Equity

3 Months Ended

Sep. 30, 2019

Equity [Abstract]

EQUITY

Note 11. EQUITY

Stock issuance:

The Company's outstanding warrants are classified as equity since they qualify for exception from derivative accounting as they are considered to be indexed to the Company's own stock and require net share settlement. The fair value of the warrants of $1,074,140 is valued based on the Black-Scholes-Merton model and is recorded as additional paid-in capital from common stock based on the relative fair value of proceeds received using the following assumptions:

	Series A
Annual dividend yield		-
Expected life (years)		5.5
Risk-free interest rate		2.72	%
Expected volatility		110.31	%

Following is a summary of the status of warrants outstanding and exercisable as of September 30, 2019: 

	Shares		Weighted Average Exercise Price
Warrants outstanding, as of June 30, 2019		2,000,000	$	1.75
Issued		-		-
Exercised		-		-
Expired		-		-
Warrants outstanding, as of September 30, 2019		2,000,000	$	1.75
Warrants exercisable, as of September 30, 2019		2,000,000	$	1.75

Warrants Outstanding	Warrants Exercisable		Weighted Average Exercise Price		Average Remaining Contractual Life
2018 Series A, 2,000,000		2,000,000	$	1.75	3.96 years

Stock based compensation:

In March 2017, the Company entered into a consulting and advisory services agreement with a consulting entity, which provides management consulting services that include marketing program design and implementation and cooperative partner selection and management. The service period began in March 2017 and will end in February 2020. The Company issued 250,000 shares of common stock as remuneration for the services, which were issued as restricted shares at $2.53 per share on March 22, 2017 to the consultant.  These shares were valued at $632,500 and the consulting expense were $52,708 for both the three months ended September 30, 2019 and 2018.

On October 23, 2017, the Company issued to its employees 130,000 shares of its restricted common stock valued at $2.80 per share. One quarter of the total number of common shares became vested on each of November 16, 2017, February 16, 2018, May 16, 2018 and August 16, 2018. These shares were valued at $364,000. For the three months ended September 30, 2019 and 2018, $0 and $91,000 were recorded as compensation expense respectively.

On October 27, 2017, the Company issued 200,000 shares of restricted common stock on the grant date with an aggregated fair value of $548,000 to a consulting company pursuant to a consulting agreement. The scope of services primarily covered advising on business development, strategic planning and compliance during the one-year service period from October 17, 2017 to October 16, 2018. $0 and $137,000 were recorded as compensation expense for three months ended September 30, 2019 and 2018, respectively.

On June 7, 2018, the Company issued 400,000 shares of common stock with a fair value of $508,000 to a consulting entity pursuant to a service agreement. The scope of services primarily covers legal consultation in PRC during the two-year service period from July 2018 to June 2020. The consulting entity is entitled to be granted the common stock on a quarterly basis in eight equal instalments. The Company recorded legal expense of $63,500 for both the three months ended September 30, 2019 and 2018.

On September 21, 2018, the Company issued 430,000 shares of common stock valued at $1.10 per share on the grant date with an aggregated fair value of $473,000 under the 2014 Stock Incentive Plan (the "Plan") to three employees, vesting immediately. The Company recorded compensation expense of $0 and $473,000 for the three months ended September 30, 2019 and 2018, respectively.

On April 8, 2019, the Company entered into a consulting services agreement with a consulting entity, which provides management consulting and advisory services. The scope of services primarily covered advising on business development, strategic planning and compliance during the six months service period from April 8, 2019 to October 7, 2019. The Company issued 300,000 shares of common stock as remuneration for the services, which were issued as restricted shares at $0.85 per share on April 16, 2019 to the consulting entity. These shares were valued at $255,000. The Company recorded compensation expense of $127,500 for the three months ended September 30, 2019.

On July 1, 2019, the Company issued 600,000 restricted shares of common stock with a fair value of $432,000 to a China-based company that specializes in the port agency business and/or its designees pursuant to a consulting service agreement. The scope of services primarily covers business consultation for one year from July 1, 2019 to June 30, 2020. The Company can terminate the agreement if they are not satisfy with the performance of the consulting firm and the consulting firm should return all the issued shares. The Company recorded compensation expense of $108,000 for the three months ended September 30, 2019.

Under a Board resolution dated January 30, 2016, the Company's CEO is authorized to grant to the employees up to one million shares under the Plan. On July 22, 2019, the Company granted 90,000 shares of restricted common stock valued at $0.70 per share on the grant date with an aggregated fair value of $63,000 under the Plan to one employee, vesting immediately. The Company recorded compensation expense of $63,000 for the three months ended September 30, 2019.

During the three months ended September 30, 2019 and 2018, $414,708 and $817,208 were recorded as stock-based compensation expense, respectively. 

On August 26, 2019, the Company issued 40,000 shares of common stock with an aggregated fair value of $28,800 to Chineseinvestors.com as settlement of a breach of service contract lawsuit.

Stock Options: 

A summary of the outstanding options is presented in the table below:

	Options		Weighted Average Exercise Price
Options outstanding, as of June 30, 2019		85,000	$	1.21
Granted		-		-
Exercised		-		-
Cancelled, forfeited or expired		-		-
Options outstanding, as of September 30, 2019		85,000	$	1.21
Options exercisable, as of September 30, 2019		85,000	$	1.21

Following is a summary of the status of options outstanding and exercisable at September 30, 2019:

Outstanding Options					Exercisable Options
Exercise Price		Number		Average Remaining Contractual Life	Average Exercise Price		Number		Average Remaining Contractual Life
$	2.01		10,000	3.34 years	$	2.01		10,000	3.34 years
$	1.10		75,000	1.82 years	$	1.10		75,000	1.82 years
			85,000					85,000