NOTE 12 – STOCKHOLDERS’ EQUITY

Common Stock

On September 30, 2014, the Company granted an aggregate of 1,750,000 shares of restricted stock under the 2009 Plan to certain executive officers, directors and employees, among which were (i) 240,000 shares of restricted stock to Mr. Tao Li, the CEO; (ii) 100,000 shares of restricted stock to Mr. Ken Ren, the CFO, (iii) 40,000 shares of restricted stock to Mr. Yizhao Zhang, (iv) 30,000 shares of restricted stock to Ms. Yiru Shi, and (v) 20,000 shares of restricted stock to Mr. Lianfu Liu, each an independent director of the Company; and (vi) 1,320,000 shares of restricted stock to key employees. The stock grants are subject to time-based vesting schedules, vesting in various installments until March 31, 2015 for the CFO and the three independent directors, until June 30, 2015 for the CEO and until March 31, 2017 for the employees. The value of the restricted stock awards was $3,675,000 and is based on the fair value of the Company’s common stock on the grant date. This amount has been amortized to compensation expense over the vesting periods for the various awards.

On December 30, 2016, the Company granted an aggregate of 870,000 shares of restricted stock under the 2009 Plan to certain key employees. The stock grants vest immediately. The value of the restricted stock awards was $1,044,000 and is based on the fair value of the Company’s common stock on the grant date.

The following table sets forth changes in compensation-related restricted stock awards during the twelve-month periods ended June 2018 and 2017:

Fair

Grant Date

Number of

Value of

Fair Value

Per share

Outstanding (unvested) at June 30, 2017

Granted

Forfeited

Vested

Outstanding (unvested) at June 30, 2018

As of June 30, 2018, the unamortized expense related to the grant of restricted shares of common stock was nil. The fair value of the restricted common stock awards was based on the closing price of the Company’s common stock on the grant date. The fair value of the common stock awarded is amortized over the various vesting terms of each grant.

The following table sets forth changes in compensation-related restricted stock awards during years ended June 30, 2018 and 2017:

				Fair			Grant Date
	Number of			Value of			Fair Value
	Shares			Shares			Per share
Outstanding (unvested) at June 30, 2016		588,000		$	235,264
Granted		870,000			1,044,000		$	1.20
Forfeited		-			-
Vested		(1,458,000	)		(1,279,264	)
Outstanding (unvested) at June 30, 2017		-			-

Granted
Forfeited
Vested
Outstanding (unvested) at June 30, 2018

During the year ended June 30, 2018, the Company issued 345,680 shares of common stock for share-based compensation valued at $421,730. The shares were valued at the market price on the date of issuance.

During the year ended June 30, 2017, the Company issued 32,660 shares of common stock for consulting services valued at $41,212. The shares were valued at the market price on the date of issuance.

Preferred Stock

Under the Company’s Articles of Incorporation, the Board has the authority, without further action by stockholders, to designate up to 20,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges, qualifications and restrictions granted to or imposed upon the preferred stock, including dividend rights, conversion rights, voting rights, rights and terms of redemption, liquidation preference and sinking fund terms, any or all of which may be greater than the rights of the common stock. If the Company sells preferred stock under its registration statement on Form S-3, it will fix the rights, preferences, privileges, qualifications and restrictions of the preferred stock of each series in the certificate of designation relating to that series and will file the certificate of designation that describes the terms of the series of preferred stock the Company offers before the issuance of the related series of preferred stock.

As of June 30, 2018, the Company has 20,000,000 shares of preferred stock authorized, with a par value of $.001 per share, of which no shares are issued or outstanding.