Quarterly report pursuant to Section 13 or 15(d)

Capital and Stock Based Compensation

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Capital and Stock Based Compensation
 9 Months Ended
Mar. 31, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure Of Compensation Related Costs Share Based Payments Text Block
Stock Based Compensation
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, and restricted share awards.
Stock Option Grants Under the Stock Plan
As of March 31, 2012, 335,000 shares were available for future issuance under the Stock Plan and 825,000 options were issued outside of the Stock Plan. Options outstanding have expiration dates ranging from November 28, 2015, through January 10, 2022.
The following table summarizes stock option activity for the nine months ended March 31, 2012:

 
Number of Shares
 
Weighted Average Exercise Price ($)
June 30, 2011
5,200,000

 
$
1.49

Time-based options awarded
1,400,000

 
$
1.10

Performance-based options awarded
275,000

 
$
1.08

Options exercised
(21,875
)
 
$
1.60

March 31, 2012
6,853,125

 
$
1.40


The unrecorded compensation expense related to stock option awards was $1.0 million as of March 31, 2012.
Director and Employee Stock Compensation
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. The Company issued 75,000 shares in July 2011 pursuant to this policy.
The Company issued 75,000 performance based options (“PBOs”) to an employee during the three months ended March 31, 2012. The fair value of these shares was calculated as $41 thousand and was based on the closing stock price on the grant date.
The fair value of shares issued under the Stock Plan during the nine months ended March 31, 2012 and 2011 was estimated using the following weighted-average assumptions.

 
March 31,
 
2012
 
2011
 
Time Based Options
 
PBOs
 
Time Based Options
 
PBOs
Number of options
1,400,000

 
 
 
275,000

 
 
 
400,000

 
 
 
400,000

 
 
Risk free interest rate
1.06 to 1.25

 
%
 
0.96 to 1.03

 
%
 
2.23

 
%
 
1.64

 
%
Expected life
5.75 to 6.00

 
yrs
 
5.25 to 5.38

 
yrs
 
6.00

 
yrs
 
5.00

 
yrs
Expected volatility (based on historical price)
62.43 to 62.81

 
%
 
61.18 to 62.48

 
%
 
61.50

 
%
 
56.00

 
%
Expected dividend
$
—

 
 
 
$
—

 
 
 
$
—

 
 
 
$
—

 
 

The Company recorded $0.4 million and $1.3 million of related stock compensation expense for the three and nine months ended March 31, 2012, respectively, and $0.6 million and $1.8 million of related stock compensation expense for the three and nine months ended March 31, 2011, respectively. Stock based compensation is included in the unaudited condensed consolidated statements of operations’ general and administrative expense.