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COMMON STOCK WARRANTS AND OPTIONS | 12 Months Ended
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Jun. 30, 2014
Common Stock Warrants and Options [Abstract] |
COMMON STOCK WARRANTS AND OPTIONS | 13. COMMON STOCK WARRANTS AND OPTIONS COMMON STOCK WARRANTS All Common Stock warrants outstanding as of June 30, 2014 were exercisable. The following table shows exercise prices and expiration dates for warrants outstanding as of June 30, 2014:
|  | Exercise |  |
Warrants |  | Price |  | Expiration
Outstanding |  | Per Share |  | Date
4,264,000 |  |  | $ | 2.6058 |  | September 18, 2016
45,000 |  |  | $ | 2.10 |  | December 31, 2017
4,309,000 |  |  |  |  |  |
Common Stock Warrant activity for the years ended June 30, 2014, 2013, and 2012 was as follows:
|  | Warrants |
Outstanding at June 30, 2011 |  |  | 15,567,199 |
Issued |  |  | - |
Exercised |  |  | (7,317 | )
Expired |  |  | (7,514,263 | )
Outstanding at June 30, 2012 |  |  | 8,045,619 |
Issued |  |  | 45,000 |
Exercised |  |  | (399,597 | )
Expired |  |  | (329,314 | )
Outstanding at June 30, 2013 |  |  | 7,361,708 |
Issued |  |  | - |
Exercised |  |  | (2,090,226 | )
Expired |  |  | (962,482 | )
Outstanding at June 30, 2014 |  |  | 4,309,000 |
In conjunction with an October 17, 2007 Securities Purchase Agreement, the Company issued warrants to purchase up to 17,532 shares of the Company’s Common Stock at $7.70 per share at any time through October 17, 2012 to the broker dealer who acted as the exclusive placement agent in the transaction. The warrants under this agreement expired unexercised. In connection with a Securities Purchase Agreement with S.A.C. Capital Associates, LLC (“SAC”) entered into by the Company on March 14, 2007, the Company issued warrants to purchase 833,333 shares of Common Stock, exercisable at $6.40 per share. As a result of the adjustment provisions contained in the warrant, as of June 30, 2009, the original warrants to purchase 833,333 shares of Common Stock at $6.40 per share had changed to warrants to purchase 903,955 shares of Common Stock at $5.90 per share. The warrants were exercisable at any time through September 14, 2013 and expired unexercised. On August 7, 2009, in conjunction with a rights offering (the “2009 Rights Offering”), the Company issued warrants to purchase 7,285,792 shares of Common Stock, exercisable at $2.20 per share at any time prior to December 31, 2011. The warrants commenced trading on August 7, 2009, on The NASDAQ Global Market under the symbol USATW. During the years ended June 30, 2012 and 2011, 4,550 and 376,355 USATW warrants were exercised at $2.20 per share resulting in the issuance of 4,550 and 376,355 shares of Common Stock, generating cash proceeds of $10,010 and $827,981, respectively. 6,904,887 of these warrants expired unexercised on December 31, 2011. Additionally, the Company issued each of the two dealer managers warrants to purchase 145,716 shares of Common Stock that were exercisable at $2.20 per share at any time prior to August 6, 2012. The dealer manager warrants expired unexercised in August 2012. On May 12, 2010, in conjunction with a public offering (the “2010 Public Offering”), the Company issued warrants to purchase 2,753,454 shares of Common Stock, exercisable at $1.13 per share at any time prior to December 31, 2013. The warrants commenced trading on May 24, 2010 on The NASDAQ Global Market under the symbol USATZ. During the years ended June 30, 2014, 2013 and 2012, 2,090,226, 369,287 and 0 USATZ warrants were exercised at $1.13 per share for cash proceeds of $2,361,956, $417,294 and $0, respectively. 58,527 shares of Common Stock, exercisable at $1.13 per share expired unexercised on December 31, 2013. On July 7, 2010, in conjunction with a rights offering (the “2010 Rights Offering”), the Company issued USATZ warrants to purchase 261,953 shares of Common Stock, exercisable at $1.13 per share at any time prior to December 31, 2013. During the year ended June 30, 2011 all of these warrants were exercised at $1.13 per share for cash proceeds of $296,007. Additionally, the Company issued to Source Capital Group (“Source”), placement agent of the 2010 Public Offering and the 2010 Rights Offering, warrants to purchase 165,207 and 15,717 shares of Common Stock, exercisable at $1.13 per share at any time prior to May 12, and July 7, 2013, respectively. During the years ended June 30, 2013, 2012 and 2011 Source elected cashless exercises of 36,186, 2,767 and 127,497 warrants resulting in the issuance of 17,094, 990 and 83,472 shares of Common Stock, respectively. During the year ended June 30, 2013, 13,216 shares of Common Stock were issued for warrants exercised at $1.13 per share for cash proceeds of $14,934. Warrants for the issuance of up to 1,258 shares of Common Stock expired unexercised in May 2013. On March 17, 2011, in conjunction with a private placement offering (the “2011 Private Placement Offering”), the Company issued warrants to purchase up to 3,900,000 shares of Common Stock, exercisable at $2.6058 per share. Additionally, the Company issued the placement agent of the 2011 Private Placement Offering warrants to purchase 364,000 shares of common stock at $2.6058 per share. The 4,264,000 warrants are exercisable from September 18, 2011 through September 18, 2016. As of June 30, 2014, no warrants have been exercised under this offering. The 3,900,000 warrants issued under the 2011 Private Placement Offering to the buyers contain a provision that if a Fundamental Transaction occurs, notably a change in control, the warrant holder may require the Company to pay the Black-Scholes calculated value of the then unexercised warrant to the warrant holder in cash. The fair value of the warrants was estimated, and the Company recorded a warrant liability in its Consolidated Balance Sheet of $585,209 and $650,638 at June 30, 2014 and 2013, respectively (see Note 9). In conjunction with the Loan and Security agreement (Note 7) and as a condition of the Bank entering into the First Amendment, the Company issued to the Bank warrants to purchase up to 45,000 shares of common stock of the Company. The warrants are exercisable at any time prior to December 31, 2017 at an exercise price of $2.10 per share. Upon the issuance of the 45,000 shares of common stock, the fair value of the warrants is $55,962 using a Black Scholes model, which was recorded as prepaid interest and included in other assets on the Consolidated Balance Sheet, and is being amortized as non-cash interest expense over the remaining term of the Line of Credit as amended in January 2013. Non-cash interest of $2,095 and $53,867 has been recognized for the years ended June 30, 2014 and 2013. As of June 30, 2014 none of these warrants has been exercised. STOCK OPTIONS The Company estimates the grant date fair value of the stock options it grants using a Black-Scholes valuation model. The Company’s assumption for expected volatility is based on its historical volatility data related to market trading of its own common stock. The Company bases its assumptions for expected life of the new stock option grants on the life of the option granted, and if relevant, its analysis of the historical exercise patterns of its stock options. The dividend yield assumption is based on dividends expected to be paid over the expected life of the stock option. The risk-free interest rate assumption is determined by using the U.S. Treasury rates of the same period as the expected option term of each stock option. The weighted-average fair value of options granted during the fiscal year ended June 30, 2014 was $1.49. There were no options granted during the fiscal years ended June 30, 2013 and 2012. The fair value of options granted during the fiscal year ended June 30, 2014 was estimated at the grant date using the following weighted average assumptions:
|  | Year ended |
|  | June 30, 2014 |
Expected volatility |  |  | 79 | %
Expected life |  | 7 years |
Expected dividends |  |  | 0.00 | %
Risk-free interest rate |  |  | 2.22 | %
Common Stock Option activity during the years ended June 30, 2014, 2013, and 2012 was as follows:
|  |  |  |  |  |  |  | Weighted- |
|  |  |  |  | Exercise |  |  | Average |
|  | Options |  |  | Price |  |  | Exercise |
|  | Outstanding |  |  | Per Share |  |  | Price |
Outstanding and exercisable at June 30, 2011 |  |  | 90,666 |  |  | $ | 7.50-8 |  |  | $ | 7.53 |
Granted |  |  | - |  |  |  | - |  |  |  | - |
Expired |  |  | (45,333 | ) |  | $ | 7.50-8 |  |  | $ | 7.53 |
Outstanding and exercisable at June 30, 2012 |  |  | 45,333 |  |  | $ | 7.50-8 |  |  | $ | 7.53 |
Granted |  |  | - |  |  |  | - |  |  |  | - |
Expired |  |  | (45,333 | ) |  | $ | 7.50-8 |  |  | $ | 7.53 |
Outstanding and exercisable at June 30, 2013 |  |  | - |  |  | $ | - |  |  | $ | - |
Granted |  |  | 120,000 |  |  | $ | 2.05 |  |  | $ | 2.05 |
Exercised/vested |  |  | - |  |  | $ | - |  |  | $ | - |
Expired |  |  | - |  |  | $ | - |  |  | $ | - |
Outstanding at June 30, 2014 |  |  | 120,000 |  |  | $ | 2.05 |  |  | $ | 2.05 |
On June 18, 2014, the shareholders of the Company approved the 2014 Stock Option Incentive Plan (the “2014 Option Plan”). Under this plan, 750,000 of stock options may be granted to officers, directors or employees of the Company. For the year ended June 30, 2014, the Board of Directors of the Company approved 20,000 options to each of the six non-employee directors. The options vest as follows: one-third one year after the grant date (June 19, 2015), one-third on June 19, 2016 and one-third on June 19, 2017. The following table shows exercisable options, exercise prices, the weighted average remaining contractual life and the aggregate intrinsic value for options outstanding as of June 30, 2014:
|  |  |  |  |  |  |  |  | Weighted Average |  |  |  |  |  |  |
Options |  |  | Options |  |  | Exercise Price Per |  |  | Remaining Life |  |  | Remaining Life |  |  | Intrinsic Value- |
Outstanding |  |  | Exercisable |  |  | Share |  |  | Outstanding |  |  | Exercisable |  |  | Outstanding |  |  | Exercisable |
120,000 |  |  |  | - |  |  | $ | 2.05 |  |  |  | 6.97 |  |  |  | - |  |  |  | - |  |  |  | - |
120,000 |  |  |  | - |  |  |  |  |  |  |  | 6.97 |  |  |  | - |  |  |  | - |  |  |  | - |

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