Share-Based Compensation

3 Months Ended

Sep. 30, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

NOTE 7. SHARE-BASED COMPENSATION

We have two equity compensation plans, the First Amended and Restated 2004 Stock Option Plan (the "Employees Plan") and the 2004 Directors Stock Option Plan (the "Directors Plan") (collectively, the "Plans"), pursuant to which (i) options to purchase share of common stock, or (ii) restricted shares of common stock, may be granted up to an aggregate amount of 833,333 common shares. Upon its adoption, the Employees Plan and the Directors Plan had 666,667 and 166,666 shares of common stock available for issuance, respectively. The Plans are substantially similar, providing for vesting periods, unless otherwise approved by the Board, of five years and six months for the Employees Plan and the Directors Plan, respectively, and allow for the options to be outstanding for a period of up to ten years, subject to forfeit 30 days after the holder ceases to be an employee or 90 days after the holder ceases to be director. At September 30, 2011, options to purchase an aggregate of 27,183 and 11,667 shares under the Employees Plan and the Directors Plan, respectively, are available to grant in future years. Aggregate share-based compensation expense under the Plans for the three months ended September 30, 2011 and 2010 are as follows:

	2011		2010
Share-based compensation expense
Common stock options	$	12,000	$	4,000
Decrease in net income	$	12,000	$	4,000
Decrease in basic and diluted earnings per share	$	0.00	$	0.00

The following weighted-average assumptions were used in the calculation of share-based compensation expense for options granted during the three months ended September 30, 2011 and 2010:

	2011		2010
Dividend rate		None		None
Price volatility		42%		44%
Risk-free interest rate		0.9% - 1.4%		1.8% - 2.4%
Expected life		6.5 years		5.25 years

As of September 30, 2011, there was an aggregate of $115,000 of unrecognized compensation cost under the Plans related to 208,000 non-vested outstanding stock options with a per share weighted average value of $1.22. The unrecognized expense is anticipated to be recognized on a straight-line basis over a weighted average period of 2.5 years. Following is a summary of stock option activity for the three months ended September 30, 2011 and 2010:

	2011				2010
	Shares		Weighted- Average Exercise Price		Shares		Weighted- Average Exercise Price
Outstanding at beginning of period		320,842	$	3.04		193,843	$	3.94
Granted		115,000		1.80		5,000		1.89
Exercised		—		—		—		—
Forfeited		—		—		—		—
Outstanding at end of period		435,842	$	2.71		198,843	$	3.88
Exercisable at end of period		228,064	$	3.44		181,758	$	3.96
Weighted-average fair value per option granted during the period			$	0.78			$	0.79

Following is a summary of information regarding options outstanding and options exercisable at September 30, 2011:

	Options Outstanding								Options Exercisable
Range of Exercise Price	Number Outstanding		Average Contractual Life		Average Exercise Price		Aggregate Intrinsic Value		Number Outstanding		Average Remaining Contractual Life		Average Exercise Price		Aggregate Intrinsic Value
$1.35 to $2.09		308,334		9.2 years	$	1.86	$	46,617		120,001		8.6 years	$	1.85	$	21,417
$2.41 to $4.68		84,173		5.6 years		3.52		—		64,729		5.6 years		3.85		—
$5.22 to $5.76		20,001		3.2 years		5.51		—		20,001		3.2 years		5.51		—
$7.65 to $9.90		23,334		3.8 years		8.65		—		23,334		3.8 years		8.65		—
Total		435,842		8.0 years	$	2.71	$	46,617		228,064		6.5 years	$	3.44	$	21,417

Our Board of Directors recently approved an increase in available shares under the Plans of an additional 500,000 shares, with 400,000 and 100,000 shares distributed between the Employees Plan and the Directors Plan, respectively. Each of the Plans, as modified, will be placed before our shareholders for approval at our 2011 Annual Shareholders' Meeting. Accordingly, these additional shares have not been included in the information presented in the foregoing paragraphs.