Share-Based Payments

9 Months Ended

Mar. 31, 2013

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

Share-Based Payments

Share-Based Payments

Equity Incentive Plan

The 2011 Executive Incentive Plan (the "Plan") of the Company was approved on February 21, 2011 by the written consent of the holder of a majority of the Company's outstanding common stock. The Plan provides the Company the ability to grant to any officer, director, employee, consultant or other person who provides services to the Company or any related entity, options, stock appreciation rights, restricted stock awards, dividend equivalents and other stock-based awards and performance awards, provided that only employees are entitled to receive incentive stock options in accordance with IRS guidelines. The Company reserved 30,000,000 shares of common stock for delivery under the Plan.  Pursuant to the Executive Incentive Plan and the employment agreements, between February 15, 2011 and March 31, 2013 the Compensation Committee of the Company's Board of Directors authorized the grants of restricted stock and stock options described below.

Restricted Stock

The per share fair value of RSUs granted with service conditions was determined on the date of grant using the fair market value of the shares on that date and is recognized as an expense over the requisite service period.

	Shares	Weighted Average Grant Date Fair Value
Nonvested at June 30, 2012	2,886,668	$29.45
Granted	—	—
Vested	(75,833)	$12.22
Forfeited and cancelled	(941,667)	$28.35
Nonvested at March 31, 2013	1,869,168	$31.11

The total compensation was $4,875 and $13,325 for the three and nine months ended March 31, 2013, respectively.   The total compensation was $8,218 and $25,190 for the three and nine months ended March 31, 2012, respectively. As of March 31, 2013 and June 30, 2012 there was $53,451 and $112,995, respectively, in total unrecognized share-based compensation costs.

Stock Options

The following table summarizes the Company's stock option activity for three months ended March 31, 2013:

	Number of Options	Weighted average exercise price
Outstanding at June 30, 2012	3,067,503	$6.24
Granted	15,428,546	$0.88
Exercised	—	—
Forfeited and cancelled	(2,418,003)	$1.93
Outstanding at March 31, 2013	16,078,046	$1.96
Exercisable at March 31, 2013	5,753,926	$2.18

The Company is accounting for these options at fair market value of the options on the date of grant, with the value being recognized over the requisite service period. The fair value of each option award is estimated using a Black-Scholes option valuation model.  Expected volatility is based on the historical volatility of the price of comparable companies' stock.  The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the option.  The Company uses historical data to estimate expected dividend yield, expected life and forfeiture rates.  Options generally have an expiration  of 10 years and vest over a period of 3 or 4 years.  The fair value of the options granted during the three months and nine months ended March 31, 2013 and 2012 were estimated based on the following weighted average assumptions:

	Three Months Ended March 31,		Nine Months Ended March 31,
	2013	2012	2013	2012
Expected volatility	80%	69%	80%	60%
Risk-free interest rate	0.32%	1.14%	0.92%	1.22%
Expected dividend yield	—	—	—	—
Expected life (in years)	6.21	6.25	6.46	6.25
Estimated fair value per option granted	$0.81	$3.81	$0.95	$4.12

The total compensation expense of $2,015 and $10,250 was included in the accompanying Consolidated Statements of Operations in selling, general and administrative expenses for the three months and nine months ended March 31, 2013, respectively. The total compensation expense of $953 and $4,619 was included in the accompanying Consolidated Statements of Operations in selling, general and administrative expenses for the three months and nine months ended March 31, 2012, respectively. 15,428,546 options were granted during the nine months ended March 31, 2013 and the grants provide for vesting annually in arrears over the next three years.  As of March 31, 2013, there was approximately $15,840 of total unrecognized stock-based compensation cost which will be recognized over a 2-3 year period.