Note 6. Capital Stock

Authorized Capital

Authorized capital stock consists of 50,000,000 common shares with par value of $0.01 per common share (2014- 25,000 common shares with no par value). At June 30, 2015 there were 8,518,791 shares issued and outstanding (2014- 1,000 common shares).

On February 19, 2015, the Company amended its articles of incorporation to replace its authorized capital of 25,000 common shares with no par value (“Old Common Shares”) with 50,000,000 common shares with par value of $0.01 per common share (“New Common Shares”). In connection with the amendment PGSC returned 1,000 Old Common Shares to treasury for cancellation in exchange for 8,101,371 New Common Shares.

Distribution of Shares

The spin-off of the Company from PGSC was effected on April 17, 2015. On that date, an aggregate of 8,101,371 of shares of the Company’s common stock were distributed to PGSC stockholders of record on April 14, 2015. On April 20, 2015, the Company’s shares began trading on the NYSE MKT LLC under the symbol "PZG"(see Note 1).

Equity Contribution

Prior to the Separation and Distribution, and in connection with merger of PGSC, PGSC made a cash equity contribution into the Company of $8.45 million.

Pursuant to the Separation Agreement the loans from PGSC were no longer repayable to PGSC. Accordingly, the Company reclassified $15,866,870 from Due to Parent Company to additional paid in capital.

Sales of Equity Securities

In connection with the consummation of the merger of PGSC and Coeur, the Company issued 417,420 shares of its common stock, with par value $0.01 per share, to Coeur in exchange for a cash payment by Coeur in the amount of $1.47 million.

Stock Options and Stock Based Compensation

Paramount’s 2015 Stock Incentive and Compensation Plan, which is shareholder-approved, permits the grant of share options and shares to its employees for up to 1.278 million shares of common stock. Option awards are generally granted with an exercise price equal to the market price of Paramount’s stock at the date of grant and have contractual lives of 5 years. To better align the interests of its key executives and employees with those of its shareholders a significant portion of those share option awards will vest contingent upon meeting certain stock price appreciation performance goals. Option and share awards provide for accelerated vesting if there is a change in control (as defined in the employee share option plan).

The fair value of option awards that have market conditions are estimated on the date of grant using a Monte-Carlo Simulation valuation model. The award’s grant date fair value is determined by taking the average of the grant date fair values under each of many Monte Carlo trials. The key assumptions used in the simulations were as follows:

	2015			2014
Weighted average risk-free interest rate		0.61	%		-
Weighted-average volatility		108.70	%		-
Weighted average fair value	$	1.16			-

The fair value of option awards that do not have market conditions are estimated on the date of grant using a Black-Scholes option valuation model that uses the assumptions noted in the following table. Because Black-Scholes option valuation models incorporate ranges of assumptions for inputs, those ranges are disclosed. Given Paramount’s short history as a public company, expected volatilities are based on, historical volatilities from five proxy companies’ stock. Paramount uses historical data to estimate option exercise and employee termination within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding; the range given below results from certain groups of employees exhibiting different behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

	2015			2014
Weighted average risk-free interest rate		0.98	%		-
Weighted-average volatility		107.47	%		-
Expected dividends	$	0.00			-
Weighted average expected term (years)		3.75			-
Weighted average fair value	$	1.08			-

A summary of option activity under the Stock Incentive and Compensation Plan as of June 30, 2015, and changes during the year then ended is presented below.

Options	Shares		Weighted Average Exercise Price		Weighted-Average Remaining Contactual Term		Aggregate Intrinsic Value ($)
Outstanding at July 1, 2014		—	$	—
Granted		995,000		1.53
Exercised		—		—
Forfeited or expired		—		—
Outstanding at June 30, 2015		995,000	$	1.53		5.00		—
Exercisable at June 30, 2015		331,670	$	1.53		5.00		—

The weighted-average grant-date fair value of options granted during the year 2015 was $1.13.

A summary of the status of Paramount’s non-vested shares as of June 30, 2015 and changes during the year ended June 30, 2015 is presented below.

Nonvested Options	Shares		Weighted- Average Grant-Date Fair Value
Nonvested at July 1, 2014		—	$	—
Granted		995,000		1.13
Vested		331,670		1.16
Forfeited		—
Nonvested at June 30, 2015		663,330

As of June 30, 2015, there was $737,368 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the employee share option plan. That cost is expected to be recognized over a weighted-average period of 1.5 years. The total fair value of shares vested during the years ended June 30, 2015 and 2014, was $360,519 and $0, respectively.