F. Note Payable

6 Months Ended

Dec. 31, 2016

F. Note Payable

Note Payable

Note payable at December 31, 2016 and June 30, 2016 consists of the following:

		December 31,		June 30,
		2016		2016
Note payable	$	640,000	$	200,000
Less current		-		-
Note payable, long-term	$	640,000	$	200,000

At December 31, 2016, the Note Payable balance of $640,000 represents the amount drawn against a $750,000 line of credit with the Anderson Family Trust (“Trust”) entered into on June 28, 2016 and amended on November 14, 2016 at which time the credit limit was increased to $750,000 and the maturity date was revised to January 1, 2018. As of December 31, 2016, the line of credit has an available balance of $110,000. The line of credit matures on January 1, 2018 when the full outstanding balance is due. The balance accrues interest at 7% per annum payable monthly and is collateralized by all assets of the Company. At loan inception, the Trust was paid a loan fee of $10,000 plus a warrant to purchase 140,000 shares of Alanco Common Stock of which 20,000 warrants vested immediately and 10,000 warrants vest each month thereafter. The exercise price per share for the warrants is $0.50 per share for one half of each vested group and $1.00 for the other half of each vested group with a five year term following the issuance date. The Company uses the Black-Scholes option pricing model to estimate fair value of stock-based awards.

During the six months ended December 31, 2016, the Company expensed approximately $15,200, in interest related to the note, approximately $7,600 related to amortization of deferred loan costs, and approximately $3,600 related to the value of 60,000 warrants which vested during the six month period. The line of credit has a provision allowing the lender, at the lender’s option, to convert up to the full amount of the credit line into shares of a then available class of preferred stock outstanding any time prior to the full repayment of the line of credit. There is currently no such preferred stock outstanding and the rights and privileges of preferred stock have not been determined.