Equity

9 Months Ended

Jun. 30, 2013

Equity [Abstract]

Equity

Equity

Stock Sale

During August 2012, we filed a shelf registration statement on Form S-3 with the SEC pursuant to which we may, from time to time, sell up to an aggregate of $50 million of our common or preferred stock, warrants or debt securities. On August 23, 2012, the registration statement was declared effective by the SEC, which will allow us to access the capital markets for the three year period following this effective date. On October 3, 2012 we sold 1,832,410 shares of common stock for net proceeds of $9.5 million.

Equity Plans

We provide long-term incentives to eligible officers, directors, and employees in the form of equity-based awards.  We maintain three equity incentive compensation plans, collectively described below as our Equity Plans:

• the 2000 Stock Option Plan (2000 Plan),

• the 2010 Equity Incentive Plan (2010 Equity Plan),

• the 2012 Equity Incentive Plan (2012 Equity Plan).

We issue new shares of common stock to satisfy awards issued under our Equity Plans.

Stock Options

Most of our stock options vest and become exercisable over a four to five year period and have a contractual life of 10 years. Certain stock options awarded are intended to qualify as incentive stock options pursuant to Section 422A of the Internal Revenue Code.

The following table summarizes stock option activity under the Equity Plans for the nine months ended June 30, 2013:

	Number of Shares		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (*) (in thousands)
Outstanding as of September 30, 2012	2,032,215		$17.76
Granted	72,650		$4.47
Exercised	(77,740	)	$4.94		$	93
Forfeited	(58,345	)	$7.19
Expired	(193,808	)	$20.18
Outstanding as of June 30, 2013	1,774,972		$17.86	4.60
Exercisable as of June 30, 2013	1,468,333		$20.53	3.94	$	7
Vested and expected to vest as of June 30, 2013	1,736,536		$18.15	4.51	$	7

(*) Intrinsic value for stock options represents the “in-the-money” portion or the positive variance between a stock option's exercise price and the underlying stock price.

As of June 30, 2013, there was approximately $0.7 million of unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested stock options granted under the Equity Plans which is expected to be recognized over an estimated weighted average life of 2.4 years.

Valuation Assumptions

The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option valuation model, adhering to the straight-line attribution approach using the following weighted-average assumptions, of which the expected term and stock price volatility rate are highly subjective:

	For the Three Months Ended June 30,					For the Nine Months Ended June 30,
	2013		2012			2013			2012
Black-Scholes weighted average assumptions:
Expected dividend rate	—	%	—		%	—		%	—		%
Expected stock price volatility rate	96.7	%	104.2		%	96.8		%	104.4		%
Risk-free interest rate	1.3	%	0.8		%	1.1		%	0.8		%
Expected term (in years)	6.0		5.0			6.0			5.0
Weighted average grant date fair value per share of stock options granted:	$2.98		$	3.04		$	3.45		$	3.09

Restricted Stock

Restricted stock awards (RSAs) and restricted stock units (RSUs) granted under the 2010 Equity Plan and 2012 Equity Plan typically vest over 3 years and are subject to forfeiture if employment terminates prior to the lapse of the restrictions. RSAs are considered issued and outstanding shares on the grant date and have the same dividend and voting rights as other common stock. RSUs are not considered issued or outstanding common stock until they vest.

The following table summarizes the activity related to RSAs and RSUs for the nine months ended June 30, 2013:

Restricted Stock Activity	Restricted Stock Awards			Restricted Stock Units
	Number of Shares		Weighted Average Grant Date Fair Value	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested as of September 30, 2012	216,703		$5.83	700,043		$4.44
Granted	—		—	528,300		$4.63
Vested	(106,797	)	$5.83	(177,509	)	$3.87
Forfeited	(8,208	)	$5.68	(92,967	)	$4.49
Non-vested as of June 30, 2013	101,698		$5.84	957,867		$4.65

Restricted stock awards: As of June 30, 2013, there was approximately $0.3 million of remaining unamortized stock-based compensation expense, net of estimated forfeitures, associated with RSAs, which will be expensed over a weighted average remaining service period of approximately 0.6 years.

Restricted stock units: As of June 30, 2013, there was approximately $2.8 million of remaining unamortized stock-based compensation expense, net of estimated forfeitures, associated with RSUs, which will be expensed over a weighted average remaining service period of approximately 2.0 years. The 1.0 million outstanding non-vested RSUs have an aggregate intrinsic value of approximately $3.4 million and a weighted average remaining contractual term of 1.2 years. Of the 1.0 million outstanding non-vested RSUs, approximately 0.9 million RSUs are expected to vest and have an aggregate intrinsic value of approximately $3.1 million and a weighted average remaining contractual term of 1.2 years.

Stock-based compensation

The effect of recording stock-based compensation expense was as follows:

Stock-based Compensation Expense - by award type	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
(in thousands)	2013		2012		2013		2012
Employee stock options	$	163	$	232	$	544	$	2,367
Restricted stock awards and units	547		605		1,468		2,126
Employee stock purchase plan	124		124		380		537
401(k) match in common stock	267		280		780		755
Outside director fees in common stock	51		34		113		212
Total stock-based compensation expense	$	1,152	$	1,275	$	3,285	$	5,997

Stock-based Compensation Expense - by expense type	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
(in thousands)	2013		2012		2013		2012
Cost of revenue	$	311	$	220	$	916	$	1,289
Selling, general, and administrative	485		708		1,326		2,954
Research and development	356		347		1,043		1,754
Total stock-based compensation expense	$	1,152	$	1,275	$	3,285	$	5,997

Income (Loss) Per Share.

The following table sets forth the computation of basic and diluted net income (loss) per share:

Basic and Diluted Net Income (Loss) Per Share	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
(in thousands, except per share)	2013			2012			2013			2012
Numerator - Net income (loss)	$	(7,283	)	$	(9,039	)	$	7,240		$	(32,603	)
Less: Undistributed earnings allocated to participating securities	—			—			(42		)	—
Undistributed earnings allocated to common shareholders for basic net income (loss) per share	$	(7,283	)	$	(9,039	)	$	7,198		$	(32,603	)
Undistributed earnings allocated to common shareholders for diluted net income (loss) per share	$	(7,283	)	$	(9,039	)	$	7,198		$	(32,603	)
Denominator:
Denominator for basic net income (loss) per share - weighted average shares outstanding	26,609			23,686			26,320			23,441
Dilutive options outstanding, unvested stock units and ESPP	—			—			300			—
Denominator for diluted net income (loss) per share - adjusted weighted average shares outstanding	26,609			23,686			26,620			23,441
Basic net income (loss) per share	$	(0.27	)	$	(0.38	)	$	0.27		$	(1.39	)
Diluted net income (loss) per share	$	(0.27	)	$	(0.38	)	$	0.27		$	(1.39	)
Weighted average antidilutive options, unvested restricted stock units and awards, warrants and ESPP shares excluded from the computation	2,873			3,531			2,467			3,604
Average market price of common stock	$	4.11		$	4.19		$	4.81		$	4.27

The antidilutive stock options and unvested stock were excluded from the computation of diluted net income (loss) per share due to the assumed proceeds from the award’s exercise or vesting being greater than the average market price of the common shares or due to the Company incurring a net loss for the periods presented.

Future Issuances

As of June 30, 2013, we had common stock reserved for the following future issuances:

Future Issuances	Number of Common Stock Shares Available for Future Issuances
Exercise of outstanding stock options	1,774,972
Unvested restricted stock units	957,867
Purchases under the employee stock purchase plan	636,001
Issuance of stock-based awards under the Equity Plans	584,730
Exercise of outstanding warrants	400,001
Purchases under the officer and director share purchase plan	93,745
Total reserved	4,447,316