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13. STOCK OPTIONS

9 Months Ended

Jun. 30, 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 June 30, 2021, there were 26,261 shares available for issuance under the Plan.

On July 16, 2021, the Board unanimously approved to (i) increase the number of shares of common stock authorized for issuance under the Plan by an additional 2,000,000 shares, resulting (if such increase is authorized by the

Company’s stockholders at the annual meeting of stockholders on September 15, 2021) in the aggregate of 3,500,000

shares of common stock authorized for issuance under the Plan, and (ii) revise Section 19 of the Plan to more closely

align with the provisions of Section 422 of the Internal Revenue Code of 1986, as amended, and Section 17.2 of the

Plan (the “Plan Amendment”).

As of July 16, 2021, options to purchase an aggregate of 801,500 shares of common stock have been issued to three

officers of the Company, conditioned upon stockholder approval of the Plan Amendment and ratification of such

issuances by the Company’s stockholders, which approval must occur on or prior to April 16, 2022, or such options

shall be rendered null and void.

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 nine months ended June 30, 2021:

	Number of Option Shares			Weighted Average Exercise Price
Balance, September 30, 2020		277,948		$	6.34
Options granted		636,750			14.98
Options expired		(11,928	)		9.13
Options canceled / forfeited		(3,751	)		21.21
Options exercised		(138,918	)		6.10
Balance, June 30, 2021		760,101		$	13.50

As of June 30, 2021, there are options exercisable to purchase 357,774 shares of common stock in the Company. As of June 30, 2021, the outstanding options have a weighted average remaining term of was 3.31 years and an intrinsic value of $3,721,218.

Option activity for the nine months ended June 30, 2021

During the nine months ended June 30, 2021, a total of 138,918 shares of the Company’s common stock were issued in connection with the exercise of 138,918 common stock options at exercise prices ranging from $4.65 and $24.40, for a total consideration of $847,940.

During the nine months ended June 30, 2021, the Company granted 636,750 options with a total fair value of $9,536,795 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 nine months ended June 30, 2021:

Fair value assumptions – Options:	June 30, 2021
Risk free interest rate		0.10-0.41%
Expected term (years)		1.7 – 5.3
Expected volatility		142%-240%
Expected dividends		0%

During the nine months ended June 30, 2021, the Company recognized $8,599,029 of stock compensation expense. As of June 30, 2021, the Company expects to recognize approximately $5.5 million of stock-based compensation for the non-vested outstanding options over a weighted-average period of 2.42 years.

On April 16, 2021, the Company’s board of directors approved one-time options to key executives Zachary Bradford, Lori Love and S. Matthew Schultz subject to the availability of shares under the Company’s 2017 Equity Incentive Plan with any remaining equity options to be granted when the Company obtains shareholder approval to increase the shares under the Plan. As of June 30, 2021, 801,500 of these options were waiting to be issued pending the shareholder approval.

Option activity for the nine months ended June 30, 2020

During the nine months ended June 30, 2020, the Company recognized $1,171,632 of stock compensation expense and granted 233,233 options to purchase shares of common stock to employees, where such options 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 $673,590 was recorded as a result of the issuances.

The Black-Scholes model utilized the following inputs to value the options granted during the nine months ended June 30, 2020:

Fair value assumptions – Options:	June 30, 2020
Risk free interest rate		0.85-1.73%
Expected term (years)		3-5
Expected volatility		124%-209%
Expected dividends		0%