Stockholders' (Deficit)

12 Months Ended

Jun. 30, 2015

Stockholders' (Deficit) [Abstract]

STOCKHOLDERS' (DEFICIT)

NOTE 11 STOCKHOLDERS’ (DEFICIT)

Equity

Common Stock includes 100,000,000 shares authorized at no par value.

2014

During the year ended June 30, 2014, the Company issued common shares as follows:

On July 31, 2013, the Company’s registration statement on Form S-1 became effective. The Company offered for sale a maximum of 6,250,000 shares of its no par value common stock at a price of $1.60 per share.

The Company issued 1,343,150 shares of common stock for cash of $1,275,605, among which 312,500 shares had been sold pursuant to the offering.

The Company issued 47,967 shares of common stock for services, inducements and interest. These shares were valued at the trading price of the Company’s common shares on the date it was agreed the shares would be issued of $234,490 which has been charged to operations during the period.

The Company issued 200,000 shares of common stock for the conversion of a $200,000 note. The fair value of the shares in excess of the note of $84,000 has been charged to operations during the period.

The Company issued 54,950 common shares for services to be performed over a one year period, which were valued at their estimated fair value of $100,000 based on the trading price of the Company’s common shares. The value of these shares has been recorded as deferred compensation as a reduction of paid in capital and is being amortized over the one year period during which the related services will be received. At June 30, 2014, $83,333 of deferred compensation has been charged to operations.

2015

On April 6, 2015, the Company issued 110,000 shares of common stock pursuant to the conversion of a $50,000 note issued by the Company, and 100,000 shares of common stock to a consultant in consideration for his service.

On April 9, 2015, the Company completed a Subscription Agreement with Engage International Technology Co. Ltd. pursuant to which Engage International purchased 1,100,000 shares of the Company’s restricted common stock, at the price of $0.50 per share for a total purchase price of $550,000. The price was based on the market price of the Company’s stock prior to April 9, 2015 when the agreement was being negotiated. The issuance of the shares was in reliance upon the exemptions from securities registration afforded by Regulation S promulgated under Regulations of the Securities Act of 1933, as amended. The sole purpose and objective of the sale was to use the proceeds received to pay off certain outstanding debts, loans, obligations and liabilities of the Company.

Stock Options and Warrants

During the year ended June 30, 2014, two employees were granted an aggregate of 614,000 five year options which vested immediately as to 114,000 options and 125,000 options each year over the next 4 years. The options were 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 approximately $1,415,710, of which $225,719 and $413,398 had been charged to operations during the year ended June 30, 2015 and 2014, respectively. As of June 30, 2015 and 2014, respectively, 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, 2015 and 2014, at $0.5 and $2.01 per share. The total number of in-the-money options outstanding and exercisable as of June 30, 2015 and 2014, was 0. The fair value of the options charged to operations during the year ended June 30, 2015 was $247,430. These two employees left the Company in April 2015 and the remaining unvested options were cancelled. The options were valued using a 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, 2015 and 2014 are as follows:

	June 30,
	2015						2014
	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Options outstanding at beginning of year		614,000	$	3.37		4.37		-	$	-		-
Changes:
Granted		-		-		-		614,000		3.37		-
Exercised		-		-		-		-		-		-
Forfeited		-		-		-		-		-		-
Cancelled		406,250		3.69		-		-		-		-
Options outstanding at end of year		207,750		2.73		3.42		614,000		3.37		4.37
Options exercisable at end of year		207,750	$	2.73		3.42		114,000	$	2.50		0.83

Stock warrants outstanding at June 30, 2015 are as follows:

	Number of Shares		Weighted Average Remaining Contractual Life (Years)
Warrants outstanding at June 30, 2014		1,525,000		0.60
Changes:
Granted		-		-
Exercised		-		-
Forfeited		-		-
Cancelled		1,000,000		-
Warrants outstanding at June 30, 2015		525,000		1.48
Warrants exercisable at June 30, 2015		525,000		1.48

Stock warrants outstanding at June 30, 2015 were as follows:

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

On April 9, 2015, in anticipation of and in connection with the share purchase by Engage International, the holder of a warrant to purchase 1,000,000 shares of common stock at an exercise price of $1.00, agreed to its cancellation for no consideration.