COMMON STOCK AND COMMON STOCK WARRANTS

6 Months Ended

Dec. 31, 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 $34,340 and $49,984 and issued 11,441 and 11,941 shares of Common stock during the three and six months ended December 31, 2012. The fiscal year to date expenses for the vesting of shares of Common Stock as of December 31, 2012 related to the following: $19,583 for shares granted under employment agreements entered into with its executive officers in April 2011; $9,947 for shares granted to Directors of the Company in June 2011 and March 2012; $19,038 for shares issued to Company Directors in lieu of cash payment; and $1,416 for shares granted to an employee.

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 (the “2011 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. Under the 2011 Plan the Company recorded stock compensation expense of $47,006 and $111,695 and issued 19,546 and 78,711 shares of Common stock during the three and six months ended December 31, 2012, respectively. The fiscal year to date expenses for the vesting of shares of Common Stock as of December 31, 2012 related to the following: $35,625 for shares granted under employment agreements entered into with its executive officers in September 2011; $31,549 of expenses related to vesting of shares granted to employees in April 2012; $23,561 of expenses related to vesting of shares granted to Directors of the Company in July 2012; and $20,960 for shares issued to Company Directors in lieu of cash payment.

In October 2012, the Company granted up to 60,000 shares of Common stock under the 2012 Stock Incentive Plan (the “2012 Plan”) to employees based on various performance targets of the Company for the remainder of the 2013 fiscal year. Under the 2012 Plan, the Company recorded stock compensation expense of $13,545 and $58,545 and issued 0 and 171,998 shares of Common Stock during the three and six months ended December 31, 2012. The fiscal year to date expenses for the vesting of shares of Common Stock as of December 31, 2012 related to the following: $41,000 for shares issued to Company Directors in lieu of cash payment; and $13,545 for shares granted to employees in October 2012. 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 six months ended December 31, 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 Performance 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 Performance Plan”) covering the Company’s executive officers. Under the 2013 Performance 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 Performance Plan as well as the relative weightings of these metrics are identical to those originally set forth in the 2012 Performance Plan. No awards would be made under the 2013 Performance 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 Performance 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, if actual results are between target and maximum, then a pro rata number of shares between target and maximum is earned, and if actual results are above maximum (distinguished) than pro rata shares above maximum is earned.

As of December 31, 2012, the Company recorded a liability of $87,837, and expense for the three and six months then ended of $43,969 and $87,837 for the 2013 Performance Plan.

As of December 31, 2011, the Company recorded a liability of $66,568, and expense for the three and six months then ended of $18,986 and $66,568 for the 2012 Performance Plan.

During the three and six months ended December 31, 2011, the Company recorded stock compensation expense of $220,224 and $427,497, and issued 97,132 and 189,798 shares of Common Stock, respectively. The 2012 fiscal year to date expenses for the vesting of shares of Common Stock as of December 31, 2011 related to the following: $109,980 of expense associated with severance for our former CEO; $95,468 and $183,468 for grants to the executive officers in April and September 2011, respectively; $5,831 of expenses related to vesting of shares granted to employees in June 2011; $27,750 of expenses related to vesting of shares granted to Directors of the Company in June 2011; and $5,000 for shares issued to Company Directors in lieu of cash payment.

In October and December 2012, executive officers exercised their right to cancel shares of common stock awarded to them under prior employment agreements and the 2012 Performance Plan for the payment of payroll taxes. 51,298 shares of the Company’s Common Stock were cancelled to satisfy $87,315 of related payroll obligations.

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; and, warrants to purchase up to 17,532 shares of Common Stock, issued in 2007, exercisable at $7.70 per share expired unexercised on October 17, 2012.