Derivative Financial Instruments

12 Months Ended

Jun. 30, 2013

Derivative Financial Instruments

Derivative Financial Instruments

18. Derivative Financial Instruments (Warrant Liability)

The Company accounted for the June 2012 Warrants issued to investors under the June 11, 2012 Securities Purchase Agreement (see Note 17 above) in accordance with ASC 815-10, Derivatives and Hedging ("ASC 815-10"). ASC 815-10 provides guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity's own stock. This applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative under ASC 815-10, including any freestanding financial instrument that is potentially settled in an entity's own stock.

Due to certain adjustments that may be made to the exercise price of the June 2012 Warrants if the Company issues or sell shares of its Class A common stock at a price which is less than the then current warrant exercise price, the June 2012 Warrants have been classified as a liability as opposed to equity in accordance with ASC 815-10 as it was determined that the June 2012 Warrants were not indexed to the Company's Class A common stock. As a result, the fair value of the June 2012 Warrants were remeasured on June 30, 2013 to reflect their fair market value at the end of the current reporting period. The June 2012 Warrants will be remeasured at each subsequent financial reporting period. The change in fair value of the June 2012 Warrants is recorded in the statement of operations and comprehensive income and is estimated using the Lattice option-pricing model using the following assumptions:

Inputs into Lattice model for warrants:	6/30/2013
Equivalent volatility		81.03	%
Equivalent interest rate		0.44	%
Estimated stock price	$	1.0866
Floor	$	1.1500
Greater of estimated stock price or floor	$	1.1500
Probability price < Strike		75.95	%
Fair value of put	$	0.8457
Probability of Fundamental Transaction occuring		5	%

All warrants issued by the Company other than the above noted June 2012 Warrants are classified as equity.

The warrant liabilities are considered a recurring Level 3 fair value measurement, with a fair value of $1,102,021 at June 30, 2013.

The following table summarizes the activity of Level 3 inputs measured on a recurring basis for the year ended June 30, 2013:

	Warrant Liability
Fair value, June 30, 2012	$	1,087,296
Change in fair value of warrant liability		14,725
Fair value, June 30, 2013	$	1,102,021