Quarterly report pursuant to Section 13 or 15(d)

Equity

Equity

3 Months Ended

Dec. 31, 2018

During the three months ended December 31, 2018 the Company issued 250,000 shares of common stock for the conversion of approximately 250,000 shares of Series B Convertible Preferred Stock, see Note 10.

Restricted Stock

During the three months ended December 31, 2018 no restricted stock was granted or exercised. 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 $0.2 million and $0.0 million for the three months ended December 31, 2018 and 2017, respectively. As of December 31, 2018, there was approximately $1.9 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, 2018		1,100
Granted		-
Exercised		-
Restricted stock outstanding as of December 31, 2018		1,100

Warrants

No warrants were granted or exercised during the three months ended December 31, 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, 2018		497			3.84		2.87		67
Granted		-			-
Exercised		-			-
Forfeited		(58	)		2.00
Warrants outstanding as of December 31, 2018		439			4.09		2.48		-

Warrants exercisable as of September 30,2018		497			3.84		2.87		67
Warrants exercisable as of December 31,2018		439			4.09		2.48		-

Stock Options

As of December 31, 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 December 31, 2018 and September 30, 2018 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.

Stock-based compensation expense attributable to stock options and warrants was $0.4 million and $0.3 million for the three months ended December 31, 2018 and 2017, respectively. As of December 31, 2018, there was approximately $2.7 million of unrecognized compensation expense related to unvested stock options outstanding, and the weighted average vesting period for those options was 3.5 years.

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, 2018		1,578			3.76		7.53		142
Granted		394			1.91
Exercised		-			-
Forfeited/Expired		(178	)		3.89
Options outstanding as of December 31, 2018		1,794			3.34		8.58		-

Exercisable as of September 30, 2018		512			5.08		7.30		1
Exercisable as of December 31, 2018		385			5.92		7.19		-

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

	Three Months Ended
	December 31, 2018
Weighted average fair value of options	$	1.75
Weighted average risk-free interest rate		3.03	%
Weighted average dividend yield	$	-
Weighted average volatility factor		104	%
Weighted average expected life (years)		10