STOCK OPTIONS AND WARRANTS

9 Months Ended

Jun. 30, 2015

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

STOCK OPTIONS AND WARRANTS

NOTE H - 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. These warrants were granted in lieu of cash for services performed or financing expenses in connection with the sale of common stock.

Transactions involving warrants (see Notes D, E and G) are summarized as follows:

	Number of Shares			Weighted Average  Exercise Price Per  Share
Balance at October 1, 2014		945,166		$	9.59
Granted		5,833,878			3.50
Exercised		(—	)		(—	)
Cancelled or expired		(716,557	)		(11.30	)
Balance at June 30, 2015		6,062,487		$	3.53

Employee 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”). 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.  On January 21, 2015, the Board of Directors approved an amendment to the Incentive Plan, which was approved by shareholders on June 16, 2015.  The amendment increases the number of shares of common stock that can be issued as stock awards and stock options thereunder to an aggregate of 8,333,333.  The amendment also extends the Incentive Plan’s expiration date to January 25, 2025.

The Incentive 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 and an award of shares of common stock. As of June 30, 2015 a total of 233,752 shares have been issued and options to purchase 4,132,475 shares have been granted under the 2005 Incentive Stock Plan.

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

	Number of Shares		Weighted  Average Exercise Price Per Share		Aggregate Intrinsic Value
Outstanding at October 1, 2014		2,909,046	$	4.74
Granted		950,094		2.85
Exercised		—		—
Cancelled or expired		(402,151)		(3.01)
Outstanding at June 30, 2015		3,456,989	$	4.42
Vested at June 30, 2015		2,494,098	$	4.13	$	0.18
Non-vested at June 30, 2015		962,891			$	0.12

 For the three and nine-month periods ended June 30, 2015, the Company issued 49,585 and 950,094, options to employees, consultants and non-employee board of director members, respectively. Included in these grants for the nine month period was 450,000 options granted to executives.

The fair value of options granted during the three and nine month periods ended June 30, 2015 was determined using the Black Scholes Option Pricing Model with the following weighted average assumptions:

	Three Months Ended June 30,  2015			Nine Months Ended June 30,  2015
Stock price	$	2.60		$	2.85
Exercise price	$	2.60		$	2.85
Expected term, years		3.75			4.85
Dividend yield		—	%		—	%
Volatility		118	%		132	%
Risk free rate		1.13	%		1.56	%

The Company recorded $1,015,361(including $544,113 for stock option modifications) and $404,507 as stock compensation expense for the three month periods ended June 30, 2015 and 2014, respectively, and $3,531,205 (including $673,176 for stock option modifications) and $1,717,837 for the nine month periods ended June 30, 2015 and 2014, respectively for the vesting portion of all options. As of June 30, 2015, unrecorded compensation cost related to non-vested awards was $2,749,586 which is expected to be recognized over a weighted average period of approximately 2.21 years.  The weighted average grant date fair value for options granted during the three and nine month periods ended June 30, 2015 was $69,430 and $1,076,502, respectively.