STOCK-BASED COMPENSATION

9 Months Ended

Jun. 30, 2021

STOCK-BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

11. STOCK-BASED COMPENSATION

On October 30, 2013, the board of directors of the Company adopted the Company’s 2013 Non-Qualified Stock Option Plan (the “2013 Option Plan”) providing for options to purchase up to 100,000 shares of common stock for issuance to directors, officers, employees of and consultants to the Company and its subsidiaries.

On May 12, 2017, the board of directors adopted the Company’s 2017 Plan pursuant to which (i) incentive stock options, (ii) non-statutory stock options, (iii) restricted stock awards and (iv) stock appreciation rights with respect to up to 100,000 shares of the Company’s common stock may be granted to directors, officers, employees of and consultants to the Company.

On May 8, 2018, the board of directors of Janel adopted the Amended 2017 Plan. The provisions and terms of the Amended 2017 Plan are the same as those in the 2017 Plan, except that the Amended 2017 Plan removes the ability of Janel to award incentive stock options and removes the requirement for stockholder approval of the 2017 Plan.

(A) Stock Options

The Company uses the Black-Scholes option pricing model to estimate the fair value of our share-based awards. In applying this model, we use the following assumptions:

• Risk-free interest rate - We determine the risk-free interest rate by using a weighted average assumption equivalent to the expected term based on the U.S. Treasury constant maturity rate.

• Expected term - We estimate the expected term of our options on the average of the vesting date and term of the option.

• Expected volatility - We estimate expected volatility using daily historical trading data of a peer group.

 • Dividend yield - We have never paid dividends on our common stock and currently have no plans to do so; therefore, no dividend yield is applied.

The fair values of our employee option awards were estimated using the assumptions below, which yielded the following weighted average grant date fair values for the periods presented:

	Nine Months Ended June 30, 2021
Risk-free Interest Rate	0.46%
Expected Option Term in Years	5.5-6.5
Expected Volatility	103.0% - 105.4%
Dividend Yield	0%
Weighted Average Grant Date Fair Value	$6.90 - $7.19

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding Balance at September 30, 2020		93,996		$	5.76		5.24	$	304.99
Granted		7,500			9.00		9.50		—
Exercised		(2,502	)		8.58		—		—
Outstanding Balance at June 30, 2021		98,994			5.93		4.79	$	1,194.41
Exercisable on June 30, 2021		83,998			5.42		4.11	$	1,056.32

The aggregate intrinsic value in the above table was calculated as the difference between the closing price of the Company’s common stock at June 30, 2021 of $18.00 per share and the exercise price of the stock options that had strike prices below such closing price.

As of June 30, 2021, there was approximately $40 of total unrecognized compensation expense related to the unvested employee stock options which is expected to be recognized over a weighted average period of less than one year.

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding Balance at September 30, 2020		6,053		$	4.13		6.0	$	29.48
Exercised		(6,053	)		—		—		—
Outstanding Balance at June 30, 2021		—			—		—		—
Exercisable on June 30, 2021		—			—		—		—

The aggregate intrinsic value in the above table was calculated as the difference between the closing price of our common stock at September 30, 2020, of $9.00 per share and the exercise price of the stock options that had strike prices below such closing price.

The compensation cost related to these options was approximately $35 and $163 for the nine-month periods ended June 30, 2021 and 2020, respectively and was included in selling, general and administrative expense in the Company’s statements of operations.

As of June 30, 2021, there was no unrecognized compensation expense related to the vested stock options.

Liability classified share-based awards

During the nine months ended June 30, 2021, 6,948 options were granted and 7,000 options were exercised with respect to Indco’s common stock. The Company uses the Black-Scholes option pricing model to estimate the fair value of Indco’s share-based awards. In applying this model, the Company used the following assumptions:

	Nine Months Ended June 30, 2021
Risk-free Interest Rate	0.46%
Expected Option Term in Years	5.5 - 6.5
Expected Volatility	103.0% - 105.4%
Dividend Yield	0%
Weighted Average Grant Date Fair Value	$9.66 - $10.00

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding Balance at September 30, 2020		39,013		$	9.24		6.81	$	85.45
Granted		6,948			12.29		9.50		—
Exercised		(7,000	)		6.48		—		—
Outstanding Balance at June 30, 2021		38,961			10.28		6.87		78.16
Exercisable on June 30, 2021		25,153			9.42		5.93		72.25

The aggregate intrinsic value in the above table was calculated as the difference between the valuation price of Indco’s common stock at June 30, 2021 of $12.29 per share and the exercise price of the stock options that had strike prices below such closing price.

The liability classified awards were measured at fair value at each reporting date until the final measurement date, which was the date of completion of services required to earn the option. The accrued compensation cost related to these options was approximately $344 and $284 as of June 30, 2021 and September 30, 2020, respectively, and is included in other liabilities in the condensed consolidated financial statement.  The compensation cost related to these options was approximately $50 and $54 for the nine-month periods ended June 30, 2021 and 2020, respectively and was included in selling, general and administrative expense in the Company’s statements of operations.

The cost associated with the options issued on each grant date is being recognized ratably over the period of service required to earn each tranche of options.

Upon vesting, the options continue to be accounted for as a liability in accordance with ASC 480-10-25-8 and are measured in accordance with ASC 480-10-35 at every reporting period until the options are settled.

Changes in the fair value of the vested options are recognized in earnings in the condensed consolidated financial statements.

The options are classified as liabilities, and the underlying shares of Indco’s common stock also contain put options which result in their classification as a mandatorily redeemable security. While their redemption does not occur on a fixed date, there is an unconditional obligation for the Company to repurchase the shares upon death of the holder.

As of June 30, 2021, there was approximately $51 of total unrecognized compensation expense related to the unvested Indco stock options. This expense is expected to be recognized over a weighted average period of less than one year.

(B) Restricted Stock

During the nine months ended June 30, 2021, there were no shares of restricted stock granted. Under the Amended 2017 Plan, each grant of restricted stock vests over a three-year period, and the cost to the recipient is zero. Restricted stock compensation expense, which is a non-cash item, is being recognized in the Company’s financial statements over the vesting period of each restricted stock grant.

As of June 30, 2021, there was no unrecognized compensation cost related to non-employee unvested restricted stock.

As of June 30, 2021, and September 30, 2020, included in accrued expenses and other current liabilities was $306 which represents 35,000 shares of restricted stock that vested but were not issued.