The following table summarizes the changes in warrants outstanding and the related prices for the shares of the Company’s Common Stock issued to non-employees of the Company. These warrants were granted in lieu of cash compensation for services performed or financing expenses in connection with the sale of the Company’s Common Stock.


	Exercise Prices	Number Outstanding	Warrants Outstanding Remaining Contractual Life (Years)	Weighted Average Exercise Price		Weighted Average Exercisable	Exercisable Weighted Average Exercise Price
$	2.40	33,333	0.92	$	2.40	33,333	$	2.40
$	2.64	8,514	2.79	$	2.64	8,514	$	2.64
$	2.85	63,159	3.79	$	2.85	63,159	$	2.85
$	3.32	3,769	3.27	$	3.32	3,769	$	3.32
$	4.26	16,667	0.32	$	4.26	16,667	$	4.26
$	5.40	115,000	1.92	$	5.40	115,000	$	5.40
$	8.25	313,768	0.67	$	8.25	313,768	$	8.25
$	10.74	1,667	1.10	$	10.74	1,667	$	10.74
$	12.84	1,667	1.60	$	12.84	1,667	$	12.84
$	14.06	387,622	3.80	$	14.06	387,622	$	14.06
$	9.59	945,166	2.35	$	9.59	945,166	$	9.59


	Number of Shares			Weighted Average Exercise Price Per Share
Balance, October 1, 2012		764,011		$	8.70
Granted		2,237,487			13.98
Exercised		(1,003,948	)		(10.20	)
Cancelled or expired		(1,013,656	)		(15.88	)
Balance at September 30, 2013		983,894		$	11.86
Granted		327,860			8.50
Exercised		(311,587	)		(13.44	)
Cancelled or expired		(55,001	)		(14.00	)
Balance, September 30, 2014		945,166			9.59

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. In 2007, 2008 and 2012, the Board of Directors and holders of a majority of the outstanding shares of Common Stock approved various increases in the number of shares of Common Stock that can be issued as stock awards and stock options thereunder to an aggregate of 5,833,334 shares and the number of shares of Common Stock that can be covered by awards made to any participant in any calendar year to 833,334 shares.

The 2005 Incentive Stock Plan is designed to retain directors, executives, and selected employees and consultants by rewarding them for making contributions to our success with an award of options to purchase shares of Common Stock. As of September 30, 2014, a total of 211,252 shares have been issued and options to purchase 3,350,780 shares have been granted under the 2005 Incentive Stock Plan.

	Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Number Exercisable	Exercisable Weighted Average Exercise Price
$	3.00	400,001	0.65	$	3.00	400,001	$	3.00
$	3.51	666,667	3.79	$	3.51	666,667	$	3.51
$	3.60	333,334	0.76	$	3.60	333,335	$	3.60
$	3.90	10,581	2.18	$	3.90	10,581	$	3.90
$	4.08	79,500	2.17	$	4.08	79,500	$	4.08
$	4.20	47,501	0.88	$	4.20	39,376	$	4.20
$	5.31	120,966	4.04	$	5.31	33,334	$	5.31
$	5.40	16,668	1.92	$	5.40	16,668	$	5.40
$	5.82	946,300	4.05	$	5.82	62,964	$	5.82
$	6.00	8,334	4.97	$	6.00	-	$	-
$	6.60	123,338	3.94	$	6.60	90,004	$	6.60
$	6.89	4,167	4.58	$	6.89	-	$	-
$	6.96	4,167	4.16	$	6.96	-	$	-
$	7.02	33,334	4.18	$	7.02	-	$	-
$	8.16	35,446	4.19	$	8.16	35,446	$	8.16
$	9.60	41,667	4.35	$	9.60	41,667	$	9.60
$	10.79	34,991	3.17	$	10.79	34,991	$	10.79
$	11.58	417	3.75	$	11.58	417	$	11.58
$	12.00	1,667	3.63	$	12.00	417	$	12.00
$	4.74	2,909,046	2.99	$	4.74	1,845,368	$	4.10


	Number of Shares			Weighted Average Exercise Price Per Share				Aggregate Intrinsic Value
Outstanding at October 1, 2012		2,086,814		$	3.60
Granted		38,323			10.88
Exercised		(99,650	)		(2.52	)
Cancelled or expired		(1,238	)		(3.60	)
Outstanding at September 30, 2013		2,024,249		$	3.78
Granted		1,229,717			6.03
Exercised		(341,668	)		(3.60	)
Cancelled or expired		(3,252	)		(7.72	)
Outstanding at September 30, 2014		2,909,046		$	4.74
Vested at September 30, 2014		1,845,368			4.10		$	3.36
Non-vested at September 30, 2014		1,063,678					$	1.46

On November 30, 2012, the Company granted an aggregate of 34,989 options to non-employee board of director members (except Mr. Catenacci) under the 2005 Incentive Stock Plan. The options are exercisable at $10.79 per share for five years, vesting one year from the date of issuance. The fair value of options was determined using the Black Scholes Option Pricing Model with the following assumptions: dividend yield $-0-, volatility of 146.33% and risk free rate of 0.82%.

On May 12, 2013, the Company granted an aggregate of 1,667 options to an employee under the 2005 Incentive Stock Plan. The options are exercisable at $12.00 per share for five years, vesting at 25% each anniversary for the next four years. The fair value of the options was determined using the Black Scholes Option Pricing Model with the following assumptions: dividend yield $-0-, volatility of 117.57% and risk free rate of 0.60%.

On May 15, 2013 the Company extended the term of 90,000 options that were set to expire to June 16, 2018. The Company recorded $408,605 of stock compensation expense for the year ended September 30, 2013 in connection with this modification as the incremental difference between fair value of the stock options immediately before and after modification.

On July 2, 2013 the Company granted an aggregate of 1,667 options to an employee under the 2005 Incentive Stock Plan. The options are exercisable at $11.58 per share for five years, vesting at 25% each anniversary for the next four years. The fair value of the options was determined using the Black Scholes Option Pricing Model with the following assumptions: dividend yield $-0-, volatility of 114% and risk free interest rate of 1.01%.

On October 14, 2013, the Company granted an aggregate of 122,987 options to purchase the Company’s Common Stock at an exercise price of $5.32 per share for five years to employees. 89,617 of these options vest at 25% each anniversary for the next four years and 33,333 of these options vest immediately.

On October 17, 2013, the Company granted Dr. James A. Hayward, Chairman, CEO and President and Dr. Ming-Hwa Liang, Chief Technology Officer and Secretary of the Company options to purchase 833,333 and 50,000 shares of the Company’s Common Stock, respectively, at an exercise price of $5.82 per share for five years with vesting at 25% each anniversary for the next four years. Also on October 17, 2013, the Company granted an aggregate of 62,963 options to non-employee board of director members at an exercise price of $5.82 per share for five years with immediate vesting.

On November 28, 2013, the Company granted 4,167 options to purchase the Company’s Common Stock at an exercise price of $6.96 per share for five years to an employee with vesting at 25% each anniversary for the next four years.

On December 2, 2013, the Company granted 33,333 options to purchase the Company’s Common Stock at an exercise price of $7.02 per share for five years to an employee with vesting at 25% each anniversary for the next four years.

On February 23, 2014 the Company extended the term of 16,667 options that were set to expire on that date. The Company recorded $43,401 of stock compensation expense for the fiscal year ended September 30, 2014 in connection with this modification as the incremental difference between the fair value of the stock options immediately before and after the modification.

On April 14, 2014, the Company granted 33,333 options to purchase the Company’s Common Stock at an exercise price of $6.60 per share for five years to an employee with vesting at 25% each anniversary for the next four years.

On August 5, 2014 the Company modified the vesting term of 33,334 options. The Company recorded $25,887 of stock compensation expense for the fiscal year ended September 30, 2014 in connection with this modification as the incremental difference between the fair value of the stock options immediately before and after the modification.

The fair value of options granted during the fiscal year ended September 30, 2014 was determined using the Black Scholes Option Pricing Model. For the purposes of the valuation model, the Company used the simplified method for determining the granted options expected lives. The simplified method is used since the Company does not have adequate historical data to utilize in calculating the expected term of options. The fair value for options granted was calculated using the following weighted average assumptions:

The Company recorded $2,033,341 (including stock option modification), $1,926,129 (including stock option modification) and $1,953,844 as stock compensation expense for fiscal years ended September 30, 2014, 2013 and 2012 respectively. As of September 30, 2014, unrecorded compensation cost related to non-vested awards was $3,429,056, which is expected to be recognized over a weighted average period of approximately 3.05 years. The weighted average grant date fair value for options granted during the fiscal years ended September 30, 2014, 2013 and 2012 was $2,573,321, $1,008,744 and $30,328, respectively.