STOCK OPTIONS AND WARRANTS

9 Months Ended

Jun. 30, 2019

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

STOCK OPTIONS AND WARRANTS

NOTE G — STOCK OPTIONS AND WARRANTS

Warrants

The following table summarizes the changes in warrants outstanding. These warrants were granted in lieu of cash compensation for services performed or financing expenses in connection with the sales of the Company’s Common Stock.

Transactions involving warrants (see Note F) are summarized as follows:

	Number of  Shares			Weighted  Average  Exercise  Price Per  Share
Balance at October 1, 2018		12,208,527		$	3.24
Granted		9,035,000			0.48
Exercised		(2,215,000	)		0.45
Cancelled or expired		(2,735,000	)		3.00
Balance at June 30, 2019		16,293,527		$	2.30

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, as amended and restated as of January 21, 2015 (the “Incentive Plan”). On March 27, 2019, the Board of Directors approved an amendment to the Incentive Plan, which was approved by shareholders on May 16, 2019. The amendment increases the number of shares of Common Stock that can be issued as stock awards and stock options thereunder from an aggregate of 8,333,333 to an aggregate of 14,333,333. 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, 2019, a total of 275,752 shares have been issued and options to purchase 8,450,764 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, 2018		6,183,214		$	3.13
Granted		3,134,878			2.55
Exercised		-			-
Cancelled or expired		(1,388,646	)		(5.39	)
Outstanding at June 30, 2019		7,929,446		$	2.51					7.08
Vested at June 30, 2019		6,409,862		$	2.94		$	-		6.45
Non-vested at June 30, 2019		1,519,584		$	0.68		$	-

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, 2019 and 2018:

	Nine Month Period  Ended  June 30, 2019			Nine Month Period  Ended  June 30, 2018
Stock price	$	0.87		$	1.57
Exercise price	$	2.55		$	1.57
Expected term, years		4.30			5.35
Dividend yield		-	%		-	%
Volatility		89	%		94	%
Risk free rate		2.0	%		2.6	%

The Company recorded an expense of $154,304 and $238,738 as stock compensation for the three month periods ended June 30, 2019 and 2018, respectively which are recorded in selling, general and administrative expenses in the condensed consolidated statement of operations. The Company recorded expense of $911,642 and $184,806 as stock compensation for the nine month periods ended June 30, 2019 and 2018, respectively.  As of June 30, 2019, unrecorded compensation cost related to non-vested awards was $637,673, which is expected to be recognized over a weighted average period of approximately 0.84 years. The weighted average grant date fair value per share for options granted during the nine month period ended June 30, 2019 was $0.32. The range of expected volatilities used to calculate the fair value of actions granted during the nine months ended June 30, 2019 was 64% to 145%.