Annual report pursuant to Section 13 and 15(d)

Stock Options and Warrants

v3.8.0.1
Stock Options and Warrants
12 Months Ended
Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Options and Warrants
9. Stock Options and Warrants

Options

 

On February 7, 2014, the Company’s Board of Directors voted to terminate the 2007 Stock Option Plan and adopted the 2014 Equity Incentive Plan (the “2014 Plan”), which provides for the issuance of incentive awards of up to 6,150,564 shares of the Company’s Common Stock to officers, key employees, consultants and directors. The options’ exercise price will be no less than the closing price of the Company’s shares on the day of issuance. When incentive stock options are granted to an employee who, at the time the incentive stock option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company, the per share exercise price will be no less than 110% of the closing price of the Company’s shares on the day of issuance.

 

On March 31, 2017, the Company granted an aggregate of 10,000,000 common stock options to certain officers of the Company. The options have a fair value of $183,730 and vest immediately and are exercisable at $0.06 per share and expire on March 31, 2020.

 

The estimated fair value of each option award granted was determined on the date of effectiveness of the grant using the Black-Scholes option valuation model.

 

The Company recorded option amortization expense in accordance with the vesting terms of $502,246 and $1,766,833 for the years ended June 30, 2017 and 2016, respectively.

 

A summary of the status of the Company’s stock option plan as of June 30, 2017 and 2016 are as follows:

 

      Options     Weighted Average Exercise Price     Weighted Average Remaining Term (Years)     Aggregate Intrinsic Value  
                           
Outstanding at June 30, 2015       5,140,339     $ 0.50       8.675     $  
Granted                       $  
Outstanding at June 30, 2016       5,140,339       0.500       7.673     $  
Exercisable at June 30, 2016       3,742,754       0.500       7.653     $  
Granted       10,000,000       0.06       3.00     $  
Outstanding at June 30, 2017       15,140,339       0.500       3.927     $  
Exercisable at June 30, 2017       15,027,839     $ 0.21       3.939     $  

 

LocatorX, Inc. Options

 

During the years ended June 30, 2017 and 2016, LocatorX granted 2,640,000 and 3,790,000 options to certain consultants and officers and are exercisable at $0.20 to $1.20 per share and expire in December 2020.

 

During the year ended June 30, 2016, 667,500 options were forfeited when the consultant that had vesting options did not have their contracts renewed. The options vest in twelve quarterly installments.

 

The estimated fair value of each option award granted was determined on the date of effectiveness of the grant using the Black-Scholes option valuation model and the fair value of the options is $267,514 and $387,661 for June 30, 2017 and 2016, respectively. The following assumptions were used for the options granted during the years ended June 30, 2017 and 2016:

 

  2017 2016
Risk-free interest rate 1.03% 0.45% - 1.07%
Expected volatility 84.31% 73.58% - 93.57%
Dividend yield 0.00% 0.00%
Expected option term 1.8 – 3 years 1.3 – 4.4 years

 

Options amortization expense of the LocatorX’s stock options was $75,979 and $128,161 for the year ended June 30, 2017 and 2016, respectively. A summary of the status of LocatorX’s stock options as of June 30, 2017 and 2016 are as follows:

 

      Options     Weighted Average Exercise Price     Weighted Average Remaining Term (Years)     Aggregate Intrinsic Value  
                           
Outstanding at June 30, 2015       300,000     $                  
 Granted       3,790,000       0.200                  
 Forfeited       667,500       0.170                  
Outstanding at June 30, 2016       3,422,500       0.186       2.557     $  
Exercisable at June 30, 2016       663,333       0.349       2.745     $  
                                   
 Forfeited                              
 Granted       2,640,000       1.17                  
Outstanding at June 30, 2017       6,062,500       0.61       1.95     $  
Exercisable at June 30, 2017       2,079,994     $ 0.25       1.53     $  

 

Warrants

 

The estimated fair value of the warrants issued was determined on the date of effectiveness of the grant using the Black-Scholes option valuation model. Warrants expense was $84,894 and $152,167 for the years ended June 30, 2017 and 2016, respectively. The Company granted 16,224,324 warrants during the year ended June 30, 2017 in connection with a private placement. During the year ended June 30, 2017, the Company granted 2,250,000 warrants for services valued at $84,894.

 

The following table presents the warrant activity during the years ended June 30, 2017 and 2016 presented on a post 1 for 100 Reverse Split basis:

 

      Common Shares Covered by Warrants     Weighted Average Exercise Price     Weighted Average Remaining Term (Years)     Aggregate Intrinsic Value  
                           
Outstanding at June 30, 2015       2,965,343     $ 1.118       1.919     $  
 Granted       11,666,667       0.060                  
 Expired       (1,418,534 )     1.352                  
                                   
Outstanding at June 30, 2016       13,213,476       0.159       1.813     $  
Exercisable at June 30, 2016       13,213,476     $ 0.159       1.813     $  
 Granted       18,474,324       0.01                  
 Expired       (513,476 )     0.50                  
Outstanding at June 30, 2017       31,174,324     $ 0.067       1.0     $ 165,000  
Exercisable at June 30, 2017       29,374,324     $ 0.067       1.0     $ 165,000  

 

The estimated fair value of $84,894 and $152,167 for the warrants was determined on the date of effectiveness of the grant using the Black-Scholes option valuation model. The following assumptions were used for the warrants for the years ended June 30, 2017 and 2016:

 

  2017 2016
Risk-free interest rate 0.99% 0.99%
Expected volatility 266% - 284% 186% - 207%
Dividend yield 0.00% 0.00%
Expected option term 4 years 1 years