From time to time, the Company grants restricted stock awards and stock options to officers, directors, employees and consultants. These awards are valued based on the grant date fair value of the instruments, net of estimated forfeitures. The value of each award is amortized on a straight-line basis over the requisite service period.

Stock Options

The Company recognized compensation expense of $13,154 and $16,942 during the three and nine months ended June 30, 2012, respectively, and $12,839 and $36,338 during the three and nine months ended June 30, 2011, respectively, related to stock option awards granted to certain employees and executives based on the grant date fair value of the awards, net of estimated forfeitures. The Company used the estimated forfeiture rate of awards of 50% based on actual forfeiture experience and other factors.

The following represents a summary of stock option activity for the nine months ended June 30, 2012:

On January 13, 2012, the Company terminated the employment of its President and Chief Executive Officer. Pursuant to the terms of his employment with the Company, the termination resulted in the forfeiture of all 13,487 of his unvested stock options.

On May 20, 2012, the employment of Larry Tomsic, the Company’s Chief Financial Officer, terminated. In exchange for services performed during this quarter, the Company agreed to accelerate the vesting of Mr. Tomsic’s existing options to purchase an aggregate of 10,526 shares of the Company’s common stock. In accordance with the provisions of his option agreements, all his options will lapse unless they are exercised within 90 days of the termination date.

Restricted Stock Awards

The Company has previously granted shares of restricted stock to certain individuals. The following table sets forth changes in compensation-related restricted stock awards during the nine months ended June 30, 2012:

Because the number of shares of the Company’s outstanding unvested restricted stock became immaterial, the Company recognized all remaining expense associated with these unvested awards (net of estimated forfeitures) during the three months ended December 31, 2010.

Stock Awards Granted to Directors

In September 2011, in an effort to preserve cash, our Board, after consultation with the Compensation Committee, determined to compensate members of the Board for their monthly retainer and other services as directors and/or members of the Board’s various standing committees through the award of shares of the Company’s common stock under the Company’s Amended and Restated 2003 Stock Plan (the “2003 Stock Plan”). Under the terms of this arrangement, each non-employee director receives a monthly award of a number of fully vested shares of the Company’s common stock equal to their monthly board of director fees divided by the closing market price of the Company’s common stock on the grant date. The Company granted an aggregate of 4,581 and 44,922 shares of common stock and recognized expense of $23,800 and $106,900 related to this arrangement during the three and nine months ended June 30, 2012, respectively. No such grants were made and no such expense was recognized during the three and nine months ended June 30, 2011.