Quarterly report pursuant to Section 13 or 15(d)

9. Stock Options

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9. Stock Options
9 Months Ended
Jun. 30, 2015
Share-based Compensation [Abstract]  
Stock Options

From time to time, the Company grants stock options and restricted stock awards to officers, directors, employees and consultants. 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 nine months ended June 30, 2015:

 

    Number of Shares     Weighted Average Exercise Price     Weighted Average Remaining Contractual Life     Intrinsic Value  
Outstanding at September 30, 2014       600,000     $ 2.76         $  
Granted       450,000     $ 2.53                  
Exercised                                
Forfeited                                
Outstanding at June 30, 2015       1,050,000     $ 1.87       5.01     $ 689,875  
Exercisable at June 30, 2015       675,000     $ 1.73       4.51     $ 542,500  
                                     

 

The Company recognized compensation expense of $621,311 and $138,595 during the nine months ended June 30, 2015, 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 June 30, 2015, the Company had $351,026 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 quarter ended June 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 June 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 June 30, 2015:

 

            Weighted-Average  
      Number of     Grant-Date  
Non-vested Shares     Shares     Fair Value  
Nonvested at September 30, 2014       450,000     $                 0.73  
Granted       450,000     $ 1.92  
Vested       (525,000 )        
Nonvested at June 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%