Stock warrants

3 Months Ended

Sep. 30, 2014

Notes to Financial Statements

Stock warrants

7. Stock warrants

In connection with the issuance of the promissory notes, the investors in the aggregate received two-year warrants to purchase up to a total of 78,750 shares of common stock at $0.50 per share, and two-year warrants purchasing up to a total of 131,250 shares of common stock at $0.01 per share. For purposes of accounting for the detachable warrants issued in connection with the convertible notes, the fair value of the warrants was estimated using the Black-Scholes-Merton option pricing formula. The value of all warrants granted at the date of issuance totaled $508,413 and was recorded as a discount to the notes payable. The amount will be amortized over the nine month term of the respective convertible note as additional interest expense.

On various dates during June 2014 and September 2014 the Company and holders of certain convertible notes agreed to cancel warrants to purchase common shares in the company and to extend the due dates on the Notes to July 1, 2016. $0.50 warrants and “Bonus Warrants” priced at $0.01, as defined in the original Convertible Note Purchase Agreements we cancelled pertaining to the Note and warrants acquired on the following dates for the following Convertible Notes and amounts. In total, 13,750 warrants at $0.50 and 25,000 “Bonus Warrants at $0.01 were cancelled.

	Number of  Shares		Weighted Average  Exercise Price
Outstanding at June 30, 2014	$	180,000	$	0.20
Granted		-		-
Exercised		-		-
Forfeited		38,750		0.09
Outstanding at September 30, 2014	$	141,250	$	-

Following is a summary of the status of warrants outstanding at September 30, 2014:

Date Issued	Exercise Price	Number of Shares	Expiration Date
8/17/12	$               0.01	6,250	7/1/2016
8/20/12	$               0.01	6,250	7/1/2016
9/10/12	$               0.01	10,000	7/1/2016
9/13/12	$               0.01	12,500	7/1/2016
9/18/12	$               0.01	6,250	7/1/2016
10/5/12	$               0.01	2,500	7/1/2016
10/25/12	$               0.01	6,250	7/1/2016
10/31/12	$               0.01	6,250	10/31/2014
1/31/13	$               0.01	6,250	7/1/2016
10/22/12	$               0.01	25,000	7/1/2016
10/31/12	$               0.50	3,750	10/31/2014
8/24/12	$               0.50	50,000	8/24/2016
Total warrants as of September 30, 2014
		141,250