STOCKHOLDERS' EQUITY

6 Months Ended

Oct. 31, 2011

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

6.          STOCKHOLDERS’ EQUITY

Common Stock

At the Company’s annual shareholder meeting on September 16, 2011, shareholders approved a reduction in the number of authorized common shares from 200 million to 55 million shares.  Accordingly, as of October 31, 2011, the number of authorized shares is 55 million and the number issued and outstanding was 26,580,681.

Preferred Stock

On September 16, 2011, there being no shares of the Series A Junior Participating Preferred Stock outstanding, the Series A Junior Participating Preferred Stock was eliminated from the Company’s Certificate of Incorporation.

Employee Equity Plans

The Company utilizes a combination of Employee Stock Purchase, Stock Option and Restricted Stock plans as a means to provide equity ownership in the Company for its employees. In the six months ended October 31, 2011, 32,032 shares of common stock were issued under the Employee Stock Purchase Plan (“ESPP”) and 202,042 shares remained available for issuance under that plan as of October 31, 2011.

Activity under the stock option and restricted stock plans was as follows (in thousands, except exercise price amounts):

			Outstanding Options
	Shares Available For Grant(1)		Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value
Balances, April 30, 2011	1,465		4,642		$	3.77	$	320
Restricted stock and restricted stock units issued	(33	)
Restricted stock and restricted stock units forfeited	132
Options granted	(538	)	538		1.05
Options exercised			(4	)	0.85
Options forfeited	450		(450	)	1.62
Options expired	829		(829	)	5.12
Plan shares expired	(188	)
Balances, October 31, 2011	2,117		3,897		$	3.36	$	38

(1)  Shares available for grant include shares from the 1999 Non-Officer Equity Incentive Plan, the 2005 New Recruit Stock Option Plan, the 2005 New Recruit Stock Plan, and the 2006 Equity Incentive Plan that may be issued as either stock options, restricted stock or restricted stock units. Shares issued under the 2006 Equity Incentive Plan as stock bonus awards, stock purchase awards, stock unit awards, or other stock awards in which the issue price is less than the fair market value on the date of grant of the award count as the issuance of 1.3 shares for each share of common stock issued pursuant to these awards for purposes of the share reserve.

The weighted average remaining contractual term for outstanding options as of October 31, 2011, is 5.92 years.

The summary of options vested and exercisable at October 31, 2011 comprised (in thousands, except term and exercise price):

	Number of Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term
Fully vested and expected to vest options	3,734	$	3.46	$	38	5.77
Options exercisable	2,570	$	4.45	$	37	4.44

The summary of unvested restricted stock awards for the six months ended October 31, 2011, comprised (in thousands, except per share data):

	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested restricted stock, April 30, 2011	3		$	3.55
Restricted stock issued	—		—
Restricted stock vested	(2	)	4.35
Nonvested restricted stock, October 31, 2011	1		$	2.92

RSUs are converted into shares of the Company’s common stock upon vesting on a one-for-one basis. Typically, vesting of RSUs is subject to the employee’s continuing service to the Company. RSUs generally vest over a period of 4 years and are expensed ratably on a straight-line basis over their respective vesting period net of estimated forfeitures.  A summary of activity of RSUs for the six months ended October 31, 2011 is presented below:

	Number of Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in thousands)				(years)	(in thousands)
Nonvested restricted stock units, April 30, 2011	230		$	1.07	1.1	$	313
Restricted stock units issued	25		1.05
Restricted stock units forfeited	(100	)	1.05
Nonvested restricted stock units, October 31, 2011	155		$	1.08	1.1	$	171
Restricted stock units expected to vest after October 31, 2011	70		$	1.13	1.1	$	61

For the six months ended October 31, 2011 and 2010, the total fair value of restricted stock awards that vested was $14,000 and $0.1 million, respectively.

As of October 31, 2011, there was approximately $0.7 million of total unrecognized compensation cost related to stock options and restricted stock/RSUs that is expected to be recognized over a weighted-average period of 2.5 years for options and 1.4 years for restricted stock and restricted stock units.

The key assumptions used in the fair value model and the resulting estimates of weighted-average fair value per share used to record stock-based compensation during the three and six month periods ended October 31, 2011 and 2010, for options granted and for employee stock purchases under the ESPP, are as follows:

	Three months ended October 31,						Six months ended October 31,
	2011			2010			2011			2010
Stock options:
Dividend yield(1)	—			—			—			—
Volatility factor(2)	0.71			0.69			0.70			0.67
Risk-free interest rate(3)	1.19		%	1.18		%	1.5		%	1.8		%
Expected life (years)(4)	4.7			4.6			4.7			4.6
Weighted average fair value of options granted during the period	$	0.60		$	0.60		$	0.60		$	0.75
Employee stock purchase plan:(5)
Dividend yield(1)	—			—			—			—
Volatility factor(2)	—			—			0.72			0.56
Risk-free interest rate(3)	—		%	—		%	0.19		%	0.32		%
Expected life (years)(4)	—			—			0.50			0.99
Weighted average fair value of employee stock purchases during the period	$	—		$	—		$	0.43		$	0.49
Restricted stock and restricted stock units:
Weighted average fair value of restricted stock and RSUs granted during the period	$	1.05		$	—		$	1.05		$	—

(1)  The Company has no history or expectation of paying dividends on its common stock.

(2)  The Company estimates the volatility of its common stock at the date of grant based on the historic volatility of its common stock for a term consistent with the expected life of the awards affected at the time of grant.

(3)  The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in affect at the time of grant.

(4)  The expected life of stock options granted under the stock option plans is based on historical exercise patterns, which the Company believes are representative of future behavior. The expected life of grants under the ESPP represents the amount of time remaining in the 12-month offering window.

(5)  Assumptions for the ESPP relate to the most recent enrollment period. Enrollment is currently permitted in May and November of each year.