Share-Based Compensation

6 Months Ended

Dec. 31, 2014

4.	Share-Based Compensation

As of December 31, 2014, we had share-based 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, 2014. We recognize stock compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. As of December 31, 2014, we had 179,797 stock options outstanding and 380,428 restricted shares outstanding. No stock options were granted or exercised during the six months ended December 31, 2014, and 3,520 options expired during the six months ended December 31, 2014. A summary of the activity of our time-based, service condition restricted shares during the six months ended December 31, 2014, is presented below:

Restricted Stock Awards	Shares			Weighted- Average Grant-Date Fair-Value

Non-vested at July 1, 2014		183,634		$	6.08
Granted		254,000			7.03
Vested		(86,096	)		6.31
Forfeited		(8,703	)		7.71
Non-vested at December 31, 2014		342,835		$	6.69

During the six months ended December 31, 2014, we released restrictions on 51,293 previously granted performance based restricted shares, based upon achievement of performance goals attributable to our fiscal year 2014 financial results. A summary of the activity of our performance based restricted shares during the six months ended December 31, 2014, is presented below:

Performance Stock Awards	Shares			Weighted Average Grant Date Fair Value

Non-vested at July 1, 2014		115,912		$	5.59
Granted		-			-
Vested		(51,293	)		5.30
Forfeited		(27,026	)		6.01
Non-vested at December 31, 2014		37,593		$	5.70

We recorded share-based compensation related to the issuance of restricted stock to employees and board members as follows (in thousands):

	Three Months Ended December 31,				Six Months Ended December 31,
	2014		2013		2014		2013
Share-based compensation expense included in the Statement of operations:
Cost of sales	$	13	$	14	$	27	$	28
Sales and marketing		32		43		72		90
Research and development		23		41		51		76
General and administrative		117		140		261		435
Total		185		238		411		629
Tax benefit		-		-		-		-
Share-based compensation expense, net of taxes	$	185	$	238	$	411	$	629

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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