Stock-based Compensatin, Equity Grants, and Warrants

9 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based Compensation, Equity Grants, and Warrants

Stock-based Compensation, Equity Grants, and Warrants

Stock-based compensation expense

Options issued under equity incentive plans were designated as either an incentive stock or a non-statutory stock option. No option was granted with a term of more than 10 years from the date of grant. Exercisability of option awards may depend on achievement of certain performance measures determined by the Compensation Committee of our Board. Shares issued upon option exercise are newly issued shares. As of June 30, 2017, there were 0.5 million shares available for grant.

Stock-based compensation expense, shown in the table below, is recorded in general and administrative expenses included in our statement of operations:

		(in thousands)				(in thousands)
		Three Months Ended				Nine Months Ended
	Ref	June 30,				June 30,
		2017		2016		2017		2016
DLH employees		$	55	$	6	$	117	$	20
Non-employee directors	(a)	8		36		496		364
Total stock option expense		$	63	$	42	$	613	$	384

Ref (a): Equity grants of restricted stock, in accordance with DLH compensation policy for non-employee directors. The shares granted in the first quarters of fiscal years ending September 30, 2017 and 2016 vested immediately, and stock expense of approximately $456 thousand and $304 thousand, respectively were recognized accordingly.

Unrecognized stock-based compensation expense

		(in thousands)
		Nine Months Ended
		June 30,
	Ref	2017		2016
Unrecognized expense for DLH employees	(a)	$	398	$	24
Unrecognized expense for non-employee directors		—		36
Total unrecognized expense		$	398	$	60

Ref (a): Compensation expense for the portion of equity awards for which the requisite service has not been rendered is recognized as the requisite service is rendered. The compensation expense for that portion of awards has been based on the grant-date fair value of those awards as calculated for recognition purposes under applicable guidance. The remaining term for the weighted average expense of these shares will be 2.5 years.

Stock option activity for the nine months endedJune 30, 2017

The aggregate intrinsic value in the table below represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their in the money options on those dates. This amount will change based on the fair market value of the Company’s stock.

					(in years)
					Weighted
				Weighted	Average	(in thousands)
		(in thousands)		Average	Remaining	Aggregate
		Number of		Exercise	Contractual	Intrinsic
	Ref	Shares		Price	Term	Value
Options outstanding, September 30, 2016		2,226		$1.43	5.8	$	7,581
Canceled		—
Granted	(a)	400		$5.94
Exercised		(397	)	$3.00
Options outstanding, June 30, 2017		2,229		$3.66	6.5	$	7,490

Ref (a): Options granted to DLH employees were valued using a Black Scholes calculation, under the following criteria:

•average yield rate of 2.46% was used

•contractual lives and expected lives were 10 years for all grants

•probability of exercise was based on reaching the market price

•monthly price volatility factor of 12% was used

•no dividend yield was contemplated

The resulting fair values ranged from $0.93 to $1.47, depending on the market measure of the stock price

Stock options shares outstanding, vested and unvested for the period ended

		Number of Shares
		(in thousands)
		June 30,	September 30,
	Ref	2017	2016
Vested and exercisable		1,562	1,909
Unvested	(a)	667	317
Options outstanding		2,229	2,226

Ref (a): Certain awards vest upon satisfaction of certain performance criteria.