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 fiscal year ended September 30, 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	(2,199	)	$4.16
Expired	(15,719	)	$3.97
Outstanding as of September 30, 2019	51,854		$5.00	4.79	$	0
Exercisable as of September 30, 2019	41,200		$5.07	4.43	$	0
Vested and expected to vest as of September 30, 2019	51,854		$5.00	4.79	$	0

(*) 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 fiscal year ended September 30, 2018, the intrinsic value of options exercised was $23,000.

As of September 30, 2019, there was approximately $20,000 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 1.1 years.

Valuation Assumptions

There were no stock option grants for the fiscal years ended September 30, 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 vesting or lapse of the restrictions, as applicable. 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 fiscal year ended September 30, 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	752,416		$3.68	—	$0.00
Vested	(321,335	)	$5.94	—	$0.00
Forfeited	(443,455	)	$5.22	—	$0.00
Non-vested as of September 30, 2019	999,247		$4.66	8,154	$8.20

As of September 30, 2019, there was approximately $3.7 million of remaining unamortized stock-based compensation expense associated with RSUs, which will be expensed over a weighted average remaining service period of approximately 2.9 years. The 1.0 million outstanding non-vested and expected to vest RSUs have an aggregate intrinsic value of approximately $3.1 million and a weighted average remaining contractual term of 2.9 years. For the fiscal years ended September 30, 2019, 2018, and 2017, the intrinsic value of RSUs vested was approximately $1.4 million, $2.3 million and $3.4 million, respectively. For the fiscal year ended September 30, 2018 and 2017, the weighted average grant date fair value of RSUs granted was $5.80 and $8.20 per share.

As of September 30, 2019, there was approximately $23,000 of remaining unamortized stock-based compensation expense associated with RSAs, which will be expensed over a weighted average remaining service period of approximately 1.0 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 the Russell Microcap Index.

The following table summarizes the activity related to PSUs and PRSAs for the fiscal year ended September 30, 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	280,000		$5.19	—	$0.00
Vested	(30,874	)	$7.14	—	$0.00
Forfeited	(175,079	)	$7.36	—	$0.00
Non-vested as of September 30, 2019	471,824		$7.03	33,333	$12.25

As of September 30, 2019, there was approximately $1.7 million of remaining unamortized stock-based compensation expense associated with PSUs, which will be expensed over a weighted average remaining service period of approximately 1.9 years. The 0.5 million outstanding non-vested and expected to vest PSUs have an aggregate intrinsic value of approximately $1.4 million and a weighted average remaining contractual term of 1.8 years. For the fiscal years ended September 30, 2019 and 2018, the intrinsic value of PSUs vested was approximately $0.2 million and $1.4 million, respectively. There were no PSUs vested in the fiscal year ended September 30, 2017. For the fiscal year ended September 30, 2018, the weighted average grant date fair value of PSUs granted was $7.62.

As of September 30, 2019, there was approximately $9,000 of remaining unamortized stock-based compensation expense associated with PRSAs, which will be expensed over a weighted average remaining service period of approximately 0.05 years.

Stock-based compensation

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



Stock-based Compensation Expense - by award type	For the Fiscal Years ended September 30,
(in thousands)	2019		2018		2017
Employee stock options	$	25	$	32	$	45
Restricted stock units and awards	1,495		1,742		1,643
Performance stock units and awards	685		1,343		1,367
Employee stock purchase plan	180		276		300
Outside director equity awards and fees in common stock	221		255		247
Total stock-based compensation expense	$	2,606	$	3,648	$	3,602



Stock-based Compensation Expense - by expense type	For the Fiscal Years ended September 30,
(in thousands)	2019		2018		2017
Cost of revenue	$	482	$	450	$	492
Selling, general, and administrative	1,478		2,584		2,605
Research and development	646		614		505
Total stock-based compensation expense	$	2,606	$	3,648	$	3,602

Stock-based compensation within selling, general and administrative expense was lower for the fiscal year ended September 30, 2019 due to the reversal of previously recognized expense associated with the forfeiture of unvested RSUs and PSUs of our former CFO Jikun Kim.

Capital Stock

Our authorized capital stock consists of 50 million shares of common stock, no par value, and 5,882,352 shares of preferred stock, $0.0001 par value. As of September 30, 2019, we had 35.8 million and 28.9 million shares of common stock issued and outstanding, respectively. There were no shares of preferred stock issued or outstanding as of September 30, 2019 and 2018.

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 each of the fiscal years ended September 30, 2019, 2018 and 2017 was approximately $0.6 million, $0.5 million and $0.5 million respectively.

(Loss) Income 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 Fiscal Years ended September 30,
(in thousands, except per share)	2019			2018			2017
Numerator:
(Loss) income from continuing operations	$	(35,984	)	$	(17,453	)	$	8,221
Undistributed (loss) earnings allocated to common shareholders for basic and diluted net (loss) income per share	(35,984		)	(17,453		)	8,235
Denominator:
Denominator for basic and fully diluted net (loss) income per share - weighted average shares outstanding	27,983			27,266			26,659
Dilutive options outstanding, unvested stock units, unvested stock awards and ESPP	—			—			885
Denominator for diluted net (loss) income per share - adjusted weighted average shares outstanding	27,983			27,266			27,544

Net (loss) income per basic and fully diluted share	$	(1.29	)	$	(0.64	)	$	0.31

Weighted average antidilutive options, unvested restricted stock units and awards, unvested performance stock units and ESPP shares excluded from the computation	810			949			398

Average market price of common stock	$	3.91		$	5.87		$	8.92

For diluted (loss) income 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 fiscal years ended September 30, 2019 and 2018 due to the Company incurring a net loss for the period. For the fiscal year ended September 30, 2017, we excluded 0.4 million of weighted average outstanding stock options, RSUs and PSUs from the calculation of diluted net income per share because their effect would have been anti-dilutive.

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.

Per the amended ESPP and after giving effect to the special dividend paid in July 2016, the total number of shares of common stock on which options may be granted under the ESPP were 3,515,574 shares. We issue new shares of common stock to satisfy the issuance of shares under this stock-based compensation plan. Common stock issued under the ESPP during the fiscal years ended September 30, 2019, 2018 and 2017 totaled 197,000, 171,000 and 133,000 shares, respectively. As of September 30, 2019, the total amount of common stock issued under the ESPP totaled 2,971,843 shares and the total shares remaining available for issuance under the ESPP totaled 543,731.

Future Issuances

As of September 30, 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	51,854
Unvested restricted stock units and awards	1,007,401
Unvested performance stock units and awards (at 200% maximum payout)	1,010,314
Purchases under the employee stock purchase plan	543,731
Issuance of stock-based awards under the Equity Plans	2,753,829
Purchases under the officer and director share purchase plan	88,741
Total reserved	5,455,870