NOTE 9 - LONG-TERM INCENTIVE PLAN AWARDS

3 Months Ended

Sep. 30, 2011

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

NOTE 9 – LONG-TERM INCENTIVE PLAN AWARDS

As we adopted the 2009 Stock Incentive Plan (“2009 Plan”), we provided for the grant of incentive stock options and non-qualified stock options to our employees and directors on June 11, 2009.

We issued additional options in 2010 under the 2009 Plan.  The options granted in 2010 generally vest and become exercisable at the rate of between 33% and 100% per year with a life of ten years. There were no options granted in fiscal year 2011.

We adopted ASC 718, “Compensation – Stock Compensation,” using a modified prospective application, and the Black-Scholes model. Under this application, we are required to record compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that remain outstanding at the date of adoption. Compensation costs will be recognized over the period that an employee provides service in exchange for the award.

The estimated forfeiture rate considers historical turnover rates stratified into employee pools in comparison with an overall employee turnover rate, as well as expectations about the future. We periodically revise the estimated forfeiture rate in subsequent periods if actual forfeitures differ from those estimates. Compensation expense recorded under this method for the three months ended September 30, 2011 was $41,550 and reduced operating income and income before income taxes by the same amount by increasing compensation expense recognized in selling and administrative expense. The recognized tax benefit related to the compensation expense for the three months ended September 30, 2011 was $0.

					Weighted-
					Average
			Weighted-		Remaining
			Average		Contractual		Aggregate
			Exercise		Life		Intrinsic
Options	Shares		Price		(In Years)		Value
Outstanding at June 30, 2011		930,836	$	1.40		7.2	$	978,470
Granted		-		-		-		-
Exercised		(22,500)		(0.45)		-		-
Forfeited or Expired		(9,334)		(1.35)		-		-
Outstanding at September 30, 2011		899,002	$	1.42		7.0	$	69,150
Exercisable at September 30, 2011		701,003	$	1.32		6.5	$	128,250
Vested and Expected to Vest at September 30, 2011		701,003	$	1.32		6.5	$	128,250

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $1.50 as of September 30, 2011, which would have been received by the option holders had all option holders exercised their options as of that date. The weighted-average grant-date fair value of stock options of 899,002, which is outstanding at September 30, 2011, was $1.29 per share.

As of September 30, 2011, there was $272,917 of total unrecognized compensation cost related to non-vested stock options granted. That cost is expected to be recognized over a weighted-average period of 1.0 years.