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2. STOCK-BASED COMPENSATION
 12 Months Ended
Jun. 30, 2015
Equity [Abstract]  
STOCK-BASED COMPENSATION

The Company has several employee stock option and officer and director stock option plans that have been approved by the shareholders of the Company. The plans require that options be granted at a price not less than market on the date of grant.

 

The Company uses the Black-Scholes option pricing model to estimate fair value of stock-based awards.

 

No options were granted during the year ended June 30, 2014. Assumptions for the award of options granted during the year ended June 30, 2015 were:

   Awards Granted in the Year Ended
Assumption  June 30, 2015
Dividend yield   0%
Expected volatility   62%
Risk-free interest rate   2%
Expected life of options (in years)   3.75 
Weighted average grant-date Black Scholes calculated fair value  $0.18 

 

The following table summarizes the Company’s stock option activity during fiscal year 2015 and 2014:

 

              Weighted  Average      
          Weighted Average          Remaining   Aggregate   Aggregate
      Number of       Exercise Price         Contractual    Fair    Instrinsic
      Options          Per Share               Term (1)   Value (3)   Value (2)
Outstanding July 1, 2013   1,084,100 $ 0.67   4.18 $ 296,100 $ -
  Granted     -   -   -   -   -
  Exercised     -   -   -   -   -
  Forfeited, expired or cancelled (260,700)   0.78   -   (83,500)   -
Outstanding June 30, 2014   823,400 $ 0.63   3.35 $ 212,600 $ -
Exercisable June 30, 2014   823,400 $ 0.63   3.35 $ 212,600 $ -
                       
Outstanding July 1, 2014   823,400 $ 0.63   3.35 $ 212,600 $ -
  Granted     390,000   0.50   4.35   69,500   -
  Exercised     -   -   -   -   -
  Forfeited, expired or cancelled (10,200)   1.50   -   (6,300)   -
Outstanding June 30, 2015   1,203,200 $ 0.58   3.03 $ 275,800 $ -
Exercisable June 30, 2015   1,047,200 $ 0.59   2.83 $ 248,100 $ -
                       
 (1) Remaining contractual term presented in years.                
 (2) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards     
       and the closing price of the Company's common stock as of June 30, 2015 and 2014, for those awards that have an   
       exercise price currently below the closing price as of June 30, 2015 of $0.28 and as of June 30, 2014 of $0.48.    
 (3) Aggregate Fair Value is calculated using the Black Scholes option pricing model to estimate fair value of stock-based   
       compensation.                    
                       

 

The Company recognized approximately $73,300 of stock-based compensation expense during the fiscal year ended June 30, 2015, which included $41,800 of stock-based compensation expense for options granted during the fiscal year ended June 30, 2015 and $31,500 for stock issued for services as described in Note 13. There is $27,700 of unamortized stock-based compensation expense related to these options which is scheduled to be recognized in the first two quarters of fiscal 2016.

 

All options granted had an exercise price of not less than the market price on date of grant, as stipulated in the stock option plans, of the Company’s common stock. As of June 30, 2015, 156,000 of the 390,000 stock options granted during fiscal 2015 to management and the Board of Directors were unvested and all options had a weighted average grant date fair value of $0.18 per share. These unvested options will vest equally over the next two fiscal quarters. There were no other unvested options at June 30, 2015. If not previously exercised, options outstanding at June 30, 2015 will expire as follows:

 

Calendar Year   Number of     Weighted Average
of Expiration   Shares     Exercise Price 
2016   3,200   $ 1.50
2017   385,000     0.75
2018   425,000     0.50
2019   390,000     0.50
    1,203,200   $ 0.58

 

Additional information about outstanding options to purchase the Company’s Common Stock as of June 30, 2015 is as follows:

 

    Options Outstanding   Options Exercisable
        Weighted Avg.   Weighted       Weighted
    Number   Remaining   Average   Number   Average
Exercise   of   Contractual   Exercise   of   Exercise
Price   Shares   Life (in years)   Price   Shares   Price
$0.50   815,000   3.63   $0.50   659,000   $0.50
$0.75   385,000   1.78   $0.75   385,000   $0.75
$1.50   3,200   0.21   $1.50   3,200   $1.50
Totals   1,203,200   3.03   $0.58   1,047,200   $0.59

 

The Company’s Stock Option Plans are administered by the Compensation/Administration Committee, currently comprised of two independent members of the Company’s Board of Directors. Company stock options are issued to employees and directors at an exercise price of not less than the fair market value, as determined under the option plan on the date of grant and must be granted within 10 years from the effective date of the Plan, with the term of the option not exceeding 10 years. Options granted to employees under the Stock Option Plans, which are terminated prior to exercise, are considered to be available for grant to subsequent employees. Total issued stock options for any plan may exceed those authorized due to termination of prior non-exercised grants. Under the Employee Incentive Stock Option Plans, incentive and non-qualified stock options may be granted with the incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended. Stock options issued during the fiscal year ended June 30, 2015 vested 20% on December 31, 2014 and 20% each quarter thereafter and there were no options issued during the fiscal year ended June 30, 2014.

 

Alanco Stock Option Summary (1)
as of June 30, 2015
      Options  Issued and Options Options Balance Exercise
Plan   Authorized Granted  Exercised Cancelled Outstanding to Issue (6) Price Range (5)
2002 (2) 75,000 156,000 27,000 94,200 34,800        --    $0.75
2002 D&O (3) 25,000 40,800 5,200 16,600 19,000        --    $0.75
2004 (2) 100,000 188,500 67,600 88,500 32,400        --    $0.75
2004 D&O (3) 50,000 83,100 13,200 33,100 36,800        --    $0.75 - $1.50
2005 (2) 150,000 310,108 81,971 160,108 68,029        --    $0.50 - $0.75
2005 D&O (3) 50,000 142,000 4,000 92,000 46,000        --    $0.50
2006 (2) 375,000 851,769 82,003 476,769 292,997        --    $0.50 - $0.75
2006 D&O (3) 125,000 261,924 23,750 136,924 101,250        --    $0.50
2011 (4) 750,000 777,948 291,024 30,000 456,924 2,052 $0.50 - $0.75
2014 (7) 500,000 115,000 0 0 115,000 385,000 $0.50
                 
Totals   2,200,000 2,927,149 595,748 1,128,201 1,203,200 387,052  
                 
(1)  Only includes plans with options currently outstanding or having a balance available to issue.    
(2)  Employee Incentive Stock Option Plan.          
(3)  Directors and Officers Stock Option Plan.          
(4)  Employee Incentive Stock Option Plan which permits granting of stock or stock options.  Grants include 291,000  
       Common Shares issued under the plan as payment of deferred employee compensation.      
(5)  Range of exercise prices for outstanding options only.          
(6)  Any options not issued under the 2002 or 2002 D&O Plans and the 2004 and 2004 D&O Plans are no longer available for
       issue as those plans were 10 year plans and have expired.          
(7)  Stock Incentive Plan which permits granting of stock options and awards.  All grants are stock options.