STOCK-BASED COMPENSATION

12 Months Ended

Jun. 30, 2012

Compensation and Employee Benefit Plans [Text Block]

5. STOCK-BASED COMPENSATION

On May 20, 2008, the Company issued 174,000 stock options (“Options”) to its officers, employees and members of the audit committee to purchase the Company’s common stock. The Options were all issued pursuant to the Company’s 2008 Stock Incentive Plan. On December 15, 2009, the Company issued 10,000 stock options to a member of the audit committee, to purchase the Company’s common stock.

A summary of the options issued under the Plan is presented in the table below:

	June 30, 2012				June 30, 2011
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price

Options outstanding, beginning of year		138,000	$	7.43		138,000	$	7.43
Granted		-		-		-		-
Canceled, forfeited or expired		-		-		-		-

Options outstanding, end of year		138,000	$	7.43		138,000	$	7.43

Options exercisable, end of year		100,400	$	7.49		80,800	$	7.53

Following is a summary of the status of options outstanding and exercisable at June 30, 2012:

Outstanding Options					Exercisable Options
Exercise Price		Number		Average Remaining Contractual Life	Average Exercise Price		Number		Average Remaining Contractual Life
$	7.75		128,000	1.0 year	$	7.75		94,400	1.0 year
$	3.37		10,000	2.0 year	$	3.37		6,000	2.0 year
			138,000					100,400

The issuance of the Options is exempted from registration under the Securities Act of 1933, as amended (the “Act”). The Options will vest at a rate of 20% per year, with 20% vesting initially on May 19, 2010. The Common Stock underlying the Options granted may be sold in compliance with Rule 144 under the Act. The term of the Options is 10 years and the exercise prices of the Options are $7.75 (174,000 options) and $3.37 (10,000 options) separately. Each Option may be exercised to purchase one share of Common Stock. Payment for the Options may be made in cash or by exchanging shares of Common Stock at their Fair Market Value. Provided the Common Stock is then traded on the NASDAQ Capital Market, the Fair Market Value will be equal to the average of the highest and lowest registered sales prices of Company Stock on the date of exercise.

The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model. The aggregate fair value of $202,089 and $397,558 at June 30, 2012 and 2011, respectively, is presented as “Unearned Stock-based Compensation”. The Company amortized stock option expenses of $195,469 for each of the years ended June 30, 2012 and 2011.

The fair value of 128,000 and 10,000 stock options granted in 2008 and 2009 were calculated at the grant date using the Black−Scholes option−pricing model with the following assumptions:

Black-Scholes Option Pricing Model for 2008 options
Assumptions:
Stock Price	$	7.75
Strike Price	$	7.75
Volatility		173.84	%
Risk-free Rate		3.02	%
Expected life		5 yrs
Dividend Yield		0.00	%
Number of Options		128,000

Black-Scholes Option Pricing Model for 2009 options
Assumptions:
Stock Price	$	3.31
Strike Price	$	3.37
Volatility		408.84	%
Risk-free Rate		2.35	%
Expected life		5 yrs
Dividend Yield		0.00	%
Number of Options		10,000

In connection with the initial public offering of the Company’s common stock on May 20, 2008, 139,032 warrants were issued to the underwriter as part of their compensation. Each warrant has the right to purchase one share of common stock for an exercise price of $9.30 per share with a term of 10 years. The fair value of these warrants which was netted against the proceeds from the initial public offering, totaled, $214,451. This estimate was based on the NASD Rule 2710 “Valuation of Non-cash Compensation”.

Following is a summary of the status of warrants outstanding and exercisable at June 30, 2012:

Warrants Outstanding				Warrants Exercisable				Weighted Aaverage Exercise Price				Average Remaining Contractual Life
	139,032				139,032			$	9.30				6.0 years