STOCKHOLDERS' EQUITY

6 Months Ended

Dec. 31, 2021

Equity [Abstract]

STOCKHOLDERS' EQUITY

7.       STOCKHOLDERS' EQUITY:

Series B Preferred stock:

Since July 1, 2014, the Company had 200 shares of Series B redeemable convertible Preferred stock outstanding with a par value of $0.01 per share, convertible at the option of the holder at $2.00 per share, with dividends accrued and payable at 2.5% per quarter. The Series B Preferred stock is mandatorily redeemable at $100 per share by the Company three years after issuance and accordingly was classified as a liability. The 200 shares have reached their maturity date and the Company approved the redemption of the Series B preferred stock during the quarter ended December 31, 2021. 200 shares of Series B redeemable convertible Preferred stock were redeemed for $41,000, which included the $21,000 in accrued dividend payable.

During the years ended June 30, 2021, and 2020, the Company declared dividends of $2,000 and $2,000 respectively. The dividends are classified as a component of operations as the Series B Preferred stock is presented as a liability in these financial statement.

Common stock:

Holders of common stock are entitled to one vote per share on all matters to be voted on by common stockholders. In the event of liquidation, dissolution or winding up of the Company, the holders of common stock are entitled to share in all assets remaining after liabilities have been paid in full or set aside and the rights of any outstanding preferred stock have been satisfied. Common stock has no preemptive, redemption or conversion rights. The rights of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of any outstanding series of preferred stock or any series of preferred stock the Company may designate in the future.

Centerpoint holds 704,309 shares of the Company’s common stock. These shares of the Company’s common stock held by Centerpoint are for the benefit of its shareholders without any beneficial interest.

During the six months ended December 31, 2021, Smith elected to convert accounts payable (based on his unreimbursed expenses) of $17,711 into 35,424 units at $0.50 per unit, with each unit consisting of one share of the Company’s restricted common stock and one warrant to purchase one share of the Company’s restricted common stock for $0.75 per share until December 31, 2024.

During the six months ended December 31, 2021, 2,315,550 warrants were exercised to purchase 2,315,550 shares of the Company’s common stock at $0.75 per share for total proceeds of $1,736,662.

During the six months ended December 31, 2021, the Company issued 66,860 shares of the Company’s common stock to three FINRA brokers as commissions for the warrant exercises. As the issuance was both a reduction and addition to additional paid in capital there was no impact to the financial statements. The Company also paid a FINRA broker $18,601 in commissions for the warrant exercises.

 Warrants:

As of December 31, 2021, the Company had approximately 19.7 million warrants outstanding, with exercise prices from $0.60 to $1.50 and expiring on various dates through June 30, 2025.

The weighted-average exercise price for the outstanding warrants is $0.73, and the weighted-average remaining contractual life as of December 31, 2021 is 2.7 years.

During the six months ended December 31, 2021, Smith elected to convert accounts payable of $17,711 into 35,424 units at $0.50 per unit, with each unit consisting of one share of the Company’s restricted common stock and one warrant to purchase one share of the Company’s restricted common stock for $0.75 per share until December 31, 2024.

During the six months ended December 31, 2021, the Company approved the issuance of 75,000 warrants for two consultants for consulting services of $7,500. The warrants are exercisable at $1.50 and expire in November 2026.

During the six months ended December 31, 2020, the Company approved the modification of existing warrants held by one former consultants and four investors, which extended certain expiration dates. The modifications resulted in incremental non-cash compensation of $5,625 and interest expenses of $2,712.

During the six months ended December 31, 2021, 2,315,550 warrants were exercised to purchase 2,315,550 shares of the Company’s common stock at $0.75 per share for total proceeds of $1,736,662.

During the 2021 calendar year, 6,431,538 warrants scheduled to expire on December 31, 2021, in aggregate, were exercised by their holders at an exercise price of $.75 per share of which 2,176,216 warrants were exercised during the quarter ended December 31, 2021. The Company issued, in aggregate, 6,431,538 share of its restricted and legended common stock in connection with these warrant exercises, of which 2,226,216 shares were issued during the quarter ended December 31, 2021. The Company received, in aggregate, $4,823,651 of gross processed from such warrant exercises, of which $1,632,162 was received in the quarter ended December 31, 2021 (these sums do not reflect expenses and commissions related to these warrant exercises). In aggregate, 648,142 warrants expired unexercised on December 31. 2021.

During the six months ended December 31, 2021, the Company issued 66,860 shares of the Company’s common stock to three FINRA brokers as commissions for the warrant exercises. As the issuance was both a reduction and addition to additional paid in capital there was no impact to the financial statements. The Company also paid a FINRA broker $18,601 in commissions for the warrant exercises.

Stock options:

The Company’s 2006 Consolidated Incentive Plan, as amended during the year ended June 30, 2021 (the “2006 Plan”), provides for the issuance of options (and/or other securities) to purchase up to 36,000,000 shares of the Company’s common stock. Terms of exercise and expiration of options/securities granted under the 2006 Plan may be established at the discretion of the Board of Directors, but no option may be exercisable for more than ten years.

The Company recorded compensation expense related to employee stock options of nil for both the three and six months ended December 31, 2021 and 2020, respectively. The Company granted nil options during both the three and six months ended December 31, 2021 and 2020, respectively.

A summary of option activity under the 2006 Plan for the six months ended December 31, 2021 is as follows:

	Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at July 1, 2021		10,471,600	$	0.77		3.7	$	6,064,335
Granted		—		—
Exercised		—		—
Forfeited		—		—
Expired		—		—
Outstanding at December 31, 2021		10,471,600	$	0.77		3.2	$	9,624,679
Exercisable at December 31, 2021		10,471,600	$	0.77		3.2	$	9,624,679

The following table presents information relating to nonvested stock options as of December 31, 2021:

	Options		Weighted Average Grant-Date Fair Value
Nonvested at July 1, 2021		—	$	—
Granted		—		—
Vested		—		—
Nonvested at December 31, 2021		—	$	—

The total fair value of stock options that vested during both the three and six months ended December 31, 2021 and 2020 was nil. As of December 31, 2021, the Company had no unrecognized compensation cost related to stock options.

Stock-based employee compensation charges in operating expenses in the Company’s financial statements for the three and six months ended December 31, 2021 and 2020 are as follows:

	Three months ended December 31, 2021		Three months ended December 31, 2020		Six months ended December 31, 2021		Six months ended December 31, 2020
General and administrative:
Change in fair value from modification of     option terms	$	—	$	8,775	$	—	$	8,775
Change in fair value from modification of     warrant terms		5,625		25,506		5,625		25,506
Fair value of stock options expensed		—		—		—		—
Total	$	5,625	$	34,281	$	5,625	$	34,281
Research and development:
Fair value of stock options expensed	$	—	$	—	$	—	$	—
Total	$	—	$	—	$	—	$	—