FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

6.  FAIR VALUE OF FINANCIAL INSTRUMENTS

In accordance with the fair value hierarchy described in Note 2, the following table shows the fair value of the Company’s financial instruments that are required to be measured at fair value as of March 31, 2013 and June 30, 2012:

March 31, 2013 (unaudited)	Level 1		Level 2		Level 3		Total
Cash equivalents	$	192,572	$	-	$	-	$	192,572
Common stock warrant liability, warrants exercisable at $2.6058 from September 18, 2011 through September 18, 2016	$	-	$	-	$	2,167,854	$	2,167,854
Common stock warrant liability, warrants exercisable at $5.90 through September 14, 2013	$	-	$	-	$	168	$	168

June 30, 2012	Level 1		Level 2		Level 3		Total
Cash equivalents	$	141,107	$	-	$	-	$	141,107
Common stock warrant liability, warrants exercisable at $2.6058 from September 18, 2011 through September 18, 2016	$	-	$	-	$	917,440	$	917,440
Common stock warrant liability, warrants exercisable at $5.90 through September 14, 2013	$	-	$	-	$	1,126	$	1,126

As of March 31, 2013 and June 30, 2012, the fair values of the Company’s Level 1 financial instruments were $192,572 and $141,107, respectively. These financial instruments consist of cash equivalents, including money market accounts. As of March 31, 2013 and June 30, 2012, the Company held no Level 2 financial instruments.

As of March 31, 2013 and June 30, 2012, the fair values of the Company’s Level 3 financial instruments totaled $2,168,022 and $918,566, respectively. The Level 3 financial instruments consist of common stock warrants issued by the Company in March 2011 and March 2007, which include features requiring liability treatment of the warrants. The fair value of warrants issued in March 2011 to purchase 3.9 million shares of the Company’s common stock is based on valuations performed by an independent third party valuation firm. The fair value was determined using proprietary valuation models using the quality of the underlying securities of the warrants, restrictions on the warrants and security underlying the warrants, time restrictions and precedent sale transactions completed in the secondary market or in other private transactions. As of March 31, 2013, the fair value of warrants issued in March 2007 to purchase 903,955 shares of the Company’s common stock was estimated by the Company to be $168 using the Black-Scholes with the following assumptions: dividend yield of 0%, expected stock price volatility of 0.54, risk free interest rate of 0.11%, and an expected life of six months. There were no transfers of assets or liabilities between level 1, level 2, or level 3 during the periods ended March 31, 2013 and June 30, 2012.

The following table summarizes the changes in fair value of the Company’s Level 3 financial instruments for the nine months ended March 31, 2013 and 2012:

	Nine months ended
	March 31,
	2013			2012
	(unaudited)			(unaudited)
Balance, Beginning of period	$	918,566		$	2,732,253
Purchase, sales, issuance, settlements, or transfers		-			-
Gain (loss) due to change in fair value of warrant liabilities, net		(1,249,456	)		1,983,442
Balance, End of period	$	2,168,022		$	748,811