Equity and Other Long Term Incentive Plans

3 Months Ended

Sep. 30, 2011

Equity and Other Long Term Incentive Plans [Abstract]

Equity and Other Long Term Incentive Plans

(11) Equity and Other Long Term Incentive Plans

Equity Grants

In the first and second quarters of the fiscal year ended June 30, 2010, the Compensation Committee of the Board of Directors granted directors, named executive officers and employees 1,995,559 and 410,000, respectively, of restricted shares. The shares were issued from the 2008 Stock Incentive Plan, vest 33.33% a year over a three-year period and expire upon employee termination.

In the first quarter of fiscal year ended June 30, 2012, the Compensation Committee of the Board of Directors granted directors, named executive officers and employees 579,000 stock options designed to increase shareholder value by compensating employees over the long term. The options were issued from the 2008 and 2011 Stock Incentive Plans, vest upon the Company’s stock achieving a closing price of $1.50 and expire 10 years from grant date.

In July 2011, the Compensation Committee of the Board of Directors granted a third party consultant 200,000 stock options intended to provide incentive which is aligned with management and the shareholders. The options were issued out of the 2011 Stock Incentive Plan, vest upon certain performance conditions and expire 7 years from grant date. Management considers the likelihood of the performance conditions being met as remote, and therefore no expense was recorded for the three months ended September 30, 2011.

As of September 30, 2011, 18,689 shares of common stock were reserved for future grants under the 2008 Stock Incentive Plan and 1,386,000 shares of common stock reserved for future grant under the 2011 Stock Incentive Plan. In the three months ended September 30, 2011 and 2010, we recognized compensation expense of $0.3 million and $0.2 million, respectively, for restricted stock and stock options outstanding.

Related Party Transactions

Director Compensation

In August 2009, the Board of Directors granted 525,000 total restricted shares valued at $0.6 million to directors from the 2008 Stock Incentive Plan. The restricted shares vest 33.33% a year for three years and expire upon termination. Compensation expense of $0.1 million was recorded in the three months ended September 30, 2011 for these awards.

In September 2011, the Board of Directors granted 150,000 total stock options valued at $0.1 million to directors from the 2011 Stock Incentive Plan. The stock options vest upon the Company’s stock achieving a closing price of $1.50 and expire 10 years from grant date. Compensation expense of $0.1 million was recorded in the three months ended September 30, 2011.

Executive Compensation

1^st Detect

In January 2010, an independent committee of the Board of Directors of 1^st Detect approved a grant of 1,180 restricted stock shares and 1,820 stock purchase warrants to certain officers, directors and employees of 1st Detect pursuant to restricted stock agreements and stock purchase warrants between 1st Detect and each such individual. The awards will vest as follows, subject to earlier vesting upon the grantee’s death or disability or in the event of a change of control of the Company: 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date. The restricted stock agreements and stock purchase warrants provide for forfeiture of unvested stock if the recipient is terminated or voluntarily ceases to perform services for 1^st Detect, immediate vesting upon a change of control, and restrictions on and requirements as to transfer. The stock purchase warrants have an exercise price equal to the fair market value of 1^st Detect’s common stock on the date of grant as determined by an independent valuation firm.

The number of shares and warrants underlying each award to a named executive officer is as follows: Thomas B. Pickens III: 300 shares, 680 warrants; John Porter: 200 shares, 180 warrants. In the three months ended September 30, 2011 and 2010, we recognized compensation expense of $0.1 million and $0.1 million, respectively, for restricted stock and warrants outstanding.

In September 2011, the Board of Directors of 1^st Detect approved a grant of 965 stock options to certain officers, directors and employees of 1^st Detect. The awards vest upon certain performance conditions being met and expire 10 years from grant date. The stock options have an exercise price equal to the fair market value of 1^st Detect’s common stock on the date of grant as determined by an independent valuation firm.

The number of options underlying each award to a named executive officer is as follows: Thomas B. Pickens III: 200 stock options; John Porter: 150 stock options. In the three months ended September 30, 2011, the Company recognized compensation expense of $0.1 million.

Assuming a business event occurred which resulted in the vesting of all restricted stock, stock purchase warrants and stock options, then Thomas B. Pickens III would hold 10.8%, John Porter would hold 4.8% and the Company would hold 63.8% of the outstanding shares of 1^st Detect.

The restricted stock issuances resulted in noncontrolling interest, as described in Note 3.

Astrogenetix

In January 2010, an independent committee of the Board of Directors of Astrogenetix approved a grant of 1,550 restricted stock shares, of which 300 have been cancelled. There were 2,050 stock purchase warrants that were also granted to certain officers, directors and employees of Astrogenetix pursuant to restricted stock agreements and stock purchase warrants between Astrogenetix and each such individual. The awards will vest as follows, subject to earlier vesting upon the grantee’s death or disability or in the event of a change of control of the Company: 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date. The restricted stock agreements and stock purchase warrants provide for forfeiture of unvested stock if the recipient is terminated or voluntarily ceases to perform services for Astrogenetix, immediate vesting upon a change of control, and restrictions on and requirements as to transfer. The stock purchase warrants have an exercise price equal to the fair market value of Astrogenetix’s common stock on the date of grant as determined by an independent valuation firm.

The number of shares and warrants underlying each award to a named executive officer is as follows: Thomas B. Pickens III: 500 shares, 1,000 warrants; John Porter: 400 shares, 800 warrants. In the three months ended September 30, 2011 and 2010, we recognized compensation expense of $0.1 million and $0.1 million, respectively, for restricted stock and warrants outstanding.

Assuming a business event occurred which resulted in the vesting of all restricted stock and stock purchase warrants, then Thomas B. Pickens III would hold 16.1%, John Porter would hold 12.9% and the Company would hold 64.5% of the outstanding shares of Astrogenetix.

The restricted stock issuances resulted in noncontrolling interest, as described in Note 3.

Stock Options

In September 2011, 779,000 stock options were granted. At September 30, 2011 and 2010, there were $0.3 million and $0.1 million, respectively, of total unrecognized compensation costs related to non-vested stock options, which is expected to be recognized over a weighted average period of 8.4 years.

The Company’s stock options activity for the three months ended September 30, 2011 was as follows:

	Shares			Weighted Average
	(in thousands)			Exercise Price
Outstanding at June 30, 2011		377		$	1.28
Granted		779			0.79
Exercised		—			—
Cancelled or expired		(3	)		26.00
Outstanding at September 30, 2011		1,153		$	0.89

Restricted Stock

At September 30, 2011 and 2010, there were $0.7 million and $1.5 million respectively, of unrecognized compensation costs related to restricted stock, which is expected to be recognized over a weighted average period of 1.0 years.

The Company’s restricted stock activity for the three months ended September 30, 2011 was as follows:

				Weighted
				Average
	Shares			Grant-Date
	(in thousands)			Fair Value
Non-vested at June 30, 2011		1,365		$	1.14
Granted		25			0.75
Vested		(244	)		1.16
Cancelled or expired		(2	)		1.22
Non-vested at September 30, 2011		1,144		$	1.12

Stock Options and Warrants for 1^st Detect

At September 30, 2011 and 2010, there was $0.1 million and $0.1 million respectively, of unrecognized compensation costs related to warrants and options, which is expected to be recognized over a weighted average period of 5.3 years. In the three months ended September 30, 2011 and 2010, we recognized compensation expense of $0.1 million and $0.1 million, respectively, for stock options and warrants outstanding.

1^st Detect stock options and warrants activity for the three months ended September 30, 2011 was as follows:

			Weighted
			Average
			Grant-Date
	Shares		Fair Value
Non-vested at June 30, 2011		1,820	$	212.00
Granted		965		212.00
Exercised		—		—
Cancelled or expired		—		—
Outstanding at September 30, 2011		2,785	$	212.00

Restricted Stock for 1^st Detect

At September 30, 2011 and 2010, there were $0.1 million and $0.2 million respectively, of unrecognized compensation costs related to restricted stock, which is expected to be recognized over a weighted average period of 0.3 years. In the three months ended September 30, 2011 and 2010, we recognized compensation expense of $0.1 million and $0.1 million, respectively, for restricted stock outstanding.

1^st Detect restricted stock activity for the three months ended September 30, 2011 was as follows:

			Weighted
			Average
			Grant-Date
	Shares		Fair Value
Non-vested at June 30, 2011		590	$	212.00
Granted		—		—
Vested		—		—
Cancelled or expired		—		—
Non-vested at September 30, 2011		590	$	212.00

Warrants for Astrogenetix

At September 30, 2011 and 2010, there was $0.1 million and $0.1 million respectively, of unrecognized compensation costs related to warrants, which is expected to be recognized over a weighted average period of 0.3 years. In the three months ended September 30, 2011 and 2010, we recognized compensation expense of $0.1 million and $0.1 million, respectively, for warrants outstanding.

Astrogenetix warrant activity for the three months ended September 30, 2011 was as follows:

			Weighted
			Average
			Grant-Date
	Shares		Fair Value
Non-vested at June 30, 2011		2,050	$	167.00
Granted		—		—
Vested		—		—
Cancelled or expired		—		—
Non-vested at September 30, 2011		2,050	$	167.00

Restricted Stock for Astrogenetix

At September 30, 2011 and 2010, there was $0.1 million and $0.1 million respectively, of unrecognized compensation costs related to restricted stock, which is expected to be recognized over a weighted average period of 0.3 years. In the three months ended September 30, 2011 and 2010, we recognized compensation expense of $0.1 million and $0.1 million, respectively, for restricted stock outstanding.

Astrogenetix restricted stock activity for the three months ended September 30, 2011 was as follows:

			Weighted
			Average
			Grant-Date
	Shares		Fair Value
Non-vested at June 30, 2011		625	$	167.00
Granted		—		—
Vested		—		—
Cancelled or expired		—		—
Non-vested at September 30, 2011		625	$	167.00