Equity and Stock-Based Compensation

2017 Equity Offering

On August 18, 2017, we entered into an Underwriting Agreement with Roth Capital Partners, LLC, as underwriter (the “Underwriter”), relating to a firm commitment underwritten offering (the “Offering”) of 1,055,000 shares of our common stock, par value $0.01 per share, at a price of $9.50 per share, and granted the Underwriter an option to purchase up to 158,250 additional shares (the “Over-Allotment Option”) of our common stock to cover over-allotments, if any. On August 23, 2017, we and the Underwriter closed the Offering and the Underwriter exercised its Over-Allotment Option at the closing. As a result, we issued a total of 1,213,250 shares of our common stock at a price of $9.50 per share. We received net proceeds of approximately $10.6 million from the Offering. We plan to use the net proceeds of the Offering for general corporate purposes, which may include working capital, capital expenditures and potential acquisitions.

Stock-Based Compensation Expense

Stock-based compensation expense of $1.3 million, $1.4 million and $1.2 million for 2017, 2016 and 2015, respectively, are included in selling, general and administrative expenses. As of September 30, 2017, total compensation cost related to non-vested stock options not yet recognized is $0.9 million, which is expected to be recognized over the next 1.13 years on a weighted-average basis.

Amtech Equity Plans

The 2007 Employee Stock Incentive Plan (the “2007 Plan), under which 500,000 shares could be granted, was adopted by our Board of Directors (the “Board”) in April 2007, and approved by the shareholders in May 2007. The 2007 Plan was amended in 2009, 2014 and 2015 to add 2,500,000 shares. The Non-Employee Directors Stock Option Plan was approved by the shareholders in 1996 for issuance of up to 100,000 shares of Common Stock to directors. The Non-Employee Directors Stock Option Plan was amended in 2005, 2009 and 2014 to add 400,000 shares.

Stock-based compensation plans as of September 30, 2017 are summarized in the table below:



Name of Plan	Shares Authorized	Shares Available	Options Outstanding	Plan Expiration
2007 Employee Stock Incentive Plan	3,000,000	686,032	1,342,391	Mar. 2020
1998 Employee Stock Option Plan	500,000	—	—	Jan. 2008
Non-Employee Directors Stock Option Plan	500,000	107,600	218,050	Mar. 2020
		793,632	1,560,441

Stock Options

Stock options issued under the terms of the plans have, or will have, an exercise price equal to or greater than the fair market value of the Common Stock at the date of the option grant and expire no later than 10 years from the date of grant, with the most recent grant expiring in 2026. Options issued under the plans vest over 6 months to 4 years. We estimate the fair value of stock option awards on the date of grant using the Black-Scholes option pricing model using the following assumptions:



	Years Ended September 30,
	2017	2016	2015
Risk free interest rate	2%	2%	2%
Expected life	6 years	6 years	6 years
Dividend rate	0%	0%	0%
Volatility	63%	63%	67%

Stock option transactions and the options outstanding are summarized as follows:



	Years Ended September 30,
	2017					2016					2015
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding at beginning of period	1,841,567			$	8.15	1,627,477			$	9.11	1,063,324			$	7.37
Granted	145,000			5.23		360,075			5.25		327,500			9.74
Assumed - merger	—					—			—		367,229			14.19
Exercised	(317,986		)	6.30		(15,346		)	3.28		(94,701		)	5.52
Forfeited/canceled	(108,140		)	12.71		(130,639		)	12.86		(35,875		)	24.71
Outstanding at end of period	1,560,441			$	7.95	1,841,567			$	8.15	1,627,477			$	9.11

Exercisable at end of period	1,055,865			$	8.58	1,127,611			$	8.92	1,002,421			$	9.74

Weighted average grant-date fair value of options granted during the period	$	3.04				$	3.03				$	5.91

The following tables summarize information for stock options outstanding and exercisable as of September 30, 2017:



	Options Outstanding
Range of Exercise Prices	Number Outstanding	Remaining Contractual Life	Average Exercise Price		Aggregate Intrinsic Value
		(in years)			(in thousands)
2.95-4.87	169,459	5.36	$	3.54
5.07-5.20	70,990	9.03	5.07
5.25-5.25	263,936	8.13	5.25
5.40-6.15	105,520	5.59	5.93
7.01-7.01	183,176	6.20	7.01
7.15-7.87	35,234	3.65	7.61
7.98-7.98	195,273	4.21	7.98
8.20-9.94	70,707	5.09	8.89
9.98-9.98	267,950	7.14	9.98
10.50-27.47	198,196	2.34	15.23
	1,560,441	5.84	$	7.95	$	7,060

Vested and expected to vest as of September 30, 2017	1,559,021	5.84	$	7.95	$	7,052



	Options Exercisable
Range of Exercise Prices	Number Exercisable	Weighted Average Exercise Price		Aggregate Intrinsic Value
				(in thousands)
2.95-4.87	132,793	$	3.18
5.07-5.20	990	5.20
5.25-5.25	74,604	5.25
5.40-6.15	90,520	5.96
7.01-7.01	131,950	7.01
7.15-7.87	25,132	7.51
7.98-7.98	195,273	7.98
8.20-9.94	53,207	9.12
9.98-9.98	155,200	9.98
10.50-27.47	196,196	15.28
	1,055,865	8.58		$	4,356

The aggregate intrinsic value in the tables above represents the total pretax intrinsic value, based on our closing stock price of $11.98 per share as of September 29, 2017, the last business day of our fiscal year, which would have been received by the option holders had all option holders exercised their options as of that date. The total intrinsic value of stock options exercised during the fiscal years ended September 30, 2017, 2016 and 2015 was $1.1 million, less than $0.1 million and $0.6 million, respectively.

Restricted Stock Awards

We award restricted shares under the existing share-based compensation plans. Our restricted share awards vest in equal annual installments over 6 months to four years. The total value of these awards is expensed on a ratable basis over the service period of the employees receiving the grants. The “service period” is the time during which the employees receiving grants must remain employed for the shares granted to fully vest. There were no restricted stock awards outstanding at the end of 2017 or 2016.