The
Company has stock-based compensation plans and reports stock-based compensation expense for all stock-based compensation awards
based on the estimated grant date fair value. The value of the compensation cost is amortized on a straight-line basis over the
requisite service periods of the award (generally the option vesting term).
The
Company estimates fair value using the Black-Scholes valuation model. Assumptions used to estimate compensation expense are determined
as follows:
| · | Expected
term is determined under the simplified method using an average of the contractual term
and vesting period of the award as appropriate statistical data required to properly
estimate the expected term was not available; |
| · | Expected
volatility of award grants made under the Company’s plans is estimated using the
historical daily changes in the market price of the Company’s common stock over
the expected term of the award and contemplation of future activity; |
| · | Risk-free
interest rate is the implied yield on zero-coupon U.S. Treasury bonds with a remaining
maturity equal to the expected term of the awards; and, |
| · | Forfeitures
are based on the history of cancellations of awards granted by the Company and management’s
analysis of potential future forfeitures. |
The
Company has several employee stock option and officer and director stock option plans that have been approved by the shareholders
of the Company. The plans require that options be granted at a price not less than market on the date of grant and are more fully
discussed in our Form 10-K for the year ended June 30, 2016.
The
following table summarizes the Company’s stock option activity during the first six months of fiscal 2017:
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Weighted |
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Weighted |
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Average |
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Average |
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Remaining |
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Aggregate |
|
Aggregate |
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Exercise Price |
|
Contractual |
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Fair |
|
Instrinsic |
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Shares |
|
Per Share |
|
Term (1) |
|
Value (3) |
|
Value (2) |
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| Outstanding July 1, 2016 |
1,200,000 |
|
$0.58 |
|
2.03 |
$ |
273,500 |
$ |
- |
|
| |
Granted |
|
- |
|
- |
|
- |
|
- |
|
- |
|
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Exercised |
|
- |
|
- |
|
- |
|
- |
|
- |
|
| |
Forfeited or expired |
- |
|
- |
|
- |
|
- |
|
- |
|
| Outstanding December 31, 2016 |
1,200,000 |
|
$0.58 |
|
1.53 |
$ |
273,500 |
$ |
- |
|
| Exercisable December 31, 2016 |
1,200,000 |
|
$0.58 |
|
1.53 |
$ |
273,500 |
$ |
- |
|
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| (1) |
Remaining contractual term presented in years. |
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| (2) |
The aggregate intrinsic value is calculated as the difference between the exercise
price of the underlying |
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awards and the closing price of the Company's common stock as of December 31,
2016, for those awards that |
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have an exercise price currently below the closing price as of December 31, 2016
of $0.07. |
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| (3) |
Aggregate Fair Value is calculated using the Black Scholes option pricing model
to estimate fair value of stock-based |
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compensation. |
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As
of December 31, 2016, there was no unamortized Black Scholes value remaining to be recognized as stock-based compensation expense.
As
of December 31, 2016, the Company had 140,000 outstanding warrants. The following table summarizes the Company’s warrant
activity during the six months ended December 31, 2016:
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Warrants Outstanding |
|
Warrants Exercisable |
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|
|
Weighted |
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|
Weighted |
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|
|
Number of |
|
Average |
|
Number of |
|
Average |
| |
|
|
Shares |
|
Exercise Price |
|
Shares |
|
Exercise Price |
| Warrants Outstanding, July 1, 2016 |
140,000 |
$ |
0.75 |
|
20,000 |
$ |
0.75 |
| |
Granted |
|
- |
|
- |
|
- |
|
- |
| |
Previously Granted, Vested |
- |
|
- |
|
60,000 |
|
0.75 |
| |
Exercised |
|
- |
|
- |
|
- |
|
- |
| |
Canceled/Expired |
- |
|
- |
|
- |
|
- |
| Warrants Outstanding, December 31, 2016 |
140,000 |
$ |
0.75 |
|
80,000 |
$ |
0.75 |
|