Quarterly report pursuant to Section 13 or 15(d)

Equity

v3.7.0.1
Equity
9 Months Ended
Mar. 31, 2017
Equity [Abstract]  
EQUITY

NOTE 12

  EQUITY

 

Preferred Stock

 

The Company is authorized to issue 4,000,000 shares of Preferred Stock with a par value of $0.001 per share as of December 31, 2016. Preferred shares issued and outstanding at March 31, 2017 and June 30, 2016 were Nil and 1,000 shares.

 

On December 30, 2015, the Company filed an amendment to the Company's Articles of Incorporation, as amended, in the form of a Certificate of Designation that authorized for issuance of up to 1,000 shares of Series A preferred stock, par value $0.001 per share, of the Company designated “Super Voting Preferred Stock” and established the rights, preferences and limitations thereof. The pertinent rights and privileges of each share of the Super Voting Preferred Stock are as follows: 

 

(i) each share shall not be entitled to receive any dividends nor any liquidation preference;

 

(ii) each share shall not be convertible into shares of the Company’s common stock; 

 

(iii) shall be automatically redeemed by the Company at $0.10 per share on the first to occur of the following triggering events: (a) 90 days following the date on which this Certificate of Designation is filed with the Secretary of State of Nevada or (b) on the date that Mr. Thornton ceases, for any reason, to serve as officer, director or consultant of the Company; and 

 

(iv) long as any shares of the Series A Preferred Stock remain issued and outstanding, the holders thereof, voting separately as a class, shall have the right to vote in an amount equal to 51% of the total vote (representing a majority voting power) effecting an increase in the authorized common stock of the Company. Such vote shall be determined by the holder(s) of the then issued and outstanding shares of Series A Preferred Stock. For example, if there are 10,000 shares of the Company’s common stock issued and outstanding at the time of a shareholder vote, the holders of the Series A Preferred Stock, will have the right to vote an aggregate of 10,408 shares, out of a total number of 20,408 shares voting. The amount of voting rights is determined based on the common shares outstanding and at the record date for the determination of shareholders entitled to vote at each meeting of shareholders of the Company or action by written consent in lieu of meetings with respect to effecting an increase in the authorized shares as presented to the shareholders of the Company. Each holder of Super Voting Preferred Stock shall vote together with the holders of Common Stock, as a single class, except (i) as provided by Nevada Statutes and (ii) with regard to the amendment, alteration or repeal of the preferences, rights, powers or other terms with the written consent of the majority of holders of Super Voting Preferred Stock. 

 

On December 31, 2015, the Company issued 1,000 shares of Super Voting Preferred Stock for $0.10 per share to Curt Thornton, President and Chief Executive Officer, and a director of the Company, as described in Note 13 Related Party Transactions.

 

The Preferred Stock – Series A has a mandatory redemption provision of $0.10 per share, accordingly it is classified as a liability in the balance sheet.

 

During the period ended March 31, 2017, the Company repurchase the said 1,000 Preferred Stock at par value of $100. Preferred shares issued and outstanding at December 31, 2016 were Nil.

 

Common Stock

 

On December 31, 2015, the Company amended its Articles of Incorporation by filing a Certificate of Amendment with the Secretary of State of Nevada to effect an increase in the number of the Company’s authorized common shares from 100,000,000 to 200,000,000. The increase in the authorized number of shares of common stock was approved by the Board of Director of the Company on December 30, 2015 and holders of more than 50% of the voting power of the Company’s capital stock on December 31, 2015.

 

On June 30, 2016, the Company amended its Articles of Incorporation by filing a Certificate of Amendment with the Secretary of State of Nevada to effect an increase in the number of the Company’s authorized common shares from 200,000,000 to 300,000,000. The increase in the authorized number of shares of common stock was approved by the Board of Director of the Company on June 30, 2016 and holders of more than 50% of the voting power of the Company’s capital stock. The Company’s ticker symbol and CUSIP remain unchanged. 

 

As of March 31, 2017 and June 30, 2016, there were 122,798,480 and 89,242,624 shares of common stock issued and outstanding, respectively.

 

During the nine months ended March 31, 2017, the Company issued 4,538,966 shares of common stock in exchange for consulting services valued at $691,577, out of which $254,166 relates to prior period services.

 

During the nine months ended March 31, 2017 the Company issued 15,124,939 shares of its common stock in conversion of $1,555,581 debt and accrued interest.

 

During January 2017 the Company settled a prior debt. According to the settlement agreement, the Company is required to issue 400,000 shares of common stock to the recipient. The shares were valued at $48,000 and the Company has recorded the same as expense in the statement of operations for the nine months ended March 31, 2017. 

 

On March 31, 2017, the Company accepted and entered into Subscription Agreements (the “Subscription Agreements”) for 13,333,339 shares of Company’s common stock with 15 accredited investors (the “Investors”) for an aggregate purchase price of $800,000 at a price of $0.06 per share. Each Investor received warrants to purchase shares of Common Stock equal to 20% of the shares each purchased (the “Warrants”). The Warrants have an exercise price of $0.09 per share and are exercisable for three-years from the date of issuance of the Warrant.  The Warrants are valued at $154,933. Net cash received after fees of $20,000, the warrant valuation of $154,933 and a subscription receivable of $50,000 was $575,067.

 

Warrants

 

Warrant activity during the nine months ended March 31, 2017, is as follows:

 

    Warrants     Weighted-
Average 
Exercise Price
    Aggregate
Intrinsic Value
 
Outstanding and exercisable at June 30, 2016     26,396,958     $ 0.14     $ 3,695,574  
Granted     3,041,667       0.04          
Exercised  (1)     (375,000 )     0.07          
Expired     (1,050,000 )     0.05          
Outstanding and exercisable at March 31, 2017     28,013,625     $ 0.14     $ 3,883,963  

 

(1) Consists of cashless exercise of 375,000 warrants in exchange for 158,612 shares of Common Stock.

 

During the nine months ended March 31, 2017, the Company issued 375,000 warrants and recorded $30,626 of stock compensation expense.

 

The fair value of the described above warrants was determined using the Black-Scholes Model with the following assumptions:

(1) risk free interest rate of 0.44%;

(2) dividend yield of 0%;

(3) volatility factor of 151%;

(4) an expected life of the conversion feature of 3 months, and

(5) estimated fair value of the company’s common stock of $0.12 per share.

 

Stock Option Plan

 

Stock option activity during the nine months ended March 31, 2017 is as follows:

 

    Stock Options     Weighted-
Average 
Exercise Price
    Aggregate
Intrinsic
Value
 
Outstanding at June 30, 2016     -     $ -     $ -  
Granted     50,000       0.23       11,500  
Exercised                        
Expired                        
Outstanding March 31, 2017     50,000     $ 0.23     $ 11,500  
Exercisable at March 31, 2017     34,000     $ 0.23     $ 5,060  
 Un-exercisable at March 31, 2017     16,000     $ 0.23     $ 6,440  

 

The Company has one stock option plan:  The Provision Interactive Technologies, Inc. 2002 Stock Option and Incentive Plan, (the “Plan”).  As of March 31, 2017, there were 3,324,149 shares available for issuance under the Plan.  The Plan is administered by the Company’s Board of Directors, (the “Board”).

 

As of March 31, 2017, the Plan provides for the granting of non-qualified and incentive stock options to purchase up to 5,000,000 shares of common stock.  Options vest at rates set by the Board, not to exceed five years and are exercisable up to ten years from the date of issuance.   The option exercise price is set by the Board at time of grant.  Options and restricted stock awards may be granted to employees, officers, directors and consultants.

 

During the nine months ended March 31, 2017 and 2016, the Company issued 50,000 and -0- options and recorded $4,496 and $-0- of stock compensation expense, respectively.

 

The fair value of options exercised in the nine months ended March 31, 2017 and 2016 was approximately $-0- and $-0-, respectively.

 

As of March 31, 2017, there was $2,120 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under existing stock option plans.

 

Restricted Stock

 

On June 1, 2016, the Company issued 1,500,000 restricted shares per rule 144 of its Common Stock, vesting in equal amounts over six (6) months to its consultant as partial compensation for services.

 

The fair value of the restricted stock granted during the nine month period ended March 31, 2017 was stated at market price on the date of vested.

During the nine month period ended March 31, 2017 and 2016, the Company recorded expenses of $255,000 and $45,000, respectively, related to restricted stock vested to non-employees.