COMMON STOCK WARRANTS AND OPTIONS

12 Months Ended

Jun. 30, 2013

Common Stock Warrants and Options [Abstract]

13. COMMON STOCK WARRANTS AND OPTIONS

All Common Stock warrants outstanding as of June 30, 2013 were exercisable. The following table shows exercise prices and expiration dates for warrants outstanding as of June 30, 2013:

	Exercise
Warrants	Price	Expiration
Outstanding	Per Share	Date
903,955	$ 5.90	September 14, 2013
2,148,753	$ 1.13	December 31, 2013
4,264,000	$ 2.6058	September 18, 2016
45,000	$ 2.10	December 31, 2017
7,361,708

In conjunction with an October 17, 2007 Securities Purchase Agreement, the Company issued warrants to purchase up to 17,532 shares of the Company’s Common Stock at $7.70 per share at any time through October 17, 2012 to the broker dealer who acted as the exclusive placement agent in the transaction. For the year ended June 30, 2013, warrants under this agreement expired unexercised.

In connection with a Securities Purchase Agreement with S.A.C. Capital Associates, LLC (“SAC”) entered into by the Company on March 14, 2007, the Company issued warrants to purchase 833,333 shares of Common Stock, exercisable at $6.40 per share. As a result of the adjustment provisions contained in the warrant, as of June 30, 2009, the original warrants to purchase 833,333 shares of Common Stock at $6.40 per share had changed to warrants to purchase 903,955 shares of Common Stock at $5.90 per share. The warrants are exercisable at any time through September 14, 2013. As of June 30, 2013 no warrants have been exercised under this agreement.

The warrant contains a provision that if a Fundamental Transaction occurs, notably a change in control, within ninety days of the Fundamental Transaction the warrant holder may require the Company to pay the Black-Scholes calculated value of the then unexercised warrant to the warrant holder in cash. The fair value of the 903,955 warrants was estimated using the Black-Scholes model and applying an estimated fair value adjustment related to warrant exercise restrictions, and the Company recorded a warrant liability in its Consolidated Balance Sheet of $0 and $1,126 at June 30, 2013 and 2012, respectively (see Note 9).

On August 7, 2009 in conjunction with a rights offering (the “2009 Rights Offering”), the Company issued warrants to purchase 7,285,792 shares of Common Stock, exercisable at $2.20 per share at any time prior to December 31, 2011. The warrants commenced trading on August 7, 2009, on The NASDAQ Global Market under the symbol USATW. During the years ended June 30, 2012 and 2011, 4,550 and 376,355 USATW warrants were exercised at $2.20 per share resulting in the issuance of 4,550 and 376,355 shares of Common Stock, generating cash proceeds of $10,010 and $827,981, respectively. 6,904,887 of these warrants expired unexercised on December 31, 2011. Additionally, the Company issued each of the two dealer managers warrants to purchase 145,716 shares of Common Stock that were exercisable at $2.20 per share at any time prior to August 6, 2012. The dealer manager warrants expired unexercised in August 2012.

On May 12, 2010, in conjunction with a public offering (the “2010 Public Offering”), the Company issued warrants to purchase 2,753,454 shares of Common Stock, exercisable at $1.13 per share at any time prior to December 31, 2013. The warrants commenced trading on May 24, 2010 on The NASDAQ Global Market under the symbol USATZ. During the years ended June 30, 2013, 2012 and 2011, 369,287, 0 and 235,414 USATZ warrants were exercised at $1.13 per share for cash proceeds of $417,294, $0 and $266,018, respectively. As of June 30, 2013 warrants for the issuance of 2,148,753 shares of Common Stock remain unexercised.

In conjunction with the 2010 Rights Offering (see Note 12), the Company issued USATZ warrants to purchase 261,953 shares of Common Stock, exercisable at $1.13 per share at any time prior to December 31, 2013. During the year ended June 30, 2011 all of these warrants were exercised at $1.13 per share for cash proceeds of $296,007.

Additionally, the Company issued to Source Capital Group (“Source”), placement agent of the 2010 Public Offering and the 2010 Rights Offering, warrants to purchase 165,207 and 15,717 shares of Common Stock, exercisable at $1.13 per share at any time prior to May 12, and July 7, 2013, respectively. During the years ended June 30, 2013, 2012 and 2011 Source elected cashless exercises of 36,186, 2,767 and 127,497 warrants resulting in the issuance of 17,094, 990 and 83,472 shares of Common Stock, respectively. During the year ended June 30, 2013, 13,216 shares of Common Stock were issued for warrants exercised at $1.13 per share for cash proceeds of $14,934. Warrants for the issuance of up to 1,258 shares of Common Stock expired unexercised in May 2013.

In conjunction with the 2011 Private Placement Offering (see Note 12), the Company issued warrants to purchase 3,900,000 shares of Common Stock at an exercise price of $2.6058 per share. Additionally, the Company issued the placement agent warrants to purchase 364,000 shares of common stock at $2.6058 per share. The 4,264,000 warrants are exercisable from September 18, 2011 through September 18, 2016. As of June 30, 2013, no warrants have been exercised under this offering.

The 3,900,000 warrants issued under the 2011 Private Placement Offering contain a provision that if a Fundamental Transaction occurs, notably a change in control, the warrant holder may require the Company to pay the Black-Scholes calculated value of the then unexercised warrant to the warrant holder in cash. The fair value of the warrants was estimated, and the Company recorded a warrant liability in its Consolidated Balance Sheet of $650,638 and $918,566 at June 30, 2013 and 2012, respectively (see Note 9).

In conjunction with the Loan and Security agreement (Note 7) and as a condition of the Bank entering into the First Amendment, the Company issued to the Bank warrants to purchase up to 45,000 shares of common stock of the Company. The warrants are exercisable at any time prior to December 31, 2017 at an exercise price of $2.10 per share. Upon the issuance of the 45,000 shares of common stock, the fair value of the warrants is $55,962 using a Black Scholes model, which was recorded as prepaid interest and included in other assets on the Consolidated Balance Sheet, and is being amortized as non-cash interest expense over the remaining term of the Line of Credit as amended in January 2013. Non-cash interest of $53,867 has been recognized for the year ended June 30, 2013. As of June 30, 2013 none of these warrants has been exercised.

Common Stock Option activity during the years ended June 30, 2013, 2012, and 2011 was as follows:

						Weighted-
				Exercise		Average
	Options			Price		Exercise
	Outstanding			Per Share		Price

Outstanding and exercisable at June 30, 2010		160,000		$	7.50-8	$	7.52
Granted		-			-		-
Expired		(69,334	)	$	7.50	$	7.50
Outstanding and exercisable at June 30, 2011		90,666		$	7.50-8	$	7.53
Granted		-			-		-
Expired		(45,333	)	$	7.50-8	$	7.53
Outstanding and exercisable at June 30, 2012		45,333		$	7.50-8	$	7.53
Granted		-			-		-
Expired		(45,333	)	$	7.50-8	$	7.53
Outstanding and exercisable at June 30, 2013		-		$	-	$	-

Prior to June 30, 2009 the Company’s Board of Directors granted options to employees and Board members to purchase shares of Common Stock at prices that were at or above fair market value on the dates the options were granted. The option term and vesting schedule were established by the contracts under which the options were granted. There was no compensation expense related to the vesting of options outstanding in the years ended June 30, 2013, 2012, and 2011 as all options were vested, and all related compensation expense had been recognized, prior to the June 30, 2011 fiscal year.