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NOTE 9 - LONG-TERM INCENTIVE PLAN AWARDS
 6 Months Ended
Dec. 31, 2011
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]
NOTE 9 – LONG-TERM INCENTIVE PLAN AWARDS

As we adopted the 2009 Stock Incentive Plan (“2009 Plan”), we provided for the grant of incentive stock options and non-qualified stock options to our employees and directors on June 11, 2009.

We issued additional options in 2010 under the 2009 Plan.  The options granted in 2010 generally vest and become exercisable at the rate of between 33% and 100% per year with a life of ten years.  For the six months ended December 31, 2011, we did not issue any options under the plan.

We adopted ASC 718, “Compensation – Stock Compensation,” using a modified prospective application, and the Black-Scholes model. Under this application, we are required to record compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that remain outstanding at the date of adoption. Compensation costs will be recognized over the period that an employee provides service in exchange for the award.

The estimated forfeiture rate considers historical turnover rates stratified into employee pools in comparison with an overall employee turnover rate, as well as expectations about the future. We periodically revise the estimated forfeiture rate in subsequent periods if actual forfeitures differ from those estimates. Compensation expense recorded under this method for the three and six months ended December 31, 2011 was $59,989 and $101,539, respectively, and reduced operating income and income before income taxes by the same amount by increasing compensation expense recognized in selling and administrative expense. The recognized tax benefit related to the compensation expense for the three months ended December 31, 2011 was $0.

A summary of the status of our stock options is presented below: 

Options
 
Shares
   
Weighted-Average
Exercise Price
   
Weighted-Average
Remaining Contractual
Life (In Years)
   
Aggregate
Intrinsic
Value
 
                         
Outstanding at June 30, 2011
   
930,836
   
$
1.40
     
7.2
   
$
978,470
 
Granted
   
30,000
     
0.57
     
2.8 
     
27,900 
 
Exercised
   
(70,000)
     
(0.52)
     
- 
     
- 
 
Forfeited or Expired
   
(14,334)
     
(1.35)
     
- 
     
- 
 
                                 
Outstanding at December 31, 2011
   
876,502
   
$
1.45
     
6.8
   
$
46,425
 
                                 
Exercisable at December 31, 2011
   
651,832
   
$
 1.15
     
5.7
   
$
230,675
 
                                 
Vested and Expected to Vest at December 31, 2011
   
651,832
   
$
1.15
     
5.7
   
$
230,675
 

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $1.50 as of December 31, 2011, which would have been received by the option holders had all option holders exercised their options as of that date. The weighted-average grant-date fair value of stock options of 846,502, which is outstanding at December 31, 2011, was $1.36 per share.

As of December 31, 2011, there was $252,141 of total unrecognized compensation cost related to non-vested stock options granted. That cost is expected to be recognized over a weighted-average period of 0.8 years.