10. WARRANTS

6 Months Ended

Dec. 31, 2012

Notes to Financial Statements

WARRANTS

At December 31, 2012 there were outstanding warrants to purchase 75,000 common shares issued by the Company as partial payment for services exercisable at $0.42 per share which expire in July 2015.

At December 31, 2012 there were outstanding warrants to purchase 2,895,303 common shares issued by the Company in connection with the Underwriting Agreement entered into with MDB Capital Group, LLC as part of underwriting compensation which provided for the sale of $12 million of common stock as described in Note 11 on June 19, 2012 exercisable at $0.475 per share and which expire in June 2017.

At December 31, 2012 there were outstanding warrants to purchase 2,558,019 common shares issued by the Company in connection with Securities Purchase Agreements entered into with certain investors providing for the sale of a total of $2,465,000 of Zero Coupon Convertible Subordinated Notes as described in Note 8 on May 1, 2012 exercisable at $0.53 per share and which expire in May 2017.

At December 31, 2012 there were outstanding warrants to purchase 60,500 common shares issued by the Company as partial payment for services exercisable at $1.00 per share which expire March 2015 through July 2015.

At December 31, 2012 there were outstanding warrants to purchase 40,000 common shares issued by the Company to an equipment supplier in January 2011 exercisable at $0.56 per share and which expire in January 2014.  The fair value of the warrants was $11,834 and was included in the cost of the equipment.

At December 31, 2012 there were outstanding warrants to purchase 1,121,875 common shares acquired by certain purchasers of Company shares in March 2010 exercisable at $1.04 per share and which expire in September 2015.

At December 31, 2012 there were outstanding warrants to purchase 358,333 common shares acquired by certain purchasers of Company shares in August 2009 exercisable at $1.33 per share and which expire in August 2015.

Warrants to purchase 50,000 shares acquired by Empire Financial Group, Ltd. as part of the underwriting compensation in connection with our United States public offering which are exercisable at $7.20 per share expired during June 2012.

Warrants to purchase 48,950 shares issued and outstanding to Strategic Growth International in connection with capital raising activities in 2007, with an exercise price of $7.20 per share expired during June 2012.

Warrants to purchase 120,023 common shares acquired by Empire Financial Group, Ltd. in 2006 exercisable at $3.23 per share expired during September 2011.

The table below summarizes warrant activity:

	Number of Warrants			Weighted-Average Exercise Price Per Share
Balance at June 30, 2011		1,886,031		$	1.73
Warrants granted		9,614,875			0.53
Warrants expired		(365,823	)		(4.54	)
Warrants exercised		(4,132,553	)		(0.53	)
Balance at June 30, 2012		7,002,530			0.63
Warrants granted		106,500			0.59
Warrants expired		-			-
Warrants exercised		-			-
Balance at December 31, 2012		7,109,030		$	0.63

For the three and six months ended December 31, 2012, the Company had approximately $4,000 and $7,000 of stock based compensation expense related to warrants.