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Fair Value Measurements & Derivative Instruments (Tables)

9 Months Ended

Jun. 30, 2013

Fair Value Measurements for Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table summarizes fair value measurements at June 30, 2013 and September 30, 2012 for assets and liabilities measured at fair value on a recurring basis:

June 30, 2013:

	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	29,025,930	$	—	$	—	$	29,025,930
Marketable securities (1)	$	4,040,795	$	—	$	—	$	4,040,795
Derivative assets	$	—	$	—	$	—	$	—
Derivative liabilities	$	—	$	—	$	2,335,163	$	2,335,163
Contingent consideration	$	—	$	—	$	173,621	$	173,621

September 30, 2012:

	Level 1		Level 2			Level 3			Total
Cash and cash equivalents	$	3,377,288	$	—	$		—	$		3,377,288
Marketable securities	$	106,500	$	—	$		—	$		106,500
Derivative assets	$	—	$	—	$		250,250	$		250,250
Derivative liabilities	$	—	$	—	$		647,213	$		647,213
Contingent consideration	$	—	$	—	$		173,621	$		173,621

Assumptions Used in Valuing Derivative Asset

The assumptions used in valuing the derivative asset were as follows:

	June 30, 2013		September 30, 2012
Risk free interest rate	NA		0.23	%
Expected life	0 Years		1.3 Years
Dividend yield	none		none
Volatility	72	%	72	%

Reconciliation of Derivative Asset

The following is a reconciliation of the derivative asset:

Value at September 30, 2011	$	161,125
Receipt of instruments		—
Increase in value		89,125
Net settlements		—
Value at September 30, 2012	$	250,250
Receipt of instruments		—
Change in value		(250,250	)
Net settlements		—
Value at June 30, 2013	$	—

Change in Fair Value of Contingent Consideration Obligations

There were no changes in contingent consideration fair value.

Value at September 30, 2011	$	—
Purchase price contingent consideration		173,621
Contingent consideration payments		—
Change in fair value of contingent consideration		—
Value at September 30, 2012	$	173,621
Purchase price contingent consideration		—
Contingent consideration payments		—
Change in fair value of contingent consideration		—
Value at June 30, 2013	$	173,621

Warrants

Assumptions Used in Valuing Derivative Liabilities

The assumptions used in valuing the derivative liabilities were as follows:

2010 Warrants	June 30, 2013		September 30, 2012
Risk free interest rate	0.51	%	0.31	%
Expected life	2.5 Years		3.2 Years
Dividend yield	none		none
Volatility	69	%	100	%

2012 Warrants	June 30, 2013		September 30, 2012
Risk free interest rate	1.41	%	N/A
Expected life	4.5 Years		N/A
Dividend yield	none		N/A
Volatility	69	%	N/A

2013 Warrants	June 30, 2013		September 30, 2012
Risk free interest rate	1.41	%	N/A
Expected life	4.6 Years		N/A
Dividend yield	none		N/A
Volatility	69	%	N/A

Reconciliation of Derivative Liability

The following is a reconciliation of the derivative liability related to these warrants:

Value at September 30, 2011	$	944,980
Issuance of instruments		—
Change in value		(297,767	)
Net settlements		—
Value at September 30, 2012	$	647,213
Issuance of instruments		1,137,896
Issuance of instruments		1,015,923
Change in value		(465,869	)
Net settlements		—
Value at June 30, 2013	$	2,335,163

Exchange rights

Assumptions Used in Valuing Derivative Liabilities

The assumptions used in valuing the derivative liability were as follows:

	June 30, 2013		September 30, 2012
Risk free interest rate	1.41	%	0.62	%
Expected life	4.5 Years		5.3 Years
Dividend yield	none		none
Volatility	69	%	100	%

Reconciliation of Derivative Liability

The following is a reconciliation of the derivative liability related to these exchange rights:

Value at September 30, 2010	$	—
Issuance of instruments		100,650
Change in value		(69,758	)
Value at September 30, 2011	$	30,892
Issuance of instruments		—
Change in value		(20,520	)
Net settlements		—
Value at September 30, 2012	$	10,372
Issuance of instruments		—
Change in value		(9,877	)
Net settlements		—
Value at June 30, 2013	$	495

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

+ References+ Details