Derivative Financial Instruments (Warrant Liability)

12 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments (Warrant Liability)

On June 11, 2012, the Company executed a Securities Purchase Agreement with respect to a private placement of an aggregate of 1,943,852 shares of its Class A common stock at $1.02 per share and the June 2012 Warrants to purchase up to 1,457,892 shares of its Class A common stock at an initial exercise price of $1.32 per share, which was subsequently reduced to $1.26, and then to $1.22 on December 21, 2016 as a result of our public offering. The June 2012 Warrants are exercisable for a period of five years beginning on December 11, 2012. The Company accounted for the June 2012 Warrants issued to investors in accordance with ASC 815-10. ASC 815-10 provides guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock. This applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative under ASC 815-10, including any freestanding financial instrument that is potentially settled in an entity’s own stock.

Due to certain adjustments that may be made to the exercise price of the June 2012 Warrants if the Company issues or sell shares of its Class A common stock at a price that is less than the then-current warrant exercise price, the June 2012 Warrants have been classified as a liability, as opposed to equity, in accordance with ASC 815-10, as it was determined that the June 2012 Warrants were not indexed to the Company’s Class A common stock.

The fair value of the outstanding June 2012 Warrants was re-measured at the end of each reporting period to reflect the then-current fair market value. The fair value was also re-measured upon each warrant exercise, to determine the fair value adjustment to the warrant liability related to the warrant exercise. As of June 30, 2017, there were 329,195 shares of Class A common stock underlying our outstanding June 2012 Warrants that were issued to investors. As of June 30, 2017, there were also 172,279 shares of Class A common stock underlying the outstanding June 2012 Warrants, which were issued to investment bankers, that do not require fair value re-measurement as they contain different provisions. The June 2012 Warrants expired on December 11, 2017. All warrants that required fair value re-measurement were exercised prior to expiration, and as such, the warrant liability was reduced to zero as of that date. The change in fair value of the June 2012 Warrants is recorded in the Consolidated Statements of Comprehensive Income, as estimated using the Lattice option-pricing model using the following range of assumptions for the respective periods:

	Year Ended June 30,
Inputs into Lattice model for warrants:	2018	2017
Equivalent volatility	21.06% - 162.92%	47.39% - 75.80%
Equivalent interest rate	0.95% - 1.14%	0.62% - 1.13%
Floor	$1.15	$1.15
Stock price	$2.56 - $2.60	$1.15 - $3.25
Probability price < strike price	0.00%	4.70%
Fair value of call	$1.13 - $2.79	$0.30 - $2.04
Probability of fundamental transaction occurring	0%	0%

All warrants issued by the Company other than the above noted June 2012 Warrants are classified as equity.

The warrant liabilities were considered recurring Level 3 financial instruments. The following table summarizes the activity of Level 3 financial instruments measured on a recurring basis for the years ended June 30, 2018 and 2017:

	Warrant Liability
Fair value, June 30, 2016	$	717,393
Reclassification of warrant liability upon exercise		(694,436	)
Change in fair value of warrant liability		467,543
Fair value, June 30, 2017		490,500
Reclassification of warrant liability upon exercise		(685,132	)
Change in fair value of warrant liability		194,632
Fair value, June 30, 2018	$	-