STOCK-BASED COMPENSATION

12 Months Ended

Sep. 30, 2014

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, 2014, 234 shares remain available for grants under the Plan.

The Compensation Committee has also issued non-qualified stock option grants with vesting periods different from the Plan. As of September 30, 2014 and 2013, total non-qualified stock options outstanding were 155.

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

	2014		2013
Risk-free interest rate	2.36	%		1.42	%
Dividend yield	0.00	%		0.00	%
Volatility of the expected market price of the Company's common stock	94.50%-94.70	%		93.60%-93.70	%
Expected life of the options (years)	8.0			8.0

A summary of our stock option activity for all options and related information for the years ended September 30, 2014 and 2013, 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, 2012		354		$	1.99
Exercised		(7	)	$	1.35	$	1.14
Granted		178		$	1.46	$	1.20
Terminated		(46	)	$	2.35
Outstanding - September 30, 2013		479		$	1.77	$	1.35		7.9	$	43

Outstanding - October 1, 2013		479		$	1.77
Exercised		(11	)	$	1.14	$	0.95
Granted		40		$	2.69	$	2.25
Terminated		(82	)	$	2.00
Outstanding - September 30, 2014		426		$	1.83	$	1.41		7.2	$	348

Exercisable at September 30, 2014		317		$	1.83	$	1.38		6.7	$	279

The aggregate intrinsic value is the product of the total options outstanding and the net positive difference of our common share price on September 30, 2014 and the options' exercise price. A summary of non-vested options for the year ended September 30, 2014 is as follows:

	Number of Shares			Weighted- Average Grant Date Fair Value

Non-vested options at October 1, 2013		261		$	1.11
Granted		40		$	2.25
Vested		(131	)	$	1.08
Forfeited		(61	)	$	1.20
Non-vested options at September 30, 2014		109		$	1.51

Eight options with an intrinsic value of $13 were exercised using a cashless exercise and 3 options with an intrinsic value of $4 were exercised using cash in fiscal 2014, which resulted in the issuance of 7 common shares, In fiscal 2013, 7 options with an intrinsic value of $1 were exercised using a cashless exercise, resulting in the issuance of 1 common share. As of September 30, 2014, our total unrecognized compensation cost related to non-vested stock options was $116 and is expected to be recognized over a weighted-average service period of 1.06 years. As of September 30, 2014, there are 155 shares outstanding that were granted outside of the Plan. Stock-based compensation expense for employee stock options for the years ended September 30, 2014 and 2013 was $84 and $225, respectively.

The following table summarizes outstanding and exercisable options as of September 30, 2014 (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
$	0.79-1.01		86		6.54	$	0.96		62	$	0.96
$	1.02-4.59		296		8.12	$	1.58		211	$	1.38
$	4.60-8.79		44		2.13	$	5.18		44	$	5.18

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References+ Details