Equity

12 Months Ended

Sep. 30, 2022

Equity [Abstract]

Equity

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 as our “Equity Plans”: (a) the 2010 Equity Incentive Plan (the “2010 Plan”), (b) the 2012 Equity Incentive Plan (the “2012 Plan”), (c) the 2019 Equity Incentive Plan (the “2019 Plan”), and (d) the 2022 New Employee Inducement Plan.

We issue new shares of common stock to satisfy awards granted under our Equity Plans. In March 2022, our shareholders approved the Amended and Restated EMCORE Corporation 2019 Plan, which was adopted by the Company’s Board of Directors in December 2021 and increased the maximum number of shares of the Company’s common stock that may be issued or transferred pursuant to awards under the 2019 Plan by an additional 1.9 million shares. In August 2022, our Board of Directors adopted the EMCORE Corporation 2022 New Employee Inducement Plan, pursuant to which a maximum of 380,000 shares of the Company’s common stock may be issued or transferred pursuant to awards made as an inducement material to the grantee’s entering into employment with the Company to the extent such grantee was not previously an employee of the Company or is entering into employment following a bona fide period of non-employment with the Company.

Stock Options

Most stock options vest and become exercisable over four to five years 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 Code.

The Company has estimated the fair value of each option grant on the date of grant using the Black-Scholes option-pricing model. The expected volatility assumption is based on the historical daily price data of the Company’s common stock over a period equivalent to the weighted average expected life of the Company’s options. The expected term of options granted is derived using assumed exercise rates based on historical exercise patterns and represents the period of time the options granted are expected to be outstanding. The risk-free interest rate is based on the actual U.S. Treasury zero-coupon rates for bonds matching the expected term of the option as of the option grant date. The dividend yield of zero is based upon the fact that the Company has not historically declared or paid cash dividends, and does not expect to declare or pay dividends in the foreseeable future.

The following table summarizes stock option activity under the Equity Plans for the fiscal year ended September 30, 2022:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (*) (in thousands)
Outstanding as of September 30, 2021	19,869	$	4.59
Granted	—	—
Exercised	5,725	5.05
Forfeited	—	—
Expired	4,163	4.13
Outstanding as of September 30, 2022	9,981	$	4.52	2.53	$	—
Exercisable as of September 30, 2022	9,981	$	4.52	2.53	$	—
Vested and expected to vest as of September 30, 2022	9,981	$	4.52	2.53	$	—

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(*)    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, 2021, the intrinsic value of options exercised was $0.

As of September 30, 2022, there was no unrecognized stock-based compensation expense related to non-vested stock options granted under the Equity Plans.

Valuation Assumptions

There were no stock option grants for the fiscal years ended September 30, 2022 and 2021.

Time-Based Restricted Stock

Time-based restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) granted to employees under the 2010 Plan, 2012 Plan, the 2019 Plan, or the 2022 New Employee Inducement 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 value of RSUs is determined by the stock price on the grant date.

The following table summarizes the activity related to RSUs and RSAs subject to time-based vesting requirements for the fiscal year ended September 30, 2022:

	RSUs			RSAs
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Non-vested as of September 30, 2021	1,804,854	$	4.61	—	$	—
Granted	1,987,657	3.46		—	—
Vested	592,711	4.57		—	—
Forfeited	254,420	3.95		—	—
Non-vested as of September 30, 2022	2,945,380	$	3.90	—	$	—

As of September 30, 2022, there was approximately $9.5 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 years. The 2.9 million outstanding non-vested and expected to vest RSUs have an aggregate intrinsic value of $4.9 million and a weighted average remaining contractual term of 1.7 years years. For the fiscal years ended September 30, 2022 and 2021, the intrinsic value of RSUs vested was approximately $3.0 million and $3.6 million, respectively and the weighted average grant date fair value of RSUs granted was $3.46 and $3.41 per share, respectively.

For the fiscal year ended September 30, 2022, $27.3 thousand of RSAs vested. As of September 30, 2022, there was no remaining unamortized stock-based compensation expense associated with RSAs.

Performance-Based Restricted 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 and are subject to forfeiture if specified vesting conditions are not satisfied. PSUs and PRSAs that are granted to executive officers and key employees are provided as long-term incentive compensation that is based on relative total shareholder return, which measures performance against the Russell Microcap Index.

PSUs are valued based on a Monte Carlo simulation model to reflect the impact of the PSUs market condition. The probability of satisfying a market condition is considered in the estimation of the grant-date fair value for PSUs and the compensation cost is not reversed if the market condition is not achieved, provided the requisite service has been provided.

The following table summarizes the activity related to PSUs for the fiscal year ended September 30, 2022:

	PSUs
	Number of Shares (at target)	Weighted Average Grant Date Fair Value
Non-vested as of September 30, 2021	967,000	$	5.01
Granted	1,082,053	4.51
Vested	92,352	5.19
Forfeited	147,648	5.19
Non-vested as of September 30, 2022	1,809,053	$	4.69

As of September 30, 2022, there was approximately $5.0 million of remaining unamortized stock-based compensation expense associated with PSUs, which will be expensed over a weighted average remaining service period of approximately 1.7 years. The 1.8 million outstanding non-vested and expected to vest PSUs have an aggregate intrinsic value of approximately $3.0 million and a weighted average remaining contractual term of 1.7 years. For the fiscal years ended September 30, 2022 and 2021, the intrinsic value of PSUs vested was $321.3 thousand and $34.4 thousand, respectively. For the fiscal years ended September 30, 2022 and 2021, the weighted average grant date fair value of PSUs granted was $4.51 and $3.81 per share, respectively.

For the fiscal year ended September 30, 2022, no PRSAs vested. As of September 30, 2022, there was no remaining unamortized stock-based compensation expense associated with PRSAs.

Stock-Based Compensation

The following table sets forth stock-based compensation expense by award type:

	Year Ended September 30,
(in thousands)	2022		2021
Employee stock options	$	—	$	2
RSUs and RSAs	2,576		2,093
PSUs and PRSAs	2,314		1,396
ESPP	—		307
Outside director equity awards and fees in common stock	484		382
Total stock-based compensation expense	$	5,374	$	4,180

The following table sets forth stock-based compensation expense by expense type:

	Year Ended September 30,
(in thousands)	2022		2021
Cost of revenue	$	952	$	767
Selling, general, and administrative	3,591		2,590
Research and development	831		823
Total stock-based compensation expense	$	5,374	$	4,180

Capital Stock

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. No shares of preferred stock were outstanding as of September 30, 2022.

On February 16, 2021, the Company closed our offering of 6,655,093 shares of our common stock, which included the full exercise of the underwriters’ option to purchase 868,056 additional shares of common stock, at a price to the public of $5.40 per share, resulting in net proceeds to us from the offering, after deducting the underwriting discounts and commissions and other offering expenses, of approximately $33.1 million. The shares were sold by us pursuant to an underwriting agreement with Cowen and Company, LLC, dated as of February 10, 2021. As of September 30, 2022 and 2021, we had 44.5 million and 43.9 million shares of common stock issued and outstanding, respectively. There were no shares of preferred stock issued or outstanding as of September 30, 2022 and 2021.

(Loss) Income Per Share

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

	Year Ended September 30,
(in thousands, except per share data)	2022		2021
Numerator
Net (loss) income	$	(24,333)	$	25,643
Denominator
Weighted average number of shares outstanding - basic	37,269		34,020
Effect of dilutive securities
Stock options	—		7
PSUs, RSUs, and restricted stock	—		1,762
Weighted average number of shares outstanding - diluted	37,269		35,789
Earnings per share - basic	$	(0.65)	$	0.75
Earnings per share - diluted	$	(0.65)	$	0.72
Weighted average antidilutive options, unvested RSUs and RSAs, unvested PSUs and ESPP shares excluded from the computation	858		195

Basic earnings per share (“EPS”) is computed by dividing net (loss) income for the period by the weighted-average number of common stock outstanding during the period. Diluted EPS is computed by dividing net (loss) income for the period by the weighted average number of common stock outstanding during the period, plus the dilutive effect of outstanding RSUs and RSAs, PSUs, stock options, and shares issuable under the employee stock purchase plan (“ESPP”) as applicable pursuant to the treasury stock method. Certain of the Company's outstanding share-based awards, noted in the table above, were excluded because they were anti-dilutive, but they could become dilutive in the future. The anti-dilutive stock options and shares of outstanding and unvested restricted stock were excluded from the computation of earnings per share for the fiscal year ended September 30, 2022 due to the Company incurring a net loss for such period.

ESPP

Until September 2021, we maintained the ESPP, which provided employees an opportunity to purchase common stock through payroll deductions. The ESPP was a 6-month duration plan with new participation periods beginning on approximately February 25 and August 26 each year, with the purchase price set at 85% of the average high and low market price of common stock on either the first or last trading day of the participation period, whichever was lower, and annual contributions were limited to the lower of 10% of an employee’s compensation or $25.0 thousand. In September 2021, the Compensation Committee of our Board Directors approved the termination of the ESPP, effective immediately.

Prior to termination of the ESPP, we issued 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 year ended September 30, 2021 totaled approximately 192.0 thousand. As of the termination of the ESPP in September 2021, the total amount of common stock issued under the ESPP totaled 3,395,090 shares.

Future Issuances

Common stock reserved for future issuances was as follows:

	As of September 30, 2022
Exercise of outstanding stock options	9,981
Unvested RSUs and RSAs	2,945,380
Unvested PSUs and PRSAs (at 200% maximum payout)	3,618,106
Issuance of stock-based awards under the Equity Plans	271,282
Purchases under the officer and director share purchase plan	88,741
Total reserved	6,933,490