STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

STOCK-BASED COMPENSATION

F. STOCK-BASED COMPENSATION

Stock options

The Company has agreements with certain of its employees and independent contractor consultants that provide grants of options to purchase the Company’s common stock.

A summary of stock options as of March 31, 2012 is as follows:

	Number of	Weighted - Average
	Shares	Exercise Price
Outstanding at June 30, 2011	824,249		$0.47
Expired	(40,000)		$0.25
Outstanding at March 31, 2012	784,249		$0.48
Exercisable at March 31, 2012	784,249		$0.48

The weighted-average remaining contractual life of stock options outstanding and exercisable at March 31, 2012 is 2.2 years. The aggregate intrinsic value of stock options outstanding as of March 31, 2012 was $1,800.

The weighted-average fair value of options granted for the nine months ended March 31, 2012 and 2011 was $0.00 and $0.14, respectively.

Stock-based compensation expense was $0 and $338 during the three months ended March 31, 2012 and 2011, respectively. Stock based compensation expense was $2 and $1,208 during the nine months ended March 31, 2012 and 2011, respectively. As of March 31, 2012, there was no unrecognized compensation costs related to stock options.

Warrants

In connection with the issuance of certain convertible notes payable, the Company has outstanding 275,000 fully vested warrants to acquire its common stock at an exercise price of $2 per share. The warrants expire in 2014. The warrants have no intrinsic value at March 31, 2012.