Quarterly report pursuant to Section 13 or 15(d)

Note 8 - Warrant Derivative Liability

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Note 8 - Warrant Derivative Liability
 9 Months Ended
Mar. 31, 2017
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]
NOTE
8
– WARRANT DERIVATIVE LIABILITY
 
The
2012
Warrants discussed in Note
7
include an exercise price re-set provision should future equity offerings be offered at a price lower than the warrant exercise price (the "Re-set Provision").
  In accordance with ASC No.
815,
the Re-set Provision has been recorded as a derivative liability in the accompanying condensed consolidated financial statements.
 
Warrants classified as derivative liabilities are recorded at their fair values at the issuance date and are revalued at each subsequent reporting date.
On
August
23,
2016,
we proposed to our
2012
Warrant Holders that the Re-set Provision included in the
2012
Warrants be eliminated.  Upon receiving consents to eliminate the Re-set Provision from a majority of the
2012
Warrant Holders, the Re-set Provision and the related derivative liability were eliminated as of
January
23,
2017.
  Prior to elimination, the derivative liabilities had an average fair value per warrant and aggregate value as of
January
23,
2017
of
$0.001
and
$1,000,
respectively and an average fair value per warrant and aggregate value as of
June
30,
2016
of
$0.01
and
$24,000,
respectively. 
 
Significant assumptions used to estimate the fair value of the warrants classified as derivative liabilities are summarized below:
 
 
 
 
 
As of
January 23, 2017
 
 
 
As of
June 30, 2016
  
Risk-free interest rate
 
 
 
0.47%
 
 
 
0.44%
–
0.49%
  
Expected life (average) (years)
 
 
0
.43
–
0.
76
 
 
0.96
–
1.33
  
Stock price (based on prices on valuation date)
 
 
 
$0.
04
 
 
 
 
$0.05
 
  
Exercise price
 
 
 
$0.14
 
 
 
 
$0.15
 
  
Expected volatility
 
 
 
110%
 
 
 
 
110%
 
  
 
The change in the estimated fair value of warrants classified as derivative liabilities during the
three
and
nine
months ended
March
31,
2017
was
$1,000
and
$14,000,
respectively, and is included as a component of other income (expense) in the accompanying condensed consolidated statements of operations.