Note 13 - Equity Transactions and Stock-based Compensation

12 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Note 1

3

. Equity Transactions

and Stock-Based Compensation

Stock Option Plan.

The Company has adopted a stock option plan for the granting of options or restricted shares to employees, officers, directors and consultants of the Company that originally provided for the purchase of up to 7,000,000 shares of common stock, at the discretion of the Board of Directors. Subsequent to the adoption, the Board of Directors and stockholders approved additional common stock shares aggregating 6,000,000 to be available for grant, for a total of 13,000,000 shares of common stock reserved for issuance under the Company’s 2001 Stock Option Plan, as amended. Stock option grants may not be priced less than the fair market value of the Company’s common stock at the date of grant. Options granted are generally for ten-year periods, except that incentive stock options granted to a 10% stockholder (as defined) are limited to five-year terms.

In June, 2015, there were 2,248,000 stock options authorized by the Board of Directors and issued to Company officers, employees and directors with an exercise price ranging from $0.09 to $0.10, vesting over three years, with terms of either five or ten years.

During the fiscal year ended June 30, 2016 and 2015, the Company incurred stock compensation expense of approximately $31 and $0.1 million, respectively. The Company expects to record additional stock compensation expense of approximately $35 over the estimated weighted average remaining vesting period of two years.

The Company calculates expected volatility for a stock-based grant based on historic daily stock price observations of

its common stock during the period immediately preceding the grant that is equal in length to the expected term of the grant. The expected term of the options is estimated based on the Company’s historical exercise rate and forfeiture rates are estimated based on employment termination experience. The risk free interest rate is based on U.S. Treasury yields for securities in effect at the time of grants with terms approximating the term of the grants. The assumptions used in the Black-Scholes option valuation model are highly subjective, and can materially affect the resulting valuations.

The following options and potentially dilutive shares for convertible notes payable

(see Note 6. Senior Credit Facility, Subordinated Convertible Note Payable, net - CD Financial, LLC and other Long Term Debt) were not included in the computation of weighted average diluted common shares outstanding as the effect of doing so would be anti-dilutive for fiscal years ended June 30, 2016 and 2015:

	Fiscal Year Ended
	June 30,
	2016	2015
Anti-dilutive stock options	694,950	2,139,550
Anti-dilutive shares for
convertible notes payable	8,230,769	-
Total anti-dilutive shares	8,925,719	2,139,550

The intrinsic value of options outstanding and exercisable at

June 30, 2016 and 2015 was $31 and $0, respectively.

A summary of the Company

’s stock option activity, and related information for the years ended June 30, follows:

		Weighted
		Average
		Exercise
	Options	Price
Outstanding as of July 1, 2014	1,724,520	$ 4.07
Granted	2,248,000	0.09
Exercised	-	-
Terminated	(18,000)	1.11
Expired	(881,570)	6.36
Outstanding as of June 30, 2015	3,072,950	0.52
Granted	-	-
Exercised	-	-
Terminated	(80,000)	0.17
Expired	(122,000)	3.63
Outstanding as of June 30, 2016	2,870,950	$ 0.40
Exercisable at June 30, 2015	2,164,550	$ 0.70
Exercisable at June 30, 2016	2,383,617	$ 0.46

The following table summarizes the range of exercise prices and weighted-average exercise prices for stock options outstanding and exercisable as of

June 30, 2016 under the Company’s stock option plans:

					Weighted
					Average
				Weighted	Remaining		Weighted
Range of				Average	Contractual		Average
Exercise Price			Outstanding	Exercise Price	Life (years)	Exercisable	Exercise Price
$ 0.09	-	$ 0.10	2,176,000	$ 0.09	8.8	1,688,667	$ 0.09
$ 0.14	-	$ 0.15	469,750	0.14	2.5	469,750	0.14
$ 3.05	-	$ 3.05	169,600	3.05	1.4	169,600	3.05
$ 3.36	-	$ 3.36	4,500	3.36	1.4	4,500	3.36
$ 6.80	-	$ 6.80	49,600	6.80	0.5	49,600	6.80
$ 7.48	-	$ 7.48	1,500	7.48	0.5	1,500	7.48
$ 0.09	-	$7.48	2,870,950	$ 0.40	4.3	2,383,617	$ 0.46