Stock Option Grants and Warrants

12 Months Ended

Jun. 30, 2012

Stock Option Grants And Warrants [Abstract]

Stock Option Grants and Warrants

Note 5 — Stock Option Grants and Warrants

Stock Option Grants — In accordance with accounting guidance on stock based compensation, payments in equity instruments for goods or services are accounted for by the fair value method. For the fiscal years ended June 30, 2012 and 2011, stock based compensation of $1,322,566 and $766,485 respectively, was reflected as an increase to additional paid in capital. Of the $1,322,566 stock based compensation for the fiscal year ended June 30, 2012, $1,188,735 was employee related and $133,831 was non-employee related. Of the $766,485 stock based compensation for the fiscal year ended June 30, 2011, $670,073 was employee related and $96,412 was non-employee related.

The Company granted stock options to various of its employees, directors and independent distributors during the year ended June 30, 2012. The options grant the right to purchase shares of the Company’s common stock at prices between $1.33 and $3.53 per share. The Company granted options to purchase shares of the Company’s common stock during the year ended June 30, 2011 at prices between $0.48 and $1.28 per share. The options are not transferable and expire on various dates through June 23, 2021. The Company also granted Stock Appreciation Rights (SARs) to an employee during the year ended June 30, 2012. The intent is to settle the SARs in cash and they are being accounted for using the liability method which requires re-measurement at each reporting period.

The following is a summary of stock option activity for the years ended June 30, 2012 and 2011:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding and exercisable, June 30, 2010		8,535,731		$	0.50		8.39
Granted		2,632,000		$	1.04		9.65
Exercised		(469,571	)	$	0.32		7.54
Forfeited		(200,000	)	$	0.74		—
Expired or Cancelled		—		$	0.00		—
Outstanding and exercisable, June 30, 2011		10,498,160		$	0.64		7.93
Granted		2,249,503		$	2.00		9.11
Exercised		(1,612,000	)	$	0.45		6.97
Forfeited		(28,667	)	$	1.57		—
Expired or Cancelled		—
Outstanding and exercisable, June 30, 2012		11,106,996		$	0.94		7.36

Warrants

At June 30, 2012, warrants to purchase an aggregate of 12,964,235 shares of the Company’s common stock were outstanding. There were no warrants issued during year ended June 30, 2012.

At June 30, 2011, warrants to purchase an aggregate of 25,460,094 shares of the Company’s common stock were outstanding. There were no warrants issued during year ended June 30, 2011.

The following is a summary of the warrants issued for the years ended June 30, 2012 and 2011:

	Common Stock Warrants
Outstanding and exercisable, June 30, 2010		38,580,294
Issued		107,992
Cancelled		—
Exercised		(13,228,192	)
Expired		—
Outstanding and exercisable, June 30, 2011		25,460,094
Issued		270,000
Cancelled		—
Exercised		(12,562,859	)
Expired		(203,000	)
Outstanding and exercisable, June 30, 2012		12,964,235

As of June 30, 2012 the Company had no warrants classified as derivative liabilities.

As of June 30, 2011 the Company classified warrants to acquire an aggregate of 8,360,000 shares issued in conjunction with the 2009 private placement of common stock as a short-term derivative liability. The Company estimated the fair value of the liability at June 30, 2011 as $7,435,883 using the Black-Scholes Merton model adjusted for dilution with the following assumptions:

1) risk free rate of 0.29 percent;

2) dividend yield of -0- percent;

3) expected life of 0.72 to 0.78 years;

4) a volatility factor of the expected market price of the Company’s common stock of 106 percent.

As of June 30, 2011 the Company classified warrants to acquire an aggregate of 15,168,052 shares issued in conjunction with the 2009 and 2010 convertible debentures as a long-term derivative liability. The Company estimated the fair value of the liability at June 30, 2011 as $19,905,401 using the Black-Scholes Merton model adjusted for dilution with the following assumptions:

1) risk free rate of 0.81 to 2.13 percent;

2) dividend yield of -0- percent ;

3) expected life of 3.43 to 5.68 years;

4) a volatility factor of the expected market price of the Company’s common stock of between 137 and 138 percent.