Equity

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,


•	the 2010 Equity Incentive Plan, and


•	the 2012 Equity Incentive Plan.

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

The Board of Directors (the “Board”) of the Company previously approved, subject to stockholder approval, amendments to the 2012 Plan that would, among other changes, (1) increase the limit on the aggregate number of shares of common stock that may be delivered pursuant to awards granted under the 2012 Plan by 500,000 shares to a new aggregate share limit of 2,500,000 shares; (2) make shares exchanged or withheld by the Company to satisfy any purchase price and tax withholding obligations related to options or “full value awards” (such as restricted stock or stock unit awards), and the total number of shares subject to stock appreciation rights (whether or not issued) count against the 2012 Plan’s share limit and no longer available for new grants under the 2012 Plan; (3) implement a maximum grant date fair value limit for awards granted to non-employee directors under the 2012 Plan during any one calendar year of $250,000 (or $350,000 in the case of awards to a non-employee director serving as Chairman of the Board or Lead Independent Director at the time of grant, or to a newly elected or appointed non-employee director during the first calendar year of service), (4) expressly allow the administrator to permit or require participants to defer awards granted under the 2012 Plan, (5) extend the term of the 2012 Plan until March 11, 2026; and (6) extend the performance-based award feature of the 2012 Plan through the first annual meeting of stockholders that occurs in 2021. The Company’s stockholders approved the amendments to the 2012 Plan on March 11, 2016. As a result of the approval of the amendments to the 2012 Plan by the Company's stockholders, no more shares may be granted under the 2007 Directors' Stock Award Plan.

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 six months ended March 31, 2016:



	Number of Shares		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (*) (in thousands)
Outstanding as of September 30, 2015	696,459		$22.47
Granted	16,700		$6.37
Exercised	(37,413	)	$4.98		$	80
Forfeited	(5,700	)	$6.35
Expired	(52,099	)	$31.22
Outstanding as of March 31, 2016	617,947		$22.51	2.76	$	97
Exercisable as of March 31, 2016	567,172		$23.97	2.18	$	97
Vested and expected to vest as of March 31, 2016	607,534		$22.79	2.65	$	97

(*) 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. For the six months ended March 31, 2015, the intrinsic value of options exercised was $95,000.

As of March 31, 2016, there was approximately $0.2 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 4.0 years.

On December 10, 2014, in connection with the sale of the Photovoltaics Business, which constituted a change in control, the terms of approximately 56,000 stock options for approximately 80 employees were modified to include accelerated vesting effective as of that date. The total incremental benefit resulting from the modifications was approximately $0.2 million and is included in the Company's income from discontinued operations, net of tax, for the six months ended March 31, 2015.

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 March 31,					For the six months ended March 31,
	2016		2015			2016			2015
Black-Scholes weighted average assumptions:
Expected dividend rate	—	%	—		%	—		%	—		%
Expected stock price volatility rate	61.0	%	72.7		%	61.3		%	76.0		%
Risk-free interest rate	1.5	%	1.7		%	1.6		%	1.8		%
Expected term (in years)	6.0		6.0			6.0			6.0

Weighted average grant date fair value per share of stock options granted:	$2.97		$	3.51		$	3.64		$	3.55

Restricted Stock

Restricted stock units (RSUs) granted to employees under the 2010 Plan and 2012 Plan typically vest over 3 years and are subject to forfeiture if employment terminates prior to the lapse of the restrictions. RSUs are not considered issued or outstanding common stock until they vest.

The following table summarizes the activity related to RSUs for the six months ended March 31, 2016:



Restricted Stock Activity	Restricted Stock Units
	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested as of September 30, 2015	570,231		$5.26
Granted	280,650		$5.22
Vested	(251,970	)	$5.14
Forfeited	(7,916	)	$5.15
Non-vested as of March 31, 2016	590,995		$5.30

As of March 31, 2016, there was approximately $2.6 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 2.2 years. The 0.6 million outstanding non-vested RSUs have an aggregate intrinsic value of approximately $3.0 million and a weighted average remaining contractual term of 1.5 years. For the six months ended March 31, 2016 and 2015, the intrinsic value of RSUs vested was approximately $1.4 million and $4.4 million, respectively. Of the 0.6 million outstanding non-vested RSUs at March 31, 2016, approximately 0.5 million are expected to vest and have an aggregate intrinsic value of approximately $2.7 million and a weighted average remaining contractual term of 1.5 years.

On December 10, 2014, in connection with the sale of the Photovoltaics Business, which constituted a change in control, the terms of approximately 147,000 RSUs for approximately 80 employees were modified to include accelerated vesting effective as of that date. The total incremental expense resulting from the modifications was approximately $49,000 and is included in the Company's income from discontinued operations, net of tax, for the six months ended March 31, 2015. In total, approximately 0.3 million RSU's vested due to change in control provisions.

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 March 31,				For the six months ended March 31,
(in thousands)	2016		2015		2016		2015
Employee stock options	$	10	$	7	$	16	$	184
Restricted stock awards and units	453		797		719		2,056
Employee stock purchase plan	56		14		111		64
401(k) match in common stock	—		144		—		224
Outside director fees in common stock	94		72		130		280
Total stock-based compensation expense	$	613	$	1,034	$	976	$	2,808



Stock-based Compensation Expense - by expense type	For the three months ended March 31,				For the six months ended March 31,
(in thousands)	2016		2015		2016		2015
Cost of revenue	$	113	$	81	$	182	$	185
Selling, general, and administrative	420		849		608		2,414
Research and development	80		104		186		209
Total stock-based compensation expense	$	613	$	1,034	$	976	$	2,808

The stock based compensation expense above relates to continuing operations. Stock based-compensation within selling, general and administrative expense was higher for three and six months ended March 31, 2015 due to stock-based compensation expense associated with the sale of the Photovoltaics and Digital Products Businesses. Included within discontinued operations is $0.9 million of stock based compensation expense for the six months ended March 31, 2015.

401(k) Plan

We have a savings plan that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under this savings plan, participating employees may defer a portion of their pretax earnings, up to the Internal Revenue Service annual contribution limit. All employer contributions were made in common stock through June 30, 2015 and since then have been made in cash. Our matching contribution in cash for the three and six months ended March 31, 2016 was approximately $0.1 million and $0.2 million, respectively. For the three and six months ended March 31, 2015, we contributed approximately $0.1 million and $0.2 million, respectively, in common stock to the savings plan. All participant accounts had their holdings in company stock liquidated as of December 3, 2015.

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 March 31,						For the six months ended March 31,
(in thousands, except per share)	2016			2015			2016			2015

Numerator:
Loss from continuing operations	$	(162	)	$	(956	)	$	(296	)	$	(4,086	)
Income from discontinued operations	4,144			4,008			5,265			63,266
Undistributed earnings allocated to common shareholders for basic and diluted net (loss) income per share	3,982			3,052			4,969			59,180
Denominator:
Denominator for basic and diluted net income (loss) per share - weighted average shares outstanding	25,942			32,077			25,818			31,640

Net income (loss) per basic and diluted share:
Continuing operations	$	(0.01	)	$	(0.03	)	$	(0.01	)	$	(0.13	)
Discontinued operations	0.16			0.13			0.20			2.00
Net income per basic and diluted share	$	0.15		$	0.10		$	0.19		$	1.87

Weighted average antidilutive options, unvested restricted stock units and awards, warrants and ESPP shares excluded from the computation	721			2,214			794			2,434

Average market price of common stock	$	5.44		$	5.34		$	6.19		$	5.32

The antidilutive stock options, unvested stock and warrants were excluded from the computation of diluted net income (loss) per share due to the Company incurring a net loss for the periods presented.

Employee Stock Purchase Plan

We maintain an Employee Stock Purchase Plan ("ESPP") that provides employees an opportunity to purchase common stock through payroll deductions. The ESPP is a 6-month duration plan with new participation periods beginning on February 25 and August 26 of each year. The purchase price is set at 85% of the average high and low market price of our common stock on either the first or last day of the participation period, whichever is lower, and annual contributions are limited to the lower of 10% of an employee's compensation or $25,000.

Future Issuances

As of March 31, 2016, 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	617,947
Unvested restricted stock units	590,995
Purchases under the employee stock purchase plan	881,706
Issuance of stock-based awards under the Equity Plans	837,887
Purchases under the officer and director share purchase plan	88,741
Issuance of deferred stock-based awards under the Directors' Stock Award Plan, as amended	22,163
Total reserved	3,039,439