Annual report pursuant to Section 13 and 15(d)

Stock Option Plans

v2.4.0.6
Stock Option Plans
12 Months Ended
Sep. 30, 2012
Stock Option Plans [Abstract]  
Stock Option Plans
13. Stock Option Plans

As of September 30, 2012, there were stock options outstanding under the Company's 1995 Stock Option Plan, Second Amended and Restated 1997 Stock Option Plan, 1999 Stock Option Plan and the 2011 Company Incentive Plan.  All four plans were approved by the shareholders.  The 1995 Stock Option Plan and the 1999 Stock Option Plan have expired, and no further options may be granted under those plans.  During fiscal 2009, the Second Amended and Restated 1997 Stock Option Plan was approved by the Board and shareholders to make an additional 592,000 options available for granting and as of September 30, 2012 there were 700,840 shares available for issuance under the Second Amended and Restated 1997 Stock Option Plan.  As of September 30, 2012 there were 500,000 shares available for issuance under the 2011 Company Incentive Plan.  The plans granted specified numbers of options to non-employee directors, and they authorized the Compensation Committee of the Board of Directors to grant either incentive or non-statutory stock options to employees.  Vesting periods are established by the Compensation Committee at the time of grant.  All stock options outstanding as of September 30, 2012 were non-statutory stock options, had exercise prices equal to the market price on the date of grant, and had expiration dates ten years from the date of grant.
 
A summary of stock option activity is as follows:
 
 
 
Year Ended September 30
 
 (Number of Options in Thousands)
 
2012
 
 
2011
 
 
 
 
 
 
 
 
Number of options outstanding:
 
 
 
 
 
 
Beginning of year
 
 
301
 
 
 
388
 
Granted
 
 
1,747
 
 
 
 
Exercised
 
 
 
 
 
(12
)
Terminated
 
 
(301
)
 
 
(75
)
 
 
 
 
 
 
 
 
 
End of year
 
 
1,747
 
 
 
301
 
 
 
 
 
 
 
 
 
 
Number of options exercisable at end of year
 
 
1,658
 
 
 
255
 
Number of options available for grant at end of year
 
 
1,201
 
 
 
731
 
 
 
 
 
 
 
 
 
 
Weighted average option prices per share:
 
 
 
 
 
 
 
 
Granted during the year
 
$
.41
 
 
$
 
Exercised during the year
 
 
 
 
 
.40
 
Terminated during the year
 
 
 
 
 
1.26
 
Outstanding at end of year
 
 
.38
 
 
 
.95
 
Exercisable at end of year
 
 
.40
 
 
 
1.00
 
 
Stock options outstanding as of September 30, 2012 were as follows (number of options in thousands):

Range of
Exercise Prices
 
Number Outstanding
 
Weighted Average Price
Number Exercisable
 
Weighted Average Price
Average Remaining Life (Years)
 
 
 
 
 
 
 
 
 
 
 
 
Under $1.00
 
1,747
 
$
.38
 
1,658
 
$
.40
4
$
1.25 to $2.39
 
 
 
 
As of September 30, 2012, the aggregate intrinsic value of outstanding stock options and exercisable stock options was $0.19.  There were no stock options exercised during the year.

The average fair value of stock options granted was estimated to be $0.26 per share in fiscal 2012.  No stock options were issued in fiscal year 2011.   This estimate was made using the Black-Scholes option pricing model and the following weighted average assumptions:
 
 
 
2012
 
 
2011
 
 
 
 
 
 
 
Expected option life (years)
 
 
5.0
 
 
 
 
 
Expected stock price volatility
 
 
76
%
 
 
 
 
Expected dividend yield
 
 
%
 
 
 
 
Risk-free interest rate
 
 
.91
%
 
 
 
 

Stock-based compensation expense attributable to stock options was $422,000 in fiscal 2012 and $8,000 in fiscal 2011.  As of September 30, 2012, there was approximately $46,000 of unrecognized compensation expense related to unvested stock options outstanding, and the weighted average vesting period for those options was 2.5 years.