GOING CONCERN	3 Months Ended
Sep. 30, 2011
Notes to Financial Statements
GOING CONCERN	The consolidated financial statements as of September 30, 2011 and for the three months then ended have been prepared on the basis of a going concern which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should the Company be required to liquidate its assets. The Company incurred a net loss of $1,675,488 for the three months ended September 30, 2011 and as of September 30, 2011 has an accumulated deficit of $57,019,131 and shareholders’ equity of $4,140,720. The ability of the Company to meet its total liabilities of $9,041,570 and to continue as a going concern is dependent upon the availability of future funding and achieving profitability. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties. The Company believes, with the financing sources in place and with other potential financing sources, that it will be able to raise the capital necessary to fund operations through at least June 30, 2012. The Company’s sources of additional capital in the year ending June 30, 2012 include the raising of additional capital pursuant to an agreement with Socius CG II, Ltd. (“Socius”), as described in Note 12. As of September 30, 2011, there was approximately $5.1 million of availability under this facility. However, this facility places certain restrictions on our ability to draw on it. For example, our ability to submit a tranche notice under the Socius Agreement is subject to certain conditions including that: (1) a registration statement covering our sale of shares of common stock to Socius in connection with the tranche is effective and (2) the issuance of such shares would not result in Socius and its affiliates beneficially owning more than 9.99% of our common stock. These limitations have been carefully considered by the Company and notwithstanding such limitations management has successfully utilized this facility and believes it will continue to be able to do so. As described in Note 12, during the three months ended September 30, 2011, the Company delivered two tranche notices to Socius pursuant to which Socius purchased $1,477,240 of Series A preferred stock. However, there can be no assurances that unforeseen circumstances will not jeopardize the Company’s ability to draw on this and other potential financing sources. Accordingly, the Company is currently exploring various alternatives including debt and equity financing vehicles, strategic partnerships, and/or government programs that may be available to the Company, as well as trying to generate additional sales and increase margins. As described in Note 1, in April 2011, the Company entered into a Collaboration Agreement with Honam Petrochemical Corporation (“Honam”), a division of LOTTE Petrochemical, pursuant to which through September 30, 2011 Honam paid the Company a total of $1.5 million. Pursuant to the Collaboration Agreement Honam is required to pay an additional (1) $1.2 million by October 10, 2011 (subsequently received on October 10, 2011) and (2) $300,000 within 10 days after a V3 single stack is set up at Honam’s research and development center. As described in Note 12, in the year ended June 30, 2011 the Company raised approximately $5.5 million through the sale of shares of Company common stock to certain investors. However, the Company has no commitments to obtain any additional funds, and there can be no assurance such funds will be available on acceptable terms or at all. If the Company is unable to obtain additional funding and improve its operations, the Company’s financial condition and results of operations may be materially adversely affected and the Company may not be able to continue operations.

GOING CONCERN

3 Months Ended

Sep. 30, 2011

The consolidated financial statements as of September 30, 2011 and for the three months then ended have been prepared on the basis of a going concern which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should the Company be required to liquidate its assets. The Company incurred a net loss of $1,675,488 for the three months ended September 30, 2011 and as of September 30, 2011 has an accumulated deficit of $57,019,131 and shareholders’ equity of $4,140,720. The ability of the Company to meet its total liabilities of $9,041,570 and to continue as a going concern is dependent upon the availability of future funding and achieving profitability. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties.

The Company believes, with the financing sources in place and with other potential financing sources, that it will be able to raise the capital necessary to fund operations through at least June 30, 2012. The Company’s sources of additional capital in the year ending June 30, 2012 include the raising of additional capital pursuant to an agreement with Socius CG II, Ltd. (“Socius”), as described in Note 12. As of September 30, 2011, there was approximately $5.1 million of availability under this facility. However, this facility places certain restrictions on our ability to draw on it. For example, our ability to submit a tranche notice under the Socius Agreement is subject to certain conditions including that: (1) a registration statement covering our sale of shares of common stock to Socius in connection with the tranche is effective and (2) the issuance of such shares would not result in Socius and its affiliates beneficially owning more than 9.99% of our common stock. These limitations have been carefully considered by the Company and notwithstanding such limitations management has successfully utilized this facility and believes it will continue to be able to do so. As described in Note 12, during the three months ended September 30, 2011, the Company delivered two tranche notices to Socius pursuant to which Socius purchased $1,477,240 of Series A preferred stock. However, there can be no assurances that unforeseen circumstances will not jeopardize the Company’s ability to draw on this and other potential financing sources.

Accordingly, the Company is currently exploring various alternatives including debt and equity financing vehicles, strategic partnerships, and/or government programs that may be available to the Company, as well as trying to generate additional sales and increase margins. As described in Note 1, in April 2011, the Company entered into a Collaboration Agreement with Honam Petrochemical Corporation (“Honam”), a division of LOTTE Petrochemical, pursuant to which through September 30, 2011 Honam paid the Company a total of $1.5 million. Pursuant to the Collaboration Agreement Honam is required to pay an additional (1) $1.2 million by October 10, 2011 (subsequently received on October 10, 2011) and (2) $300,000 within 10 days after a V3 single stack is set up at Honam’s research and development center.

As described in Note 12, in the year ended June 30, 2011 the Company raised approximately $5.5 million through the sale of shares of Company common stock to certain investors. However, the Company has no commitments to obtain any additional funds, and there can be no assurance such funds will be available on acceptable terms or at all. If the Company is unable to obtain additional funding and improve its operations, the Company’s financial condition and results of operations may be materially adversely affected and the Company may not be able to continue operations.