Stockholders' Equity

9 Months Ended

Mar. 31, 2012

Notes to Financial Statements

Stockholders' Equity

NOTE 4 - Stockholders’ Equity

Preferred Stock

The Company has authorized 5,000,000 shares of preferred stock, par value $0.001 per share with such rights, preferences and limitation as may be set from time to time by resolution of the board of directors and the filing of a certificate of designation as required by Delaware General Corporation Law.

Common Stock

The issuances of common stock during the nine months ended March 31, 2012 were as follows:

In July 2011, the Company issued 30,000 shares of common stock to a director in exchange for $30,000 in connection with the exercise of options with an exercise price of $1.00 per share.

In November 2011, the Company issued 100,000 shares of common stock in exchange for $50,000 in connection with a private placement with an accredited investor.

In December 2011, the Company issued 5,000 shares of common stock to a director in connection with the exercise of options with an exercise price of $0.667 per share.

In December 2011, the Company issued 441,179 shares of common stock to a director in settlement of a loan amount due to the director by the Company's predecessor company. The fair value of the shares issued was $300,000, calculated using the closing price on the date of the settlement, and was recorded as a loss on settlement. As further inducement to enter into the settlement, the Company offered to reduce the exercise price of warrants held by the director from $1.50 to $0.50 per share if the director exercised the options within a short period of time. The Company issued an additional 130,000 shares of common stock to the director in exchange for $65,000 in connection with the preceding offer. As a result, the Company recognized a loss on warrant repricing of $5,834 representing the difference between the market value of the warrants exercised at an exercise price of $1.50 per share and the market value at the new exercise price of $0.50 per share.

In January 2012, the Company issued 166,667 shares of common stock to LPC in exchange for $100,000 and issued 150,000 commitment shares to LPC in connection with the signing of a $5 million purchase agreement. The value of the commitment shares was $90,000 based upon the $0.60 per share price and was offset against the proceeds as an offering cost.

During the nine months ended March 31, 2012, the Company issued 833,400 shares of common stock in exchange for $416,700 in connection with private placements with 25 accredited investors.

In January 2012, the Company issued 85,000 shares in exchange for $42,500 in connection with the exercise of warrants. The warrants had original exercise prices between $1.25 and $1.60 share. The Company recognized a loss on repricing of the warrants exercised of $11,919, during the three months ended March 31, 2012, representing the change in the value of the repriced warrants as compared to the value of the original warrants on the date of exercise.

Common Stock Warrants

The Company accounts for warrants issued for services in accordance with ASC 505-50-30-2 Equity Based Payments to Non-Employees. As such, the Company calculates the fair value of the warrants granted using the Black-Scholes option pricing model and records the fair value to either prepaid expense or expense based upon the terms of the underlying contract for services. In applying the Black-Scholes method, the Company calculates volatility based upon the historical market price of the Company’s common stock, utilizes discount rates obtained from the Federal Reserve Statistical Release for treasury instruments of the same duration and expected term as the contractual term of the warrants.

Warrants issued in connection with the sale of shares of common stock are treated as part of the equity transaction and are recorded in stockholders’ equity or liabilities in accordance with the guidance at ASC 480-10-25.

A summary of warrants issued for settlements and changes during the periods July 1, 2010 to March 31, 2011 and from July 1, 2011 to March 31, 2012 is as follows:

Warrants Issued as Settlements
	Number of Warrants			Weighted Average Exercise Price		Remaining Contractual Life
Balance at June 30, 2010		474,508		$	1.05		1.92
Granted		—		$	—		—
Exercised		—		$	—		—
Forfeited		—		$	—		—
Expired		—		$	—		—
Outstanding at March 31, 2011		474,508		$	1.05		2.17
Exercisable at March 31, 2011		474,058		$	1.05		2.17
Weighted average fair value of warrants granted during the nine months ended March 31, 2011					N/A
Balance at June 30, 2011		474,058		$	1.50		1.92
Granted		—		$	—		—
Exercised		(130,000	)	$	0.50		—
Forfeited		—		$	—		—
Expired		—		$	—		—
Outstanding at March 31, 2012		344,058		$	1.50		1.17
Exercisable at March 31, 2012		344,058		$	1.50		1.17
Weighted average fair value of warrants granted during the nine months ended March 31, 2012.					N/A

 In December 2011, the Company issued 130,000 shares of common stock to a director in connection with the exercise of warrants with an exercise price of $0.50 per share in exchange for $65,000. See Note 6.

A summary of warrants issued for cash and changes during the periods June 30, 2010 to March 31, 2011 and from June 30, 2011 to March 31, 2012 is as follows:

Warrants issued for cash
	Number of Warrants			Weighted Average Exercise Price		Remaining Contractual Life
Balance at June 30, 2010		2,733,303		$	1.56		2.37
Granted		2,341,200		$	1.31		5.00
Exercised		(303,303	)	$	1.25		—
Forfeited		—		$	—		—
Expired		—		$	—		—
Outstanding at March 31, 2011		4,771,200		$	1.46		2.93
Exercisable at March 31, 2011		4,771,200		$	1.46		2.93
Weighted average fair value of warrants granted during the nine months ended March 31, 2011					N/A
Balance at June 30, 2011		4,651,200		$	1.46		2.68
Granted		—		$	—		—
Exercised		(85,000	)	$	0.50		—
Exercise recission		45,000		$	1.25		—
Forfeited		—		$	—		—
Expired		—		$	—		—
Outstanding at March 31, 2012		4,611,200		$	1.47		1.93
Exercisable at March 31, 2012		4,611,200		$	1.47		1.93
Weighted average fair value of warrants granted during the nine months ended March 31, 2012.					N/A

In January 2012, the Company issued 85,000 shares in exchange for $42,500 in connection with the exercise of warrants. The warrants had original exercise prices between $1.25 and $1.60 share. The Company recognized a loss on repricing of the warrants exercised of $11,919, during the three months ended March 31, 2012, representing the change in the value of the repriced warrants as compared to the value of the original warrants on the date of exercise.