As of June 30, 2012, we had 3,588,465 shares of common stock reserved for future issuance.

On March 9, 2011, we completed a public offering of 2,250,000 shares of common stock, together with warrants to purchase up to an aggregate of 1,125,000 shares of common stock with a per unit purchase price of $2.00.  The warrants may be exercised by the holders at an exercise price of $2.64 per share starting September 9, 2011 continuing through March 9, 2016.  Net proceeds after expenses from the offering were approximately $3.9 million.

Warrants

The Amended 1998 Stock Option Plan ("1998 Plan") permits the grant of stock or options to employees, directors and consultants.  A total of 949,500 shares were approved by the stockholders for issuance under the 1998 Plan.  Options are granted at prices that are equal to 100% of the fair market value on the date of grant, and expire over a term not to exceed ten years.  Options generally vest ratably over three to five years, unless otherwise determined by the Board of Directors.  The 1998 Plan, but not the options granted, expired in February 2008.

The 2002 Independent Directors Equity Incentive Plan ("2002 Plan") permits the grant of stock or options to independent directors.  A total of 87,500 shares were approved by the stockholders for issuance under the 2002 Plan.  Options are granted at prices which are equal to 100% of the fair market value on the date of grant, and expire over a term not to exceed ten years.  Options generally vest immediately, unless otherwise determined by the Board of Directors.  The 2002 Plan, but not the options granted, expired in January 2012.

The 2006 Equity Incentive Plan ("2006 Plan") permits the grant of options, restricted stock, stock bonuses and stock appreciation rights to employees, directors and consultants.  Under the 2006 Plan, the number of shares of common stock equal to 6% of the number of outstanding shares of the Company are authorized to be issued.  The number of shares available to grant for awards adjusts at the beginning of each fiscal year if additional options to purchase shares of common stock were issued in the preceding fiscal year.  As of June 30, 2012 there have been 2,568,580 shares approved under the Plan for issuance.

At June 30, 2012, the total compensation cost related to stock-based awards granted to employees under the Company's stock option plans but not yet recognized was $172,000.  This cost will be amortized on a straight-line basis over a weighted-average period of approximately two years and will be adjusted for subsequent changes in estimated forfeitures.  The total fair value of options vested during the years ended June 30, 2012, 2011 and 2010 was $440,000, $568,000 and $525,000.

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company's common stock.  There were no options that were exercised during the years ended June 30, 2012 and 2010.  During the year ended June 30, 2011, the aggregate intrinsic value of options exercised under the Company's stock option plans was $1,000 determined as of the date of option exercise.

Common Stock Restricted Awards

On November 3, 2010, we entered into a four-year distribution agreement ("Agreement") with Nanshan for distribution of our Res-Q and MXP products in China and Hong Kong.  As part of the Agreement, we initially granted Nanshan restricted stock equal to one-half percent of the total outstanding common shares of the Company, or 70,117 shares.  The shares were restricted for a minimum period of six months and were released from restriction at the conclusion of the initial six-month period based on Nanshan's performance in accordance with the Agreement. As the restricted stock had a performance commitment, it was amortized over the shortest period over which the shares may vest, six months.  Accordingly, we recorded $143,000 of stock compensation expense as a component of selling, general and administrative expenses, which represents the fair value of the award that was earned during the year ended June 30, 2011.  In addition, the Agreement calls for the issuance of up to an additional 806,000 shares of restricted stock upon the completion of certain revenue milestones.  The maximum number of restricted shares issuable totals 876,117 and is based upon the milestone achievement of $43 million in cumulative sales over the term of the Agreement.

In June 2011, the Company's Compensation Committee granted 30,000 shares of restricted common stock to an officer, vesting in three equal installments on the first, second and third anniversary of the grant date.

For the period ended June 30, 2012, the Company's Compensation Committee granted 720,000 shares of restricted common stock to director level and executive members of management, vesting in three equal installments on the first, second and third anniversary of the grant date.