SHAREHOLDERS' EQUITY

3 Months Ended

Sep. 30, 2011

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

6. SHAREHOLDERS’ EQUITY

Common Stock Issuances

Three months ended September 30, 2011

For exercise of options:

During the three months ended September 30, 2011, 643,333 options were exercised for cash at exercise prices ranging from $0.31 to $2.00 for total gross proceeds of $588,000.

For exercise of warrants:

There were no warrants exercised during the three months ended September 30, 2011.

Employee stock options

During the three months ended September 30, 2011, we granted options to purchase 1,069,480 awards under the long term incentive plan.  In July 2011, our Board of Directors approved an increase in the shares authorized under the long-term incentive plan from 5,000,000 to 10,000,000, which increase is subject to stockholder approval. We subsequently granted options to purchase an aggregate of 425,520 additional shares to various employees, with provisions for vesting beginning twelve months after grant.  Because stockholder approval has not been obtained, we have classified these awards as liability awards on our balance sheet.

Three months ended September 30, 2010

For exercise of options:

During the three months ended September 30, 2010, 40,000 options were exercised for cash at exercise prices ranging from $0.31 to $1.13 for total gross proceeds of $27,850.

For exercise of warrants:

During the three months ended September 30, 2010, 575,000 warrants were exercised for cash at an exercise price of $0.98 for total gross proceeds of $563,500. Additionally, during the three months ended September 30, 2010, we issued 223,240 shares of common stock to YA Global upon the cashless exercise of warrants to purchase 468,611 shares of common stock.

Employee stock options

During the three months ended September 30, 2010, we granted options to purchase 75,000 shares of common stock to our employees. The amortized compensation expense associated with these employee stock options during the three months ended September 30, 2010 was $43,000. See Note 7.