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STOCK OPTIONS

3 Months Ended

Dec. 31, 2019

Other Liabilities Disclosure [Abstract]

The Company sponsors a stock-based incentive compensation plan known as the 2017 Incentive Plan (the “Plan”), which was established by the Board of Directors of the Company on June 19, 2017. A total of 300,000 shares were initially reserved for issuance under the Plan. As of December 31, 2019, there were 82,049 shares available for issuance under the plan.

The Plan allows the Company to grant incentive stock options, non-qualified stock options, stock appreciation right, or restricted stock. The incentive stock options are exercisable for up to ten years, at an option price per share not less than the fair market value on the date the option is granted. The incentive stock options are limited to persons who are regular full-time employees of the Company at the date of the grant of the option. Non-qualified options may be granted to any person, including, but not limited to, employees, independent agents, consultants and attorneys, who the Company’s Board believes have contributed, or will contribute, to the success of the Company. Non-qualified options may be issued at option prices of less than fair market value on the date of grant and may be exercisable for up to ten years from date of grant. The option vesting schedule for options granted is determined by the Board of Directors at the time of the grant. The Plan provides for accelerated vesting of unvested options if there is a change in control, as defined in the Plan.

The following is a summary of stock option activity during the three months ended December 31, 2019.

		Number of Option Shares				Weighted Average Exercise Price
Balance, September 30, 2019			81,254			$	11.82
Options granted			136,697			$	5.62
Options expired			—				—
Options canceled			—				—
Options exercised			—				—
Balance, December 31, 2019			217,951			$	7.93

As of December 31, 2019, there are options exercisable to purchase 193,265 shares of common stock in the Company. As of December 31, 2019, the outstanding options have a weighted average remaining term of was 2.60 years and an intrinsic value of $26,382.

Option activity for the three months ended December 31, 2019

During the three months ended December 31, 2019, the Company issued 136,697 options to purchase shares of common stock to employees, the shares were granted at quoted market prices ranging from $4.50 to $8.50. The options were valued at issuance using the Black Scholes model and stock compensation expense of $478,022 was recorded as a result of the issuances.

The Black-Scholes model utilized the following inputs to value the options granted during the three months ended December 31, 2019:

Fair value assumptions – Options:		December 31, 2019
Risk free interest rate			1.52-1.73%
Expected term (years)			3-5
Expected volatility			124%-144%
Expected dividends			0%

As of December 31, 2019, the Company expects to recognize $271,478 of stock-based compensation for the non-vested outstanding options over a weighted-average period of 2.62 years.

Option activity for the three months ended December 31, 2018

During the three months ended December 31, 2018, the Company issued 5,779 options to purchase shares of common stock to employees, the shares were granted at quoted market prices ranging from $15.10 to $59.00. The options were valued at issuance using the Black Scholes model and stock compensation expense of $95,000 was recorded as a result of the issuances.

On March 10, 2018 the Company issued a total of 25,000 options to four consultants for advisory services. The options vest evenly 12 months from issuance. The options expire 24 months after issuance and require a cash investment to exercise. The options were valued at issuance using the Black Scholes model at $342,500 and amortized of the term of the agreement. During the three months ended December 31, 2018, $126,678 was expensed as stock-based compensation.

The Black-Scholes model utilized the following inputs to value the options granted during the three months ended December 31, 2018:

Fair value assumptions – Options:		December 31, 2018
Risk free interest rate			2.84-2.90%
Expected term (years)			3
Expected volatility			266%-271%
Expected dividends			0%

Tabular disclosure of the freestanding option contracts issued by an entity that are indexed to, and potentially settled in, an entity's own stock. Includes disclosure on the strike price and the number of shares to which the contract is indexed, the settlement date or dates of the contract, and the issuer's accounting for the contract. If the terms of the contract provide settlement alternatives, those settlement alternatives are disclosed, including who controls the settlement alternatives, and the maximum number of shares that could be required to be issued, to net share settle the contract, if applicable. If a contract does not have a fixed or determinable maximum number of shares that could be required to be issued, the fact that a potentially infinite number of shares that may be required to be issued to settle the contract is disclosed. Disclosure also includes the contract's current fair value for each settlement alternative and how changes in the price of the issuer's equity instruments affect those settlement amounts.

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