Stock Options and Warrants

3 Months Ended

Sep. 30, 2014

Equity [Abstract]

Note 10 - Stock Options and Warrants

Options

On February 7, 2014, the Company’s Board of Directors voted to terminate the 2007 Stock Option Plan and adopted the 2014 Equity Incentive Plan (the “2014 Plan”), which provides for the issuance of incentive awards of up to 6,150,564 shares of the Company’s Common Stock to officers, key employees, consultants and directors. The options’ exercise price will be no less than the closing price of the Company’s shares on the day of issuance. When incentive stock options are granted to an employee who, at the time the incentive stock option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company, the per share exercise price will be no less than 110% of the closing price of the Company’s shares on the day of issuance.

On February 7, 2014, the Company granted an aggregate of 4,690,339 common stock options to certain officers and advisors of the Company. The stock options were granted upon the effectuation of the Reverse Split on September 8, 2014. The options are exercisable at $0.50 per share and expire on February 7, 2024. 3,690,339 of the options vest in twelve quarterly installments beginning February 7, 2014 and 1,000,000 of the options vest in twelve monthly installments beginning February 7, 2014. The total fair value of the award was estimated to be $9,380,675. $2,669,673 was expensed during the three months ended September 30, 2014 and $6,711,002 will be recognized over the remaining vesting period of the options. These were the only stock options outstanding at September 30, 2014, leaving 1,460,225 options available for grant under the 2014 Plan.

The estimated fair value of each option award granted was determined on the date of effectiveness of the grant using the Black-Scholes option valuation model. The following weighted-average assumptions were used for the options granted during the three months ended September 30, 2014:

	2014
Risk-free interest rate	2.48%
Expected volatility	312.48% - 317.03%
Dividend yield	0%
Expected option term	10 years

A summary of the status of the Company’s stock option plan as of September 30, 2014 and changes during the three months ended September 30, 2014 is as follows:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Term (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2014		-	$	-
Granted		4,690,339		0.500
Outstanding at September 30, 2014		4,690,339		0.500		9.362	$	5,628,407
Exercisable at September 30, 2014		1,198,390	$	0.500		9.362	$	1,438,068

Warrants

The following table presents the warrant activity during the three month period ended September 30, 2014 presented on a post 1 for 100 Reverse Split basis:

	Common Shares Covered by Warrants		Weighted Average Exercise Price		Weighted Average Remaining Term (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2014		2,000,689	$	0.894		1.879	$	1,860,154
Granted		-		-
Reset adjustment		1,175		1.100
Outstanding at September 30, 2014		2,001,864	$	0.924		1.627	$	1,555,298
Exercisable at September 30, 2014		2,006,955	$	0.924		1.627	$	1,555,298