Quarterly report pursuant to Section 13 or 15(d)

11. Stock-based Compensation

11. Stock-based Compensation

6 Months Ended

Mar. 31, 2017

From time to time, the Company grants stock options and restricted stock awards to directors, officers and employees. These awards are valued at the grant date by determining the fair value of the instruments, net of estimated forfeitures. The value of each award is amortized on a straight-line basis over the requisite service period.

Stock Options

The following table summarizes stock option activity for the six months ended March 31, 2017:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Intrinsic Value
Outstanding at September 30, 2016		175,000	$	11.22		3.75	$	346,500
Granted		36,668		22.52
Exercised		–
Forfeited		–
Outstanding at March 31, 2017		211,668	$	13.19		3.98	$	899,875
Exercisable at March 31, 2017		168,750	$	8.85		2.54	$	899,875

The Company recognized compensation expense of $69,520 and $174,885 during the six months ended March 31, 2017 and 2016, respectively, related to stock option awards granted to certain employees and officers based on the grant date fair value of the awards, net of estimated forfeitures.

At March 31, 2017 the Company has $495,796 of unrecognized compensation expense (net of estimated forfeitures) associated with stock option awards which the company expects to recognize as compensation expense through December of 2021.

The exercise price for stock options outstanding and exercisable at March 31, 2017 is as follows:

Outstanding				Exercisable
Number of		Exercise		Number of		Exercise
Options		Price		Options		Price
	31,250	$	5.00		31,250	$	5.00
	25,000		7.50		25,000		7.50
	31,250		10.00		31,250		10.00
	4,167		10.86
	4,167		10.86
	4,167		10.86
	4,167		10.86
	6,250		12.50		6,250		12.50
	6,250		15.00		–		15.00
	75,000		15.18		75,000		15.18
	4,000		23.41
	4,000		27.60
	4,000		31.74
	4,000		36.50
	4,000		41.98
	211,668				168,750

The following table summarizes information about the Company’s non-vested shares as of March 31, 2017:

Non-vested Shares	Number of Shares		Weighted Average Grant-Date Fair Value

Non-vested at September 30, 2016	6,250	$	14.22
Granted	36,668	$	17.70
Vested	–
Non-vested at March 31, 2017	42,918	$	17.19

Options were granted during 2017 and 2016, where the exercise price was less than the common stock price at the date of grant or where the exercise price was greater than the common stock price at the date of grant. The assumptions used in calculating the fair value of stock options granted use the Black-Scholes option pricing model for options granted were as follows:

Risk-free interest rate		1.25%
Expected life of the options		5.0 to 10.0 years
Expected volatility		107%
Expected dividend yield		0%