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--06-30
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2014
2014-03-31
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Smaller Reporting Company
IsoRay, Inc.
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<div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> This public offering resulted in gross proceeds of $3.7 million. The offering yielded approximately $3,279,292 in cash after expenses.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 85%; TEXT-ALIGN: justify">Gross proceeds from public offering</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">3,703,527</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Underwriting discount</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(185,176</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Legal and accounting expense</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(184,514</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Listing expense</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(48,500</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Other expense</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (6,045</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Net proceeds</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">3,279,292</td> <td style="TEXT-ALIGN: left"> </td> </tr> </table> <!--EndFragment--></div> </div><div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> On March 21, 2014, the Company entered into a Securities Purchase Agreement with certain investors providing for the sale of a total of 5,644,300 shares of common stock for an aggregate purchase price of $14,675,180 at a price per share of $2.60 (the "Registered Direct Offering"). The Company received net proceeds from the offering of approximately $13,818,927 from the Registered Direct Offering which will be used to meet the Company's working capital needs and general corporate purposes.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 85%; TEXT-ALIGN: justify">Gross proceeds from registered direct offering</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">14,675,180</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Placement agent fees</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(733,759</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Legal and accounting expense</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(72,494</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Listing expense</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(45,000</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Other expense</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (5,000</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Net proceeds</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">13,818,927</td> <td style="TEXT-ALIGN: left"> </td> </tr> </table> <!--EndFragment--></div> </div>
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<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <table style="MARGIN-BOTTOM: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0px" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top; TEXT-ALIGN: justify"> <td style="WIDTH: 0in"> </td> <td style="WIDTH: 0.5in; TEXT-ALIGN: left"><strong>6.</strong></td> <td style="TEXT-ALIGN: justify"><strong>Commitments and Contingencies</strong></td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <u>Patent and Know-How Royalty License Agreement</u></p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> The Company is the holder of an exclusive license to use certain "know-how" developed by one of the founders of a predecessor to the Company and licensed to the Company by the Lawrence Family Trust, a Company shareholder. The terms of this license agreement require the payment of a royalty based on the Net Factory Sales Price, as defined in the agreement, of licensed product sales. Because the licensor's patent application was ultimately abandoned, only a 1% "know-how" royalty based on Net Factory Sales Price, as defined in the agreement, remains applicable. To date, management believes that there have been no product sales incorporating the "know-how" and therefore no royalty is due pursuant to the terms of the agreement. Management believes that ultimately no royalties should be paid under this agreement as there is no intent to use this "know-how" in the future.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> The licensor of the "know-how" has disputed management's contention that it is not using this "know-how". On September 25, 2007 and again on October 31, 2007, the Company participated in nonbinding mediation regarding this matter; however, no settlement was reached with the Lawrence Family Trust. After additional settlement discussions, which ended in April 2008, the parties failed to reach a settlement. The parties may demand binding arbitration at any time.</p> <!--EndFragment--></div> </div>
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<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <table style="MARGIN-BOTTOM: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0px" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top; TEXT-ALIGN: justify"> <td style="WIDTH: 0in"> </td> <td style="WIDTH: 0.5in; TEXT-ALIGN: left"><strong>2.</strong></td> <td style="TEXT-ALIGN: justify"><strong>New Accounting Pronouncements</strong></td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <strong> </strong></p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the "FASB") or other standards setting bodies that are adopted by us as of the specified effective dates. Unless otherwise discussed, we believe the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial position, results of operations and cash flows upon adoption.</p> <!--EndFragment--></div> </div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <table style="MARGIN-BOTTOM: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0px" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top; TEXT-ALIGN: justify"> <td style="WIDTH: 0in"> </td> <td style="WIDTH: 0.5in; TEXT-ALIGN: left"><strong>5.</strong></td> <td style="TEXT-ALIGN: justify"><strong>Share-Based Compensation</strong></td> </tr> </table> <p style="FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> The following table presents the share-based compensation expense recognized during the three and nine months ended March 31, 2014 and 2013:</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 95%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif; MARGIN-LEFT: 0.2in" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: justify" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="6" nowrap="nowrap">Three months<br /> ended March 31,</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="6" nowrap="nowrap">Nine months<br /> ended March 31,</td> <td nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2">2014</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2">2013</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2">2014</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2">2013</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 40%; TEXT-ALIGN: justify">Cost of product sales</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">4,500</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">10,164</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">13,421</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">30,492</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Research and development expenses</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">3,482</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">7,607</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">10,447</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">25,042</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Sales and marketing expenses</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">879</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">1,386</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">2,636</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">4,568</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">General and administrative expenses</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 4,572</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 8,423</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 38,713</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 25,267</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: justify">Total share-based compensation</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 13,433</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 27,580</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 65,217</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 85,369</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> As of March 31, 2014, total unrecognized compensation expense related to stock-based options was $29,192 and the related weighted-average period over which it is expected to be recognized is approximately 0.87 years.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> The Company currently provides stock-based compensation under four equity incentive plans approved by the Board of Directors. Options granted under each of the plans have a ten year maximum term, an exercise price equal to at least the fair market value of the Company's common stock on the date of the grant, and varying vesting periods as determined by the Board. For stock options with graded vesting terms, the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> A summary of stock options within the Company's share-based compensation plans as of March 31, 2014 was as follows:</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 90%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif; MARGIN-LEFT: 0.5in" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Weighted</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Weighted</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Average</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Average</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Remaining</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Aggregate</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Number of</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Exercise</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Contractual</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Intrinsic</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Options</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Price</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Term</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Value</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 40%; PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: justify; PADDING-LEFT: 0.125in; TEXT-INDENT: -0.125in"> Outstanding at March 31, 2014</td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt"> </td> <td style="WIDTH: 1%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,324,072</td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt"> </td> <td style="WIDTH: 1%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="WIDTH: 12%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1.82</td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt"> </td> <td style="WIDTH: 1%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 4.3</td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt"> </td> <td style="WIDTH: 1%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="WIDTH: 12%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,050,334</td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left; PADDING-LEFT: 0.125in; TEXT-INDENT: -0.125in"> Vested and expected to vest at March 31, 2014</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,238,840</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1.86</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 4.23</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1,923,611</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: justify; PADDING-LEFT: 0.125in; TEXT-INDENT: -0.125in"> Vested and exercisable at March 31, 2014</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,040,732</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1.93</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 3.85</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1,714,527</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> There were 26,333 options exercised during the nine months ended March 31, 2014 and 31,700 options exercised during the nine months ended March 31, 2013. The Company's current policy is to issue new shares to satisfy option exercises. The intrinsic value of the employee options exercised during the nine months ended March 31, 2014 was $15,130 and the nine months ended March 31, 2013 was $13,866.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> There were 65,000 stock option awards granted and no stock option awards granted during the nine months ended March 31, 2014 and 2013, respectively.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Of the 65,000 options, 50,000 were director stock options issued to the Chief Executive Officer and Chairman on September 5, 2013 with an exercise price of $0.58 per share which was the closing price of the Company common stock on the day of issuance. The fair value of the stock options issued on September 5, 2013 using a Black Scholes model is $25,150 utilizing the closing price on the day of grant of $0.58 per share as the grant and exercise price, a five year term, volatility of 132.31% and a discount rate of 1.85%.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> The remaining 15,000 were employee stock options issued to three members of management on September 6, 2013 with an exercise price of $0.59 per share which was the closing price of the Company common stock on the day of issuance. The fair value of the stock options issued on September 6, 2013 using a Black Scholes model is $6,906 utilizing the closing price on the day of grant of $0.59 per share as the grant and exercise price, a five year term, volatility of 132.31% and a discount rate of 1.77%.</p> <!--EndFragment--></div> </div>
-0.05
-0.02
-0.13
-0.08
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <table style="MARGIN-BOTTOM: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0px" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top; TEXT-ALIGN: justify"> <td style="WIDTH: 0in"> </td> <td style="WIDTH: 0.5in; TEXT-ALIGN: left"><strong>3.</strong></td> <td style="TEXT-ALIGN: justify"><strong>Loss per Share</strong></td> </tr> </table> <p style="FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Basic earnings per share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding, and does not include the impact of any potentially dilutive common stock equivalents. Common stock equivalents, including warrants and options to purchase the Company's common stock, are excluded from the calculations when their effect is antidilutive. At March 31, 2014 and 2013, the calculation of diluted weighted average shares did not include preferred stock, common stock warrants, or options that are potentially convertible into common stock as those would be antidilutive due to the Company's net loss position.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Securities not considered in the calculation of diluted weighted average shares, but that could be dilutive in the future as of March 31, 2014 and 2013, were as follows:</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif; MARGIN-LEFT: 0.5in" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center"> </td> <td style="TEXT-ALIGN: center"> </td> <td style="TEXT-ALIGN: center" colspan="6" nowrap="nowrap">March 31,</td> <td style="TEXT-ALIGN: center"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">2014</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">2013</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 68%; TEXT-ALIGN: justify">Series B preferred stock</td> <td style="WIDTH: 2%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">59,065</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 2%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">59,065</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Common stock warrants</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">646,811</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">1,957,033</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Common stock options</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 2,324,072</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 2,312,072</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left">Total potential dilutive securities</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 3,029,948</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 4,328,170</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <!--EndFragment--></div> </div>
127419
87660
P10M13D
29192
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <table style="MARGIN-BOTTOM: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0px" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top; TEXT-ALIGN: justify"> <td style="WIDTH: 0in"> </td> <td style="WIDTH: 0.5in; TEXT-ALIGN: left"><strong>7.</strong></td> <td style="TEXT-ALIGN: justify"><strong>Fair Value Measurements</strong></td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> The table below sets forth the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2014 and June 30, 2013, respectively, and the fair value calculation input hierarchy level the Company has determined applies to each asset and liability category. </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: justify" nowrap="nowrap">Description</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Balance at<br /> March 31, 2014</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Balance at<br /> June 30, 2013</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" nowrap="nowrap">Input<br /> Hierarchy Level</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Assets:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: center"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="WIDTH: 25%; TEXT-ALIGN: justify; PADDING-LEFT: 9pt">Cash and cash equivalents</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 22%; TEXT-ALIGN: right">23,702,901</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 22%; TEXT-ALIGN: right">2,899,927</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 24%; TEXT-ALIGN: center">Level 1</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 9pt">Restricted cash</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">181,194</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">181,149</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: center">Level 1</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 9pt"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: center"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Liabilities:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: center"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 9pt">Warrant liability</td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">678,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">104,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: center">Level 2</td> </tr> </table> <!--EndFragment--></div> </div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Change in fair value of the derivative warrant liability for the three months ended March 31, 2014 and 2013, respectively.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 85%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Three months ended</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Three months ended</td> <td nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: justify" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">March 31, 2014</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">March 31, 2013</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 70%; TEXT-ALIGN: left">Change in fair value of the derivative warrant liability</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">1,095,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">(109,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left">)</td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Change in fair value of the derivative warrant liability for purchaser warrants and underwriter warrants contained in an equity transaction on October 19, 2011.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 85%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap">Three months ended<br /> March 31, 2014</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap">Three months ended<br /> March 31, 2013</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 40%; TEXT-ALIGN: justify">Balance, beginning of the period</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">650,003</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">20,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">650,003</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">218,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Change in fair value</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">650,003</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">1,004,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(99,000</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Warrants corrected</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">10,869</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Warrants exercised</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (258,943</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (423,000</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Balance, end of the period</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">401,929</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">601,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">650,003</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">119,000</td> <td style="TEXT-ALIGN: left"> </td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Change in fair value of the derivative warrant liability for purchaser warrants and underwriter warrants contained in an equity transaction on December 7, 2011.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 85%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap"><font style="FONT-SIZE: 10pt">Three months ended</font><br /> <font style="FONT-SIZE: 10pt">March 31, 2014</font></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap"><font style="FONT-SIZE: 10pt">Three months ended</font> <br /> <font style="FONT-SIZE: 10pt"> March 31, 2013</font></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 40%; TEXT-ALIGN: justify">Balance, beginning of the period</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">63,598</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">3,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">63,598</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">22,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Change in fair value</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">63,598</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">91,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">63,598</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(10,000</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Warrants corrected</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(400</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Warrants exercised</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (12,148</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (17,000</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Balance, end of the period</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">51,050</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">77,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">63,598</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">12,000</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left">Total fair value of warrant derivative liability at March 31, 2014 and 2013</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: right"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 678,000</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: right"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 131,000</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Change in fair value of the derivative warrant liability for the nine months ended March 31, 2014 and 2013, respectively.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 85%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> <p style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: center; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0pt"> Nine months ended<br /> March 31, 2014</p> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> <p style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: center; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0pt"> Nine months ended<br /> March 31, 2013</p> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 70%; TEXT-ALIGN: justify; PADDING-LEFT: 5.4pt"> Change in fair value</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">1,014,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">(183,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left">)</td> </tr> </table> <p style="FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Change in fair value of the derivative warrant liability for purchaser warrants and underwriter warrants contained in an equity transaction on October 19, 2011.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 85%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap"><font style="FONT-SIZE: 10pt">Nine months ended</font><br /> <font style="FONT-SIZE: 10pt">March 31, 2014</font></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap"><font style="FONT-SIZE: 10pt">Nine months ended</font><br /> <font style="FONT-SIZE: 10pt">March 31, 2013</font></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 40%; TEXT-ALIGN: justify">Balance, beginning of the period</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">650,003</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">94,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">650,003</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">286,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Change in fair value</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">650,003</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">914,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">650,003</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(167,000</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Warrants corrected</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">10,869</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">16,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Warrants exercised</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (258,943</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (423,000</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Balance, end of the period</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">401,929</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">601,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">650,003</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">119,000</td> <td style="TEXT-ALIGN: left"> </td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Change in fair value of the derivative warrant liability for purchaser warrants and underwriter warrants contained in an equity transaction on December 7, 2011.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 85%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap">Nine months ended<br /> March 31, 2014</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap">Nine months ended<br /> March 31, 2013</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 40%; TEXT-ALIGN: justify">Balance, beginning of the period</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">63,598</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">10,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">63,598</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">28,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Change in fair value</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">63,598</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">85,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">63,598</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(16,000</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Warrants corrected</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(400</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(1,000</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Warrants exercised</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (12,148</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (17,000</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Balance, end of the period</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">51,050</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">77,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">63,598</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">12,000</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: justify">Total fair value of warrant derivative liability at March 31, 2014 and 2013</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: right"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 678,000</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: right"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 131,000</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <sup>1</sup> Quantity of warrants either issued or outstanding as of the date of valuation.</p> <!--EndFragment--></div> </div>
640732
564075
1805732
1678487
50906
185904
-60308
6853
177195
-21525
-99675
-67195
-39759
-54654
-18551
-87368
49752
27500
30301
36000
10393
12961
-4516
-2204
2213
69427
45
104
827
6
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <table style="MARGIN-BOTTOM: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0px" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top; TEXT-ALIGN: justify"> <td style="WIDTH: 0in"> </td> <td style="WIDTH: 0.5in; TEXT-ALIGN: left"><strong>4.</strong></td> <td style="TEXT-ALIGN: justify"><strong>Inventory</strong></td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Inventory consisted of the following at March 31, 2014 and June 30, 2013:</p> <p style="FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif; MARGIN-LEFT: 0.5in" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: justify" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">March 31,</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">June 30,</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2">2014</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2">2013</td> <td style="PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 70%; TEXT-ALIGN: justify">Raw materials</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">165,657</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">167,671</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Work in process</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">181,457</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">195,323</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Finished goods</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 39,906</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 42,577</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: justify"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 387,020</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 405,571</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <!--EndFragment--></div> </div>
42577
39906
405571
387020
469758
469758
167671
165657
195323
181457
556
83
1391
355
1689110
2546101
7055356
27199964
792868
1020750
23063717
3294479
-21546
-13030
-2239197
-2269946
-2083439
-715037
-4281317
-2863032
-2086097
-717695
-5015669
-2871006
-1094444
109083
-1013436
183349
1039901
1010024
3207573
3053234
-988995
-824120
-3267881
-3046381
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <table style="MARGIN-BOTTOM: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0px" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top; TEXT-ALIGN: justify"> <td style="FONT-STYLE: normal; TEXT-ALIGN: left; WIDTH: 0.5in"> <strong>1.</strong></td> <td style="FONT-STYLE: normal; TEXT-ALIGN: justify"><strong>Basis of Presentation</strong></td> </tr> </table> <p style="FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> The accompanying consolidated financial statements are those of IsoRay, Inc., and its wholly-owned subsidiaries (IsoRay or the Company). All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts in the prior-year financial statements have been reclassified to conform to the current year presentation.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px; BACKGROUND-COLOR: white"> In the opinion of management, the accompanying unaudited interim consolidated financial statements and notes to the interim consolidated financial statements contain all adjustments, consisting of normal recurring items, necessary to present fairly, in all material respects, the financial position of IsoRay, Inc. and its wholly-owned subsidiaries. These unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and related footnotes as set forth in the Company's annual report filed on Form 10-K for the year ended June 30, 2013, as it may be amended from time to time.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px; BACKGROUND-COLOR: white"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px; BACKGROUND-COLOR: white"> The results of operations for the periods presented may not be indicative of those which may be expected for a full year. The unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States ("GAAP") have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures are adequate for the information not to be misleading.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px; BACKGROUND-COLOR: white"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px; BACKGROUND-COLOR: white"> The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the disclosures of contingent liabilities. Accordingly, ultimate results could differ materially from those estimates.</p> <!--EndFragment--></div> </div>
25305
75057
276507
258619
100000
130301
10632
10632
5168
12926
16333
2658
2658
7974
7974
0.001
0.001
0.001
0.001
0.001
0.001
0.001
0.001
0.001
0.001
726378
1000000
1000000
5000000
5000000
1000000
1000000
7001671
0
1671
0
0
59065
59065
0
0
0
0
0
0
59065
59065
0
0
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0
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <table style="MARGIN-BOTTOM: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0px" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top; TEXT-ALIGN: justify"> <td style="WIDTH: 0in"> </td> <td style="WIDTH: 0.5in; TEXT-ALIGN: left"><strong>8.</strong></td> <td style="TEXT-ALIGN: justify"><strong>Preferred Dividends</strong></td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> On December 19, 2013, the Board of Directors declared a dividend on the Series B Preferred Stock of all currently payable and accrued outstanding and cumulative dividends through December 31, 2013 in the amount of $10,632. Dividends on the Series B Preferred Stock were last paid on December 31, 2012 as declared by the Board of Directors on December 21, 2012 in the amount of $10,632. The dividends outstanding and cumulative through December 31, 2013 of $10,632 and through December 31, 2012 of $10,632 were paid as of those dates.</p> <!--EndFragment--></div> </div>
59
59
59
59
214382
212079
13818927
3291977
1478703
1800589
3279292
13818927
15129
11309
5961001
1825
1638000
4067091
35470
255910
1684282
1183067
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <table style="MARGIN-BOTTOM: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0px" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top; TEXT-ALIGN: justify"> <td style="WIDTH: 0in"> </td> <td style="WIDTH: 0.5in; TEXT-ALIGN: left"> <strong>10.</strong></td> <td style="TEXT-ALIGN: justify"><strong>Related Party Transaction</strong></td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> During the nine months ended March 31, 2014 and 2013, the Company continued to engage the services of APEX Data Systems, Inc., owned by Dwight Babcock, the Company's Chairman and Chief Executive Officer, to modify and maintain the Company's web interfaced data collection application to aggregate patient data in a controlled environment. The Audit Committee and Board of Directors approved the use of the ongoing services of APEX Data Systems. Mr. Babcock recused himself from the Board vote due to his conflict of interest. The cost recorded during nine months ended March 31, 2014 and 2013 from APEX Data Systems, Inc. for the maintenance of the web interfaced data collection application was $12,720 and $10,960. An additional $9,000 was spent on the implementation of Customer Relationship Management software in the nine months ended March 31, 2014.</p> <!--EndFragment--></div> </div>
9000
153611
155137
470631
445785
181149
181194
181149
181194
-52091334
-56372651
1134319
1251478
3269642
3283167
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Securities not considered in the calculation of diluted weighted average shares, but that could be dilutive in the future as of March 31, 2014 and 2013, were as follows:</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif; MARGIN-LEFT: 0.5in" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center"> </td> <td style="TEXT-ALIGN: center"> </td> <td style="TEXT-ALIGN: center" colspan="6" nowrap="nowrap">March 31,</td> <td style="TEXT-ALIGN: center"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">2014</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">2013</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 68%; TEXT-ALIGN: justify">Series B preferred stock</td> <td style="WIDTH: 2%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">59,065</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 2%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">59,065</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Common stock warrants</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">646,811</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">1,957,033</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Common stock options</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 2,324,072</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 2,312,072</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left">Total potential dilutive securities</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 3,029,948</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 4,328,170</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <!--EndFragment--></div> </div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> The following table presents the share-based compensation expense recognized during the three and nine months ended March 31, 2014 and 2013:</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 95%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif; MARGIN-LEFT: 0.2in" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: justify" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="6" nowrap="nowrap">Three months<br /> ended March 31,</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="6" nowrap="nowrap">Nine months<br /> ended March 31,</td> <td nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2">2014</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2">2013</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2">2014</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2">2013</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 40%; TEXT-ALIGN: justify">Cost of product sales</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">4,500</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">10,164</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">13,421</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">30,492</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Research and development expenses</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">3,482</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">7,607</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">10,447</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">25,042</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Sales and marketing expenses</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">879</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">1,386</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">2,636</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">4,568</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">General and administrative expenses</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 4,572</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 8,423</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 38,713</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 25,267</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: justify">Total share-based compensation</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 13,433</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 27,580</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 65,217</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 85,369</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <!--EndFragment--></div> </div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> The table below sets forth the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2014 and June 30, 2013, respectively, and the fair value calculation input hierarchy level the Company has determined applies to each asset and liability category. </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: justify" nowrap="nowrap">Description</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Balance at<br /> March 31, 2014</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Balance at<br /> June 30, 2013</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" nowrap="nowrap">Input<br /> Hierarchy Level</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Assets:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: center"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="WIDTH: 25%; TEXT-ALIGN: justify; PADDING-LEFT: 9pt">Cash and cash equivalents</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 22%; TEXT-ALIGN: right">23,702,901</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 22%; TEXT-ALIGN: right">2,899,927</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 24%; TEXT-ALIGN: center">Level 1</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 9pt">Restricted cash</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">181,194</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">181,149</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: center">Level 1</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 9pt"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: center"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Liabilities:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: center"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 9pt">Warrant liability</td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">678,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">104,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: center">Level 2</td> </tr> </table> <!--EndFragment--></div> </div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Inventory consisted of the following at March 31, 2014 and June 30, 2013:</p> <p style="FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif; MARGIN-LEFT: 0.5in" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: justify" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">March 31,</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">June 30,</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2">2014</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2">2013</td> <td style="PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 70%; TEXT-ALIGN: justify">Raw materials</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">165,657</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">167,671</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Work in process</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">181,457</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">195,323</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Finished goods</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 39,906</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 42,577</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: justify"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 387,020</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 405,571</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <!--EndFragment--></div> </div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> A summary of stock options within the Company's share-based compensation plans as of March 31, 2014 was as follows:</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 90%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif; MARGIN-LEFT: 0.5in" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Weighted</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Weighted</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Average</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Average</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Remaining</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Aggregate</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Number of</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Exercise</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Contractual</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Intrinsic</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Options</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Price</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Term</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> Value</td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 40%; PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: justify; PADDING-LEFT: 0.125in; TEXT-INDENT: -0.125in"> Outstanding at March 31, 2014</td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt"> </td> <td style="WIDTH: 1%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,324,072</td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt"> </td> <td style="WIDTH: 1%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="WIDTH: 12%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1.82</td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt"> </td> <td style="WIDTH: 1%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 4.3</td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt"> </td> <td style="WIDTH: 1%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="WIDTH: 12%; BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,050,334</td> <td style="WIDTH: 1%; PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left; PADDING-LEFT: 0.125in; TEXT-INDENT: -0.125in"> Vested and expected to vest at March 31, 2014</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,238,840</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1.86</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 4.23</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1,923,611</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: justify; PADDING-LEFT: 0.125in; TEXT-INDENT: -0.125in"> Vested and exercisable at March 31, 2014</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,040,732</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1.93</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 3.85</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1,714,527</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <!--EndFragment--></div> </div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> The following table summarizes the warrants outstanding as of the beginning of the fiscal year, warrants exercised and warrants issued during the year and weighted average prices for each category.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> <p style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: center; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0pt"> </p> <p style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: center; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0pt"> Warrants</p> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Weighted average<br /> exercise price</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 70%; TEXT-ALIGN: justify">Outstanding as of June 30, 2013</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">1,957,033</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">1.38</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Warrants issued</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">5,648,738</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">0.72</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Warrants corrected</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">10,869</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">0.94</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Warrants exercised</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (6,969,829</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 0.86</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: justify">Outstanding as of March 31, 2014</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 646,811</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1.14</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <p style="FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <em>Warrants outstanding as of March 31, 2014</em></p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <strong> </strong></p> <table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Expiration date</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Exercise price</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 15%; TEXT-ALIGN: right">6,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 40%; TEXT-ALIGN: right; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> June 8, 2015</td> <td style="WIDTH: 10%; TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 29%; TEXT-ALIGN: right">1.18</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">25,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: right; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> July 27, 2015</td> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">2.00</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">157,832</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: right; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> November 21, 2015</td> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">1.56</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">401,929</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: right; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> October 19, 2016</td> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">0.944</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">51,050</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: right; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> December 7, 2016</td> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">0.944</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 5,000</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: right; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> June 27, 2017</td> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 0.98</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">646,811</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.14</td> <td style="TEXT-ALIGN: left"> </td> </tr> </table> <!--EndFragment--></div> </div>
245558
290812
931210
928962
65217
85369
P10Y
0.58
0.59
P5Y
P5Y
1.3231
1.3231
0.0185
0.0177
2040732
1.93
15130
13866
50000
15000
65000
2050334
2324072
1.82
P4Y3M18D
1714527
P3Y10M6D
1923611
2238840
1.86
P4Y2M23D
0.58
0.59
0.535
2.60
1000
5366246
24653863
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><div> <div><!--StartFragment--> <table style="MARGIN-BOTTOM: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0px" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top; TEXT-ALIGN: justify"> <td style="WIDTH: 0in"> </td> <td style="WIDTH: 0.5in; TEXT-ALIGN: left"><strong>9.</strong></td> <td style="TEXT-ALIGN: justify"><strong>Shareholders' Equity</strong></td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <em> </em></p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <em>Common and preferred stock transactions</em></p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <u>Series D</u></p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> On August 29, 2013, the Company entered into an agreement to sell 3,800,985 common units, each consisting of 1 share of common stock and a warrant to purchase 0.816 shares of common stock (the "Common Units"), and 1,670 preferred units, each consisting of 1 share of Series D Convertible Preferred Stock and a warrant to purchase 1,525.23 shares of common stock (the "Preferred Units") on a firm commitment underwritten basis. The Common Units were sold at an initial per unit purchase price of $0.535 and the Preferred Units were sold at an initial per unit purchase price of $1,000. The warrants were all exercisable at $0.72 per share and had a twenty-four month term. Each share of the Series D Convertible Preferred Stock was convertible into 1,869.15 shares of common stock at any time at the option of the holder, subject to adjustment and certain ownership percentage restrictions. The preferred shares which were convertible into shares of common stock contained a beneficial conversion feature of $726,378 which was recognized as a deemed dividend to the Series D preferred shareholders on the date of issuance. This public offering resulted in gross proceeds of $3.7 million. The offering yielded approximately $3,279,292 in cash after expenses.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 85%; TEXT-ALIGN: justify">Gross proceeds from public offering</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">3,703,527</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Underwriting discount</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(185,176</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Legal and accounting expense</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(184,514</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Listing expense</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(48,500</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Other expense</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (6,045</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Net proceeds</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">3,279,292</td> <td style="TEXT-ALIGN: left"> </td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> During January 2014, the holder of the 1,670 shares of Series D convertible preferred stock fully exercised its right to convert the 1,670 shares of Series D convertible preferred stock into 3,121,480 shares of common stock which at the time of conversion resulted in an increase in shares of common stock outstanding from 38,419,502 to 41,540,982. Subsequent to the conversion, no shares of Series D convertible preferred stock remain outstanding.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <u>Common Stock</u></p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> On March 21, 2014, the Company entered into a Securities Purchase Agreement with certain investors providing for the sale of a total of 5,644,300 shares of common stock for an aggregate purchase price of $14,675,180 at a price per share of $2.60 (the "Registered Direct Offering"). The Company received net proceeds from the offering of approximately $13,818,927 from the Registered Direct Offering which will be used to meet the Company's working capital needs and general corporate purposes.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 85%; TEXT-ALIGN: justify">Gross proceeds from registered direct offering</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">14,675,180</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Placement agent fees</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(733,759</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Legal and accounting expense</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(72,494</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Listing expense</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(45,000</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Other expense</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (5,000</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Net proceeds</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">13,818,927</td> <td style="TEXT-ALIGN: left"> </td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <em>Warrant exercises</em></p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> During the month of March 2014, the holder of the Series D warrants issued in November 2010 exercised its right to purchase 1,050,000 shares of common stock. Each warrant had an exercise price of $1.56 per share of Company common stock and the exercise contributed $1,638,000 in total additional cash and equity.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> During the month of March 2014, certain holders of the warrants to purchase Company common stock issued in the October and December 2011 equity transaction exercised their right to purchase 37,574 shares of common stock. Each warrant had an original exercise price of $1.053 that was reduced in accordance with the terms of the warrant for dilution as the result of subsequent offerings to a revised exercise price of $0.944 per share of Company common stock. This created a liability of $35,470 as the stock had not been issued by the transfer agent as of the end of March, however, shares of common stock were issued during April in compliance with the contractual terms of the warrant.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> During the month of March 2014, certain holders of the warrants to purchase Company common stock issued in the October and December 2011 equity transaction exercised their right to purchase 271,091 shares of common stock. Each warrant had an original exercise price of $1.053 that was reduced in accordance with the terms of the warrant for dilution as the result of subsequent offerings to a current exercise price of $0.944 per share of Company common stock and the exercise contributed $255,910 in total additional cash and equity.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> During the month of March 2014, the holders of the warrants to purchase Company common stock issued in the August 2013 equity transaction exercised their right to purchase 5,648,738 shares of common stock. Each warrant had an exercise price of $0.72 per share of Company common stock and the exercise contributed $4,067,091 in total additional cash and equity.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> The gross proceeds from the exercise of the common stock warrants exercised were $5,961,001 during the nine months ended March 31, 2014, net of the $35,470 liability for the shares of common stock which were not issued until April 2014.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <em> </em></p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <em>Warrant liability and related offering cost deferral</em></p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Based on the guidance contained in ASC 815 "Derivatives and Hedging", management has concluded that the warrants issued in the October and December 2011 underwritten registered offering of 2,500,000 shares of common stock should be classified as a derivative liability and has recorded a liability at fair value. The Company determined the fair value of the warrants using the Black-Scholes fair value model. The Company determined the fair value of the warrants on the date of the offering to be as disclosed in the tables below. The Company has recognized a change in fair value as described in the tables below:</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Change in fair value of the derivative warrant liability for the three months ended March 31, 2014 and 2013, respectively.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 85%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Three months ended</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Three months ended</td> <td nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: justify" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">March 31, 2014</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">March 31, 2013</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 70%; TEXT-ALIGN: left">Change in fair value of the derivative warrant liability</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">1,095,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">(109,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left">)</td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Change in fair value of the derivative warrant liability for purchaser warrants and underwriter warrants contained in an equity transaction on October 19, 2011.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 85%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap">Three months ended<br /> March 31, 2014</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap">Three months ended<br /> March 31, 2013</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 40%; TEXT-ALIGN: justify">Balance, beginning of the period</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">650,003</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">20,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">650,003</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">218,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Change in fair value</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">650,003</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">1,004,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(99,000</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Warrants corrected</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">10,869</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Warrants exercised</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (258,943</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (423,000</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Balance, end of the period</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">401,929</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">601,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">650,003</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">119,000</td> <td style="TEXT-ALIGN: left"> </td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Change in fair value of the derivative warrant liability for purchaser warrants and underwriter warrants contained in an equity transaction on December 7, 2011.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 85%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap"><font style="FONT-SIZE: 10pt">Three months ended</font><br /> <font style="FONT-SIZE: 10pt">March 31, 2014</font></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap"><font style="FONT-SIZE: 10pt">Three months ended</font> <br /> <font style="FONT-SIZE: 10pt"> March 31, 2013</font></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 40%; TEXT-ALIGN: justify">Balance, beginning of the period</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">63,598</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">3,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">63,598</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">22,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Change in fair value</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">63,598</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">91,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">63,598</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(10,000</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Warrants corrected</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(400</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Warrants exercised</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (12,148</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (17,000</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Balance, end of the period</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">51,050</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">77,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">63,598</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">12,000</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left">Total fair value of warrant derivative liability at March 31, 2014 and 2013</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: right"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 678,000</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: right"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 131,000</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Change in fair value of the derivative warrant liability for the nine months ended March 31, 2014 and 2013, respectively.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 85%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> <p style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: center; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0pt"> Nine months ended<br /> March 31, 2014</p> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> <p style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: center; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0pt"> Nine months ended<br /> March 31, 2013</p> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 70%; TEXT-ALIGN: justify; PADDING-LEFT: 5.4pt"> Change in fair value</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">1,014,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">(183,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left">)</td> </tr> </table> <p style="FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Change in fair value of the derivative warrant liability for purchaser warrants and underwriter warrants contained in an equity transaction on October 19, 2011.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 85%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap"><font style="FONT-SIZE: 10pt">Nine months ended</font><br /> <font style="FONT-SIZE: 10pt">March 31, 2014</font></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap"><font style="FONT-SIZE: 10pt">Nine months ended</font><br /> <font style="FONT-SIZE: 10pt">March 31, 2013</font></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 40%; TEXT-ALIGN: justify">Balance, beginning of the period</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">650,003</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">94,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">650,003</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">286,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Change in fair value</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">650,003</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">914,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">650,003</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(167,000</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Warrants corrected</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">10,869</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">16,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Warrants exercised</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (258,943</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (423,000</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Balance, end of the period</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">401,929</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">601,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">650,003</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">119,000</td> <td style="TEXT-ALIGN: left"> </td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> Change in fair value of the derivative warrant liability for purchaser warrants and underwriter warrants contained in an equity transaction on December 7, 2011.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 85%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap">Nine months ended<br /> March 31, 2014</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="6" nowrap="nowrap">Nine months ended<br /> March 31, 2013</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity<sup>1</sup></td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Amount</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 40%; TEXT-ALIGN: justify">Balance, beginning of the period</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">63,598</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">10,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">63,598</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">28,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Change in fair value</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">63,598</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">85,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">63,598</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(16,000</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Warrants corrected</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(400</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(1,000</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Warrants exercised</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (12,148</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (17,000</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> -</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Balance, end of the period</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">51,050</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">77,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">63,598</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">12,000</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: justify">Total fair value of warrant derivative liability at March 31, 2014 and 2013</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: right"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 678,000</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: right"> </td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 131,000</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <sup>1</sup> Quantity of warrants either issued or outstanding as of the date of valuation.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <em> </em></p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <em>Warrants</em></p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> The following table summarizes the warrants outstanding as of the beginning of the fiscal year, warrants exercised and warrants issued during the year and weighted average prices for each category.</p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap"> <p style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: center; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0pt"> </p> <p style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: center; FONT: 10pt Times New Roman, Times, Serif; MARGIN-TOP: 0pt"> Warrants</p> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; FONT-SIZE: 10pt; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Weighted average<br /> exercise price</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 70%; TEXT-ALIGN: justify">Outstanding as of June 30, 2013</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 12%; TEXT-ALIGN: right">1,957,033</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 12%; TEXT-ALIGN: right">1.38</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: justify">Warrants issued</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">5,648,738</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">0.72</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: justify">Warrants corrected</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">10,869</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">0.94</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: justify">Warrants exercised</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (6,969,829</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 0.86</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: justify">Outstanding as of March 31, 2014</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 646,811</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1.14</td> <td style="PADDING-BOTTOM: 2.5pt; TEXT-ALIGN: left"> </td> </tr> </table> <p style="FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> </p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <em>Warrants outstanding as of March 31, 2014</em></p> <p style="TEXT-ALIGN: justify; FONT: 10pt Times New Roman, Times, Serif; MARGIN: 0pt 0px"> <strong> </strong></p> <table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Quantity</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Expiration date</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">Exercise price</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: center" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 15%; TEXT-ALIGN: right">6,000</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 40%; TEXT-ALIGN: right; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> June 8, 2015</td> <td style="WIDTH: 10%; TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 1%; TEXT-ALIGN: left">$</td> <td style="WIDTH: 29%; TEXT-ALIGN: right">1.18</td> <td style="WIDTH: 1%; TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">25,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: right; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> July 27, 2015</td> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">2.00</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">157,832</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: right; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> November 21, 2015</td> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">1.56</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">401,929</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: right; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> October 19, 2016</td> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">0.944</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: rgb(204,255,204)"> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">51,050</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: right; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> December 7, 2016</td> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">0.944</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: white"> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 5,000</td> <td style="PADDING-BOTTOM: 1pt; TEXT-ALIGN: left"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: right; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> June 27, 2017</td> <td style="TEXT-ALIGN: justify; PADDING-LEFT: 0px; TEXT-INDENT: 0px"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; 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