STOCK OPTIONS AND WARRANTS

9 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

STOCK OPTIONS AND WARRANTS

7. STOCK OPTIONS AND WARRANTS

Options

During the nine months ended June 30, 2022, the Company granted 100,000 new stock options, issued 14,000 shares upon the exercise of outstanding stock options, and had 223,500 stock options that were forfeited because of the termination of employment.

The fair value of each option award granted in the nine months ended June 30, 2022 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 historical volatility of a peer group of companies. The expected term of options granted was determined using the simplified method under SAB 107 which represents the mid-point between the vesting term and 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 nine months ended June 30, 2022:

	June 30, 2022
Risk-free interest rate		2.38	%
Expected option life		6 years
Expected volatility		70.53	%
Expected dividend yield		0.00	%
Exercise price	$	2.16

The following table summarizes stock option activity for the nine months ended June 30, 2022:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding at September 30, 2021		4,511,691		$	4.73		8.4	$	452,206
Granted		100,000			2.16
Exercised		(14,000	)		0.90
Expired		-			-
Forfeited		(223,500	)		13.16
Outstanding at June 30, 2022		4,374,191		$	4.25		7.8	$	-
Exercisable at June 30, 2022		1,932,379		$	4.92		6.8	$	-

The Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized stock option expense of $2,687,529 and $8,002,917 for the nine months ended June 30, 2022 and June 30, 2021, respectively. Unamortized option expense as of June 30, 2022, for all options outstanding amounted to $1,808,520. These costs are expected to be recognized over a weighted average period of 1.4 years.

A summary of the status of the Company’s nonvested options as of June 30, 2022, is presented below:

Nonvested options

	Number of Nonvested Options			Weighted Average Grant Date Fair Value
Nonvested options at September 30, 2021		2,870,799		$	5.02
Granted		100,000			2.16
Forfeited		(54,333	)		4.43
Vested		(474,653	)		5.90
Nonvested options at June 30, 2022		2,441,813		$	4.74

Warrants

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 (the “2020 Warrants”) to purchase our common stock at an exercise price of $9.00 a share. The 2020 Warrants became exercisable on December 23, 2020 and expire on June 18, 2025.

On March 19, 2021, we entered into an underwriting agreement in connection with our registered public offering of (i) 2,777,777 units (the “2021 Units”), at a price to the public of $4.50 per 2021 Unit, with each 2021 Unit consisting of (a) one share of our common stock, (b) one Series A Warrant, and (c) one Series B Warrant (together with the Series A Warrants, the “2021 Warrants”), and (ii) 416,666 Series A Warrants and 416,666 Series B Warrants, each pursuant to the underwriter’s full exercise of their overallotment option with respect to such warrants.

Each Series A Warrant entitles the registered holder to purchase one share of our common stock at an exercise price of $4.50 per share. Each Series B Warrant entitles the registered holder thereof to purchase one-half of a share of our common stock at an exercise price of $5.85 per whole share. The 2021 Warrants have a term of 5 years.

The Series A and Series B Warrant holders are obligated to pay the exercise price in cash upon exercise of the 2021 Warrants unless we fail to maintain a current prospectus relating to the common stock issuable upon the exercise of the 2021 Warrants (in which case, the 2021 Warrants may only be exercised via a “cashless” exercise provision).

On April 13, 2022, pursuant to Securities Act registration exemptions under Regulation S and/or Section 4(a)(2) of the Securities Act, the Company sold 884,778 2022 Units, with each 2022 Unit consisting of (a) one share of our common stock and (b) one 2022 Warrant. Each 2022 Warrant entitles the holder to purchase one share of our common stock at an exercise price of $2.00 per share. The 2022 Warrants have a term of 5 years. Holders may exercise their 2022 Warrants on a “cashless” basis pursuant to a formula set forth in the form of 2022 Warrant.

The following table summarizes warrant activity for the nine months ended June 30, 2022:

	Number of Shares Issuable Upon Exercise of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding at September 30, 2021		4,831,915		$	4.98		4.5	$	-
Issued		884,778			2.00
Exercised		(384,447	)		4.51
Expired		-			-
Outstanding at June 30, 2022		5,332,246		$	4.52		3.9		-
Exercisable at June 30, 2022		5,332,246		$	4.52		3.9	$	-

In the nine months ended June 30, 2022, we issued 384,447 shares of common stock related to exercises of 2021 Warrants, including 380,447 shares of common stock issued upon exercise of 380,447 Series A Warrants and 4,000 shares of common stock issued upon exercise of 8,000 Series B Warrants. In connection with such exercises, in the nine months ended June 30, 2022, we received aggregate net proceeds of $1,702,596.