Quarterly report pursuant to Section 13 or 15(d)

STOCK-BASED COMPENSATION

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STOCK-BASED COMPENSATION
6 Months Ended
Mar. 31, 2021
STOCK-BASED COMPENSATION  
STOCK-BASED COMPENSATION

5.STOCK-BASED COMPENSATION

2013 Stock Incentive Plan

On June 18, 2013, the Company established the 2013 Stock Incentive Plan (the “2013 Plan”). Under the 2013 Plan, during the fiscal year ended September 30, 2020, a maximum number of 28,114,256 shares of the Company’s authorized and available common stock could be issued in the form of options, stock appreciation rights, sales or bonuses of restricted stock, restricted stock units or dividend equivalent rights, and an award may consist of one such security or benefit, or two or more of them in any combination or alternative. The 2013 Plan provides that on the first business day of each fiscal year commencing with fiscal year 2014, the number of shares of our common stock reserved for issuance under the 2013 Plan for all awards except for incentive stock option awards will be subject to increase by an amount equal to the lesser of (A) 3,000,000 Shares, (B) four (4) percent of the number of shares outstanding on the last day of the immediately preceding fiscal year of the Company, or (C) such lesser number of shares as determined by the Company’s Board of Directors (the “Board”). The exercise price of each option shall be the fair value as determined in good faith by the Board at the time each option is granted. On October 1, 2020, the aggregate number of authorized shares under the Plan was further increased by 3,000,000 shares to a total of 31,114,256 shares.

As of March 31, 2021, a total of 19,199,212 options had been issued to employees and directors and 8,792,500 options had been issued to consultants. The exercise price of each option is equal to the closing price of a share of our common stock on the date of grant option.

Share-based awards

During the six months ended March 31, 2021, the Company granted 20,000 options to employees and directors and 1,075,000 options to consultants to purchase shares of common stock under the 2013 Plan.

Share-based compensation expense for awards granted during the six months ended March 31, 2021 was based on the grant date fair value estimated using the Black-Scholes Option Pricing Model. The following assumptions were used to calculate the fair value of share-based compensation for the six months ended March 31, 2021; expected volatility, 79.44% - 119.44%, risk-free interest rate, 0.13% – 2.85%, expected dividend yield, 0%, expected term, 5.6 years. Expected price volatility is the measure by which the Company’s stock price is expected to fluctuate during the expected term of an option. The Company exited shell company status on June 26, 2013. In situations where a newly public entity has limited historical data on the price of its publicly traded shares and no other traded financial instruments, authoritative guidance is provided on estimating this assumption by basing its expected volatility on the historical, expected, or implied volatility of similar entities whose share option prices are publicly available. In making the determination as to similarity, the guidance recommends the consideration of industry, stage of life cycle, size and financial leverage of such other entities. Prior to January 1, 2018, the Company’s expected volatility was derived from the historical daily change in the market price of its common stock since it exited shell company status, as well as the historical daily change in the market price for the peer group as determined by the Company. Effective January 1, 2018, the Company’s expected volatility is derived from the historical daily change in the market price of its common stock since it exited shell company status.

Common Stock Options

Stock compensation activity under the 2013 Plan for the six months ended March 31, 2021 follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

Weighted

 

Average

 

 

 

 

 

Option

 

Average

 

Remaining

 

Aggregate

 

 

Shares

 

Exercise

 

Contractual

 

Intrinsic

 

 

Outstanding

 

Price

 

Term (years)

 

Value

Outstanding at September 30, 2020

 

18,248,346

 

$

0.36

 

2.59

 

$

79,330

Awarded

 

1,095,000

 

 

0.17

 

 

 

Forfeited/Cancelled

 

(213,348)

 

 

0.44

 

 

 

Outstanding at March 31, 2021

 

19,129,998

 

 

0.35

 

2.45

 

 

123,233

Vested at March 31, 2021

 

17,059,070

 

 

0.37

 

2.52

 

 

83,541

Vested and expected to vest at March 31, 2021

 

19,129,998

 

$

0.35

 

2.45

 

$

123,233

 

As of March 31, 2021, 6,318,356 shares are available for future grants under the 2013 Plan. Share-based compensation expense recorded in the Company’s Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020 resulting from stock options awarded to the Company’s employees, directors and consultants was approximately $89,000 and $258,000, respectively. Of this amount during the three months ended March 31, 2021 and 2020, $27,000 and $112,000, respectively, were recorded as research and development expenses, and $62,000 and $146,000, respectively were recorded as general and administrative expenses in the Company’s Consolidated Statements of Operations. Share-based compensation expense recorded in the Company’s Consolidated Statements of Operations for the six months ended March 31, 2021 and 2020 resulting from stock options awarded to the Company’s employees, directors and consultants was approximately $174,000 and $417,000, respectively. Of this amount during the six months ended March 31, 2021 and 2020, $53,000 and $229,000, respectively, were recorded as research and development expenses, and $121,000 and $188,000, respectively were recorded as general and administrative expenses in the Company’s Consolidated Statements of Operations.

During the six months ended March 31, 2021 and 2020, no stock options awarded were exercised.

As of March 31, 2021, there is approximately $183,000 of unrecognized compensation expense related to unvested stock-based compensation arrangements granted under the 2013 Plan. That cost is expected to be recognized over a weighted average period of 1.19 years.

Restricted Stock

On October 14, 2020, the Company awarded 50,000 shares of Restricted Stock to a consultant. The shares subject to this grant were awarded under the 2013 Plan and vested 90 days from the date of the award. In addition, in the event of a Change of Control (as such term is defined in the 2013 Plan), 100% of the grants will immediately vest. On January 27, 2021, the Company awarded 500,000 shares of Restricted Stock to a consultant. The shares subject to this grant are awarded under the 2013 Plan and vested immediately.

On July 19, 2018, the Company awarded 745,000 shares of Restricted Stock to members of the Board of Directors and management and 220,000 shares of Restricted Stock to a consultant. The shares subject to this grant are awarded under the 2013 Plan and vested on the second anniversary of the date of grant. In addition, in the event of a Change of Control (as such term is defined in the 2013 Plan), 100% of the grants will immediately vest. As of September 30, 2020, all restricted shares have vested.

Restricted stock activity in shares under the 2013 Plan for the six months ended March 31, 2021 and 2020 follows:

 

 

 

 

 

 

 

    

2020

    

2019

Non Vested at September 30, 2020 and 2019

 

 —

 

965,000

Awarded

 

550,000

 

 —

Vested

 

(550,000)

 

 —

Forfeited

 

 —

 

 —

Non Vested at March 31, 2021 and 2020

 

 —

 

965,000

 

The weighted average restricted stock award date fair value information for the six months ended March 31, 2021 and 2020 follows:

 

 

 

 

 

 

 

 

 

    

2020

    

2019

Non Vested at September 30, 2020 and 2019

 

$

 —

 

$

0.57

Awarded

 

 

0.19

 

 

 —

Vested

 

 

(0.19)

 

 

 —

Forfeited

 

 

 —

 

 

 —

Non Vested at March 31, 2021 and 2020

 

$

 —

 

$

0.57

 

For the three months ended March 31, 2021 and 2020 compensation expense recorded for the restricted stock awards was approximately $104,000 and $39,000, respectively. For the six months ended March 31, 2021 and 2020 compensation expense recorded for the restricted stock awards was approximately $104,000 and $79,000, respectively.