Fair Value Accounting

12 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Accounting

Fair Value Accounting

ASC 820, Fair Value Measurements, establishes a valuation hierarchy for disclosure of the inputs to valuation techniques used to measure fair value. This 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 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.

• 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 this 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, 2013
Assets:
Cash and cash equivalents	$	16,104	—	—	$	16,104
Restricted cash	815		—	—	815
Liabilities:
Warrant liability	—		155	—	155
As of September 30, 2012
Assets:
Cash and cash equivalents	$	9,047	—	—	$	9,047
Restricted cash	82		—	—	82
Liabilities:
Warrant liability	—		670	—	670

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

Restricted cash represents temporarily restricted deposits held as compensating balances against short-term borrowing arrangements.

As of September 30, 2013 and 2012, warrants representing the right to purchase 400,001 and 750,011 shares, respectively, of our common stock were outstanding. All of our 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 income (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 effect a mandatory exercise of each warrant. The valuation model requires the input of subjective assumptions, including the warrant's expected life and the price volatility of the underlying stock. The change in the fair value of our warrants has been primarily due to the change in the closing price of our common stock.

Assumptions used in Monte Carlo Option Valuation Model	Warrants issued on February 20, 2008		Warrants issued on October 1, 2009
	As of September 30, 2013	As of September 30, 2012	As of September 30, 2013	As of September 30, 2012
Number of warrants issued	—	350,010	400,001	400,001
Expiration date	—	2/20/2013	4/1/2015	4/1/2015
Exercise price	$—	$60.24	$6.76 - $9.44	$6.76 - $9.44
Expected dividend yield	—	—	—	—
Expected stock price volatility	—%	54.82%	51.52%	81.56%
Risk-free interest rate	—%	0.14%	0.22%	0.27%
Expected term (in years)	0	0.39	1.50	2.50
Total warrant valuation	$—	$—	$155,000	$670,000

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

Impairment tests related to our goodwill and long-lived assets involves comparing fair value to carrying amount. See Note 9 - Intangible Assets for disclosures related to recent long-lived asset impairment tests.