13. STOCK-BASED COMPENSATION

12 Months Ended

Sep. 30, 2021

Equity [Abstract]

13. STOCK-BASED COMPENSATION

13.   STOCK-BASED COMPENSATION

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.

On September 15, 2021, the shareholders approved and the Company executed a second amendment to (i) increase the number of shares of common stock authorized for issuance under the Plan by an additional 2,000,000 shares, resulting in an 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.

As of September 30, 2021, there were 1,225,351 shares available for issuance under the Plan.

The Plan allows the Company to grant incentive stock options, non-qualified stock options, stock appreciation rights, or restricted stock units. 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 full-time employees of the Company at the date of the grant of the option. 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.

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. As of September 30, 2021, no non-qualified options were granted to any person.

The Company recognized $3,868,927 and $3,608,885 for the years ended September 30, 2021 and September 30, 2020, respectively, in stock-based compensation under the stock-based incentive compensation plan.

STOCK OPTIONS

The following is a summary of stock option activity during the year ended September 30, 2021: 

	Number of Option Shares			Weighted Average Exercise Price ($)
Balance, September 30, 2019		81,254			11.82
Options granted		233,233			5.28
Options expired		(25,692	)		8.71
Options canceled		(10,847	)		19.04
Options exercised		—			—
Balance, September 30, 2020		277,948			6.34
Options granted		1,469,250			19.32
Options expired		(12,975	)		10.53
Options canceled		(45,876	)		16.31
Options exercised		(141,318	)		6.14
Balance, September 30, 2021		1,547,029			18.35

As of September 30, 2021, there are options exercisable to purchase 525,646 shares of common stock in the Company and 1,028,383 unvested options outstanding that cannot be exercised until vesting conditions are met. As of September 30, 2021, the outstanding options have a weighted average remaining term of 4.03 years and an intrinsic value of $1,579,336.

Option activity for the year ended September 30, 2021

During the year ended September 30, 2021, a total of 141,318 shares of the Company’s common stock were issued in connection with the exercise of 141,318 common stock options at exercise prices ranging from $4.65 to $24.40, for a total consideration of $867,308.

During the year ended September 30, 2021, the Company granted 1,469,250 options with a total fair value of $21,582,485 to purchase shares of common stock to employees. The Company offset $953,125 of stock compensation expense against bonuses accrued during the prior year and recognized $7,731,606 during the 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 year ended September 30, 2021:

Fair value assumptions Options:	September 30, 2021
Risk free interest rate		0.10-0.41%
Expected term (years)		1.5-5.25
Expected volatility		140% to 239%
Expected dividends		0%

As of September 30, 2021, the Company expects to recognize $16,434,789 of stock-based compensation for the non-vested outstanding options over a weighted-average period of 2.47 years.

Option activity for the year ended September 30, 2020

During the year ended September 30, 2020, the Company issued 233,233 options to purchase shares of common stock to employees, the options were granted with exercise prices equal to the then current 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 year ended September 30, 2020:

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

RESTRICTED STOCK UNITS

The Company grants RSUs that contain either a) service conditions, or b) performance conditions, or c) market performance conditions. RSUs containing service conditions vest monthly or annually. RSUs containing performance conditions generally vest over 1 year, and the number of shares earned depends on the achievement of predetermined Company metrics.

When the criteria for vesting is met, the Company recognizes the expense equal to the total fair value of the common stock price on the grant date. All of the RSUs issued prior to September 30, 2021 were either vested or forfeited and cancelled.

The following table summarizes the performance-based restricted stock units at the maximum award amounts based upon the respective performance share agreements. Actual shares that will vest depend on the attainment of the performance-based criteria.

	Number of Shares			Weighted Average Grant- Date Fair Value Per Share		Aggregate Intrinsic Value
Outstanding at September 30, 2020		—			—		—
Granted		579,302		$	10.53	$	1,669,711
Vested		(558,475	)	$	10.03	$	1,651,231
Forfeited		(9,832	)	$	17.98	$	18,480
Outstanding at September 30, 2021		10,995		$	27.73		—

As of September 30, 2021, the Company had $123,216 unrecognized compensation cost related to restricted stock unit awards that will be recognized over a weighted average period of 0.4 years.

The Company recognized stock-based compensation expenses related to restricted stock units, of $3,862,679 for fiscal 2021. The Company recognized $1,904,520 in stock-based compensation expense for restricted stock units issued in 2021 related to 2020 bonuses.