7. NOTE PAYABLE

12 Months Ended

Jun. 30, 2016

Note payable at June 30, 2016 and 2015 consists of the following:

		2016		2015
Note payable	$	200,000	$	-
Less current		-		-
Note payable, long-term	$	200,000	$	-

At June 30, 2016, the Note Payable balance of $200,000 represents the amount drawn against a $500,000 line of credit with the Anderson Family Trust (“Trust”) entered into on June 28, 2016. As of June 30, 2016, the line of credit has an available balance of $300,000. The line of credit matures on July 1, 2017 when the full outstanding balance is due. The balance accrues interest at 7% per annum payable monthly and is collateralized by the Company’s AES Indian Mesa property. In addition, 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 monthly. 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.

Assumptions for warrants granted during the year ended June 30, 2016 were:

	Awards Granted	Awards Granted
	With an Exercise	With an Exercise
Assumption	Price of $0.50	Price of $1.00
Dividend yield	0%	0%
Expected volatility	62%	62%
Risk-free interest rate	2%	2%
Expected life of options (in years)	5.0	5.0
Weighted average grant-date Black Scholes calculated fair value	$0.07	$0.04

During the fiscal year ended June 30, 2016, the Company expensed approximately $100 in interest related to the note, approximately $1,200 related to amortization of deferred loan costs, and approximately $1,200 related to the value of vested warrants. 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.