Equity and Other Long Term Incentive Plans

3 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity and Other Long Term Incentive Plans

(11) Equity and Other Long Term Incentive Plans

Equity Grants

In the first and second quarters of the fiscal year ended June 30, 2010, the Compensation Committee of the Board of Directors granted directors, named executive officers and employees 1,995,559 and 410,000, respectively, of restricted shares. The shares were issued from the 2008 Stock Incentive Plan, vest 33.33% a year over a three-year period and expire upon employee termination.

In the first quarter of fiscal year ended June 30, 2012, the Compensation Committee of the Board of Directors granted directors, named executive officers and employees 579,000 stock options designed to increase shareholder value by compensating employees over the long term. The options were issued from the 2008 and 2011 Stock Incentive Plans, vest upon the Company’s stock achieving a closing price of $1.50 and expire 10 years from grant date.

In July 2011, the Compensation Committee of the Board of Directors granted a third party consultant 200,000 stock options intended to align his incentives with management and the shareholders. The options were issued out of the 2011 Stock Incentive Plan, vest upon certain performance conditions and expire 7 years from grant date. Management considers the likelihood of the performance conditions being met as remote, and therefore no expense was recorded for the three months ended September 30, 2011.

In the first quarter of fiscal year 2013, the Compensation Committee of the Board of Directors granted directors, named executive officers and employees 330,000 stock options designed to increase shareholder value by compensating employees over the long term. The options were issued from the 2011 Stock Incentive Plans, vest upon the Company’s stock achieving a closing price of $1.50 and expire 10 years from grant date.

As of September 30, 2012, 333,501 shares of common stock were reserved for future grants under the 2008 Stock Incentive Plan and 1,056,000 shares of common stock reserved for future grant under the 2011 Stock Incentive Plan. In the three months ended September 30, 2012 and 2011, we recognized compensation expense of $(0.1) million and $0.3 million, respectively, for restricted stock and stock options outstanding.

Related Party Transactions

Director Compensation

In August 2009, the Board of Directors granted 525,000 total restricted shares valued at $0.6 million to directors from the 2008 Stock Incentive Plan. The restricted shares vest 33.33% a year for three years and expire upon termination. Compensation expense of $0.1 million was recorded in the three months ended September 30, 2012 for these awards.

In September 2011, the Board of Directors granted 150,000 total stock options valued at $0.1 million to directors from the 2011 Stock Incentive Plan. The stock options vest upon the Company’s stock achieving a closing price of $1.50 and expire 10 years from grant date. Compensation expense of $0.1 million was recorded in the three months ended September 30, 2012.

In August 2012, the Board of Directors granted 150,000 total stock options valued at $0.1 million to directors from the 2011 Stock Incentive Plan. The stock options vest upon the Company’s stock achieving a closing price of $1.50 and expire 10 years from grant date. Compensation expense of $0.1 million was recorded in the three months ended September 30, 2012.

Executive Compensation

1^st Detect

In January 2010, an independent committee of the Board of Directors of 1^st Detect approved a grant of 1,180 restricted stock shares, of which 75 have been subsequently cancelled, and 1,820 stock purchase warrants, of which 45 have been cancelled, to certain officers, directors and employees of 1^st Detect. The awards vest 50% a year over a 2 year period. The restricted stock awards are equal to the fair market value of 1^st Detect’s common stock on the date of grant as determined by an independent valuation firm.

The number of shares and warrants underlying each award to a named executive officer is as follows: Thomas B. Pickens III: 300 shares, 680 warrants. There was no compensation expense for the three months ended September 30, 2012 and in the three months ended September 30, 2011, we recognized compensation expense of $0.1 million, for restricted stock and warrants outstanding.

In September 2012, the Board of Directors of 1^st Detect approved a grant of 965 stock options, of which 230 have been subsequently cancelled, to certain officers, directors and employees of 1^st Detect. The awards vest upon certain performance conditions being met and expire 10 years from grant date. The stock options have an exercise price equal to the fair market value of 1^st Detect’s common stock on the date of grant as determined by an independent valuation firm.

The number of options underlying each award to a named executive officer is as follows: Thomas B. Pickens III: 200 stock options. In the three months ended September 30, 2012 and 2011, the Company recognized compensation expense of $0.1 million and $0.1 million, respectively.

Assuming a business event occurred which resulted in the vesting of all restricted stock, stock purchase warrants and stock options, then Thomas B. Pickens III would hold 11 % and the Company would hold 66% of the outstanding shares of 1^st Detect.

The restricted stock issuances resulted in noncontrolling interest, as described in Note 3.

Astrogenetix

In January 2010, an independent committee of the Board of Directors of Astrogenetix approved a grant of 1,550 restricted stock shares, of which 375 have been cancelled. There were 2,050 stock purchase warrants, of which 50 have been subsequently cancelled, that were also granted to certain officers, directors and employees of Astrogenetix. The awards vest 50% a year over a 2 year period. The restricted stock awards are equal to the fair market value of Astrogentix’s common stock on the date of grant as determined by an independent valuation firm.

The number of shares and warrants underlying each award to a named executive officer is as follows: Thomas B. Pickens III: 500 shares, 1,000 warrants. There was no compensation expense for the three months ended September 30, 2012 and in the three months ended September 30, 2011, we recognized compensation expense of $0.1 million, for restricted stock and warrants outstanding.

Assuming a business event occurred which resulted in the vesting of all restricted stock and stock purchase warrants, then Thomas B. Pickens III would hold 16% and the Company would hold 65% of the outstanding shares of Astrogenetix.

The restricted stock issuances resulted in noncontrolling interest, as described in Note 3.

Stock Options

In September 2012, 330,000 stock options were granted to employees and directors. At September 30, 2012 and 2011, there were $0.5 million and $0.3 million, respectively, of total unrecognized compensation costs related to non-vested stock options, which is expected to be recognized over a weighted average period of 9.5 years.

The Company’s stock options activity for the three months ended September 30, 2012 was as follows:

	Shares	Weighted Average
	(in thousands)	Exercise Price
Outstanding at June 30, 2012	1,141	$	0.79
Granted	330		1.20
Exercised	(100)		0.35
Cancelled or expired	(165)		0.74
Outstanding at September 30, 2012	1,206	$	0.95

Restricted Stock

At September 30, 2012 and 2011, there were $0.1 million and $0.7 million respectively, of unrecognized compensation costs related to restricted stock, which is expected to be recognized over a weighted average period of 1.5 years.

The Company’s restricted stock activity for the three months ended September 30, 2012 was as follows:

	Shares (in thousands)	Weighted Average Grant-Date Fair Value
Non-vested at June 30, 2012	678	$	1.14
Granted	—		—
Vested	(209)		1.22
Cancelled or expired	(133)		1.15
Non-vested at September 30, 2012	336	$	1.16

Stock Options and Warrants for 1^st Detect

At September 30, 2012 and 2011, there was $0.1 million and $0.1 million respectively, of unrecognized compensation costs related to warrants and options, which is expected to be recognized over a weighted average period of 9.0 years.

1^st Detect stock options and warrants activity for the three months ended September 30, 2012 was as follows:

	Shares	Weighted Average Grant-Date Fair Value
Non-vested at June 30, 2012	2,730	$	212.00
Granted	—		—
Exercised	—		—
Cancelled or expired	(220)		212.00
Outstanding at September 30, 2012	2,510	$	212.00

Restricted Stock for 1^st Detect

At September 30, 2012, the awards were fully vested and there is no additional compensation expense to be recognized related to restricted stock. At September 30, 2011 there was $0.1 million of unrecognized compensation costs related to restricted stock.

Warrants for Astrogenetix

At September 30, 2012 the warrants were fully vested and there is no additional compensation expense to be recognized related to warrants. At September 30, 2011 there was $0.1 million of unrecognized compensation costs related to warrants.

Astrogenetix warrant activity for the three months ended September 30, 2012 was as follows:

	Shares	Weighted Average Grant-Date Fair Value
Outstanding at June 30, 2012	2,000	$	167.00
Granted	—		—
Exercised	—		—
Cancelled or expired	—		—
Outstanding at September 30, 2012	2,000	$	167.00

Restricted Stock for Astrogenetix

At September 30, 2012, the awards were fully vested and there is no additional compensation expense to be recognized related to restricted stock. At September 30, 2011 there was $0.1 million of unrecognized compensation costs related to restricted stock.