STOCK OPTIONS AND WARRANTS

3 Months Ended

Dec. 31, 2016

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

STOCK OPTIONS AND WARRANTS

NOTE F — STOCK OPTIONS AND WARRANTS

Warrants

During the three months ended December 31, 2016, the Company issued warrants to purchase 2,272,727 shares of its common stock as part of the Private Placement (See Note E). In addition, warrants to purchase an aggregate of 68,182 shares of common stock were issued to the Company's placement agents, Maxim Group LLC and Imperial Capital LLC (See Note E).

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 are summarized as follows:

	Number of  Shares		Weighted  Average  Exercise  Price Per  Share
Balance at October 1, 2016		7,208,060	$	3.64
Granted		2,340,909		3.47
Exercised		-		-
Cancelled or expired		-		-
Balance at December 31, 2016		9,548,969	$	3.60

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, 2012 and 2015, the Board of Directors and holders of a majority of the outstanding shares of common stock present at the annual meetings of stockholders 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 8,833,333 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 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. As of December 31, 2016, a total of 275,752 shares have been issued and options to purchase 5,759,601 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, 2016		4,403,234		$	4.08
Granted		837,328			2.07
Exercised		-			-
Cancelled or expired		(3,084	)		(3.07	)
Outstanding at December 31, 2016		5,237,478		$	3.76
Vested at December 31, 2016		3,829,118		$	3.95		$	222,290		4.66
Non-vested at December 31, 2016		1,408,360					$	129,083		7.99

During the three month period ended December 31, 2016, the Company issued an aggregate of 837,328 options to employees, non-employee board of director members, a consultant and members of the strategic advisory board. Included in these grants were 280,000 options granted to executives during the three month period ended December 31, 2016 and 5,000 performance based options granted to a consultant. These performance based options vest when a certain performance condition is met by the consultant.

The fair value of options granted during the three month periods ended December 31, 2016 and 2015 was determined using the Black Scholes Option Pricing Model with the following weighted average assumptions:

	Three  Months  Ended  December 31, 2016			Three  Months  Ended  December 31, 2015
Stock price	$	2.06		$	3.04
Exercise price	$	2.06		$	3.04
Expected term, years		5.35			6.10
Dividend yield		-	%		-	%
Volatility		112	%		130	%
Risk free rate		2.0	%		1.8	%

The Company recorded $1,458,020 and $396,991 as stock compensation expense for the three month period ended December 31, 2016 and 2015, respectively. Included in this amount is $74,537 for the three month period ended December 31, 2016 for stock option modifications to extend the term of options for certain nonemployee board of director members. As of December 31, 2016, unrecorded compensation cost related to non-vested awards was $3,568,665, which is expected to be recognized over a weighted average period of approximately 3.27 years. The weighted average grant date fair value per share for options granted during the three month periods ended December 31, 2016 and 2015 was $1.68 and $2.71, respectively.