Note 10 - Equity Compensation

3 Months Ended

Sep. 30, 2011

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

NOTE 10 -  EQUITY COMPENSATION

Stock Options

The Company has an equity compensation plan that was approved by shareholders which covers all of its full-time employees, outside directors and certain advisors.  The options granted or stock awards made pursuant to this plan are granted at fair market value at date of grant or award.  Options granted to non-employee directors become exercisable 25% each ninety days (cumulative) from date of grant and options granted to employees generally become exercisable 25% per year (cumulative) beginning one year after the date of grant.  If a stock option holder’s employment with the Company terminates by reason of death, disability or retirement, as defined in the Plan, the Plan generally provides for acceleration of vesting.  The number of shares reserved for issuance is 2,800,000, of which 717,959 shares were available for future grant or award as of September 30, 2011.  This plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted and unrestricted stock awards, performance stock awards, and other stock awards.  As of September 30, 2011, a total of 2,104,789 options for common shares were outstanding from this plan as well as two previous stock option plans (both of which had also been approved by shareholders), and of these, a total of 1,519,739 options for common shares were vested and exercisable.  The approximate unvested stock option expense as of September 30, 2011 that will be recorded as expense in future periods is $641,366.  The weighted average time over which this expense will be recorded is approximately 18 months.

The fair value of each option on the date of grant was estimated using the Black-Scholes option pricing model.  The below listed weighted average assumptions were used for grants in the periods indicated.

	Three Months Ended September 30
		2011	2010
Dividend yield		--	3.76%
Expected volatility		--	52%
Risk-free interest rate		--	1.4%
Expected life		--	4.5 yrs.

At September 30, 2010, the 282,200 options granted in the first three months of fiscal 2010 to both employees and non-employee directors had per share exercise prices ranging from $4.84 to $6.07, fair values ranging from $1.60 to $2.15, and remaining contractual lives of between nine years and nine months and ten years.

The Company calculates stock option expense using the Black-Scholes model.  Stock option expense is recorded on a straight line basis with an estimated 3.6% forfeiture rate effective July 1, 2011, with the previous estimated forfeiture rate having been 3.0% prior to July 1, 2011.  The expected volatility of the Company’s stock was calculated based upon the historic monthly fluctuation in stock price for a period approximating the expected life of option grants.  The risk-free interest rate is the rate of a five year Treasury security at constant, fixed maturity on the approximate date of the stock option grant.  The expected life of outstanding options is determined to be less than the contractual term for a period equal to the aggregate group of option holders’ estimated weighted average time within which options will be exercised.  It is the Company’s policy that when stock options are exercised, new common shares shall be issued.  The Company recorded $128,100 and $414,800 of expense related to stock options in three months ended September 30, 2011 and 2010, respectively.  As of September 30, 2011, the Company expects that approximately 567,991 outstanding stock options having a weighted average exercise price of $7.23 per share, intrinsic value of $225,543 and weighted average remaining contractual terms of 8.1 years will vest in the future.

Information related to all stock options for the periods ended September 30, 2011 and 2010 is shown in the table below:

	Three Months Ended September 30, 2011
						Weighted
				Weighted		Average
				Average		Remaining	Aggregate
	Shares			Exercise Price		Contractual Term	Intrinsic Value
Outstanding at 6/30/11		2,123,939		$	10.80	6.3 years	$	955,401
Granted		--		$	--
Forfeitures/expiration		(17,150	)	$	16.37
Exercised		(2,000	)		5.21
Outstanding at 9/30/11		2,104,789		$	10.76	6.1 years	$	351,774
Exercisable at 9/30/11		1,519,739		$	12.13	5.4 years	$	116,020

	Three Months Ended September 30, 2010
						Weighted
				Weighted		Average
				Average		Remaining	Aggregate
	Shares			Exercise Price		Contractual Term	Intrinsic Value
Outstanding at 6/30/10		2,123,086		$	11.64	6.6 years	$	15,270
Granted		282,200		$	5.21
Forfeitures		(126,409	)	$	9.69
Exercised		--		$	--
Outstanding at 9/30/10		2,278,877		$	10.95	7.1 years	$	425,262
Exercisable at 9/30/10		1,278,552		$	13.04	5.7 years	$	28,272

The aggregate intrinsic value of options exercised during the three month period ended September 30, 2011 was $1,960.  The Company received $10,420 of cash from employees who exercised 2,000 options during the three months ended September 30, 2011.  None of the shares of stock were sold.

The Company awarded a total of 1,220 and 2,068 common shares, respectively, in the three months ended September 30, 2011 and September 30, 2010 as stock compensation awards.  These common shares were valued at their approximate $10,000 and $10,000 fair market values, respectively, on their dates of issuance, respectively, pursuant to the compensation programs for non-employee directors who receive a portion of their compensation as an award of Company common stock.  Stock compensation awards are made in the form of newly issued common shares of the Company.

Deferred Compensation Plan

The Company has a non-qualified deferred compensation plan providing for both Company contributions and participant deferrals of compensation.  The Plan is fully funded in a Rabbi Trust.  All Plan investments are in common shares of the Company.  As of September 30, 2011 there were 28 participants, all with fully vested account balances.  A total of 263,297 common shares with a cost of $2,624,200, and 244,868 common shares with a cost of $2,499,700 were held in the Plan as of September 30, 2011 and June 30, 2011, respectively, and, accordingly, have been recorded as treasury shares. The change in the number of shares held by this plan is the net result of share purchases and sales on the open stock market for compensation deferred into the Plan and for distributions to terminated employees.  The Company does not issue new common shares for purposes of the non-qualified deferred compensation plan.  The Company accounts for assets held in the non-qualified deferred compensation plan in accordance with ASC Topic 710, Compensation – General.  For fiscal year 2012, the Company estimates the Rabbi Trust for the Nonqualified Deferred Compensation Plan will make net repurchases in the range of 22,000 to 24,000 common shares of the Company.  During the three months ended September 30, 2011 and 2010, the Company used approximately $124,500 and $95,800, respectively, to purchase common shares of the Company in the open stock market for either employee salary deferrals or Company contributions into the non-qualified deferred compensation plan.  The Company does not currently repurchase its own common shares for any other purpose.