |  | $ 0.78 |  | 8.9 |  | 4,407,160
Exercisable at September 30, 2018 |  | 632,000 |  | $ 0.51 |  | 7.9 |  | 860,960
The following table summarizes stock option activity for the year ended September 30, 2017.
|  |  |  | Weighted |  | Weighted |  |
|  |  |  | Average |  | Average |  |
|  | Number of |  | Exercise |  | Remaining |  | Aggregate
|  | Shares |  | Price |  | Contractual Life (years) |  | Intrinsic Value
Outstanding at September 30, 2016 |  | 573,000 |  | $ 0.70 |  |  |  |
Granted |  | 2,684,000 |  | 0.54 |  |  |  |
Exercised |  | - |  | - |  |  |  |
Expired |  | (192,500) |  | 0.48 |  |  |  |
Forfeited |  | - |  | - |  |  |  |
Outstanding at September 30, 2017 |  | 3,064,500 |  | $ 0.58 |  | 9.6 |  | 17,425
Exercisable at September 30, 2017 |  | 180,500 |  | $ 0.48 |  | 8.4 |  | 17,425
A summary of the status of the Company’s unvested shares as of September 30, 2018 and 2017, are presented below:
|  | Number of
|  | Nonvested Shares
Nonvested shares at September 30, 2016 |  | 378,000
Granted |  | 2,684,000
Exercised |  | -
Forfeited |  | (120,000)
Vested |  | (58,000)
Nonvested shares at September 30, 2017 |  | 2,884,000
Granted |  | 1,150,000
Exercised |  | -
Forfeited |  | (240,000)
Vested |  | (484,000)
Nonvested shares at September 30, 2018 |  | 3,310,000

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- 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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