7. STOCK COMPENSATION

12 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

7. STOCK COMPENSATION

7. STOCK COMPENSATION

The Company awarded employees and non-employees with stock compensation as follows:

	Fiscal Year Ended September 30,
	2014		2013		2012
Employees	$	3,958,637	$	2,636,905	$	2,266,316
Non-employees	$	771,946	$	454,855	$	581,996

During the years ended September 30, 2014, 2013 and 2012, non-employee compensation excluded $26,468, $57,553 and $53,333, respectively, for future services to be performed (Note 11).

During the years ended September 30, 2014, 2013 and 2012, the Company recognized expense of $3,958,637, $2,636,905 and $2,229,326, respectively, for options issued or vested and restricted stock awarded during the year. This expense was recorded as general and administrative expense. No options were exercised during the years ended September 30, 2014, 2013 and 2012. No restricted shares vested during the year ended September 30, 2014.

During the year ended September 30, 2014, the Company issued 1,643,240 stock options to employees and directors at a fair value of $1,518,862, ($0.92 fair value per option). During the year ended September 30, 2013, the Company issued 1,809,387 stock options to employees and directors at a fair value of $3,652,630, ($2.02 fair value per option). During the year ended September 30, 2012, the Company issued 667,937 stock options to employees and directors at a fair value of $1,876,122, ($2.80 fair value per option) and also cancelled 390,047 stock options that were outstanding to employees and directors at a fair value of $265,096, ($0.68 fair value per option). On September 30, 2014, the Company had 3,387,265 options that were unvested at a fair value of $7,288,244, which is a weighted average fair value of $2.15 per share with a weighted average remaining vesting life of 1.87 years. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions.

	2014	2013	2012
Expected stock price volatility	72.81 – 86.87%	84.41-92.28%	87.72-94.93%
Risk-free interest rate	0.59 – 2.65%	0.75-2.73%	0.83-1.92%
Expected life of options	3.0 – 9.76 Years	4.85-9.77 Years	4.82-9.66 Years
Expected dividend yield	-	-	-

Non-Qualified Stock Option Plan--At September 30, 2014, the Company has collectively authorized the issuance of 5,680,000 shares of common stock under its Non-Qualified Stock Option Plan. Options typically vest over a three-year period and expire no later than ten years after the grant date. Terms of the options are to be determined by the Company’s Compensation Committee, which administers the plans. The Company’s employees, directors, officers, and consultants or advisors are eligible to be granted options under the Non-Qualified Stock Option Plans.

Incentive Stock Option Plan--At September 30, 2014, the Company had collectively authorized the issuance of 1,960,000 shares of common stock under its Incentive Stock Option Plan. Options typically vest over a three-year period and expire no later than ten years after the grant date. Terms of the options were determined by the Company’s Compensation Committee, which administers the plans. Only the Company’s employees are eligible to be granted options under the Incentive Stock Option Plans.

Activity in the Company’s Non-Qualified and Incentive Stock Option Plans for the year ended September 30, 2014 is summarized as follows:

Non-Qualified and Incentive Stock Option Plans

	Outstanding				Exercisable
			Weighted				Weighted
		Weighted	Ave	Aggregate		Weighted	Ave	Aggregate
	Number of	Average	Remaining Contractual	Intrinsic	Number of	Average	Remaining Contractual	Intrinsic
	Shares	Exercise Price	Term (Years)	Value	Shares	Exercise Price	Term (Years)	Value
Outstanding at October 1, 2013	5,188,141	$3.62	6.53	$133	2,422,997	$4.00	4.95	$133
Vested					1,094,803	$2.14
Granted (a)	1,723,240	$1.09
Exercised
Forfeited	6,316	$1.60
Expired	73,916	$4.29			73,916	$4.29
Cancelled
Outstanding at September 30, 2014	6,831,149	$2.98	6.55	$3,600	3,443,884	$3.40	5.49	$3,600

(a) During the year ending September 30, 2014, 80,000 stock options were granted to consultants.

A summary of the status of the Company’s non-vested options for the year ended September 30, 2014 is presented below:

				Weighted Average
	Number of			Grant Date
	Shares			Fair Value
Unvested at October 1, 2012		1,649,063		$	3.60
Vested		(729,087	)
Granted		1,859,387
Forfeited		(14,219	)
Unvested at October 1, 2013		2,765,144		$	2.79
Vested		(1,094,803	)
Granted		1,723,240
Forfeited		(6,316	)
Unvested at September 30, 2014		3,387,265		$	2.15

In November 2011, the Company modified the number of options issued to certain employees and directors, as well as the exercise prices and the expiration dates of the options. This resulted in the cancellation of 390,047 options priced between $5.40 and $19.40 and the issuance of 312,037 options at $3.20. In accordance with ASC 718, the incremental compensation cost was $409,370 and amortized over the remaining service period.

In December 2011, the Company extended the expiration date on 29,167 options from the Stock Option Plans with exercise prices ranging from $1.60 to $3.30. The options originally would have expired between April 2012 and August 2012 and were extended for three years to expiration dates ranging from April 2015 to August 2015. This extension was considered a new measurement date with respect to the modified options. At the date of modification, the additional cost of the options was $36,990. As of September 30, 2014, all repriced options remained outstanding.

In December 2012, the Company offered employees and directors holding options that expire on April 1, 2013 the opportunity to forfeit these options and have new options issued with an expiration date of December 17, 2017. All twelve employees and directors eligible for this offer accepted the terms. This resulted in the cancellation of 387,466 options priced at $2.20 per share and the concurrent issuance of the same number of options at $2.80 per share. At the cancellation date, the incremental compensation cost was $477,879 which was amortized over the remaining service period. As of September 30, 2014, all options remained outstanding.

Stock Bonus Plans -- At September 30, 2014, the Company was authorized to issue up to 1,594,000 shares of common stock under its Stock Bonus Plans. All employees, directors, officers, consultants, and advisors are eligible to be granted shares. During the year ended September 30, 2014, 164,787 shares were issued to the Company’s 401(k) plan for a cost of $155,434. During the year ended September 30, 2013, 74,230 shares were issued to the Company’s 401(k) plan for a cost of $158,856. During the year ended September 30, 2012, 42,627 shares were issued to the Company’s 401(k) plan for a cost of $154,516. During the years ended September 30, 2012, the Company issued 618 shares from Stock Bonus Plans to consultants for payment of services at a cost $1,792. As of September 30, 2014, the Company has issued a total of 1,058,896 shares of common stock from the Stock Bonus Plans.

Stock Compensation Plan-- At September 30, 2014, 1,350,000 shares were authorized for use in the Company’s stock compensation plan. During the years ended September 30, 2014, 2013 and 2012, 409,968, 50,000 and 100,000 shares were issued from the Stock Compensation Plan to consultants for payment of services at a cost of $439,008, $140,000 and $320,000, respectively. As of September 30, 2014, the Company has issued 1,098,621 shares of common stock from the Stock Compensation Plan.

Incentive Stock Bonus Plan-- On July 22, 2014 the Company's shareholders approved the 2014 Incentive Stock Bonus Plan, authorizing the issuance of 16,000,000 shares in the Company’s Incentive Stock Bonus Plan. During the year ended September 30, 2014, 15,700,000 shares were issued from the Incentive Stock Bonus Plan to officers and employees. The shares are unvested and are held in escrow. The shares will only be earned upon the achievement of certain milestones leading to the commercialization of the Company’s Multikine technology, or specified increases in the market price of the Company’s stock. If the performance or market criteria are not met as specified in the Incentive Stock Bonus Plan, all or a portion of the awarded shares will be forfeited. At September 30, 2014, no restricted shares were vested. The fair value of the shares on the grant date was calculated to be $8,662,502, using the market value on the grant-date for issuances where the attainment of performance criteria is likely and using a Monte Carlo simulation for issuances where the attainment of performance criteria is uncertain. The total value of the shares, if earned, will be expensed over the requisite service periods for each milestone, provided the requisite service periods are rendered, regardless of whether the market conditions are met. No compensation cost is recognized for awards where the requisite service period is not rendered. During the year ended September 30, 2014, the Company recorded expense relating to the restricted stock of $1,477,954. At September 30, 2014, the Company has unrecognized compensation expense of $7,184,548 which is expected to be recognized over a weighted average period of 5.35 years.