Equity

Preferred Stock

As of

September 30, 2018,

there were

25,000

shares of Series E Convertible Preferred Stock outstanding. The shares of Series E Preferred Stock are initially convertible into an aggregate of

187,500

shares of common stock at the initial conversion rate of

$4.00

per share. The conversion price of the Series E Preferred Stock will be subject to adjustment solely in the event of stock dividends, combinations, splits, recapitalizations, and similar corporate events and does

not

provide for general price-based anti-dilution adjustments. Each share of Series E Preferred Stock has a stated value of

$30.00

per share and has the following rights and preferences: (i) each holder of the Series E Preferred Stock has the right, at any time, to convert the shares of Series E Preferred Stock into shares of common stock, (ii) the Series E Preferred Stock is redeemable at the Company's option commencing

one

year after the original issuance date, provided that the Company's common stock is listed on a national securities exchange at such time, and (iii) the Series E Preferred Stock will pay dividends at the rate of

per annum in cash. The shares of Series E Preferred Stock were issued in a transaction with the holder of the Company's previously outstanding shares of Series B Preferred Stock to exchange the shares of Series B Preferred Stock for the shares of Series E Preferred Stock. Pursuant to the exchange agreement for the preferred stock, the holder of the shares of Series B Preferred Stock agreed to waive all unpaid dividends that had accrued on the shares of Series B Preferred Stock. At

September 30, 2018

the Company has accrued dividends of approximately

$9,349

on the Series E Preferred Stock which remain unpaid.

As of

September 30, 2018,

there are

605,000

shares of Series D Convertible Preferred Stock outstanding. The Series D Preferred Stock can be converted by the holders into an aggregate of

619,154

shares of common stock at an initial conversion rate of

$9.77139

per share. The holders of such shares have the right to convert the preferred shares at any time, although the shares received upon conversion

may

not

be offered or sold except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. The Company has the right to repurchase the outstanding Series D Preferred Stock at a redemption price equal to

$10.00

per share, plus accrued and unpaid dividends, and to require holders to convert their Series D Preferred Stock beginning in

June 2016.

Dividends on the Series D Preferred Stock accrue at a rate of

per annum and are payable semi-annually in cash or stock at the Company's option. At

September 30, 2018,

the Company has accrued dividends in the amount of approximately

$76,366

on the Series D Preferred Stock, which remain unpaid.

The Company's preferred stock takes precedence over Common Stock but ranks below debt in the event of liquidation. In addition, the Series D Convertible Preferred Stock ranks above the Series E Convertible Preferred Stock.

Earnings per Share

FASB ASC Topic

260,

Earnings per Share

, requires the presentation of basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted-average number of ordinary shares outstanding during the period, while diluted earnings per share is calculated to include any dilutive effects to ordinary shares. For the

three

months ended

September 30, 2018,

our ordinary share equivalents consisted of stock options, restricted stock units, convertible debt, preferred stock and warrants.

	Three Months Ended
	September 30,

	2018			2017
Basic earnings (loss) per share
Net loss	$	(223,372)		$	(1,126,523	)
Preferred stock dividends		(85,715	)		(84,550	)
Net loss available to common shareholders after preferred stock dividends	$	(309,087)		$	(1,211,073	)
Weighted average shares used in the computation of basic earnings per share		7,365,723			7,249,370

Loss per share - basic	$	(0.04)		$	(0.17	)



Dilutive earnings (loss) per share
Loss available to common shareholders	$	(309,087)		$	(1,211,073	)
Weighed average shares used in the computation of diluted loss per share		7,365,723			7,249,370
Shares used in the computation of diluted loss per share		7,365,723			7,249,370

Loss per share - diluted	$	(0.04)			(0.17	)

Common Stock Warrants

A schedule of common stock warrant activity for the

three

months ended

September 30, 2018

is as follows:

Warrant Activity	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value

Outstanding June 30, 2018		3,458,826		$	3.65		3.41	$	-
Issued		-
Expired		(61,112	)	$	11.69		-	$	-
Outstanding September 30, 2018		3,397,714		$	3.25		3.30	$	-
Exercisable, September 30, 2018		3,397,714		$	3.25		3.47	$	-

Due to the adjustment of the conversion price of the New Senior Notes, the exercise price of outstanding warrants to purchase an aggregate of

825,144

shares of common stock has been adjusted from

$2.07

$1.22

per share.