Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized over the employee’s requisite service period. The Company recognized $16,068 and $12,533 in stock-based compensation expense during the three months ended December 31, 2011 and 2010, respectively, and recognized $32,329 and $24,077 in stock-based compensation expense during the six months ended December 31, 2011 and 2010, respectively. These expenses were recorded as selling, general and administrative expenses in the condensed consolidated statements of operations.

Stock Options. The Company maintains a 2005 equity incentive plan for the benefit of employees. Incentive and nonqualified stock options, restricted common stock, stock appreciation rights, and other stock-based awards may be granted under the plan. Awards granted under the plan may be performance-based. As of December 31, 2011, there were 905,114 shares of common stock authorized and reserved for issuance, but not granted under the terms of the 2005 equity incentive plan, as amended.

The following table summarizes the Company’s stock option activity during the six-month period ended December 31, 2011.

	Number of Options			Weighted-Average Exercise Price
Outstanding at beginning of period		933,462		$	1.33
Granted		-			-
Exercised		-			-
Cancelled		(72,844	)		1.46
Outstanding at end of period		860,618			1.31

Exercisable at end of period		567,108			1.56

The Black-Scholes option-pricing model is used to estimate the fair value of options granted under the Company’s stock option plan. There were no options granted during the six months ended December 31, 2011.

As of December 31, 2011, there was $68,445 of unrecognized stock-based compensation cost related to grants under the stock option plan that is expected to be expensed over a weighted-average period of 4 years. There was $3,909 of intrinsic value for options outstanding as of December 31, 2011.