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SHARE-BASED COMPENSATION
 6 Months Ended
Dec. 31, 2012
SHARE-BASED COMPENSATION

NOTE 8. SHARE-BASED COMPENSATION

We have two equity compensation plans, the Second Amended and Restated 2004 Stock Option Plan (the “Employees Stock Option Plan”) and the Amended and Restated 2004 Directors Stock Option Plan (the “Directors Stock Option Plan”) (collectively, the “Stock Option Plans”), pursuant to which (i) options to purchase shares of common stock, or (ii) restricted shares of common stock, may be granted up to an aggregate amount of 1,333,333 common shares, with 1,066,667 and 266,666 shares distributed between the Employees Stock Option Plan and the Directors Stock Option Plan, respectively. The Stock Option Plans are substantially similar, providing for a strike price equal to the closing price for a share of our common stock as of the last business day immediately prior to the grant date, vesting periods (as determined by the Board for the Employees Stock Option Plan and six months for the Directors Stock Option Plan), and terms of up to ten years, subject to forfeit 30 days after the holder ceases to be an employee or 90 days after the holder ceases to be director, as the case may be. At December 31, 2012, 219,966 and 81,667 shares under the Employees Stock Option Plan and the Directors Stock Option Plan, respectively, are available to grant in future years. Share-based compensation expense under the Stock Option Plans for the three months ended December 31, 2012 and 2011 were $36,000 and $21,000, respectively, and for the six months ended December 31, 2012 and 2011 was $65,000 and $33,000, respectively.

Stock Options

The following assumptions were used in the calculation of share-based compensation expense for options granted during the three months ended December 31, 2011 (no options were granted during the three months ended December 31, 2012), and the six months ended December 31, 2012 and 2011:

 

     Three Months
Ended
December 31,
2011

Dividend rate

    None

Price volatility

    88%

Risk-free interest rate

    1.0%-1.2%

Expected life

    5.5 years

 

     Six Month Ended
December 31,
     2012   2011

Dividend rate

    None   None

Price volatility

    87%   62%

Risk-free interest rate

    0.9%   1.0%-1.3%

Expected life

    6.0 years   6.0 years

 

As of December 31, 2012, there was an aggregate of $259,000 of unrecognized compensation cost under the Stock Option Plans related to 329,000 non-vested outstanding stock options with a per share weighted average value of $1.36. The unrecognized expense is anticipated to be recognized on a straight-line basis over a weighted average period of 2.2 years. Following is a summary of stock option activity for the six months ended December 31, 2012 and 2011:

 

     2012      2011  
     Shares     Weighted-
Average
Exercise
Price		      Shares     Weighted-
Average
Exercise
Price		  

Outstanding at beginning of period

      591,672      $ 2.48         320,842      $ 2.71   

Granted

      35,000        1.73         205,000        2.04   

Exercised

      (33,334 )      1.50         —          —    

Forfeited

      (13,334 )      7.74         (14,168 )      2.43   
  

 

 

    

 

 

     

 

 

    

 

 

  

Outstanding at end of period

      580,004      $ 2.37         511,674      $ 2.65   
  

 

 

    

 

 

     

 

 

    

 

 

  

Exercisable at end of period

      250,976      $ 2.96         244,591      $ 3.32   

Weighted-average fair value per option granted during the period

      $ 1.25         $ 1.16   

 

 

Following is a summary of information regarding options outstanding and options exercisable at December 31, 2012:

 

     Options Outstanding      Options Exercisable  

Range of

Exercise Price

    Number
Outstanding		      Average
Contractual
Life		      Average
Exercise
Price		      Aggregate
Intrinsic
Value		      Number
Outstanding		      Average
Remaining
Contractual
Life		      Average
Exercise
Price		      Aggregate
Intrinsic
Value		  

$1.35 to $3.48

      515,000         8.8 years       $ 1.97       $ 61,150         185,972         8.2 years       $ 2.04       $ 19,210   

$3.49 to $5.62

      50,003         3.2 years         4.81       $ 0         50,003         3.2 years         4.81       $ 0   

$5.63 to $7.76

      10,001         2.7 years         7.34       $ 0         10,001         2.7 years         7.34       $ 0   

$7.77 to $9.90

      5,000         2.5 years         9.90       $ 0         5,000         2.5 years         9.90       $ 0   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

      580,004         8.2 years       $ 2.37       $ 61,150         250,976         6.9 years       $ 2.96       $ 19,210   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Restricted Stock

The following is a summary of restricted share activity for the six months ended December 31, 2012:

 

     Shares      Weighted-
Average
Grant Date
Fair Value		  

Outstanding at beginning of year

      —          —    

Granted

      35,000       $ 1.73   

Vested

      —           —     

Forfeited

      —           —     
  

 

 

     

 

 

  

Outstanding at end of period

      35,000       $ 1.73   
  

 

 

     

 

 

  

As of December 31, 2012, there was $43,000 in unrecognized compensation cost related to non-vested outstanding restricted shares. The unrecognized expense is anticipated to be amortized over the next 2.7 fiscal years.

There was no restricted share activity during the six months ended December 31, 2011, nor were any restricted shares outstanding during the period.