Annual report pursuant to Section 13 and 15(d)

Equity and Share-based Compensation

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Equity and Share-based Compensation
12 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
9. Equity and Share-based Compensation

During fiscal 2018 the Company issued 110,083 shares of common stock for the conversion of approximately 110,083 shares of Series B Convertible Preferred Stock (see Note 10).

 

Restricted Stock

 

In fiscal 2018, the Company granted 600,000 and 500,000 restricted shares of common stock to its Chairman and Chief Executive Officer and President, respectively. The restricted shares are to be earned over a three-year period and cliff vest at the end of the third year from the date of grant. Stock-based compensation expense attributable to restricted stock was $0.3 million and $0 million in fiscal 2018 and fiscal 2017, respectively. The fair values of the granted shares based upon the quoted market price of the Company’s common stock on the close of business on the date of grant of $2.39 per share was $2.4 million. As of September 30, 2018, there was approximately $2.1 million of unrecognized compensation expense related to restricted stock outstanding.

 

A summary of restricted stock activity is presented as follows:

 

 

    Number of Shares  
Restricted stock outstanding as of September 30, 2017     -  
Granted     1,100  
Exercised     -  
Restricted stock outstanding as of September 30, 2018     1,100  
         
Restricted stock exercisable as of September 30,2018     -  

 

Warrants

 

No warrants were granted or exercised during fiscal 2018.

 

    Number of Shares    

Weighted Average Exercise Price Per Share

($)

    Weighted Average Remaining Contractual Life     Total Intrinsic Value of Warrants ($)  
Warrants outstanding as of September 30, 2016     997       2.92              
Granted     -       -              
Exercised     (500 )     2.00              
Warrants outstanding as of September 30, 2017     497       3.84              
Granted     -       -              
Exercised     -       -              
Warrants outstanding as of September 30, 2018     497       3.84       2.87       67  
                                 
Warrants exercisable as of September 30,2017     497       3.84       3.87       234  
Warrants exercisable as of September 30,2018     497       3.84       2.87       67  

 

Stock Options

 

As of September 30, 2018, there were stock options outstanding under the Company’s, Second Amended and Restated 1997 Stock Option Plan and the Company’s Amended and Restated 2013 Incentive Stock Plan. Both plans were approved by the shareholders. The plans granted specified numbers of options to non-employee directors, and they authorized the Compensation Committee of the Board of Directors to grant either incentive or non-statutory stock options to employees. Vesting periods are established by the Compensation Committee at the time of grant. All stock options outstanding as of September 30, 2018 and September 30, 2017 were non-statutory stock options, had exercise prices equal to the market price on the date of grant, and had expiration dates ten years from the date of grant.

 

A summary of stock option activity is as follows:                    
                     
    Number of Shares    

Weighted Average Exercise Price per share

($)

    Weighted Average Remaining Contractual Life (Years)    

Total Intrinsic Value of Options

($)

 
                         
Options outstanding as of September 30, 2016     568       4.39              
Granted     382       5.15              
Exercised     -       -              
Forfeited/Expired     (42 )     4.38              
Options outstanding as of September 30, 2017     908       5.11              
Granted     780       2.45              
Exercised     -       -              
Forfeited/Expired     (110 )     5.33              
Options outstanding as of September 30, 2018     1,578       3.76       7.53       142  
                                 
Exercisable as of September 30, 2017     408       4.79       8.00       303  
Exercisable as of September 30, 2018     512       5.08       7.30       1  

 

The fair value of stock options granted was made using the Black-Scholes option pricing model and the following assumptions:

 

    2018     2017  
Weighted average fair value of options   $ 2.24     $ 4.63  
Weighted average risk-free interest rate     2.68 %     2.20 %
Weighted average dividend yield   $ -     $ -  
Weighted average volatility factor     105 %     104 %
Weighted average expected life (years)     10       10  

 

Stock-based compensation expense attributable to stock options and warrants was $1.4 million and $0.9 million in fiscal 2018 and fiscal 2017, respectively. As of September 30, 2018, there was approximately $2.4 million of unrecognized compensation expense related to unvested stock options outstanding, and the weighted average vesting period for those options was 3.5 years.