STOCK-BASED COMPENSATION

12 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 14. STOCK-BASED COMPENSATION

Stock-based Payments

2009 Options Plan - The Company granted options to purchase 293,000 ordinary shares under the 2009 Plan to its employees and non-employee directors on July 29, 2009. The options have an excise price of $6.00, equal to the IPO price of the Company’s ordinary shares, and will vest over a period of five years, with the first 20% vesting on July 29, 2010. The options expire ten years after the date of grant, on July 29, 2019.

The Company recognizes compensation cost for awards with graded vesting on a straight-line basis over the requisite service period for the entire award. The grant date fair value of the options was ¥30.17 ($4.42) per share.As of June 30, 2013, 100,000 options were forfeited and reallocated to the incentive pool; options to purchase 193,000 of ordinary shares were outstanding, of which 154,400 shares are vested under the 2009 Plan and no options have been exercised.

Placement Agent Warrants - In connection with its IPO in 2009, the Company sold the placement agent warrants to purchase 170,000 ordinary shares at $7.20 per share for a nominal amount. These warrants are exercisable for a period of five years.

The Company had 170,000 of agent warrants outstanding as of June 30, 2013 and no warrants were exercised during this year.

2012 Option Plan – The Company granted options to purchase 415,000 ordinary shares to its employees and a non-employee director on March 26, 2012. The options have an excise price of $2.96, equal to the share price of the Company’s ordinary shares at March 26, 2012, and will vest over a period of five years, with the first 20% vesting on March 26, 2013. The options expire ten years after the date of grant, on March 26, 2012. The fair value was estimated on March 26, 2012 using the Binomial Lattice valuation model, with the following weighted-average assumptions:

Stock price at grant date	$	2.96
Exercise price (per share)	$	2.96
Risk free rate of interest		1.56	%
Dividend yield		0	%
Expected volatility		46	%
Expected life (in years)		7.5

* Volatility is projected using the performance of PHLX Oil Service Sector index over past five years.

** The life of options represents the period the option is expected to be outstanding.

*** The risk-free interest rate is based on the U.S. government bond, with a maturity that approximates the life of the option.

**** Forfeiture rate is the estimated percentage of options forfeited by employees by leaving or being terminated before vesting.

The Company recognizes compensation cost for awards with graded vesting on a straight-line basis over the requisite service period for the entire award. The grant date fair value of the options was ¥10.06 ($1.59) per share. Compensation expense was ¥1,239,788 and ¥1,852,656 ($299,385) for the years ended June 30, 2012 and 2013, respectively. As of June 30, 2013, 83,000 options are vested under the 2012 Plan and no options have been exercised.

The following is a summary of the stock option activity:

Stock Options	Shares		Weighted Average Exercise Price Per Share
Outstanding as of July 1, 2011	193,000	$	6.00
Granted	415,000		2.96
Forfeited	-		-
Exercised	-		-
Outstanding as of June 30, 2012	608,000	$	3.93

Stock Options	Shares		Weighted Average Exercise Price Per Share
Outstanding as of July 1, 2012	608,000	$	3.93
Granted	-		-
Forfeited	-		-
Exercised	-		-
Outstanding as of June 30, 2013	608,000	$	3.93

The following is a summary of the status of options outstanding and exercisable at June 30, 2013:

Outstanding Options				Exercisable Options
Average Exercise Price		Number	Average Remaining Contractual life (Years)		Average Exercise Price	Number	Average Remaining Contractual life (Years)
$	6.00	193,000	1.08	$	6.00	154,400	1.08
$	2.96	415,000	3.75	$	2.96	83,000	3.75

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References+ Details