STOCK-BASED COMPENSATION

12 Months Ended

Sep. 30, 2011

STOCK-BASED COMPENSATION

9.  STOCK-BASED COMPENSATION

Summary of Stock Option Plans and Activity

In March 2008, our shareholders approved the 2008 Stock Option Plan (the “Plan”) to replace the 1997 Outside Director Stock Option Plan and the 1997 Employee Stock Option Plan.  Future common shares will be granted from the 2008 Stock Option Plan.  The purpose of the Plan is to promote our long-term interests by providing a means of attracting and retaining officers, directors and key employees.  The Compensation Committee shall administer the Plan and approve the particular officers, directors or employees eligible for grants.  Under the Plan, employees are granted the option to purchase our common shares at fair market value on the date of the grant.  Generally, options granted vest and become exercisable in four equal installments commencing one year from date of grant and expire upon the earlier of the employee’s termination of employment with us, or ten years from the date of grant.  This plan terminates in fiscal 2018.

The maximum number of common shares that may be granted under the Plan is 500 shares.  At September 30, 2011, 35 shares remain available for grants under the Plan.

The weighted-average assumptions used to compute the fair value of options granted for the fiscal years ended September 30 were as follows:

	2011			2010
Risk-free interest rate		3.08	%		2.85	%
Dividend yield		0.00	%		0.00	%
Volatility of the expected market price of the Company's common stock		90.00%- 91.00	%		55.00%-96.00	%
Expected life of the options (years)		8.0			8.0

A summary of our stock option activity and related information for the years ended September 30, 2011 and 2010, respectively, is as follows (in thousands except for share prices):

	Options (shares)			Weighted- Average Exercise Price		Weighted- Average Grant  Date Fair Value		Weighted-Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding - October 1, 2009		620		$	5.97
Exercised		-		$	-
Granted		432		$	1.06	$	0.89
Terminated		(347	)	$	6.58
Outstanding - September 30, 2010		705		$	2.66	$	1.82		8.2	$	9
Outstanding - October 1, 2010		705		$	2.66
Exercised		-		$	-
Granted		27		$	2.24	$	1.84
Terminated		(59	)	$	2.54
Outstanding - September 30, 2011		673		$	2.65	$	1.83		7.2	$	69
Exercisable at September 30, 2011		288		$	4.22	$	2.75		5.4	$	12

A summary of non-vested options for the year ended September 30, 2011 is as follows:

	Number of Shares			Weighted- Average Grant Date Fair Value
Non-vested options at October 1, 2010		520		$	1.27
Granted		27		$	1.84
Vested		(108	)	$	1.71
Forfeited		(54	)	$	1.61
Non-vested options at September 30, 2011		385		$	1.14

No options were exercised in fiscal years 2011 and 2010.   As of September 30, 2011, our total unrecognized compensation cost related to non-vested stock options was $291 and is expected to be recognized over a weighted-average service period of 1.53 years.

The following table summarizes outstanding and exercisable options as of September 30, 2011 (in thousands except per share amounts):

Range of Exercise Prices		Shares Outstanding		Weighted- Average Remaining Contractual Life (Years)		Weighted- Average Exercise Price		Shares Exercisable		Weighted- Average Exercise Price
$	0.79 - 2.80		420		8 .74	$	1 .12		73	$	1 .08
$	2.81 - 4.59		114		3 .70	$	4 .28		104	$	4 .36
$	4.60 - 8.79		139		5 .52	$	5 .96		111	$	6 .17