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EQUITY
 12 Months Ended
Jun. 30, 2026
Equity [Abstract]  
EQUITY

NOTE 11. EQUITY

 

Common Stock Issued

 

Securities Purchase Agreements (“SPA”)

 

SPA 2026

 

In May 2026, the Company completed a SPA with certain existing institutional and individual investors selling 77,788 shares of common stock at $4.40 per share and prefunded warrants to purchase up to 341,530 shares of common stock at $4.39 per warrant (which is convertible to one share of common stock on a one for one basis).

 

Included with this SPA, the Company issued common stock warrants to purchase up to 524,148 shares of common stock at $4.39 per warrant, convertible to common stock on a one for one basis. The relative fair value of the warrants issued in connection with this SPA is $1,609,692, which is included in additional paid-in capital.

 

The Company realized total net proceeds (after professional fees) of $1.77 million from the May 2026 SPA.

 

Also see Notes 14 and 16.

 

SPA 2024

 

In December 2024, the Company completed a SPA with an institutional investor selling 248,750 shares of common stock at $21.20 per share and prefunded warrants to purchase up to 95,000 shares of common stock at $21.19 per warrant (which is convertible to one share of common stock on a one for one basis). The prefunded warrants had an exercise price of $0.001 per share of common stock, and were exercised in full in January 2025 for a de minimis amount (95,000 shares at $0.001 per share).

 

The Company realized total net proceeds (after underwriting and professional fees) of $6.79 million from the December 2024 SPA.

 

Exercise of Warrants

 

In December 2024, an institutional investor exercised warrants (issued in connection with the November 2021 SPA) convertible into 12,500 shares of common stock. The Company realized proceeds of $0.18 million ($14.00 per share).

 

In January 2025, an institutional investor exercised warrants (issued in connection with a December 2024 SPA) convertible into 95,000 shares of common stock. The Company realized de minimis proceeds (95,000 shares at $0.001 per share).

 

Common stock issued to Employees as Compensation

 

During the year ended June 30, 2026, the Company issued 2,625 unrestricted shares of common stock to an employee as compensation and recorded share-based compensation expense of approximately $0.03 million in loss on discontinued operations in the consolidated statement of operations.

 

During the year ended June 30, 2025, the Company issued 4,625 unrestricted shares of common stock to an employee as compensation and recorded share-based compensation expense of approximately $0.05 million in loss on discontinued operations in the consolidated statement of operations.

 

Common stock issued to Vendors

 

During the year ended June 30, 2025, the Company issued 312 unrestricted shares of common stock to a vendor for services performed and recorded share-based compensation expense of approximately $0.01 million in loss on discontinued operations in the consolidated statement of operations.

 

Common stock issued for Exercise of Stock Options

 

During the year ended June 30, 2025, the Company issued approximately 1,000 shares of common stock in cashless transactions upon exercise of the respective option grants and realized cash proceeds of zero.

 

 

Warrants

 

In connection with the November 2021 SPA and the May 2026 SPA, the Company issued warrants, which are exercisable into Company common shares on a one-for-one basis, as detailed below. The warrants are not publicly traded.

 

The remaining outstanding warrants as of June 30, 2026 are:

   

   Warrants Outstanding   Exercise Price   Expiration Date
            
November 2021 SPA   60,125   $4.40   November 2026
November 2021 SPA   21,125   $4.40   May 2027
May 2026 SPA   524,147   $4.40   November 2033
May 2026 SPA (Prefunded Warrants)   341,530   $4.40   No Expiry
Total   946,927         

 

Down-round adjustment

 

The warrants issued in the Company’s November 2021 SPA contain a provision that reduces the exercise price if the Company subsequently issues common stock, or securities exercisable or convertible into common stock, at an effective price per share below the then-current exercise price, subject to specified exceptions. In connection with the May 2026 SPA offering of common stock and pre-funded warrants at an effective price of $4.40 per share, this provision was triggered and the exercise price of the 81,250 such warrants then outstanding was reduced from $14.00 per share to $4.40 per share. The number of shares issuable upon exercise of those warrants was not changed.

 

In accordance with ASC 815-40-35-17, the Company measured the value of the effect of the down round feature as the difference between the fair value of the warrants immediately after the trigger using the pre-reduction exercise price of $14.00 and their fair value using the reduced exercise price of $4.40. For each tranche, both measurements were performed as of the same date using the same stock price, expected volatility, risk-free interest rate and remaining contractual term, so that the exercise price is the only assumption that differs between them, and neither measurement reflects the down-round feature. The Company determined that value to be $89,005 using a Black-Scholes option pricing model. Because the two tranches have different remaining contractual terms, the assumptions were determined separately for each tranche: expected volatility of 83.9% and 84.7%; risk-free interest rates of 3.8% and 3.8%; remaining contractual terms of 0.47 and 0.97 years; and an expected dividend yield of 0% for both tranches.

 

The $89,005 value of the effect of the down round feature was recognized as a deemed dividend and reduced income available to common stockholders in the computation of net loss per share for the year ended June 30, 2026. Because the Company has an accumulated deficit and the amount represents a return of contributed capital rather than a distribution of earnings, no amount was reclassified within stockholders’ equity and total stockholders’ equity was unchanged. The down round adjustment did not affect the equity classification of the warrants, and the warrants were not remeasured.

 

Stock-Based Compensation

 

Equity Incentive Plan

 

The Company’s 2016 Equity Incentive Plan (the “Plan”), as amended, has approximately 1.78 million common shares reserved for issuance. As of June 30, 2026, there were approximately 1.33 million shares available for issuance under the Plan.

 

 

The Company recognizes compensation expense relating to awards ratably over the requisite period, which is generally the vesting period.

 

Stock options have been recorded at their fair value. The Black-Scholes option-pricing model assumptions used to value the issuance of stock options under the Plan for the specific periods below are noted in the following table:

      

   2026   2025 
   For the Years Ended
June 30,		 
   2026   2025 
Weighted average expected terms (in years)   5.6    5.5 
Weighted average expected volatility   101.0%   125.6%
Weighted average risk-free interest rate   4.0%   4.3%
Expected dividend yield   0.0%   0.0%

 

The grant date fair value for options granted during the years ended June 30, 2026 and 2025 was approximately $0.48 million and $0.75 million, respectively.

 

The following is a summary of the Company’s stock option activity for the years ended June 30, 2026 and 2025:

       

       Weighted Average     
           Remaining     
       Exercise   Contractual   Intrinsic 
   Options   Price   Term (Yrs)   Value 
Outstanding at July 1, 2025   345,775   $26.96    5.6   $- 
Options Granted   70,026    10.48    7.3    130,053 
Options Exercised   -    -    0.0    - 
Options Forfeited / Cancelled   (91,590)   27.28    0.4    - 
Outstanding at June 30, 2026   324,211   $23.36    4.4   $130,053 
Exercisable at June 30, 2026   292,132   $24.32    3.9   $100,609 

 

       Weighted Average     
           Remaining     
       Exercise   Contractual   Intrinsic 
   Options   Price   Term (Yrs)   Value 
Outstanding at July 1, 2024   455,484   $31.60    6.5   $- 
Options Granted   68,225    19.04    9.4    16,300 
Options Exercised   (4,450)   20.00    1.8    - 
Options Forfeited / Cancelled   (173,484)   36.24    6.8    9,942 
Outstanding at June 30, 2025   345,775   $26.96    5.6   $- 
Exercisable at June 30, 2025   231,266   $28.64    4.6   $- 

 

The intrinsic value of stock options activity for the years ended June 30, 2026 and 2025 was computed using a fair market value (fiscal year to date VWAP – volume weighted average price) of the common stock of $8.80 per share and $18.48 per share, respectively.

 

The intrinsic value of stock options outstanding and exercisable as of June 30, 2026 and 2025 was computed using Nasdaq market closing prices of the common stock of $6.16 per share and $10.88 per share, respectively.

 

The preceding stock option activity tables exclude 0.25 million executive target options, whose vesting was considered remote (and therefore not expensed) from issuance in 2023 until these never-vested options were cancelled upon the executives’ resignations in May and June 2026.

 

 

The Company’s stock option-based expense for the years months ended June, 2026 and 2025 consisted of the following:

       

   2026   2025 
   For the Years Ended 
   June 30 
   2026   2025 
Stock option-based expense:          
Research and development expenses  $107,353   $107,563 
General and administrative expenses   324,572    254,011 
Sales and marketing expenses   18,326    31,100 
Board option expense   290,458    229,389 
Total  $740,709   $622,063 

 

As of June 30, 2026, total unrecognized compensation expense to employees, board members and vendors related to stock options was approximately $0.23 million and is expected to be recognized over a weighted average period of 1.56 years.