Stockholders' Equity

9 Months Ended

Jun. 30, 2011

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Note 8 — Stockholders’ Equity

Warrants

A summary of warrants issued, exercised and expired during the nine months ended June 30, 2011, is as follows:

				Weighted
				Avg.
				Exercise
Warrants:	Shares			Price
Balance at October 1, 2010		7,393,334		$	1.14
Issued		—			—
Exercised		(51,000	)		1.00
Expired		(376,667	)		1.59
Balance at June 30, 2011		6,965,667		$	1.12

Employee and Director Stock Options

The weighted-average grant date fair value of options granted during the nine months ended June 30, 2011 and 2010, was $0.40 and $0.93, respectively. There were no options exercised during the nine months ended June 30, 2011 and 2010. The fair values of stock-based awards granted during the nine months ended June 30, 2011 and 2010, were calculated with the following weighted-average assumptions:

	2011			2010
Risk-free interest rate:		1.05	%		1.32	%
Expected term:	3 years			3 years
Expected dividend yield:		0.00	%		0.00	%
Expected volatility:		48.91	%		68.59	%

For the nine months ended June 30, 2011 and 2010 the Company recorded $305,000 and $188,000, respectively, of stock-based compensation expense, which has been classified as operating expenses, sub-classification of payroll, taxes and benefits, for the employees and general and administrative for the directors. As of June 30, 2011, there is $157,000 in total unrecognized compensation expense related to non-vested employee and director stock options granted under the 2007 Stock Plan, which is expected to be recognized over 1.3 years.

Stock option activity for the nine months ended June 30, 2011, is summarized as follows:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
2007 Stock Plan:	Shares			Price		Life (Years)		Value
Options outstanding at October 1, 2010		1,655,000		$	0.92		2.58	$	792,250
Granted		500,000			1.25
Expired or forfeited		(70,000	)		1.03
Options outstanding at June 30, 2011		2,085,000		$	0.99		3.01	$	828,250
Options exercisable at June 30, 2011		1,515,000		$	0.90		2.61	$	738,750
Options vested or expected to vest at June 30, 2011		2,085,000		$	0.99		3.01	$	828,250

2009 Employee Stock Purchase Plan

The 2009 Employee Stock Purchase Plan (the “ESPP”) became effective June 10, 2009, the effective date of the registration statement filed on Form S-8 with the SEC. The ESPP provides a means by which employees of the Company are given an opportunity to purchase common stock of the Company through payroll deductions. The maximum number of shares to be offered under the ESPP is 500,000 shares of the Company’s common stock, subject to changes authorized by the Board of Directors of the Company. Shares are offered through consecutive offering periods with durations of approximately six (6) months, commencing on the first trading day on or after June 1 and November 30 of each year and terminating on the last trading day before the commencement of the next offering period. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code. The ESPP allows employees to designate up to 15% of their cash compensation to purchase shares of the Company’s common stock at 85% of the lesser of the fair market value at the beginning of the offering period or the exercise date, which is the last trading day of the offering period. Employees who own stock possessing 5% or more of the total combined voting power or value of all classes of the Company’s common stock are not eligible to participate in the ESPP.

As of June 30, 2011, 274,581 shares of the Company’s common stock have been purchased through the ESPP, using $211,000 of proceeds received from employee payroll deductions. For the nine months ended June 30, 2011 and 2010, the Company received $64,000 and $102,000, respectively, through payroll deductions under the ESPP.

The Company uses the Black-Scholes option pricing model to estimate the fair value of the shares expected to be issued under the ESPP at the grant date, the beginning date of the offering period, and recognizes compensation expense ratably over the offering period. If an employee elects to increase their payroll withholdings during the offering period, the increase is treated as a modification to the original option granted under the ESPP. As a result of the modification, the incremental fair value, if any, associated with the modified award is recognized as compensation expense at the date of the modification. Compensation expense is recognized only for shares that vest under the ESPP. For the nine months ended June 30, 2011 and 2010, the Company recognized $23,000 and $92,000, respectively, of compensation expense related to the ESPP.