Stockholders' Equity

12 Months Ended

Jun. 30, 2013

Equity [Abstract]

Stockholders' Equity

NOTE P – STOCKHOLDERS’ EQUITY

Options

As of June 30, 2013, the Company had one shareholder approved plan, the 2009 Stock Option Plan (the “Plan”), under which shares were available for equity based awards. Under the Plan, 5,000,000 shares of common stock are reserved for issuance until the Plan terminates on October 19, 2019.

Under the Plan, eligible employees and certain independent consultants may be granted options to purchase shares of the Company’s common stock.  The shares issuable under the Plan will either be shares of the Company’s authorized but previously unissued common stock or shares reacquired by the Company, including shares purchased on the open market.  As of June 30, 2013, there were 1,416,500 options available for grant under the Plan.

All stock option grants made under the Plan were at exercise prices no less than the Company’s closing stock price on the date of grant.  Options under the Plan were determined by the board of directors in accordance with the provisions of the plan.  The terms of each option grant include vesting, exercise, and other conditions are set forth in a Stock Option Agreement evidencing each grant.  No option can have a life in excess of ten (10) years.  The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model.  The model requires various assumptions, including a risk-free interest rate, the expected term of the options, the expected stock price volatility over the expected term of the options, and the expected dividend yield.  Compensation expense for employee stock options is recognized ratably over the vesting term.  The Company has no awards with market or performance conditions.

The following table summarizes stock-based compensation expense by line item in the consolidated statements of operations, all relating to employee stock plans:

	Twelve Months Ended June 30,
	2013		2012
Cost of Goods Sold	$	10,275	$	15,978
Other Selling and Marketing		8,186		33,819
General and Administrative		15,919		22,149
Total	$	34,380	$	71,946

Stock-based compensation expense recognized in the consolidated statements of operations for each of the twelve month period ended June 30, 2013 and 2012 is based on awards ultimately expected to vest.

A summary of option activity under the Company’s stock plan for the year ended June 30, 2013 and 2012 is presented below:

Option Activity	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value as of June 30, 2013
Outstanding at June 30, 2011		2,125,956		$	.20		3.4 years	$	—
Granted		1,738,000		$	.17			$	—
Exercised		—		$	—			$	—
Forfeited or Expired		(357,000	)	$	.20			$	—
Outstanding at June 30, 2012		3,506,956		$	.18		3.4 years	$	—
Granted		2,894,000		$	.06			$	—
Exercised		—		$	—			$	—
Forfeited or Expired		(2,817,456	)	$	.16			$	—
Outstanding at June 30, 2013		3,583,500		$	.10		3.8 years	$	115,605
Exercisable at June 30, 2013		522,750		$	.19		2.4 years	$	—

The aggregate intrinsic value in the table above is before applicable income taxes and represents the excess amount over the exercise price optionees would have received if all options had been exercised on the last business day of the period indicated, based on the Company’s closing stock price of $.13 for such day.  The total intrinsic value of stock options exercised during fiscal years 2013 and 2012 was $0.

A summary of the Company’s non-vested options for the year ended June 30, 2013 is presented below:

Non-vested Options	Shares			Weighted Average Grant-Date Fair Value
Non-vested at June 30, 2012		2,569,625		$	.04
Granted		2,894,000			.06
Vested		(317,625	)		.09
Forfeited		(2,285,250	)		.05
Non-vested at June 30, 2013		2,860,750		$	.04

The weighted average grant-date fair value of stock options granted during fiscal years 2013 and 2012 were $217,600 and $73,758, respectively.  The total grant-date fair values of stock options that vested during fiscal years 2013 and 2012 were $20,147 and $44,524, respectively.

The following table summarizes the weighted average characteristics of outstanding stock options as of June 30, 2013:

			Outstanding Options				Exercisable Options
Exercise Prices			Number of Shares	Remaining Life (Years)		Weighted Average Price	Number of Shares		Weighted Average Price
	$	.06 to $.10	2,313,000	4.3	$	.07	—	$	—
	$	.15 to $.16	1,016,500	3.1	$	.16	332,250	$	.16
	$	.25	254,000	1.3	$	.25	190,500	$	.25
Total stock options			3,583,500	3.8	$	.10	522,750	$	.19

The range of fair value assumptions related to options granted during the years ended June 30, 2013 and 2012 were as follows:

	2013		2012
Exercise Price:	$	0.06 - 0.10	$	0.16 - 0.20
Volatility:		29% to 147%		56% to 109%
Risk Free Rate:		0.43% to 0.65%		0.56% to 0.66%
Vesting Period:	4 years		4 years
Forfeiture Rate:		0%		0%
Expected Life	4.4 years		4.5 years
Dividend Rate		0%		0%

As of June 30, 2013, total unrecognized stock-based compensation expense related to all unvested stock options was $114,844, which is expected to be expensed over a weighted average period of 2.8 years.

Share Purchase Warrants

As of June 30, 2013, the following share purchase warrants were outstanding:

Number of Warrants		Exercise Price		Expiration Date
	292,479	$	.50	June 26, 2014
	1,292,479	$	.75	June 26, 2014
	877,435	$	1.00	June 26, 2014
	2,462,393

The following table summarizes the continuity of the Company’s share purchase warrants:

	Shares			Weighted Average Exercise Price
Balance June 30, 2012		2,712,393		$	.76
Issued		—			—
Expired		(250,000	)		.25
Balance June 30, 2013		2,462,393		$	.81

Issuance of Restricted Common Stock for Services

One November 17, 2011, we issued 250,000 shares of common stock with a fair value of $25,000, and subsequently on January 3, 2012, February 1, 2012, March 1, 2012, and April 1, 2012 we issued an additional 100,000 shares of common stock (for a total of 400,000 shares) with a fair value of $40,000 to Trilogy Capital Partners for investor relations services. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The shares were not offered via general solicitation to the public but solely to the aforementioned service provider. The Company issued restricted shares in connection with these issuances.

Effective October 1, 2011, the Company completed the sale of its wholly owned subsidiary WMI to an original owner of WMI for 25,394,000 shares of common stock and the payment of $700,000. The fair value of the treasury stock was determined based on the fair value of the assets exchanged, which was determined to be the more readily determinable value under ASC 845-10.

During April 2012, the Company entered into a private placement whereby they sold 2,850,000 shares of common stock at $0.10 per share for gross proceeds of $285,000 and paid offering costs of $36,250. In addition, the Company issued the placement agent 650,000 shares of common stock upon completion of the private placement.