Correction of Previously Reported Information

9 Months Ended

Mar. 31, 2014

Accounting Changes and Error Corrections [Abstract]

Correction of Previously Reported Information

During the audit of the Company’s consolidated financial statements for the year ended June 30, 2014, the Company identified an error in the accounting for and presentation of the impact of the November 15, 2103 private placement offering (“November Offering”) on the Company’s derivative liability as of January 31, 2014 and March 31, 2014. In the November Offering, the Company issued warrants (“November 2013 Warrants”) entitling the Investors to purchase one thousand (1,000) shares of common stock for each $1.00 principal amount of consideration received, at an exercise price of $0.10 per share. Since the exercise price per share of the November 2013 Warrants was lower than the $3.00 warrant exercise prices of the warrants issued during the 2010/2011 private placement offerings, and the $6.00 exercise price of the warrants issued in the 2012 private placement offering, the exercise prices with respect to these previous warrant issuances should have been lowered, and the amount of shares exercisable increased based on the reset provisions in each warrant agreement. The Company did not account for the reset provisions in the previously reported consolidated financial statements as of January 31, 2014, and therefore the amounts accounted for as assumed net liabilities in the February 6, 2014 Reverse Recapitalization (Note 2) were recorded erroneously as of March 31, 2014. In addition the amount calculated as the fair market value for the derivative liabilities as of March 31, 2014 did not properly account for the change in exercise price and number of exercisable shares for the warrants from the 2010-2012 private placement offerings, as reset by the November Offering.

In accordance with the SECs Staff Accounting Bulletin Nos. 99 and 108 (“SAB 99” and “SAB 108”), the Company evaluated this error and, based on an analysis of quantitative and qualitative factors, determined that the error is material to the March 31, 2014 period. Therefore, as permitted by SAB 108, the Company corrected, in the current filing, previously reported results for the period ended March 31, 2014.

The following table presents the effect of the correction of the previously reported information and the impact on the Company’s unaudited consolidated balance sheet for the year ended March 31, 2014:

	As of March 31, 2014
	As Previously Reported		Adjustments			As Restated
Liabilities and stockholders’ deficit:
Derivative liability	$	986,905	$	2,544,090		$	3,530,995
Additional paid-in capital		587,139		(825,813	)		(238,674	)

Deficit accumulated during the exploration stage (3,006,199) (1,718,277) (4,724,476)

Total liabilities and stockholders’ deficit 2,997,129 —   2,997,129

The following table presents the effect of the correction of the previously reported information and the impact on the Company’s unaudited consolidated statement of expenses for the three months ended March 31, 2014:

	As of March 31, 2014
	As Previously Reported			Adjustments			As Restated
Loss from operations:	$	(1,829,118	)		—		$	(1,829,118	)
Other income (expenses):
Realized and unrealized loss on derivatives		(662,263	)		(1,718,277	)		(2,380,540	)
Total other income (expenses)		(1,067,224	)		(1,718,277	)		(2,785,501	)
Loss from continuing operations		(2,896,342	)		(1,718,277	)		(4,614,619	)
Loss from discontinued operations		(212,479	)		—			(212,479	)
Net loss		(3,108,821	)		(1,718,277	)		(4,827,089	)

The following table presents the effect of the correction of the previously reported information and the impact on the Company’s unaudited consolidated statement of expenses for the nine months ended March 31, 2014:

	As of March 31, 2014
	As Previously Reported			Adjustments			As Restated
Loss from operations:	$	(2,061,880	)		—		$	(2,061,880	)
Other income (expenses):
Realized and unrealized loss on derivatives		(662,263	)		(1,718,277	)		(2,380,540	)
Total other income (expenses)		(1,075,565	)		(1,718,277	)		(2,793,842	)
Loss from continuing operations		(3,137,445	)		(1,718,277	)		(4,855,722	)
Loss from discontinued operations		(212,479	)		—			(212,479	)
Net loss		(3,349,924	)		(1,718,277	)		(5,068,201	)

The following table presents the effect of the correction of the previously reported information and the impact on the Company’s unaudited consolidated statement of expenses for the period July 11, 2011 (Inception) through March 31, 2014:

	As of March 31, 2014
	As Previously Reported			Adjustments			As Restated
Loss from operations:	$	(3,426,602	)		—		$	(3,426,602	)
Other income (expenses):
Realized and unrealized loss on derivatives		(662,263	)		(1,718,277	)		(2,380,540	)
Total other income (expenses)		(1,081,687	)		(1,718,277	)		(2,799,964	)
Loss from continuing operations		(4,508,289	)		(1,718,277	)		(6,226,566	)
Loss from discontinued operations		(212,479	)		—			(212,479	)
Net loss		(4,720,768	)		(1,718,277	)		(6,493,045	)

In addition to the information noted above the correction of the previously reported information impacted the Company’s loss from continuing operations per share to $0.42 from $0.27 and to $0.44 from $0.29 for the three and nine months ended March 31, 2014, respectively.