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13. STOCK OPTIONS

6 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [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. On October 7, 2020, the Company executed a first amendment to the Plan to increase its share pool from 300,000 to 1,500,000 shares of common stock. As of March 31, 2021, there were 461,767 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 six months ended March 31, 2021.

	Number of Option Shares		Weighted Average Exercise Price
Balance, September 30, 2020		277,948	$	6.34
Options granted		298,500		9.03
Options expired		11,511		8.65
Options cancelled		—		—
Options exercised		98,202		5.82
Balance, March 31, 2021		466,735	$	8.11

As of March 31, 2021, there are options exercisable to purchase 338,191 shares of common stock in the Company. As of March 31, 2021, the outstanding options have a weighted average remaining term of was 2.43 years and an intrinsic value of $7,345,720.

Option activity for the six months ended March 31, 2021

During the six months ended March 31, 2021, a total of 98,202 shares of the Company’s common stock were issued in connection with the exercise of 98,202 common stock options at exercise prices ranging from $4.65 and $24.40, for a total consideration of $571,747.

During the six months ended March 31, 2021, the Company issued 298,500 options with a total fair value of $2,696,715 to purchase shares of common stock to employees. The Company offset $953,125 of stock compensation expense against bonuses accrued during the prior year. The shares were granted at quoted market prices ranging from $7.55 to $34.67 and were valued at issuance using the Black Scholes model.

The Black-Scholes model utilized the following inputs to value the options granted during the six months ended March 31, 2021:

Fair value assumptions – Options:	March 31, 2021
Risk free interest rate		0.18-0.22%
Expected term (years)		3
Expected volatility		167%-172%
Expected dividends		0%

During the six months ended March 31, 2021 and 2020, the Company recognized of $1,163,401and $716,740 of stock compensation expense respectively. As of March 31, 2021, the Company expects to recognize $742,865 of stock-based compensation for the non-vested outstanding options over a weighted-average period of 1.01 years.

Option activity for the six months ended March 31, 2020

During the six months ended March 31, 2020, the Company issued 233,233 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 $716,740 was recorded as a result of the issuances.

The Black-Scholes model utilized the following inputs to value the options granted during the six months ended March 31, 2020:

Fair value assumptions – Options:	March 31, 2020
Risk free interest rate		0.85-1.73%
Expected term (years)		3-5
Expected volatility		124%-209%
Expected dividends		0%