F. Note Payable - Related Party |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||
| F. Note Payable - Related Party | |||||||||||||||||||||||||||||||||||||||||||
| Note Payable |
Note payable – related party at March 31, 2017 and June 30, 2016 consists of the following:
At March 31, 2017, the note payable – related party balance of $750,000 represents the amount drawn against a $750,000 line of credit with the Anderson Family Trust (“Trust”) managed by Donald and Rebecca Anderson, both of whom are members of the Company’s Board of Directors. The line of credit was entered into on June 28, 2016 and amended on November 14, 2016, at which time the credit limit was increased to $750,000 and the maturity date was revised to January 1, 2018 when the full outstanding balance is due. As of March 31, 2017, the line of credit has no remaining balance available to be borrowed. The outstanding balance accrues interest at 7% per annum payable monthly and is collateralized by all assets of the Company. At loan inception, 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 each month thereafter. 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.
During the nine months ended March 31, 2017, the Company expensed approximately $27,500 in interest related to the note, approximately $11,700 related to amortization of deferred loan costs, and approximately $5,300 related to the value of 90,000 warrants which vested during the nine month period. At March 31, 2017, the Company had unpaid interest to the Trust of approximately $8,400. 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 thenavailable 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. |