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Stockbased Compensation
 3 Months Ended
Sep. 30, 2013
Equity [Abstract]  
Stockbased Compensation

NOTE 3. STOCK-BASED COMPENSATION

Options

At September 30, 2013, the Company had the 2009 Stock Option Plan (the Plan), which is shareholder-approved and under which 5,000,000 shares are reserved for issuance until the Plan terminates on October 20, 2019.

Under the Plan, eligible employees and certain independent consultants may be granted options to purchase shares of the Company’s common stock. The shares issuable under the Plan will either be shares of the Company’s authorized but previously unissued common stock or shares reacquired by the Company, including shares purchased on the open market. As of September 30, 2013, the number of shares available for issuance under the Plan was 433,500.

The following table summarizes the Company’s stock option activities during the three months ended September 30, 2013:

Number of Shares
Underlying
Outstanding
Options		 Weighted
Average
Remaining
Contractual
Life (Years)		 Weighted
Average
Exercise
Price		 Intrinsic
Value
Options outstanding as of June 30, 2013 3,583,500 3.8 $.10 $-
Granted 1,726,000 4.9 $.05 $-
Exercised - - $- $-
Forfeited or expired (343,000) 3.8 $.11 $-
Options outstanding as of September 30, 2013 4,966,500 4.0 $.09 $-
Options exercisable as of September 30, 2013 907,750 3.1 $.13 $-

The aggregate intrinsic value in the table above is before applicable income taxes and represents the excess amount over the exercise price optionees would have received if all options had been exercised on the last business day of the period indicated, based on the Company’s closing stock price of $.045 for such day.

There were 1,726,000 stock options granted during the three months ended September 30, 2013 and 80,000 stock options granted during the three months ended September 30, 2012. The value assumptions related to options granted during the three months ended September 30, 2013 and 2012, respectively, were as follows:

Three Months
Ended September 30, 2013

Three Months
Ended September 30, 2012
Exercise Price: $.051 $.10
Volatility: 251% 40%
Risk Free Rate: .99% .43%
Vesting Period: 4 years 4 years
Forfeiture Rate: 0% 0%
Expected Life 4.5 years 4.5 years
Dividend Rate 0% 0%

The following table summarizes the weighted average characteristics of outstanding stock options as of

September 30, 2013:

Outstanding Options Exercisable Options
Exercise Prices Number
of Shares		 Remaining
Life
(Years)		 Weighted
Average
Price		 Number of
Shares		 Weighted
Average
Price
$.05 to .09 3,746,000 4.5 $.06 400,000 $.06
$.15 to .16 966,500 2.9 $.16 317,250 $.16
$.20 to .25 254,000 1.0 $.25 190,500 $.25
Total stock options 4,966,500 4.0 $.09 907,750 $.13

Stock-based compensation

We account for stock-based compensation to employees in accordance with FASB ASC 718, Compensation Stock Compensation. We measure the cost of each stock option and at its fair value on the grant date. Each award vests over the subsequent period during which the recipient is required to provide service in exchange for the award (the vesting period). The cost of each award is recognized as expense in the financial statements over the respective vesting period.

Stock option-based compensation expense recognized in the condensed consolidated statements of operations for the three month period ended September 30, 2013 and 2012 are based on awards ultimately expected to vest, and is reduced for estimated forfeitures.

The following table summarizes stock option-based compensation expense by line item in the Condensed Consolidated Statements of Operations, all relating to the Plan:

Three Months
Ended September 30,
2013 2012
Cost of Goods Sold $4,600 $2,974
Other Selling and Marketing 2,227 933
General and Administrative 17,500 6,667
Total Stock-based Compensation Expense $24,327 $10,574

As of September 30, 2013, the Company’s total unrecognized compensation cost was $115,444, which will be recognized over the weighted average vesting period of 3 years.