STOCK OPTIONS AND WARRANTS

9 Months Ended

Jun. 30, 2018

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

STOCK OPTIONS AND WARRANTS

NOTE F — STOCK OPTIONS AND WARRANTS

Warrants

The following table summarizes the changes in warrants outstanding and the related prices for the shares of common stock issued to non-employees of the Company.

Transactions involving warrants are summarized as follows:

	Number of  Shares			Weighted  Average  Exercise  Price Per  Share
Balance at October 1, 2017		9,540,455		$	3.60
Granted		2,735,000			2.00
Exercised		-			-
Cancelled or expired		(3,769	)		3.32
Balance at June 30, 2018		12,271,686		$	3.24

Stock Options

In 2005, the Board of Directors and the holders of a majority of the outstanding shares of common stock approved the 2005 Incentive Stock Plan (the “Incentive Plan”). The number of shares of common stock that can be issued as stock awards and stock options thereunder is an aggregate of 8,333,333 shares and the number of shares of common stock that can be covered by awards made to any participant in any calendar year is 833,334 shares. The Incentive Plan’s expiration date is January 25, 2025.

The Incentive Plan is designed to retain directors, executives, and selected employees and consultants by rewarding them for making contributions to the Company's success with an award of options to purchase shares of common stock. As of June 30, 2018, a total of 275,752 shares have been issued and options to purchase 5,745,789 shares have been granted under the Incentive Plan.

Transactions involving stock options issued to employees and consultants are summarized as follows:

	Number of  Shares			Weighted  Average  Exercise  Price Per  Share			Aggregate  Intrinsic  Value		Weighted Average Contractual Life  (Years)
Outstanding at October 1, 2017		5,333,227		$	3.71
Granted		560,814			1.57
Exercised		-			-
Cancelled or expired		(670,820	)		(3.65	)
Outstanding at June 30, 2018		5,223,221		$	3.48					4.49
Vested at June 30, 2018		4,474,702		$	3.75		$	-		3.72
Non-vested at June 30, 2018		748,519					$	-

During the nine month period ended June 30, 2018, the Company issued stock options to purchase an aggregate of 560,814 shares, of which 556,147 were granted to non-employee Board of Director members.

The Company uses the Black Scholes Option Pricing Model to determine the fair value of options granted. The following significant weighted average assumptions in the Black Scholes Option Pricing Model were utilized to estimate the fair value of share based payment awards during the nine month periods ended June 30, 2018 and 2017:

	Nine Month Period  Ended  June 30, 2018			Nine Month Period  Ended  June 30, 2017
Stock price	$	1.57		$	2.01
Exercise price	$	1.57		$	2.29
Expected term, years		5.35			5.47
Dividend yield		-	%		-%
Volatility		94	%		112	%
Risk free rate		2.6	%		2.0	%

The Company recorded an expense of $238,738 and $566,377 as stock compensation for the three month periods ended June 30, 2018 and 2017, respectively. The Company recorded an expense of $184,806 and $2,562,300 as stock compensation for the nine month periods ended June 30, 2018 and 2017, respectively. The expense for the nine month period ended June 30, 2018 include the reversal of the expense of $415,786 previously recorded for certain performance based stock options that were cancelled and therefore the performance conditions were no longer probable and the options did not vest. As of June 30, 2018, unrecorded compensation cost related to non-vested awards was $814,781 which is expected to be recognized over a weighted average period of approximately 1.04 years. The weighted average grant date fair value per share for options granted during the nine month period ended June 30, 2018 was $1.16.