10. Stock Options and Warrants

9 Months Ended

Mar. 31, 2016

9. Stock Options and Warrants

Options

On February 7, 2014, the Company’s Board of Directors voted to terminate the 2007 Stock Option Plan and adopted the 2014 Equity Incentive Plan (the “2014 Plan”), which provides for the issuance of incentive awards of up to 6,150,564 shares of the Company’s Common Stock to officers, key employees, consultants and directors. The options’ exercise price will be no less than the closing price of the Company’s shares on the day of issuance. When incentive stock options are granted to an employee who, at the time the incentive stock option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company, the per share exercise price will be no less than 110% of the closing price of the Company’s shares on the day of issuance.

On February 7, 2014, the Company granted an aggregate of 4,690,339 common stock options to certain officers and advisors of the Company. The stock options were granted upon the effectuation of the Reverse Split on September 8, 2014. The options are exercisable at $0.50 per share and expire on February 7, 2024. 3,690,339 of the option vest in twelve quarterly installments beginning February 7, 2014 and 1,000,000 of the options vest in twelve monthly installments beginning February 7, 2014. The total fair value of the award was estimated to be $9,380,675.

On October 21, 2014, the Company granted an aggregate of 450,000 common stock options to certain officers and advisors of the Company. The options are exercisable at $0.50 per share and expire on October 21, 2024. The options vest in four annual installments beginning October 21, 2014.

The estimated fair value of each option award granted was determined on the date of effectiveness of the grant using the Black-Scholes option valuation model. The following weighted-average assumptions were used for the options granted during the year ended Jun 30, 2015:

		2015
Risk free interest rate		1.44% - 2.48%
Expected stock price volatility		312.48% - 321.74%
Dividend yield		0.00%
Expected term (years)		2.5 - 5.9 years

Due to timing of the vesting, option amortization expense in the amount of $1,502,823 for options issued in the prior year was recognized for the nine months ended March 31, 2016. A summary of the status of the Company’s stock option plan as of March 31, 2016 and changes during the three months ended March 31, 2016 is as follows:

	Number of Shares	Weighted Average Exercise Price	Weighted Average Remaining Term (Years)	Total Intrinsic Value
Outstanding as of June 30, 2015	5,140,339	$ 0.500
Granted	-	-
Forfeited	-	-
Outstanding as of March 31, 2016	5,140,339	$ 0.500	7.922	$ -
Options vested and exercisable	3,685,229	$ 0.500	7.908	$ -

LocatorX Options

From January through March 31, 2016, LocatorX granted an aggregate of 3,442,500 common stock options to certain consultants of the Company. The options are exercisable at $0.10 to $0.20 per share and expire on December 31, 2020. The options vest in twelve quarterly installments.

Options totaling 667,500 shares were forfeited when consultant that had vesting options did not have their contracts renewed.

The estimated fair value of each option award granted was determined on the date of effectiveness of the grant using the Black-Scholes option valuation model. The fair value of the options is $283,109. The following weighted-average assumptions were used for the options granted during the year ended March 31, 2016:

	2015-2016
Risk-free interest rate	0.86% - 1.07%
Expected volatility	73.58% - 93.57%
Dividend yield	0.00%
Expected option term	1.6 – 4.4 years

Options amortization expense of the LocatorX stock options was $53,238 for the nine months ended March 31, 2016. A summary of the status of LocatorX’s stock options as of March 31, 2016 is as follows:

	Options	Weighted Average Exercise Price	Weighted Average Remaining Term (Years)	Aggregate Intrinsic Value

Outstanding at June 30, 2015	300,000	$ 0.100	5.512
Forefeited	667,500	$ 0.17
Granted	3,790,000	0.190
Outstanding at March 31, 2016	3,422,500	0.186	2.807	$ -
Exercisable at March 31, 2015	269,167	$ 0.171	3.330	$ -

MV Portfolios Warrants

The estimated fair value of the warrants issued was determined on the date of effectiveness of the grant using the Black-Scholes option valuation model. Warrants expense was $152,167 for the nine months ended March 31, 2016. The following table presents the warrant activity during the nine month period ended March 31, 2016 presented on a post 1 for 100 Reverse Split basis:

	Number of Shares	Weighted Average Exercise Price	Weighted Average Remaining Term (Years)	Total Intrinsic Value
Outstanding as of June 30, 2015	2,965,343	$ 1.118	1.919	$ -
Reset adjustments	-	-
Granted	10,000,000	0.060
Forfeited	(1,173,666)	1.352
Outstanding as of March 31, 2016	11,791,677	$ 0.198	1.635	$ -
Warrants vested and exercisable	11,791,677	$ 0.198	1.635	$ -

The estimated fair value of $152,167 for the warrants was determined on the date of effectiveness of the grant using the Black-Scholes option valuation model. All warrant expenses were expensed immediately for the nine months ended March 31, 2016. The following weighted-average assumptions were used for the warrants for the nine months ended March 31, 2016:

	2015-2016
Risk-free interest rate	0.99%
Expected volatility	186% - 207%
Dividend yield	0.00%
Expected option term	1 years

MV Portfolios, Inc. 10-Q