11. EMPLOYEE AND DIRECTOR EQUITY INCENTIVE PLANS

3 Months Ended

Sep. 30, 2015

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

EMPLOYEE AND DIRECTOR EQUITY INCENTIVE PLANS

The Company previously adopted the 2002 Stock Option Plan ("2002 Plan") in which a stock option committee could grant up to 1,000,000 shares to key employees or non-employee members of the board of directors.  The options vest in accordance with specific terms and conditions contained in an employment agreement.  If vesting terms and conditions are not defined in an employment agreement, then the options vest as determined by the stock option committee.  If the vesting period is not defined in an employment agreement or by the stock option committee, then the options immediately vest in full upon death, disability, or termination of employment.  Vested options expire upon the earlier of either the five year anniversary of the vesting date or termination of employment.  No shares are available to be issued under the 2002 Plan.

The Company also previously adopted the 2007 Equity Incentive Plan ("2007 Plan") that authorized the board of directors or a committee to grant up to 300,000 shares to employees and directors of the Company.  Unless defined in an employment agreement or otherwise determined, the options vest ratably over a three-year period.  Options expire 10 years after the date of grant.  No shares are available to be issued under the 2007 Plan.

In November 2010, the Company adopted the 2010 Omnibus Long-Term Incentive Plan ("Omnibus Plan") which authorizes a committee of the board of directors to grant stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, other stock-based awards, and cash awards.  The Omnibus Plan authorized up to 800,000 shares plus shares of Common Stock underlying any outstanding stock option of other awards granted by any predecessor employee stock plan of the Company that is forfeited, terminated, or cancelled without issuance of shares, to employees, officers, non-employee members of the board of directors, consultants, and advisors.  Unless otherwise determined, options vest ratably over a three-year period and expire 8 years after the date of grant.

At the annual meeting of shareholders held on November 7, 2012, the Company's shareholders approved an amendment of the Omnibus Plan which increased the number of shares of the Company's common stock available for issuance pursuant to awards under the Omnibus Plan by 900,000 shares and the creation of the 2012 Non-Employee Director Equity Compensation Plan ("2012 Director Equity Plan"), under which the Company may issue up to 700,000 restricted stock unit awards and other equity awards to our non-employee directors pursuant to the Company's director compensation policy.

At the annual meeting of shareholders held on November 18, 2014, the Company's shareholders approved an amendment of the Omnibus Plan which increased the number of shares of the Company's common stock available for issuance pursuant to awards under the Omnibus Plan by 1,250,000.  The shareholders also approved an amendment of the 2012 Director Equity Plan which increased the number of shares of the Company's common stock available for issuance pursuant to awards under the 2012 Director Equity Plan by 1,000,000.  As of September 30, 2015, there were a total of 480,877 shares available to be issued under the Omnibus Plan and 456,804 shares available to be issued under the 2012 Director Equity Plan.

In aggregate for all plans, at September 30, 2015 there were a total of 2,438,060 options and 1,907,910 RSUs outstanding.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing method.  The Company uses historical data to estimate the expected price volatility, the expected option life and the expected forfeiture rate.  The Company has not made any dividend payments nor does it have plans to pay dividends in the foreseeable future.  The following assumptions were used to estimate the fair value of options granted during the three months ended September 30, 2015 and September 30, 2014 using the Black-Scholes option-pricing model:

	Three Months Ended September 30,
	2015	2014
Expected life of option (years)	4	4
Risk-free interest rate	1.14 - 1.38%	1.23 - 1.41%
Assumed volatility	100.77 - 101.70%	100.97 - 103.91%
Expected dividend rate	0.00%	0.00%
Expected forfeiture rate	6.23 - 7.97%	5.00 - 6.32%

Time-vested and performance-based stock awards, including stock options and RSUs are accounted for at fair value at date of grant.  Compensation expense is recognized over the requisite service and performance periods.

During the three months ended September 30, 2015 and September 30, 2014, the Company's results of operations include compensation expense for stock options and RSUs granted under its various equity incentive plans.  The amount recognized in the condensed consolidated financial statements related to stock-based compensation was $156,792 and $376,392, based on the amortized grant date fair value of options and RSUs during the three months ended September 30, 2015 and September 30, 2014, respectively.

Information with respect to stock option activity is as follows:

	Number of Options			Weighted Average Exercise Price		Average Remaining Contractual Life (in years)
Balance at June 30, 2014		1,419,068		$	3.23
Options granted		423,000			0.85
Options forfeited		(264,290	)		3.22
Balance at June 30, 2015		1,577,778			2.60		5.74
Options granted		1,056,500			0.76
Options forfeited		(196,218	)		3.37
Balance at September 30, 2015		2,438,060		$	1.74		6.60

The following table summarizes information relating to the stock options outstanding as of September 30, 2015:

			Outstanding						Exercisable
Range of Exercise Prices			Number of Options		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number of Options		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price
	$	0.48 to $1.00		1,355,050		7.61	$	0.73		158,050		6.56	$	0.68
	$	1.01 to $2.50		744,360		6.51		1.51		225,932		5.88		1.80
	$	2.51 to $5.00		98,900		3.74		3.94		98,900		3.74		3.94
	$	5.01 to $7.50		224,750		2.46		6.48		224,750		2.46		6.48
	$	7.51 to $17.95		15,000		0.33		17.95		15,000		0.33		17.95
Balance at September 30, 2015				2,438,060		6.60	$	1.74		722,632		4.55	$	3.64

During the three months ended September 30, 2015, options to purchase 1,056,500 shares were granted to employees exercisable at $0.51 to $0.85 per share based on various service-based and performance-based vesting terms from July 2015 through September 2018 and exercisable at various dates through September 2023.  During the three months ended September 30, 2014, options to purchase 265,000 shares were granted to employees exercisable at $1.02 to $1.67 per share based on service based vesting terms from July 2014 through September 2017 and exercisable at various dates through September 2022.

The aggregate intrinsic value of outstanding options totaled $9,725 and was based on the Company's adjusted closing stock price of $0.56 as of September 30, 2015.

A summary of the status of unvested employee stock options as of September 30, 2015 and June 30, 2015 and changes during the three months and year then ended is presented below:

	Number of Options			Weighted Average Grant Date Fair Value Per Share		Average Remaining Contractual Life (in years)
Balance at June 30, 2014		822,469		$	1.63
Options granted		423,000			0.85
Options vested		(347,328	)		1.42
Options forfeited		(121,616	)		2.31
Balance at June 30, 2015		776,525			1.19
Options granted		1,056,500			0.76
Options vested		(22,297	)		1.67
Options forfeited		(95,300	)		0.82
Balance at September 30, 2015		1,715,428		$	0.94	7.46

Total fair value of options granted for the three months ended September 30, 2015 and September 30, 2014 was $555,314 and $193,749, respectively.  At September 30, 2015, there was $667,877 in unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 1.7 years.

The Company compensates its directors with RSUs and cash.  On November 18, 2014, 562,500 RSUs were granted to the Company's directors in partial payment of director's fees through November 2015 under the 2012 Director Equity Plan.  As of September 30, 2015, 562,500 of the RSUs had vested and there were $90,000 in director's fees expense settled with RSUs for the three months ended September 30, 2015.

As of September 30, 2015 there were no unvested RSUs and $0 in unrecognized compensation cost.  Generally, shares of common stock related to vested RSUs are to be issued six months after the holder's separation from service with the Company.

The table below summarizes the activity of the RSUs for the three months ended September 30, 2015 and the year ended June 30, 2015:

	Number of Restricted Stock Units			Weighted Average Valuation Price Per Unit
Balance at June 30, 2014		1,346,813		$	1.87
RSUs granted		922,500			1.05
RSUs forfeited		(103,334	)		1.69
Shares issued		(229,944	)		0.80
Balance at June 30, 2015		1,936,035			1.53
RSUs granted		-			-
RSUs forfeited		-			-
Shares issued		(28,125	)		0.64
Balance at September 30, 2015		1,907,910		$	1.63