STOCK-BASED COMPENSATION

9 Months Ended

Jun. 30, 2015

STOCK-BASED COMPENSATION

The 2008 Stock Option Plan (“the Plan”) is used to promote our long-term interests by providing a means of attracting and retaining officers, directors and key employees and aligning their interests with those of our shareholders. The Plan is described more fully in Note 9 in the Notes to the Consolidated Financial Statements in our Form 10-K for the year ended September 30, 2014. All options granted under the Plan had an exercise price equal to the market value of the underlying common shares on the date of grant. We expense the estimated fair value of stock options over the vesting periods of the grants. We recognize expense for awards subject to graded vesting using the straight-line attribution method, reduced for estimated forfeitures. Forfeitures are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates and an adjustment is recognized at that time. The Compensation Committee may also issue non-qualified stock option grants with vesting periods different from the Plan. As of June 30, 2015, there are 30 shares underlying options outstanding that were granted outside of the Plan. The assumptions used are detailed in Note 9 to the Consolidated Financial Statements in our Form 10-K for the year ended September 30, 2014. Stock based compensation expense for the three and nine months ended June 30, 2015 was $19 and $67, respectively. Stock based compensation expense for the three and nine months ended June 30, 2014 was $19 and $65, respectively.

A summary of our stock option activity for the nine months ended June 30, 2015 is as follows (in thousands except for share prices):

	Options (shares)			Weighted- Average Exercise Price		Weighted- Average Grant Date Fair Value

Outstanding - October 1, 2014		426		$	1.83	$	1.41
Exercised		(128	)		1.38		1.12
Granted		35			2.38		1.98
Foreitures		(26	)		4.21		2.91
Outstanding -June 30, 2015		307		$	1.88	$	1.48

During the nine months ended June 30, 2015, 128 options were exercised cashlessly and we granted options for 35 common shares under the Plan. The fair value of the option grant is estimated on the date of the grant. The weighted-average assumptions used to compute the fair value of these options were as follows:

Risk-free interest rate	1.93% - 2.13	%
Dividend yield	0.00	%
Expected volatility	88.00% - 100.06	%
Expected life of the options (years)	8.0
Forfeitures	3.00	%