Equity

Equity Plans

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


•	the 2000 Stock Option Plan,


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


•	the 2012 Equity Incentive Plan (“2012 Plan”), and


•	the 2019 Equity Incentive Plan (“2019 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 six months ended March 31, 2019:



	Number of Shares		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (*) (in thousands)
Outstanding as of September 30, 2018	69,980		$4.74
Granted	—		—
Exercised	(208	)	$3.97		—
Forfeited	(52	)	$3.97
Expired	(1,267	)	$5.21
Outstanding as of March 31, 2019	68,453		$4.74	4.70	$	1
Exercisable as of March 31, 2019	48,118		$4.76	3.87	$	1
Vested and expected to vest as of March 31, 2019	68,453		$4.74	4.70	$	1

(*) 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, 2018, the intrinsic value of options exercised was $13,000.

As of March 31, 2019, there was approximately $14,000 of unrecognized stock-based compensation expense related to non-vested stock options granted under the Equity Plans which is expected to be recognized over an estimated weighted average life of 1.6 years.

Valuation Assumptions

There were no stock option grants for the six months ended March 31, 2019 and 2018.

Time-Based Restricted Stock

Time-based restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) granted to employees under the 2010 Plan, 2012 Plan or 2019 Plan typically vest over 3 to 4 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. RSAs are considered issued and outstanding on the grant date and are subject to forfeiture if specified vesting conditions are not satisfied.

The following table summarizes the activity related to RSUs and RSAs subject to time-based vesting requirements for the six months ended March 31, 2019:



Restricted Stock Activity	Restricted Stock Units			Restricted Stock Awards
Restricted Stock Activity	Number of Shares		Weighted Average Grant Date Fair Value	Number of Shares	Weighted Average Grant Date Fair Value
Non-vested as of September 30, 2018	1,011,621		$6.04	8,154	$8.20
Granted	63,254		$3.94	—	$0.00
Vested	(223,174	)	$6.00	—	$0.00
Forfeited	(117,108	)	$4.73	—	$0.00
Non-vested as of March 31, 2019	734,593		$6.08	8,154	$8.20

As of March 31, 2019, there was approximately $3.8 million of remaining unamortized stock-based compensation expense associated with RSUs, which will be expensed over a weighted average remaining service period of approximately 2.7 years. The 0.7 million outstanding non-vested and expected to vest RSUs have an aggregate intrinsic value of approximately $2.7 million and a weighted average remaining contractual term of 1.6 years. For the six months ended March 31, 2019 and 2018, the intrinsic value of RSUs vested was approximately $0.9 million and $2.0 million, respectively. For the six months ended March 31, 2018, the weighted average grant date fair value of RSUs granted was $6.53 per share.

As of March 31, 2019, there was approximately $34,000 of remaining unamortized stock-based compensation expense associated with RSAs, which will be expensed over a weighted average remaining service period of approximately 1.5 years.

Performance Stock

Performance based restricted stock units (“PSUs”) and performance based shares of restricted stock (“PRSAs”) granted to employees under the 2012 Plan or 2019 Plan typically vest over 1 to 3 years and are subject to forfeiture in whole, if employment terminates, or in whole or in part, if specified vesting conditions are not satisfied, in each case prior to vesting. PSUs are not considered issued or outstanding common stock until they vest. PRSAs are considered issued and outstanding on the grant date (at 200% of the target number of shares) and are subject to forfeiture if specified vesting conditions are not satisfied. PSUs and PRSAs that are granted to our executive officers and key employees are provided as long-term incentive compensation that is based on relative total shareholder return, which measures our performance against that of our competitors.

The following table summarizes the activity related to PSUs and PRSAs for the six months ended March 31, 2019:



Performance Stock Activity	Performance Stock Units			Performance Stock Awards
Performance Stock Activity	Number of Shares (at Target)		Weighted Average Grant Date Fair Value	Number of Shares (at Target)	Weighted Average Grant Date Fair Value
Non-vested as of September 30, 2018	397,777		$8.48	33,333	$12.25
Granted	—		$0.00	—	$0.00
Vested	(30,874	)	$7.14	—	$0.00
Forfeited	(132,579	)	$7.24	—	$0.00
Non-vested as of March 31, 2019	234,324		$9.35	33,333	$12.25

As of March 31, 2019, there was approximately $1.0 million of remaining unamortized stock-based compensation expense associated with PSUs, which will be expensed over a weighted average remaining service period of approximately 1.5 years. The 0.2 million outstanding non-vested and expected to vest PSUs have an aggregate intrinsic value of approximately $0.9 million and a weighted average remaining contractual term of 1.5 years. There were no PSUs vested in the three months ended March 31, 2019 and 2018. For the six months ended March 31, 2019 and 2018, the intrinsic value of PSUs vested was approximately $0.2 million and $1.4 million, respectively. For the six months ended March 31, 2018, the weighted average grant date fair value of PSUs granted was $7.62.

As of March 31, 2019, there was approximately $0.1 million of remaining unamortized stock-based compensation expense associated with PRSAs, which will be expensed over a weighted average remaining service period of approximately 0.5 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 March 31,				For the six months ended March 31,
(in thousands)	2019		2018		2019		2018
Employee stock options	$	7	$	10	$	14	$	20
Restricted stock units and awards	396		412		782		863
Performance stock units and awards	229		361		169		650
Employee stock purchase plan	42		75		82		161
Outside director equity awards and fees in common stock	47		75		99		154
Total stock-based compensation expense	$	721	$	933	$	1,146	$	1,848



Stock-based Compensation Expense - by expense type	For the three months ended March 31,				For the six months ended March 31,
(in thousands)	2019		2018		2019		2018
Cost of revenue	$	109	$	115	$	220	$	254
Selling, general, and administrative	473		652		632		1,290
Research and development	139		166		294		304
Total stock-based compensation expense	$	721	$	933	$	1,146	$	1,848

Stock-based compensation within selling, general and administrative expense was lower for the six months ended March 31, 2019 due to the reversal of previously recognized expense associated with the forfeiture of unvested RSUs and PSUs of our former CFO Jikun Kim.

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. Since June 2015, all employer contributions are made in cash. Our matching contribution in cash for the each of the three months ended March 31, 2019 and 2018 was approximately $0.1 million. Our matching contribution in cash for the each of the six months ended March 31, 2019 and 2018 was approximately $0.3 million.

Loss Per Share

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



Basic and Diluted Net Loss Per Share	For the three months ended March 31,						For the six months Ended March 31,
(in thousands, except per share)	2019			2018			2019			2018
Numerator:
Loss from continuing operations	$	(4,994	)	$	(3,071	)	$	(10,532	)	$	(3,153	)
Undistributed earnings allocated to common shareholders for basic and diluted net income per share	(4,994		)	(3,071		)	(10,532		)	(3,153		)
Denominator:
Denominator for basic and fully diluted net loss per share - weighted average shares outstanding	27,652			27,197			27,592			27,113

Net loss per basic and fully diluted share	$	(0.18	)	$	(0.11	)	$	(0.38	)	$	(0.12	)

Weighted average antidilutive options, unvested restricted stock units and awards, unvested performance stock units and ESPP shares excluded from the computation	849			972			535			793

Average market price of common stock	$	4.26		$	6.05		$	4.48		$	6.79

For diluted loss per share, the denominator includes all outstanding common shares and all potential dilutive common shares to be issued. The anti-dilutive stock options and unvested stock were excluded from the computation of diluted net loss per share for the three months ended March 31, 2019 and 2018 due to the Company incurring a net loss for the period.

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 approximately 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 trading 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, 2019, 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	68,453
Unvested restricted stock units and awards	742,747
Unvested performance stock units and awards (at 200% maximum payout)	535,314
Purchases under the employee stock purchase plan	674,152
Issuance of stock-based awards under the Equity Plans	3,621,906
Purchases under the officer and director share purchase plan	88,741
Total reserved	5,731,313