Share-Based Compensation

6 Months Ended

Dec. 31, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

4. Share-Based Compensation

     As of December 31, 2011, we had share-based employee compensation plans which are described in Note 11 of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2011. Option awards are granted with an exercise price equal to the market price of our stock at the date of grant. We recognize stock compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. As of December 31, 2011, we had approximately 284,000 stock options outstanding and 562,500 restricted shares outstanding. No stock options were granted during the six months ended December 31, 2011.

     During the three and six months ended December 31, 2011, we issued 27,500 and 66,500 shares of restricted stock, respectively, to employees and board members that vest over either a three or four year service period. Vesting is based solely on a service condition, and restrictions generally release ratably over the service period. A summary of the activity of our service condition restricted shares during the six months ended December 31, 2011, is presented below:

				Weighted Average
				Grant Date
Restricted Stock Awards	Shares			Fair Value
Non-vested at July 1, 2011	330,644		$	5.05
Granted	66,500			5.29
Vested	(95,879	)		4.67
Forfeited	(16,028	)		5.69
Non-vested at December 31, 2011	285,237		$	5.20

     During the three and six months ended December 31, 2011, we released restrictions on 13,563 and 101,017 performance based restricted shares, respectively, for certain shares granted to executive management and the board of directors that were eligible for release due to the company meeting performance criteria related to our fiscal 2011 financial results. We cancelled 30,772 and 73,771 performance based restricted shares during the three and six months ended December 31, 2011 for restricted shares granted to executive management that expired during the period because neither the performance criteria for our fiscal 2009, 2010 and 2011 financial results, nor the market condition (achievement of certain share price) were met. A summary of the activity of our performance based restricted shares during the six months ended December 31, 2011, is presented below:

				Weighted Average
				Grant Date
Performance Stock Awards	Shares			Fair Value
Non-vested at July 1, 2011	452,055		$	2.09
Granted	-			-
Vested	(101,017	)		1.96
Forfeited	(73,771	)		1.70
Non-vested at December 31, 2011	277,267		$	2.25

We recorded share-based compensation related to issuance of stock options and restricted stock to employees, board members, and non-employees, as follows (amounts in thousands of dollars):

		Three Months Ended				Six Months Ended
		December 31,				December 31,
		2011		2010		2011		2010
Share-based compensation expense included in the
Statement of Operations:
Cost of sales	$	16	$	14	$	34	$	20
Sales and marketing		38		75		75		117
Research and development		30		49		74		83
General and administrative		102		175		273		292
Total		186		313		456		512
Tax benefit		-		-		-		-
Share-based compensation expense, net of taxes	$	186	$	313	$	456	$	512