Quarterly report pursuant to Section 13 or 15(d)

Stock Based Compensation

v2.4.0.6
Stock Based Compensation
 3 Months Ended
Sep. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Based Compensation
Note 7 - Stock Based Compensation
The Stock Plan
On December 8, 2010, shareholders approved an amendment to the Company's 1998 Stock Incentive Plan (the "Stock Plan") to increase the number of authorized common stock shares reserved for awards under the Stock Plan to a total of 7,205,000 shares. These authorized shares can take the form of non-qualified stock options, stock appreciation rights, restricted share awards, annual awards of stock to directors, and performance based awards ("PBOs").
Stock Option Grants
Stock option grants contain both time based and performance based vesting provisions. The time based options are expensed on a straight-line basis over the vesting period. Performance based options are recognized when the achievement of the performance conditions is considered probable. Management re-assesses whether satisfaction of performance conditions are probable at the end of each reporting period. If changes in the estimated outcome of the performance conditions affect the quantity of the awards expected to vest, the cumulative effect of the change is recognized in the period of change. As of September 30, 2012, management believes the achievement of the performance conditions related to the PBOs is probable. Accordingly, the Company has recognized expense on these awards over the period of time the performance condition is expected to be achieved.
As of September 30, 2012, 460,000 shares were available for future issuance under the Stock Plan. Of the 925,000 options granted during the three months ended September 30, 2012, 75,000 were issued as PBOs and 800,000 options were issued outside of the Stock Plan. Options outstanding have expiration dates ranging from November 28, 2015, through September 5, 2022.
The following table summarizes the stock option activity for the three months ended:
 
September 30, 2012
 
Number of
Shares
 
WAEPS (1)
June 30, 2012
6,753,125

 
$1.44
Granted
925,000

 
$1.31
Forfeited
(483,334
)
 
$1.13
September 30, 2012
7,194,791

 
$1.37
Weighted average remaining contractual term
5.1 years
(1) Weighted average exercise price per share
The fair value of stock option grants was estimated using the following weighted average assumptions for the three months ended:
 
September 30,
 
2012
 
2011
Number of options (1)
925,000
 
—
Weighted average grant date fair value per share
$1.31
 
$0.00
Expected dividend
$0.00
 
$0.00
Risk free interest rate
0.6
%
 
-
0.8
%
 
—
%
 
-
—
%
Expected life
5.13 years

 
-
6.00 years

 
0 years

 
-
0 years

Expected volatility (based on historical price)
60.7
%
 
-
63.5
%
 
—
%
 
-
—
%
(1) There were no stock option grants for the three months ended September 30, 2011.
Stock Compensation Expense
The Company recorded $0.3 million and $0.4 million of related stock compensation expense for the three months ended September 30, 2012, and 2011, respectively. Stock based compensation is included in general and administrative expense in the unaudited condensed consolidated statements of operations. The unrecorded expected future compensation expense related to stock option awards was $0.9 million as of September 30, 2012.
The Company's compensation policy is designed to provide the Company's directors with a portion of their annual Board compensation in the form of equity. The number of shares for each director award is subject to an annual maximum of 15,000 shares. As of September 30, 2012, no shares were issued by the Company pursuant of this policy.