Stock-based Compensation

6 Months Ended

Dec. 31, 2011

Stock-based Compensation [Abstract]

Stock-based Compensation

Note 5 — Stock-based Compensation

We adopted and the shareholders approved the 2007 Long-Term Incentive Plan (the “2007 Plan”), effective November 21, 2006, to provide incentives to certain eligible employees, directors and consultants. A maximum of 10,000,000 shares of our common stock can be issued under the 2007 Plan in connection with the grant of awards. Awards to purchase common stock have been granted pursuant to the 2007 Plan and are outstanding to various employees, officers, directors, independent distributors and Scientific Advisory Board (“SAB”) members at prices between $0.21 and $0.76 per share, vesting over one- to three-year periods. Awards expire in accordance with the terms of each award and the shares subject to the award are added back to the 2007 Plan upon expiration of the award. As of December 31, 2011, awards for the purchase of an aggregate of 7,645,160 shares of our common stock are outstanding under the 2007 Plan.

We adopted and the shareholders approved the 2010 Long-Term Incentive Plan (the “2010 Plan”), effective September 27, 2010, to provide incentives to certain eligible employees, directors and consultants. As of December 31, 2011 a maximum of 3,500,000 shares of our common stock were available for issuance under the 2010 Plan in connection with the grant of awards. Awards to purchase common stock have been granted pursuant to the 2010 Plan and are outstanding to various employees, officers and directors at prices between $0.63 and $1.75 per share, vesting over ten month- to four-year periods. As of December 31, 2011, awards for the purchase of an aggregate of 2,292,000 shares of our common stock are outstanding under the 2010 Plan. At our annual meeting of shareholders in January 2012 our shareholders approved a 3,400,000 share increase in the number of shares available for issuance under the 2010 Plan, increasing from 3,500,000 to 6,900,000 shares.

Payments in equity instruments for goods or services are accounted for under the guidance of share based payments, which require use of the fair value method. We have adjusted the expense for the anticipated forfeitures. Compensation based options totaling 24,500 and 112,000 were granted for the three and six month periods ended December 31, 2011, respectively. Compensation based options totaling none and 58,000 were granted for the three and six month periods ended December 31, 2010, respectively.

For the three and six months ended December 31, 2011, stock based compensation of $217,830 and $573,051, respectively, was reflected as an increase to additional paid in capital. Of the stock based compensation for the three and six months ended December 31, 2011, $189,601 and $440,372, respectively, was employee related and $28,229 and $132,679, respectively, was non-employee related. For the three and six months ended December 31, 2010, stock based compensation of $46,958 and $162,115, respectively, was reflected as an increase to additional paid in capital. Of the stock based compensation for the three and six months ended December 31, 2010, $46,958 and $132,517, respectively, was employee related and none and $29,598, respectively, was non-employee related.

Compensation expense was calculated using the fair value method during the three and six month periods ended December 31, 2011 and 2010 using the Black-Scholes option pricing model. The following assumptions were used for options and warrants granted during the six month periods ended December 31, 2011 and 2010:

1. risk-free interest rates of between 0.93 and 0.97 percent for the six months ended December 31, 2011 and between 1.33 and 1.62 percent for the six months ended December 31, 2010;

2. dividend yield of -0- percent;

3. expected life of 3 to 6 years; and

4. a volatility factor of the expected market price of our common stock of between 129 and 137 percent for the six months ended December 31, 2011 between 128 and 129 percent for the six months ended December 31, 2010.