Stockholders' Equity

6 Months Ended

Dec. 31, 2019

Stockholders' Equity Note [Abstract]

Stockholders' Equity

NOTE 19. STOCKHOLDERS’ EQUITY

Options

At December 31, 2019, the Company had the 2009 and 2015 Stock Option Plans (the “Plans”), which are shareholder-approved and under which 100,000 shares are reserved for issuance under the 2009 Plan until that Plan terminated on October 20, 2019 and 5,000,000 shares are reserved for issuance under the 2015 Plan until that Plan terminates on August 31, 2025.

Under the Plans, 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 December 31, 2019, the number of shares available for issuance under the 2015 Plan was 900,000. There are no shares available for issuance under the 2009 Plan, other than the 100,000 stock options that have already been granted.

The following table summarizes the Company’s stock option activities during the six months ended December 31, 2019:

	Number of Shares Underlying Outstanding Options			Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Intrinsic Value
Options outstanding as of June 30, 2019		4,050,000		2.3 years	$	.02	$	13,500
Granted		300,000		4.7 years		.03		—
Exercised		—		-		—		—
Forfeited or expired		(150,000	)	1.0 years		.03		—
Options outstanding as of December 31, 2019		4,200,000		2.0 years		.02	$	13,500
Options exercisable as of December 31, 2019		2,825,000		1.5 years		.02	$	13,500

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 $.02 for such day. 

There were 300,000 stock options granted during the six months ended December 31, 2019 and 200,000 stock options granted during the six months ended December 31, 2018. The value assumptions related to options granted during the six months ended December 31, 2019 and 2018, were as follows:

	Six Months  Ended December 31, 2019	Six Months  Ended December 31, 2018
Exercise Price:	$.02 - $.03	$.046
Volatility:	405% - 407%	391%
Risk Free Rate:	1.6% - 1.81%	2.7%
Vesting Period:	4 years	4 years
Forfeiture Rate:	0%	0%
Expected Life	4.1 years	4.1 years
Dividend Rate	0%	0%

 The following table summarizes the weighted average characteristics of outstanding stock options as of December 31, 2019:

			Outstanding Options						Exercisable Options
Exercise Prices			Number of Shares		Remaining Life  (Years)		Weighted Average  Price		Number of Shares			Weighted Average  Price
	$	.01 to .03		3,800,000		1.9	$	.02		2,650,000	$	.02
	$	.034 to .05		400,000		2.7	$	.05		175,000	$	.04
Total stock options				4,200,000		2.0	$	.02		2,825,000	$	.02

Stock-based compensation

We account for stock-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation. We measure the cost of each stock option and at its fair value on the grant date. Each award vests over the subsequent period during which the recipient is required to provide service in exchange for the award (the vesting period). The cost of each award is recognized as expense in the financial statements over the respective vesting period.

Stock option-based compensation expense recognized in the condensed consolidated statements of operations for the six month periods ended December 31, 2019 and 2018 are based on awards ultimately expected to vest, and is reduced for estimated forfeitures.

The following table summarizes stock option-based compensation expense by line item in the Condensed Consolidated Statements of Operations, all relating to the Plans: 

	Three Months  Ended December 31,				Six Months  Ended December 31,
	2019		2018		2019		2018
	(in thousands)
Cost of Goods Sold	$	—	$	—	$	—	$	—
Other Selling and Marketing		1		1		2		2
General and Administrative		5		5		9		10
Total Stock-based Compensation Expense	$	6	$	6	$	11	$	12

As of December 31, 2019, the Company’s total unrecognized compensation cost was $33,218 which will be recognized over the weighted average vesting period of three years.

Share Purchase Warrants

As of December 31, 2019 and 2018, there were no share purchase warrants outstanding.

Common Stock

The Company’s authorized common stock was 175,000,000 shares at December 31, 2019 and June 30, 2019.  Common shareholders are entitled to dividends if and when declared by the Company’s Board of Directors, subject to preferred stockholder dividend rights. At December 31, 2019, the Company had reserved the following shares of common stock for issuance:

	December 31,
	2019
Shares of common stock reserved for issuance under the 2009 Stock Option Plan		100,000
Shares of common stock reserved for issuance under the 2015 Stock Option Plan		5,000,000
Shares of common stock issuable upon conversion of the Preferred Stock		4,300,000
Total shares of common stock equivalents		9,400,000

Preferred Stock

On February 18, 2011, the Company filed an amendment to its Articles of Incorporation, effective February 9, 2011, authorizing the issuance of preferred stock and the Company now has 10,000,000 authorized shares of preferred stock, par value $.0001 per share, of which 4,300,000 shares have been designated and issued as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible into one share of common stock and has a liquidation preference of $.2325 ($1,000,000 in the aggregate). Liquidation payments to the preferred holders have priority and are made in preference to any payments to the holders of common stock. In addition, each share of Series A Convertible Preferred Stock is entitled to the number of votes equal to the result of: (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Convertible Preferred Shares issued and outstanding at the time of such vote. At each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration, including the election of directors, holders of Series A Convertible Preferred Shares shall vote together with the holders of common shares as a single class.