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Stock Options and Warrants

3 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

5. STOCK OPTIONS AND WARRANTS

During the three months ended December 31, 2020, the Company issued 15,000 options to independent contractors and 684,969 options to independent Board members. The right to excise these options shall vest and become exercisable over a period of 3 years for independent contractors and for independent board members, 1/3 of options vested immediately with the balance over a period of 2 years. The exercise price ranged from $10.15 - $16.79 per share. The options will expire ten years from the grant date, 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 the Company’s historical stock performance. The expected term of options granted was determined using 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 three months ended December 31, 2020:

For non-employees and independent Board members	December 31, 2020
Risk-free interest rate		0.81 – 0.88	%
Expected option life		10 years
Expected volatility		310 - 311	%
Expected dividend yield		0.00	%
Exercise price		$10.15 - $16.79

For the three months ended December 31, 2020, 40,833 options were forfeited because of the termination of employment. For the three months ended December 31, 2020, 6,000 shares were issued upon the exercise of stock options.

The following table summarizes stock option activity for three months ended December 31, 2020:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding at September 30, 2020		1,620,667		$	5.74		7.3	$	19,112,118
Granted		699,969			10.29
Exercised		(6,000	)		1.53
Expired		-			-
Forfeited		(40,833	)		19.50
Outstanding at December 31, 2020		2,273,803		$	6.05		7.9		11,043,375

Exercisable at December 31, 2020		1,160,902		$	6.81		4.9	$	5,793,130

The Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized stock option expenses of $4,507,298 for the three months ended December 31, 2020. Unamortized option expense as of December 31, 2020, for all options outstanding amounted to $6,339,444. These costs are expected to be recognized over a weighted- average period of 1.5 years. The Company recognized stock option expenses of $2,220,861 for the three months ended December 31, 2019.

A summary of the status of the Company’s nonvested options as of December 31, 2020, is presented below:

Nonvested options

	Number of nonvested shares			Weighted average grant date fair value
Nonvested shares at September 30, 2020		762,917		$	10.60
Granted		699,969			10.29
Forfeited		(7,500	)		19.50
Vested		(342,485	)		10.15
Nonvested shares at December 31, 2020		1,112,901		$	10.48

On June 23, 2020, as part of our agreement with Benchmark Company, LLC the underwriter of the Company’s June 2020 registered public offering of common stock, we issued 40,250 warrants to purchase our common stock at an exercise price of $9.00 a share. These warrants are exercisable on December 23, 2020 and expire on June 18, 2025.

The following table summarizes warrant activity for the three months ended December 31, 2020:

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding at September 30, 2020		40,250	$	9.00		4.7	$	321,598
Granted		-		-
Exercised		-		-
Expired		-		-
Forfeited		-		-
Outstanding December 31, 2020		40,250	$	9.00		4.5		64,400

Exercisable at December 31, 2020		40,250	$	9.00		4.5	$	64,400