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8. STOCK PURCHASE OPTIONS AND WARRANTS

3 Months Ended

Sep. 30, 2014

The Board of Directors on June 10, 2009 approved the 2009 Long-Term Stock Incentive Plan. The purpose of the 2009 Long-term Stock Incentive Plan is to advance the interests of the Company by encouraging and enabling acquisition of a financial interest in the Company by employees and other key individuals. The 2009 Long-Term Stock Incentive Plan is intended to aid the Company in attracting and retaining key employees, to stimulate the efforts of such individuals and to strengthen their desire to remain with the Company. A maximum of 1,500,000 shares of the Company's Common Stock is reserved for issuance under stock options to be issued under the 2009 Long-Term Stock Incentive Plan. The Plan permits the grant of incentive stock options, nonstatutory stock options and restricted stock awards. The 2009 Long-Term Stock Incentive Plan is administered by the Board of Directors or, at its direction, a Compensation Committee comprised of officers of the Company.

Stock Purchase Options

During the three months ended September 30, 2014, the Company did not issue any stock purchase options.

During the fiscal year ended June 30, 2014, the Company issued 25,000 stock purchase options for a value of $6,045. The Company did recognize $10,713 in employee stock option expense during the fiscal year ended June 30, 2014 for options vested during the period that were issued in prior periods.

The following table summarizes the changes in options outstanding of the Company during the three months ended September 30, 2014.

Date Issued	Number of Options			Weighted Average Exercise Price			Weighted Average Grant Date Fair Value		Expiration Date (yrs)		Value if Exercised
Balance June 30, 2014		381,429		$	0.55		$	0.12		0.62	$	209,643
Granted		-			-			-		-		-
Exercised		-			-			-		-		-
Cancelled/Expired		(301,429	)		(0.52	)		-		-		(156,743	)
Outstanding as of September 30, 2014		80,000		$	0.66		$	0.59		1.94	$	52,900

The following table summarizes the changes in options outstanding of the Company during the fiscal year ended June 30, 2014.

Date Issued	Number of Options			Weighted Average Exercise Price			Weighted Average Grant Date Fair Value		Expiration Date (yrs)		Value if Exercised
Balance June 30, 2013		613,429		$	0.85		$	1.20		1.95	$	522,843
Granted		25,000			0.15			0.24		5.00		3,750
Exercised		-			-			-		-		-
Cancelled/Expired		(257,000	)		(1.23	)		-		-		(316,950	)
Outstanding as of June 30, 2014		381,429		$	0.55		$	0.12		0.62	$	209,643

Stock Purchase Warrants

During the three months ended September 30, 2014, the Company issued warrants to purchase a total of 3,300,000. The Company issued 50,000 warrants in conjunction to extended two convertible note payables and issued 2,250,000 warrants in conjunction to a consulting agreement entered into in July 2014. The Company also issued 1,000,000 warrants related to the B Booth agreements which were expensed during the current year. The warrants were valued using the Black-Scholes pricing model under the assumptions noted below. The Company apportioned value to the warrants based on the relative fair market value of the Common Stock and warrants.

During the fiscal year ended June 30, 2014, the Company issued warrants to purchase a total of 1,366,016 and expired 498,500 shares of the Company’s Common Stock. The Company issued 29,400 warrants in conjunction to a default clause in a convertible note payable and issued 311,616 warrants in conjunction to a consulting agreement entered into in July 2013. The Company also issued 500,000 warrants in conjunction to a consulting agreement entered into in October 2013.The Company issued 25,000 warrants in conjunction to an extension in a convertible note payable in conjunction with 50,000 shares of common stock. The Company issued 100,000 warrants in conjunction with a consulting agreement entered into January 2014. The Company issued 300,000 warrants in conjunction with an employment agreement entered into January 2014. The Company also issued 100,000 warrants as compensation for references purchased. The warrants were valued using the Black-Scholes pricing model under the assumptions noted below. The Company apportioned value to the warrants based on the relative fair market value of the Common Stock and warrants.

The following table presents the assumptions used to estimate the fair values of the stock warrants and options granted:

	September 30,			June 30,
	2014			2014
Expected volatility		109-125	%		113-132	%
Expected dividends		0	%		0	%
Expected term	2-5 Years			2-10 Years
Risk-free interest rate		0.47-1.66	%		0.35-1.75	%

The following table summarizes the changes in warrants outstanding issued to employees and non-employees of the Company during the three months ended September 30, 2014.

Date Issued	Number of Warrants		Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Expiration Date (yrs)		Value if Exercised
Balance June 30, 2014		8,332,579	$	0.76	$	0.70		2.96	$	6,370,432
Granted		3,300,000		0.53		0.15		2.20		712,500
Exercised		-		-		-		-		-
Cancelled/Expired		-		-		-		-		-
Outstanding as of September 30, 2014		11,632,579	$	0.61	$	0.55		2.54	$	7,082,932

The following table summarizes the changes in warrants outstanding issued to employees and non-employees of the Company during the fiscal year ended June 30, 2014.

Date Issued	Number of Warrants			Weighted Average Exercise Price			Weighted Average Grant Date Fair Value		Expiration Date (yrs)		Value if Exercised
Balance June 30, 2013		7,530,063		$	0.67		$	2.45		4.17	$	4,770,713
Granted		1,366,016			1.30			0.23		5.00		1,774,467
Exercised		(65,000	)		(0.25	)		0.14		-		(16,250	)
Cancelled/Expired		(498,500	)		((0.70	))		-		-		(158,498	)
Outstanding as of June 30, 2014		8,332,579		$	0.76		$	0.70		2.96	$	6,370,432