COMMON STOCK AND COMMON STOCK WARRANTS

3 Months Ended

Sep. 30, 2012

Common Stock Warrants and Options [Abstract]

COMMON STOCK AND COMMON STOCK WARRANTS

6. COMMON STOCK AND COMMON STOCK WARRANTS

Under the 2010 Stock Incentive Plan, the Company recorded stock compensation expense of $15,644 and issued 500 shares of Common stock during the three months ended September 30, 2012. $9,792 of the expense related to the vesting of shares under employment agreements entered into with its executive officers in April 2011; and $5,852 of expenses related to vesting and issuance of shares to an employee and Directors of the Company granted in June 2011 and March 2012.

In July 2012, the Board of Directors accepted the recommendation of the Compensation Committee that each of the three non-employee Directors who joined the Board after March 31, 2012 receive a stock award of 10,000 shares of Common Stock. Under the 2011 Stock Incentive Plan 30,000 shares of Common Stock were awarded with a grant date fair value of $1.45 per share, and vest as follows: 9,999 on August 10, 2012; 9,999 on August 10, 2013; and, 10,002 on August 10, 2014. The Company recorded stock compensation expense of $64,689 and issued 59,165 shares of Common stock during the three months ended September 30, 2012. $26,719 of the expense related to the vesting of shares under employment agreements entered into with its executive officers in September 2011, and 41,666 shares of Common Stock vested under these grants on September 27, 2012. $18,124 of expenses related to vesting of shares granted to Directors of the Company in July 2012; 9,999 shares of Common Stock vested under this grant in August 2012. $19,846 of expenses related to vesting of shares granted to employees in April 2012; 7,500 shares of Common Stock vested under these grants in September 2012.

Under the 2012 Stock Incentive Plan, the Company recorded stock compensation expense of $45,000 and issued 171,998 shares of Common stock during the three months ended September 30, 2012. All of the expense and 35,713 shares of Common Stock were issued to Company Directors in lieu of cash payment for compensation for services to the Company in the three months ended September 30, 2012. The other 136,285 shares of Common Stock were issued to its executive officers under the Fiscal Year 2012 Performance Share Plan (the “2012 Plan”) after the filing of the Company’s form 10-K on September 26, 2012.

On September 5, 2012, at the recommendation of the Compensation Committee, the board of directors adopted the Fiscal Year 2013 Performance Share Plan (the “2013 Plan”) covering the Company’s executive officers. Under the 2013 Plan, each executive officer would be awarded common stock in the event the Company achieves certain performance goals during the fiscal year ending June 30, 2013. The metrics under the 2013 Plan as well as the relative weightings of these metrics are identical to those originally set forth in the 2012 Plan. No awards would be made under the 2013 Plan if either (i) none of the minimum, threshold performance target goals has been achieved, or (ii) if operating earnings for the 2013 fiscal year are not equal or better than those during the 2012 fiscal year.

If all of the target goals are achieved under the 2013 Plan, the executive officers would be awarded shares having the following value: Mr. Herbert – $275,000; and Mr. DeMedio – $100,000. If all of the minimum, threshold performance target goals are achieved, the executive officers would be awarded shares having the following value: Mr. Herbert – $75,000; and Mr. DeMedio – $25,000. If all of the maximum, distinguished performance target goals are achieved, the executive officers would be awarded shares having the following value: Mr. Herbert – $550,000; and Mr. DeMedio – $200,000. If the actual results for the fiscal year are less than the target goals (but greater than the minimum, threshold performance target goals), each executive would be awarded a lesser pro rata number of shares from the target goal, and if actual results are greater than the maximum, distinguished goals, each executive would be awarded a greater pro rata number of shares over the maximum distinguished goal.

As of September 30, 2012 and for the three months then ended the Company recorded a liability and expense of $43,868.

In the same quarter a year ago for the 2012 Plan, the Company recorded a liability and expense of $47,582.

Warrants to purchase up to 291,432 shares of Common Stock, issued in conjunction with the 2009 Rights Offering, exercisable at $2.20 per share expired unexercised on August 6, 2012.

During the three months ended September 30, 2011, the Company recorded stock compensation expense of $240,453 and issued 92,666 shares of Common stock. $66,094 and $156,749 of the expense related to the vesting of shares under employment agreements entered into with its executive officers in April and September 2011, respectively; and $17,610 of expenses related to vesting and issuance of shares to employees and Directors of the Company granted in June 2011.