8. Stock Options

12 Months Ended

Jun. 30, 2015

Notes

8. Stock Options

8.                     STOCK OPTIONS

The Company has a marketing agreement that provides stock options. The fair value of each grant was estimated at the date of grant using the Black-Scholes option-pricing model. Black-Scholes utilizes assumptions related to volatility, the risk-free interest rate, the dividend yield (which is assumed to be zero, as the Company has not paid cash dividends to date and does not currently expect to pay cash dividends) and the expected term of the option. Expected volatilities utilized in the model are based mainly on the historical volatility of the Company’s stock price over a period commensurate with the expected life of the share option as well as other factors.  The risk-free interest rate is derived from the zero-coupon U.S. government issues with a remaining term equal to the expected life at the time of grant.

On June 15, 2010, the Company adopted “The 2011 compensation plan” and reserved 4,000,000 shares of common stock to be issued to employees and consultants as payment for services.

On November 15, 2013, the Company entered into a marketing consulting agreement, which included authorizing issuance of 3,174,000 stock options to purchase shares of the Company’s common stock at an exercise price of $0.06 per share. The term of the options is ten years.

Approximately 8% percent of the options vest at the end of each month following the grant date and ending October 31, 2014. The Company recorded a total expense of $63,478 and $126,956 related to these options during the year ended June 30, 2015 and 2014, respectively. As of June 30, 2015, all options were outstanding. At June 30, 2015, the remaining contractual term of these options was approximately 7 years. The value of these options on the grant date was $190,434 as the closing stock price on the grant date was $0.06.

Fair market value using the Black-Scholes option-pricing model was determined using the following assumptions:

Expected life (years)	9.33
Risk free rate of return	2.71%
Dividend yield	0
Expected volatility	262%

All the options issued under the November 2013, agreement expire on November 30, 2023.

Stock Options at June 30, 2013
Issued	3,174,000
Exercised	-
Forfeited	-
Balance of stock options at June 30, 2014	3,174,000
Issued	-
Exercised	-
Forfeited	-
Balance of stock options at June 30, 2015	3,174,000