Compensation expense includes the estimated fair value of equity awards vested during the reported period. Expense for equity awards vested is determined based on the grant date fair value previously calculated for pro forma disclosures. For the three and six months ended October 31, 2011 and 2010, equity-based compensation expense from operations was comprised of the following (in thousands):

	Three Months Ended		Six Months Ended
	October 31,		October 31,
	2011	2010	2011	2010
Direct Costs of Revenue	$ 19	$ 14	$ 37	$ 26
Product Development	40	38	79	76
Selling, General and Administrative	187	183	357	385
Total Equity-Based Compensation	$ 246	$ 235	$ 473	$ 487

The following table shows remaining unrecognized compensation expense on a pre-tax basis related to all types of non-vested equity awards outstanding as of October 31, 2011. This table does not include an estimate for future grants that may be issued (in thousands).

Fiscal Year Ending April 30,					Amount
Remainder of 2012					$ 451
2013					622
2014					429
2015					209
2016					13
Total					$ 1,724

The cost above is expected to be recognized over a weighted-average period of 1.40 years.

We estimate the fair value of our share-based awards using the Black-Scholes option pricing model. The Black-Scholes option pricing model incorporates various assumptions including expected life, interest rates and expected volatility. Changes in the assumptions can materially affect the fair value estimates and ultimately how much we recognize as stock-based compensation expense. The fair values of our stock options are estimated at the date of grant. The weighted average input assumptions used and resulting fair values for the six months ended October 31, 2011 and 2010, were as follows:

	Six Months Ended
	October 31,
	2011	2010
Expected life (in years)	5.0	5.0
Risk-free interest rate	0.8%	1.0%
Volatility	89%	87%
Dividend yield	-	-
Weighted-average fair value of stock options granted during the year	$ 2.39	$ 3.38
Forfeiture rate	20%	20%

The Company bases its expected life assumption on its historical experience and on the terms and conditions of the stock awards it grants to employees. The risk-free interest rate is based upon United States Treasury interest rates appropriate for the expected life of the awards. The expected volatility is based on the historical volatility of the Company's common stock over the most recent period commensurate with the estimated expected life of the Company's stock options. The Company did not pay cash dividends in fiscal 2011 or year to date in fiscal 2012, and does not anticipate paying any cash dividends in the foreseeable future. Consequently, an expected dividend yield of zero is used in the Black-Scholes option pricing model.

We recognize expense only for the stock-based awards that are ultimately expected to vest. Therefore, the Company has developed an estimate of the number of awards expected to cancel prior to vesting ("forfeiture rate"). The Company's uses a forfeiture rate that is estimated based on historical cancellation experience, and is applied to all stock-based awards. The Company recognizes stock-based compensation cost as an expense ratably on a straight-line basis over the requisite service period.

In the second quarter of fiscal 2011, the Company's shareholders approved the 2010 Stock Plan (the "2010 Stock Plan"). Under the 2010 Stock Plan the Company may make awards to issue up to 1,500,000 shares of common stock to eligible employees, consultants and directors. Stock options granted under the 2010 Stock Plan generally vest over four years, are exercisable to the extent vested and expire 10 years from the date of grant. Under the 2010 Stock Plan the Company may grant options at prices not less than the fair market value at the date of grant. Under the 2001 Stock Option Plan (the "2001 Option Plan") which expired as of September 2010, the Company was able to grant options to eligible employees, directors, and consultants at prices not less than the fair market value at the date of grant for incentive stock options and not less than 85% of the fair market value at the date of grant for non-statutory stock options. Options granted under the 2001 Option Plan generally vest over four years, are exercisable to the extent vested, and expire 10 years from the date of grant.

A summary of the Company's stock option activity for the six months ended October 31, 2011 is as follows:

				Weighted
			Weighted	average remaining	Aggregate
			average	contractual	intrinsic
		Shares	exercise price	term (in years)	value (1)
Outstanding at April 30, 2011		2,152,183	$ 3.38	6.91	$ 550,903
	Granted	812,700	$ 2.39
	Exercised	(91,100)	$ 1.43
	Canceled or expired	(90,718)	$ 3.60
Outstanding at October 31, 2011		2,783,065	$ 3.14	7.44	$ 171,420

Exercisable at October 31, 2011		1,418,810	$ 3.47	6.33	$ 87,573

(1) Aggregate intrinsic value is defined as the difference between the current market value and the exercise price and is estimated using the closing price of the Company's common stock on the last trading day of the periods ended as of the dates indicated.

Total intrinsic value of awards exercised during the quarters ended October 31, 2011 and October 31, 2010 was $26,614 and $0, respectively. The total fair value of awards vested during the quarters ended October 31, 2011 and October 31, 2010 was $348,790 and $245,647, respectively.

A summary of the Company's nonvested stock option activity for the period ended October 31, 2011 is as follows:

		Weighted
		average fair
	Shares	value
Nonvested at April 30, 2011	884,854	$ 2.03
Granted	812,700	$ 1.27
Vested	(319,978)	$ 2.01
Canceled or expired	(9,753)	$ 1.67
Nonvested at October 31, 2011	1,367,823	$ 1.60