COMMON STOCK

6 Months Ended

Dec. 31, 2013

Equity [Abstract]

COMMON STOCK

NOTE 8. COMMON STOCK

Rights Offering

On December 17, 2013, we publicly announced plans to complete a rights offering to existing holders of our Common Stock and filed a preliminary Form S-3 with the Securities and Exchange Commission. Upon completion of the rights offering, we expect to receive gross proceeds of approximately $3,000,000 before expenses, subject to reduction by us in our sole discretion as we may deem advisable to preserve our use of tax attributes such as net operating loss carryforwards or for other reasons. We have received a standby commitment from AO Partners, LLC and Farnam Street Capital, Inc. (each a beneficial shareholder of our common stock; each a “Standby Purchaser” and collectively the “Standby Purchasers”) to purchase any and all shares of Common Stock that are not subscribed for by shareholders in connection with the rights offering, subject to reduction by us as described above.  Nicholas J. Swenson, one of our directors, is the Managing Member of AO Partners and, in such capacity, has the power to direct the affairs of AO Partners.  Raymond E. Cabillot, also one of our directors, is Chief Executive Officer and a director of Farnam Street Capital and, in such capacity, has the power to direct the affairs of Farnam Street Capital.  No fees or other consideration will be paid by us to the Standby Purchasers in exchange for their commitment to purchase any and all unsubscribed shares of Common Stock following the rights offering.

The rights offering will be made through a distribution to our existing shareholders of non-transferable subscription rights to purchase their pro rata portion of newly issued shares of Common Stock. The subscription price has not yet been determined but is expected to be based on a percentage discount of the closing market price of the Common Stock, as reported by the NASDAQ Capital Market, on the latest practicable date prior to the launch of the rights offering. The record date for the distribution of the rights and the dates for both the subscription period and the expiration of the rights offering will be included in the final prospectus that will be filed with the Securities and Exchange Commission (“SEC”).

We intend to use the net proceeds from the Rights Offering to pursue strategic opportunities that may present themselves from time to time or, if not used to pursue strategic opportunities, for working capital and general corporate purposes, including to fund ongoing research and development and product initiatives.  Also, to the extent net proceeds of the Rights Offering are not deployed, some of the funds may be invested in accordance with the terms of our Surplus Capital Investment Policy.

Share Repurchase Program

In September 2013, our Board approved a share repurchase program authorizing the Company, at the direction of the Investment Committee of the Board, to repurchase up to 750,000 shares of our common stock under parameters to be determined by the Investment Committee. The repurchase program has no stated expiration date and there have been no purchases under the program.