Quarterly report pursuant to sections 13 or 15(d)

STOCK OPTIONS AND WARRANTS

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STOCK OPTIONS AND WARRANTS
9 Months Ended
Mar. 31, 2013
STOCK OPTIONS AND WARRANTS [Abstract]  
STOCK OPTIONS AND WARRANTS
NOTE 3 – STOCK OPTIONS AND WARRANTS
 
The Company adopted a qualified equity incentive plan (the "Plan") on March 4, 2001. Under the Plan the Company is authorized to grant up to 3,000,000 shares of common stock. On December 13, 2004, the shareholders approved the Plan and ratified the amendment to increase the total number of shares to be granted under the Plan from 3,000,000 to 4,000,000 effective November 1, 2004.  On November 13, 2007 the shareholders ratified the amendment to increase the total number of shares to be granted under the Plan from 4,000,000 to 6,000,000. The plan expired on March 4, 2011.
 
On November 17, 2009, the Board of Directors (the "Board') granted 681,785 stock options to the board members, employees, and consultants as payments for their services and in recognition of individual performance for the year ended June 30, 2009. In addition, the Board granted 248,564 warrants payments to consultants for payments of their services and incentive performance awards.  Of 681,785 stock options grant, approximately 115,428 were awarded to the board members for their services and were vested on the date of grant. Of 248,564 warrants issued, 99,977 warrants were vested immediately on the grant date. The remainder 566,357 stock options and 148,587 warrants were vested one-third immediately, one-third were vested on November 17, 2010 and the remaining one-third were vested on November 17, 2011, assuming the person receiving the equity awards is employed or being utilized by the Company at the time of vesting.   The exercise price of those stock options and warrants is $0.77 per share.  The weighted average grant date fair value of options and warrants was $0.48 per share based on the Black-Scholes option-pricing model.  The options and warrants expire five years from the date of grant.
 
On October 27, 2008, the Board granted 1,335,102 stock options to the board members, employees, and consultants as payments for their services and in recognition of individual performance for the year ended June 30, 2008. In addition, the Board granted 705,302 warrants payments to consultants for payments of their services and incentive performance awards.  Further, 60,000 shares of restricted common stock were issued to a consultant as payment for services.  Of the 1,335,102 stock options grant, approximately 464,102 were awarded to the board members for their services and were vested on the date of grant. Of the 705,302 warrants issued, 240,302 warrants were vested immediately on the grant date.  The remainder 871,000 stock options and 465,000 warrants were vested one-third immediately, one-third were vested on October 27, 2009 and the remaining one-third were vested on October 27, 2010, assuming the person receiving the equity awards is employed or being utilized by the Company at the time of vesting.  The exercise price of those stock options and warrants is $0.20 per share, which was the closing price of the common stock on the date of grant.  The weighted average grant date fair value of options and warrants was $0.19 per share based on the Black-Scholes option-pricing model.  The options and warrants expire five years from the date of grant.
 
On April 18, 2008, the Board granted 148,571 shares of restricted common stock as payment for the services rendered by the board members for the year ended June 30, 2007 for those elected to receive common stocks and all shares were immediately vested.  In addition, the Board granted 1,074,666 stock options to the board members, employees, consultants as payments for their services and in recognition of individual performance for the year ended June 30, 2007.  The stock options were vested one-third immediately, one-third were vested on April 17, 2009 and the remaining one-third were vested on April 17, 2010, assuming the person receiving the equity awards is employed by the Company at the time of vesting.  The exercise price of those stock options is $0.42 per share, which was the closing price of the common stock on the date of grant.  The weighted average grant date fair value of options was $0.32 per share based on the Black-Scholes option-pricing model.  The options and warrants expire five years from the date of grant.
 
On August 6, 2007, the Board granted 484,056 non-qualified stock options to the Chief Executive Officer ("CEO") at an exercise price of $0.75 per share. These options were fully vested and immediately exercisable at the date of grant.  In addition, the Board granted 1,452,167 non-qualified stock options at an exercise price of $0.74 per share on September 25, 2007, as part of the CEO's employment agreement. The second stock options are vested and become exercisable 1/16th of the total 1,452,167 options on each three-month anniversary beginning on June 11, 2007.  The average grant date fair value of the options was $0.46 per share based on the Black-Scholes option-pricing model.  These options expire six years from the date of grant.
 
On December 20, 2006, the Company issued 790,770 stock options to board members, management, employees, and consultants for their services.  These options have an exercise price of $1.05 per share. The stock options were vested one-third immediately, one-third were vested on December 20, 2007 and the remaining one-third were vested on December 20, 2008, assuming the person receiving the equity awards is employed by the Company at the time of vesting.  The weighted average grant date fair value of options was $0.69 per share based on the Black-Scholes option-pricing model.  The options expire five years from the date of grant.  All of the options were forfeited or expired.
 
No options and warrants were granted during the nine months ended March 31, 2013 and 2012.
 
A summary of options for the periods ended March 31, 2013 and 2012 is shown below:
 
                         
   
March 31, 2013
   
March 31, 2012
 
                         
   
Number of Shares
   
Weighted-Average Exercise Price
   
Number of Shares
   
Weighted-Average Exercise Price
 
Outstanding at beginning of period
    4,341,115     $ 0.57       4,797,270     $ 0.57  
Granted
                               
Exercised
                               
Forfeited
    (861,153 )     0.60                  
Expired
    (257,145 )     0.60       (456,155 )   $ 1.05  
Outstanding at end of period
    3,222,817     $ 0.60       4,341,115     $ 0.59  
Exercisable at end of period
    3,222,817               4,341,115          
Available for issuance at end of period
    -               -          
                                 
                                 
The following is a summary of warrants granted, exercised, canceled and outstanding involving the grants in the periods ended March 31, 2013 and 2012:
 
   
March 31, 2013
   
March 31, 2012
 
                                 
   
Number of Shares
   
Weighted-Average Exercise Price
   
Number of Shares
   
Weighted-Average Exercise Price
 
                                 
Outstanding at beginning of period
    958,299     $ 0.46       974,920     $ 0.47  
Granted
                    10,714     $ 0.02  
Exercised
                               
Expired
                    (26,351 )   $ 1.02  
Outstanding at end of period
    958,299     $ 0.36       959,283     $ 0.45  
Exercisable at end of period
    958,299               959,283