Stock Options and Warrants

12 Months Ended

Jun. 30, 2014

Disclosure Of Compensation Related Costs Share based Payments [Abstract]

STOCK OPTIONS AND WARRANTS

NOTE 8 STOCK OPTIONS AND WARRANTS

Two employees were granted an aggregate of 614,000 five year options (see Note 10) which vested immediately as to 114,000 options and as to 125,000 options per year over the next 4 years. The options are exercisable at $2.50 per share for 114,000 options, $3.00 per share for 125,000 options, $3.50 per share for 125,000 options, $3.75 for 125,000 options and $4.00 for 125,000 options. The aggregate grant date fair value of the options was $1,415,710 of which $413,398 has been charged to operations during the year ended June 30, 2014. The balance of the fair value of the options will be charged to operations over the vesting period. The options were valued using the Binomial option pricing model with the following assumptions:

Volatility 154% - Dividend rate 0% - Interest rate 1.36% - 1.66% - Term 5 years

A summary of the status of the stock options granted to employees and others as of June 30, 2014 is as follows:

			Weighted
	Number		Average
	of		Exercise
	Options		Price
Options outstanding at beginning of year		—	$	—
Changes during the year:
Granted		614,000	$	3.37
Cancelled/exercised		—
Options outstanding at end of year		614,000	$	3.37
Options exercisable at end of year		114,000	$	2.50
Weighted average fair value of options granted during the year			$	3.37

Costs incurred with respect to stock based compensation related to options for the years ended June 30, 2014 was $413,398. Unrecognized cost as of June 30, 2014 was $1,002,312 which amount is expected to be recognized over approximately 54 months. As of June 30, 2014, the aggregate intrinsic value of all stock options outstanding and expected to vest was approximately $0 and the aggregate intrinsic value of currently exercisable stock options was approximately $0. The intrinsic value of each option share is the difference between the fair market value of our common stock and the exercise price of such option share to the extent it is “in-the-money”. Aggregate intrinsic value represents the value that would have been received by the holders of in-the-money options had they exercised their options on the last trading day of the year and sold the underlying shares at the closing stock price on such day. The intrinsic value calculation is based on the assumed market value of our common stock on June 30, 2014, at $2.01 per share. The total number of in-the-money options outstanding and exercisable as of June 30, 2014, was 0.

The following table presents summary information concerning the options outstanding as of June 30, 2014:

Exercise prices		Number Outstanding		Number Exercisable		Weighted Average Remaining Contractual Life (Years)
	$ 2.50 – 4.00		614,000		114,000		4.50

Stock Warrants

In conjunction with the issuance of the convertible notes described in Note 6, the Company issued 125,000 warrants exercisable at $2.00 per share that expire after three years. The aggregate fair value of the warrants was $157,584, using a binomial option pricing model and the following assumptions:

Volatility 154% - Dividend rate 0% - Interest rate 0.77% - Term 3 years

In conjunction with the conversion of the $200,000 note described in note 6 the Company issued an aggregate of 400,000 three year warrants exercisable 200,000 warrants at $1.50 per share and 200,000 warrants at $2.00 per share. The aggregate grant date fair value of the warrants was $580,600 and has been charged to operations during the year ended June 30, 2014. The warrants were valued using the Binomial option pricing model with the following assumptions:

Volatility 108% - Dividend rate 0% - Interest rate 0.86% - 1.66% - Term 3 years

The Company issued a 1,000,000 five year warrant exercisable at $1.00 per share for services. The aggregate grant date fair value of the warrant was $1,572,005 and has been charged to operations during the year ended June 30, 2014. The warrant was valued using the Binomial option pricing model with the following assumptions:

Volatility 108% - Dividend rate 0% - Interest rate 0.86% - 1.66% - Term 3 years

The total fair value of all warrants issued was $2,310,189

Stock warrants outstanding at June 30, 2014 are as follows:

Date Issued	Expiration Date	Exercise Price		Number of Warrants
July 2013	July 2016	$	2.00		125,000
February 2014	February 2019	$	1.00		1,000,000
February 2014	February 2017	$	1.50		200,000
February 2014	February 2017	$	2.00		200,000