Fair Value Accounting

12 Months Ended

Sep. 30, 2011

Fair Value Accounting [Abstract]

Fair Value Accounting [Text Block]

Fair Value Accounting

ASC 820, Fair Value Measurements and Disclosures, establishes a valuation hierarchy for disclosure of the inputs to valuation techniques used to measure fair value. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

• Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. We classify investments within Level 1 if quoted prices are available in active markets. Level 1 assets include instruments valued based on quoted market prices in active markets which generally could include money market funds, corporate publicly traded equity securities on major exchanges, and U.S. Treasury notes with quoted prices on active markets.

• Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly, through market corroboration, for substantially the full term of the financial instrument. We classify items in Level 2 if the investments are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. These investments could include: government agencies, corporate bonds, commercial paper, and auction rate securities.

• Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. We do not hold any financial assets or liabilities within Level 3.

Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The following table lists our financial assets and liabilities that are measured at fair value on a recurring basis:

Fair Value Measurement
(in thousands)	[Level 1]		[Level 2]		[Level 3]
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Remaining Inputs		Significant Unobservable Inputs		Total
As of September 30, 2011
Assets:
Cash	$	15,598	$	—	$	—	$	15,598
Restricted fund deposits	544		—		—		544
Liabilities:
Warrants	—		601		—		601
As of September 30, 2010
Assets:
Cash	$	19,944	$	—	$	—	$	19,944
Restricted fund deposits	1,298		—		—		1,298
Liabilities:
Warrants	—		475		—		475

Cash consists primarily of bank deposits and occasionally highly liquid short-term investments with a maturity of three months or less at the time of purchase.

In fiscal 2010, restricted cash represents interest-bearing investments in bank certificates of deposit or similar type money market funds which act as collateral supporting the issuance of letters of credit and performance bonds for the benefit of third parties and temporary bank controlled deposits on account. In fiscal 2011, restricted cash represents recently deposited cash that is temporary controlled by our bank.

As of September 30, 2011 and 2010, warrants representing 3,000,003 shares of our common stock were outstanding. All of our warrants are classified as a liability since the warrants meet the classification requirements for liability accounting pursuant to ASC 815, Derivatives and Hedging. Each quarter, we expect an impact on our statement of operations and comprehensive loss when we record the change in fair value of our outstanding warrants using the Monte Carlo option valuation model. The Monte Carlo option valuation model is used since it allows the valuation of each warrant to factor in the value associated with our right to affect a mandatory exercise of each warrant.

Assumptions used in Monte Carlo Option Valuation Model	Warrants issued on February 20, 2008		Warrants issued on October 1, 2009
	As of September 30, 2011	As of September 30, 2010	As of September 30, 2011	As of September 30, 2010
Number of warrants issued	1,400,003	1,400,003	1,600,000	1,600,000
Expiration date	2/20/2013	2/20/2013	4/1/2015	4/1/2015
Exercise price	$15.06	$15.06	$1.69 - $2.36	$1.69 - $2.36
Expected dividend yield	—	—	—	—
Expected stock price volatility	88.12%	117.93%	111.71%	100.11%
Risk-free interest rate	0.13%	0.42%	0.42%	1.27%
Expected term (in years)	1.39	2.39	3.50	4.50
Total warrant valuation	$9,800	$0 (1)	$590,800	$475,093

(1) Prior to January 1, 2011, these warrants were classified as equity instruments. During the quarter ended March 31, 2011, we determined that the warrants issued in February 2008 should have been accounted for as a liability since these warrants met the definition of a derivative instrument and did not qualify for equity classification. The valuation of the warrants was based on a Monte Carlo option pricing model which resulted in a fair value of approximately $8.2 million, $1.8 million, $0.4 million, $0.1 million, and $0.2 million as of February 20, 2008, September 30, 2008, September 30, 2009, September 30, 2010 and December 31, 2010, respectively. During the three months ended March 31, 2011, we adjusted common stock and accumulated deficit, both equity-related accounts, by $8,218,000 and $8,022,000, respectively, and recorded the liability related to the fair value of the warrants as of January 1, 2011 of $196,000 to correct the initial accounting treatment of the warrants from equity to liability accounting as an out-of-period adjustment.

The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, prepaid expenses and other current assets, borrowings under our credit facility, accounts payable, accrued expenses and other current liabilities approximate fair value because of the short maturity of these instruments.

Impairment tests for our long-lived assets involves comparing fair value to carrying amount. We derive fair value using both the guideline public company valuation method, and on a lesser extent, the discounted cash flow valuation method. The guideline public company valuation method entails a comparison to publicly traded companies within similar industry, product lines, market, growth, margins and risk and is generally based on published data regarding the public companies' stock price, revenue, and earnings. The discounted cash flow valuation method is based on both undiscounted and discounted cash flow models using assumptions about revenue growth rates, appropriate discount rates relative to risk, and estimates of terminal value. See Footnote 9 - Intangible Assets for additional disclosures related to impairment of our long-lived assets.