10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

———————

FORM 10-K

———————

þ  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: June 30, 2013

or

¨  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: _____________ to _____________

GelTech Solutions, Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-52993	56-2600575
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation or Organization)	File Number)	Identification No.)

Address of Principal Executive Office: 1460 Park Lane South, Suite 1, Jupiter, Florida  33458

Registrant’s telephone number, including area code: (561) 427-6144

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001, par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  ¨ Yes   þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   ¨ Yes   þ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  þ Yes     ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   þ Yes   ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  ¨   þ No

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $5.7 million based on December 31, 2012 closing price of $0.32 per share.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.  34,001,101 shares outstanding as of September 23, 2013.

INDEX

		PAGE
	PART I
Item 1.	Business.	1
Item 1A.	Risk Factors.	11
Item 1B.	Unresolved Staff Comments.	11
Item 2.	Properties.	11
Item 3.	Legal Proceedings.	12
Item 4.	Mine Safety Disclosures.	12
	PART II
Item 5.	Market for Registrant’s Common Equity and Related Shareholder Matters and Issuer Purchases of Equity Securities.	13
Item 6.	Selected Financial Data.	13
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	14
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	28
Item 8.	Financial Statements and Supplementary Data.	28
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.	28
Item 9A.	Controls and Procedures.	28
Item 9B.	Other Information.	29
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	30
Item 11.	Executive Compensation.	30
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	30
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	30
Item 14.	Principal Accountants Fees and Services.	30
	PART IV
Item 15.	Exhibits, Financial Statement Schedules.	31

SIGNATURES 33

PART I

ITEM 1. BUSINESS

GelTech is a Delaware corporation organized in 2006. Our current business model is focused on the following environmentally friendly products:

●

FireIce® – a fire suppression and fire retardant product,

●

Emergency Manhole FireIce Delivery System, or EMFIDS – a system which immediately disburses FireIce® on the ladder and on the utility worker when there is a fire in the manhole,

●

FireIce® HDU – a home defense unit allowing homeowners to apply FireIce® to protect homes from advancing wildfires,

●

Soil₂O®– “Dust Control” – a dust control product we introduced in fiscal 2011, which substantially reduces water usage and

●

Soil₂O® – a line of agricultural moisture retention products.

FireIce®

Industry Overview

The fire suppression market in the United States is currently estimated at about $888 million and is estimated to exceed $1 billion by 2016 according to an IHS report released in November 2012.  Until 1989, halon was a popular fire suppressant because it could be used to protect highly valued assets that would be damaged by traditional water sprinkler systems.  However, in 1989 the Montreal Protocol determined that halon depleted the ozone layer, and in 1994, the United States Environmental Protection Agency banned its production.  Since then, the lack of availability of halon fire suppressants has sparked worldwide efforts in developing alternative firefighting agents and delivery systems. In November 2010, the United Nations Environment Programme adopted a resolution urging states to intensify development of acceptable halon alternatives for fire extinguishing systems used in aircraft and hand-held fire extinguishers.  The following year, the International Civil Aviation Organization agreed to phase out the use of halon in hand-held fire extinguishers on aircraft by 2016.

Our fire suppression business has two marketing thrusts:

●

suppression of structural and other fires within cities and towns, including manhole and utility pole fires, and

●

suppression of wildland fires managed by federal and state land stewardship agencies.

According to the National Fire Protection Association, in 2012 there were 1,389,500 fires in the United States that caused approximately $11.7 billion in damage. In 2012, there were 25,612 structural fires in New York where the fire department budget has an operating budget for fiscal year 2013 of $1.7 billion. The United States Forest Service, or the Forest Service, and the Department of the Interior are responsible for protecting most federal lands from wildfires. For fiscal year 2013, approximately $3.2 billion has been appropriated to the Forest Service and the Department of the Interior for the purpose of protecting federal lands from wildfires, which includes approximately $369 million to be used in the suppression of wildfires.  California experienced its worst fire in history with the recent fire in Yosemite National Park.

1

Our Fire-Suppression Products

FireIce® is the registered trade name of our fire suppression product. FireIce® is a dry powder that when added to water in very low concentrations (0.07 to 1.2 percent by weight), rapidly absorbs water to produce a gel whose consistency depends on the selected concentration. The dry powder can be easily mixed with water. Within seconds of being mixed with water, FireIce® is ready to use and turns into a fire preventing, heat absorbing and fire suppressing gel. In many applications the gel forms a cohesive layer which acts as a vapor barrier and prolongs the effectiveness of the water. Due to the gel layer created by FireIce® on burning and adjacent objects, FireIce® also has the ability to suffocate a fire.  

FireIce® has the following properties. We believe it:

●

is non-toxic,

●

is environmentally safe,

●

is non-corrosive to metals,

●

mixes easily with water,

●

will not clog or stick in spraying devices,

●

reduces the threat of a fire rekindling,

●

extinguishes fires more rapidly than traditional methods, and

●

is lighter when mixed with water than competing products thus reducing airframe stress in aerial applications

In addition to selling FireIce® by itself, we have developed two products which use FireIce®: (i) EMFIDS and (ii) FireIce® Home Defense Unit.

Since January 2009, our senior management has focused on marketing FireIce® to Consolidated Edison, or Con Ed, to develop a preferred solution in combating manhole and utility pole fires.   This led to the recent development of the EMFIDS which is an innovative system designed to deliver a mixture of FireIce® and water into a manhole in order to coat the ladder and the utility worker in the event of an incident involving an explosion or fire in the manhole while utility workers are in the manhole performing routine repairs or maintenance.  The unit has been designed by GelTech to be quickly set up and disassembled by utility crews. EMFIDS delivers FireIce® from 12 custom designed strategically located spray nozzles, six on the ladder itself and six on a halo that fits into the opening of the manhole.  The FireIce® and water mixture is contained in a pressurized tank which is mounted to the utility company’s vehicle and is connected to the unit by one hose; that connects to both the ladder and the halo.  EMFIDS can be activated three ways (1) manually by pressing an activation button on the control panel located in the maintenance vehicle, (2) automatically by a heat sensor located on the halo and (3) manually by pressing an activation button located on the ladder.  Once activated, the system is designed to deliver FireIce® continuously for at least one minute.  The main purpose of EMFIDS is to maintain the integrity of the ladder in the manhole and to coat the utility worker with FireIce®, providing the worker the opportunity to escape the manhole thereby improving the worker’s chance for survival.  Each time a unit is activated, GelTech will require that the unit be returned to a nearby GelTech facility to be cleaned, inspected, recharged and refilled with FireIce® prior to being redeployed in the field.

The Home Defense Unit is sold in three versions (i) an industrial version which includes a pressure cleaner, a patented wand assembly and FireIce® powder; (ii) a smaller version for homeowners which consists of a smaller pressure cleaner, a patented wand assembly and FireIce® powder; and (iii) the patented wand assembly and FireIce® powder for those homeowners who have pressure cleaners.

Uses

There are many existing and potential uses for FireIce®. Because it is both a fire suppressant and a medium term fire retardant, FireIce® allows greater flexibility in attacking fires as follows:

●

FireIce® can be sprayed directly on manhole and utility pole fires with our innovative eductor wand.

2

●

FireIce® can be dispensed via EMFIDS on the ladder and utility worker during an emergency that occurs while workers are performing repairs or routine.

●

FireIce® can be applied by firefighters, or consumers using our FireIce® Home Defense Unit, directly to buildings and other structures as a retardant to protect them from advancing fires.

●

FireIce®, mixed with water can be dispensed and applied by all types of wildland and urban firefighting equipment used in direct fire suppression. This includes pressurized water extinguishers, pumper and brush trucks, fixed wing aircraft and helicopters, backpack extinguishers, or even hand held spray bottles.

●

FireIce® can also be rapidly sprayed on foliage to create a firebreak and prevent the spread of fires.

●

FireIce® absorbs many times its own weight in water and is a much more homogenous mixture producing a more consistent drop pattern with increased droplet size that reduces drift and evaporation when dropped aerially.

The National Interagency Fire Center reported that in 2012, there were 67,774 wildfires affecting 9.3 million acres in the U.S., making 2012 the third highest wildfire season.

Fires are not only a major problem in the United States. In August 2010, Russia suffered immense forest fires causing more than 60 casualties, destroying one third of all crops, and resulting in a nationwide ban on grain exports by the world’s third largest wheat producer. The total damages were estimated to be up to $15 billion to the Russian economy (or one percent of Russia’s Gross Domestic Product).  By July 2012, more than 30 wildfires were blazing in eastern Russia, causing damage to more land than all of the wildfires of 2010.  Due to extreme heat, Australia also faced widespread wildfires in 2012 and 2013.  From September 2012 through January 2013, Australia was battling over 141 wildfires burning through more than 324,000 acres of forest and farmland.  FireIce® can play a major role in extinguishing and containing wildland fires, including forest fires, by being sprayed from airplanes directly over such fires, including in areas too dangerous for ground-based firefighters to enter. FireIce® can also be sprayed from tanker trucks on the edges of these fires.

FireIce® also has a number of potential retail and consumer uses:

●

It can be sprayed out of fire extinguishers.

●

It can be used in a spray bottle by professionals, such as welders, who work with blowtorches.

Sales and Marketing

Prior to FireIce being listed on the US Forest Service QPL list, we initially focused our marketing efforts on local fire departments and local government officials stressing that we have the only gel that can be sold to fire departments for application directly on fires. Competitive gels can be applied to burning structures as a retardant but not as a fire suppressant.

We market and sell FireIce® through fire equipment distributors, online and direct marketing, attendance at fire industry national trade shows and through our sales staff members who call on potential customers and respond to inquiries.

3

Because of the wildfires which threaten the United States each year, we understand the potential for FireIce® and the tremendous marketplace for aerial firefighting in conjunction with the Forest Service. In March 2011, GelTech was notified by the Forest Service that FireIce® would be listed on the Forest Service’s Qualified Products List, or the QPL List. Inclusion on the QPL List qualifies our product for use to fight brush and wildfires on State and Federal lands. GelTech anticipates that this listing will lead to a substantial increase in the sales of FireIce® in the future. In May 2012, we were one of two companies awarded blanket purchase agreements by the Forest Service to provide FireIce® product and services in support of single engine air tankers (SEATS), helicopters and very large air tankers (VLATS) in aerial wildland firefighting operations and also for wildland firefighting ground operations. While these agreements do not require the Forest Service or other governmental agencies to use our product or services, the agreements establish the pricing and terms in the event any of these agencies deploy our equipment and product to fight wildfires.  Since we received the agreements, we have been deployed by the Bureau of Indian Affairs on wildfires in New Mexico and have been used on a limited basis by the Forest Service to fight fires in Washington. Under the terms of our approval by the Forest Service, FireIce® may be deployed for use on wildfires except in fixed-tank helicopters and multi-engine planes. To date, the Company has not generated material revenue from the application of FireIce® for wildland firefighting.

In January 2012, two homes were protected by firefighters from a fast moving grass fire in Montana by applying FireIce® to the homes and surrounding foliage

To date, the sales of the Home Defense Unit have not been material. We expect to support the Home Defense Unit by continuing to market it in California and in other western states where homes are threatened by wildfires. These efforts may include local advertising where appropriate and recruiting local distributors. We currently have one distributor in each of Colorado, Montana, Nevada and Southern California.  

In July 2013, we received a substantial purchase order from Con Ed for the EMFIDS.  Earlier in 2013, we opened a facility in Brooklyn, New York to help support Con Ed’s use of FireIce® to combat manhole fires and the same location will be used to facilitate the implementation and use of the EMFIDS.

We intend to market the use of the EMFIDS to other utility companies throughout the United States.

In addition to domestic sales, we have also devoted efforts to sell FireIce® internationally. We believe the international market may provide us an important opportunity.

In November 2011, we entered into an exclusive distribution agreement for Australia. Our distributor, which has operations in 38 countries and generates annual revenues of €2 billion, is required to make minimum annual purchases in order to retain its exclusive status. To date, our Australian distributor has not met their minimum purchase commitments. In March 2012, GelTech entered into a five year exclusive distribution agreement for Turkey. In order to maintain exclusivity, the distributor has agreed to minimum annual purchases totaling $925,000 over the next five years. Initially, our Turkish distributor is required to make minimum purchases of $175,000 through 2013. To date, the Turkish distributor has made product purchases totaling $34,000.

In July 2012, we entered into an exclusive distribution agreement for the People’s Republic of China. Under the agreement, our distributor is required to make annual minimum purchases in order to maintain exclusivity and to be eligible for preferred pricing. However, GelTech and this distributor are unable to sell FireIce® in China until a trademark issue is resolved.  See the Risk Factor on page 23.

In addition to the distributor agreements in the countries noted above, we have demonstrated our product in Russia and Brazil, and have held preliminary discussions with several entities in other Asian and Pacific Rim markets.  These countries are covered by an exclusive agreement with a company in which one owner is a former officer and director of GelTech.  In March 2013, we notified the company that we were terminating the agreement, however we received notification from an attorney representing the distributor that they do not believe our termination was in accordance with the terms of the agreement, although no suit has been filed by the distributor to date. Our relationship with the former officer and director is not good.  See the lawsuit we filed against him in “Item 3 – Legal Proceedings.”

In our international sales program, we require payment in advance of shipment through irrevocable letters of credit. We also require payment in United States dollars to eliminate the risk of currency fluctuation.

In the year ended June 30, 2013, FireIce® accounted for 38.8% of our revenues.

4

Raw Materials and Suppliers

The raw materials for FireIce® are in abundant supply. The base ingredients of FireIce® are manufactured by a third party and packaging is performed for us by two other third parties. However, there are also several other companies that are able to manufacture the base ingredients.

Competition

The fire suppression market is highly competitive. However, we believe we will be able to compete effectively because:

●

FireIce® is more effective than other fire suppressants.

●

The price per gallon of FireIce® is significantly less than our competitors’ products.

●

The effectiveness of FireIce® to rapidly extinguish and deter rekindling, allows fire departments to put out fires faster which save manpower and overtime costs associated with spending extra time on a fire scene.

●

Once a fire has been extinguished, any dispensing system used to apply FireIce® can be easily cleaned with water from a garden hose.

●

Currently, FireIce® is the only water enhancing gel that can be applied to fires as a suppressant.

●

FireIce® is different from foam. Foam consists of air bubbles in water and a small amount of surfactant. When the bubbles burst, the foam collapses. When mixed with FireIce®, water is held by a three-dimensional network of cross-linked polymers. When FireIce® is applied to the fire, the water evaporates and the liquid collapses, sapping the fire of not only heat but oxygen as well. It takes longer for water to evaporate from our polymer than for air bubbles to burst. We believe this is how FireIce® provides more efficient protection and lasts longer than foam.

In the wildland firefighting industry, the market is made up of the numerous state and federal agencies responsible for protecting state and federal wildlands and parks. The market leader in the wildland chemicals industry is Phoschek. Because of the strong relationships Phoschek has with these agencies, many dating back to the 1960’s, and the natural resistance to change, which can be even greater in the government sector, we have encountered significant resistance as we attempt to gain market share. Nonetheless, we believe that FireIce® has distinct advantages over Phoschek’s products in aerial attack operations. FireIce® is more effective at suppressing fires, is non-corrosive to aircraft parts, is lighter than current Phoschek products thus reducing airframe stress and maximum load issues, is not harmful to plant fish and wildlife and has superior drop characteristics.. Phoschek is a long-term retardant. FireIce® is used in “direct attack” and, long-term retardant is used in “indirect attack”.  Direct attack is when the product is dropped directly on the fire. Indirect attack is when the product is used to create a fire break in front of the fire. Some long-term retardant gels take time to dry and cure in order to create a fire break. FireIce® is ready immediately to be used on fires. Based on these factors and our successes when used in New Mexico and Washington, we believe we will eventually overcome the competitive barriers.

Another significant competitor is Tyco Fire & Security, a major business segment of publicly-traded Tyco International Ltd. (NYSE: TYC). Tyco Fire & Security produces ANSUL®, a premium brand of special hazard fire protection products including fire extinguishers and hand line units, pre-engineered restaurant, vehicle, and industrial systems; sophisticated fire detection/suppression systems and a complete line of dry chemical, foam, and gaseous extinguishing agents. Tyco Fire & Security is a very well-funded company and has significantly more financial, marketing and sales resources than us. Ansul’s main sales thrust is the installation of “in building” fire suppression systems, but they manufacture a wide variety of products. They also have a very extensive distributor list and have a significant share of the market that we are attempting to enter.

5

Another competitor is U.S. Foam Technologies, a manufacturer and distributor of environmentally friendly firefighting foams. It is a small company whose main marketing thrust is to attract customers to its website through the use of the Google “adwords” program. It also markets its foams at the national firefighting conventions. Since we eventually intend to market FireIce® throughout the entire United States, and because U.S. Foam Technologies’ main focus appears to be the Midwest, we do not believe it will be a competitive threat in the near future.

National Foam, part of the Kidde Fire Fighting organization, is a manufacturer of foam concentrate, foam proportioning systems, fixed and portable foam firefighting equipment, monitors, nozzles and specialized big flow pumping solutions. National Foam has historically been at the forefront of foam fire fighting and fire control technology and is the acknowledged world leader in providing foam based solutions. Other brands associated with National Foam include: Feecon, offering airport crash rescue and general mobile firefighting equipment and Wirt Knox, offering a range of hose racks, reels, carts and general hose storage accessories. National Foam has significant financial resources and is part of a large fire fighting company conglomerate. Thus, it has significantly more financial, marketing and sales resources than we do.

Thermo-Gel® provides the fire fighting industry with a product that can be used for structure protection, exposure protection, defensible perimeters and wet lines. This product consists of superabsorbent polymers-polyacrylamide and sodium polyacrylate, mineral oil, and surfactants, and is supplied as a liquid concentrate which is mixed in an eductor. It does require special expensive equipment to use. Thermo-Gel is used in fighting active fires, wildland fires, prescribed burns, aviation applications, and in the protection of all types of structures from homes to commercial and industrial investments. This product has been approved by the Forest Service. In addition to the expense of the equipment needed to use the product, ThermoGel also requires frequent agitation to remain usable, has poor drop characteristics, requires a 30 minute hydration time and is difficult to clean off of aircraft, mixing equipment and airport tarmacs.

Seasonality

There is no real seasonality to structural fires. These occur throughout the year. In wildland fires, FireIce® use will be more likely during the warmer, drier summer months when forest and other wildland fires are more prevalent. However, in Southern California wildland fires occur year round and are most damaging in September and October. This seasonality may be minimized if we are able to expand our distribution internationally to countries in the Southern hemisphere. The seasonality for manhole fires falls in the Summer and Winter months.

Soil₂O “Dust Control”

Industry Overview 

Dust control is vital to several industries including agriculture, construction, mining and transportation. In response to the level of dust emissions from agricultural, mining and other industries, the Environmental Protection Agency, or the EPA, issued proposed rules titled National Ambient Air Quality Standards for Particulate Matter which were published in the Federal Register on June 29, 2012. These proposed rules reduce the amount of allowable dust released in the air by one-half. According to the EPA’s website, dust accounts for over 25% of particle matter smaller than 2.5 micrometers in diameter, which are the major cause of reduced visibility or haze in parts of the U.S., and it accounts for over 78% of particle matter smaller than 10 micrometers in diameter, which causes respiratory related health issues. Dust also causes environmental damage such as acid rain, increased acidity in lakes and streams, depletion of nutrients in the soil and damage to sensitive forests and farm crops. In terms of agriculture, the U.S. Department of Agriculture, or USDA, estimates the total annual cost of soil erosion from agriculture in the U.S. is about $44 billion per year.  According to the Global Education Project, nearly one-third of the world’s cropland has been abandoned because of soil erosion and degradation over the past 40 years.  In terms of mining, according to the U.S. Geological Survey, a bureau of the U.S. Department of the Interior, reported that in 2012, there were about 4,155 stone quarries and 93 stone mines which release large amounts of dust in the atmosphere.

6

The Product

In May 2011, GelTech launched a new product called Soil₂O® “Dust Control” using its environmentally friendly Soil₂O® product. “Dust Control” is useful in a variety of commercial and industrial markets with dust control and moisture retention problems including road construction sites, rock pits, unpaved roadways, landfills and coal piles. In contrast to the standard product used on gravel roads and rock pits and other dust causing surfaces, Soil₂O® “Dust Control” is environmentally friendly and requires significantly less water. Water is commonly transported to sites in large trucks. Thus, “Dust Control” reduces a company’s carbon footprint by reducing the number of vehicle trips. In addition, fewer trips reduces labor, water and fuel costs and reduces the wear and tear on vehicles and equipment.

Uses

Soil₂O® “Dust Control” may be used in a variety of ways to control dust in multiple industries, including the following:

●

Soil₂O® “Dust Control” may be sprayed on mining, rock quarry or landfill haul roads to eliminate dust from constant traffic,

●

Soil₂O® “Dust Control” can be sprayed on quarry conveyor belts to reduce airborne dust, and

●

Soil₂O® “Dust Control” can be sprayed on coal ash beds to reduce airborne dust at coal fired power plants.

●

Soil₂O® “Dust Control” can be sprayed on horse tracks and corrals to reduce airborne dust.

●

Soil₂O® “Dust Control” can be used to maintain unpaved raceways and parking lots at rural dirt tracks used for auto racing.

Benefits

Soil₂O® “Dust Control” is beneficial because it will reduce the number of times companies will need to spray haul roads, thus reducing water usage, fuel, maintenance and labor costs. In addition, the product is non-toxic and environmentally friendly and can be integrated into the reclamation process for mining companies, instead of being a product that needs to be cleaned up.

Sales and Marketing

We began sales of Soil₂O® “Dust Control” in Southern California in December 2010 and have two full-time employees responsible for selling the product, focusing on dust control for the rock quarry, construction, and agricultural industries. In the year ended June 30, 2013, Soil₂O® “Dust Control” accounted for 37.3% of our revenue

In May 2013, our Chief Technology Officer spent four days working with a large international mining company demonstrating Soil₂O® “Dust Control’s” effectiveness in mitigating the dust that is created from the heavy machinery and trucks which use the mining roads.  Soil₂O® “Dust Control” was selected over two competing products in side by side testing. In April 2013, GelTech received an order for Soil₂O® “Dust Control” from this mining company.

Competition

Competition in the dust control industry runs the gamut from regional providers of product, trucks and equipment to multinational chemical companies providing chemical solutions and application equipment on a global basis. Generally speaking, the industry consists of products made up of chemical compounds that are in some form or fashion petroleum based, are much more expensive per application and are not environmentally friendly. A large number of companies have chosen to use water alone to mitigate airborne particulate matter. For these companies, our product can be most helpful by reducing the number of watering trips necessary to control dust thus reducing the overall cost of dust control and reducing the cost of any remediation which may be required by current EPA guidelines.

7

There are a few niche dust control products in the marketplace. The main and most widely used product is Magnesium Chloride, or MagChloride. MagChloride has a hygroscopic quality which has the ability to absorb moisture from the air, controlling the number of small particles which become airborne. MagChloride still needs many laps with a water truck to keep it hydrated and working. After just a few applications our “Dust Control” product offering helps to limit the times a water truck is needed, saving fuel, labor costs, and thousands of gallons of water per day.

Soil₂O®- Agricultural Application

Industry Overview

According to the USDA, although less than 15 percent of U.S. cropland is irrigated, agriculture accounts for 80 percent of the nation’s consumptive water use.  According to the World Bank, agricultural water management is a vital practice in ensuring food security, poverty reduction, and environmental protection.  However, irrigation in all forms costs billions of dollars a year.  The total estimated cost for irrigation in 2012 for the Central Valley Project in California alone was $3,597,358.  The total value of all loans currently held by the World Bank for irrigation and drainage is $3.7 billion.  After decades of successfully expanding irrigation and improving productivity, farmers and managers face an emerging crisis in the form of poorly performing irrigation schemes, slow modernization, declining investment, constrained water availability, and environmental degradation. Similarly, irrigation for golf courses can be costly as well.  According to the United States Golf Association, it is not uncommon for irrigation systems to cost more than $1 million per golf course.  Effective irrigation and water management practices can help maintain profitability for farmers and golf course managers in an era of increasingly limited and more costly water supplies.  

Drought conditions also affect the cost of agriculture and water consumption.  In August 2012, drought conditions in the U.S. caused corn yields – which account for nearly 40% of the global harvest – to be 17% lower than expected, contributing to a rise in food prices.  In response, the federal government passed a $383 million emergency drought aid package for farmers, also known as the Agricultural Disaster Assistance Act of 2012.  Furthermore, President Obama announced that farmers would be provided with nearly $80 million in additional funding, and several State legislatures passed emergency drought assistance legislation as well.  

The Product

Soil₂O®’s main ingredient is a potassium based co-polymer. Versions of this product have been used in the agricultural industry for many years. Soil₂O® can absorb hundreds of times its weight in water. Water is rapidly drawn into a polymer network where it is stored. As the soil dries out, the polymer releases up to 95% of the water it has absorbed back into the soil. Therefore, the water becomes available when the plants need it most. Soil₂O® is available in different particle sizes — the finer the size of the particle, the greater its absorption capacity and speed.

We are marketing two distinct versions of Soil₂O®, a sprayable version and a granular one. The sprayable version is a fine particle blend that is for use on existing grass and can be applied using any type of spray rig or backpack sprayer. The granular product has been formulated to be tilled into the top four to six inches of the soil to assist in replacing and replanting of grass, including sodding and seeding, and is also recommended to be used during the planting of trees, shrubs, and annuals. The granular version is appropriate for planting situations in which the grass is not already established. We are now selling both versions to our distributors which are marketing the products to the agricultural and other markets.

Soil₂O® degrades naturally in the soil. Sunlight and salinity exposure make it break down faster. The Soil₂O® sprayable version is used as a top dressing and sprayed onto already established turf and grasses. Our formulation provides a specifically formulated particle size which, with irrigation, gets down to the roots to supply turf and grasses with water and nutrients. Since the sprayable particle size is very small and not as protected from the ultraviolet light given off by the sun as the granular form, it is broken down much more rapidly than the granular form. The granular form of Soil₂O® is tilled directly into the soil and will last for three to five years without having to be reapplied. The market for the granular product includes newly-designed golf courses, courses doing replanting as part of their continual golf course maintenance or any new landscaping project. Although granular form re-orders for large scale use may be limited due to its long duration in soil, we expect it to be used in both industrial and retail markets for the planting of landscaping which always has constant turnover due to landscaping re-design, re-planting and young tree mortality rates. We have initiated marketing both versions of Soil₂O® to the agricultural market.

8

Uses

Soil₂O® has multiple potential uses in the agricultural market:

●

Soil₂O® products are specially designed for use as a soil conditioner for water and nutrient retention, interior and exterior farming including growers, turf farms and greenhouses, landscaping, forestry, horticulture and golf course maintenance. Each product’s goal is to increase the water holding capacity of soils and potting mixes, thereby reducing the frequency of irrigation, as well as reducing leaching of valuable nutrients.

●

Soil₂O® can also be beneficial for lawns and sod by improving germination and promoting regular even growth of lawns. This is especially useful for turf farms, golf courses and grass in parks and gardens.

●

Soil₂O® can be effective in agriculture, particularly in commercial farming. By storing water for later release as the soil becomes drier, Soil₂O® delays wilting and makes it possible for certain plants to become better established while waiting for rain or irrigation to begin. In one test, the use of Soil₂O® in rain fed sugar cane increased the yield by approximately 25%.

●

By absorbing fertilizer, Soil₂O® reduces the amount that runs out of the soil and makes it available to the plants for a longer period of time.

●

Soil₂O® can be used in the planting of trees, bushes and saplings by enhancing root development and reducing mortality rates due to transplant shock.

●

Soil₂O® can keep plants, trees and cut flowers hydrated and thereby facilitate their transportation over long distances.

We believe that the water scarcity in the U.S. has created an opportunity to demonstrate to governments that Soil₂O® can provide a solution for the agricultural market in areas where farmers use irrigation to water crops. In addition, the agriculture market has a substantial problem in related to fertilizer and nutrient leaching. Soil₂O® has been shown to be successful in retaining fertilizer and nutrients at the root level, thus reducing leaching.

Sales and Marketing

GelTech has recently limited its marketing efforts for Soil₂O® to applications for golf courses and commercial landscapers.  Golf course superintendents find the product works well on berms and around sand traps where water run-off is an issue. Commercial landscapers use our granular product to improve growth and reduce plant mortality for new plantings.

In the year ended June 30, 2013, Soil₂O® accounted for 6.2% of our revenue.

Raw Materials and Suppliers

Our Soil₂O® base ingredients are manufactured for us by a third party. There are several other companies that are also capable of manufacturing the main ingredients.

Competition

Polymers have been marketed on and off for over 20 years as additions to soil to increase water retention and reduce irrigation. Numerous companies appear to have products that are very similar to Soil₂O®. Some of these companies are:

●

Horticultural Alliance, Inc.

●

Turbo Technologies, Inc.

●

American Soil Technologies, Inc. [OTCBB: SOYL]

9

The first two are private companies and it is unclear what financial, marketing and sales resources they have compared to us. On the other hand, American Soil Technologies, Inc. files reports with the SEC. However, from American Soil’s filings with the SEC, it is clear that it has experienced significant losses, has nominal revenue and assets, has a large accumulated deficit and has a working capital deficit which may hamper its ability to compete.  It supplies polymer soil additions and other related products. American Soil has an exclusive license to two method patents with cross-linked and linear polymers as their basis. They also have a patent on a slow release liquid fertilizer. American Soil also has two patents on a machine designed to install its liquid products in mature turf as well as some standing crops. Since we do not currently have a patent on Soil₂O® itself or on any of its uses, it is possible that a competitor could reverse engineer Soil₂O® and market it under its own brand name. We have filed a patent application for the sprayable version of Soil₂O®.

Seasonality

We expect Soil₂O® will experience seasonality in sales during the fall and winter quarters. However, we do not expect as much seasonality in the Southeastern areas that generally experience year round growing cycles, with the sale of the agricultural products preceding the growing cycle of various crops. We also believe a demand for Soil₂O® may be higher if the drought conditions affecting the Midwestern and Southwestern U.S. persist.

Intellectual Property  

The following are patents and patents pending for products we currently market or expect to market:

●

U.S. patent application, Serial No. 11/775,512 –Water retention mixture and method for spray application and International Patent application, Serial No. PCT/US2008/069398;

●

U.S. patent application, Serial No. 12/208,832 – Rapid Deployment Fire Retardant Gel Pack and International Patent application, Serial No. PCT/US2009/056532;

●

U.S. patent application, Serial No. 12/282,603 – Process and Device for Fire Prevention and Extinguishing;

●

U.S. patent, Patent No. 7,992,647 – Process and Device for Fire Prevention and Extinguishing;

●

U.S. patent application, Serial No. 12/270,485 – Method and Apparatus for Improving Fire Prevention and Extinguishment;

●

U.S. patent, Patent No. D649,294 – Firehose Eductor;

●

U.S. patent application, Serial No. 61/430,601 – Method of Controlling Road Dust in Strip Mines;

●

U.S. patent application, Serial No. 61/430,601 – Strip Mine Conveyor Belt Dust Control;

●

U.S. patent application, Serial No. 12/887,230 – Home Safety Kit;

●

U.S. patent application, Serial No. 61/754,068 – Device for Treating Manhole Electrical Fires;

●

U.S. patent application, Serial No. 61/755,237 – Device for Suppressing Electrical Conduit Fires;

●

U.S. patent application, Serial No. 61/758,594 – Fluid Dispensing ladder;

●

U.S. patent, Patent No. D637,357 – Fire Extinguisher Dispensing Hose;

●

U.S. patent, Patent No. D684,662 – Firehose Handheld Eductor Nozzle; and

●

U.S. patent application, Serial No. 12/870,333 - Water Based Fire Extinguisher.

We also hold patents for IceWear™ and our hurricane suppression project. Our Chief Technology Officer continues to develop potential new products. We recently filed new patent applications, some of which are to improve our existing technologies and others are for new products.

10

We claim trademark rights to the following marks. Federal trademark applications are on file with the United States Trademark Office:

●

GelTech Solutions®

●

FireIce®

●

SkinArmor™

●

Soil₂O®

●

IceWear™

●

WeatherTech Innovations®

Employees

As of September 23, 2013, we had 21 employees of which all are full-time employees. We hire independent contractors on an “as needed” basis only. None of our employees are subject to collective bargaining agreements. We believe that our employee relationships are satisfactory. In addition to our Chief Executive Officer and our Chief Technology Officer, we employ three other members of the Cordani family. See the section titled “Certain Relationships and Related Transactions, and Director Independence.”

Research and Development

During the last two fiscal years, GelTech spent $179,158 and $83,707 on research and development expenses.

ITEM 1A. RISK FACTORS

Not applicable to smaller reporting companies. However, our principal risk factors are described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our corporate office is located in Jupiter, Florida. We lease our office on a month-to-month basis at a monthly rental fee of $8,211. If we were required to move, we believe that there is a large supply of commercial property available in the general area which we could lease at comparable prices. We also lease space on a month-to-month basis in an industrial yard in California which houses inventory at a monthly cost of $2,600.  In February 2013, the Company signed a 12 month lease for a building in Brooklyn, New York, to support operations in the New York City area, at a monthly rent of $3,600.

11

ITEM 3. LEGAL PROCEEDINGS

David Hopkins, a former employee, sued GelTech and its Chief Executive Officer, Michael Cordani, in the 15th Judicial Circuit Court in Palm Beach County, on June 23, 2008, alleging breach of a consulting agreement and an employment agreement purportedly entered into in May and June 2007, respectively. In addition, the Complaint sought relief for fraud, civil theft, invasion of privacy and trespass. On July 23, 2012, a jury returned a verdict against GelTech for $1,046,000 ($841,000 for breach of a consulting agreement, $150,000 for fraudulent misrepresentation, $50,000 for invasion of privacy, and $5,000 for trespass) and against only Mr. Cordani for $200,000 (civil theft).  The jury found Mr. Cordani liable on the same claims as GelTech except for the breach of a consulting agreement.

In November 2012, our insurance carrier paid Mr. Hopkins $200,000 related to the invasion of privacy claim and the fraudulent misrepresentation claim.

In January 2013, the Court ruled in favor of GelTech’s post-trial motions dismissing the $200,000 civil theft claim against Mr. Cordani and reducing the verdict against GelTech to $500,000. In February 2013, GelTech was granted a new trial on damages relating to the verdict. GelTech expects the trial on damages will occur in late 2013.

On June 3, 2013, GelTech filed a lawsuit in the 15th Judicial Circuit Court in Palm Beach County, Florida, against Jerome Eisenberg, a director and former Executive Chairman, for inducing GelTech to enter into an Employment Agreement based on false representations by Mr. Eisenberg that he would facilitate a $25 million financing on behalf of GelTech. GelTech is seeking to have the Court rescind the Employment Agreement and recover the compensation paid to Mr. Eisenberg under the Employment Agreement. Mr. Eisenberg is an officer of a company which entered into a long-term Distribution Agreement with GelTech in 2009. See “Certain Relationships and Related Transactions, and Director Independence.”

ITEM 4. MINE SAFETY DISCLOSURE

Not Applicable

12

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is quoted on the Over-the-Counter Bulletin Board, or the Bulletin Board, under the symbol “GLTC”. Our common stock last traded at $0.94 on September 23, 2013. As of that date there were approximately 240 shareholders of record. We believe that additional beneficial owners of our common stock hold shares in street name. The following table provides the high and low bid price information for our common stock for each quarterly period within the two most recent fiscal years as reported by the Bulletin Board. The quotation reflects inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Fiscal Year	High		Low
2013
June 30, 2013	$	1.20	$	0.855
March 31, 2013	$	1.75	$	0.31
December 31, 2012	$	0.64	$	0.21
September 30, 2012	$	0.99	$	0.55
2012
June 30, 2012	$	1.20	$	0.65
March 31, 2012	$	1.34	$	0.40
December 31, 2011	$	0.85	$	0.55
September 30, 2011	$	1.88	$	0.70

Dividend Policy

We have not paid cash dividends on our common stock and do not plan to pay such dividends in the foreseeable future. Our Board of Directors, or the Board, will determine our future dividend policy on the basis of many factors, including results of operations, capital requirements, and general business conditions. Dividends, under Delaware General Corporation Law, may only be paid from our net profits or surplus. To date, we have not had a fiscal year with net profits and do not have surplus.

Recent Sales of Unregistered Securities

In addition to those unregistered securities previously disclosed in reports filed with the Securities and Exchange Commission, or the SEC, we have sold securities without registration under the Securities Act of 1933, or the Securities Act, as described below.

On June 3, 2013, GelTech issued 250,000 shares of common stock and 125,000 warrants (exercisable at $1.25 per share) to its Chief Operating Officer and principal shareholder for $200,000. On June 5, 2013, GelTech issued 235,295 shares of common stock to an accredited investor for $200,000. All of the securities described in this paragraph were issued without registration under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) and Rule 506 thereunder.

ITEM 6. SELECTED FINANCIAL DATA

Not required for smaller reporting companies.

13

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements that involve risks and uncertainties. Words such as may, will, should, would, anticipates, expects, intends, plans, believes, seeks, estimates and similar expressions identify such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements.

Overview

GelTech Solutions, Inc., or GelTech, markets the following products: (1) FireIce®, a water enhancing powder that can be utilized both as a fire suppressant in urban firefighting, including underground utility fires, and in wildland firefighting and as a medium-term fire retardant to protect wildlands, structures and firefighters; (2) Emergency Manhole FireIce Delivery System, or EMFIDS, an innovative system designed to deliver FireIce® into a manhole in the event of a fire; (3) FireIce® Home Defense Unit, a system for applying FireIce® to structures to protect them from wildfires; (4) Soil₂O® “Dust Control”, our new application which is used for dust mitigation in the aggregate, road construction, mining, as well as, other industries that deal with daily dust control issues; and (5) Soil₂O®, a product which reduces the use of water and is primarily marketed to golf courses, commercial landscapers and the agriculture market.  Our financial statements have been prepared on a going concern basis, and we need to generate sufficient material revenues to support the ongoing business of GelTech.

Critical Accounting Estimates

In response to the SEC’s financial reporting release, FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, the Company has selected its most subjective accounting estimation processes for purposes of explaining the methodology used in calculating the estimate, in addition to the inherent uncertainties pertaining to the estimate and the possible effects on the Company’s financial condition. The accounting estimates are discussed below. This estimate involves certain assumptions that if incorrect could create a material adverse impact on the Company’s results of operations and financial condition.

Revenue Recognition

Under ASC 605-15-25 we recognize sales of our products when each of the following has occurred:

- The price of the product sold is fixed or determinable and evidence of an agreement is present

- The title and risk of loss of the product has passed to the buyer and the sale is not contingent upon the buyer being able to resell the product.

- We have a reasonable expectation that the buyer has the intent and the ability to pay for the product ordered.

- We have no future obligation to the seller related to the product sold.

Stock-Based Compensation

We have granted stock options to our officers and directors at exercise prices equal to or greater than the fair value of the shares at the date of grant.

Under ASC 718-10 we recognize an expense for the fair value of our outstanding stock options as they vest, whether held by employees or others.

14

We estimate the fair value of each stock option and warrant at the grant date using the Black-Scholes option pricing model based upon certain assumptions which are contained in Note 1 to the Consolidated Financial Statements contained herein. The Black-Scholes model requires the input of highly subjective assumptions including the expected stock price volatility. Because our stock options and warrants have characteristics different from those of traded options, and because changes in the subjective input of assumptions can materially affect the fair value estimate, in our management’s opinion, the existing models may not necessarily provide a reliable single measure of the fair value of such stock options.

The methods, estimates, and judgments that we use in applying our accounting policies have a significant impact on the results that we report in our consolidated financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. These estimates which are discussed below involve certain assumptions that if incorrect could create a material adverse impact on GelTech’s results of operations and financial condition.

We use the trading price of our common stock, or alternatively, the price of recent private placement sales of our common stock in making our estimates.

Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere herein.

For the Fiscal Year Ended June 30, 2013 Compared to the Fiscal Year Ended June 30, 2012.

Revenue

For the fiscal year ended June 30, 2013, or Fiscal 2013, we had revenue of $526,010 as compared to revenue of $419,577 for the fiscal year ended June 30, 2012, or Fiscal 2012. Revenue during Fiscal 2013 consisted of sales of FireIce® and Soil₂O® amounting to $204,185 and $228,824, respectively. In addition, the Company recognized revenue of $93,000 for paid for research and development in Fiscal 2013.  Revenue in Fiscal 2012 consisted of sales of FireIce® and Soil₂O® amounting to approximately $209,441 and $210,136, respectively. We anticipate that our revenues from both FireIce® and Soil₂O® will increase in fiscal 2014 due to continued sales of FireIce® and the EMFIDS system to the utility industry and due to increased sales of Soil₂O® Dust Control to the mining industry.

Cost of Goods Sold

For Fiscal Year 2013, our costs of goods sold were $180,427 as compared to $185,419 for Fiscal 2012. The change is consistent with the respective revenue from product sales. We expect that our cost of sales will follow the same trend as our revenues in fiscal 2014.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $$6,103,435 for Fiscal 2013 as compared to $5,035,418 for Fiscal 2012. This increase is reflective of increases in the following major expense categories:

Salaries and employee benefits – Salaries and employee benefits increased $584,206 as a result of the hiring in October 2012 of an Executive Chairman at an annual salary of $200,000, the recognition of the expense associated with the Termination and Release Agreement with the former President of $168,920 and from the additional contract staffing for the Company’s operations facility in Brooklyn, New York to support our manhole fire pilot program for Consolidated Edison in New York of approximately $210,000.  It is anticipated that these costs will increase in fiscal 2014 as we add sales and support personnel to increase awareness of FireIce and EMFIDS in the utility industry and the wildland firefighting industry and to increase awareness of Soil₂O® dust control.

15

Professional fees - Professional fees increased $355,448 related to an increase in legal expenses of $337,000 related to lawsuits by a former employee and a former distributor, an increase in patent attorney fees of $61,000 related to the new patent filings for EMFIDs and related to trademark infringement issues in China. These increases were partially offset by a decrease in accounting consulting fees of $20,000 related to the hiring of a fulltime CFO in September 2011.

Travel expense - Travel expense increased $44,584 related to an increase in travel to/from New York to support the manhole fire pilot program and research and development with Con Ed.

Non-cash compensation – Non-cash compensation expense related to director, executive and employee stock options increased $126,015 in Fiscal 2013 related additional option, SARs and RSU grants to employees and directors. We would anticipate that these expenses would be lower in future years as a result of the forfeiture of outstanding options and SARs upon the resignation by the Company’s former President and the clawback of options and RSUs upon the termination of the Company’s former Executive Chairman.

These expense increases were partially offset by a decrease in the following expense category:

Investor relations - Investor relation costs decreased $81,099 resulting from a reduction in the number of investor presentations in Fiscal 2013. It is anticipated that these costs will continue at the Fiscal 2013 levels in fiscal 2014.

Research and Development Costs

Research and development costs for Fiscal 2013 were $179,158¸ as compared to $83,707 during the Fiscal 2012. The increase in the Fiscal 2013 amount related to research into the EMFIDS system and other FireIce® applications in the utility industry.  The Company received $93,000 for paid for research in Fiscal 2013 to offset these costs.  We expect that these costs will continue at a relatively even level as we continue to explore new products and new applications of our existing products.

Other Income (Expense)

Net other income for Fiscal 2013 was $715,263 as compared to net other expense of $2,245,092 for Fiscal 2012. In Fiscal 2013, net other income was primarily impacted by a reduction of the accrual for losses from litigation related to a lawsuit by a former employee. The reduction was recorded to reflect insurance payments made to the plaintiff in settlement of the invasion of privacy and fraudulent misrepresentation awards. In February 2013, the Company received a favorable ruling from the trial judge vacating the civil theft award of $600,000 and reducing the breach of consulting agreement award from $841,000 to $500,000. As a result, the Company has recognized other income of $1,141,000 for Fiscal 2013.  This other income was partially offset by interest expense of $473,605, a loss on extinguishment of debt of $21,311, other expense of $19,114 related to losses on sales of two vehicles and a loss on settlement of a lawsuit with a former distributor and the cost of repricing warrants in order to induce their exercise of $70,491. Net other expense in Fiscal 2012 consisted of losses on settlements of $1,500 in cash and $300,000 in restricted common stock, related to the satisfaction of debts of the Company’s predecessor company, a non-cash expense of $17,753 representing the cost of reducing the exercise price of warrants in order to induce their exercise, interest expense related to the company’s convertible notes of $280,000, of which $2,800 represented cash payments with the remainder consisting of accrued interest and note discount amortization, and an accrual of $1,646,000 in connection with the jury verdict related to the lawsuit brought by a former consultant.

Net Loss

For Fiscal 2013 our net loss was $5,221,747 as compared to $7,130,059 for the fiscal year ended June 30, 2012. The decrease in the net loss was the result of the higher gross profit and other income which was partially offset by higher total operating expenses as described above. Net loss per common share was $0.18 for Fiscal 2013 as compared to a net loss per common share of $0.31 for Fiscal 2012. The weighted average number of shares outstanding was 29,492,235 and 23,036,823 for the fiscal years ended June 30, 2013 and 2012, respectively.

16

Liquidity and Capital Resources

A summary of our cash flows is as follows:

	Fiscal Year Ended June 30,
	2013		2012
Net cash used in operating activities	$	4,195,655	$	3,634,531
Net cash used in investing activities		28,496		30,258
Net cash provided by financing activities		4,230,232		1,792,007
Net increase (decrease) in cash and cash equivalents	$	6,081	$	(1,872,782)

Net Cash Used in Operating Activities

For Fiscal 2013, we used net cash of $4,195,655 in operating activities as compared to $3,634,531 for Fiscal 2012. The increase in cash used from operations was primarily the result of the difference between the prior year accrual for losses from litigation resulting in an increase in accrued liabilities of $1,625,067 as compared to the current year reversal of those accruals due to a $200,000 payment by the insurance company and the reversal of $941,000 of the accrual as result of rulings by the court.  Other major factors that impacted the cash used in operations were the amortization of discounts on convertible notes of $385,650, and the remaining balance of $102,056 of the accrual related to the Termination and Release Agreement with our former President.  

Cash used from operations in Fiscal 2012 was primarily the result of a decrease in stock options issued for non-employee services of $322,850, a decrease in common stock issued for services of $168,500, the absence in Fiscal 2012 of a loss on extinguishment of debt of $267,390 and the $62,414 cost of warrants issued to induce the exercise of "out of the money" warrants which were partially offset by the increase in the net loss of $903,000, for the reasons identified above, an increase in stock option compensation expense of $450,000, a common stock issued as settlement of $300,000, amortization of the note discounts related to the beneficial conversion features of convertible notes of $193,044 and a $1,406,339 improvement in non-debt working capital balances. 

Net Cash Used in Investing Activities

In Fiscal 2013, cash used in investing activities amounted to $28,496 resulting from the purchase of a new support vehicle for our Brooklyn, New York facility plus minimal purchases of computer equipment, net of the proceeds from the sale of a support vehicle maintained at our California facility.  Cash flows used in investing activities for Fiscal 2012 amounted to $30,258 which consisted of the purchase of ancillary vehicle equipment and general office equipment.

Net Cash Provided By Financing Activities

Cash flows from financing activities for Fiscal 2013 were $4,230,232 as compared to $1,792,007 for Fiscal 2012. During Fiscal 2013, GelTech received $810,003 from the sale of stock to Lincoln Park Capital Fund, LLC, or Lincoln Park, $1,658,000 from the sale of common stock to accredited investors in private placement transactions, $300,000 from the sale of common stock and warrants to accredited investors in private placement transactions, $910,000 from the exercise of warrants for cash and $6,534 from the exercise of options for cash, $175,000 from convertible notes with third parties and $500,000 from convertible notes with related parties. These receipts were used for working capital, capital expenditures for equipment and vehicles to repay related party advances of $84,800 and to repay $30,745 of insurance financing.   

During Fiscal 2012, we received $571,700 from the sale of common stock in private placements, received $610,000 from sales stock in connection with our Stock Purchase Agreement with Lincoln Park, received $75,835 and $65,000 from the exercise of options and warrants, respectively, received $105,000 from convertible notes with third parties, $325,000 from convertible notes with related parties and received $89,380 from notes payable with related parties. These fundings were used to make payments on related party notes of $5,000 and to make payments on insurance premium finance contracts of $44,908.

17

Historical Financings

Since July 1, 2012, GelTech has raised $2,208,000 from the sale of common stock in connection with private placements with 15 accredited investors including Michael Reger, our principal shareholder and Chief Operating Officer, Michael Cordani, our Chief Executive Officer and Chairman of the Board and Peter Cordani, our President and Chief Technology Officer.  In consideration for their investments, GelTech issued 4,185,323 shares of common stock at prices ranging from $0.35 to $1.08 per share and 341,912 warrants with exercise prices ranging from $1.25 to $1.30 per share.

In September and October 2012, GelTech issued 1,820,000 shares of common stock in exchange for $910,000 in connection with the exercise of 1,820,000 warrants (including 1,200,000 warrants held by Mr. Reger) related to an offer by us to reduce the exercise prices of the warrants to $0.50 per share. Additionally, in September 2012, Mr. Reger converted his $322,996 convertible original issue discount note into 665,992 shares of common stock.

In August 2012, the Company received $175,000 in exchange for six month convertible original issue discount notes in the amount of $179,375 from two accredited investors. The notes are convertible into common stock at $0.50 per share. The notes bear an annual interest rate of 5% and are convertible into the Company's common stock at the rate of $0.50 per share.  In February 2013, one note holder was issued 205,000 shares of the Company’s common stock in exchange for a note in the amount of $102,500.

In August 2013 and September 2013 the Company retired four convertible original issue discount notes with an aggregate face value of $292,740 in exchange for the payment of $202,923 and the issuance of 243,543 shares of common stock.  These transactions included the payment of $86,049 to its former Executive Chairman in satisfaction of a convertible original issue discount note in the amount of $86,100.

From December 2012 through February 2013, we received $500,000 of loans from Mr. Reger.  In connection with these loans and prior loans, all of Mr. Reger’s outstanding loans were consolidated into a $1,997,483 note convertible at $0.35 per share due December 31, 2016, and all of his then outstanding notes were cancelled. Additionally, in July 2013, in consideration for a $1,000,000 loan, GelTech issued Mr. Reger a $1,000,000 five-year note convertible at $1.00 per share and 500,000 five-year warrants exercisable at $1.30.  Each of the notes described in this paragraph bear an annual interest rate of 7.5%.

As previously disclosed, in January 2012, GelTech signed a $5 million Purchase Agreement with Lincoln Park and filed a registration statement related to the transaction covering the shares that may be issued to Lincoln Park under the Purchase Agreement. Provided that the registration statement is current, GelTech has the right, in its sole discretion, through July 4, 2014 to sell shares of common stock to Lincoln Park in amounts between $30,000 and $500,000 per sale, depending on certain conditions as set forth in the Purchase Agreement, up to $4.9 million.  As of the date of this report, GelTech may sell up to $30,000 per sale.  Since July 1, 2013, GelTech has issued 1,676,766 shares of common stock in exchange for $1,200,002 under the Purchase Agreement and has the ability to sell another $3.2 million under the Purchase Agreement. The price at which we may sell shares to Lincoln Park is subject to a floor of $0.35 per share.

Liquidity and Capital Resource Considerations

As of September 27, 2013, we had approximately $197,000 in available cash. Although we do not anticipate the need to purchase any additional material capital assets in order to carry out our business, it may be necessary for us to purchase additional mobile mixing trucks and support vehicles in the future, depending on demand.

We may be required to pay approximately $90,000 to Lincoln Park in the event that they initiate a successful lawsuit against us for sales under a stale registration statement.  To date, no legal filings have been made or threatened by Lincoln Park.  In addition, we face a new trial on damages from a former employee and consultant.  We cannot predict how much we will be required to pay.  See the related Risk Factors on pages 23 and 28. In the event that the Plaintiff is awarded a substantial award in the new trial, we may not have the money to secure an appeal bond.

GelTech believes the Lincoln Park Purchase Agreement could provide it with a sufficient amount of working capital for the next 12 months. GelTech has continued to meet with additional potential investors to explore other financing alternatives.

18

Ultimately, if GelTech is unable to generate substantial cash flows from sales of its products, complete financings or sales to Lincoln Park, it may not be able to remain operational.

Related Party Transactions

For information on related party transactions and their financial impact, see Note 7 and Note 9 to the consolidated financial statements.

New Accounting Pronouncements

See Note 1 to our consolidated financial statements included herein for discussion of recent accounting pronouncements.

Cautionary Note Regarding Forward-Looking Statements

This report includes forward-looking statements including statements regarding expected results from the litigation described in this report, our expectations of future revenues and cost of sales, anticipated capital expenditures, expectations regarding our working capital, and our liquidity.

All statements other than statements of historical facts contained in this report, including statements regarding our future financial position, liquidity, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.

The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements are contained in the Risk Factors that follow. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. For more information regarding some of the ongoing risks and uncertainties of our business, see the Risk Factors and our other filings with the SEC.

Risk Factors

Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors before deciding whether to invest in GelTech. If any of the events discussed in the risk factors below occur, our business, consolidated financial condition, results of operations or prospects could be materially and adversely affected. In such case, the value and marketability of the common stock could decline.

Risk Factors Relating to Our Company

Our ability to continue as a going concern is in doubt absent obtaining adequate new debt or equity financing and achieving sufficient sales levels.

We incurred net losses of approximately $5.2 million in fiscal 2013 and $7.1 million in fiscal 2012. We anticipate these losses will continue for the foreseeable future. We currently have a working capital deficiency and have not reached a profitable level of operations, all of which raise substantial doubt about our ability to continue as a going concern. Our continued existence is dependent upon our achieving sufficient sales levels of our products including FireIce®, EMFIDS, and Soil₂O® “Dust Control” and obtaining adequate financing.

19

The extent we rely on Lincoln Park as a source of funding will depend on a number of factors including, the prevailing market price of our common stock and volume of trading and the extent to which we are able to secure working capital from other sources, such as through the sale of our products. If obtaining sufficient funding from Lincoln Park does not occur, Lincoln Park suffers liquidity issues and is unable to comply with its obligations under the Purchase Agreement, the funding is prohibitively dilutive or if we are unable to sell enough of our products, we will need to secure another source of funding in order to satisfy our working capital needs. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could be a material adverse effect on our business, operating results, financial condition and prospects. 

If we do not raise additional debt or equity capital, we may not be able to remain operational.

We have negative working capital and owe approximately $2.0 million in long-term convertible debt held by our principal shareholder, which is due in December 2016. Because we are not currently generating positive cash flow, we need to sell debt or equity securities whether from Lincoln Park or any other party. If our stock price is below the $0.35 minimum price, we will be unable to sell shares to Lincoln Park to help support our operations.

Because of the lingering effects of the recession, the lack of available credit for small-cap companies, difficulties for small-cap companies in raising money and our stock price and trading volume, we may be hampered in our ability to raise the necessary working capital. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. If we do not raise the necessary working capital and/or increase revenue, we will not be able to remain operational.

Because we have not generated material sales of FireIce® since it was launched over four years ago, there can be no assurances it will be accepted by potential customers.

We launched FireIce® in fiscal 2009 and have not yet achieved a consistent sustainable revenue stream. However, we expect to recognize $425,000 of revenue from the sale of EMFIDS to Con Ed in the quarter ending September 30, 2013. There are multiple factors, which may prevent us from successfully commercializing FireIce®, our fire suppression gel:

●

We need to convince potential customers, including federal and state governments, that FireIce® is superior to and less costly than competitive products.

●

We may need additional capital in order to demonstrate to governments that we can rapidly fulfill orders.

●

In seeking to sell FireIce®, we face substantial competition and must deal with the natural reluctance of people to change.

●

Internationally, we are required to comply with local laws which may require certification of FireIce®, a local partner, local licenses and other matters which are barriers to our selling FireIce®.

Because we have yet to generate material revenue on which to evaluate our potential for future success and to determine if we will be able to execute our business plan, it is difficult to evaluate our future prospects and the risk of success or failure of our business.

While we have conducted development and sales and marketing activities, we have not generated material revenue to date. You must consider our business and prospects in light of the risks and difficulties we will encounter as an early-stage company. These risks include:

●

our ability to effectively and efficiently market and distribute our products,

●

our ability to obtain market acceptance of our current products and future products that may be developed by us, and

●

our ability to sell our products at competitive prices which exceed our per unit costs.

We may not be able to address these risks and difficulties, which could materially and adversely affect our revenue, operating results and our ability to continue to operate our business.

20

Although we are encouraged by the potential of EMFIDS and its role as a tool for municipal utility companies to combat manhole fires, we cannot assure you that we will successfully commercialize it or, if we do, it will generate sufficient revenues and gross profit to support our operations.

Our senior management, including our Chief Technology Officer, has worked over a long period of time with management at Con Ed in New York City.  Through extensive testing, Con Ed partially funded a research project which led to the development of the EMFIDS.  After completion of the research and testing of the EMFIDS, Con Ed placed a $425,000 order, which we expect to recognize as revenue in the quarter ending September 30, 2013.  While this order is substantial, it is not enough to sustain our operations and we are dependent upon receipt of re-orders from Con Ed and new orders from other utility companies.  We cannot assure you we will generate sufficient revenue and gross profits from the sale of EMFIDS and FireIce® to utility companies.

Because we have not yet generated material revenue to date, it may never result in the generation of material revenue or profitability.

Since our incorporation in 2006, our goal has been to generate revenue from the sale and development of our products including FireIce® and Soil₂O®. Our marketing of these products is subject to a number of risks, including:

●

In seeking to sell FireIce® to government agencies, we will encounter typical risks such as a reluctance to change, the impact of the recession on local government budgets and competition.

●

We have not proven that we have the ability to market and sell our products.

●

Although we have a pending U.S. patent application for the sprayable form of Soil₂O®, we have no patent protection for the granular form and there are many products on the market which are advertised as performing similar functions to Soil₂O® granular;

●

If the pending patent application is not granted for the sprayable form of Soil₂O®, we will face direct competition, which can erode any market share we may achieve and create pricing pressure; and

We cannot assure you that our marketing efforts will result in material sales or that if it does result in material sales, that such sales will necessarily translate into profitability.

Our growth strategy reflected in our business plan may not be achievable or may not result in profitability.

We may not be able to implement our growth strategy reflected in our business plan rapidly enough for us to achieve profitability. Our growth strategy is dependent on a number of factors, including market acceptance of our fire suppression gel and our moisture preservation product. We cannot assure you that our potential markets will purchase our products or that those parties will purchase our products at the cost and on the terms assumed in our business plan.

Among other things, implementation of our growth strategy would be adversely affected if:

●

we are not able to attract sufficient customers to the products we offer in light of the price and other terms required in order for us to attain the level of profitability that will enable us to continue to pursue our growth strategy;

●

adequate penetration of new markets at reasonable cost becomes impossible limiting the future demand for our products below the level assumed by our business plan;

●

we were forced to significantly adapt our business plan to meet changes in our markets; and

●

for any reason, we are not able to attract, hire, retain and motivate qualified personnel.

21

If we cannot manage our growth effectively, we may not become profitable.

Businesses, which grow rapidly often, have difficulty managing their growth. If we grow as rapidly as we anticipate, we will need to expand our management by recruiting and employing experienced executives and key employees capable of providing the necessary support. We cannot assure you that our management will be able to manage our growth effectively or successfully. Our failure to meet these challenges could cause us to lose money, and your investment could be lost.

Among other things, implementation of our growth strategy would be adversely affected if we were not able to attract sufficient customers to the products we offer or plan to offer in light of the price and other terms required in order for us to attain the necessary profitability.

We may not be able to maintain and expand our business if we are not able to retain, hire and integrate key management and operating personnel.

Our success depends in large part on the continued services and efforts of key management personnel. Competition for such employees is intense and the process of locating key personnel with the combination of skills and attributes required to execute our business strategies may be lengthy. The loss of key personnel could have a material adverse impact on our ability to execute our business objectives. We do not have any life insurance on the lives of any of our executive officers.

We could face potential difficulties in locating sufficient manufacturing sources if our products gain widespread commercial acceptance.

We have used third parties to manufacture our products on a limited basis. If we are unable to produce our products in sufficient quantities at an acceptable cost, we may lose customers and our business could be harmed. Our ability to expand production could also be hindered by the availability of materials used to manufacture our products or the availability of qualified personnel. These difficulties could result in reduced quality of our products or reduced sales, which could damage our industry reputation and hurt our profitability.

Although we began marketing of Soil₂O® in 2007, we have not achieved material sales.

Although we began marketing and selling Soil₂O® as a product providing a solution to golf courses facing drought conditions in 2007, we have not generated material sales. Initially, we entered into an exclusive distribution agreement with a third party for the States of Florida and Arizona. We have terminated the exclusive nature of that agreement because of limited sales. We may not be able to sell Soil₂O® in volumes and at prices, which will be profitable to us. We have to expand our sales and distribution efforts to other states. Additionally, we must recruit distributors for agricultural usage of Soil₂O®. If we cannot expand our sales and distribution network, our future sales of Soil₂O® will be limited since our sales efforts have been aimed primarily at the agriculture industry in the Southeastern U.S.

22

If we are unable to resolve the trademark dispute with our former Chinese distributor, we will not receive the revenue we anticipated from sales of FireIce in China.

In July 2012, we entered into an Exclusive Distribution Agreement with Xinfang Group, or the Distributor. Pursuant to the agreement, GelTech granted the Distributor the exclusive right to market, promote and sell FireIce in the People’s Republic of China, Hong Kong, Macau and Taiwan. In order for the Distributor to maintain their exclusivity and pricing under the agreement, the Distributor was required to purchase a minimum of $87.9 million over the 10 year term of the agreement, including $6.0 million in the first year, $7.2 million in the second year and 5% increases thereafter.  However, shipments under this Agreement have been delayed indefinitely pending resolution of the trademark registration of FireIce by our prior distributor in China. We have been advised by our Chinese counsel that any sales of FireIce by GelTech or the Distributor in China would be deemed an infringement on the prior distributor’s trademark and therefore no shipments under our Agreement will begin until this is resolved or we register an alternative trademark and receive approval to sell in China using that trademark.  GelTech has filed an administrative proceeding in China seeking to cancel the third party’s registration of FireIce, and the resolution of this proceeding may not be resolved until as late as October 2013. Even if the FireIce registration is cancelled we have been advised that it could take as many as 18 months for GelTech to re-register the FireIce trademark.  In December 2012, we filed a trademark application for FireGel in China.  If the application is accepted, GelTech would be allowed to sell FireIce under the FireGel name within 12 - 18 months after acceptance.  Even if the trademark issue is resolved, we cannot assure you that the Distributor will purchase the required minimums in order to maintain their exclusivity or purchase any FireIce.  We have been advised that the first distributor has been selling an inferior product under the FireIce® trademark.  This conduct has the potential to ultimately adversely hamper our ability to sell our FireIce® product in China.  If we are unable to generate revenue from China, our future financial results will be adversely affected.

If we lose a substantial sum in our pending lawsuit, the judgment creditor will be in a position to seize our assets and cause us to cease operations.

In June 2012, a jury awarded Mr. David Hopkins, a former employee, a total of $1,246,000 for invasion of privacy, trespassing, fraudulent misrepresentation, civil theft and breach of a consulting agreement.  GelTech’s insurance company has paid Mr. Hopkins $200,000 covering the invasion of privacy and fraudulent misrepresentation claims.  Subsequently, GelTech filed post-trial motions.  In 2013, the court ruled on GelTech’s post-trial motions and ordered a new trial on damages.  In the event that Mr. Hopkins is awarded a substantial award in the new trial, GelTech may not have the money to secure an appeal bond.  In the event that we are unable to post bond, or if an appeal is unsuccessful, we will be required to pay the amount of the judgment plus statutory interest. If we fail to do so, the plaintiff, as a judgment creditor, can take action to seize our assets and we may not be able to remain in business.

If the Forest Service does not modify its unwritten policy of prohibiting the use of water enhancers in large tanker planes, it will hinder our ability to generate revenue from extinguishing wildfires.

The Forest Service has established a “policy” which does not permit “water enhancers” (which includes FireIce) to be dropped from the very large tanker planes, or VLATs. With no success to date, GelTech has sought to urge the Forest Service to permit the usage of FireIce® in VLATs. If GelTech is unable to sell FireIce® for use in VLATs, it will have an adverse impact on our future results of operations.

Because we do not have a patent on Soil₂O® or its uses, if our competitors are able to reverse engineer our product, our ability to compete effectively may be harmed.

Currently, there are numerous companies that advertise moisture preservation products that appear similar to Soil₂O®. Because we lack any patent protection on Soil₂O® itself and have only a patent pending for the sprayable form, there is a substantial risk that one of these competitors could determine how to make the granular form of Soil₂O® and market it under their own brand name; thereby adversely affecting our ability to compete successfully.

A change in environmental regulations may adversely affect the use of FireIce® and Soil₂O® and may hinder our ability to generate revenue from this line of business.

While we believe that FireIce® and Soil₂O® (including Soil₂O® “Dust Control”) are environmentally friendly, we may become subject to changing environmental regulations that could adversely affect the use of it. If we do become subject to environmental regulations, the use of FireIce® and Soil₂O® may be limited as compared to other technologies which may be less expensive or more efficient.

23

FireIce® and Soil₂O® face substantial competition in the fire suppression and moisture preservation markets, respectively, and there is no guarantee potential customers will select our products over those of our competitors.

We face multiple competitors in the fire suppression, fire retardation and moisture preservation markets. In the fire suppression and retardation fields, we face substantial competition including with one company that is the principal vendor to the Forest Service. In the moisture preservation areas, we face competition from numerous independently owned businesses that have competing and in some case very similar products. In addition, companies may be developing or may, in the future, engage in the development of products and/or technologies competitive with our products. We expect that technological developments will occur and that competition is likely to intensify as new technologies are employed.

Many of our competitors are capable of developing or have developed and are capable of continuing to develop products based on similar or other technology, which are or may be competitive with our products and technologies. We believe several of our competitors in the fire-fighting business have substantially greater financial and other resources, research and development capabilities and more experience in obtaining regulatory approvals, manufacturing and marketing than we do. Because our competitors in the moisture preservation markets are private companies, we are unable to determine the amount of financial and other resources they have available. However, some of these companies appear to have had much greater marketing experience than we have. Potential customers may prefer the pricing terms or service offered by competitors. Furthermore, competitors may have an advantage as a result of having existing business relationships with potential customers.

Because we are seeking to enter into contracts with federal and state governments, we will be subject to a number of risks, which could adversely affect our business.

We are seeking to sell our products, including FireIce®, to federal and state governments. In selling to the government, we will be subject to a number of significant risks including:

●

Increasing state, local and federal budget deficits which can delay and impede our receipt of orders;

●

We may not be successful in selling our products to the government, although we will incur material costs as part of our sales efforts;

●

Government contracts often contain unfavorable termination provisions; and

●

We may be subject to audit and modification of agreements by the government in its sole discretion, which subjects us to additional risks.

The government can unilaterally:

●

suspend or prevent us for a set period of time from receiving new contracts or extending existing contracts based on violations or suspected violations of laws or regulations;

●

terminate our existing contracts;

●

reduce the scope and value of our existing contracts;

●

audit and object to our contract-related costs and fees; and

●

change certain terms and conditions in our contracts.

Further, as part of any audit or review, the government may review the adequacy of, and our compliance with, our internal control systems and policies, including those relating to our purchasing, property, compensation and/or management information systems. In addition, if an audit or review uncovers any improper or illegal activity, we may be subject to civil and criminal penalties and administrative sanctions, including termination of our contracts, forfeiture of profits, suspension of payments, fines and suspension or prohibition from doing business with the government or any of its agencies. We could also suffer serious harm to our reputation if allegations of impropriety were made against us.

24

Even if we are able to successfully enter into contracts to supply federal and state governments with our products, there can be no assurances these contracts will result in substantial revenues or be renewed.

The process of obtaining government contracts is lengthy and uncertain, and we must compete for each contract. Similar to large corporations, government employees resist change and taking risks. This can make it more difficult to obtain government contracts. Moreover, the award of one government contract does not necessarily secure the award of future contracts. Governments are subject to budgetary restrictions, which may limit their ability to buy our products. These budgetary restrictions have been magnified by the current recession, which has resulted in material decreases in tax receipts. Even if we are able to enter into a contract with a government, there is no guarantee it will result in substantial revenues or the contract(s) will be renewed.  

If we face intellectual property litigation filed by third parties, we will be subject to a number of possible adverse consequences including being required to finance very expensive litigation.

Third parties may assert patent and other intellectual property infringement litigation against us claiming our products infringe on its patents or otherwise violates its intellectual property rights. Any lawsuit, whether or not successful, could:

●

divert management’s attention;

●

result in prohibitive costs; or

●

require us to enter into royalty or licensing agreements, which may not be available on acceptable terms, or at all.

As a result, any third-party intellectual property claims against us could increase our expenses and adversely affect our business. In addition, agreements with third parties may require us to indemnify them for intellectual property infringement claims, which would increase the cost to us resulting from an adverse ruling on any such claim. Even if we have not infringed any intellectual property rights, we cannot be sure our legal defenses will be successful, and even if we are successful in defending against such claims, our legal defense could require significant financial resources and management time.

If we are unable to protect our intellectual property rights, we may be unable to compete with competitors developing similar technologies.

Our intellectual property including our patents is our key asset. We currently expect to commercialize three U.S. patents and eight patents pending.  We regard the protection of our intellectual property as critical to our success. In addition to pursuing patents, we have taken steps to protect our intellectual property by entering into confidentiality agreements with our employees, licensees, independent contractors and other advisors. These agreements may not be enforceable or may not effectively prevent disclosure of confidential information, including trade secrets, and may not provide an adequate remedy in the event of an unauthorized disclosure. Monitoring unauthorized disclosure is difficult, and we do not know whether the steps we have taken to prevent such disclosure are, or will be, adequate. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our intellectual property rights, and failure to obtain or maintain protection of our intellectual property rights could adversely affect our business and financial results.

Risks Related to Our Common Stock

Because the market for our common stock is limited, persons who purchase our common stock may not be able to resell their shares at or above the purchase price paid by them.

Our common stock trades on the OTC Bulletin Board, or the Bulletin Board, which is not a liquid market. With some limited exceptions, there has not been an active public market for our common stock. We cannot assure you that an active public market for our common stock will develop or be sustained in the future. If an active market for our common stock does not develop or is not sustained, the price may decline.

25

Because we are subject to the “penny stock” rules, brokers cannot generally solicit the purchase of our common stock which adversely affects its liquidity and market price.

The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock on the Bulletin Board has been substantially less than $5.00 per share and therefore we are currently considered a “penny stock” according to SEC rules. This designation requires any broker-dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules limit the ability of broker-dealers to solicit purchases of our common stock and therefore reduce the liquidity of the public market for our shares.

Moreover, as a result of apparent regulatory pressure from the SEC and the Financial Industry Regulatory Authority, a growing number of broker-dealers decline to permit investors to re-sell shares of penny stocks like GelTech. This may have had and may continue to have a depressive effect upon the common stock price.

Due to factors beyond our control, our stock price may be volatile.

Any of the following factors could affect the market price of our common stock:

●

sales by Lincoln Park,

●

short selling or manipulative conduct by market makers and others,

●

our failure to generate recurring sustainable revenue,

●

our failure to achieve and maintain profitability,

●

the sale of a large amount of common stock by our shareholders including those who invested prior to commencement of trading,

●

actual or anticipated variations in our quarterly results of operations,

●

announcements by us or our competitors of significant contracts, new products, acquisitions, commercial relationships, joint ventures or capital commitments,

●

disclosure of any adverse results in litigation,

●

the loss of major customers or product or component suppliers,

●

the loss of significant business relationships,

●

our failure to meet financial analysts’ performance expectations,

●

changes in earnings estimates and recommendations by financial analysts, or

●

changes in market valuations of similar companies.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs and divert our management’s time and attention, which would otherwise be used to benefit our business.

26

Because the majority of our outstanding shares are freely tradable, sales of these shares could cause the market price of our common stock to drop significantly, even if our business is performing well.

As of the date of this report, we had outstanding approximately 34 million shares of common stock, of which our directors and executive officers own approximately 13 million shares, which are subject to the limitations of Rule 144 under the Securities Act of 1933, which we refer to as the “Act”.  Substantially all of the remaining outstanding shares are freely tradable.

In general, Rule 144 provides that any non-affiliate of GelTech, who has held restricted common stock for at least six-months, is entitled to sell their restricted stock freely, provided that GelTech stays current in its SEC filings. After one year, a non-affiliate may sell without any restrictions.

An affiliate of GelTech may sell after six months with the following restrictions: (i) GelTech is current in its filings, (ii) certain manner of sale provisions, (iii) filing of Form 144, and (iv) volume limitations limiting the sale of shares within any three-month period to a number of shares that does not exceed 1% of the total number of outstanding shares. A person who has ceased to be an affiliate at least three months immediately preceding the sale and who has owned such shares of common stock for at least one year is entitled to sell the shares under Rule 144 without regard to any of the limitations described above.

The sale of our common stock to Lincoln Park may cause dilution and the sale of the shares by Lincoln Park could cause the price of our common stock to decline.

The number of shares ultimately offered for sale by Lincoln Park is dependent upon the number of shares purchased by Lincoln Park under the Purchase Agreement. The purchase price for the common stock to be sold to Lincoln Park pursuant to the Purchase Agreement will fluctuate based on the price of our common stock. Depending upon market liquidity at the time, a sale of shares by Lincoln Park at any given time could cause the trading price of our common stock to decline. After it has acquired such shares, Lincoln Park may sell all, some or none of such shares. Therefore, sales to Lincoln Park by us under the Purchase Agreement may result in substantial dilution to the interests of other holders of our common stock. The sale of a substantial number of shares of our common stock, or anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales. However, we have the right to control the timing and amount of any sales of our shares to Lincoln Park.

An investment in GelTech may be diluted in the future as a result of the issuance of additional securities or the exercise of options or warrants.

In order to raise additional capital to fund our strategic plan, we may issue additional shares of common stock or securities convertible, exchangeable or exercisable into common stock from time to time, which could result in substantial dilution to any person who purchases our common stock. Because we have a negative net tangible book value, purchasers will suffer substantial dilution. We cannot assure you that we will be successful in raising funds from the sale of common stock or other equity securities.

In the future, we may issue preferred stock without the approval of our shareholders, which could make it more difficult for a third party to acquire us and could depress our stock price.

Our Board may issue, without a vote of our shareholders, one or more series of preferred stock that have more than one vote per share. This could permit our board of directors to issue preferred stock to investors who support us and our management and permit our management to retain control of our business. Additionally, issuance of preferred stock could block an acquisition resulting in both a drop in our stock price and a decline in interest of our common stock.

27

If our common stock becomes subject to a “chill” or a “freeze” imposed by the Depository Trust Company, or DTC, your ability to sell your shares may be limited.

The DTC acts as a depository or nominee for street name shares or stock that investors deposit with their brokers. Although through DTC our common stock is eligible for electronic settlement rather than delivery of paper certificates, DTC in the last several years has imposed a chill or freeze on the deposit, withdrawal and transfer of common stock of issuers whose common stock trades on the Bulletin Board. Depending on the type of restriction, it can prevent shareholders from buying or selling our shares and prevent us from raising money. A chill or freeze may remain imposed on a security for a few days or an extended period of time (in at least one instance a number of years). While we have no reason to believe a chill or freeze will be imposed against our common stock, if it were your ability to sell your shares would be limited.

Since we intend to retain any earnings for development of our business for the foreseeable future, you will likely not receive any dividends for the foreseeable future.

We have not and do not intend to pay any dividends in the foreseeable future, as we intend to retain any earnings for development and expansion of our business operations. As a result, you will not receive any dividends on your investment for an indefinite period of time.

Because sales made to Lincoln Park in December 2012 may have been made in violation of the Securities Act, if Lincoln Park sues us prior to December 27, 2013 to recover their purchase price of $90,000 we may be required to rescind the sale(s) and return the proceeds with interest.

Under the Purchase Agreement, we have the right to sell common stock to Lincoln Park from time to time provided that the registration statement is declared effective and is current at the time of sale. In December 2012, GelTech sold shares under the Purchase Agreement and received $90,000 of proceeds ($0.36 per share). At that time, the prospectus was not current because it included financial statements that were older than 16 months. As a result, GelTech may have violated Section 5 of the Securities Act. Consequently, Lincoln Park may have the right to recover the amount paid by them for the shares sold in December with interest. Under federal law, this right will expire one year from the dates of purchase. If Lincoln Park sues us prior to the one year anniversary of the sale, we may be liable.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting companies.

Item 8.

Financial Statements and Supplementary Data.

See pages F-1 through F-32.

Item 9.

Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. Our management carried out an evaluation, with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, or the Exchange Act. Based on their evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

28

Management’s Annual Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of the end of the period covered by this report. In making this assessment, our management used the criteria set forth by the Committee of Sponsor Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of the end of the period covered by this report based on that criteria.

Our internal control over financial reporting is a process designed under the supervision of our Principal Executive Officer and Principal Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles, or GAAP. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting during the three months ended June 30, 2013 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

Item 9B. Other Information.

None.

29

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by this item is incorporated by reference from GelTech’s Proxy Statement for its Annual Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this report.

Item 11. Executive Compensation.

The information required by this item is incorporated by reference from GelTech’s Proxy Statement for its Annual Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this report.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item is incorporated by reference from GelTech’s Proxy Statement for its Annual Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this report.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item is incorporated by reference from GelTech’s Proxy Statement for its Annual Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this report.

Item 14. Principal Accountants Fees and Services.

The information required by this item is incorporated by reference from GelTech’s Proxy Statement for its Annual Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this report.

30

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(1)	Financial Statements. See Index to Consolidated Financial Statements, which appears on page F-1 hereof. The financial statements listed in the accompanying Index to Consolidated Financial Statements are filed herewith in response to this Item.
(2)	Financial Statements Schedules. All schedules are omitted because they are not applicable or because the required information is contained in the Consolidated Financial Statements or notes included herein.
(3)	Exhibits.

EXHIBIT INDEX

Exhibit		Incorporated by Reference			Filed or Furnished
No.	Exhibit Description	Form	Date	Number	Herewith
3.1	Certificate of Incorporation	Sb-2	7/20/07	3.1
3.2	Amended and Restated Bylaws	Sb-2	7/20/07	3.2
3.3	Amendment No. 1 to the Amended and Restated Bylaws	10-K	9/28/10	3.3
3.4	Amendment No. 2 to the Amended and Restated Bylaws	8-K	9/26/11	3.1
10.1	Amended and Restated 2007 Equity Incentive Plan	10-K	9/28/10	10.1
10.2	Form of Executive Employment Agreement *	10-Q	2/11/13	10.4
10.3	Jerome Eisenberg Employment Agreement*	10-Q	2/11/13	10.5
10.4	Form of Stock Appreciation Rights Agreement*	10-Q	2/11/13	10.7
10.5	Jerome Eisenberg Restricted Stock Unit Agreement*	10-Q	2/11/13	10.6
10.6	Credit Enhancement and Financing Security Agreement dated May 29, 2009	10-K	9/28/09	10.1
10.7	Revolving Line of Credit Agreement dated May 29, 2009	10-K	9/28/09	10.2
10.8	Renewal of Promissory Note dated May 20, 2010	10-K	9/28/10	10.7
10.9	Credit Enhancement and Financing Security Agreement dated May 20, 2010	10-K	9/28/10	10.8
10.10	Modification of Revolving Line of Credit Agreement dated May 20, 2010	10-K	9/28/10	10.9
10.11	Reger Note dated February 18, 2011	10-Q	5/13/11	10.11
10.12	Reger Stock Purchase Agreement dated February 18, 2011	10-K	9/28/11	10.15
10.13	Reger Note dated March 29, 2012	10-K	9/28/12	10.12
10.14	Reger Note dated December 27, 2012	10-Q	2/11/13	10.2
10.15	Reger Note dated February 1, 2013	10-Q	2/11/13	10.3
10.16	Reger Stock Purchase Agreement dated May 2, 2013				Filed
10.17	Reger Warrant dated May 2, 2013				Filed
10.18	Reger Warrant dated May 31, 2013				Filed
10.19	Reger Convertible Note dated July 11, 2013	S-1A	8/5/13	10.30
10.20	Reger Warrant dated July 11, 2013				Filed
10.21	Lincoln Park Purchase Agreement dated September 1, 2010	8-K	9/7/10	10.1
10.22	Lincoln Park Registration Rights Agreement dated September 1, 2010	8-K	9/7/10	10.2
10.23	Lincoln Park Warrant dated September 1, 2010	8-K	9/7/10	10.3
10.24	Lincoln Park Purchase Agreement dated January 4, 2012	8-K	1/6/12	10.1

31

10.25	Lincoln Park Registration Rights Agreement dated January 4, 2012	8-K	1/6/12	10.2
10.26	Lincoln Park Termination Agreement dated January 3, 2012	8-K	1/6/12	10.3
10.27	Hull Promissory Note	S-1	1/6/12	10.21
10.28	TFISA Distribution Agreement**	10-Q	2/14/12	10.2
10.29	Amendment No.1 to the TFISA Distribution Agreement**	10-Q	2/14/12	10.3
10.30	Eisenberg Promissory Note	S-1/A	3/13/12	10.24
10.31	Form of Convertible Note – Private Placement	10-Q	5/11/12	10.1
10.32	Ingarra Termination and Release Agreement	10-Q	5/13/13	10.4
14.1	Code of Ethics	10-K	9/29/08	14.1
21.1	List of Subsidiaries	10-K	9/28/12	21.1
23.1	Consent of Salberg & Company, P.A.				Filed
31.1	Certification of Principal Executive Officer (Section 302)				Filed
31.2	Certification of Principal Financial Officer (Section 302)				Filed
32.1	Certification of Principal Executive Officer and Principal Financial Officer (Section 906)				Furnished
101 INS	XBRL Instance Document				Furnished***
101 SCH	XBRL Taxonomy Extension Schema				Furnished***
101 CAL	XBRL Taxonomy Extension Calculation Linkbase				Furnished***
101 LAB	XBRL Taxonomy Extension Label Linkbase				Furnished***
101 PRE	XBRL Taxonomy Extension Presentation Linkbase				Furnished***
101 DEF	XBRL Taxonomy Extension Definition Linkbase				Furnished***

———————

*

Management compensatory agreement.

**

Filed pursuant to a confidential treatment request. Portions of the exhibit have been omitted pursuant to the request for confidential treatment.

***

Attached as Exhibit 101 to this report are the Company’s financial statements for the fiscal year ended June 30, 2013 formatted in XBRL (eXtensible Business Reporting Language). The XBRL-related information in Exhibit 101 to this report shall not be deemed “filed” or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act, and is not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of those sections.

Copies of this filing (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to GelTech Solutions, Inc., 1460 Park Lane South, Suite 1 Jupiter, Florida 33458, Attention: Corporate Secretary.

32

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: September 27, 2013

GelTech Solutions, Inc.
By:	/s/ MICHAEL CORDANI
	Michael Cordani Chief Executive Officer (Principal Executive Officer)

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signatures	Title	Date
/s/ MICHAEL HULL	Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer)	September 27, 2013
Michael Hull
/s/ MICHAEL CORDANI	Director	September 27, 2013
Michael Cordani
/s/ PETER CORDANI	Director	September 27, 2013
Peter Cordani
/s/ MICHAEL BECKER	Director	September 27, 2013
Michael Becker
/s/ LEONARD MASS	Director	September 27, 2013
Leonard Mass
/s/ PHIL O’CONNELL, JR.	Director	September 27, 2013
Phil O’Connell, Jr.

33

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)	F-5
Consolidated Statements of Cash Flows	F-6
Notes to Consolidated Financial Statements	F-8

F - 1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

GelTech Solutions, Inc.

We have audited the accompanying consolidated balance sheets of GelTech Solutions, Inc. and Subsidiaries (the “Company”) as of June 30, 2013 and 2012, and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the two years in the period ended June 30, 2013.  These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of GelTech Solutions, Inc. and Subsidiaries as of June 30, 2013 and 2012, and the consolidated results of its operations and its cash flows for each of the two years in the period ended June 30, 2013, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the consolidated financial statements, the Company has a net loss and net cash used in operating activities in 2013 of $5,221,747 and $4,195,655, respectively, and has a working capital deficit, accumulated deficit and stockholders’ deficit of $556,140, $28,021,633 and $2,270,386, respectively, at June 30, 2013. These matters raise substantial doubt about the Company's ability to continue as a going concern.  Management’s Plan in regards to these matters is also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Salberg & Company, P.A.

Salberg & Company, P.A.

Boca Raton, Florida

September 27, 2013

2295 NW Corporate Blvd., Suite 240 • Boca Raton, FL 33431-7328

Phone: (561) 995-8270 • Toll Free: (866) CPA-8500 • Fax: (561) 995-1920

www.salbergco.com • info@salbergco.com

Member National Association of Certified Valuation Analysts • Registered with the PCAOB

Member CPAConnect with Affiliated Offices Worldwide • Member AICPA Center for Audit Quality

F - 2

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of June 30,
	2013			2012
ASSETS
Cash and cash equivalents	$	90,275		$	84,194
Accounts receivable trade, net		37,277			55,160
Inventories		588,703			546,118
Prepaid expenses and other current assets		66,756			45,785
Total current assets		783,011			731,257
Furniture, fixtures and equipment, net		158,184			188,779
Deposits		26,886			15,631
	$	968,081		$	935,667
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable	$	265,122		$	234,375
Accrued expenses		176,734			72,637
Litigation accrual		505,000			1,646,000
Accrual for severance agreement		102,056			—
Notes payable - related parties		—			84,380
Convertible notes - related parties, net of discount		79,261			283,230
Convertible notes - third parties, net of discount		192,163			74,214
Insurance premium finance contract		11,796			9,250
Deferred revenue		7,019			—
Total current liabilities		1,339,151			2,404,086
Convertible note - related party		1,899,316			1,497,483
Total liabilities		3,238,467			3,901,569
Commitments and contingencies (Note 10)
Stockholders' deficit
Preferred stock: $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock: $0.001 par value; 50,000,000 shares authorized; 33,084,671 and 24,914,474 shares issued and outstanding as of June 30, 2013 and 2012, respectively.		33,084			24,914
Additional paid in capital		25,718,163			19,809,070
Accumulated deficit		(28,021,633	)		(22,799,886	)
Total stockholders' deficit		(2,270,386	)		(2,965,902	)
Total liabilities and stockholders' deficit	$	968,081		$	935,667

The accompanying notes are an integral part of these consolidated financial statements.

F - 3

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Years Ended June 30,
	2013			2012
Sales	$	526,010		$	419,577
Cost of goods sold		180,427			185,419
Gross profit		345,583			234,158
Operating expenses:
Selling, general and administrative expenses		6,103,435			5,035,418
Research and development		179,158			83,707
Total operating expenses		6,282,593			5,119,125
Loss from operations		(5,937,010	)		(4,884,967	)
Other income (expense)
Interest income		864			466
Loss on settlement		(5,088	)		(301,500	)
Loss on sale of assets		(9,822	)		—
Loss on extinguishment of debt		(25,515	)		—
Other income (loss)		1,298,920			(1,646,000	)
Cost of repricing warrants to induce exercise		(70,491	)		(17,753	)
Interest expense		(473,605	)		(280,305	)
Total other income (expense)		715,263			(2,245,092	)
Net loss	$	(5,221,747	)	$	(7,130,059	)
Net loss per common share - basic and diluted	$	(0.18	)	$	(0.31	)
Weighted average shares outstanding - basic and diluted		29,479,048			23,036,823

The accompanying notes are an integral part of these consolidated financial statements.

F - 4

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

							Additional
	Common Stock						Paid In			Accumulated
	(Shares)			Par Value			Capital			Deficit			Total
Balance at July 1, 2011		22,104,570		$	22,105		$	16,452,674		$	(15,669,827	)	$	804,952
Common stock issued for cash		1,143,400			1,143			570,557			—			571,700
Common stock issued in connection with stock purchase agreement		1,002,749			1,002			608,998			—			610,000
Common stock upon exercise of options		35,000			35			33,300			—			33,335
Common stock issued upon exercise of warrants		215,000			215			107,285			—			107,500
Common stock issued as settlement		441,177			441			299,559			—			300,000
Options vested								1,371,519			—			1,371,519
Beneficial conversion feature of debt offerings		—			—			347,398			—			347,398
Cost of repricing warrants to induce warrant exercise		—			—			17,753			—			17,753
Rescission of option exercise		(27,422	)		(27	)		27			—			—
Net loss for the fiscal year ended June 30, 2012		—			—			—			(7,130,059	)		(7,130,059	)
Balance at June 30, 2012		24,914,474			24,914			19,809,070			(22,799,886	)		(2,965,902	)
Common stock issued for cash		3,539,321			3,539			1,654,461			—			1,658,000
Common stock issued in connection with stock purchase agreement		1,333,820			1,334			808,669			—			810,003
Common stock and warrants issued for cash		375,000			375			299,625						300,000
Common stock issued upon exercise of options		11,667			12			6,522			—			6,534
Common stock issued upon exercise of warrants		1,829,171			1,829			908,171			—			910,000
Common stock issued for interest		210,226			210			77,574						77,784
Grant of restricted stock units		200,000			200			89,800			—			90,000
Convertible note conversions		870,992			871			434,624						435,495
Cancellation of restricted stock units grant under clawback provision		(200,000	)		(200	)		(89,800	)		—			(90,000	)
Options and stock appreciation rights vested		—			—			1,407,534			—			1,407,534
Beneficial conversion feature of debt offerings		—			—			309,342			—			309,342
Cost of repricing warrants to induce warrant exercise		—			—			70,491			—			70,491
Cancellation of stock appreciation rights grant under clawback provision		—			—			(67,920	)		—			(67,920	)
Net loss for the fiscal year ended June 30, 2013		—			—			—			(5,221,747	)		(5,221,747	)
Balance at June 30, 2013		33,084,671		$	33,084		$	25,718,163		$	(28,021,633	)	$	(2,270,386	)

The accompanying notes are an integral part of these consolidated financial statements.

F - 5

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended June 30,
	2013			2012
Cash flows from operating activities
Reconciliation of net loss to net cash used in operating activities:
Net loss	$	(5,221,747	)	$	(7,130,059	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		49,269			51,301
Bad debt expense		—			2,739
Amortization of beneficial conversion feature of convertible notes		—			193,044
Amortization of original issue discounts related to convertible notes		385,650			6,924
Amortization of stock based prepaid consulting		—			42,500
Equity compensation expense		1,497,534			1,371,519
Cost of repricing warrants to induce exercise		70,491			17,753
Loss on disposal of assets		9,822			—
Loss on stock issued for interest		4,205			—
Common stock issued as settlement		—			300,000
Other income from the clawback of equity compensation		(157,920	)		—
Reversal of litigation accrual		(941,000	)		—
Payment by insurance company of prior period litigation expense		(200,000	)		—
Changes in assets and liabilities:
Accounts receivable		17,883			45,925
Inventories		(42,585	)		(152,684	)
Prepaid expenses and other current assets		26,500			27,930
Other assets		(11,255	)		—
Accounts payable		30,748			(36,490	)
Accrual for severance agreement		102,056			—
Deferred revenue		7,019			—
Accrued expenses		177,675			1,625,067
Net cash used in operating activities		(4,195,655	)		(3,634,531	)
Cash flows from Investing Activities
Proceeds from sale of asset		15,000			—
Purchases of equipment		(43,496	)		(30,258	)
Net cash used in investing activities		(28,496	)		(30,258	)
Cash flows from Financing Activities
Proceeds from sale of stock through private placements		1,658,000			1,181,700
Proceeds from sale of stock and warrants through private placements		300,000			—
Proceeds from sale of stock under stock purchase agreement		810,003			—
Proceeds from exercise of warrants		910,000			65,000
Proceeds from exercise of stock options		6,534			75,835
Proceeds from related party advances		—			89,380
Payments on notes with related parties		(84,380	)		(5,000	)
Proceeds from convertible notes with third parties		175,000			105,000
Proceeds from convertible notes with related parties		500,000			325,000
Payments on Insurance Finance Contract		(44,925	)		(44,908	)
Net cash provided by financing activities		4,230,232			1,792,007
Net increase (decrease) in cash and cash equivalents		6,081			(1,872,782	)
Cash and cash equivalents - beginning		84,194			1,956,976
Cash and cash equivalents - ending	$	90,275		$	84,194

The accompanying notes are an integral part of these consolidated financial statements.

F - 6

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

	For the Year Ended June 30,
	2013		2012
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	2,702	$	2,843
Cash paid for income taxes	$	—	$	—
Supplementary Disclosure of Non-cash Investing and Financing Activities:
Financing of prepaid insurance contracts	$	47,471	$	43,931
Beneficial conversion feature of convertible notes	$	309,342	$	347,398
Conversion of notes for common stock	$	435,495	$	—
Accrued interest financed with convertible note	$	—	$	74,874
Common stock issued for interest	$	77,784	$	—

The accompanying notes are an integral part of these consolidated financial statements.

F - 7

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

1.

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

GelTech Solutions, Inc., or GelTech, markets the following products: (1) FireIce®, a water enhancing powder that can be utilized both as a fire suppressant in urban firefighting, including underground utility fires, and in wildland firefighting and as a medium-term fire retardant to protect wildlands, structures and firefighters; (2) Emergency Manhole FireIce Delivery System, or EMFIDS, an innovative system designed to deliver FireIce® into a manhole in the event of a fire; (3) FireIce® Home Defense Unit, a system for applying FireIce® to structures to protect them from wildfires; (4) Soil₂O® “Dust Control”, our new application which is used for dust mitigation in the aggregate, road construction, mining, as well as, other industries that deal with daily dust control issues; and (5) Soil₂O®, a product which reduces the use of water and is primarily marketed to golf courses, commercial landscapers and the agriculture market.  Our financial statements have been prepared on a going concern basis, and we need to generate sufficient material revenues to support the ongoing business of GelTech.

The corporate office is located in Jupiter, Florida.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its three wholly-owned subsidiaries: FireIce Gel, Inc., GelTech International, Inc. and Weather Tech Innovations, Inc. There has been no activity in Weather Tech Innovations, Inc. and GelTech International, Inc.  All intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

For the purposes of the statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The Company’s cash equivalents consist of a brokerage money market account.

Investments in Marketable Securities

The Company may invest in various marketable securities and accounts for such investments in accordance with ASC 320-10.

Certain securities that the Company may invest in may be determined to be non-marketable. Non-marketable securities where the Company owns less than 20% of the investee are accounted for at cost pursuant to ASC 323-10.

Management determines the appropriate classification of its investments at the time of acquisition and reevaluates such determination at each balance sheet date. Trading securities that the Company may hold are treated in accordance with ASC 320-10 with any unrealized gains and losses included in earnings. Available-for-sale securities are carried at fair value, with unrealized gains and losses, net of tax, reported as a separate component of stockholders' equity. Investments classified as held-to-maturity are carried at amortized cost. In determining realized gains and losses, the cost of the securities sold is based on the specific identification method.

F - 8

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

The Company periodically reviews its investments in marketable and non-marketable securities and records a reserve for impairment for any securities whose value is considered non-recoverable. The Company's determination of whether a security is other than temporarily impaired incorporates both quantitative and qualitative information. GAAP requires the exercise of judgment in making this assessment for qualitative information, rather than the application of fixed mathematical criteria. The Company considers a number of factors including, but not limited to, the length of time and the extent to which the fair value has been less than cost, the financial condition and near term prospects of the issuer, the reason for the decline in fair value, changes in fair value subsequent to the balance sheet date, and other factors specific to the individual investment. The Company's assessment involves a high degree of judgment and accordingly, actual results may differ materially from the Company's estimates and judgments.

Accounts Receivable

Accounts receivable are customer obligations due under normal trade terms. Senior management reviews accounts receivable on a monthly basis to determine if any receivables will potentially be uncollectible. The Company includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve, in its overall allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

Inventories

Inventories are stated at the lower of cost or market, with cost determined using a first-in, first-out method.

Property and Equipment and Depreciation

Property and equipment is recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of 3 to 7 years. Leasehold improvements are amortized over the lesser of the lease term or the useful life of the improvements. Expenditures for maintenance and repairs are expensed as incurred.

Impairment of Long-Lived Assets

The Company accounts for long-lived assets in accordance with the provisions of ASC 360-10. This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Fair Value of Financial Instruments and Fair Value Measurements

We measure our financial assets and liabilities in accordance with ASC 820 "Fair Value Measurements and Disclosures". For certain of our financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their short maturities. The carrying amount of our convertible and other debt approximates the fair value because the interest rate on those debts do not vary materially from the market rate for similar debt instruments.

F - 9

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

Effective July 1, 2008, we adopted accounting guidance for fair value measurements of financial assets and liabilities and adopted the same guidance for non-financial assets and liabilities effective July 1, 2009. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1:

Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2:

Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3:

Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The Company had no financial or non-financial assets or liabilities measured at fair value and subject to this accounting standard as of June 30, 2013 or 2012.

Revenue Recognition

Revenue from sales of products is recognized when persuasive evidence of an arrangement exists, products have been shipped to the customer, economic risk of loss has passed to the customer, the price is fixed or determinable, collection is reasonably assured, and any future obligations of the Company are insignificant.  Revenue is shown net of returns and allowances.  The Company does provide certain customers with the right of return for unsold product.  Sales to these customers are recorded as the customer sells the product, thus removing the right of return.

Products shipped from either our third-party fulfillment companies or our Jupiter, Florida or Irwindale, California locations are shipped FOB shipping point. Normal payment terms are net 30 or net 60 days depending on the arrangement we have with the customer. As such, revenue is recognized when product has been shipped from either the third-party fulfillment company or from the Jupiter, Florida or Irwindale, California locations.

The Company follows the guidance of ASC 605-50-25, “Revenue Recognition, Customer Payments”. Accordingly, any incentives received from vendors are recognized as a reduction of the cost of products. Promotional products or samples given to customers or potential customers are recognized as a cost of goods sold.  However, products we utilize to perform demonstrations for potential customers are recorded as a marketing expense in operations.  During the fiscal years ended June 30, 2013 and 2012, these demonstration costs amounted to $10,889 and $50,622, respectively. Cash incentives provided to our customers are recognized as a reduction of the related sale price, and, therefore, are a reduction in sales.

Shipping and Handling Costs

Amounts invoiced to customers for shipping and handling are included in revenues. Shipping and handling costs related to sales of products are included in selling, general and administrative expenses and were $51,943 and $63,726 in 2013 and 2012, respectively.

Research and Development

In accordance with ASC 730-10 expenditures for research and development of the Company's products are expensed when incurred, and are included in operating expenses. The Company recognized research and development costs of $179,158 and $83,707 for the fiscal years ended June 30, 2013 and 2012, respectively.

F - 10

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

Advertising

The Company conducts advertising for the promotion of its products and services. In accordance with ASC 720-35, advertising costs are charged to operations when incurred; such amounts aggregated $26,931 in fiscal 2013 and $82,719 in fiscal 2012.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Significant estimates in fiscal 2013 and fiscal 2012 include the allowance for doubtful accounts, depreciation and amortization, valuation of inventories, valuation of the beneficial conversion features associated with convertible notes, valuation of options and warrants granted for services or settlements, valuation of common stock granted for services or for debt conversion, accruals for litigation losses and the valuation of deferred tax assets.

Net Earnings (Loss) per Share

The Company computes net earnings (loss) per share in accordance with ASC 260-10. ASC 260-10 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. For the years ended June 30, 2013 and 2012, there was no separate computation of dilutive net loss per share since the common stock equivalents outstanding were anti-dilutive due to the net losses. At June 30, 2013 there were options to purchase 8,097,840 shares and warrants to purchase 1,883,700 shares of common stock outstanding which may dilute future earnings per share. In addition, there are 6,336,267 shares reserved for issuance related to convertible note agreements.

Stock-Based Compensation

 The Company accounts for stock-based compensation in accordance with ASC 718-10 “Compensation – Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options, restricted stock units, and  stock appreciation rights are based on estimated fair values. Stock option compensation expense recognized under ASC 718-10 for the years ended June 30, 2013 and 2012 was $1,497,534 and $1,371,519, respectively, related to employee, director and advisory board stock options, and is included in selling, general and administrative expenses in the consolidated statements of operations. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. At June 30, 2013, the total compensation cost for stock options not yet recognized was $1,752,879. This cost will be amortized on a straight-line basis over the remaining requisite service period of the options.

The Company accounts for non-employee stock based awards at fair value in accordance with the measurement and recognition criteria of ASC 505-50 "Equity Based payments to Non-Employees. Stock based compensation to non-employees recognized for the years ended June 30, 2013 and 2012 was $-0- and $322,850, respectively.

2007 Equity Incentive Plan

In January 2007, the Company established the 2007 Equity Incentive Plan under which provided for the issuance of up to 1,500,000 stock options, stock appreciation rights, restricted stock or restricted stock units to our directors, employees and consultants. In September 2008, the Board of Directors approved an amendment to the Company’s 2007 Equity Incentive Plan to increase the number of shares authorized by the plan from 1,500,000 to 3,500,000.  In fiscal 2012, Board of Directors increased the number of share authorized under the Plan to 4,500,000.  In June 2013, the Board of Directors approved an amendment to increase the number of shares authorized by the plan to 15,000,000.

F - 11

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

Under the Equity Incentive Plan, all directors who are not employees or own 10% or more of the Company’s outstanding stock at the time of grant shall automatically receive a grant of stock options as follows:

Initial Grants

A – Chairman of the Board

- 50,000 options

B – Director

- 30,000 options

C – Chair of a Committee

- 10,000 options

D – Member of a Committee

- 5,000 options

In June 2013, the Board of Directors increased the annual grants to the following amounts:

Annual Grants

A – Chairman of the Board

- 70,000 options

B – Director

- 100,000 options

C – Chair of a Committee

- 200,000 options

D – Member of a Committee

- 10,000 options

All initial grants of options to new non-employee directors and committee members vest annually over a three year period on the anniversary date of the grant, subject to continuing service as a director, Committee member, Chairman of the Board or Chairman of a Committee on the applicable vesting date. Options automatically granted annually under the 2007 Equity Incentive Plan vest the following June 30th, subject to continuing service as a director. Because our Chairman of the Board is an employee, he is not eligible for a grant. The exercise price of options or stock appreciation rights granted under the 2007 Equity Incentive Plan shall not be less than the fair market value of the underlying common stock at the time of grant. In the case of incentive stock options, the exercise price may not be less than 110% of the fair market value in the case of 10% shareholders. Options and stock appreciation rights granted under the 2007 Equity Incentive Plan shall expire no later than ten years after the date of grant. The option price may be paid in United States dollars by check or wire transfer or, at the discretion of the Board of Directors or Compensation Committee, by delivery of shares of our common stock having fair market value equal as of the date of exercise to the cash exercise price, or a combination thereof.

The identification of individuals entitled to receive awards, the terms of the awards, and the number of shares subject to individual awards, are determined by the Board of Directors or the Compensation Committee, in their sole discretion. The purchase price per share, if applicable, shall be adjusted for any increase or decrease in the number of issued shares resulting from a recapitalization, reorganization, merger, consolidation, exchange of shares, stock dividend, stock split, reverse stock split, or other subdivision or consolidation of shares.

The Board of Directors or the Compensation Committee may from time to time alter, amend, suspend, or discontinue the Equity Incentive Plan with respect to any shares as to which awards of stock rights have not been granted. However no rights granted with respect to any awards under this Equity Incentive Plan before the amendment or alteration shall be impaired by any such amendment, except with the written consent of the grantee. Under the terms of the Equity Incentive Plan, the Board of Directors or the Compensation Committee may also grant awards which will be subject to vesting under certain conditions. The vesting may be time-based or based upon meeting performance standards, or both.

In April 2010, the Company amended the 2007 Equity Incentive Plan to increase the number of stock options granted annually to directors from 20,000 to 50,000.  In June 2013, the Company amended the 2007 Equity Incentive Plan to increase the number of stock options granted annually to directors to 100,000.

All of our Stock Option Agreements provide for “clawback” provisions, which enable our Board of Directors to cancel stock awards and recover past profits if the person is dismissed for cause or commits certain acts which harm us.

Determining Fair Value Under ASC 718-10

The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Company’s determination of fair value using an option-pricing model is affected by the stock price as well as assumptions regarding the number of highly subjective variables.

F - 12

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

Income Taxes

The Company accounts for income taxes pursuant to the provisions of ASC 740-10, "Accounting for Income Taxes," which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

The Company follows the provisions of the ASC 740 -10 related to, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.

Effective July 1, 2007, the Company adopted ASC 740-10-25 Definition of Settlement, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. As of June 30, 2013, the fiscal tax years ended June 30, 2010, 2011 and 2012 are still subject to audit.

Legal Costs and Contingencies

In the normal course of business, the Company incurs costs to hire and retain external legal counsel to advise it on regulatory, litigation and other matters. The Company expenses these costs as the related services are received.

If a loss is considered probable and the amount can be reasonably estimated, the Company recognizes an expense for the estimated loss. If the Company has the potential to recover a portion of the estimated loss from a third party, the Company makes a separate assessment of recoverability and reduces the estimated loss, if recovery is also deemed probable.

New Accounting Pronouncements

ASUs which were not effective until after June 30, 2013 are not expected to have a significant effect on the Company's consolidated financial position or results of operations.

F - 13

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

2.

GOING CONCERN

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize it assets and discharge its liabilities in the normal course of business. The Company has a net loss and net cash used in operating activities in fiscal 2013 of $5,221,747 and $4,195,655 respectively and has a working capital deficit, accumulated deficit and stockholders’ deficit of $556,140, $28,021,633 and $2,270,386, respectively, at June 30, 2013. In addition, the Company has not yet generated revenue sufficient to support ongoing operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders, the ability of the Company to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

During the year ended June 30, 2013 the Company received $1,658,000 in exchange for common stock and $300,000 in exchange for common stock and warrants in connection with private placements, received $910,000 in connection with the exercise of warrants and received $675,000 in exchange for convertible notes. In addition,  the Company  received $810,003 under the stock purchase agreement with Lincoln Park Capital, signed in January 2012, and has the ability to sell another $3.6 million under the agreement.

Management believes that the actions presently being taken provide the opportunity for the Company to continue as a going concern.

3.

ACCOUNTS RECEIVABLE

Accounts receivable at June 30, 2013 and 2012 was as follows:

	2013			2012
Accounts receivable	$	70,062		$	95,685
Allowance for doubtful accounts		(32,785	)		(40,525	)
	$	37,277		$	55,160

Bad debt expense on trade accounts receivable for 2013 and 2012 was $-0- and $2,739, respectively.

4.

INVENTORIES

Inventories consisted of the following at June 30, 2013 and 2012:

	2013		2012
Finished goods	$	333,987	$	364,630
Raw materials		254,716		181,488
	$	588,703	$	546,118

F - 14

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

5.

FURNITURE, FIXTURES AND EQUIPMENT

Furniture, fixtures and equipment consisted of the following as of June 30, 2013 and 2012:

	Estimated	June 30,
	Useful Life	2013			2012
Equipment	3 - 5 years	$	88,875		$	69,538
Storage facilities	3 years		20,802			19,717
Vehicles	5 - 7 years		164,232			189,897
Furniture and fixtures	5 years		20,420			20,420
			294,329			299,572
Accumulated depreciation			(136,145	)		(110,793	)
		$	158,184		$	188,779

Depreciation expense in 2013 and 2012 was $49,269 and $51,301, respectively.

6.

CONVERTIBLE AND NON-CONVERTIBLE NOTE AGREEMENTS

On May 29, 2009, the Company received a line of credit (“Line of Credit”) from the Company’s principal stockholder (the “Lender”). In connection with this Line of Credit, the Company executed a Revolving Promissory Note which permitted the Company to borrow up to $2,500,000. Interest, at an annual rate of 5%, was due monthly on the 20th day of each month which commenced on July 20, 2009.

In February 2011, the Company renegotiated the Line of Credit Agreement with the Lender. As part of the renegotiation, the Company issued 892,857 shares of the Company’s common stock and five-year warrants to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $1.25 per share in exchange for a $1,000,000 reduction in the principal amount of the Line of Credit. In addition, the remaining principal amount due under the line of credit of $1,497,483 was replaced by a five-year convertible note of the same amount, convertible at $1.12 per share (fair market value on transaction date based upon the quoted trading price) and bearing annual interest of 5%, due on the maturity date of the note (the “2011 Note”). As an inducement for the Lender to enter into the convertible note agreement, the Company granted the Lender five-year warrants to purchase 300,000 shares of the Company’s common stock at an exercise price of $1.75 per share. These warrants were exercised in September 2012 in exchange for $150,000 in connection with the Company’s offer to all warrant holders to exercise warrants at $0.50 per share instead of the exercise price negotiated on the date of the grant. In February 2013, the 2011 Note, plus a $275,000 convertible original issue discount note were combined into one convertible note agreement, see discussion below.

In December 2011, the Company received short term advances from its Chief Executive Officer, former President and Chief Financial Officer in the amounts of $10,000, $29,380 and $50,000, respectively. The advances bear interest rates of 0.7%, 5.0% and 5.0%, respectively. In addition, as further inducement for the advance from the Chief Financial Officer, the Company approved the reduction in the exercise price of 150,000 options granted to the Chief Financial Officer from $1.95 to $0.60 per share. In connection with this repricing, the expense related to the vesting of these options was increased by $15,067 which will be recognized over the remaining service period. Through June 30, 2013, the Company has made repayments to its Chief Executive Officer, former President and Chief Financial Officer on the notes due these individuals in the amounts of $10,000, $29,380 and $50,000, respectively. As of June 30, 2013, accrued interest due to the CEO and CFO related to these notes amounted to $2,372.

F - 15

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

On March 9, 2012, the Company received $105,000 from third parties in exchange for nine month convertible original issue discount notes in the amount of $107,625. The notes bear an annual interest rate of 5% and are convertible into the Company's common stock at the rate of $0.50 per share. In connection with the issuance of the notes, the Company recorded a loan discount related to the intrinsic value of the beneficial conversion feature in the amount of $84,562 which will be amortized to interest expense over the life of the notes. In September 2012, the Company issued new one-year convertible original issue discount notes in the amount of $120,540, bearing annual interest of 12% and convertible at $0.50 per share in exchange for cancellation of the old notes. This modification was not considered a debt extinguishment. In accordance with ASC 470, the Company will recognize a debt discount related to the change in fair value of the embedded conversion option in the amount of $35,138 which will be amortized to interest expense over the life of the convertible notes. For the year ended June 30, 2013, the Company has recognized interest expense of $11,262 and $60,309, respectively, related to the amortization of the original issue discount and the beneficial conversion feature discount.

On March 10, 2012, the Company received $75,000 from a director in exchange for a six month convertible original issue discount note in the amount of $76,875. The note bears an annual interest rate of 5% and is convertible into the Company's common stock at the rate of $0.50 per share. In connection with the issuance of the note, the Company recorded a loan discount related to the intrinsic value of the beneficial conversion feature in the amount of $63,038 was amortized to interest expense over the life of the note. In September 2012, the Company issued a new one-year convertible original issue discount note in the amount of $86,100, bearing annual interest of 12% and convertible at $0.50 per share in exchange for cancellation of the old note. This modification was not considered a debt extinguishment. In accordance with ASC 470, the Company will recognize a debt discount related to the change in fair value of the embedded conversion option in the amount of $24,971 which will be amortized to interest expense over the life of the convertible note. For the year ended June 30, 2013, the Company has recognized interest expense of $8,101 and $44,222, respectively, related to the amortization of the original issue discount and the beneficial conversion feature discount.

On March 29, 2012, the Company received $250,000 from its principal stockholder and accrued interest due this stockholder as of February 18, 2012 of $74,874 was paid by including the interest in a new six month convertible original issue discount note in the amount of $332,996. The note bears an annual interest rate of 5% and is convertible into the Company's common stock at the rate of $0.50 per share. In connection with the issuance of the note, the Company recorded a loan discount related to the intrinsic value of the beneficial conversion feature in the amount of $199,798 and an original issue discount of $8,121 which will be amortized to interest expense over the life of the note. For the period from July 1, 2012 to September 28, 2012 the Company recognized interest expense of $3,972 and $97,703, respectively, related to the amortization of the original issue discount and the beneficial conversion feature discount. On September 28, 2012, the holder elected to convert the note into common stock and was issued 665,992 shares of common stock by the Company.

In August 2012, the Company received $175,000 in exchange for six month convertible original issue discount notes in the amount of $179,375 with two accredited investors. The notes are convertible into common stock at $0.50 per share. The notes bear an annual interest rate of 5% and are convertible into the Company's common stock at the rate of $0.50 per share. In connection with the issuance of the notes, the Company recorded a loan discount related to the intrinsic value of the beneficial conversion feature in the amount of $106,600 and an original issue discount of $4,375 which will be amortized to interest expense over the life of the notes. In February 2013, one note holder was issued 205,000 shares of the Company’s common stock in exchange for a note in the amount of $102,500. In addition, the other note holder was issued a new one year original issue discount note for $86,100 convertible at $0.35 per share. The Company recorded an original issue discount of $9,225 and a beneficial conversion feature discount of $4,920 in connection with the new note. The Company recognized interest expense of $7,552 and $4,920, respectively, related to the original issue discount and the beneficial conversion feature discount during the year ended June 30, 2013.

On December 28, 2012, the Company received $250,000 from its principal stockholder in exchange for a one year convertible original issue discount note in the amount of $275,000 (the “2012 Note”). The note bears an annual interest rate of 10% and is convertible into the Company's common stock at the rate of $0.35 per share. In connection with the issuance of the note, the Company recorded a loan discount related to the intrinsic value of the beneficial conversion feature in the amount of $23,571 and an original issue discount of $25,000 which will be amortized to interest expense over the life of the note.

F - 16

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

In February 2013, the Company entered into a new convertible note agreement in the amount of $1,997,483, convertible into common stock at a conversion price of $0.35 per share, bearing interest at an annual rate of 7.5% and due on December 31, 2016. This note was issued in exchange for the 2011 Note and the 2012 Note and receipt of $250,000. In connection with the transaction, the Company issued 210,226 shares of common stock in exchange for accrued interest of $73,579 due on the 2011 and 2012 notes resulting in a loss on conversion of interest of $4,204. The exchange of cash and the 2011 and 2012 notes was recorded as a debt extinguishment which resulted in a loss on extinguishment of debt in the amount of $21,311 for the year ended June 30, 2013. Because this convertible debt  instrument contained an embedded beneficial conversion feature, and was extinguished before conversion, the amount of the reacquisition price to be allocated to the repurchased beneficial feature was measured using the intrinsic value of that conversion feature at the extinguishment date and was immaterial.  In connection with the new note agreement, the Company recorded a note discount in the amount of $114,142 related to the beneficial conversion feature of the note calculated using the intrinsic value, of which $15,975 has been amortized as of June 30, 2013.

A summary of notes payable and related discounts as of June 30, 2013 is as follows:

	Principal		Unamortized Discount			Debt, Net of Discount
Third parties
Convertible notes payable	$	206,640	$	(14,477	)	$	192,163
Less current portion		206,640		(14,477	)		192,163
Convertible notes payable, net of current portion	$	—	$	—		$	—
Related parties
Convertible notes payable	$	2,083,583	$	(105,006	)	$	1,978,577
Less current portion		86,100		(6,839	)		79,261
Convertible and non-convertible note payable, net of current portion	$	1,997,483	$	(98,167	)	$	1,899,316

7.

STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock

The Company has authorized 5,000,000 shares of preferred stock, par value $0.001 per share with such rights, preferences and limitations as may be set from time to time by resolution of the board of directors and the filing of a certificate of designation as required by Delaware law.

Common Stock Issued for Cash

On January 5, 2012, the Company signed a $5 million common stock purchase agreement with Lincoln Park Capital Fund, LLC, an Illinois limited liability company (“LPC”). Upon signing the agreement, the Company received $100,000 from LPC as an initial purchase under the $5 million commitment in exchange for 316,667 shares of the Company’s common stock.

The Company also entered into a registration rights agreement with LPC whereby it agreed to file a registration statement related to the transaction with the Securities and Exchange Commission (“SEC”) covering the shares that may be issued to LPC under the purchase agreement. The Company filed a registration statement on January 6, 2012 which became effective on March 26, 2012. Under the registration statement, the Company registered 4.4 million shares of the Company’s common stock. From March 26, 2012 through June 30, 2012, the Company issued 686,082 shares of common stock in exchange for $510,000.

F - 17

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

The Company has the right, in its sole discretion, over a 30-month period to sell shares of common stock to LPC in amounts up to $500,000 per sale, depending on certain conditions as set forth in the purchase agreement, which at the time of the purchase agreement was signed was up to an additional $4.9 million. During the year ended June 30, 2012, the Company issued 1,002,749 shares of common stock in exchange for $610,000 under the purchase agreement.  During the year ended June 30, 2013, the Company issued 1,333,820 shares of common stock in exchange for $810,003 in connection with the Purchase Agreement with Lincoln Park Capital.

There are no upper limits to the price LPC may pay to purchase our common stock and the purchase price of the shares related to the purchase agreement will be based on the prevailing market prices of the Company’s shares immediately preceding the time of sales without any fixed discount, and the Company will control the timing and amount of any future sales of shares to LPC. LPC shall not have the right or the obligation to purchase any shares of common stock on any business day that the price the Company’s common stock is below $0.35.

In consideration for entering into the purchase agreement, the Company issued to LPC 150,000 shares of common stock as a commitment fee and will issue up to 450,000 shares pro rata as LPC purchases additional shares.  As of June 30, 2013, 249,180 “pro-rata” shares have been issued. The commitment shares are subject to a 30 month lock up restriction. The purchase agreement may be terminated by the Company at any time at our discretion without any cost to it. Except for a limitation on variable priced financings, there are no financial or business covenants, restrictions on future fundings, rights of first refusal, participation rights, penalties or liquidated damages in the agreement. 

During the year ended June 30, 2012 the Company issued 1,143,400 shares of common stock in exchange for $571,700 in connection with private placements with 34 accredited investors.

During the year ended June 30, 2013, the Company issued 3,914,321 shares of common stock in exchange for $1,958,000 in connection with private placements with 13 accredited investors, including issuances of 1,910,714 shares to our Chief Operating Officer and principal stockholder in exchange for $950,000 and 241,379 shares each to our Chief Executive Officer and Chief Technology Officer in exchange for a total of $280,000.

Common Stock Issued for Interest

In February 2013, the Company issued 210,226 shares of common stock to its Chief Operating Officer and principal stockholder as payment of accrued interest in the amount of $73,579. The Company recorded a loss on conversion of interest of $4,204 in connection with this transaction representing the difference between the conversion price of $0.35 per share and the fair market value of the stock on the date of conversion, $0.37 per share.

Common Stock Issued for Exercise of Options and Warrants and Cashless Exercise of Warrants

In July 2011, the Company issued 30,000 shares of common stock to a director in exchange for $30,000 in connection with the exercise of options with an exercise price of $1.00 per share.

In December 2011, the Company issued 5,000 shares of common stock to a director in connection with the exercise of options with an exercise price of $0.667 per share.

In January 2012, the Company issued 85,000 shares in exchange for $42,500 in connection with the exercise of warrants. The warrants had original exercise prices between $1.25 and $1.60 share. The Company recognized a loss on repricing of the warrants exercised of $11,919, during the three months ended March 31, 2012, representing the change in the value of the repriced warrants as compared to the value of the original warrants on the date of exercise.

F - 18

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

In September 2012, the Company issued 1,740,000 shares of common stock in exchange for $870,000 in connection with the exercise of 1,640,000 warrants and 100,000 options to purchase shares of the Company’s common stock related to an offer by the Company to reduce the exercise price to $0.50 per share. The original exercise prices of the warrants and options ranged from $1.25 to $1.75 per share. The cost of repricing warrants recognized by the Company amounted to $70,491 for the three months ended September 30, 2012. The cost represents the incremental increase in the fair value of the repriced warrants and options as compared to the original warrants and options granted, valued on the exercise date. The fair value of the warrants and options was determined using the Black-Scholes option pricing model.

In October 2012, the Company issued 80,000 shares of common in exchange for $40,000 in connection with the exercise of warrants at $0.50 per share.

In March 2013, the Company issued 9,171 shares of common stock related to the cashless exercise of 45,000 warrants to purchase common stock at an exercise price of $1.25 per share based upon a fair market value of our stock of $1.57 on the date of exercise.

In June 2013, the Company issued 11,667 shares of common stock in exchange for $6,534 in connection with the exercise of options by a director.

Common Stock Issued for Conversion of Debt

In September 2012, our Chief Operating Officer and principal stockholder converted his $322,996 convertible original issue discount note which was due on September 28, 2012 into 665,992 shares of common stock.

In February 2013, the Company issued 205,000 shares of common stock in connection with the conversion of a convertible original issue discount note in the amount of $102,500.

Common Stock Issued for Settlement

In December 2011, the Company issued 441,177 shares of common stock to a director in settlement of a loan amount due to the director by the Company's predecessor company. The fair value of the shares issued was $300,000, calculated using the closing price on the date of the settlement, and was recorded as a loss on settlement. As further inducement to enter into the settlement, the Company offered to reduce the exercise price of warrants held by the director from $1.50 to $0.50 per share if the director exercised the warrants within a short period of time. The Company issued an additional 130,000 shares of common stock to the director in exchange for $65,000 in connection with the preceding offer. As a result, the Company recognized a loss on warrant repricing of $5,834 representing the difference between the market value of the warrants exercised at an exercise price of $1.50 per share and the market value at the new exercise price of $0.50 per share.

Restricted Stock Units

On November 14, 2012 , the Compensation Committee of the Board of Directors granted its former Executive Chairman  800,000 restricted stock units  (“RSU”), of which (i) 200,000 units vested immediately, (ii) 200,000 units vest upon the Company generating $3,000,000 in revenue in any 12-month period, (iii) another 200,000 units vest upon the Company generating $5,000,000 in revenue in any 12-month period and (iv) another 200,000 units vest upon the Company generating $6,000,000 in revenue in any 12-month period. Vested Units shall be paid in shares of the Company's common stock.  The Company valued the 200,000 RSU's  which vested immediately, at $0.45 per share based on the closing bid price on the vesting date and recorded stock compensation expense of $90,000, resulting from the obligation to issue 200,000 shares of common stock.

In June 2013 the Executive Chairman was terminated for cause and the clawback provisions of the RSU agreement provided for the cancellation of the Company's obligation to issue these 200,000 shares of common stock.  As the shares had not yet been physically issued, the Company reduced its common stock issuable and recognized Other Income for the grant date fair value of $90,000 for these shares in accordance with guidance in ASC 718-20-35, Awards Classified as Equity, Subsequent Measurement in conjunction with a Clawback feature since the $196,000 fair value of the 200,000 shares at the cancellation date exceeds the grant date value of $90,000.

F - 19

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

The fair value of stock option grants for the fiscal year ended June 30, 2013 and 2012 were estimated using the following weighted- average assumptions:

	2013	2012
Risk free interest rate	0.53% – 2.49%	0.23% – 2.35%
Expected term in years	2.5 – 10.0	1.5 – 6.5
Dividend yield	-	-
Volatility of common stock	89.67% – 93.11%	87.55% – 91.39%
Estimated annual forfeitures	-	-

The Black-Scholes option-pricing model was developed for use in estimating the fair value of non-traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's stock options and warrants have characteristics different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of such stock options In fiscal 2013 and 2012, the Company used the Company’s trading prices in calculating the stock price volatility and based its volatility on historical volatility. The expected term was estimated using the simplified method for employee stock options since the Company does not have adequate historical exercise data to estimate the expected term.

Options to Purchase Common Stock

A summary of stock option transactions issued to employees under the 2007 Plan for the fiscal years ended June 30, 2013 and 2012 is as follows:

Employee Options and Stock Appreciation Rights

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balance at June 30, 2011		4,439,507		$	1.12		5.39
Granted		675,000		$	0.75		10.00
Exercised		—		$	—		—
Forfeited		—		$	—
Expired		(525,000	)	$	1.00		—
Outstanding at June 30, 2012		4,589,507		$	1.04		5.95	$	339,417
Exercisable at June 30, 2012		2,808,088		$	1.05		5.03	$	181,750
Weighted average fair value of options granted during the year ended June 30, 2012				$	0.56
Balance at June 30, 2012		4,589,507		$	1.04		5.95
Granted		4,622,500		$	0.55		9.64
Exercised		—		$	—		—
Forfeited		(2,875,000	)	$	0.92		—
Expired		—		$	—
Outstanding at June 30, 2013		6,337,007		$	0.75		6.62	$	2,505,808
Exercisable at June 30, 2013		3,696,174		$	0.90		5.70	$	1,056,738
Weighted average fair value of options granted during the year ended June 30, 2013				$	0.41

F - 20

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

On September 1, 2011, ten-year options to purchase 150,000 shares of common stock at an exercise price of $1.95 share, which were granted by the Company on June 3, 2011, to its Chief Financial Officer (CFO) became effective, upon his transition from part time consultant to full-time employee. Of the options granted, 50,000 vested immediately and the remaining options vest semi-annually on December 31st and June 30th over the 3-year requisite service period with the first vesting date being December 31, 2011, subject to continued employment. The options were valued at $224,778 using the Black-Scholes option pricing model using a volatility of 90.6% (derived from the historical market price of the Company’s common stock since it began trading in June 2008) an expected term of 6.5 years (using the simplified method) and a discount rate of 2.11%. In December 2011, the Company reduced the exercise price of the options to $0.60 per share as inducement for a loan from the CFO (See related party transactions). As a result, the value of the options was increased by $15,067 which will be recorded as expense over the remaining requisite service period.

On September 20, 2011, the Company granted ten-year options to purchase 175,000 shares of common stock at an exercise price of $0.81 share to each of its three original executive officers (a total of 525,000 options). The options vest semi-annually on December 31st and June 30th with the first vesting date being December 31, 2011, subject to continued employment. The options were valued using the Black-Scholes option pricing model using a volatility of 88.89% (derived from the historical market price of the Company’s common stock since it began trading in June 2008) an expected term of 6.5 years (using the simplified method) and a discount rate of 1.25%. The value of the options, $320,271, will be recorded as expense over the requisite service period. These options replaced options to purchase the same number of shares at an exercise price of $1.00 per share which expired on September 15, 2011.

In June 2012, the Company granted the Company’s president a three year extension and amended the exercise price of options to purchase 50,000 shares of common stock which had an original expiration date of June 25, 2012. The extended options vested immediately and were valued with the Black-Scholes option pricing model using a volatility of 91.39% (derived from the historical market price of the Company’s common stock since it began trading in June 2008) an expected term of 1.5 years (using the simplified method) and a discount rate of 0.23%. The calculated value of $17,011 was recognized as expense during the year ended June 30, 2012.

In June 2012, the Company granted the Company’s Chief Executive Officer, Chief Technology Officer, Chief Financial Officer and former President ten year options to each purchase 150,000 shares of common stock at an exercise price of $0.74 per share. The options vested based upon meeting certain prescribed management goals, the first of which occurred in July 2012.  The options were valued with the Black-Scholes option pricing model using a volatility of 91.39% (derived from the historical market price of the Company’s common stock since it began trading in June 2008) an expected term of 5.5 years (using the simplified method) and a discount rate of 0.78%. The calculated value of $320,640 will be recognized as the management goals are achieved.

On September 21, 2012, the Company granted options to purchase 70,000 shares of the Company’s common stock at an exercise price of $0.63 per share to the father of the Company’s Chief Executive Officer and Chief Technology Officer in recognition of his service. Of the options granted, 35,000 vest immediately with the remainder vesting semi-annually each December 31 and June 30 over a three year period, subject to continued employment on the vesting date. The Company valued the options at $28,358 using the Black-Scholes option pricing model using a volatility of 90.09%, based upon the historical price of the Company’s common stock since June 2008, an estimated term of 4 years, using the Simplified Method and a discount rate of 0.53%.

On September 21, 2012, the Company granted five-year options to purchase 265,000 shares of common stock at an exercise price of $0.60 per share to non-executive employees. The options vest 25% immediately with the remainder vesting annually over three years, subject to continued employment. The Company valued the options at $101,029 using the Black-Scholes option pricing model using a volatility of 89.93%, based upon the historical price of the Company’s common stock since June 2008, an estimated term of 4 years, using the Simplified Method and a discount rate of 0.53%. The resulting expense will be recognized 25% immediately and the remainder over the vesting period.

F - 21

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

On November 14, 2012, in connection with the signing of new employment agreements, the Compensation Committee of the Board of Directors granted its Chief Executive Officer, Chief Financial Officer, Chief Technology Officer and former President, 800,000 stock settled stock appreciation rights (“SARS”) each, of which (i) 200,000 rights vested immediately, (ii) 200,000 rights vest upon the Company generating $3,000,000 in revenue in any 12-month period, (iii) another 200,000 rights vest upon the Company generating $5,000,000 in revenue in any 12-month period and (iv) another 200,000 rights vest upon the Company generating $6,000,000 in revenue in any 12-month period. The SARs are exercisable at $0.45 per share over a 10-year period. The Company valued the 3,200,000 SARS at $1,086,560 using the Black-Scholes option pricing model using a volatility of 89.67%, based upon the historical price of the Company’s common stock since June 2008, an estimated term of 6.5 years, using the Simplified Method and a discount rate of 0.93%. Compensation expense of $271,640 was recognized immediately relating to the 800,000 SARS that vested immediately. The remaining compensation expense will be recognized based on managements assessment that the performance targets are likely to be met within 18 months of the grant date, resulting in the $814,920 of unrecognized compensation expense being expensed by June 30, 2014.

In connection with this grant, the Company’s Chief Executive Officer, former President and Chief Technology Officer agreed to cancel 250,000 stock options granted to each of them in their prior employment agreements. Because the fair value of the options cancelled exceeded the fair value of the new options granted, no additional expense will be recognized relating to these options.

In connection with a Termination and Release Agreement (the “Release Agreement”) effective February 8, 2013, the Company issued its former President options to purchase 112,500 shares of common stock at an exercise price of $0.39 per share, subject to a lockup agreement for the option shares and the other shares he currently owns. The options are fully vested and have a ten year term. The Company valued the options at $43,875 using the Black-Scholes option pricing model using a volatility of 89.67%, based upon the historical price of the Company’s common stock since June 2008, an estimated term of 9.42 years, using the Simplified Method and a discount rate of 0.93%. Additionally, in connection with the Release Agreement the Company cancelled options to purchase 1,325,000 shares of common stock at exercise prices from $0.667 to $1.22 per share and under a clawback provision rescinded 800,000 stock appreciation rights. As a result of the clawback, the Company recorded other income of $67,920 representing the expense previously recognized for the vested portion of the Stock Appreciation Rights.

In June 2013, the Company granted its Chief Executive Officer, Chief Technology Officer and Chief Financial Officer 125,000 each ten-year options to purchase shares of common stock at an exercise price of $1.10 per share. The options vest in equal amounts annually on the anniversary date of the grant over three years, subject to continued employment. The Company valued the options at $317,963 using the Black-Scholes option pricing model using a volatility of 91.6%, based upon the historical price of the Company’s common stock since June 2008, an estimated term of 6.5 years, using the Simplified Method and a discount rate of 1.78%. The resulting expense will be recognized over the requisite service period of three years.

F - 22

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

A summary of options issued to directors under the 2007 Plan and changes during the period from June 30, 2011 to June 30, 2012 and from June 30, 2012 to June 30, 2013 is as follows:

Options Issued to Directors

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balance at June 30, 2011		790,000		$	1.25		7.98
Granted		280,000		$	1.60		10.00
Exercised		(35,000	)	$	0.95		—
Forfeited		(142,500	)	$	1.46		—
Expired		(35,000	)	$	0.95		—
Outstanding at June 30, 2012		857,500		$	1.36		7.96	$	24,820
Exercisable at June 30, 2012		724,666		$	1.39		7.83	$	14,612
Weighted average fair value of options granted during the year ended June 30, 2012				$	1.27
Balance at June 30, 2012		857,500		$	1.36		7.96
Granted		610,000		$	0.95		10.00
Exercised		(11,667	)	$	0.56		10.00
Forfeited		(255,000	)	$	1.38		—
Expired		—		$	—		—
Outstanding at June 30, 2013		1,200,833		$	1.16		8.04	$	165,386
Exercisable at June 30, 2013		795,168		$	1.24		7.25	$	98,654
Weighted average fair value of options granted during the year ended June 30, 2013				$	0.72

On July 1, 2011, as an automatic grant under the Equity Incentive Plan, the Company granted options to purchase 245,000 shares of the Company’s common stock to directors of the Company. The options have an exercise price of $1.75 per share, vest over one year and have a ten year term. The options were valued using the Black-Scholes model using a volatility of 89.65% (derived using the historical market price for the Company’s common stock since it began trading in June 2008), an expected term of 6.5 years (using the simplified method) and a discount rate of 2.35%. The value of the options, $311,001, will be recognized over the vesting term, one year.

In July 2011, the Company issued 30,000 shares of common stock to a director in exchange for $30,000 in connection with the exercise of options with an exercise price of $1.00 per share.

On September 28, 2011, in connection with the resignation of a director, options to purchase 142,500 shares of common stock at a weighted average exercise price of $1.46 per share were forfeited.

In December 2011, the Company issued 5,000 shares of common stock to a director in connection with the exercise of options with an exercise price of $0.667 per share.

In January 2012, the Company granted options to purchase 35,000 shares of the Company’s common stock to a new director of the Company upon his appointment to the board and his election to serve on the audit committee. The options have an exercise price of $0.60 per share, vest over three years and have a ten year term. The options were valued using the Black-Scholes model using a volatility of 87.55% (derived using the historical market price for the Company’s common stock since it began trading in June 2008), an expected term of 6.5 years (using the simplified method) and a discount rate of 1.30%. The value of the options, $14,633, will be recognized over the vesting term, three years.

F - 23

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

On July 1, 2012, as an automatic granter under the Equity Incentive Plan, the Company issued options to purchase 230,000 shares of common stock to directors. The options have an exercise price of $0.91 per share, vest on June 30, 2013¸ subject to continuing service as a director and bear a ten year term. The options were valued using the Black-Scholes model using a volatility of 91.04% (derived using the historical market price for the Company’s common stock since it began trading in June 2008), an expected term of 5.5 years (using the simplified method) and a discount rate of 0.82%. The value of these options will be recognized as expense over the requisite service period.

On December 6, 2012, the Company issued options to purchase 5,000 shares of common stock to a director upon his appointment to the audit committee. The options have an exercise price of $0.36 per share, and vest over three years, subject to continued service and bear a ten year term. The options were valued using the Black-Scholes model using a volatility of 89.86% (derived using the historical market price for the Company’s common stock since it began trading in June 2008), an expected term of 6.5 years (using the simplified method) and a discount rate of 0.90%. The value of these options, $1,360, will be recognized as expense over the requisite service period.

In March 2013, the Company granted each of its three non-employee directors ten year options to purchase 125,000 shares of common stock at an exercise price of $0.99 per share. The options vest annually over a three year period, subject to continued service as a director. The options were valued using the Black-Scholes model using a volatility of 93.11 (derived using the historical market price for the Company’s common stock since it began trading in June 2008), an expected term of 6.5 years (using the simplified method) and a discount rate of 1.25%. The value of these options, $287,405, will be recognized as expense over the requisite service period.

In June 2013 in connection with the termination for cause of its former Executive Chairman, the Company clawed back options to purchase 255,000 shares of common stock with exercise prices from $0.91 to $1.95 per share previously granted to the Executive Chairman.  In addition, the Company rescinded a grant of 800,000 restricted stock units with an exercise price of $0.45 per share, of which 200,000 had vested.  

A summary of options issued to non-employees, non-directors under the 2007 Plan and changes during the fiscal years ended June 30, 2013 and 2012 is as follows:

Non-Employee, Non-Director Options

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balance at June 30, 2011		540,000		$	1.16		3.14
Granted		—		$	—		—
Exercised		—		$	—
Forfeited		—		$	—		—
Expired		—		$	—		—
Outstanding at June 30, 2012		540,000		$	1.16		2.14	$	—
Exercisable at June 30, 2012		540,000		$	1.16		2.14	$	—
Weighted average fair value of options granted during the year ended June 30, 2012					N/A
Balance at June 30, 2012		540,000		$	1.16		2.14
Granted		275,000		$	1.23		10.00
Exercised		(100,000	)	$	0.50		—
Forfeited		—		$	—		—
Expired		(155,000	)	$	1.00		—
Outstanding at June 30, 2013		560,000		$	1.22		5.96	$	6,250
Exercisable at June 30, 2013		285,000		$	1.21		2.22	$	—
Weighted average fair value of options granted during the year ended June 30, 2013				$	1.00

F - 24

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

In March 2013, the Company granted ten year options to purchase 150,000 shares of common stock at an exercise price of $1.33 per share to a consultant. The options vest annually over a three year period, subject to continued service as a consultant. The options were valued using the Black-Scholes model using a volatility of 93.11 (derived using the historical market price for the Company’s common stock since it began trading in June 2008), an expected term of 6.5 years (using the simplified method) and a discount rate of 1.23%. The value of these options, $154,415, will be recognized as expense over the requisite service period.

In June 2013, the Company granted a consultant ten-year options to purchase 125,000 shares of common stock at an exercise price of $1.10 per share.  The options vest in equal amounts annually on the anniversary date of the grant over three years, subject to continued engagement as a consultant.  The Company valued the options at $119,618 using the Black-Scholes option pricing model using a volatility of 91.6%, based upon the historical price of the Company’s common stock since June 2008, an estimated term of 10.0 years, the term of the option and a discount rate of 2.49%. The resulting expense will be recognized over the requisite service period, three years.

Warrants Issued as Settlements

	Number of Warrants			Weighted Average Exercise Price		Remaining Contractual Life
Balance at June 30, 2011		474,508		$	1.05		1.92
Granted		—		$	—		—
Exercised		(130,000	)	$	0.50		—
Forfeited		—		$	—		—
Expired		—		$	—		—
Outstanding at June 30, 2012		344,508		$	1.05		0.92
Exercisable at June 30, 2012		344,508		$	1.05		0.92
Weighted average fair value of warrants granted during the year ended June 30, 2012					N/A
Balance at June 30, 2012		344,508		$	1.05		0.92
Granted		350,000		$	0.63		4.22
Exercised		—		$	—		—
Forfeited		—		$	—		—
Expired		(344,508	)	$	1.05		—
Outstanding at June 30, 2013		350,000		$	0.63		4.22
Exercisable at June 30, 2013		350,000		$	0.63		4.22
Weighted average fair value of warrants granted during the year ended June 30, 2013				$	0.33

In December 2011, the Company issued 130,000 shares of common stock to a director in connection with the exercise of warrants with an exercise price of $0.50 per share in exchange for $65,000. As a result, the Company recognized a loss on warrant repricing of $5,834 representing the difference between the market value of the warrants exercised at an exercise price of $1.50 per share and the market value at the new exercise price of $0.50 per share. See Note 9.

F - 25

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

On September 21, 2012, the Company granted five year warrants to purchase 350,000 shares of the Company’s common stock at an exercise price of $0.63 per share to a director in recognition of his exemplary five years of service to the Company. The warrants vested immediately. The Company valued the warrants at $115,883 using the Black-Scholes option pricing model using a volatility of 90.09%, based upon the historical price of the Company’s common stock since June 2008, an estimated term of 2.5 years, using the Simplified Method and a discount rate of 0.32%.

In May 2013, warrants to purchase 344,058 shares of common stock at an exercise price of $1.05 per share held by a director expired.

A summary of warrants issued for cash and changes during the periods June 30, 2011 to June 30, 2012 and from June 30, 2012 to June 30, 2013 is as follows:

Warrants issued for cash or services

	Number of Warrants			Weighted Average Exercise Price		Remaining Contractual Life
Balance at June 30, 2011		4,651,200		$	1.46		2.68
Granted		—		$	—		—
Exercised		(85,000	)	$	0.50		—
Exercise rescission		45,000		$	1.25		—
Forfeited		—		$	—		—
Expired		(150,000	)	$	1.50		—
Outstanding at June 30, 2012		4,461,200		$	1.46		2.46
Exercisable at June 30, 2012		4,461,200		$	1.46		2.46
Weighted average fair value of warrants granted during the year ended June 30, 2012					N/A
Balance at June 30, 2012		4,461,200		$	1.46		2.46
Granted		362,500		$	1.16		10.00
Exercised		(1,865,000	)	$	0.50		—
Forfeited		—		$	—		—
Expired		(1,425,000	)	$	1.60		—
Outstanding at June 30, 2013		1,533,700		$	1.25		2.06
Exercisable at June 30, 2013		1,533,700		$	1.25		2.06
Weighted average fair value of warrants granted during the year ended June 30, 2013				$	0.44

In January 2012, the Company issued 85,000 shares in exchange for $42,500 in connection with the exercise of warrants. The warrants had original exercise prices between $1.25 and $1.60 share. As a result, the Company recognized a loss on warrant repricing of $11,919 representing the difference between the market value of the warrants exercised at an exercise price of $1.50 per share and the market value at the new exercise price of $0.50 per share.

In July 2011, the Company rescinded the cashless exercise of warrants to purchase 45,000 shares of the Company’s common stock at $1.25 per share held by a former director.

In May 2012, warrants to purchase 150,000 shares of common stock at $1.50 per share, held by our Chief Operating Officer and principal stockholder, expired.

F - 26

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

On September 21, 2012, the Company granted five year warrants to purchase 50,000 shares of the Company’s common stock at an exercise price of $0.63 per share to the Company’s Investor Relations firm in recognition of their performance over the past year. The warrants vested immediately. The Company valued the warrants at $21,787 using the Black-Scholes option pricing model using a volatility of 90.09%, based upon the historical price of the Company’s common stock since June 2008, an estimated term of 5 years, the term of the warrants, and a discount rate of 0.70%.

During the year ended June 30, 2013, the Company issued 1,820,000 shares of common stock in exchange for $910,000 in connection with the exercise of 1,820,000 warrants to purchase shares of the Company’s common stock related to an offer by the Company to reduce the exercise price to $0.50 per share. The original exercise prices of the warrants ranged from $1.25 to $1.75 per share. The cost of repricing warrants recognized by the Company amounted to $70,491 for the year ended June 30, 2013. The cost represents the incremental increase in the fair value of the repriced warrants as compared to the original warrants granted, valued on the exercise date. The fair value of the warrants was determined using the Black-Scholes option pricing model.

In March 2013, the Company issued 9,171 shares of common stock in connection with the cashless exercise of warrants to purchase 45,000 shares of common stock with an exercise price of $1.25 and a fair market value of the Company’s common stock of $1.57 on the date of exercise.

In May 2013, the Company issued five year warrants to purchase 312,500 shares of common stock at an exercise price of $1.25 per share in connection with two private placements with its Chief Operating Officer and principal stockholder.

During the year ended June 30, 2013, warrants to purchase 1,425,000 shares of the Company’s common stock at an exercise price of $1.60 per share expired unexercised.

Options to Purchase Common Stock and Stock Appreciation Rights

Stock-based compensation expense recognized under ASC 718-10 for the fiscal years ended June 30, 2013 and 2012 was $1,497,534 and $1,371,519, respectively, for stock options and stock appreciation rights granted to employees, directors and a consultant. This expense is included in selling, general and administrative expenses in the consolidated statements of operations. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. At June 30, 2013, the total compensation cost for stock options and stock appreciation rights not yet recognized was approximately $1,729,556. This cost will be recognized over the remaining vesting term of the options and stock appreciation rights of approximately five years.

8.

INCOME TAXES

Due to the net losses incurred, there was no income tax provision for the fiscal years ended June 30, 2013 and 2012. Deferred tax assets and liabilities as of June 30, 2013 and 2012, were as follows:

	June 30, 2013			June 30, 2012
Net operating loss carryforward	$	8,817,486		$	7,357,047
Allowance for bad debt		15,250			1,042
Stock-based compensation		1,304,426			800,329
Less: Deferred tax liability – depreciation		(9,557	)		(61,063	)
Net deferred tax assets		10,127,605			8,097,355
Less valuation allowance		(10,127,605	)		(8,097,355	)
Net deferred tax asset	$	—		$	—

The Company had available at June 30, 2013, net operating loss carryforwards for federal and state tax purposes of approximately $23,432,064 that could be applied against taxable income in subsequent years through June 30, 2033. The amount of net operating loss carryforward that can offset future taxable income may be limited in accordance with IRC Section 382 following certain ownership changes.

F - 27

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

Based on the weight of available evidence, both positive and negative, a valuation allowance to fully provide for the net deferred tax assets has been recorded since it is more likely than not that the deferred tax assets will not be realized. The valuation allowance was increased by $2,030,250 during fiscal year ended June 30, 2013.

Reconciliation of the differences between income tax benefit computed at the federal and state statutory tax rates and the provision for income tax benefit for the fiscal years ended June 30, 2013 and 2012 was as follows:

	For the Fiscal Year Ended June 30,
	2013						2012
	Amount			%			Amount			%
Tax at U.S. statutory rate	$	(1,775,395	)		-34.00	%	$	(2,424,220	)		-34.00	%
State taxes, net of federal benefit		(188,025	)		-3.60	%		(258,310	)		-3.63	%
Other		(66,830	)		-1.28	%		494,801			6.95	%
Change in valuation allowance		2,030,250			38.88	%		2,187,729			30.68	%
	$	—			0.00	%	$	—			0.00	%

9.

RELATED PARTY TRANSACTIONS

In addition to the Chief Executive Officer (CEO) and the Chief Technology Officer (CTO) the following related parties are employed at GelTech:

· the CEO’s wife as a bookkeeper at $1,400 per week,

· The CEO and CTO’s father is a researcher at $2,200 per week, and

· The CEO and CTO’s mother as a receptionist at $600 per week.

The Company has employment arrangements with its executive officers which are described in Note 10.

The Company has entered into a series of credit facilities with its largest principal stockholder as more fully described in Note 6.

In December 2011, the Company issued 441,177 shares of common stock to a director in settlement of a loan amount due to the director by the Company's predecessor company. The fair value of the shares issued was $300,000, calculated using the closing price on the date of the settlement, and was recorded as a loss on settlement. As further inducement to enter into the settlement, the Company offered to reduce the exercise price of warrants held by the director from $1.50 to $0.50 per share if the director exercised the options within a short period of time. The Company issued an additional 130,000 shares of common stock to the director in exchange for $65,000 in connection with the preceding offer. As a result, the Company recognized a loss on warrant repricing of $5,834 in other income (loss), representing the difference between the market value of the warrants exercised at an exercise price of $1.50 per share and the market value at the new exercise price of $0.50 per share.

In December 2011, the Company received short term advances from its Chief Executive Officer, its former President and its Chief Financial Officer in the amounts of $10,000, $29,380 and $50,000, respectively. The advances bore interest rates of 0.7%, 5.0% and 5.0%, respectively. In addition, as further inducement for the advance from the Chief Financial Officer, the Company approved the reduction in the exercise price of 150,000 options granted to the Chief Financial Officer from $1.95 to $0.60 per share. In connection with this repricing, the expense related to the vesting of these options was increased by $15,067 which will be recognized over the remaining service period. As of June 30, 2013, all amounts due under these notes have been repaid.

In September 2012, the Company granted options to purchase 70,000 shares of the Company’s common stock to the father of the Company’s CEO and CTO as more fully described in Note 7.

F - 28

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

In September 2012, the Company granted warrants to purchase 350,000 shares of the Company’s common stock to a director as more fully described in Note 7. Effective February 8, 2013, the Company’s President and Director resigned from the Company to pursue other opportunities. In connection with his separation, the Company agreed to pay the former President $150,000 plus COBRA payments over 14 months. In addition, the Company agreed to issue the former President ten year fully vested options to purchase 112,500 shares of the Company’s common stock at an exercise price of $0.39 per share, subject to a lockup agreement for the option shares and the other shares he currently owns. In addition, options and stock appreciation rights to purchase 2,125,000 shares of the Company’s common stock at exercise prices from $0.45 to $1.22 per share, previously issued to him, were cancelled. The Company recognized a severance expense of $168,920 for the year ended June 30, 2013 representing the total liability to the Company under the severance agreement. As of June 30, 2013, the remaining liability under the agreement amounted to $102,056.

10.

COMMITMENTS AND CONTINGENCIES

The Company leases office and warehouse space located in Jupiter, Florida under a month-to-month lease and rents space under a one year lease in an industrial yard in Irvine, California. In February 2013, the Company entered into a one year lease agreement for a support facility in Brooklyn, New York at a monthly rent of $3,600.   Rent expense for the fiscal year ended June 30, 2013 and 2012 was $143,614 and $103,044, respectively.

In March 2011, the Compensation Committee approved new employment terms for each of the Company’s three executive officers. The Executives will receive a base salary of $150,000 per year with the Committee having the authority to increase the Executive’s base salary for the succeeding 12-month period with the increase based on profitability, positive cash flow or such other factors as the Committee deems important. Following the completion of each fiscal year, the Committee will have the discretion to award each of the executives a target bonus based on each Executive’s job performance, the Company’s revenue growth, positive cash flow, net income before income taxes or other criteria selected by the Committee. In addition, the executives received options as previously described in Note 1. In October 2011, the Company entered into employment agreements with its executive officers.

Effective September 1, 2011, the Compensation Committee approved an Employment Agreement with the Company's Chief Financial Officer (CFO). The CFO will receive a base salary of $146,000 per year with the Committee having the authority to increase the CFO’s base salary for the succeeding 12-month period with the increase based on profitability, positive cash flow or such other factors as the Committee deems important. In addition, the CFO received options as previously described in Note 7.

On November 14, 2012, the Compensation Committee approved new employment agreements for the Company’s Chief Executive Officer, then President, Chief Technology Officer and Chief Financial Officer. The employment agreements each provide for base salaries of $150,000 and 800,000 stock settled stock appreciation rights (“SARS”) of which (i) 200,000 vested immediately, (ii) 200,000 vest upon the Company generating $3,000,000 in revenue in any 12-month period, (iii) another 200,000 vest upon the Company generating $5,000,000 in revenue in any 12-month period and (iv) another 200,000 vest upon the Company generating $6,000,000 in revenue in any 12-month period. The SARs are exercisable at $0.45 per share over a 10-year period. The Company’s Chief Executive Officer, then President and Chief Technology Officer agreed to cancel the 250,000 stock options granted to each of them in their prior employment agreements. These executives’ base salary will increase to: (i) $170,000 upon the Company generating $3,000,000 in revenue in any 12-month period, (ii) $190,000 upon the Company generating $5,000,000 in any 12-month period and (iii) $200,000 upon the Company generating $6,000,000 in any 12-month period.

Additionally, the Compensation Committee approved an employment agreement for the Company’s Executive Chairman. The Executive Chairman receives a base salary of $200,000 per year and was granted 800,000 restricted stock units vesting on identical terms as the SARs. All of the five senior executives receive a monthly car allowance of $600 per month. The Compensation Committee will also have the discretion to award each of the executives a bonus based upon job performance, revenue growth or any other factors determined by the Compensation Committee. Each of the employment agreements was effective as of October 1, 2012 and is for a four-year term. In June 2013, the Company terminated this agreement for cause.

F - 29

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

In August 2011, the Company entered into a settlement agreement with a former shareholder of Dyn-O-Mat, the Company's predecessor. At the time of the Company's formation, the Company was unable to contact the investor in order to offer the investor shares of GelTech in exchange for the investor's shares of Dyn-O-Mat. The investor came forward in May 2011 seeking to receive the same offer made to Dyn-O-Mat shareholders in 2007. Under the settlement agreement, the Company paid the investor $50,000, which has been recorded as a loss on settlement as of June 30, 2011. In addition, the Company's Chief Technology Officer and his father agreed to pay the investor an additional $125,000 prior to December 31, 2011. As of June 30, 2013, this amount has not yet been paid.

The Company was sued by a former employee on June 23, 2008, alleging breach of a consulting agreement and an employment agreement entered into in May and June 2007, respectively. In addition, the plaintiff seeks to recover certain of his personal property, which was used or stored in the Company’s offices, and alleges the Company invaded his privacy by looking at his personal computer (which was used in the Company’s business) in the Company’s offices. A jury trial was held for the lawsuit in July 2012. At the conclusion of the trial, the plaintiff was awarded $200,000 under his invasion of privacy and fraudulent misrepresentation claim, $5,000 on the trespass claim,$841,000 on the breach of consulting agreement claim and $200,000 against the Company’s CEO on a claim of civil theft, which by law results in an award of $600,000 for the plaintiff. The Company’s board of directors approved the indemnification of the Company’s CEO for the $600,000. The Company filed a post trial motion for Judgment Notwithstanding Verdict, New Trial and Remittitur, requesting that the judge set aside or reduce the amounts of the jury verdict.

Based upon the verdicts, the Company recorded a litigation accrual of $1,646,000 as of June 30, 2012. In November 2012, the insurance carrier paid the plaintiff $200,000 in settlement of the invasion of privacy and fraudulent misrepresentation awards. As a result, the Company reduced the amounts accrued for these awards resulting in other income of $200,000 for the period ended December 31, 2012.

In January 2013, the court ruled on the Company’s post-trial motions in this litigation dismissing the $200,000 civil theft verdict (which was subject to triple damages) against the CEO and reducing the $841,000 breach of the consulting agreement award to $500,000. The Company then filed a motion seeking a new trial on damages. The Company received a favorable ruling on this motion and received a new trial on the damages. As a result of the reduction in the award for breach of the consulting agreement from $841,000 to $500,000 and the vacating of the award for civil theft which the Company had previously accrued $600,000, the Company recorded other income of $941,000 for the year ended June 30, 2013.  The Company expects the trial to determine damages to occur in late 2013.

The Company may be subject to rescission rights from an investor who purchased 249,931 shares of the Company’s common stock in December 2012 at an average price of $0.36 per share during a time when the Registration Statement for those shares was stale due to the Company’s failure to file a Post-Effective Amendment to its Registration Statement including updated financial statements. As such, from now until the end of December 2013, the investor has the right under Section 5 of the Securities Act of 1933 to file suit against the Company to rescind the purchase and force the Company to repurchase the shares at the price paid by the investor. To date, the investor has not filed suit and because the market price of the Company’s common stock has been significantly higher than $0.36 per share, the Company considers the likelihood that the investor will file suit to be remote. Therefore, in accordance with ASC 450-20 “Loss Contingencies”, the Company has not recorded a liability for the potential rescission.

11.

CONCENTRATIONS

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through June 30, 2013. As of June 30, 2013, the Company had no cash equivalent balances that were not insured.

At June 30, 2013, there were accounts receivable from three customers that each exceeded 10% of the total gross accounts receivable at 39.2%, 13.9% and 11.6%. At June 30, 2012, there were accounts receivable from three customers that each exceeded 10% of the total gross accounts receivable at 43%, 24.1% and 18.1%.

F - 30

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

During fiscal 2013, two customers accounted for 36.3% and 32.4% of sales. No other customer had sales in excess of 10% of revenues.  During fiscal 2012, three customers accounted for approximately 14.3%, 12.4% and 12.3%, % of sales.

During fiscal 2013, sales resulted from two products, FireIce and Soil₂O® and from paid for research and development which made up 38.8%, 43.5% and 17.7% of total sales, respectively.  During fiscal 2012, all sales resulted from two products, FireIce and Soil₂O® which made up 49.9% and 50.1% of total sales.

During the year ended June 30, 2013, the Company purchased approximately $142,000 of raw material from one vendor and approximately $32,000 from another vendor which amounted to 50.8% and 11.5%, respectively, of the inventory purchases in fiscal 2013.  During the year ended June 30, 2012, the Company purchased approximately $205,000 of raw material from one vendor and approximately $81,000 from another vendor which amounted to 52.2% and 20.6%, respectively, of the inventory purchases in fiscal 2012.

12.

SUBSEQUENT EVENTS

During July and August 2013, the Company issued 40,000 shares of common stock in exchange for $43,200 in connection with the exercise of options at $0.96 per share by a director and warrants at $1.25 per share by an investor.

As prescribed by the Company's 2007 Equity Incentive Plan, on July 1, 2013, the Company issued options to purchase 370,000 shares of common stock to directors. The options have an exercise price of $0.99 per share, vest on June 30, 2014¸ subject to continuing service as a director and bear a ten year term.  The options were valued using the Black-Scholes model using a volatility of 93.11% (derived using the historical market price for the Company’s common stock since it began trading in June 2008), an expected term of 5.5 years (using the simplified method) and a discount rate of 1.52%. The value of these options will be recognized as expense over the requisite service period.

Since July 1, 2013, the Company has issued 289,941 shares of common stock and five year warrants to purchase 29,412 shares of common stock at an exercise price of $1.25 per share in exchange for $275,000 in connection with private placements with five accredited investors.

In July 2013, the Company issued ten year options to purchase 50,000 shares of common stock to a director. The options have an exercise price of $1.30 per share and vested immediately.  The options were valued using the Black-Scholes model using a volatility of 93.11% (derived using the historical market price for the Company’s common stock since it began trading in June 2008), an expected term of 5.0 years (using the simplified method) and a discount rate of 1.37%. The value of these options will be recognized as expense in the quarter ending September 30, 2013.

In July 2013, the Company issued ten year options to purchase 250,000 shares of common stock, each to its Chief Executive Officer, Chief Technology Officer and Chief Financial Officer. The options have an exercise price of $1.30 per share and vest 50% upon the market value of the Company’s common stock trading at or greater than $2.00 per share for any 10 day period out of a 30 day trading period and the other 50% vesting upon the market value of the Company’s common stock trading at or greater than $3.00 per share for any 10 day period out of a 30 day trading period.  The options were valued using the Black-Scholes model using a volatility of 93.11% (derived using the historical market price for the Company’s common stock since it began trading in June 2008), an expected term of 6.5 years (using the simplified method) and a discount rate of 2.62%. The value of these options will be recognized as expense over the requisite service period.

In July 2013, the Company received $1 million from its Chief Operating Officer and principal stockholder in exchange for a five year, $1 million convertible note with a conversion rate of $1.00 per share and an annual interest of 7.5%, plus five year warrants to purchase 500,000 shares of the common stock at $1.30 per share.  The Company calculated the relative fair market value of the warrants to be $311,949 using the Black-Scholes model using a volatility of 91.46% (derived using the historical market price for the Company’s common stock since it began trading in June 2008), an expected term of 5 years (the term of the warrants) and a discount rate of 1.4%.  In addition, the Company calculated the intrinsic value of the beneficial conversion feature of the note to be $304,257.  These resulting note discounts will be amortized to interest expense over the term of the note.

F - 31

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

In August and September 2013, the Company issued 342,946 shares of common stock in exchange for $390,000 in connection with the Purchase Agreement with Lincoln Park Capital.

In August 2013, the Company issued 8,880 shares of common stock as a partial conversion of a convertible note and repaid the remaining balance of $30,000.  In addition, the Company issued 234,663 shares of common stock in connection with the early conversion of a convertible note in the amount of $86,100, due in February 2014.

In September 2013, the Company repaid two convertible notes of $86,100 each, one of which was due to the Company’s former Executive Chairman.

F - 32

EX-10.16

EXHIBIT 10.16

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "Agreement”) is made effective as of the 2 day of May 2013 (“Effective Date”), by and between GELTECH SOLUTIONS INC., a Delaware corporation (being herein referred to as the "Seller"), and MICHAEL L. REGER (being herein referred to as the (“Purchaser”)

PRELIMINARY STATEMENTS

A.

The Seller has agreed sell and the Purchaser has agreed to sell 375,000  shares of GelTech Solutions, Inc. common stock (the “Common Stock”) at the agreed upon price  of Three Hundred Thousand and 00/100 Dollars ($300,000.00) (the “Purchase Price”).

B.

Upon the consummation of the purchase of the Common Stock, the Seller has agreed to issue a Warrant, in substantially the form attached hereto as Exhibit “A,” to purchase additional shares of the Sellers common stock (the “Warrant”).

C.

The Warrant shall have an exercise price equal to the Warrant Price (as defined in the Warrant) and shall expire five (5) years after the Closing Date (as defined below).  

NOW, THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Seller and Purchaser do hereby agree as follows:

ARTICLE I
Purchase and Sale of the Common Stock

Section 1.01. Purchase and Sale. As of the Effective Date and upon the terms and subject to the conditions set forth herein, the Seller shall deliver to the Purchaser  the Common Stock to the Purchaser free and clear of all liens, and Purchaser shall purchase the Common Stock from the Seller in accordance with this Agreement and for the Purchase Price set forth above.

Section 1.02. Time and Place of Closing. Subject to the satisfaction or waiver of the conditions herein, the closing (the “Closing”) of the transactions contemplated by this Agreement shall take place on May 2, 2013 (“Closing Date”), or at such time, date or place as Seller and Purchaser may agree.

Section 1.03. Delivery of the Common Stock Payment of Purchase Price. At Closing: (a) the Seller shall deliver to the Purchaser the certificate(s) representing the Common Stock that has been issued, duly endorsed, along with the Warrant; and (b) the Purchaser shall deliver the Purchase Price.

1

ARTICLE II
Representations and Warranties of Seller

Subject to all of the terms, conditions and provisions of this Agreement, the Seller hereby represents and warrants to Purchaser, as of the date hereof and as of the Closing, as follows:

Section 2.01. Organization and Qualification. The Seller has the requisite corporate power and authority to enter into and perform this Agreement, and the Warrant (collectively, the "Transaction Documents") and to issue and sell the Common Stock and the Warrant in accordance with their terms. The execution, delivery and performance of the Transaction Documents by the Seller, and the consummation by it of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary corporate action, and no further consent or authorization of the Seller or its Board of Directors or stockholders is required. The other Transaction Documents will have been duly executed and delivered by the Seller at the Closing. Each of the Transaction Documents constitutes, or shall constitute when executed and delivered, a valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor's rights and remedies or by other equitable principles of general application. Seller is a Delaware corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Seller has all requisite power and authority, corporate or otherwise, to own, lease and operate its assets and properties and to carry on its business, except where a violation would not have a material adverse effect on the business or assets of the Seller. The Seller has full legal right to sell, assign and transfer the Common Stock to Purchaser and will, upon Closing of this Agreement deliver to Purchaser a certificate or certificates representing the Common Stock that has been issued, and transfer good and indefeasible title to the Common Stock to Purchaser, free and clear of liens.

Section 2.02.  Consents and Approvals. No governmental approvals and no notifications, filings or registrations to or with any governmental authority or any other person is or will be necessary for the valid execution and delivery by the Seller of any of the Transaction Documents or the consummation of the transactions contemplated by each document, or the enforceability of each document, other than those which have been obtained or made and are in full force and effect or such necessary filings which will be done after the Closing to be in conformity with all governmental regulations.

Section 2.03. Brokers, Finders and Financial Advisors. No broker, finder or financial advisor has acted for Seller in connection with this Agreement, and no broker, finder or financial advisor is entitled to any broker's, finder's or financial advisor's fee or other commission in respect thereof based in any way on any contract with Seller.

2

ARTICLE III
Representations and Warranties of Purchaser

Subject to all of the terms, conditions and provisions of this Agreement, Purchaser hereby represents and warrants to the Seller, as of the date hereof and as of the Closing, as follows:

Section 3.01. Authority. Purchaser has all requisite power and authority to execute and deliver the Transaction Documents and to consummate the transactions contemplated by each document.  Purchaser has duly and validly executed and delivered this Agreement and, assuming the due authorization, execution and delivery of this Agreement by the Seller, the Transaction Documents constitute the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and general equitable principles.

Section 3.02. Brokers, Finders and Financial Advisors. No broker, finder or financial advisor has acted for Purchaser in connection with this Agreement or the transactions contemplated hereby or thereby, and no broker, finder or financial advisor is entitled to any broker's, finder's or financial advisor's fee or other commission in respect thereof based in any way on any contract with Purchaser.

Section 3.03. Investment Representations.  Purchaser is acquiring the Common Stock, and Warrant for his own account, for investment purposes, and not with a view to or in connection with the resale or other distribution of the same in violation of applicable securities laws.  Purchaser is an “accredited investor” as defined in Rule 501(a) under Regulation D of the Securities Act of 1933.  Purchaser understands and agrees that the Common Stock, Warrant and securities to be issued upon exercise of the Warrant have not been registered under the Securities Act of 1933 and are “restricted securities.”  Purchaser has had the opportunity to receive the advice of its legal, financial and other advisors, and has knowledge of finance, securities and investments generally, and experience and skill in investments based on actual participation and has the ability to bear the economic risks of Purchasers investment in the Company.  

ARTICLE IV

Covenants

Section 4.01. Further Assurances. Seller and Purchaser agree that, from time to time, whether before, at or after the Closing, each of them will take such other action and to execute, acknowledge and deliver such contracts, deeds, or other documents (a) as may be reasonably requested and necessary or appropriate to carry out the purposes and intent of this Agreement; or (b) to effect or evidence the transfer to the Purchaser of the Common Stock held by or in the name of the Seller.

3

ARTICLE V

Conditions

Section 5.01. Conditions to Obligations of Seller. Purchaser shall have complied with and performed in all material respects all of the terms, covenants, agreements and conditions contained in this Agreement which are required to be complied with and performed on or prior to Closing.

Section 5.02. Conditions to Obligations of Purchaser. The Seller shall have complied with and performed in all material respects all of the terms, covenants, agreements and conditions contained in this Agreement which are required to be complied with and performed on or prior to Closing.

ARTICLE VI

Miscellaneous

Section 6.01. Notices. Any and all notices, requests or other communications shall be given in writing and delivered by: (a) regular, overnight or registered or certified mail (return receipt requested), with first class postage prepaid, (b) hand delivery; (c) facsimile transmission; or (d) overnight courier service, to the parties at the following addresses or facsimile numbers:

(i) if to Seller, to

GelTech Solutions, Inc.

c/o Michael Cordani, Chief Executive Officer

1460 Park Lane South, Suite 1

Jupiter, FL 33458

Telephone Number: (561) 427-6144

Facsimile Number:  (561) 427-6182

(ii) Copies to:

Nason, Yeager, Gerson, White & Lioce, P.A.

c/o Michael D. Harris, Esq.

 1645 Palm Beach Lakes Boulevard, Suite 1200

West Palm Beach, Florida 33401

Telephone Number: (561) 686-3307

(ii) if to Purchaser, to:

Michael L Reger

777 Yamato Rd . Ste 300

Boca Raton FL 33431

Telephone Number: (561) 544-4600

(ii) Copies to:

David W. Jamison Jr. P.A. 

 c/o David W. Jamison, Esq

7501 Red Bay Pl.

Coral Springs, Florida 33065

Telephone Number: (954) 614-2171

Facsimile Number:  (866) 929-4975

4

or at such other address or number as shall be designated by either of the parties in a notice to the other party.

Section 6.02. Amendments and Waiver. No amendment, modification, restatement or supplement of this Agreement shall be valid unless the same is in writing and signed by the parties hereto. No waiver of any provision of this Agreement shall be valid unless in writing and signed by the party against whom that waiver is sought to be enforced.

Section 6.03. Counterparts. This Agreement may be executed in counterparts and by the different parties in separate counterparts, each of which when so executed shall be deemed an original and all of which taken together shall constitute one and the same agreement.

Section 6.04. Captions and Headings. The captions and headings contained in this Agreement are inserted and included solely for convenience and shall not be considered or given any effect in construing the provisions of this Agreement.

Section 6.05. Construction. The parties acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement with its legal counsel and that this Agreement shall be construed as if jointly drafted by the parties hereto.

Section 6.06. Applicable Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

Section 6.07. Submission to Jurisdiction. Each of the parties hereby: (a) irrevocably submits to the non-exclusive personal jurisdiction of any Florida court, over any claim arising out of or relating to this Agreement and irrevocably agrees that all such claims may be heard and determined in such Florida court; and (b) irrevocably waives, to the fullest extent permitted by applicable law, any objection it may now or hereafter have to the laying of venue in any proceeding brought in a Florida court.

Section 6.08. Entire Agreement. This Agreement sets forth all of the promises, agreements, conditions, understandings, warranties and representations among the parties with respect to the transactions contemplated hereby and thereby, and supersedes all prior agreements, arrangements and understandings between the parties, whether written, oral or otherwise.

Section 6.09. Signatures. For purposes of this Agreement and all Transaction Documents a faxed or emailed signature shall constitute an original signature.

[Remainder of page intentionally left blank]

5

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

SELLER:
GelTech Solutions, Inc., a Delaware corporation
By:
	Michael Cordani, Chief Executive Officer
PURCHASER:
Michael L. Reger, Individually

[Stock Purchase Agreement – Execution Page]

6

EX-10.17

EXHIBIT 10.17

THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), OR ANY OTHER SECURITIES LAWS, HAVE BEEN TAKEN FOR INVESTMENT, AND MAY NOT BE SOLD OR TRANSFERRED OR OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL TO THE ISSUER OF THESE SECURITIES THAT SUCH REGISTRATION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED.

Date: May 2, 2013

WARRANT FOR THE PURCHASE OF SHARES OF

COMMON STOCK OF GELTECH SOLUTIONS, INC.
 

THIS IS TO CERTIFY that, for value received, Michael Reger, his successors and assigns (collectively, the “Holder”), are entitled to purchase, subject to the terms and conditions hereinafter set forth, 187,500 shares of GelTech Solutions, Inc., a Delaware corporation (the “Company”) common stock, $0.001 par value per share (the “Common Stock”) and to receive certificates for the Common Stock so purchased.  The exercise price of this Warrant is $1.25 per share, subject to adjustment as provided below (the “Exercise Price”).  

1.

Exercise Period.  This Warrant may be exercised by the Holder beginning on the date listed above (the “Issuance Date”), and ending at 5:00 pm, New York time, five years thereafter (the “Exercise Period”).  This Warrant will terminate automatically and immediately upon the expiration of the Exercise Period.    

2.

Exercise of Warrant.  

(a)

Exercise.  This Warrant may be exercised, in whole or in part, at any time and from time to time during the Exercise Period.  Such exercise shall be accomplished by tender to the Company of an amount equal to the Exercise Price multiplied by the number of underlying shares being purchased (the “Purchase Price”), in cash, by wire transfer or by certified check or bank cashier’s check, payable to the order of the Company.  

(b)

Upon receipt of the Purchase Price in Section 2(a), together with presentation and surrender to the Company of this Warrant with an executed subscription form in substantially the form attached hereto as Schedule A (the “Subscription”), the Company will deliver to the Holder, as promptly as possible, a certificate or certificates representing the shares of Common Stock so purchased, registered in the name of the Holder or its transferee (as permitted under Section 3 below).  With respect to any exercise of this Warrant, the Holder will for all purposes be deemed to have become the holder of record of the number of shares of Common Stock purchased hereunder on the date a properly executed Subscription and payment

1

of the Purchase Price is received by the Company (the “Exercise Date”), irrespective of the date of delivery of the certificate evidencing such shares, except that, if the date of such receipt is a date on which the stock transfer books of the Company are closed, such person will be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.  Fractional shares of Common Stock will not be issued upon the exercise of this Warrant.  In lieu of any fractional shares that would have been issued but for the immediately preceding sentence, the Holder will be entitled to receive cash equal to the current market price of such fraction of a share of Common Stock on the trading day immediately preceding the Exercise Date.  In the event this Warrant is exercised in part, the Company shall issue a New Warrant (defined below) to the Holder covering the aggregate number of shares of Common Stock as to which this Warrant remains exercisable for.  The Company acknowledges and agrees that this Warrant was issued on the Issuance Date.

3.

Recording, Transferability, Exchange and Obligations to Issue Common Stock.

(a)

Registration of Warrant.  The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary from the transferee and transferor.

(b)

Registration of Transfers.  The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto as Schedule B duly completed and signed, to the Company at its address specified herein.  As a condition to the transfer, the Company may request a legal opinion as contemplated by the legend.  Upon any such registration or transfer, a New Warrant to purchase Common Stock, in substantially the form of this Warrant (any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder.  The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

(c)

This Warrant is exchangeable upon its surrender by the Holder to the Company for New Warrants of like tenor and date representing in the aggregate the right to purchase the number of shares purchasable hereunder, each of such New Warrants to represent the right to purchase such number of shares as may be designated by the Holder at the time of such surrender (not to exceed the aggregate number of shares underlying this Warrant).

(d)

The Company’s obligations to issue and deliver Common Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other person, and irrespective of any other circumstance

2

which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Common Stock.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant  as required pursuant to the terms hereof.

4.

Adjustments to Exercise Price and Number of Shares Subject to Warrant.  The Exercise Price and the number of shares of Common Stock purchasable upon the exercise of this Warrant are subject to adjustment from time to time upon the occurrence of any of the events specified in this Section 4.  For the purpose of this Section 4, “Common Stock” means shares now or hereafter authorized of any class of common stock of the Company, however designated, that has the right to participate in any distribution of the assets or earnings of the Company without limit as to per share amount (excluding, and subject to any prior rights of, any class or series of preferred stock).

(a)

In case the Company shall (i) pay a dividend or make a distribution in shares of Common Stock to holders of shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its shares of Common Stock other securities of the Company, then the Exercise Price in effect at the time of the record date for such dividend or on the effective date of such subdivision, combination or reclassification, and/or the number and kind of securities issuable on such date, shall be proportionately adjusted so that the Holder of the Warrant thereafter exercised shall be entitled to receive the aggregate number and kind of shares of Common Stock (or such other securities other than Common Stock) of the Company, at the same aggregate Exercise Price, that, if such Warrant had been exercised immediately prior to such date, the Holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, distribution, subdivision, combination or reclassification.  Such adjustment shall be made successively whenever any event listed above shall occur.

(b)

In case the Company shall fix a record date for the making of a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the surviving corporation) of cash, evidences of indebtedness or assets, or subscription rights or warrants, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Fair  Market Value per share of Common Stock on such record date, less the amount of cash so to be distributed or the Fair Market Value (as determined in good faith by, and reflected in a formal resolution of, the board of directors of the Company) of the portion of the assets or evidences of indebtedness so to be distributed, or of such subscription rights or warrants, applicable to one share of Common Stock, and the denominator of which shall be the Fair Market Value per share of Common Stock.  Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Exercise Price shall again be adjusted to be the Exercise Price, which would then be in effect if such record date had not been fixed.  

3

(c)

Notwithstanding any provision herein to the contrary, no adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price; provided, however, that any adjustments which by reason of this Section 4(c) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.  All calculations under this Section 4 shall be made to the nearest cent or the nearest one-hundredth of a share, as the case may be.

(d)  

In the event that at any time, as a result of an adjustment made pursuant to Section 4(a) above, the Holder of any Warrant thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, thereafter the number of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares of Common Stock contained in this Section 4, and the other provisions of this Warrant shall apply on like terms to any such other shares.

(e)

Fundamental Transactions.  If, at any time while this Warrant is outstanding, (1) the Company effects any merger or consolidation of the Company with or into another company, (2) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or another company or person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (4) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Common Stock then issuable upon exercise in full of this Warrant (the “Alternate Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  At the Holder’s option and request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a New Warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof.  Any such successor or surviving entity shall be deemed to be required to comply with the provisions of this Section 4(e) and shall insure that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

4

(f)

In case any event shall occur as to which the other provisions of this Section 4 are not strictly applicable but the failure to make any adjustment would not fairly protect the purchase rights represented by this Warrant in accordance with the essential intent and principles hereof, then, in each such case, the Company shall effect such adjustment, on a basis consistent with the essential intent and principles established in this Section 4, as may be necessary to preserve, without dilution, the purchase rights represented by this Warrant.

(g)

Notice of Adjustments.  Upon the occurrence of each adjustment pursuant to this Section 4, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Common Stock or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based.  Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s Transfer Agent.

5.

Legend.  If there is not a current effective registration statement in effect and the exemption provided by Rule 144 under the Securities Act is unavailable when exercised, the stock certificates shall bear the following legend.

“The securities represented by this certificate have not been registered under the Securities Act of 1933 (the “Securities Act”), and may not be offered for sale or sold except pursuant to (i) an effective registration statement under the Securities Act, or (ii) an opinion of counsel to the issuer, that an exemption from registration under the Securities Act is available.”

6.

Reservation of Common Stock.  The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Common Stock upon exercise of this Warrant as herein provided, the number of shares of Common Stock which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 4).  The Company covenants that all Common Stock so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.

7.

Replacement of Warrant.  If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (which may include a surety bond), if requested.  Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.  If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company's obligation to issue the New Warrant.

5

8.

Charges, Taxes and Expenses.  Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Common Stock or Warrants in a name other than that of the Holder.  The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Common Stock upon exercise hereof.

9.

Certain Notices to Holder.  

In the event of (a) any fixing by the Company of a record date with respect to the holders of any class of securities of the Company for the purpose of determining which of such holders are entitled to dividends or other distributions, or any rights to subscribe for, purchase or otherwise acquire any shares of capital stock of any class or any other securities or property, or to receive any other right, (b) any capital reorganization of the Company, or reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all of the assets or business of the Company to, or consolidation or merger of the Company with or into, any other entity or person, or (c) any voluntary or involuntary dissolution or winding up of the Company, then and in each such event the Company will give the Holder a written notice specifying, as the case may be (i) the record date for the purpose of such dividend, distribution, or right, and stating the amount and character of such dividend, distribution, or right; or (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, conveyance, dissolution, liquidation, or winding up is to take place and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such capital stock or securities receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock securities) for securities or other property deliverable upon such event.  Any such notice shall be given at least 10 days prior to the earliest date therein specified.

10.

No Rights as a Shareholder.  This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company, nor to any other rights whatsoever except the rights herein set forth.  Provided, however, the Company shall not close any merger arising out of any merger agreement in which it is not the surviving entity, or sell all or substantially all of its assets unless the Company shall have first provided the Holder with 20 days’ prior written notice.

11.

Additional Covenants of the Company.  The Company shall not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant.

12.

Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Company, the Holder and their respective successors and permitted assigns.

6

13.

Severability.  Every provision of this Warrant is intended to be severable.  If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the remainder of this Warrant.

14.

Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware without regard to choice of law considerations.

15.

Attorneys’ Fees.  In any action or proceeding brought to enforce any provision of this Warrant, the prevailing party shall be entitled to recover reasonable attorneys’ fees in addition to its costs and expenses and any other available remedies.  

16.

Entire Agreement.  This Warrant (including the Exhibits attached hereto) constitutes the entire understanding between the Company and the Holder with respect to the subject matter hereof, and supersedes all prior negotiations, discussions, agreements and understandings relating to such subject matter.

17.

Good Faith. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate  in order to protect the rights of the holder of this Warrant against such impairment.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer as of the date first set forth above.

GelTech Solutions, Inc.  

By: ___________________________

       Michael Cordani

       Chief Executive Officer

7

Schedule  A

SUBSCRIPTION FORM

(To be Executed by the Holder to Exercise the Rights To Purchase Common Stock Evidenced by the Within Warrant)

The undersigned hereby irrevocably subscribes for _______ shares of the Common Stock (the “Stock”) of GelTech Solutions, Inc. (the “Company”) pursuant to and in accordance with the terms and conditions of the attached Warrant (the “Warrant”), and hereby makes payment of $_______ therefore by tendering cash, wire transferring or delivering a certified check or bank cashier’s check, payable to the order of the Company. The undersigned requests that a certificate for the Stock be issued in the name of the undersigned and be delivered to the undersigned at the address stated below.  If the Stock is not all of the shares purchasable pursuant to the Warrant, the undersigned requests that a new Warrant of like tenor for the balance of the remaining shares purchasable thereunder be delivered to the undersigned at the address stated below.

In connection with the issuance of the Stock, I hereby represent to the Company that I am acquiring the Stock for my own account for investment and not with a view to, or for resale in connection with, a distribution of the shares within the meaning of the Securities Act of 1933 (the “Securities Act”).

I am  /  I am not [please circle the applicable box] an accredited investor for at least one of the reasons on the second page to this Exhibit A to the Warrant.  If the SEC has amended the rule defining the definition of accredited investor, I acknowledge that as a condition to exercise the Warrant, the Company may request updated information regarding the Holder’s status as an accredited investor.  My exercise of the Warrant shall be in compliance with the applicable exemptions under the Securities Act and applicable state law

I understand that if at this time the Stock has not been registered under the Securities Act, I must hold such Stock indefinitely unless the Stock is subsequently registered and qualified under the Securities Act or is exempt from such registration and qualification.  I shall make no transfer or disposition of the Stock unless (a) such transfer or disposition can be made without registration under the Securities Act by reason of a specific exemption from such registration and such qualification, or (b) a registration statement has been filed pursuant to the Securities Act and has been declared effective with respect to such disposition.  I agree that each certificate representing the Stock delivered to me shall bear substantially the same as set forth on the front page of the Warrant.

I further agree that the Company may place stop transfer orders with its transfer agent same effect as the above legend.  The legend and stop transfer notice referred to above shall be removed only upon my furnishing to the Company of an opinion of counsel to the Company to the effect that such legend may be removed.

Date:_______________________________	Signed: _______________________________ Print Name:____________________________ Address:______________________________
Date:_______________________________	Signed: _______________________________ Print Name:____________________________ Address:______________________________

For Individual Investors Only:

1.

I am a person who has an individual net worth, or a person who with his or her spouse has a combined net worth, in excess of $1,000,000. For purposes of calculating net worth under this paragraph (1), (i) the primary residence shall not be included as an asset, (ii) to the extent that the indebtedness that is secured by the primary residence is in excess of the fair market value of the primary residence, the excess amount shall be included as a liability, and (iii) if the amount of outstanding indebtedness that is secured by the primary residence exceeds the amount outstanding 60 days prior to exercising these securities, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability.

2a.

A person who had individual income (exclusive of any income attributable to the person’s spouse) of more than who has $200,000 in each of the two most recently completed years and who reasonably expects to have an individual income in excess of $200,000 this year.

2b.

Alternatively, a person, who with his or her spouse, has joint income in excess of $300,000 in each applicable year.

3.

A director or executive officer of the Company.

Other Investors:

4.

Any bank as defined in Section 3(a)(2) of the Securities Act of 1933 (“Securities Act”) whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; insurance company as defined in Section 2(13) of the Securities Act; investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000, or if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

5.

A private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940.

6.

An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.  

7.

A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Securities Act.

8.

An entity in which all of the equity owners are accredited investors.

Schedule  B

ASSIGNMENT

(To be Executed by the Holder to Effect Transfer of the Attached Warrant)

For Value Received __________________________ hereby sells, assigns and transfers to _________________________ the Warrant attached hereto and the rights represented thereby to purchase _________ shares of Common Stock in accordance with the terms and conditions hereof, and does hereby irrevocably constitute and appoint ___________________________ as attorney to transfer such Warrant on the books of the Company with full power of substitution.

Dated:________________________

Signed: _____________________________

Please print or typewrite
name and address of
assignee:

Please insert Social Security
or other Tax Identification
Number of Assignee:

Dated:________________________

Signed: _____________________________

Please print or typewrite
name and address of
assignee:
Please insert Social Security
or other Tax Identification
Number of Assignee:

EX-10.18

EXHIBIT 10.18

THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), OR ANY OTHER SECURITIES LAWS, HAVE BEEN TAKEN FOR INVESTMENT, AND MAY NOT BE SOLD OR TRANSFERRED OR OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL TO THE ISSUER OF THESE SECURITIES THAT SUCH REGISTRATION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED.

Date: May 31, 2013

WARRANT FOR THE PURCHASE OF SHARES OF

COMMON STOCK OF GELTECH SOLUTIONS, INC.
 

THIS IS TO CERTIFY that, for value received, Michael Reger, his successors and assigns (collectively, the “Holder”), are entitled to purchase, subject to the terms and conditions hereinafter set forth, 125,000 shares of GelTech Solutions, Inc., a Delaware corporation (the “Company”) common stock, $0.001 par value per share (the “Common Stock”) and to receive certificates for the Common Stock so purchased.  The exercise price of this Warrant is $1.25 per share, subject to adjustment as provided below (the “Exercise Price”).

1.

Exercise Period.  This Warrant may be exercised by the Holder beginning on the date listed above (the “Issuance Date”), and ending at 5:00 pm, New York time, five years thereafter (the “Exercise Period”).  This Warrant will terminate automatically and immediately upon the expiration of the Exercise Period.

2.

Exercise of Warrant.  

(a)

Exercise.  This Warrant may be exercised, in whole or in part, at any time and from time to time during the Exercise Period.  Such exercise shall be accomplished by tender to the Company of an amount equal to the Exercise Price multiplied by the number of underlying shares being purchased (the “Purchase Price”), in cash, by wire transfer or by certified check or bank cashier’s check, payable to the order of the Company.  

(b)

Upon receipt of the Purchase Price in Section 2(a), together with presentation and surrender to the Company of this Warrant with an executed subscription form in substantially the form attached hereto as Schedule A (the “Subscription”), the Company will deliver to the Holder, as promptly as possible, a certificate or certificates representing the shares of Common Stock so purchased, registered in the name of the Holder or its transferee (as permitted under Section 3 below).  With respect to any exercise of this Warrant, the Holder will for all purposes be deemed to have become the holder of record of the number of shares of Common Stock purchased hereunder on the date a properly executed Subscription and payment of the Purchase Price is received by the Company (the “Exercise Date”), irrespective of the date

1

of delivery of the certificate evidencing such shares, except that, if the date of such receipt is a date on which the stock transfer books of the Company are closed, such person will be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.  Fractional shares of Common Stock will not be issued upon the exercise of this Warrant.  In lieu of any fractional shares that would have been issued but for the immediately preceding sentence, the Holder will be entitled to receive cash equal to the current market price of such fraction of a share of Common Stock on the trading day immediately preceding the Exercise Date.  In the event this Warrant is exercised in part, the Company shall issue a New Warrant (defined below) to the Holder covering the aggregate number of shares of Common Stock as to which this Warrant remains exercisable for.  The Company acknowledges and agrees that this Warrant was issued on the Issuance Date.

3.

Recording, Transferability, Exchange and Obligations to Issue Common Stock.

(a)

Registration of Warrant.  The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary from the transferee and transferor.

(b)

Registration of Transfers.  The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto as Schedule B duly completed and signed, to the Company at its address specified herein.  As a condition to the transfer, the Company may request a legal opinion as contemplated by the legend.  Upon any such registration or transfer, a New Warrant to purchase Common Stock, in substantially the form of this Warrant (any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder.  The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

(c)

This Warrant is exchangeable upon its surrender by the Holder to the Company for New Warrants of like tenor and date representing in the aggregate the right to purchase the number of shares purchasable hereunder, each of such New Warrants to represent the right to purchase such number of shares as may be designated by the Holder at the time of such surrender (not to exceed the aggregate number of shares underlying this Warrant).

(d)

The Company’s obligations to issue and deliver Common Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with

2

the issuance of Common Stock.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant  as required pursuant to the terms hereof.

4.

Adjustments to Exercise Price and Number of Shares Subject to Warrant.  The Exercise Price and the number of shares of Common Stock purchasable upon the exercise of this Warrant are subject to adjustment from time to time upon the occurrence of any of the events specified in this Section 4.  For the purpose of this Section 4, “Common Stock” means shares now or hereafter authorized of any class of common stock of the Company, however designated, that has the right to participate in any distribution of the assets or earnings of the Company without limit as to per share amount (excluding, and subject to any prior rights of, any class or series of preferred stock).

(a)

In case the Company shall (i) pay a dividend or make a distribution in shares of Common Stock to holders of shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its shares of Common Stock other securities of the Company, then the Exercise Price in effect at the time of the record date for such dividend or on the effective date of such subdivision, combination or reclassification, and/or the number and kind of securities issuable on such date, shall be proportionately adjusted so that the Holder of the Warrant thereafter exercised shall be entitled to receive the aggregate number and kind of shares of Common Stock (or such other securities other than Common Stock) of the Company, at the same aggregate Exercise Price, that, if such Warrant had been exercised immediately prior to such date, the Holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, distribution, subdivision, combination or reclassification.  Such adjustment shall be made successively whenever any event listed above shall occur.

(b)

In case the Company shall fix a record date for the making of a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the surviving corporation) of cash, evidences of indebtedness or assets, or subscription rights or warrants, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Fair  Market Value per share of Common Stock on such record date, less the amount of cash so to be distributed or the Fair Market Value (as determined in good faith by, and reflected in a formal resolution of, the board of directors of the Company) of the portion of the assets or evidences of indebtedness so to be distributed, or of such subscription rights or warrants, applicable to one share of Common Stock, and the denominator of which shall be the Fair Market Value per share of Common Stock.  Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Exercise Price shall again be adjusted to be the Exercise Price, which would then be in effect if such record date had not been fixed.  

3

(c)

Notwithstanding any provision herein to the contrary, no adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price; provided, however, that any adjustments which by reason of this Section 4(c) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.  All calculations under this Section 4 shall be made to the nearest cent or the nearest one-hundredth of a share, as the case may be.

(d)  

In the event that at any time, as a result of an adjustment made pursuant to Section 4(a) above, the Holder of any Warrant thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, thereafter the number of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares of Common Stock contained in this Section 4, and the other provisions of this Warrant shall apply on like terms to any such other shares.

(e)

Fundamental Transactions.  If, at any time while this Warrant is outstanding, (1) the Company effects any merger or consolidation of the Company with or into another company, (2) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or another company or person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (4) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Common Stock then issuable upon exercise in full of this Warrant (the “Alternate Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  At the Holder’s option and request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a New Warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof.  Any such successor or surviving entity shall be deemed to be required to comply with the provisions of this Section 4(e) and shall insure that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

4

(f)

In case any event shall occur as to which the other provisions of this Section 4 are not strictly applicable but the failure to make any adjustment would not fairly protect the purchase rights represented by this Warrant in accordance with the essential intent and principles hereof, then, in each such case, the Company shall effect such adjustment, on a basis consistent with the essential intent and principles established in this Section 4, as may be necessary to preserve, without dilution, the purchase rights represented by this Warrant.

(g)

Notice of Adjustments.  Upon the occurrence of each adjustment pursuant to this Section 4, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Common Stock or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based.  Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s Transfer Agent.

5.

Legend.  If there is not a current effective registration statement in effect and the exemption provided by Rule 144 under the Securities Act is unavailable when exercised, the stock certificates shall bear the following legend.

“The securities represented by this certificate have not been registered under the Securities Act of 1933 (the “Securities Act”), and may not be offered for sale or sold except pursuant to (i) an effective registration statement under the Securities Act, or (ii) an opinion of counsel to the issuer, that an exemption from registration under the Securities Act is available.”

6.

Reservation of Common Stock.  The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Common Stock upon exercise of this Warrant as herein provided, the number of shares of Common Stock which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 4).  The Company covenants that all Common Stock so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.

7.

Replacement of Warrant.  If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (which may include a surety bond), if requested.  Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.  If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company's obligation to issue the New Warrant.

5

8.

Charges, Taxes and Expenses.  Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Common Stock or Warrants in a name other than that of the Holder.  The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Common Stock upon exercise hereof.

9.

Certain Notices to Holder.  

In the event of (a) any fixing by the Company of a record date with respect to the holders of any class of securities of the Company for the purpose of determining which of such holders are entitled to dividends or other distributions, or any rights to subscribe for, purchase or otherwise acquire any shares of capital stock of any class or any other securities or property, or to receive any other right, (b) any capital reorganization of the Company, or reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all of the assets or business of the Company to, or consolidation or merger of the Company with or into, any other entity or person, or (c) any voluntary or involuntary dissolution or winding up of the Company, then and in each such event the Company will give the Holder a written notice specifying, as the case may be (i) the record date for the purpose of such dividend, distribution, or right, and stating the amount and character of such dividend, distribution, or right; or (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, conveyance, dissolution, liquidation, or winding up is to take place and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such capital stock or securities receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock securities) for securities or other property deliverable upon such event.  Any such notice shall be given at least 10 days prior to the earliest date therein specified.

10.

No Rights as a Shareholder.  This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company, nor to any other rights whatsoever except the rights herein set forth.  Provided, however, the Company shall not close any merger arising out of any merger agreement in which it is not the surviving entity, or sell all or substantially all of its assets unless the Company shall have first provided the Holder with 20 days’ prior written notice.

11.

Additional Covenants of the Company.  The Company shall not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant.

12.

Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Company, the Holder and their respective successors and permitted assigns.

6

13.

Severability.  Every provision of this Warrant is intended to be severable.  If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the remainder of this Warrant.

14.

Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware without regard to choice of law considerations.

15.

Attorneys’ Fees.  In any action or proceeding brought to enforce any provision of this Warrant, the prevailing party shall be entitled to recover reasonable attorneys’ fees in addition to its costs and expenses and any other available remedies.  

16.

Entire Agreement.  This Warrant (including the Exhibits attached hereto) constitutes the entire understanding between the Company and the Holder with respect to the subject matter hereof, and supersedes all prior negotiations, discussions, agreements and understandings relating to such subject matter.

17.

Good Faith. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate  in order to protect the rights of the holder of this Warrant against such impairment.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer as of the date first set forth above.

GelTech Solutions, Inc.  

By: ___________________________

       Michael R. Hull

       Chief Financial Officer

7

Schedule  A

SUBSCRIPTION FORM

(To be Executed by the Holder to Exercise the Rights To Purchase Common Stock Evidenced by the Within Warrant)

The undersigned hereby irrevocably subscribes for _______ shares of the Common Stock (the “Stock”) of GelTech Solutions, Inc. (the “Company”) pursuant to and in accordance with the terms and conditions of the attached Warrant (the “Warrant”), and hereby makes payment of $_______ therefore by tendering cash, wire transferring or delivering a certified check or bank cashier’s check, payable to the order of the Company. The undersigned requests that a certificate for the Stock be issued in the name of the undersigned and be delivered to the undersigned at the address stated below.  If the Stock is not all of the shares purchasable pursuant to the Warrant, the undersigned requests that a new Warrant of like tenor for the balance of the remaining shares purchasable thereunder be delivered to the undersigned at the address stated below.

In connection with the issuance of the Stock, I hereby represent to the Company that I am acquiring the Stock for my own account for investment and not with a view to, or for resale in connection with, a distribution of the shares within the meaning of the Securities Act of 1933 (the “Securities Act”).

I am  /  I am not [please circle the applicable box] an accredited investor for at least one of the reasons on the second page to this Exhibit A to the Warrant.  If the SEC has amended the rule defining the definition of accredited investor, I acknowledge that as a condition to exercise the Warrant, the Company may request updated information regarding the Holder’s status as an accredited investor.  My exercise of the Warrant shall be in compliance with the applicable exemptions under the Securities Act and applicable state law

I understand that if at this time the Stock has not been registered under the Securities Act, I must hold such Stock indefinitely unless the Stock is subsequently registered and qualified under the Securities Act or is exempt from such registration and qualification.  I shall make no transfer or disposition of the Stock unless (a) such transfer or disposition can be made without registration under the Securities Act by reason of a specific exemption from such registration and such qualification, or (b) a registration statement has been filed pursuant to the Securities Act and has been declared effective with respect to such disposition.  I agree that each certificate representing the Stock delivered to me shall bear substantially the same as set forth on the front page of the Warrant.

I further agree that the Company may place stop transfer orders with its transfer agent same effect as the above legend.  The legend and stop transfer notice referred to above shall be removed only upon my furnishing to the Company of an opinion of counsel to the Company to the effect that such legend may be removed.

Date:_______________________________	Signed: _______________________________ Print Name:____________________________ Address:______________________________
Date:_______________________________	Signed: _______________________________ Print Name:____________________________ Address:______________________________

For Individual Investors Only:

1.

I am a person who has an individual net worth, or a person who with his or her spouse has a combined net worth, in excess of $1,000,000. For purposes of calculating net worth under this paragraph (1), (i) the primary residence shall not be included as an asset, (ii) to the extent that the indebtedness that is secured by the primary residence is in excess of the fair market value of the primary residence, the excess amount shall be included as a liability, and (iii) if the amount of outstanding indebtedness that is secured by the primary residence exceeds the amount outstanding 60 days prior to exercising these securities, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability.

2a.

A person who had individual income (exclusive of any income attributable to the person’s spouse) of more than who has $200,000 in each of the two most recently completed years and who reasonably expects to have an individual income in excess of $200,000 this year.

2b.

Alternatively, a person, who with his or her spouse, has joint income in excess of $300,000 in each applicable year.

3.

A director or executive officer of the Company.

Other Investors:

4.

Any bank as defined in Section 3(a)(2) of the Securities Act of 1933 (“Securities Act”) whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; insurance company as defined in Section 2(13) of the Securities Act; investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000, or if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

5.

A private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940.

6.

An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.  

7.

A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Securities Act.

8.

An entity in which all of the equity owners are accredited investors.

Schedule  B

ASSIGNMENT

(To be Executed by the Holder to Effect Transfer of the Attached Warrant)

For Value Received __________________________ hereby sells, assigns and transfers to _________________________ the Warrant attached hereto and the rights represented thereby to purchase _________ shares of Common Stock in accordance with the terms and conditions hereof, and does hereby irrevocably constitute and appoint ___________________________ as attorney to transfer such Warrant on the books of the Company with full power of substitution.

Dated:________________________

Signed: _____________________________

Please print or typewrite
name and address of
assignee:

Please insert Social Security
or other Tax Identification
Number of Assignee:

Dated:________________________

Signed: _____________________________

Please print or typewrite
name and address of
assignee:
Please insert Social Security
or other Tax Identification
Number of Assignee:

EX-10.20

EXHIBIT 10.20

THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), OR ANY OTHER SECURITIES LAWS, HAVE BEEN TAKEN FOR INVESTMENT, AND MAY NOT BE SOLD OR TRANSFERRED OR OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL TO THE ISSUER OF THESE SECURITIES THAT SUCH REGISTRATION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED.

Date: July 11, 2013

WARRANT FOR THE PURCHASE OF SHARES OF

COMMON STOCK OF GELTECH SOLUTIONS, INC.
 

THIS IS TO CERTIFY that, for value received, Michael Reger, his successors and assigns (collectively, the “Holder”), are entitled to purchase, subject to the terms and conditions hereinafter set forth, 500,000 shares of GelTech Solutions, Inc., a Delaware corporation (the “Company”) common stock, $0.001 par value per share (the “Common Stock”) and to receive certificates for the Common Stock so purchased.  The exercise price of this Warrant is $1.30 per share, subject to adjustment as provided below (the “Exercise Price”).  

1.

Exercise Period.  This Warrant may be exercised by the Holder beginning on the date listed above (the “Issuance Date”), and ending at 5:00 pm, New York time, five years thereafter (the “Exercise Period”).  This Warrant will terminate automatically and immediately upon the expiration of the Exercise Period.    

2.

Exercise of Warrant.  

(a)

Exercise.  This Warrant may be exercised, in whole or in part, at any time and from time to time during the Exercise Period.  Such exercise shall be accomplished by tender to the Company of an amount equal to the Exercise Price multiplied by the number of underlying shares being purchased (the “Purchase Price”), in cash, by wire transfer or by certified check or bank cashier’s check, payable to the order of the Company.  

(b)

Upon receipt of the Purchase Price in Section 2(a), together with presentation and surrender to the Company of this Warrant with an executed subscription form in substantially the form attached hereto as Schedule A (the “Subscription”), the Company will deliver to the Holder, as promptly as possible, a certificate or certificates representing the shares of Common Stock so purchased, registered in the name of the Holder or its transferee (as permitted under Section 3 below).  With respect to any exercise of this Warrant, the Holder will for all purposes be deemed to have become the holder of record of the number of shares of Common Stock purchased hereunder on the date a properly executed Subscription and payment

1

of the Purchase Price is received by the Company (the “Exercise Date”), irrespective of the date of delivery of the certificate evidencing such shares, except that, if the date of such receipt is a date on which the stock transfer books of the Company are closed, such person will be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.  Fractional shares of Common Stock will not be issued upon the exercise of this Warrant.  In lieu of any fractional shares that would have been issued but for the immediately preceding sentence, the Holder will be entitled to receive cash equal to the current market price of such fraction of a share of Common Stock on the trading day immediately preceding the Exercise Date.  In the event this Warrant is exercised in part, the Company shall issue a New Warrant (defined below) to the Holder covering the aggregate number of shares of Common Stock as to which this Warrant remains exercisable for.  The Company acknowledges and agrees that this Warrant was issued on the Issuance Date.

3.

Recording, Transferability, Exchange and Obligations to Issue Common Stock.

(a)

Registration of Warrant.  The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary from the transferee and transferor.

(b)

Registration of Transfers.  The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto as Schedule B duly completed and signed, to the Company at its address specified herein.  As a condition to the transfer, the Company may request a legal opinion as contemplated by the legend.  Upon any such registration or transfer, a New Warrant to purchase Common Stock, in substantially the form of this Warrant (any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder.  The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

(c)

This Warrant is exchangeable upon its surrender by the Holder to the Company for New Warrants of like tenor and date representing in the aggregate the right to purchase the number of shares purchasable hereunder, each of such New Warrants to represent the right to purchase such number of shares as may be designated by the Holder at the time of such surrender (not to exceed the aggregate number of shares underlying this Warrant).

(d)

The Company’s obligations to issue and deliver Common Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other person of any obligation to the Company or any violation or alleged

2

violation of law by the Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Common Stock.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant  as required pursuant to the terms hereof.

4.

Adjustments to Exercise Price and Number of Shares Subject to Warrant.  The Exercise Price and the number of shares of Common Stock purchasable upon the exercise of this Warrant are subject to adjustment from time to time upon the occurrence of any of the events specified in this Section 4.  For the purpose of this Section 4, “Common Stock” means shares now or hereafter authorized of any class of common stock of the Company, however designated, that has the right to participate in any distribution of the assets or earnings of the Company without limit as to per share amount (excluding, and subject to any prior rights of, any class or series of preferred stock).

(a)

In case the Company shall (i) pay a dividend or make a distribution in shares of Common Stock to holders of shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its shares of Common Stock other securities of the Company, then the Exercise Price in effect at the time of the record date for such dividend or on the effective date of such subdivision, combination or reclassification, and/or the number and kind of securities issuable on such date, shall be proportionately adjusted so that the Holder of the Warrant thereafter exercised shall be entitled to receive the aggregate number and kind of shares of Common Stock (or such other securities other than Common Stock) of the Company, at the same aggregate Exercise Price, that, if such Warrant had been exercised immediately prior to such date, the Holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, distribution, subdivision, combination or reclassification.  Such adjustment shall be made successively whenever any event listed above shall occur.

(b)

In case the Company shall fix a record date for the making of a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the surviving corporation) of cash, evidences of indebtedness or assets, or subscription rights or warrants, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Fair  Market Value per share of Common Stock on such record date, less the amount of cash so to be distributed or the Fair Market Value (as determined in good faith by, and reflected in a formal resolution of, the board of directors of the Company) of the portion of the assets or evidences of indebtedness so to be distributed, or of such subscription rights or warrants, applicable to one share of Common Stock, and the denominator of which shall be the Fair Market Value per share of Common Stock.  Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Exercise Price shall again be adjusted to be the Exercise Price, which would then be in effect if such record date had not been fixed.  

3

(c)

Notwithstanding any provision herein to the contrary, no adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price; provided, however, that any adjustments which by reason of this Section 4(c) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.  All calculations under this Section 4 shall be made to the nearest cent or the nearest one-hundredth of a share, as the case may be.

(d)  

In the event that at any time, as a result of an adjustment made pursuant to Section 4(a) above, the Holder of any Warrant thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, thereafter the number of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares of Common Stock contained in this Section 4, and the other provisions of this Warrant shall apply on like terms to any such other shares.

(e)

Fundamental Transactions.  If, at any time while this Warrant is outstanding, (1) the Company effects any merger or consolidation of the Company with or into another company, (2) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or another company or person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (4) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Common Stock then issuable upon exercise in full of this Warrant (the “Alternate Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  At the Holder’s option and request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a New Warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof.  Any such successor or surviving entity shall be deemed to be required to comply with the provisions of this Section 4(e) and shall insure that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

4

(f)

In case any event shall occur as to which the other provisions of this Section 4 are not strictly applicable but the failure to make any adjustment would not fairly protect the purchase rights represented by this Warrant in accordance with the essential intent and principles hereof, then, in each such case, the Company shall effect such adjustment, on a basis consistent with the essential intent and principles established in this Section 4, as may be necessary to preserve, without dilution, the purchase rights represented by this Warrant.

(g)

Notice of Adjustments.  Upon the occurrence of each adjustment pursuant to this Section 4, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Common Stock or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based.  Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s Transfer Agent.

5.

Legend.  If there is not a current effective registration statement in effect and the exemption provided by Rule 144 under the Securities Act is unavailable when exercised, the stock certificates shall bear the following legend.

“The securities represented by this certificate have not been registered under the Securities Act of 1933 (the “Securities Act”), and may not be offered for sale or sold except pursuant to (i) an effective registration statement under the Securities Act, or (ii) an opinion of counsel to the issuer, that an exemption from registration under the Securities Act is available.”

6.

Reservation of Common Stock.  The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Common Stock upon exercise of this Warrant as herein provided, the number of shares of Common Stock which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 4).  The Company covenants that all Common Stock so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.  Provided, however, the Company does not have the authorized capital to permit exercise of this Warrant as of the Issuance Date.  The Company shall comply with the affirmative covenant in the Convertible Note dated the same date as this Warrant.  Any breach of that covenant shall be a breach of this Warrant.

7.

Replacement of Warrant.  If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (which may include a surety bond), if requested.  Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the

5

Company may prescribe.  If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company's obligation to issue the New Warrant.

8.

Charges, Taxes and Expenses.  Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Common Stock or Warrants in a name other than that of the Holder.  The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Common Stock upon exercise hereof.

9.

Certain Notices to Holder.  

In the event of (a) any fixing by the Company of a record date with respect to the holders of any class of securities of the Company for the purpose of determining which of such holders are entitled to dividends or other distributions, or any rights to subscribe for, purchase or otherwise acquire any shares of capital stock of any class or any other securities or property, or to receive any other right, (b) any capital reorganization of the Company, or reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all of the assets or business of the Company to, or consolidation or merger of the Company with or into, any other entity or person, or (c) any voluntary or involuntary dissolution or winding up of the Company, then and in each such event the Company will give the Holder a written notice specifying, as the case may be (i) the record date for the purpose of such dividend, distribution, or right, and stating the amount and character of such dividend, distribution, or right; or (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, conveyance, dissolution, liquidation, or winding up is to take place and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such capital stock or securities receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock securities) for securities or other property deliverable upon such event.  Any such notice shall be given at least 10 days prior to the earliest date therein specified.

10.

No Rights as a Shareholder.  This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company, nor to any other rights whatsoever except the rights herein set forth.  Provided, however, the Company shall not close any merger arising out of any merger agreement in which it is not the surviving entity, or sell all or substantially all of its assets unless the Company shall have first provided the Holder with 20 days’ prior written notice.

11.

Additional Covenants of the Company.  The Company shall not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant.

6

12.

Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Company, the Holder and their respective successors and permitted assigns.

13.

Severability.  Every provision of this Warrant is intended to be severable.  If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the remainder of this Warrant.

14.

Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware without regard to choice of law considerations.

15.

Attorneys’ Fees.  In any action or proceeding brought to enforce any provision of this Warrant, the prevailing party shall be entitled to recover reasonable attorneys’ fees in addition to its costs and expenses and any other available remedies.  

16.

Entire Agreement.  This Warrant (including the Exhibits attached hereto) constitutes the entire understanding between the Company and the Holder with respect to the subject matter hereof, and supersedes all prior negotiations, discussions, agreements and understandings relating to such subject matter.

17.

Good Faith. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate  in order to protect the rights of the holder of this Warrant against such impairment.

Signature Page Follows

7

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer as of the date first set forth above.

GelTech Solutions, Inc.  

By: ___________________________

       Michael Cordani

       Chief Executive Officer

8

Schedule  A

SUBSCRIPTION FORM

(To be Executed by the Holder to Exercise the Rights To Purchase Common Stock Evidenced by the Within Warrant)

The undersigned hereby irrevocably subscribes for _______ shares of the Common Stock (the “Stock”) of GelTech Solutions, Inc. (the “Company”) pursuant to and in accordance with the terms and conditions of the attached Warrant (the “Warrant”), and hereby makes payment of $_______ therefore by tendering cash, wire transferring or delivering a certified check or bank cashier’s check, payable to the order of the Company. The undersigned requests that a certificate for the Stock be issued in the name of the undersigned and be delivered to the undersigned at the address stated below.  If the Stock is not all of the shares purchasable pursuant to the Warrant, the undersigned requests that a new Warrant of like tenor for the balance of the remaining shares purchasable thereunder be delivered to the undersigned at the address stated below.

In connection with the issuance of the Stock, I hereby represent to the Company that I am acquiring the Stock for my own account for investment and not with a view to, or for resale in connection with, a distribution of the shares within the meaning of the Securities Act of 1933 (the “Securities Act”).

I am  /  I am not [please circle the applicable box] an accredited investor for at least one of the reasons on the second page to this Exhibit A to the Warrant.  If the SEC has amended the rule defining the definition of accredited investor, I acknowledge that as a condition to exercise the Warrant, the Company may request updated information regarding the Holder’s status as an accredited investor.  My exercise of the Warrant shall be in compliance with the applicable exemptions under the Securities Act and applicable state law

I understand that if at this time the Stock has not been registered under the Securities Act, I must hold such Stock indefinitely unless the Stock is subsequently registered and qualified under the Securities Act or is exempt from such registration and qualification.  I shall make no transfer or disposition of the Stock unless (a) such transfer or disposition can be made without registration under the Securities Act by reason of a specific exemption from such registration and such qualification, or (b) a registration statement has been filed pursuant to the Securities Act and has been declared effective with respect to such disposition.  I agree that each certificate representing the Stock delivered to me shall bear substantially the same as set forth on the front page of the Warrant.

I further agree that the Company may place stop transfer orders with its transfer agent same effect as the above legend.  The legend and stop transfer notice referred to above shall be removed only upon my furnishing to the Company of an opinion of counsel to the Company to the effect that such legend may be removed.

Date:_______________________________	Signed: _______________________________ Print Name:____________________________ Address:______________________________
Date:_______________________________	Signed: _______________________________ Print Name:____________________________ Address:______________________________

For Individual Investors Only:

1.

I am a person who has an individual net worth, or a person who with his or her spouse has a combined net worth, in excess of $1,000,000. For purposes of calculating net worth under this paragraph (1), (i) the primary residence shall not be included as an asset, (ii) to the extent that the indebtedness that is secured by the primary residence is in excess of the fair market value of the primary residence, the excess amount shall be included as a liability, and (iii) if the amount of outstanding indebtedness that is secured by the primary residence exceeds the amount outstanding 60 days prior to exercising these securities, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability.

2a.

A person who had individual income (exclusive of any income attributable to the person’s spouse) of more than who has $200,000 in each of the two most recently completed years and who reasonably expects to have an individual income in excess of $200,000 this year.

2b.

Alternatively, a person, who with his or her spouse, has joint income in excess of $300,000 in each applicable year.

3.

A director or executive officer of the Company.

Other Investors:

4.

Any bank as defined in Section 3(a)(2) of the Securities Act of 1933 (“Securities Act”) whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; insurance company as defined in Section 2(13) of the Securities Act; investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000, or if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

5.

A private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940.

6.

An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.  

7.

A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Securities Act.

8.

An entity in which all of the equity owners are accredited investors.

Schedule  B

ASSIGNMENT

(To be Executed by the Holder to Effect Transfer of the Attached Warrant)

For Value Received __________________________ hereby sells, assigns and transfers to _________________________ the Warrant attached hereto and the rights represented thereby to purchase _________ shares of Common Stock in accordance with the terms and conditions hereof, and does hereby irrevocably constitute and appoint ___________________________ as attorney to transfer such Warrant on the books of the Company with full power of substitution.

Dated:________________________

Signed: _____________________________

Please print or typewrite
name and address of
assignee:

Please insert Social Security
or other Tax Identification
Number of Assignee:

Dated:________________________

Signed: _____________________________

Please print or typewrite
name and address of
assignee:
Please insert Social Security
or other Tax Identification
Number of Assignee:

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 of GelTech Solutions, Inc. filed on September 29, 2008, and Form S-1 of GelTech Solutions, Inc. filed on March 13, 2012 of our report dated September 27, 2013 on the consolidated financial statements of GelTech Solutions, Inc. and Subsidiaries, as of June 30, 2013 and 2012 and for each of the two years in the period ended June 30, 2013.

/s/ Salberg & Company, P.A.

SALBERG & COMPANY, P.A.

Boca Raton, Florida

September 27, 2013

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Michael Cordani, certify that:

1.

I have reviewed this annual report on Form 10-K of GelTech Solutions, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 27, 2013

/s/ Michael Cordani

Michael Cordani

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Michael Hull, certify that:

1.

I have reviewed this annual report on Form 10-K of GelTech Solutions, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 27, 2013

/s/ Michael Hull

Michael Hull

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of GelTech Solutions, Inc. (the “Company”) on Form 10-K for the year ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof, I, Michael Cordani, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.

The annual report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

2.

The information contained in the annual report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael Cordani

Michael Cordani

Chief Executive Officer

(Principal Executive Officer)

Dated: September 27, 2013

In connection with the annual report of GelTech Solutions, Inc. (the “Company”) on Form 10-K for the year ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof, I, Michael Hull, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.

The annual report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

2.

The information contained in the annual report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael Hull

Michael Hull

Chief Financial Officer

(Principal Financial Officer)

Dated: September 27, 2013

XML

CONCENTRATIONS

12 Months Ended

Jun. 30, 2013

CONCENTRATIONS [Abstract]

CONCENTRATIONS

11.

CONCENTRATIONS

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through June 30, 2013. As of June 30, 2013, the Company had no cash equivalent balances that were not insured.

At June 30, 2013, there were accounts receivable from three customers that each exceeded 10% of the total gross accounts receivable at 39.2%, 13.9% and 11.6%. At June 30, 2012, there were accounts receivable from three customers that each exceeded 10% of the total gross accounts receivable at 43%, 24.1% and 18.1%.

During fiscal 2013, two customers accounted for 36.3% and 32.4% of sales. No other customer had sales in excess of 10% of revenues.  During fiscal 2012, three customers accounted for approximately 14.3%, 12.4% and 12.3%, % of sales.

During fiscal 2013, sales resulted from two products, FireIce and Soil₂O® and from paid for research and development which made up 38.8%, 43.5% and 17.7% of total sales, respectively.  During fiscal 2012, all sales resulted from two products, FireIce and Soil₂O® which made up 49.9% and 50.1% of total sales.

During the year ended June 30, 2013, the Company purchased approximately $142,000 of raw material from one vendor and approximately $32,000 from another vendor which amounted to 50.8% and 11.5%, respectively, of the inventory purchases in fiscal 2013.  During the year ended June 30, 2012, the Company purchased approximately $205,000 of raw material from one vendor and approximately $81,000 from another vendor which amounted to 52.2% and 20.6%, respectively, of the inventory purchases in fiscal 2012.

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Sales	$ 526,010	$ 419,577
Cost of goods sold	180,427	185,419
Gross profit	345,583	234,158
Operating expenses:
Selling, general and administrative expenses	6,103,435	5,035,418
Research and development	179,158	83,707
Total operating expenses	6,282,593	5,119,125
Loss from operations	(5,937,010)	(4,884,967)
Other income (expense)
Interest income	864	466
Loss on settlement	(5,088)	(301,500)
Loss on sale of assets	(9,822)
Loss on extinguishment of debt	(25,515)
Other income (loss)	1,298,920	(1,646,000)
Cost of repricing warrants to induce exercise	(70,491)	(17,753)
Interest expense	(473,605)	(280,305)
Total other income (expense)	715,263	(2,245,092)
Net loss	$ (5,221,747)	$ (7,130,059)
Net loss per common share - basic and diluted	$ (0.18)	$ (0.31)
Weighted average shares outstanding - basic and diluted	29,479,048	23,036,823

XML

INVENTORIES

12 Months Ended

Jun. 30, 2013

INVENTORIES [Abstract]

INVENTORIES

4.

INVENTORIES

Inventories consisted of the following at June 30, 2013 and 2012:

	2013		2012
Finished goods	$	333,987	$	364,630
Raw materials		254,716		181,488
	$	588,703	$	546,118

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Tables)

12 Months Ended

Jun. 30, 2013

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Schedule of Fair Value Assumptions for Stock Options

The fair value of stock option grants for the fiscal year ended June 30, 2013 and 2012 were estimated using the following weighted- average assumptions:

	2013	2012
Risk free interest rate	0.53% - 2.49%	0.23% - 2.35%
Expected term in years	2.5 - 10.0	1.5 - 6.5
Dividend yield	-	-
Volatility of common stock	89.67% - 93.11%	87.55% - 91.39%
Estimated annual forfeitures	-	-

Employee Options and Stock Appreciation Rights [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Options Activity

Employee Options and Stock Appreciation Rights

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balance at June 30, 2011		4,439,507		$	1.12		5.39
Granted		675,000		$	0.75		10.00
Exercised		-		$	-		-
Forfeited		-		$	-
Expired		(525,000	)	$	1.00		-
Outstanding at June 30, 2012		4,589,507		$	1.04		5.95	$	339,417
Exercisable at June 30, 2012		2,808,088		$	1.05		5.03	$	181,750
Weighted average fair value of options granted during the year ended June 30, 2012				$	0.56
Balance at June 30, 2012		4,589,507		$	1.04		5.95
Granted		4,622,500		$	0.55		9.64
Exercised		-		$	-		-
Forfeited		(2,875,000	)	$	0.92		-
Expired		-		$	-
Outstanding at June 30, 2013		6,337,007		$	0.75		6.62	$	2,505,808
Exercisable at June 30, 2013		3,696,174		$	0.90		5.70	$	1,056,738
Weighted average fair value of options granted during the year ended June 30, 2013				$	0.41

Director [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Options Activity

Options Issued to Directors

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balance at June 30, 2011		790,000		$	1.25		7.98
Granted		280,000		$	1.60		10.00
Exercised		(35,000	)	$	0.95		-
Forfeited		(142,500	)	$	1.46		-
Expired		(35,000	)	$	0.95		-
Outstanding at June 30, 2012		857,500		$	1.36		7.96	$	24,820
Exercisable at June 30, 2012		724,666		$	1.39		7.83	$	14,612
Weighted average fair value of options granted during the year ended June 30, 2012				$	1.27
Balance at June 30, 2012		857,500		$	1.36		7.96
Granted		610,000		$	0.95		10.00
Exercised		(11,667	)	$	0.56		10.00
Forfeited		(255,000	)	$	1.38		-
Expired		-		$	-		-
Outstanding at June 30, 2013		1,200,833		$	1.16		8.04	$	165,386
Exercisable at June 30, 2013		795,168		$	1.24		7.25	$	98,654
Weighted average fair value of options granted during the year ended June 30, 2013				$	0.72

Non-Employee, Non-Director Options [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Options Activity

Non-Employee, Non-Director Options

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balance at June 30, 2011		540,000		$	1.16		3.14
Granted		-		$	-		-
Exercised		-		$	-
Forfeited		-		$	-		-
Expired		-		$	-		-
Outstanding at June 30, 2012		540,000		$	1.16		2.14	$	-
Exercisable at June 30, 2012		540,000		$	1.16		2.14	$	-
Weighted average fair value of options granted during the year ended June 30, 2012					N/A
Balance at June 30, 2012		540,000		$	1.16		2.14
Granted		275,000		$	1.23		10.00
Exercised		(100,000	)	$	0.50		-
Forfeited		-		$	-		-
Expired		(155,000	)	$	1.00		-
Outstanding at June 30, 2013		560,000		$	1.22		5.96	$	6,250
Exercisable at June 30, 2013		285,000		$	1.21		2.22	$	-
Weighted average fair value of options granted during the year ended June 30, 2013				$	1.00

Warrants Issued for Cash or Services [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Options Activity

Warrants issued for cash or services

	Number of Warrants			Weighted Average Exercise Price		Remaining Contractual Life
Balance at June 30, 2011		4,651,200		$	1.46		2.68
Granted		-		$	-		-
Exercised		(85,000	)	$	0.50		-
Exercise rescission		45,000		$	1.25		-
Forfeited		-		$	-		-
Expired		(150,000	)	$	1.50		-
Outstanding at June 30, 2012		4,461,200		$	1.46		2.46
Exercisable at June 30, 2012		4,461,200		$	1.46		2.46
Weighted average fair value of warrants granted during the year ended June 30, 2012					N/A
Balance at June 30, 2012		4,461,200		$	1.46		2.46
Granted		362,500		$	1.16		10.00
Exercised		(1,865,000	)	$	0.50		-
Forfeited		-		$	-		-
Expired		(1,425,000	)	$	1.60		-
Outstanding at June 30, 2013		1,533,700		$	1.25		2.06
Exercisable at June 30, 2013		1,533,700		$	1.25		2.06
Weighted average fair value of warrants granted during the year ended June 30, 2013				$	0.44

Warrants Issued As Settlements [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Options Activity

Warrants Issued as Settlements

	Number of Warrants			Weighted Average Exercise Price		Remaining Contractual Life
Balance at June 30, 2011		474,508		$	1.05		1.92
Granted		-		$	-		-
Exercised		(130,000	)	$	0.50		-
Forfeited		-		$	-		-
Expired		-		$	-		-
Outstanding at June 30, 2012		344,508		$	1.05		0.92
Exercisable at June 30, 2012		344,508		$	1.05		0.92
Weighted average fair value of warrants granted during the year ended June 30, 2012					N/A
Balance at June 30, 2012		344,508		$	1.05		0.92
Granted		350,000		$	0.63		4.22
Exercised		-		$	-		-
Forfeited		-		$	-		-
Expired		(344,508	)	$	1.05		-
Outstanding at June 30, 2013		350,000		$	0.63		4.22
Exercisable at June 30, 2013		350,000		$	0.63		4.22
Weighted average fair value of warrants granted during the year ended June 30, 2013				$	0.33

XML

SUBSEQUENT EVENTS

12 Months Ended

Jun. 30, 2013

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

12.

SUBSEQUENT EVENTS

During July and August 2013, the Company issued 40,000 shares of common stock in exchange for $43,200 in connection with the exercise of options at $0.96 per share by a director and warrants at $1.25 per share by an investor.

As prescribed by the Company's 2007 Equity Incentive Plan, on July 1, 2013, the Company issued options to purchase 370,000 shares of common stock to directors. The options have an exercise price of $0.99 per share, vest on June 30, 2014¸ subject to continuing service as a director and bear a ten year term.  The options were valued using the Black-Scholes model using a volatility of 93.11% (derived using the historical market price for the Company's common stock since it began trading in June 2008), an expected term of 5.5 years (using the simplified method) and a discount rate of 1.52%. The value of these options will be recognized as expense over the requisite service period.

Since July 1, 2013, the Company has issued 289,941 shares of common stock and five year warrants to purchase 29,412 shares of common stock at an exercise price of $1.25 per share in exchange for $275,000 in connection with private placements with five accredited investors.

In July 2013, the Company issued ten year options to purchase 50,000 shares of common stock to a director. The options have an exercise price of $1.30 per share and vested immediately.  The options were valued using the Black-Scholes model using a volatility of 93.11% (derived using the historical market price for the Company's common stock since it began trading in June 2008), an expected term of 5.0 years (using the simplified method) and a discount rate of 1.37%. The value of these options will be recognized as expense in the quarter ending September 30, 2013.

In July 2013, the Company issued ten year options to purchase 250,000 shares of common stock, each to its Chief Executive Officer, Chief Technology Officer and Chief Financial Officer. The options have an exercise price of $1.30 per share and vest 50% upon the market value of the Company's common stock trading at or greater than $2.00 per share for any 10 day period out of a 30 day trading period and the other 50% vesting upon the market value of the Company's common stock trading at or greater than $3.00 per share for any 10 day period out of a 30 day trading period.  The options were valued using the Black-Scholes model using a volatility of 93.11% (derived using the historical market price for the Company's common stock since it began trading in June 2008), an expected term of 6.5 years (using the simplified method) and a discount rate of 2.62%. The value of these options will be recognized as expense over the requisite service period.

In July 2013, the Company received $1 million from its Chief Operating Officer and principal stockholder in exchange for a five year, $1 million convertible note with a conversion rate of $1.00 per share and an annual interest of 7.5%, plus five year warrants to purchase 500,000 shares of the common stock at $1.30 per share.  The Company calculated the relative fair market value of the warrants to be $311,949 using the Black-Scholes model using a volatility of 91.46% (derived using the historical market price for the Company's common stock since it began trading in June 2008), an expected term of 5 years (the term of the warrants) and a discount rate of 1.4%.  In addition, the Company calculated the intrinsic value of the beneficial conversion feature of the note to be $304,257.  These resulting note discounts will be amortized to interest expense over the term of the note.

In August and September 2013, the Company issued 342,946 shares of common stock in exchange for $390,000 in connection with the Purchase Agreement with Lincoln Park Capital.

In August 2013, the Company issued 8,880 shares of common stock as a partial conversion of a convertible note and repaid the remaining balance of $30,000.  In addition, the Company issued 234,663 shares of common stock in connection with the early conversion of a convertible note in the amount of $86,100, due in February 2014.

In September 2013, the Company repaid two convertible notes of $86,100 each, one of which was due to the Company's former Executive Chairman.

XML

INCOME TAXES (Schedule of Reconciliation of Provision (Benefit) for Income Taxes) (Details) (USD $)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Amount
Tax at U.S. statutory rate	$ (1,775,395)	$ (20,424,220)
State taxes, net of federal benefit	(188,025)	(258,310)
Other	(66,830)	494,801
Change in valuation allowance	2,030,250	2,187,729
Total income tax expense (benefit)
Percentage
Tax at U.S. statutory rate	(34.00%)	(34.00%)
State taxes, net of federal benefit	(3.60%)	(3.63%)
Other	(1.28%)	6.95%
Change in valuation allowance	38.88%	30.68%
Total effective income tax rate	0.00%	0.00%

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Common Stock Issued for Conversion of Debt) (Details) (Convertible OID Note [Member], USD $)	1 Months Ended
	Feb. 28, 2013	Sep. 30, 2012
Convertible OID Note [Member]
Debt Conversion [Line Items]
Shares issued for convertible OID note	102,500	665,992
Value of shares issued	$ 205,000	$ 322,996
Convertible OID note, due date		Sep. 28, 2012

XML

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Equity Incentive Plan) (Details)	1 Months Ended		12 Months Ended				1 Months Ended	12 Months Ended	1 Months Ended		12 Months Ended	1 Months Ended	12 Months Ended	1 Months Ended	12 Months Ended
	Sep. 20, 2011	Jul. 31, 2013 Director [Member]	Jun. 30, 2013 2007 Equity Incentive Plan Member]	Jun. 30, 2012 2007 Equity Incentive Plan Member]	Sep. 01, 2008 2007 Equity Incentive Plan Member]	Jan. 31, 2007 2007 Equity Incentive Plan Member]	Jan. 31, 2007 2007 Equity Incentive Plan Member] Chairman of the Board [Member]	Jun. 30, 2013 2007 Equity Incentive Plan Member] Chairman of the Board [Member]	Apr. 30, 2010 2007 Equity Incentive Plan Member] Director [Member]	Jan. 31, 2007 2007 Equity Incentive Plan Member] Director [Member]	Jun. 30, 2013 2007 Equity Incentive Plan Member] Director [Member]	Jan. 31, 2007 2007 Equity Incentive Plan Member] Member of a Committee [Member]	Jun. 30, 2013 2007 Equity Incentive Plan Member] Member of a Committee [Member]	Jan. 31, 2007 2007 Equity Incentive Plan Member] Member of a Committee [Member]	Jun. 30, 2013 2007 Equity Incentive Plan Member] Member of a Committee [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized			15,000,000	4,500,000	3,500,000	1,500,000
Percentage of outstanding shares ownership, benchmark			10.00%
Fair market percentage exercise price exceeding ownership benchmark percentage			110.00%
Initial grants	525,000	50,000					50,000			30,000		10,000		5,000
Annual grants								70,000	50,000	20,000	100,000		200,000		10,000

XML

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Excluding 2007 Equity Incentive Plan) (Details) (USD $)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Revenue Recognition
Marketing expense	$ 10,889	$ 50,622
Shipping and Handling Costs
Shipping and handling costs	51,943	63,726
Research and Development
Research and development	179,158	83,707
Advertising
Advertising expense	26,931	82,719
Net Earnings (Loss) per Share
Shares reserved for issuance to convertible note agreements	6,336,267
Share Based Compensation By Beneficiary [Line Items]
Share-based compensation expense	1,497,534	1,371,519
Employee, Director and Advisory Board [Member]
Share Based Compensation By Beneficiary [Line Items]
Share-based compensation expense	1,497,534	1,371,519
Share-based compensaion expense not yet recognized	1,752,879
Nonemployees [Member]
Share Based Compensation By Beneficiary [Line Items]
Share-based compensation expense	0	322,850
Share-based compensaion expense not yet recognized
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares considered antidilutive	8,097,840
Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares considered antidilutive	1,883,700
Minimum [Member]
Property, equipment and improvements
Estimated useful life	3 years
Maximum [Member]
Property, equipment and improvements
Estimated useful life	7 years

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Options to Purchase Common Stock and Stock Appreciation Rights) (Narrative) (USD $)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 1,497,534	$ 1,371,519
Employee Options and Stock Appreciation Rights [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	1,497,534	1,371,519
Remaining shares vesting period	5 years
Share-based compensaion expense not yet recognized	$ 1,729,556

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Preferred Stock) (Details) (USD $)	Jun. 30, 2013	Jun. 30, 2012
STOCKHOLDERS' EQUITY (DEFICIT) [Abstract]
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, par value per share	$ 0.001	$ 0.001

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Restricted Stock Units) (Details) (USD $)	12 Months Ended		1 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Restricted Stock [Member]	Nov. 14, 2012 Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 1,497,534	$ 1,371,519		$ 90,000
Immediately vested shares				200,000
Vested shares upon generating $3,000,000 in revenue in any 12-month period				200,000
Vested shares upon generating $5,000,000 in revenue in any 12-month period				200,000
Vested shares upon generating $6,000,000 in revenue in any 12-month period				200,000
Options vested, exercise price				$ 0.45
Cancellation of restricted stock units grant under clawback provision, shares			200,000
Cancellation of restricted stock units grant under clawback provision	$ (90,000)		$ 90,000
Grant date, fair value of vested shares			$ 196,000

XML

RELATED PARTY TRANSACTIONS (Details) (USD $)	1 Months Ended			12 Months Ended			1 Months Ended			1 Months Ended						12 Months Ended	1 Months Ended
	Mar. 31, 2013	Jan. 31, 2012	Sep. 20, 2011	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 CEO's Wife [Member]	Sep. 30, 2012 CEO and CTO's Father [Member]	Jun. 30, 2013 CEO and CTO's Father [Member]	Jun. 30, 2013 CEO and CTO's Mother [Member]	Sep. 30, 2012 Director Settlement [Member]	Dec. 31, 2011 Director Settlement [Member]	Dec. 31, 2011 Warrant to Director [Member]	Dec. 31, 2011 Chief Executive Officer [Member]	Feb. 28, 2013 President [Member]	Dec. 31, 2011 President [Member]	Jun. 30, 2013 President [Member]	Feb. 28, 2013 President [Member] Minimum [Member]	Feb. 28, 2013 President [Member] Maximum [Member]	Dec. 31, 2011 Chief Financial Officer [Member]
Related Party Transaction [Line Items]
Weekly salary amount						$ 1,400		$ 2,200	$ 600
Shares issued for convertible OID note																			150,000
Issuance of common stock for settlement, shares											441,177
Issuance of common stock for settlement, value					300,000						300,000
Common stock upon exercise of options				6,534	33,335							130,000
Compensation cost increase																			15,067
Proceeds from exercise of warrants		42,500		910,000	65,000							65,000
Loss on warrant repricing		11,919		70,491	17,753							5,834
Market value of warrants	$ 1.25	$ 0.50										$ 0.50							$ 1.95
Proceeds from related party advances					89,380								10,000		29,380				50,000
Debt, interest rate													0.70%		5.00%				5.00%
Severance expense				$ 168,920										$ 150,000		$ 102,056
Exercised	45,000	85,000		1,820,000										112,500
Options granted, grant price												$ 1.50					$ 0.45	$ 1.22
Granted			525,000				70,000			350,000

XML

FURNITURE, FIXTURES AND EQUIPMENT (Details) (USD $)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Property, Plant and Equipment [Line Items]
Furniture, fixtures, and equipment	$ 294,329	$ 299,572
Accumulated depreciation	(136,145)	(110,793)
Total furniture, fixtures, and equipment, net	158,184	188,779
Depreciation	49,269	51,301
Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	7 years
Equipment [Member]
Property, Plant and Equipment [Line Items]
Furniture, fixtures, and equipment	88,875	69,539
Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	5 years
Storage Facilities [Member]
Property, Plant and Equipment [Line Items]
Furniture, fixtures, and equipment	20,802	19,717
Estimated useful life	3 years
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Furniture, fixtures, and equipment	164,232	189,897
Vehicles [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	5 years
Vehicles [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	7 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Furniture, fixtures, and equipment	$ 20,420	$ 20,420
Estimated useful life	5 years

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Narrative) (Options) (Details) (USD $)	1 Months Ended			2 Months Ended	12 Months Ended		1 Months Ended						2 Months Ended	1 Months Ended		12 Months Ended		1 Months Ended
	Mar. 31, 2013	Jan. 31, 2012	Sep. 20, 2011	Aug. 30, 2013	Jun. 30, 2013	Jun. 30, 2012	Jul. 31, 2013 Chief Financial Officer [Member]	Dec. 31, 2011 Chief Financial Officer [Member]	Nov. 14, 2012 Three Original Executive Officers [Member]	Sep. 30, 2012 Chief Executive Officer And Chief Technology Officer Father [Member]	Jul. 31, 2013 Director [Member]	Dec. 31, 2011 Director [Member]	Aug. 30, 2013 Director [Member]	Feb. 08, 2013 Stock Options [Member]	Sep. 30, 2012 Stock Options [Member]	Jun. 30, 2013 Stock Options [Member]	Jun. 30, 2012 Stock Options [Member]	Feb. 08, 2013 Stock Options [Member] Minimum [Member]	Feb. 08, 2013 Stock Options [Member] Maximum [Member]	Dec. 31, 2011 Stock Options [Member] Chief Financial Officer [Member]	Jun. 03, 2011 Stock Options [Member] Chief Financial Officer [Member]	Feb. 08, 2013 Stock Options [Member] Three Original Executive Officers [Member]	Sep. 20, 2011 Stock Options [Member] Three Original Executive Officers [Member]	Feb. 08, 2013 Stock Options [Member] President [Member]	Jun. 30, 2012 Stock Options [Member] President [Member]	Jun. 30, 2012 Stock Options [Member] Chief Executive Officer, Chief Technology Officer, Chief Financial Officer and former President [Member]	Sep. 30, 2012 Stock Options [Member] Chief Executive Officer And Chief Technology Officer Father [Member]	Jun. 30, 2013 Stock Options [Member] Chief Executive Officer And Chief Financial Officer And Chief Technology Officer [Member]	Sep. 30, 2012 Stock Options [Member] Non-executive Employees [Member]	Jul. 31, 2013 Stock Options [Member] Director [Member]	Jun. 30, 2013 Stock Options [Member] Director [Member]	Jul. 31, 2012 Stock Options [Member] Director [Member]	Dec. 31, 2011 Stock Options [Member] Director [Member]	Sep. 28, 2011 Stock Options [Member] Director [Member]	Jul. 31, 2011 Stock Options [Member] Director [Member]	Dec. 06, 2012 Stock Options [Member] New Director Appointment Audit Committee [Member]	Jan. 31, 2012 Stock Options [Member] New Director Appointment Audit Committee [Member]	Mar. 31, 2013 Stock Options [Member] Non-Employee, Non-Director Options [Member]	Jun. 30, 2013 Stock Options [Member] Former Executive Chairman [Member]	Jun. 30, 2013 Stock Options [Member] Former Executive Chairman [Member] Minimum [Member]	Jun. 30, 2013 Stock Options [Member] Former Executive Chairman [Member] Maximum [Member]	Jun. 30, 2013 Stock Options [Member] Consultant [Member]	Mar. 31, 2013 Stock Options [Member] Consultant [Member]	Feb. 08, 2013 Stock Appreciation Rights (SARs) [Member]	Nov. 14, 2012 Stock Appreciation Rights (SARs) [Member] Chief Executive Officer, Chief Technology Officer, Chief Financial Officer and former President [Member]	Nov. 14, 2012 Restricted Stock [Member]	Jun. 30, 2013 Restricted Stock [Member] Former Executive Chairman [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted			525,000							70,000	50,000					4,622,500	675,000				150,000		175,000	112,500	50,000	150,000	70,000	125,000	265,000	370,000		230,000			245,000	5,000	35,000	125,000				125,000	150,000		800,000	3,200,000
Number of shares issued																																	5,000		30,000
Granted, exercise price							$ 1.30				$ 1.30					$ 0.55	$ 0.75	$ 0.667	$ 1.22	$ 0.60	$ 1.95		$ 0.81	$ 0.39	$ 0.74	$ 0.74	$ 0.63	$ 1.10	$ 0.60	$ 0.99		$ 0.91			$ 1.75	$ 0.36	$ 0.60	$ 0.99		$ 0.91	$ 1.95	$ 1.10	$ 1.33		$ 0.45		$ 0.45
Cash received from stock options exercised				$ 43,200	$ 6,534	$ 75,835																									$ 6,534				$ 30,000
Exercised options, exercise price	$ 1.57	$ 1.5			$ 0.50			$ 0.60				$ 0.50	$ 0.96		$ 0.50																		$ 0.667		$ 1
Fair value																				15,067	224,778		320,271	43,875		320,640	28,358	317,963	101,029						311,001		14,633	287,405				119,618	154,415		1,086,560
Requisite service period																					3 years							3 years
Vested																																															200,000
Vesting period																												3 years	3 years						1 year	3 years	3 years					3 years	3 years
Vesting rate																													25.00%
Vesting period for semiannual vesting shares																											3 years
Percentage expensed immediately																													25.00%																25.00%
Immediately vested shares																					50,000						35,000																		200,000	200,000
Vested shares upon generating $3,000,000 in revenue in any 12-month period																																													200,000	200,000
Volatility																					90.60%		88.89%	89.67%	91.39%	91.39%	90.09%	91.60%	89.93%	93.11%		91.04%			89.65%	89.86%	87.55%	93.11%				91.60%	93.11%		89.67%
Vested shares upon generating $5,000,000 in revenue in any 12-month period																																													200,000	200,000
Expected term, simplified method											5 years										6.5		6.5	9.42	1.5	5.5	4.0	6.5	4	5.5		5.5			6.5	6.5	6.5	6.5				10.0	6.5		6.5
Vested shares upon generating $6,000,000 in revenue in any 12-month period																																													200,000	200,000
Expiration date																							Sep. 15, 2011		Jun. 25, 2012
Cancelled options									250,000					1,325,000		2,875,000						250,000												142,500										800,000
Cancelled, exercise price																							$ 1.00											$ 1.46
Other income																																												67,920
Discount rate											1.37%										2.11%		1.25%	0.93%	0.23%	0.78%	0.53%	1.78%	0.53%	1.52%		0.82%			2.35%	0.90%	1.30%	1.25%				2.49%	1.23%		0.93%
Options expense																									17,011											1,360									271,640
Share-based compensaion expense not yet recognized																$ 1,729,556																													$ 814,920
Share based compensation, term																					10 years		10 years	10 years	3 years	10 years		10 years	5 years	10 years		10 years			10 years	10 years	10 years	10 years				10 years	10 years		10 years
Options Rescinded																																							255,000								800,000

XML

INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2013

INCOME TAXES [Abstract]

Schedule of Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities as of June 30, 2013 and 2012, were as follows:

	June 30, 2013			June 30, 2012
Net operating loss carryforward	$	8,817,486		$	7,357,047
Allowance for bad debt		15,250			1,042
Stock-based compensation		1,304,426			800,329
Less: Deferred tax liability - depreciation		(9,557)			(61,063	)
Net deferred tax assets		10,127,605			8,097,355
Less valuation allowance		(10,127,605	)		(8,097,355	)
Net deferred tax asset	$	-		$	-

Schedule of Reconciliation of Provision (Benefit) for Income Taxes

Reconciliation of the differences between income tax benefit computed at the federal and state statutory tax rates and the provision for income tax benefit for the fiscal years ended June 30, 2013 and 2012 was as follows:

	For the Fiscal Year Ended June 30,
	2013						2012
	Amount			%			Amount			%
Tax at U.S. statutory rate	$	(1,775,395	)		-34.00	%	$	(2,424,220	)		-34.00	%
State taxes, net of federal benefit		(188,025	)		-3.60	%		(258,310	)		-3.63	%
Other		(66,830	)		-1.28	%		494,801			6.95	%
Change in valuation allowance		2,030,250			38.88	%		2,187,729			30.68	%
	$	-			0.00	%	$	-			0.00	%

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities
Net loss	$ (5,221,747)	$ (7,130,059)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	49,269	51,301
Bad debt expense		2,739
Amortization of beneficial conversion feature of convertible notes		193,044
Amortization of original issue discounts related to convertible notes	385,650	6,924
Amortization of stock based prepaid consulting		42,500
Equity compensation expense	1,497,534	1,371,519
Cost of repricing warrants to induce exercise	70,491	17,753
Loss on disposal of assets	9,822
Loss on stock issued for interest	4,205
Common stock issued as settlement		300,000
Other income from the clawback of equity compensation	(157,920)
Reversal of litigation accrual	(941,000)
Payment by insurance company of prior period litigation expense	(200,000)
Changes in assets and liabilities:
Accounts receivable	17,883	45,925
Inventories	(42,585)	(152,684)
Prepaid expenses and other current assets	26,500	27,930
Other assets	(11,255)
Accounts payable	30,748	(36,490)
Accrual for severance agreement	102,056
Deferred revenue	7,019
Accrued expenses	177,675	1,625,067
Net cash used in operating activities	(4,195,655)	(3,634,531)
Cash flows from Investing Activities
Proceeds from sale of asset	15,000
Purchases of equipment	(43,496)	(30,258)
Net cash used in investing activities	(28,496)	(30,258)
Cash flows from Financing Activities
Proceeds from sale of stock through private placements	1,658,000	1,181,700
Proceeds from sale of stock and warrants through private placements	300,000
Proceeds from sale of stock under stock purchase agreement	810,003
Proceeds from exercise of warrants	910,000	65,000
Proceeds from exercise of stock options	6,534	75,835
Proceeds from related party advances		89,380
Payments on notes with related parties	(84,380)	(5,000)
Proceeds from convertible notes with third parties	175,000	105,000
Proceeds from convertible notes with related parties	500,000	325,000
Payments on Insurance Finance Contract	(44,925)	(44,908)
Net cash provided by financing activities	4,230,232	1,792,007
Net increase (decrease) in cash and cash equivalents	6,081	(1,872,782)
Cash and cash equivalents - beginning	84,194	1,956,976
Cash and cash equivalents - ending	90,275	84,194
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	2,702	2,843
Cash paid for income taxes
Supplementary Disclosure of Non-cash Investing and Financing Activities:
Financing of prepaid insurance contracts	47,471	43,931
Beneficial conversion feature of convertible notes	309,342	347,398
Conversion of notes for common stock	435,495
Accrued interest financed with convertible note		74,874
Common stock issued for interest	$ 77,784

XML

GOING CONCERN

12 Months Ended

Jun. 30, 2013

GOING CONCERN [Abstract]

GOING CONCERN

2.

GOING CONCERN

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize it assets and discharge its liabilities in the normal course of business. The Company has a net loss and net cash used in operating activities in fiscal 2013 of $5,221,747 and $4,195,655 respectively and has a working capital deficit, accumulated deficit and stockholders' deficit of $556,140, $28,021,633 and $2,270,386, respectively, at June 30, 2013. In addition, the Company has not yet generated revenue sufficient to support ongoing operations. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders, the ability of the Company to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

During the year ended June 30, 2013 the Company received $1,658,000 in exchange for common stock and $300,000 in exchange for common stock and warrants in connection with private placements, received $910,000 in connection with the exercise of warrants and received $675,000 in exchange for convertible notes. In addition,  the Company  received $810,003 under the stock purchase agreement with Lincoln Park Capital, signed in January 2012, and has the ability to sell another $3.6 million under the agreement.

Management believes that the actions presently being taken provide the opportunity for the Company to continue as a going concern.

XML

FURNITURE, FIXTURES AND EQUIPMENT

12 Months Ended

Jun. 30, 2013

FURNITURE, FIXTURES AND EQUIPMENT [Abstract]

FURNITURE, FIXTURES AND EQUIPMENT

5.

FURNITURE, FIXTURES AND EQUIPMENT

Furniture, fixtures and equipment consisted of the following as of June 30, 2013 and 2012:

	Estimated	June 30,
	Useful Life	2013			2012
Equipment	3 - 5 years	$	88,875		$	69,538
Storage facilities	3 years		20,802			19,717
Vehicles	5 - 7 years		164,232			189,897
Furniture and fixtures	5 years		20,420			20,420
			294,329			299,572
Accumulated depreciation			(136,145	)		(110,793	)
		$	158,184		$	188,779

Depreciation expense in 2013 and 2012 was $49,269 and $51,301, respectively.

XML

ACCOUNTS RECEIVABLE

12 Months Ended

Jun. 30, 2013

ACCOUNTS RECEIVABLE [Abstract]

ACCOUNTS RECEIVABLE

3.

ACCOUNTS RECEIVABLE

Accounts receivable at June 30, 2013 and 2012 was as follows:

	2013			2012
Accounts receivable	$	70,062		$	95,685
Allowance for doubtful accounts		(32,785	)		(40,525	)
	$	37,277		$	55,160

Bad debt expense on trade accounts receivable for 2013 and 2012 was $-0- and $2,739, respectively.

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Schedule of Fair Value Assumptions for Stock Options) (Details) (Stock Options [Member])	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk free interest rate	0.53%	0.23%
Expected term	2 years 6 months	1 year 6 months
Dividend yield
Volatility	89.67%	87.55%
Estimated annual forfeitures
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk free interest rate	2.49%	2.35%
Expected term	10 years	6 years 6 months
Dividend yield
Volatility	93.11%	91.39%
Estimated annual forfeitures

XML

GOING CONCERN (Details) (USD $)	2 Months Ended	12 Months Ended			12 Months Ended				3 Months Ended	12 Months Ended
	Aug. 30, 2013	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2013 Exchange for Common Stock [Member]	Jun. 30, 2013 Private Placement [Member]	Jun. 30, 2013 Warrants [Member]	Jun. 30, 2013 Convertible Note [Member]	Jun. 30, 2012 Lincoln Park Capital Fund, LLC. [Member]	Jun. 30, 2013 Lincoln Park Capital Fund, LLC. [Member]
GOING CONCERN [Abstract]
Net loss		$ 5,221,747	$ 7,130,059
Net cash used in operating activities		4,195,655	3,634,531
Working capital deficit		556,140
Accumulated deficit		28,021,633	22,799,886
Stockholders' deficit		2,270,386	2,965,902	(804,952)
Related Party Transaction [Line Items]
Potential proceeds from sale of equity										3,600,000
Common stock issued for cash, shares	40,000								686,082
Proceeds from equity exchange					$ 1,658,000	$ 300,000	$ 910,000	$ 675,000		$ 810,003

XML

CONVERTIBLE AND NON-CONVERTIBLE NOTE AGREEMENTS (Narrative) (Details) (USD $)	1 Months Ended	2 Months Ended	12 Months Ended		1 Months Ended		12 Months Ended	1 Months Ended		1 Months Ended			12 Months Ended	1 Months Ended		12 Months Ended	1 Months Ended			3 Months Ended	1 Months Ended			12 Months Ended	1 Months Ended
	Sep. 20, 2011	Aug. 30, 2013	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2011 Shareholder Advances [Member]	Feb. 28, 2013 Convertible OID Note [Member]	Jun. 30, 2013 Convertible OID Note [Member]	Feb. 28, 2011 Reduction In Principal Amount Of Line Of Credit [Member] Convertible Note [Member]	Sep. 30, 2012 Reduction In Principal Amount Of Line Of Credit [Member] Convertible Note [Member]	Feb. 28, 2011 Reduction In Principal Amount Of Line Of Credit [Member] Line of Credit [Member]	Sep. 30, 2012 Third Party [Member] Convertible OID Note [Member]	Mar. 31, 2012 Third Party [Member] Convertible OID Note [Member]	Jun. 30, 2013 Third Party [Member] Convertible OID Note [Member]	Sep. 30, 2012 Director [Member] Convertible OID Note [Member]	Mar. 31, 2012 Director [Member] Convertible OID Note [Member]	Jun. 30, 2013 Director [Member] Convertible OID Note [Member]	Dec. 31, 2012 Principal Stockholder [Member] Convertible OID Note [Member]	Sep. 30, 2012 Principal Stockholder [Member] Convertible OID Note [Member]	Mar. 31, 2012 Principal Stockholder [Member] Convertible OID Note [Member]	Sep. 30, 2012 Principal Stockholder [Member] Convertible OID Note [Member]	May 29, 2009 Principal Stockholder [Member] Line of Credit [Member]	Feb. 28, 2013 Investors [Member] Convertible OID Note [Member]	Aug. 31, 2012 Investors [Member] Convertible OID Note [Member]	Jun. 30, 2013 Investors [Member] Convertible OID Note [Member]	Dec. 31, 2011 Chief Executive Officer [Member] Shareholder Advances [Member]	Dec. 31, 2011 President [Member] Shareholder Advances [Member]	Dec. 31, 2011 Chief Financial Officer [Member] Shareholder Advances [Member]
Debt Conversion [Line Items]
Proceeds from issuance of debt						$ 250,000						$ 105,000			$ 75,000		$ 250,000		$ 250,000				$ 175,000
Debt issued						1,997,483		1,497,483			120,540	107,625		86,100	76,875		275,000		332,996			86,100	179,375		10,000	29,380	50,000
Term								5 years		5 years	1 year	9 months		1 year	6 months		1 year		6 months			1 year	6 months
Debt, interest rate						7.50%		5.00%			12.00%	5.00%		12.00%	5.00%		10.00%		5.00%		5.00%		5.00%		0.70%	5.00%	5.00%
Convertible note, conversion price						$ 0.35		$ 1.12			$ 0.50	$ 0.50		$ 0.50	$ 0.5		$ 0.35		$ 0.5			$ 0.35	$ 0.50
Unamortized beneficial conversion feature						114,142						84,562			63,038		23,571		199,798			4,920	106,600
Unamortized discount on notes payable											35,138			24,971					8,121
Amortization of beneficial conversion feature of convertible notes				193,044			15,975						60,309			44,222				97,703				4,920
Amortization of original issue discounts related to convertible notes			385,650	6,924									11,262			8,101	25,000			3,972		9,225	4,375	7,552
Interest accrued					2,372	73,579													74,874
Interest expense			473,605	280,305
Repayments of notes payable																									10,000	29,380	50,000
Line of credit, borrowing capacity																					2,500,000
Line of credit, commencement date																					Jul. 20, 2009
Shares issued from conversion of convertible debt																		665,992				205,000
Number of shares callable by warrants								300,000		1,000,000
Exercise price of shares called by warrants					0.60			0.50	0.50	1.25
Debt conversion, cash payment amount								150,000	150,000
Debt conversion, amount										1,000,000												102,500
Loss on extinguishment of debt			(25,515)			4,204	21,311
Stock options expense					$ 15,067
Granted	525,000				150,000
Granted, exercise price					$ 1.95			$ 1.75
Common shares issued		40,000				210,226				892,857

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Common Stock Issued for Exercise of Options and Warrants and Cashless Exercise of Warrants) (Details) (USD $)	1 Months Ended		2 Months Ended	12 Months Ended		1 Months Ended		2 Months Ended	1 Months Ended	12 Months Ended		1 Months Ended							3 Months Ended		12 Months Ended		1 Months Ended		1 Months Ended
	Mar. 31, 2013	Jan. 31, 2012	Aug. 30, 2013	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2011 Director [Member]	Jul. 31, 2011 Director [Member]	Aug. 30, 2013 Director [Member]	Sep. 30, 2012 Employee Stock Option [Member]	Jun. 30, 2013 Employee Stock Option [Member]	Jun. 30, 2012 Employee Stock Option [Member]	Jun. 30, 2013 Employee Stock Option [Member] Director [Member]	Dec. 31, 2011 Employee Stock Option [Member] Director [Member]	Jul. 31, 2011 Employee Stock Option [Member] Director [Member]	Mar. 31, 2013 Warrant [Member]	Oct. 31, 2012 Warrant [Member]	Sep. 30, 2012 Warrant [Member]	Jan. 31, 2012 Warrant [Member]	Sep. 30, 2012 Warrant [Member]	Mar. 31, 2012 Warrant [Member]	Jun. 30, 2013 Warrant [Member]	Jun. 30, 2012 Warrant [Member]	Sep. 30, 2012 Warrant [Member] Minimum [Member]	Jan. 31, 2012 Warrant [Member] Minimum [Member]	Sep. 30, 2012 Warrant [Member] Maximum [Member]	Jan. 31, 2012 Warrant [Member] Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares issued			40,000									11,667	5,000	30,000		80,000	1,740,000	85,000
Proceeds from exercise of stock options			$ 43,200	$ 6,534	$ 75,835							$ 6,534		$ 30,000
Number of common shares issued from cashless exercise of warrants	9,171														9,171
The market value of the Company's common stock															$ 1.57
Exercise rescission							45,000															45,000
Loss on warrant repricing		11,919		70,491	17,753	5,834													70,491	11,919
Exercised options, exercise price	$ 1.57	$ 1.5		$ 0.50		$ 0.50		$ 0.96	$ 0.50				$ 0.667	$ 1							$ 0.50	$ 0.50
Proceeds from exercise of warrants		$ 42,500		$ 910,000	$ 65,000	$ 65,000										$ 40,000	$ 870,000	$ 42,500
Warrant exercise price															1.25	0.50								1.25		1.60
Exercised	45,000	85,000		1,820,000		130,000			100,000						45,000		1,640,000				1,865,000	85,000	1.25		1.75

XML

COMMITMENTS AND CONTINGENCIES (Details) (USD $)	1 Months Ended						12 Months Ended		1 Months Ended			1 Months Ended			1 Months Ended
	Feb. 28, 2013	Dec. 31, 2012	Nov. 30, 2012	Dec. 31, 2011	Sep. 20, 2011	Jun. 30, 2011	Jun. 30, 2013	Jun. 30, 2012	Nov. 14, 2012 Chief Executive Officer, Chief Technology Officer, Chief Financial Officer and former President [Member]	Jul. 31, 2013 Chief Financial Officer [Member]	Sep. 01, 2011 Chief Financial Officer [Member]	Nov. 14, 2012 Three Original Executive Officers [Member]	Mar. 31, 2011 Three Original Executive Officers [Member]	Nov. 14, 2012 Executive Chairman [Member]	Feb. 08, 2013 Stock Appreciation Rights (SARs) [Member]	Nov. 14, 2012 Stock Appreciation Rights (SARs) [Member] Chief Executive Officer, Chief Technology Officer, Chief Financial Officer and former President [Member]	Nov. 14, 2012 Stock Appreciation Rights (SARs) [Member] Executive Chairman [Member]	Jul. 31, 2012 Loss Contingency Invasion Of Privacy And Misrepresentation [Member]	Jan. 31, 2013 Loss Contingency Breach Of Agreement [Member]	Jul. 31, 2012 Loss Contingency Breach Of Agreement [Member]	Jul. 31, 2012 Loss Contingency Trespass Claim [Member]	Jul. 31, 2012 Loss Contingency Civil Theft [Member]	Jan. 31, 2013 Loss Contingency Civil Theft Law Enforced Settlement [Member]	Jul. 31, 2012 Loss Contingency Civil Theft Law Enforced Settlement [Member]
COMMITMENTS AND CONTINGENCIES [Abstract]
Rent expense	$ 3,600						$ 143,614	$ 103,044
Loss Contingencies [Line Items]
Litigation accrual							505,000	1,646,000
Litigation, provision																		200,000	500,000	841,000	5,000	200,000		600,000
Portion of litigation expense that was dismissed																							200,000
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Immediately vested shares																200,000
Vested shares upon generating $3,000,000 in revenue in any 12-month period																200,000
Vested shares upon generating $6,000,000 in revenue in any 12-month period																200,000
Vested shares upon generating $5,000,000 in revenue in any 12-month period																200,000
Increase in salary upon the Company generating $3,000,000 in revenue in any 12-month period									170,000
Increase in salary upon the Company generating $5,000,000 in any 12-month period									190,000
Increase in salary upon Company generating $6,000,000 in any 12-month period									200,000
Granted					525,000											800,000	800,000
Share based compensation, term																10 years
Cancelled options												250,000			800,000
Annual base salary per executive									150,000		146,000		150,000	200,000
Granted, exercise price										$ 1.30						$ 0.45
Amount paid by insurance			200,000
Loss contingency accrual, period increase (decrease)			(200,000)
Loss related to buyout of previous investor						50,000
Liability to previous investor by related party				125,000
Reversal of litigation accrual							941,000
Stock price per share		$ 0.36
Number of shares an investor purchased that the company may be subject to rescission rights		$ 249,931

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Narrative) (Warrant) (Details) (USD $)	1 Months Ended				12 Months Ended		1 Months Ended	12 Months Ended	1 Months Ended	12 Months Ended	1 Months Ended				2 Months Ended	1 Months Ended
	Mar. 31, 2013	May 31, 2012	Jan. 31, 2012	Sep. 20, 2011	Jun. 30, 2013	Jun. 30, 2012	Jan. 31, 2012 Minimum [Member]	Jun. 30, 2013 Minimum [Member]	Jan. 31, 2012 Maximum [Member]	Jun. 30, 2013 Maximum [Member]	Jul. 31, 2013 Director [Member]	May 31, 2013 Director [Member]	Dec. 31, 2011 Director [Member]	Jul. 31, 2011 Director [Member]	Aug. 30, 2013 Director [Member]	Jul. 31, 2013 Chief Operating Officer [Member]	May 31, 2013 Chief Operating Officer And Principle Stockholder [Member]	Sep. 30, 2012 Private Placement Five Year Warrants [Member] Director [Member]	Sep. 30, 2012 Private Placement Five Year Warrants [Member] Investor Relations Firm [Member]	May 31, 2013 Private Placement Five Year Warrants [Member] Chief Operating Officer And Principle Stockholder [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted				525,000							50,000							350,000	50,000	312,500
Granted, exercise price							$ 1.25	$ 1.25	$ 1.60	$ 1.75	$ 1.30							$ 0.63	$ 0.63	$ 1.25
Warrants issued, volatility rate																91.46%		90.09%	90.09%
Warrants issued, expected term, years																		2 years 6 months	5 years
Discount rate											1.37%					1.40%		0.32%	0.70%
Fair value																$ 311,949		$ 115,883	$ 21,787
Proceeds from exercise of warrants			42,500		910,000	65,000							65,000
Exercised	45,000		85,000		1,820,000								130,000
Exercised options, exercise price	$ 1.57		$ 1.5		$ 0.50								$ 0.50		$ 0.96
Cost of repricing warrants to induce exercise			$ 11,919		$ 70,491	$ 17,753							$ 5,834
Market value of warrants	$ 1.25		$ 0.50										$ 1.50
Exercise rescission														45,000
Exercise recission, exercise price														$ 1.25
Warrants expired		150,000			1,425,000							344,058					150,000
Options expired, exercise price		$ 1.50			$ 1.60							$ 1.05					$ 1.5
Common Stock Issued In Connection With Cashless Exercise Of Warrants	9,171

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Jun. 30, 2013	Jun. 30, 2012
CONSOLIDATED BALANCE SHEETS [Abstract]
Preferred stock, par value per share	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	33,084,671	24,914,474
Common stock, shares outstanding	33,084,671	24,914,474

XML

INCOME TAXES

12 Months Ended

Jun. 30, 2013

INCOME TAXES [Abstract]

INCOME TAXES

8.

INCOME TAXES

Due to the net losses incurred, there was no income tax provision for the fiscal years ended June 30, 2013 and 2012. Deferred tax assets and liabilities as of June 30, 2013 and 2012, were as follows:

	June 30, 2013			June 30, 2012
Net operating loss carryforward	$	8,817,486		$	7,357,047
Allowance for bad debt		15,250			1,042
Stock-based compensation		1,304,426			800,329
Less: Deferred tax liability - depreciation		(9,557	)		(61,063	)
Net deferred tax assets		10,127,605			8,097,355
Less valuation allowance		(10,127,605	)		(8,097,355	)
Net deferred tax asset	$	-		$	-

The Company had available at June 30, 2013, net operating loss carryforwards for federal and state tax purposes of approximately $23,432,064 that could be applied against taxable income in subsequent years through June 30, 2033. The amount of net operating loss carryforward that can offset future taxable income may be limited in accordance with IRC Section 382 following certain ownership changes.

Based on the weight of available evidence, both positive and negative, a valuation allowance to fully provide for the net deferred tax assets has been recorded since it is more likely than not that the deferred tax assets will not be realized. The valuation allowance was increased by $2,030,250 during fiscal year ended June 30, 2013.

Reconciliation of the differences between income tax benefit computed at the federal and state statutory tax rates and the provision for income tax benefit for the fiscal years ended June 30, 2013 and 2012 was as follows:

	For the Fiscal Year Ended June 30,
	2013						2012
	Amount			%			Amount			%
Tax at U.S. statutory rate	$	(1,775,395	)		-34.00	%	$	(2,424,220	)		-34.00	%
State taxes, net of federal benefit		(188,025	)		-3.60	%		(258,310	)		-3.63	%
Other		(66,830	)		-1.28	%		494,801			6.95	%
Change in valuation allowance		2,030,250			38.88	%		2,187,729			30.68	%
	$	-			0.00	%	$	-			0.00	%

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (USD $)	Total	Common Stock [Member]	Additional Paid In Capital [Member]	Accumulated Deficit [Member]
Balance at Jun. 30, 2011	$ 804,952	$ 22,105	$ 16,452,674	$ (15,669,827)
Balance, shares at Jun. 30, 2011		22,104,570
Common stock issued for cash	571,700	1,143	570,557
Common stock issued for cash, shares		1,143,400
Common stock issued in connection with stock purchase agreement	610,000	1,002	608,998
Common stock issued in connection with stock purchase agreement, shares		1,002,749
Common stock upon exercise of options	33,335	35	33,300
Common stock upon exercise of options, shares		35,000
Common stock issued upon exercise of warrants	107,500	215	107,285
Common stock issued upon exercise of warrants, shares		215,000
Common stock issued as settlement	300,000	441	299,559
Common stock issued as settlement, shares		441,177
Options and stock appreciation rights vested	1,371,519		1,371,519
Beneficial conversion feature of debt offerings	347,398		347,398
Cost of repricing warrants to induce warrant exercise	17,753		17,753
Rescission of option exercise		(27)	27
Rescission of option exercise, shares		(27,442)
Net loss	(7,130,059)			(7,130,059)
Balance at Jun. 30, 2012	(2,965,902)	24,914	19,809,070	(22,799,886)
Balance, shares at Jun. 30, 2012	24,914,474	24,914,474
Common stock issued for cash	1,658,000	3,539	1,654,461
Common stock issued for cash, shares		3,539,321
Common stock issued in connection with stock purchase agreement	810,003	1,334	808,669
Common stock issued in connection with stock purchase agreement, shares		1,333,820
Common stock and warrants issued for cash	300,000	375	299,625
Common stock and warrants issued for cash, shares		375,000
Common stock upon exercise of options	6,534	12	6,522
Common stock upon exercise of options, shares		11,667
Common stock issued upon exercise of warrants	910,000	1,829	908,171
Common stock issued upon exercise of warrants, shares		1,829,171
Common stock issued for interest	77,784	210	77,574
Common stock issued for interest, shares		210,226
Grant of restricted stock units	90,000	200	89,800
Grant of restricted stock units, shares		200,000
Convertible note conversions	435,495	871	434,624
Convertible note conversions, shares		870,992
Cancellation of restricted stock units grant under clawback provision	(90,000)	(200)	(89,800)
Cancellation of restricted stock units grant under clawback provision, shares		(200,000)
Options and stock appreciation rights vested	1,407,534		1,407,534
Beneficial conversion feature of debt offerings	309,342		309,342
Cost of repricing warrants to induce warrant exercise	70,491		70,491
Cancellation of stock appreciation rights grant under clawback provision	(67,920)		(67,920)
Net loss	(5,221,747)			(5,221,747)
Balance at Jun. 30, 2013	$ (2,270,386)	$ 33,084	$ 25,718,163	$ (28,021,633)
Balance, shares at Jun. 30, 2013	33,084,671	33,084,671

XML

CONSOLIDATED BALANCE SHEETS (USD $)	Jun. 30, 2013	Jun. 30, 2012
Current assets
Cash and cash equivalents	$ 90,275	$ 84,194
Accounts receivable trade, net	37,277	55,160
Inventories	588,703	546,118
Prepaid expenses and other current assets	66,756	45,785
Total current assets	783,011	731,257
Furniture, fixtures and equipment, net	158,184	188,779
Deposits	26,886	15,631
Total assets	968,081	935,667
Current liabilities
Accounts payable	265,122	234,375
Accrued expenses	176,734	72,637
Litigation accrual	505,000	1,646,000
Accrual for severance agreement	102,056
Notes payable - related parties		84,380
Convertible notes - related parties, net of discount	79,261	283,230
Convertible notes - third parties, net of discount	192,163	74,214
Insurance premium finance contract	11,796	9,250
Deferred revenue	7,019
Total current liabilities	1,339,151	2,404,086
Convertible note - related party	1,899,316	1,497,483
Total liabilities	3,238,467	3,901,569
Commitments and contingencies (Note 10)
Stockholders' deficit
Preferred stock: $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding
Common stock: $0.001 par value; 50,000,000 shares authorized; 33,084,671 and 24,914,474 shares issued and outstanding as of June 30, 2013 and 2012, respectively.	33,084	24,914
Additional paid in capital	25,718,163	19,809,070
Accumulated deficit	(28,021,633)	(22,799,886)
Total stockholders' deficit	(2,270,386)	(2,965,902)
Total liabilities and stockholders' deficit	$ 968,081	$ 935,667

XML

CONCENTRATIONS (Details) (USD $)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Concentration Risk [Line Items]
Raw materials	$ 254,716	$ 181,488
Vendor One Concentration Risk [Member]
Concentration Risk [Line Items]
Raw materials	142,000	205,000
Vendor Two Concentration Risk [Member]
Concentration Risk [Line Items]
Raw materials	32,000	81,000
Accounts Receivable [Member]
Concentration Risk [Line Items]
Number of customers in concentration	3	3
Accounts Receivable [Member] | Customer One Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	39.20%	43.00%
Accounts Receivable [Member] | Customer Two Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	13.90%	24.10%
Accounts Receivable [Member] | Customer Three Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	11.60%	18.10%
Sales Revenue [Member]
Concentration Risk [Line Items]
Number of customers in concentration	2	3
Number of products in concentration	2	2
Sales Revenue [Member] | Customer One Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	36.30%	14.30%
Sales Revenue [Member] | Customer Two Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	32.40%	12.40%
Sales Revenue [Member] | Customer Three Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage		12.30%
Sales Revenue [Member] | Fire Ice [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	38.80%	49.90%
Sales Revenue [Member] | Soil 2 O [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	43.50%	50.10%
Sales Revenue [Member] | Paid For Research And Development [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	17.70%
Inventory purchases [Member] | Vendor One Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	50.80%	52.20%
Raw materials	142,000	205,000
Inventory purchases [Member] | Vendor Two Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	11.50%	20.60%
Raw materials	$ 32,000	$ 81,000

XML

ACCOUNTS RECEIVABLE (Details) (USD $)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
ACCOUNTS RECEIVABLE [Abstract]
Accounts receivable	$ 70,062	$ 95,685
Allowance for doubtful accounts	(32,785)	(40,525)
Accounts receivable, net	37,277	55,160
Bad debt expense	$ 0	$ 2,739

XML

CONVERTIBLE AND NON-CONVERTIBLE NOTE AGREEMENTS (Tables)

12 Months Ended

Jun. 30, 2013

CONVERTIBLE AND NON-CONVERTIBLE NOTE AGREEMENTS [Abstract]

Schedule of Notes Payable and Related Discounts

A summary of notes payable and related discounts as of June 30, 2013 is as follows:

	Principal		Unamortized Discount			Debt, Net of Discount
Third parties
Convertible notes payable	$	206,640	$	(14,477	)	$	192,163
Less current portion		206,640		(14,477	)		192,163
Convertible notes payable, net of current portion	$	-	$	-		$	-
Related parties
Convertible notes payable	$	2,083,583	$	(105,006	)	$	1,978,577
Less current portion		86,100		(6,839	)		79,261
Convertible and non-convertible note payable, net of current portion	$	1,997,483	$	(98,167	)	$	1,899,316

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Schedule of Warrant Activity) (Details) (USD $)	1 Months Ended				12 Months Ended			1 Months Ended		12 Months Ended
	Mar. 31, 2013	May 31, 2012	Jan. 31, 2012	Sep. 20, 2011	Jun. 30, 2013	Jun. 30, 2013 Warrants to Purchase Common Stock [Member]	Jun. 30, 2012 Warrants to Purchase Common Stock [Member]	Mar. 31, 2013 Warrants Issued for Cash or Services [Member]	Sep. 30, 2012 Warrants Issued for Cash or Services [Member]	Jun. 30, 2013 Warrants Issued for Cash or Services [Member]	Jun. 30, 2012 Warrants Issued for Cash or Services [Member]
Number of Warrants
Balance at beginning of period						344,508	474,508			4,461,200	4,651,200
Granted				525,000		350,000				362,500
Exercised	(45,000)		(85,000)		(1,820,000)		(130,000)	(45,000)	(1,640,000)	(1,865,000)	(85,000)
Exercise rescission											45,000
Forfeited
Expired		(150,000)			(1,425,000)	(344,508)				(1,425,000)	(150,000)
Outstanding at end of period						350,000	344,508			1,533,700	4,461,200
Exercisable at end of period						350,000	344,508			1,533,700	4,461,200
Weighted Average Exercise Price
Balance at beginning of period						$ 1.05	$ 1.05			$ 1.46	$ 1.46
Granted						$ 0.63				$ 1.16
Exercised	$ 1.57		$ 1.5		$ 0.50		$ 0.50			$ 0.50	$ 0.50
Exercise rescission											$ 1.25
Forfeited
Expired		$ 1.50			$ 1.60	$ 1.05				$ 1.60	$ 1.5
Outstanding at end of period						$ 0.63	$ 1.05			$ 1.25	$ 1.46
Exercisable at end of period						$ 0.63	$ 1.05			$ 1.25	$ 1.46
Fair value of warrants granted						$ 0.33				$ 0.44
Remaining Contractual Life
Beginning balance						11 months 1 day	1 year 11 months 1 day			2 years 5 months 16 days	2 years 8 months 5 days
Granted						4 years 2 months 19 days				10 years
Exercised
Exercise recission
Forfeited
Expired
Outstanding at end of period						4 years 2 months 19 days	11 months 1 day			2 years 22 days	2 years 5 months 16 days
Exercisable at end of period						4 years 2 months 19 days	11 months 1 day			2 years 22 days	2 years 5 months 16 days

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Common Stock Issued for Settlement) (Details) (USD $)	1 Months Ended		12 Months Ended		1 Months Ended
	Mar. 31, 2013	Jan. 31, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2011 Director Settlement [Member]	Dec. 31, 2011 Director Settlement Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock issued as settlement				$ 300,000	$ 300,000	$ 65,000
Issuance of common stock for settlement, shares					441,177	130,000
Proceeds from exercise of warrants		42,500	910,000	65,000
Exercised	45,000	85,000	1,820,000
Exercised options, exercise price	$ 1.57	$ 1.5	$ 0.50		$ 1.50
Loss on warrant repricing		$ 11,919	$ 70,491	$ 17,753		$ 5,834
Market value of warrants	$ 1.25	$ 0.50			$ 0.50

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Common Stock Issued for Cash) (Details) (USD $)	1 Months Ended		2 Months Ended	12 Months Ended		1 Months Ended	12 Months Ended		3 Months Ended	1 Months Ended		12 Months Ended		1 Months Ended		12 Months Ended
	Mar. 31, 2013	Jan. 31, 2012	Aug. 30, 2013	Jun. 30, 2013	Jun. 30, 2012	Jul. 31, 2013 Private Placement [Member]	Jun. 30, 2013 Private Placement [Member]	Jun. 30, 2012 Private Placement [Member]	Jun. 30, 2012 Lincoln Park Capital Fund, LLC. [Member]	Sep. 15, 2013 Lincoln Park Capital Fund, LLC. [Member] Common Stock Purchase Agreement [Member]	Jan. 05, 2012 Lincoln Park Capital Fund, LLC. [Member] Common Stock Purchase Agreement [Member]	Jun. 30, 2013 Lincoln Park Capital Fund, LLC. [Member] Common Stock Purchase Agreement [Member]	Jun. 30, 2012 Lincoln Park Capital Fund, LLC. [Member] Common Stock Purchase Agreement [Member]	Jan. 05, 2012 Lincoln Park Capital Fund, LLC. [Member] Registration Rights Agreement [Member]	Jul. 31, 2013 Chief Operating Officer [Member]	Jun. 30, 2013 Chief Operating Officer [Member] Private Placement [Member]	Jun. 30, 2013 Chief Executive Officer [Member] Private Placement [Member]	Jun. 30, 2013 Chief Technology Officer [Member] Private Placement [Member]
Stockholders Equity Note [Line Items]
Common stock upon exercise of options				$ 6,534	$ 33,335
Proceeds from exercise of stock options			43,200	6,534	75,835
Common stock issued for cash, shares			40,000			289,941	3,914,321	1,143,400	686,082	342,946	316,667	1,333,820	1,002,749			1,910,714	241,279	241,279
Exercise price of shares called by warrants															1.00
Proceeds from private placement							1,958,000	571,700				810,003				950,000	280,000	280,000
Exercised options, exercise price	$ 1.57	$ 1.5		$ 0.50
Proceeds from issuance of common stock				1,658,000	1,181,700	275,000			510,000	390,000	100,000		610,000
Common stock registered														4,400,000
Period of time to sell common stock												30 months
Maximum amount per transaction												500,000
Additional amount since agreement was signed												4,900,000
Market price benchmark, no purchases can occur												$ 0.35
Common stock issued as commitment fee												150,000
Additional shares available for issuance per agreement												450,000
Shares of common stock issued, pro rata												249,180
Purchase agreement commitment											$ 5,000,000
Number of accredited investors						5	13	34

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Common Stock Issued for Interest) (Details) (Chief Operating Officer [Member], USD $)		1 Months Ended
	Jul. 31, 2013	Feb. 28, 2013 2007 Equity Incentive Plan Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock issued, shares		210,226
Accrued interest		$ 73,579
Loss on conversion of interest		$ 4,204
Conversion price	$ 1.30	$ 0.35
Fair market value of stock, per share		$ 0.37

XML

STOCKHOLDERS' EQUITY (DEFICIT)

12 Months Ended

Jun. 30, 2013

STOCKHOLDERS' EQUITY (DEFICIT) [Abstract]

STOCKHOLDERS' EQUITY (DEFICIT)

7.

STOCKHOLDERS' EQUITY (DEFICIT)

Preferred Stock

The Company has authorized 5,000,000 shares of preferred stock, par value $0.001 per share with such rights, preferences and limitations as may be set from time to time by resolution of the board of directors and the filing of a certificate of designation as required by Delaware law.

Common Stock Issued for Cash

On January 5, 2012, the Company signed a $5 million common stock purchase agreement with Lincoln Park Capital Fund, LLC, an Illinois limited liability company ("LPC"). Upon signing the agreement, the Company received $100,000 from LPC as an initial purchase under the $5 million commitment in exchange for 316,667 shares of the Company's common stock.

The Company also entered into a registration rights agreement with LPC whereby it agreed to file a registration statement related to the transaction with the Securities and Exchange Commission ("SEC") covering the shares that may be issued to LPC under the purchase agreement. The Company filed a registration statement on January 6, 2012 which became effective on March 26, 2012. Under the registration statement, the Company registered 4.4 million shares of the Company's common stock. From March 26, 2012 through June 30, 2012, the Company issued 686,082 shares of common stock in exchange for $510,000.

The Company has the right, in its sole discretion, over a 30-month period to sell shares of common stock to LPC in amounts up to $500,000 per sale, depending on certain conditions as set forth in the purchase agreement, which at the time of the purchase agreement was signed was up to an additional $4.9 million. During the year ended June 30, 2012, the Company issued 1,002,749 shares of common stock in exchange for $610,000 under the purchase agreement.  During the year ended June 30, 2013, the Company issued 1,333,820 shares of common stock in exchange for $810,003 in connection with the Purchase Agreement with Lincoln Park Capital.

There are no upper limits to the price LPC may pay to purchase our common stock and the purchase price of the shares related to the purchase agreement will be based on the prevailing market prices of the Company's shares immediately preceding the time of sales without any fixed discount, and the Company will control the timing and amount of any future sales of shares to LPC. LPC shall not have the right or the obligation to purchase any shares of common stock on any business day that the price the Company's common stock is below $0.35.

In consideration for entering into the purchase agreement, the Company issued to LPC 150,000 shares of common stock as a commitment fee and will issue up to 450,000 shares pro rata as LPC purchases additional shares.  As of June 30, 2013, 249,180 "pro-rata" shares have been issued. The commitment shares are subject to a 30 month lock up restriction. The purchase agreement may be terminated by the Company at any time at our discretion without any cost to it. Except for a limitation on variable priced financings, there are no financial or business covenants, restrictions on future fundings, rights of first refusal, participation rights, penalties or liquidated damages in the agreement. 

During the year ended June 30, 2012 the Company issued 1,143,400 shares of common stock in exchange for $571,700 in connection with private placements with 34 accredited investors.

During the year ended June 30, 2013, the Company issued 3,914,321 shares of common stock in exchange for $1,958,000 in connection with private placements with 13 accredited investors, including issuances of 1,910,714 shares to our Chief Operating Officer and principal stockholder in exchange for $950,000 and 241,379 shares each to our Chief Executive Officer and Chief Technology Officer in exchange for a total of $280,000.

Common Stock Issued for Interest

In February 2013, the Company issued 210,226 shares of common stock to its Chief Operating Officer and principal stockholder as payment of accrued interest in the amount of $73,579. The Company recorded a loss on conversion of interest of $4,204 in connection with this transaction representing the difference between the conversion price of $0.35 per share and the fair market value of the stock on the date of conversion, $0.37 per share.

Common Stock Issued for Exercise of Options and Warrants and Cashless Exercise of Warrants

In July 2011, the Company issued 30,000 shares of common stock to a director in exchange for $30,000 in connection with the exercise of options with an exercise price of $1.00 per share.

In December 2011, the Company issued 5,000 shares of common stock to a director in connection with the exercise of options with an exercise price of $0.667 per share.

In January 2012, the Company issued 85,000 shares in exchange for $42,500 in connection with the exercise of warrants. The warrants had original exercise prices between $1.25 and $1.60 share. The Company recognized a loss on repricing of the warrants exercised of $11,919, during the three months ended March 31, 2012, representing the change in the value of the repriced warrants as compared to the value of the original warrants on the date of exercise.

In September 2012, the Company issued 1,740,000 shares of common stock in exchange for $870,000 in connection with the exercise of 1,640,000 warrants and 100,000 options to purchase shares of the Company's common stock related to an offer by the Company to reduce the exercise price to $0.50 per share. The original exercise prices of the warrants and options ranged from $1.25 to $1.75 per share. The cost of repricing warrants recognized by the Company amounted to $70,491 for the three months ended September 30, 2012. The cost represents the incremental increase in the fair value of the repriced warrants and options as compared to the original warrants and options granted, valued on the exercise date. The fair value of the warrants and options was determined using the Black-Scholes option pricing model.

In October 2012, the Company issued 80,000 shares of common in exchange for $40,000 in connection with the exercise of warrants at $0.50 per share.

In March 2013, the Company issued 9,171 shares of common stock related to the cashless exercise of 45,000 warrants to purchase common stock at an exercise price of $1.25 per share based upon a fair market value of our stock of $1.57 on the date of exercise.

In June 2013, the Company issued 11,667 shares of common stock in exchange for $6,534 in connection with the exercise of options by a director.

Common Stock Issued for Conversion of Debt

In September 2012, our Chief Operating Officer and principal stockholder converted his $322,996 convertible original issue discount note which was due on September 28, 2012 into 665,992 shares of common stock.

In February 2013, the Company issued 205,000 shares of common stock in connection with the conversion of a convertible original issue discount note in the amount of $102,500.

Common Stock Issued for Settlement

In December 2011, the Company issued 441,177 shares of common stock to a director in settlement of a loan amount due to the director by the Company's predecessor company. The fair value of the shares issued was $300,000, calculated using the closing price on the date of the settlement, and was recorded as a loss on settlement. As further inducement to enter into the settlement, the Company offered to reduce the exercise price of warrants held by the director from $1.50 to $0.50 per share if the director exercised the warrants within a short period of time. The Company issued an additional 130,000 shares of common stock to the director in exchange for $65,000 in connection with the preceding offer. As a result, the Company recognized a loss on warrant repricing of $5,834 representing the difference between the market value of the warrants exercised at an exercise price of $1.50 per share and the market value at the new exercise price of $0.50 per share.

Restricted Stock Units

On November 14, 2012 , the Compensation Committee of the Board of Directors granted its former Executive Chairman  800,000 restricted stock units  ("RSU"), of which (i) 200,000 units vested immediately, (ii) 200,000 units vest upon the Company generating $3,000,000 in revenue in any 12-month period, (iii) another 200,000 units vest upon the Company generating $5,000,000 in revenue in any 12-month period and (iv) another 200,000 units vest upon the Company generating $6,000,000 in revenue in any 12-month period. Vested Units shall be paid in shares of the Company's common stock.  The Company valued the 200,000 RSU's  which vested immediately, at $0.45 per share based on the closing bid price on the vesting date and recorded stock compensation expense of $90,000, resulting from the obligation to issue 200,000 shares of common stock.

In June 2013 the Executive Chairman was terminated for cause and the clawback provisions of the RSU agreement provided for the cancellation of the Company's obligation to issue these 200,000 shares of common stock.  As the shares had not yet been physically issued, the Company reduced its common stock issuable and recognized Other Income for the grant date fair value of $90,000 for these shares in accordance with guidance in ASC 718-20-35, Awards Classified as Equity, Subsequent Measurement in conjunction with a Clawback feature since the $196,000 fair value of the 200,000 shares at the cancellation date exceeds the grant date value of $90,000.

The fair value of stock option grants for the fiscal year ended June 30, 2013 and 2012 were estimated using the following weighted- average assumptions:

	2013	2012
Risk free interest rate	0.53% - 2.49%	0.23% - 2.35%
Expected term in years	2.5 - 10.0	1.5 - 6.5
Dividend yield	-	-
Volatility of common stock	89.67% - 93.11%	87.55% - 91.39%
Estimated annual forfeitures	-	-

The Black-Scholes option-pricing model was developed for use in estimating the fair value of non-traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's stock options and warrants have characteristics different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of such stock options In fiscal 2013 and 2012, the Company used the Company's trading prices in calculating the stock price volatility and based its volatility on historical volatility. The expected term was estimated using the simplified method for employee stock options since the Company does not have adequate historical exercise data to estimate the expected term.

Options to Purchase Common Stock

A summary of stock option transactions issued to employees under the 2007 Plan for the fiscal years ended June 30, 2013 and 2012 is as follows:

Employee Options and Stock Appreciation Rights

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balance at June 30, 2011		4,439,507		$	1.12		5.39
Granted		675,000		$	0.75		10.00
Exercised		-		$	-		-
Forfeited		-		$	-
Expired		(525,000	)	$	1.00		-
Outstanding at June 30, 2012		4,589,507		$	1.04		5.95	$	339,417
Exercisable at June 30, 2012		2,808,088		$	1.05		5.03	$	181,750
Weighted average fair value of options granted during the year ended June 30, 2012				$	0.56
Balance at June 30, 2012		4,589,507		$	1.04		5.95
Granted		4,622,500		$	0.55		9.64
Exercised		-		$	-		-
Forfeited		(2,875,000	)	$	0.92		-
Expired		-		$	-
Outstanding at June 30, 2013		6,337,007		$	0.75		6.62	$	2,505,808
Exercisable at June 30, 2013		3,696,174		$	0.90		5.70	$	1,056,738
Weighted average fair value of options granted during the year ended June 30, 2013				$	0.41

On September 1, 2011, ten-year options to purchase 150,000 shares of common stock at an exercise price of $1.95 share, which were granted by the Company on June 3, 2011, to its Chief Financial Officer (CFO) became effective, upon his transition from part time consultant to full-time employee. Of the options granted, 50,000 vested immediately and the remaining options vest semi-annually on December 31st and June 30th over the 3-year requisite service period with the first vesting date being December 31, 2011, subject to continued employment. The options were valued at $224,778 using the Black-Scholes option pricing model using a volatility of 90.6% (derived from the historical market price of the Company's common stock since it began trading in June 2008) an expected term of 6.5 years (using the simplified method) and a discount rate of 2.11%. In December 2011, the Company reduced the exercise price of the options to $0.60 per share as inducement for a loan from the CFO (See related party transactions). As a result, the value of the options was increased by $15,067 which will be recorded as expense over the remaining requisite service period.

On September 20, 2011, the Company granted ten-year options to purchase 175,000 shares of common stock at an exercise price of $0.81 share to each of its three original executive officers (a total of 525,000 options). The options vest semi-annually on December 31st and June 30th with the first vesting date being December 31, 2011, subject to continued employment. The options were valued using the Black-Scholes option pricing model using a volatility of 88.89% (derived from the historical market price of the Company's common stock since it began trading in June 2008) an expected term of 6.5 years (using the simplified method) and a discount rate of 1.25%. The value of the options, $320,271, will be recorded as expense over the requisite service period. These options replaced options to purchase the same number of shares at an exercise price of $1.00 per share which expired on September 15, 2011.

In June 2012, the Company granted the Company's president a three year extension and amended the exercise price of options to purchase 50,000 shares of common stock which had an original expiration date of June 25, 2012. The extended options vested immediately and were valued with the Black-Scholes option pricing model using a volatility of 91.39% (derived from the historical market price of the Company's common stock since it began trading in June 2008) an expected term of 1.5 years (using the simplified method) and a discount rate of 0.23%. The calculated value of $17,011 was recognized as expense during the year ended June 30, 2012.

In June 2012, the Company granted the Company's Chief Executive Officer, Chief Technology Officer, Chief Financial Officer and former President ten year options to each purchase 150,000 shares of common stock at an exercise price of $0.74 per share. The options vested based upon meeting certain prescribed management goals, the first of which occurred in July 2012.  The options were valued with the Black-Scholes option pricing model using a volatility of 91.39% (derived from the historical market price of the Company's common stock since it began trading in June 2008) an expected term of 5.5 years (using the simplified method) and a discount rate of 0.78%. The calculated value of $320,640 will be recognized as the management goals are achieved.

On September 21, 2012, the Company granted options to purchase 70,000 shares of the Company's common stock at an exercise price of $0.63 per share to the father of the Company's Chief Executive Officer and Chief Technology Officer in recognition of his service. Of the options granted, 35,000 vest immediately with the remainder vesting semi-annually each December 31 and June 30 over a three year period, subject to continued employment on the vesting date. The Company valued the options at $28,358 using the Black-Scholes option pricing model using a volatility of 90.09%, based upon the historical price of the Company's common stock since June 2008, an estimated term of 4 years, using the Simplified Method and a discount rate of 0.53%.

On September 21, 2012, the Company granted five-year options to purchase 265,000 shares of common stock at an exercise price of $0.60 per share to non-executive employees. The options vest 25% immediately with the remainder vesting annually over three years, subject to continued employment. The Company valued the options at $101,029 using the Black-Scholes option pricing model using a volatility of 89.93%, based upon the historical price of the Company's common stock since June 2008, an estimated term of 4 years, using the Simplified Method and a discount rate of 0.53%. The resulting expense will be recognized 25% immediately and the remainder over the vesting period.

On November 14, 2012, in connection with the signing of new employment agreements, the Compensation Committee of the Board of Directors granted its Chief Executive Officer, Chief Financial Officer, Chief Technology Officer and former President, 800,000 stock settled stock appreciation rights ("SARS") each, of which (i) 200,000 rights vested immediately, (ii) 200,000 rights vest upon the Company generating $3,000,000 in revenue in any 12-month period, (iii) another 200,000 rights vest upon the Company generating $5,000,000 in revenue in any 12-month period and (iv) another 200,000 rights vest upon the Company generating $6,000,000 in revenue in any 12-month period. The SARs are exercisable at $0.45 per share over a 10-year period. The Company valued the 3,200,000 SARS at $1,086,560 using the Black-Scholes option pricing model using a volatility of 89.67%, based upon the historical price of the Company's common stock since June 2008, an estimated term of 6.5 years, using the Simplified Method and a discount rate of 0.93%. Compensation expense of $271,640 was recognized immediately relating to the 800,000 SARS that vested immediately. The remaining compensation expense will be recognized based on managements assessment that the performance targets are likely to be met within 18 months of the grant date, resulting in the $814,920 of unrecognized compensation expense being expensed by June 30, 2014.

In connection with this grant, the Company's Chief Executive Officer, former President and Chief Technology Officer agreed to cancel 250,000 stock options granted to each of them in their prior employment agreements. Because the fair value of the options cancelled exceeded the fair value of the new options granted, no additional expense will be recognized relating to these options.

In connection with a Termination and Release Agreement (the "Release Agreement") effective February 8, 2013, the Company issued its former President options to purchase 112,500 shares of common stock at an exercise price of $0.39 per share, subject to a lockup agreement for the option shares and the other shares he currently owns. The options are fully vested and have a ten year term. The Company valued the options at $43,875 using the Black-Scholes option pricing model using a volatility of 89.67%, based upon the historical price of the Company's common stock since June 2008, an estimated term of 9.42 years, using the Simplified Method and a discount rate of 0.93%. Additionally, in connection with the Release Agreement the Company cancelled options to purchase 1,325,000 shares of common stock at exercise prices from $0.667 to $1.22 per share and under a clawback provision rescinded 800,000 stock appreciation rights. As a result of the clawback, the Company recorded other income of $67,920 representing the expense previously recognized for the vested portion of the Stock Appreciation Rights.

In June 2013, the Company granted its Chief Executive Officer, Chief Technology Officer and Chief Financial Officer 125,000 each ten-year options to purchase shares of common stock at an exercise price of $1.10 per share. The options vest in equal amounts annually on the anniversary date of the grant over three years, subject to continued employment. The Company valued the options at $317,963 using the Black-Scholes option pricing model using a volatility of 91.6%, based upon the historical price of the Company's common stock since June 2008, an estimated term of 6.5 years, using the Simplified Method and a discount rate of 1.78%. The resulting expense will be recognized over the requisite service period of three years.

A summary of options issued to directors under the 2007 Plan and changes during the period from June 30, 2011 to June 30, 2012 and from June 30, 2012 to June 30, 2013 is as follows:

Options Issued to Directors

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balance at June 30, 2011		790,000		$	1.25		7.98
Granted		280,000		$	1.60		10.00
Exercised		(35,000	)	$	0.95		-
Forfeited		(142,500	)	$	1.46		-
Expired		(35,000	)	$	0.95		-
Outstanding at June 30, 2012		857,500		$	1.36		7.96	$	24,820
Exercisable at June 30, 2012		724,666		$	1.39		7.83	$	14,612
Weighted average fair value of options granted during the year ended June 30, 2012				$	1.27
Balance at June 30, 2012		857,500		$	1.36		7.96
Granted		610,000		$	0.95		10.00
Exercised		(11,667	)	$	0.56		10.00
Forfeited		(255,000	)	$	1.38		-
Expired		-		$	-		-
Outstanding at June 30, 2013		1,200,833		$	1.16		8.04	$	165,386
Exercisable at June 30, 2013		795,168		$	1.24		7.25	$	98,654
Weighted average fair value of options granted during the year ended June 30, 2013				$	0.72

On July 1, 2011, as an automatic grant under the Equity Incentive Plan, the Company granted options to purchase 245,000 shares of the Company's common stock to directors of the Company. The options have an exercise price of $1.75 per share, vest over one year and have a ten year term. The options were valued using the Black-Scholes model using a volatility of 89.65% (derived using the historical market price for the Company's common stock since it began trading in June 2008), an expected term of 6.5 years (using the simplified method) and a discount rate of 2.35%. The value of the options, $311,001, will be recognized over the vesting term, one year.

In July 2011, the Company issued 30,000 shares of common stock to a director in exchange for $30,000 in connection with the exercise of options with an exercise price of $1.00 per share.

On September 28, 2011, in connection with the resignation of a director, options to purchase 142,500 shares of common stock at a weighted average exercise price of $1.46 per share were forfeited.

In December 2011, the Company issued 5,000 shares of common stock to a director in connection with the exercise of options with an exercise price of $0.667 per share.

In January 2012, the Company granted options to purchase 35,000 shares of the Company's common stock to a new director of the Company upon his appointment to the board and his election to serve on the audit committee. The options have an exercise price of $0.60 per share, vest over three years and have a ten year term. The options were valued using the Black-Scholes model using a volatility of 87.55% (derived using the historical market price for the Company's common stock since it began trading in June 2008), an expected term of 6.5 years (using the simplified method) and a discount rate of 1.30%. The value of the options, $14,633, will be recognized over the vesting term, three years.

On July 1, 2012, as an automatic granter under the Equity Incentive Plan, the Company issued options to purchase 230,000 shares of common stock to directors. The options have an exercise price of $0.91 per share, vest on June 30, 2013¸ subject to continuing service as a director and bear a ten year term. The options were valued using the Black-Scholes model using a volatility of 91.04% (derived using the historical market price for the Company's common stock since it began trading in June 2008), an expected term of 5.5 years (using the simplified method) and a discount rate of 0.82%. The value of these options will be recognized as expense over the requisite service period.

On December 6, 2012, the Company issued options to purchase 5,000 shares of common stock to a director upon his appointment to the audit committee. The options have an exercise price of $0.36 per share, and vest over three years, subject to continued service and bear a ten year term. The options were valued using the Black-Scholes model using a volatility of 89.86% (derived using the historical market price for the Company's common stock since it began trading in June 2008), an expected term of 6.5 years (using the simplified method) and a discount rate of 0.90%. The value of these options, $1,360, will be recognized as expense over the requisite service period.

In March 2013, the Company granted each of its three non-employee directors ten year options to purchase 125,000 shares of common stock at an exercise price of $0.99 per share. The options vest annually over a three year period, subject to continued service as a director. The options were valued using the Black-Scholes model using a volatility of 93.11 (derived using the historical market price for the Company's common stock since it began trading in June 2008), an expected term of 6.5 years (using the simplified method) and a discount rate of 1.25%. The value of these options, $287,405, will be recognized as expense over the requisite service period.

In June 2013 in connection with the termination for cause of its former Executive Chairman, the Company clawed back options to purchase 255,000 shares of common stock with exercise prices from $0.91 to $1.95 per share previously granted to the Executive Chairman.  In addition, the Company rescinded a grant of 800,000 restricted stock units with an exercise price of $0.45 per share, of which 200,000 had vested.  

A summary of options issued to non-employees, non-directors under the 2007 Plan and changes during the fiscal years ended June 30, 2013 and 2012 is as follows:

Non-Employee, Non-Director Options

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balance at June 30, 2011		540,000		$	1.16		3.14
Granted		-		$	-		-
Exercised		-		$	-
Forfeited		-		$	-		-
Expired		-		$	-		-
Outstanding at June 30, 2012		540,000		$	1.16		2.14	$	-
Exercisable at June 30, 2012		540,000		$	1.16		2.14	$	-
Weighted average fair value of options granted during the year ended June 30, 2012					N/A
Balance at June 30, 2012		540,000		$	1.16		2.14
Granted		275,000		$	1.23		10.00
Exercised		(100,000	)	$	0.50		-
Forfeited		-		$	-		-
Expired		(155,000	)	$	1.00		-
Outstanding at June 30, 2013		560,000		$	1.22		5.96	$	6,250
Exercisable at June 30, 2013		285,000		$	1.21		2.22	$	-
Weighted average fair value of options granted during the year ended June 30, 2013				$	1.00

In March 2013, the Company granted ten year options to purchase 150,000 shares of common stock at an exercise price of $1.33 per share to a consultant. The options vest annually over a three year period, subject to continued service as a consultant. The options were valued using the Black-Scholes model using a volatility of 93.11 (derived using the historical market price for the Company's common stock since it began trading in June 2008), an expected term of 6.5 years (using the simplified method) and a discount rate of 1.23%. The value of these options, $154,415, will be recognized as expense over the requisite service period.

In June 2013, the Company granted a consultant ten-year options to purchase 125,000 shares of common stock at an exercise price of $1.10 per share.  The options vest in equal amounts annually on the anniversary date of the grant over three years, subject to continued engagement as a consultant.  The Company valued the options at $119,618 using the Black-Scholes option pricing model using a volatility of 91.6%, based upon the historical price of the Company's common stock since June 2008, an estimated term of 10.0 years, the term of the option and a discount rate of 2.49%. The resulting expense will be recognized over the requisite service period, three years.

Warrants Issued as Settlements

	Number of Warrants			Weighted Average Exercise Price		Remaining Contractual Life
Balance at June 30, 2011		474,508		$	1.05		1.92
Granted		-		$	-		-
Exercised		(130,000	)	$	0.50		-
Forfeited		-		$	-		-
Expired		-		$	-		-
Outstanding at June 30, 2012		344,508		$	1.05		0.92
Exercisable at June 30, 2012		344,508		$	1.05		0.92
Weighted average fair value of warrants granted during the year ended June 30, 2012					N/A
Balance at June 30, 2012		344,508		$	1.05		0.92
Granted		350,000		$	0.63		4.22
Exercised		-		$	-		-
Forfeited		-		$	-		-
Expired		(344,508	)	$	1.05		-
Outstanding at June 30, 2013		350,000		$	0.63		4.22
Exercisable at June 30, 2013		350,000		$	0.63		4.22
Weighted average fair value of warrants granted during the year ended June 30, 2013				$	0.33

In December 2011, the Company issued 130,000 shares of common stock to a director in connection with the exercise of warrants with an exercise price of $0.50 per share in exchange for $65,000. As a result, the Company recognized a loss on warrant repricing of $5,834 representing the difference between the market value of the warrants exercised at an exercise price of $1.50 per share and the market value at the new exercise price of $0.50 per share. See Note 9.

On September 21, 2012, the Company granted five year warrants to purchase 350,000 shares of the Company's common stock at an exercise price of $0.63 per share to a director in recognition of his exemplary five years of service to the Company. The warrants vested immediately. The Company valued the warrants at $115,883 using the Black-Scholes option pricing model using a volatility of 90.09%, based upon the historical price of the Company's common stock since June 2008, an estimated term of 2.5 years, using the Simplified Method and a discount rate of 0.32%.

In May 2013, warrants to purchase 344,058 shares of common stock at an exercise price of $1.05 per share held by a director expired.

A summary of warrants issued for cash and changes during the periods June 30, 2011 to June 30, 2012 and from June 30, 2012 to June 30, 2013 is as follows:

Warrants issued for cash or services

	Number of Warrants			Weighted Average Exercise Price		Remaining Contractual Life
Balance at June 30, 2011		4,651,200		$	1.46		2.68
Granted		-		$	-		-
Exercised		(85,000	)	$	0.50		-
Exercise rescission		45,000		$	1.25		-
Forfeited		-		$	-		-
Expired		(150,000	)	$	1.50		-
Outstanding at June 30, 2012		4,461,200		$	1.46		2.46
Exercisable at June 30, 2012		4,461,200		$	1.46		2.46
Weighted average fair value of warrants granted during the year ended June 30, 2012					N/A
Balance at June 30, 2012		4,461,200		$	1.46		2.46
Granted		362,500		$	1.16		10.00
Exercised		(1,865,000	)	$	0.50		-
Forfeited		-		$	-		-
Expired		(1,425,000	)	$	1.60		-
Outstanding at June 30, 2013		1,533,700		$	1.25		2.06
Exercisable at June 30, 2013		1,533,700		$	1.25		2.06
Weighted average fair value of warrants granted during the year ended June 30, 2013				$	0.44

In January 2012, the Company issued 85,000 shares in exchange for $42,500 in connection with the exercise of warrants. The warrants had original exercise prices between $1.25 and $1.60 share. As a result, the Company recognized a loss on warrant repricing of $11,919 representing the difference between the market value of the warrants exercised at an exercise price of $1.50 per share and the market value at the new exercise price of $0.50 per share.

In July 2011, the Company rescinded the cashless exercise of warrants to purchase 45,000 shares of the Company's common stock at $1.25 per share held by a former director.

In May 2012, warrants to purchase 150,000 shares of common stock at $1.50 per share, held by our Chief Operating Officer and principal stockholder, expired.

On September 21, 2012, the Company granted five year warrants to purchase 50,000 shares of the Company's common stock at an exercise price of $0.63 per share to the Company's Investor Relations firm in recognition of their performance over the past year. The warrants vested immediately. The Company valued the warrants at $21,787 using the Black-Scholes option pricing model using a volatility of 90.09%, based upon the historical price of the Company's common stock since June 2008, an estimated term of 5 years, the term of the warrants, and a discount rate of 0.70%.

During the year ended June 30, 2013, the Company issued 1,820,000 shares of common stock in exchange for $910,000 in connection with the exercise of 1,820,000 warrants to purchase shares of the Company's common stock related to an offer by the Company to reduce the exercise price to $0.50 per share. The original exercise prices of the warrants ranged from $1.25 to $1.75 per share. The cost of repricing warrants recognized by the Company amounted to $70,491 for the year ended June 30, 2013. The cost represents the incremental increase in the fair value of the repriced warrants as compared to the original warrants granted, valued on the exercise date. The fair value of the warrants was determined using the Black-Scholes option pricing model.

In March 2013, the Company issued 9,171 shares of common stock in connection with the cashless exercise of warrants to purchase 45,000 shares of common stock with an exercise price of $1.25 and a fair market value of the Company's common stock of $1.57 on the date of exercise.

In May 2013, the Company issued five year warrants to purchase 312,500 shares of common stock at an exercise price of $1.25 per share in connection with two private placements with its Chief Operating Officer and principal stockholder.

During the year ended June 30, 2013, warrants to purchase 1,425,000 shares of the Company's common stock at an exercise price of $1.60 per share expired unexercised.

Options to Purchase Common Stock and Stock Appreciation Rights

Stock-based compensation expense recognized under ASC 718-10 for the fiscal years ended June 30, 2013 and 2012 was $1,497,534 and $1,371,519, respectively, for stock options and stock appreciation rights granted to employees, directors and a consultant. This expense is included in selling, general and administrative expenses in the consolidated statements of operations. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. At June 30, 2013, the total compensation cost for stock options and stock appreciation rights not yet recognized was approximately $1,729,556. This cost will be recognized over the remaining vesting term of the options and stock appreciation rights of approximately five years.

XML

INVENTORIES (Details) (USD $)	Jun. 30, 2013	Jun. 30, 2012
INVENTORIES [Abstract]
Finished goods	$ 333,987	$ 364,630
Raw materials	254,716	181,488
Total inventory	$ 588,703	$ 546,118

XML

STOCKHOLDERS' EQUITY (DEFICIT) (Schedule of Stock Options Activity) (Details) (USD $)	1 Months Ended				12 Months Ended	1 Months Ended		12 Months Ended
	Mar. 31, 2013	May 31, 2012	Jan. 31, 2012	Sep. 20, 2011	Jun. 30, 2013	Feb. 08, 2013 Employee Options and Stock Appreciation Rights [Member]	Sep. 30, 2012 Employee Options and Stock Appreciation Rights [Member]	Jun. 30, 2013 Employee Options and Stock Appreciation Rights [Member]	Jun. 30, 2012 Employee Options and Stock Appreciation Rights [Member]	Jun. 30, 2013 Director [Member]	Jun. 30, 2012 Director [Member]	Jun. 30, 2013 Non Employee Non Director Options [Member]	Jun. 30, 2012 Non Employee Non Director Options [Member]
Number of Options
Balance at beginning of period								4,589,507	4,439,507	857,500	790,000	540,000	540,000
Granted				525,000				4,622,500	675,000	610,000	280,000	275,000
Exercised	(45,000)		(85,000)		(1,820,000)		(100,000)			(11,667)	(35,000)	(100,000)
Forfeited						(1,325,000)		(2,875,000)		(255,000)	(142,500)
Expired		(150,000)			(1,425,000)				(525,000)		(35,000)	(155,000)
Outstanding at end of period								6,337,007	4,589,507	1,200,833	857,500	560,000	540,000
Exercisable at end of period								3,696,174	2,808,088	795,168	724,666	285,000	540,000
Weighted Average Exercise Price
Balance at beginning of period								$ 1.04	$ 1.12	$ 1.36	$ 1.25	$ 1.16	$ 1.16
Granted								$ 0.55	$ 0.75	$ 0.95	$ 1.60	$ 1.23
Exercised	$ 1.57		$ 1.5		$ 0.50		$ 0.50			$ 0.56	$ 0.95	$ 0.50
Forfeited								$ 0.92		$ 1.38	$ 1.46
Expired		$ 1.50			$ 1.60				$ 1.00		$ 0.95	$ 1.00
Outstanding at end of period								$ 0.75	$ 1.04	$ 1.16	$ 1.36	$ 1.22	$ 1.16
Exercisable at end of period								$ 0.90	$ 1.05	$ 1.24	$ 1.39	$ 1.21	$ 1.16
Options granted, grant price								$ 0.41	$ 0.56	$ 0.72	$ 1.27	$ 1.00
Weighted Average Remaining Contractual Life
Beginning balance								5 years 11 months 12 days	5 years 4 months 21 days	7 years 11 months 16 days	7 years 11 months 23 days	2 years 1 month 21 days	3 years 1 month 21 days
Granted								9 years 7 months 21 days	10 years	10 years	10 years	10 years
Exercised										10 years
Forfeited
Expired
Outstanding at end of period								6 years 7 months 13 days	5 years 11 months 12 days	8 years 15 days	7 years 11 months 16 days	5 years 11 months 16 days	2 years 1 month 21 days
Exercisable at end of period								5 years 8 months 12 days	5 years 11 days	7 years 3 months	7 years 9 months 29 days	2 years 2 months 19 days	2 years 1 month 21 days
Aggregate Intrinsic Value
Outstanding at end of period								$ 2,505,808	$ 339,417	$ 165,386	$ 24,820	$ 6,250
Exercisable at end of period								$ 1,056,738	$ 181,750	$ 98,654	$ 14,612

XML

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Jun. 30, 2013

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

10.

COMMITMENTS AND CONTINGENCIES

The Company leases office and warehouse space located in Jupiter, Florida under a month-to-month lease and rents space under a one year lease in an industrial yard in Irvine, California. In February 2013, the Company entered into a one year lease agreement for a support facility in Brooklyn, New York at a monthly rent of $3,600.   Rent expense for the fiscal year ended June 30, 2013 and 2012 was $143,614 and $103,044, respectively.

In March 2011, the Compensation Committee approved new employment terms for each of the Company's three executive officers. The Executives will receive a base salary of $150,000 per year with the Committee having the authority to increase the Executive's base salary for the succeeding 12-month period with the increase based on profitability, positive cash flow or such other factors as the Committee deems important. Following the completion of each fiscal year, the Committee will have the discretion to award each of the executives a target bonus based on each Executive's job performance, the Company's revenue growth, positive cash flow, net income before income taxes or other criteria selected by the Committee. In addition, the executives received options as previously described in Note 1. In October 2011, the Company entered into employment agreements with its executive officers.

Effective September 1, 2011, the Compensation Committee approved an Employment Agreement with the Company's Chief Financial Officer (CFO). The CFO will receive a base salary of $146,000 per year with the Committee having the authority to increase the CFO's base salary for the succeeding 12-month period with the increase based on profitability, positive cash flow or such other factors as the Committee deems important. In addition, the CFO received options as previously described in Note 7.

On November 14, 2012, the Compensation Committee approved new employment agreements for the Company's Chief Executive Officer, then President, Chief Technology Officer and Chief Financial Officer. The employment agreements each provide for base salaries of $150,000 and 800,000 stock settled stock appreciation rights ("SARS") of which (i) 200,000 vested immediately, (ii) 200,000 vest upon the Company generating $3,000,000 in revenue in any 12-month period, (iii) another 200,000 vest upon the Company generating $5,000,000 in revenue in any 12-month period and (iv) another 200,000 vest upon the Company generating $6,000,000 in revenue in any 12-month period. The SARs are exercisable at $0.45 per share over a 10-year period. The Company's Chief Executive Officer, then President and Chief Technology Officer agreed to cancel the 250,000 stock options granted to each of them in their prior employment agreements. These executives' base salary will increase to: (i) $170,000 upon the Company generating $3,000,000 in revenue in any 12-month period, (ii) $190,000 upon the Company generating $5,000,000 in any 12-month period and (iii) $200,000 upon the Company generating $6,000,000 in any 12-month period.

Additionally, the Compensation Committee approved an employment agreement for the Company's Executive Chairman. The Executive Chairman receives a base salary of $200,000 per year and was granted 800,000 restricted stock units vesting on identical terms as the SARs. All of the five senior executives receive a monthly car allowance of $600 per month. The Compensation Committee will also have the discretion to award each of the executives a bonus based upon job performance, revenue growth or any other factors determined by the Compensation Committee. Each of the employment agreements was effective as of October 1, 2012 and is for a four-year term. In June 2013, the Company terminated this agreement for cause.

In August 2011, the Company entered into a settlement agreement with a former shareholder of Dyn-O-Mat, the Company's predecessor. At the time of the Company's formation, the Company was unable to contact the investor in order to offer the investor shares of GelTech in exchange for the investor's shares of Dyn-O-Mat. The investor came forward in May 2011 seeking to receive the same offer made to Dyn-O-Mat shareholders in 2007. Under the settlement agreement, the Company paid the investor $50,000, which has been recorded as a loss on settlement as of June 30, 2011. In addition, the Company's Chief Technology Officer and his father agreed to pay the investor an additional $125,000 prior to December 31, 2011. As of June 30, 2013, this amount has not yet been paid.

The Company was sued by a former employee on June 23, 2008, alleging breach of a consulting agreement and an employment agreement entered into in May and June 2007, respectively. In addition, the plaintiff seeks to recover certain of his personal property, which was used or stored in the Company's offices, and alleges the Company invaded his privacy by looking at his personal computer (which was used in the Company's business) in the Company's offices. A jury trial was held for the lawsuit in July 2012. At the conclusion of the trial, the plaintiff was awarded $200,000 under his invasion of privacy and fraudulent misrepresentation claim, $5,000 on the trespass claim,$841,000 on the breach of consulting agreement claim and $200,000 against the Company's CEO on a claim of civil theft, which by law results in an award of $600,000 for the plaintiff. The Company's board of directors approved the indemnification of the Company's CEO for the $600,000. The Company filed a post trial motion for Judgment Notwithstanding Verdict, New Trial and Remittitur, requesting that the judge set aside or reduce the amounts of the jury verdict.

Based upon the verdicts, the Company recorded a litigation accrual of $1,646,000 as of June 30, 2012. In November 2012, the insurance carrier paid the plaintiff $200,000 in settlement of the invasion of privacy and fraudulent misrepresentation awards. As a result, the Company reduced the amounts accrued for these awards resulting in other income of $200,000 for the period ended December 31, 2012.

In January 2013, the court ruled on the Company's post-trial motions in this litigation dismissing the $200,000 civil theft verdict (which was subject to triple damages) against the CEO and reducing the $841,000 breach of the consulting agreement award to $500,000. The Company then filed a motion seeking a new trial on damages. The Company received a favorable ruling on this motion and received a new trial on the damages. As a result of the reduction in the award for breach of the consulting agreement from $841,000 to $500,000 and the vacating of the award for civil theft which the Company had previously accrued $600,000, the Company recorded other income of $941,000 for the year ended June 30, 2013.  The Company expects the trial to determine damages to occur in late 2013.

The Company may be subject to rescission rights from an investor who purchased 249,931 shares of the Company's common stock in December 2012 at an average price of $0.36 per share during a time when the Registration Statement for those shares was stale due to the Company's failure to file a Post-Effective Amendment to its Registration Statement including updated financial statements. As such, from now until the end of December 2013, the investor has the right under Section 5 of the Securities Act of 1933 to file suit against the Company to rescind the purchase and force the Company to repurchase the shares at the price paid by the investor. To date, the investor has not filed suit and because the market price of the Company's common stock has been significantly higher than $0.36 per share, the Company considers the likelihood that the investor will file suit to be remote. Therefore, in accordance with ASC 450-20 "Loss Contingencies", the Company has not recorded a liability for the potential rescission.

XML

CONVERTIBLE AND NON-CONVERTIBLE NOTE AGREEMENTS

12 Months Ended

Jun. 30, 2013

CONVERTIBLE AND NON-CONVERTIBLE NOTE AGREEMENTS [Abstract]

CONVERTIBLE AND NON-CONVERTIBLE NOTE AGREEMENTS

6.

CONVERTIBLE AND NON-CONVERTIBLE NOTE AGREEMENTS

On May 29, 2009, the Company received a line of credit ("Line of Credit") from the Company's principal stockholder (the "Lender"). In connection with this Line of Credit, the Company executed a Revolving Promissory Note which permitted the Company to borrow up to $2,500,000. Interest, at an annual rate of 5%, was due monthly on the 20th day of each month which commenced on July 20, 2009.

In February 2011, the Company renegotiated the Line of Credit Agreement with the Lender. As part of the renegotiation, the Company issued 892,857 shares of the Company's common stock and five-year warrants to purchase 1,000,000 shares of the Company's common stock at an exercise price of $1.25 per share in exchange for a $1,000,000 reduction in the principal amount of the Line of Credit. In addition, the remaining principal amount due under the line of credit of $1,497,483 was replaced by a five-year convertible note of the same amount, convertible at $1.12 per share (fair market value on transaction date based upon the quoted trading price) and bearing annual interest of 5%, due on the maturity date of the note (the "2011 Note"). As an inducement for the Lender to enter into the convertible note agreement, the Company granted the Lender five-year warrants to purchase 300,000 shares of the Company's common stock at an exercise price of $1.75 per share. These warrants were exercised in September 2012 in exchange for $150,000 in connection with the Company's offer to all warrant holders to exercise warrants at $0.50 per share instead of the exercise price negotiated on the date of the grant. In February 2013, the 2011 Note, plus a $275,000 convertible original issue discount note were combined into one convertible note agreement, see discussion below.

In December 2011, the Company received short term advances from its Chief Executive Officer, former President and Chief Financial Officer in the amounts of $10,000, $29,380 and $50,000, respectively. The advances bear interest rates of 0.7%, 5.0% and 5.0%, respectively. In addition, as further inducement for the advance from the Chief Financial Officer, the Company approved the reduction in the exercise price of 150,000 options granted to the Chief Financial Officer from $1.95 to $0.60 per share. In connection with this repricing, the expense related to the vesting of these options was increased by $15,067 which will be recognized over the remaining service period. Through June 30, 2013, the Company has made repayments to its Chief Executive Officer, former President and Chief Financial Officer on the notes due these individuals in the amounts of $10,000, $29,380 and $50,000, respectively. As of June 30, 2013, accrued interest due to the CEO and CFO related to these notes amounted to $2,372.

On March 9, 2012, the Company received $105,000 from third parties in exchange for nine month convertible original issue discount notes in the amount of $107,625. The notes bear an annual interest rate of 5% and are convertible into the Company's common stock at the rate of $0.50 per share. In connection with the issuance of the notes, the Company recorded a loan discount related to the intrinsic value of the beneficial conversion feature in the amount of $84,562 which will be amortized to interest expense over the life of the notes. In September 2012, the Company issued new one-year convertible original issue discount notes in the amount of $120,540, bearing annual interest of 12% and convertible at $0.50 per share in exchange for cancellation of the old notes. This modification was not considered a debt extinguishment. In accordance with ASC 470, the Company will recognize a debt discount related to the change in fair value of the embedded conversion option in the amount of $35,138 which will be amortized to interest expense over the life of the convertible notes. For the year ended June 30, 2013, the Company has recognized interest expense of $11,262 and $60,309, respectively, related to the amortization of the original issue discount and the beneficial conversion feature discount.

On March 10, 2012, the Company received $75,000 from a director in exchange for a six month convertible original issue discount note in the amount of $76,875. The note bears an annual interest rate of 5% and is convertible into the Company's common stock at the rate of $0.50 per share. In connection with the issuance of the note, the Company recorded a loan discount related to the intrinsic value of the beneficial conversion feature in the amount of $63,038 was amortized to interest expense over the life of the note. In September 2012, the Company issued a new one-year convertible original issue discount note in the amount of $86,100, bearing annual interest of 12% and convertible at $0.50 per share in exchange for cancellation of the old note. This modification was not considered a debt extinguishment. In accordance with ASC 470, the Company will recognize a debt discount related to the change in fair value of the embedded conversion option in the amount of $24,971 which will be amortized to interest expense over the life of the convertible note. For the year ended June 30, 2013, the Company has recognized interest expense of $8,101 and $44,222, respectively, related to the amortization of the original issue discount and the beneficial conversion feature discount.

On March 29, 2012, the Company received $250,000 from its principal stockholder and accrued interest due this stockholder as of February 18, 2012 of $74,874 was paid by including the interest in a new six month convertible original issue discount note in the amount of $332,996. The note bears an annual interest rate of 5% and is convertible into the Company's common stock at the rate of $0.50 per share. In connection with the issuance of the note, the Company recorded a loan discount related to the intrinsic value of the beneficial conversion feature in the amount of $199,798 and an original issue discount of $8,121 which will be amortized to interest expense over the life of the note. For the period from July 1, 2012 to September 28, 2012 the Company recognized interest expense of $3,972 and $97,703, respectively, related to the amortization of the original issue discount and the beneficial conversion feature discount. On September 28, 2012, the holder elected to convert the note into common stock and was issued 665,992 shares of common stock by the Company.

In August 2012, the Company received $175,000 in exchange for six month convertible original issue discount notes in the amount of $179,375 with two accredited investors. The notes are convertible into common stock at $0.50 per share. The notes bear an annual interest rate of 5% and are convertible into the Company's common stock at the rate of $0.50 per share. In connection with the issuance of the notes, the Company recorded a loan discount related to the intrinsic value of the beneficial conversion feature in the amount of $106,600 and an original issue discount of $4,375 which will be amortized to interest expense over the life of the notes. In February 2013, one note holder was issued 205,000 shares of the Company's common stock in exchange for a note in the amount of $102,500. In addition, the other note holder was issued a new one year original issue discount note for $86,100 convertible at $0.35 per share. The Company recorded an original issue discount of $9,225 and a beneficial conversion feature discount of $4,920 in connection with the new note. The Company recognized interest expense of $7,552 and $4,920, respectively, related to the original issue discount and the beneficial conversion feature discount during the year ended June 30, 2013.

On December 28, 2012, the Company received $250,000 from its principal stockholder in exchange for a one year convertible original issue discount note in the amount of $275,000 (the "2012 Note"). The note bears an annual interest rate of 10% and is convertible into the Company's common stock at the rate of $0.35 per share. In connection with the issuance of the note, the Company recorded a loan discount related to the intrinsic value of the beneficial conversion feature in the amount of $23,571 and an original issue discount of $25,000 which will be amortized to interest expense over the life of the note.

In February 2013, the Company entered into a new convertible note agreement in the amount of $1,997,483, convertible into common stock at a conversion price of $0.35 per share, bearing interest at an annual rate of 7.5% and due on December 31, 2016. This note was issued in exchange for the 2011 Note and the 2012 Note and receipt of $250,000. In connection with the transaction, the Company issued 210,226 shares of common stock in exchange for accrued interest of $73,579 due on the 2011 and 2012 notes resulting in a loss on conversion of interest of $4,204. The exchange of cash and the 2011 and 2012 notes was recorded as a debt extinguishment which resulted in a loss on extinguishment of debt in the amount of $21,311 for the year ended June 30, 2013. Because this convertible debt  instrument contained an embedded beneficial conversion feature, and was extinguished before conversion, the amount of the reacquisition price to be allocated to the repurchased beneficial feature was measured using the intrinsic value of that conversion feature at the extinguishment date and was immaterial.  In connection with the new note agreement, the Company recorded a note discount in the amount of $114,142 related to the beneficial conversion feature of the note calculated using the intrinsic value, of which $15,975 has been amortized as of June 30, 2013.

A summary of notes payable and related discounts as of June 30, 2013 is as follows:

	Principal		Unamortized Discount			Debt, Net of Discount
Third parties
Convertible notes payable	$	206,640	$	(14,477	)	$	192,163
Less current portion		206,640		(14,477	)		192,163
Convertible notes payable, net of current portion	$	-	$	-		$	-
Related parties
Convertible notes payable	$	2,083,583	$	(105,006	)	$	1,978,577
Less current portion		86,100		(6,839	)		79,261
Convertible and non-convertible note payable, net of current portion	$	1,997,483	$	(98,167	)	$	1,899,316

XML

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Jun. 30, 2013

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

GelTech Solutions, Inc., or GelTech, markets the following products: (1) FireIce®, a water enhancing powder that can be utilized both as a fire suppressant in urban firefighting, including underground utility fires, and in wildland firefighting and as a medium-term fire retardant to protect wildlands, structures and firefighters; (2) Emergency Manhole FireIce Delivery System, or EMFIDS, an innovative system designed to deliver FireIce® into a manhole in the event of a fire; (3) FireIce® Home Defense Unit, a system for applying FireIce® to structures to protect them from wildfires; (4) Soil₂O® "Dust Control", our new application which is used for dust mitigation in the aggregate, road construction, mining, as well as, other industries that deal with daily dust control issues; and (5) Soil₂O®, a product which reduces the use of water and is primarily marketed to golf courses, commercial landscapers and the agriculture market.  Our financial statements have been prepared on a going concern basis, and we need to generate sufficient material revenues to support the ongoing business of GelTech.

The corporate office is located in Jupiter, Florida.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its three wholly-owned subsidiaries: FireIce Gel, Inc., GelTech International, Inc. and Weather Tech Innovations, Inc. There has been no activity in Weather Tech Innovations, Inc. and GelTech International, Inc.  All intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

For the purposes of the statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The Company's cash equivalents consist of a brokerage money market account.

Investments in Marketable Securities

The Company may invest in various marketable securities and accounts for such investments in accordance with ASC 320-10.

Certain securities that the Company may invest in may be determined to be non-marketable. Non-marketable securities where the Company owns less than 20% of the investee are accounted for at cost pursuant to ASC 323-10.

Management determines the appropriate classification of its investments at the time of acquisition and reevaluates such determination at each balance sheet date. Trading securities that the Company may hold are treated in accordance with ASC 320-10 with any unrealized gains and losses included in earnings. Available-for-sale securities are carried at fair value, with unrealized gains and losses, net of tax, reported as a separate component of stockholders' equity. Investments classified as held-to-maturity are carried at amortized cost. In determining realized gains and losses, the cost of the securities sold is based on the specific identification method.

The Company periodically reviews its investments in marketable and non-marketable securities and records a reserve for impairment for any securities whose value is considered non-recoverable. The Company's determination of whether a security is other than temporarily impaired incorporates both quantitative and qualitative information. GAAP requires the exercise of judgment in making this assessment for qualitative information, rather than the application of fixed mathematical criteria. The Company considers a number of factors including, but not limited to, the length of time and the extent to which the fair value has been less than cost, the financial condition and near term prospects of the issuer, the reason for the decline in fair value, changes in fair value subsequent to the balance sheet date, and other factors specific to the individual investment. The Company's assessment involves a high degree of judgment and accordingly, actual results may differ materially from the Company's estimates and judgments.

Accounts Receivable

Accounts receivable are customer obligations due under normal trade terms. Senior management reviews accounts receivable on a monthly basis to determine if any receivables will potentially be uncollectible. The Company includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve, in its overall allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

Inventories

Inventories are stated at the lower of cost or market, with cost determined using a first-in, first-out method.

Property and Equipment and Depreciation

Property and equipment is recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of 3 to 7 years. Leasehold improvements are amortized over the lesser of the lease term or the useful life of the improvements. Expenditures for maintenance and repairs are expensed as incurred.

Impairment of Long-Lived Assets

The Company accounts for long-lived assets in accordance with the provisions of ASC 360-10. This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Fair Value of Financial Instruments and Fair Value Measurements

We measure our financial assets and liabilities in accordance with ASC 820 "Fair Value Measurements and Disclosures". For certain of our financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their short maturities. The carrying amount of our convertible and other debt approximates the fair value because the interest rate on those debts do not vary materially from the market rate for similar debt instruments.

Effective July 1, 2008, we adopted accounting guidance for fair value measurements of financial assets and liabilities and adopted the same guidance for non-financial assets and liabilities effective July 1, 2009. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1:

Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2:

Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3:

Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The Company had no financial or non-financial assets or liabilities measured at fair value and subject to this accounting standard as of June 30, 2013 or 2012.

Revenue Recognition

Revenue from sales of products is recognized when persuasive evidence of an arrangement exists, products have been shipped to the customer, economic risk of loss has passed to the customer, the price is fixed or determinable, collection is reasonably assured, and any future obligations of the Company are insignificant.  Revenue is shown net of returns and allowances.  The Company does provide certain customers with the right of return for unsold product.  Sales to these customers are recorded as the customer sells the product, thus removing the right of return.

Products shipped from either our third-party fulfillment companies or our Jupiter, Florida or Irwindale, California locations are shipped FOB shipping point. Normal payment terms are net 30 or net 60 days depending on the arrangement we have with the customer. As such, revenue is recognized when product has been shipped from either the third-party fulfillment company or from the Jupiter, Florida or Irwindale, California locations.

The Company follows the guidance of ASC 605-50-25, "Revenue Recognition, Customer Payments". Accordingly, any incentives received from vendors are recognized as a reduction of the cost of products. Promotional products or samples given to customers or potential customers are recognized as a cost of goods sold.  However, products we utilize to perform demonstrations for potential customers are recorded as a marketing expense in operations.  During the fiscal years ended June 30, 2013 and 2012, these demonstration costs amounted to $10,889 and $50,622, respectively. Cash incentives provided to our customers are recognized as a reduction of the related sale price, and, therefore, are a reduction in sales.

Shipping and Handling Costs

Amounts invoiced to customers for shipping and handling are included in revenues. Shipping and handling costs related to sales of products are included in selling, general and administrative expenses and were $51,943 and $63,726 in 2013 and 2012, respectively.

Research and Development

In accordance with ASC 730-10 expenditures for research and development of the Company's products are expensed when incurred, and are included in operating expenses. The Company recognized research and development costs of $179,158 and $83,707 for the fiscal years ended June 30, 2013 and 2012, respectively.

Advertising

The Company conducts advertising for the promotion of its products and services. In accordance with ASC 720-35, advertising costs are charged to operations when incurred; such amounts aggregated $26,931 in fiscal 2013 and $82,719 in fiscal 2012.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Significant estimates in fiscal 2013 and fiscal 2012 include the allowance for doubtful accounts, depreciation and amortization, valuation of inventories, valuation of the beneficial conversion features associated with convertible notes, valuation of options and warrants granted for services or settlements, valuation of common stock granted for services or for debt conversion, accruals for litigation losses and the valuation of deferred tax assets.

Net Earnings (Loss) per Share

The Company computes net earnings (loss) per share in accordance with ASC 260-10. ASC 260-10 requires presentation of both basic and diluted earnings per share ("EPS") on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. For the years ended June 30, 2013 and 2012, there was no separate computation of dilutive net loss per share since the common stock equivalents outstanding were anti-dilutive due to the net losses. At June 30, 2013 there were options to purchase 8,097,840 shares and warrants to purchase 1,883,700 shares of common stock outstanding which may dilute future earnings per share. In addition, there are 6,336,267 shares reserved for issuance related to convertible note agreements.

Stock-Based Compensation

 The Company accounts for stock-based compensation in accordance with ASC 718-10 "Compensation - Stock Compensation" which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options, restricted stock units, and  stock appreciation rights are based on estimated fair values. Stock option compensation expense recognized under ASC 718-10 for the years ended June 30, 2013 and 2012 was $1,497,534 and $1,371,519, respectively, related to employee, director and advisory board stock options, and is included in selling, general and administrative expenses in the consolidated statements of operations. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. At June 30, 2013, the total compensation cost for stock options not yet recognized was $1,752,879. This cost will be amortized on a straight-line basis over the remaining requisite service period of the options.

The Company accounts for non-employee stock based awards at fair value in accordance with the measurement and recognition criteria of ASC 505-50 "Equity Based payments to Non-Employees. Stock based compensation to non-employees recognized for the years ended June 30, 2013 and 2012 was $-0- and $322,850, respectively.

2007 Equity Incentive Plan

In January 2007, the Company established the 2007 Equity Incentive Plan under which provided for the issuance of up to 1,500,000 stock options, stock appreciation rights, restricted stock or restricted stock units to our directors, employees and consultants. In September 2008, the Board of Directors approved an amendment to the Company's 2007 Equity Incentive Plan to increase the number of shares authorized by the plan from 1,500,000 to 3,500,000.  In fiscal 2012, Board of Directors increased the number of share authorized under the Plan to 4,500,000.  In June 2013, the Board of Directors approved an amendment to increase the number of shares authorized by the plan to 15,000,000.

Under the Equity Incentive Plan, all directors who are not employees or own 10% or more of the Company's outstanding stock at the time of grant shall automatically receive a grant of stock options as follows:

Initial Grants

A - Chairman of the Board

- 50,000 options

B - Director

- 30,000 options

C - Chair of a Committee

- 10,000 options

D - Member of a Committee

- 5,000 options

In June 2013, the Board of Directors increased the annual grants to the following amounts:

Annual Grants

A - Chairman of the Board

- 70,000 options

B - Director

- 100,000 options

C - Chair of a Committee

- 200,000 options

D - Member of a Committee

- 10,000 options

All initial grants of options to new non-employee directors and committee members vest annually over a three year period on the anniversary date of the grant, subject to continuing service as a director, Committee member, Chairman of the Board or Chairman of a Committee on the applicable vesting date. Options automatically granted annually under the 2007 Equity Incentive Plan vest the following June 30th, subject to continuing service as a director. Because our Chairman of the Board is an employee, he is not eligible for a grant. The exercise price of options or stock appreciation rights granted under the 2007 Equity Incentive Plan shall not be less than the fair market value of the underlying common stock at the time of grant. In the case of incentive stock options, the exercise price may not be less than 110% of the fair market value in the case of 10% shareholders. Options and stock appreciation rights granted under the 2007 Equity Incentive Plan shall expire no later than ten years after the date of grant. The option price may be paid in United States dollars by check or wire transfer or, at the discretion of the Board of Directors or Compensation Committee, by delivery of shares of our common stock having fair market value equal as of the date of exercise to the cash exercise price, or a combination thereof.

The identification of individuals entitled to receive awards, the terms of the awards, and the number of shares subject to individual awards, are determined by the Board of Directors or the Compensation Committee, in their sole discretion. The purchase price per share, if applicable, shall be adjusted for any increase or decrease in the number of issued shares resulting from a recapitalization, reorganization, merger, consolidation, exchange of shares, stock dividend, stock split, reverse stock split, or other subdivision or consolidation of shares.

The Board of Directors or the Compensation Committee may from time to time alter, amend, suspend, or discontinue the Equity Incentive Plan with respect to any shares as to which awards of stock rights have not been granted. However no rights granted with respect to any awards under this Equity Incentive Plan before the amendment or alteration shall be impaired by any such amendment, except with the written consent of the grantee. Under the terms of the Equity Incentive Plan, the Board of Directors or the Compensation Committee may also grant awards which will be subject to vesting under certain conditions. The vesting may be time-based or based upon meeting performance standards, or both.

In April 2010, the Company amended the 2007 Equity Incentive Plan to increase the number of stock options granted annually to directors from 20,000 to 50,000.  In June 2013, the Company amended the 2007 Equity Incentive Plan to increase the number of stock options granted annually to directors to 100,000.

All of our Stock Option Agreements provide for "clawback" provisions, which enable our Board of Directors to cancel stock awards and recover past profits if the person is dismissed for cause or commits certain acts which harm us.

Determining Fair Value Under ASC 718-10

The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Company's determination of fair value using an option-pricing model is affected by the stock price as well as assumptions regarding the number of highly subjective variables.

Income Taxes

The Company accounts for income taxes pursuant to the provisions of ASC 740-10, "Accounting for Income Taxes," which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

The Company follows the provisions of the ASC 740 -10 related to, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.

Effective July 1, 2007, the Company adopted ASC 740-10-25 Definition of Settlement, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. As of June 30, 2013, the fiscal tax years ended June 30, 2010, 2011 and 2012 are still subject to audit.

Legal Costs and Contingencies

In the normal course of business, the Company incurs costs to hire and retain external legal counsel to advise it on regulatory, litigation and other matters. The Company expenses these costs as the related services are received.

If a loss is considered probable and the amount can be reasonably estimated, the Company recognizes an expense for the estimated loss. If the Company has the potential to recover a portion of the estimated loss from a third party, the Company makes a separate assessment of recoverability and reduces the estimated loss, if recovery is also deemed probable.

New Accounting Pronouncements

ASUs which were not effective until after June 30, 2013 are not expected to have a significant effect on the Company's consolidated financial position or results of operations.

XML

SUBSEQUENT EVENTS (Details) (USD $)	0 Months Ended		1 Months Ended				2 Months Ended	12 Months Ended		1 Months Ended	12 Months Ended		3 Months Ended	1 Months Ended		12 Months Ended		1 Months Ended	12 Months Ended	1 Months Ended			12 Months Ended	1 Months Ended	12 Months Ended	1 Months Ended		2 Months Ended	1 Months Ended	2 Months Ended	1 Months Ended	12 Months Ended		1 Months Ended
	Sep. 15, 2013	Aug. 15, 2013	Aug. 30, 2013	Mar. 31, 2013	Jan. 31, 2012	Sep. 20, 2011	Aug. 30, 2013	Jun. 30, 2013	Jun. 30, 2012	Jul. 31, 2013 Private Placement [Member]	Jun. 30, 2013 Private Placement [Member]	Jun. 30, 2012 Private Placement [Member]	Jun. 30, 2012 Lincoln Park Capital Fund, LLC. [Member]	Sep. 15, 2013 Lincoln Park Capital Fund, LLC. [Member] Common Stock Purchase Agreement [Member]	Jan. 05, 2012 Lincoln Park Capital Fund, LLC. [Member] Common Stock Purchase Agreement [Member]	Jun. 30, 2013 Lincoln Park Capital Fund, LLC. [Member] Common Stock Purchase Agreement [Member]	Jun. 30, 2012 Lincoln Park Capital Fund, LLC. [Member] Common Stock Purchase Agreement [Member]	Jul. 31, 2013 Chief Executive Officer [Member]	Jun. 30, 2013 Chief Executive Officer [Member] Private Placement [Member]	Jul. 31, 2013 Chief Financial Officer [Member]	Dec. 31, 2011 Chief Financial Officer [Member]	Jul. 31, 2013 Chief Technology Officer [Member]	Jun. 30, 2013 Chief Technology Officer [Member] Private Placement [Member]	Jul. 31, 2013 Chief Operating Officer [Member]	Jun. 30, 2013 Chief Operating Officer [Member] Private Placement [Member]	Jul. 31, 2013 Director [Member]	Dec. 31, 2011 Director [Member]	Aug. 30, 2013 Director [Member]	Sep. 30, 2012 Chief Executive Officer And Chief Technology Officer Father [Member]	Aug. 30, 2013 Investor [Member]	Sep. 30, 2012 Employee Stock Option [Member]	Jun. 30, 2013 Employee Stock Option [Member]	Jun. 30, 2012 Employee Stock Option [Member]	Feb. 08, 2013 Employee Stock Option [Member] President [Member]	Jun. 30, 2012 Employee Stock Option [Member] President [Member]	Dec. 31, 2011 Employee Stock Option [Member] Chief Financial Officer [Member]	Jun. 03, 2011 Employee Stock Option [Member] Chief Financial Officer [Member]	Jul. 31, 2013 Employee Stock Option [Member] Director [Member]	Jun. 30, 2013 Employee Stock Option [Member] Director [Member]	Jul. 31, 2012 Employee Stock Option [Member] Director [Member]	Dec. 31, 2011 Employee Stock Option [Member] Director [Member]	Jul. 31, 2011 Employee Stock Option [Member] Director [Member]	Sep. 30, 2012 Employee Stock Option [Member] Chief Executive Officer And Chief Technology Officer Father [Member]
Subsequent Event [Line Items]
Granted						525,000				29,412																50,000			70,000			4,622,500	675,000	112,500	50,000		150,000	370,000		230,000		245,000	70,000
Proceeds from exercise of stock options							$ 43,200	$ 6,534	$ 75,835																														$ 6,534			$ 30,000
Exercised options, exercise price				$ 1.57	$ 1.5			$ 0.50													$ 0.60						$ 0.50	$ 0.96		$ 1.25	$ 0.50										$ 0.667	$ 1
Granted, exercise price										$ 1.25								$ 1.30		$ 1.30		$ 1.30				$ 1.30						$ 0.55	$ 0.75	$ 0.39	$ 0.74	$ 0.60	$ 1.95	$ 0.99		$ 0.91		$ 1.75	$ 0.63
Immediately recognized percentage																										100.00%
Share based compensation, term																																		10 years	3 years		10 years	10 years		10 years		10 years
Warrants issued, volatility rate																								91.46%										89.67%	91.39%		90.60%	93.11%		91.04%		89.65%	90.09%
Expected term, simplified method																								5 years		5 years								9.42	1.5		6.5	5.5		5.5		6.5	4.0
Discount rate																								1.40%		1.37%								0.93%	0.23%		2.11%	1.52%		0.82%		2.35%	0.53%
Common shares issued							40,000			289,941	3,914,321	1,143,400	686,082	342,946	316,667	1,333,820	1,002,749		241,279				241,279		1,910,714														11,667		5,000	30,000
Proceeds from issuance of common stock								1,658,000	1,181,700	275,000			510,000	390,000	100,000		610,000
Repayments of related party debt	86,100							84,380	5,000
Repayments of Convertible Debt		86,100	30,000
Terms of conversion feature																		The options have an exercise price of $1.30 per share and vest 50% upon the market value of the Company's common stock trading at or greater than $2.00 per share for any 10 day period out of a 30 day trading period and the other 50% vesting upon the market value of the Company's common stock trading at or greater than $3.00 per share for any 10 day period out of a 30 day trading period.		The options have an exercise price of $1.30 per share and vest 50% upon the market value of the Company's common stock trading at or greater than $2.00 per share for any 10 day period out of a 30 day trading period and the other 50% vesting upon the market value of the Company's common stock trading at or greater than $3.00 per share for any 10 day period out of a 30 day trading period.		The options have an exercise price of $1.30 per share and vest 50% upon the market value of the Company's common stock trading at or greater than $2.00 per share for any 10 day period out of a 30 day trading period and the other 50% vesting upon the market value of the Company's common stock trading at or greater than $3.00 per share for any 10 day period out of a 30 day trading period.
Proceeds from private placement											1,958,000	571,700				810,003			280,000				280,000		950,000
Proceeds from sale of stock and warrants through private placements								300,000
Convertible note conversions, shares		234,663	8,880																					500,000
Exercise price of shares called by warrants																								1.00
Loss on warrant repricing					11,919			70,491	17,753																		5,834
Shares issued for services, shares																		250,000		250,000		250,000
Term of securities issued																		10 years		10 years		10 years
Volatility																		93.11%		93.11%		93.11%
Estimated life																		6 years 6 months		6 years 6 months		6 years 6 months
Discount rate																		2.62%		2.62%		2.62%
Immediately vested shares																																					50,000						35,000
Proceeds from issuance of debt																								1,000,000
Convertible note, conversion price																								$ 1.30
Discount for beneficial conversion																								304,257
Fair value																								$ 311,949										$ 43,875		$ 15,067	$ 224,778					$ 311,001	$ 28,358
Issued note, interest rate																								7.50%
Number of accredited investors										5	13	34

XML

INCOME TAXES (Schedule of Deferred Tax Assets and Liabilities) (Details) (USD $)	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
INCOME TAXES [Abstract]
Net operating loss carryforward	$ 8,817,486	$ 7,357,047
Allowance for bad debt	15,250	1,042
Stock-based compensation	1,304,426	800,329
Less: Deferred tax liability - depreciation	(9,557)	(61,063)
Net deferred tax assets	10,127,605	8,097,355
Less valuation allowance	(10,127,605)	(8,097,355)
Net deferred tax asset
Net operating loss carryforwards	23,432,064
Operating loss carry-forward expiration date	Jun. 30, 2033
Increase in valuation allowance	$ 2,030,250

XML

CONVERTIBLE AND NON-CONVERTIBLE NOTE AGREEMENTS (Schedule of Debt) (Details) (USD $)	Jun. 30, 2013	Jun. 30, 2012
Third Party
Convertible notes payable, principal	$ 206,640
Convertible notes payable, unamortized discount	(14,477)
Convertible notes payable, net	192,163
Less current portion, principal	206,640
Less current portion, unamortized discount	(14,477)
Less current portion, net	192,163	74,214
Convertible notes payable, net of current portion, principal
Convertible notes payable, net of current portion, unamortized discount
Convertible notes payable, net of current portion, net
Related Party
Convertible notes payable, related, principal	2,083,583
Convertible notes payable, related, unamortized discount	(105,006)
Convertible notes payable, related, net	1,978,577
Less current portion, related, principal	86,100
Less current portion, related, unamortized portion	(6,839)
Less current portion, related, net	79,261
Convertible and nonconvertible note payable, net of current portion, principal	1,997,483
Convertible and nonconvertible note payable, net of current portion, unamortized discount	(98,167)
Convertible and nonconvertible note payable, net of current portion, net	$ 1,899,316	$ 1,497,483

XML

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policy)

12 Months Ended

Jun. 30, 2013

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Nature of Operations

Nature of Operations

GelTech Solutions, Inc., or GelTech, markets the following products: (1) FireIce®, a water enhancing powder that can be utilized both as a fire suppressant in urban firefighting, including underground utility fires, and in wildland firefighting and as a medium-term fire retardant to protect wildlands, structures and firefighters; (2) Emergency Manhole FireIce Delivery System, or EMFIDS, an innovative system designed to deliver FireIce® into a manhole in the event of a fire; (3) FireIce® Home Defense Unit, a system for applying FireIce® to structures to protect them from wildfires; (4) Soil₂O® "Dust Control", our new application which is used for dust mitigation in the aggregate, road construction, mining, as well as, other industries that deal with daily dust control issues; and (5) Soil₂O®, a product which reduces the use of water and is primarily marketed to golf courses, commercial landscapers and the agriculture market.  Our financial statements have been prepared on a going concern basis, and we need to generate sufficient material revenues to support the ongoing business of GelTech.

The corporate office is located in Jupiter, Florida.

Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its three wholly-owned subsidiaries: FireIce Gel, Inc., GelTech International, Inc. and Weather Tech Innovations, Inc. There has been no activity in Weather Tech Innovations, Inc. and GelTech International, Inc.  All intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and Cash Equivalents

For the purposes of the statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The Company's cash equivalents consist of a brokerage money market account.

Investments in Marketable Securities

Investments in Marketable Securities

The Company may invest in various marketable securities and accounts for such investments in accordance with ASC 320-10.

Certain securities that the Company may invest in may be determined to be non-marketable. Non-marketable securities where the Company owns less than 20% of the investee are accounted for at cost pursuant to ASC 323-10.

Management determines the appropriate classification of its investments at the time of acquisition and reevaluates such determination at each balance sheet date. Trading securities that the Company may hold are treated in accordance with ASC 320-10 with any unrealized gains and losses included in earnings. Available-for-sale securities are carried at fair value, with unrealized gains and losses, net of tax, reported as a separate component of stockholders' equity. Investments classified as held-to-maturity are carried at amortized cost. In determining realized gains and losses, the cost of the securities sold is based on the specific identification method.

The Company periodically reviews its investments in marketable and non-marketable securities and records a reserve for impairment for any securities whose value is considered non-recoverable. The Company's determination of whether a security is other than temporarily impaired incorporates both quantitative and qualitative information. GAAP requires the exercise of judgment in making this assessment for qualitative information, rather than the application of fixed mathematical criteria. The Company considers a number of factors including, but not limited to, the length of time and the extent to which the fair value has been less than cost, the financial condition and near term prospects of the issuer, the reason for the decline in fair value, changes in fair value subsequent to the balance sheet date, and other factors specific to the individual investment. The Company's assessment involves a high degree of judgment and accordingly, actual results may differ materially from the Company's estimates and judgments.

Accounts Receivable

Accounts Receivable

Accounts receivable are customer obligations due under normal trade terms. Senior management reviews accounts receivable on a monthly basis to determine if any receivables will potentially be uncollectible. The Company includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve, in its overall allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

Inventories

Inventories

Inventories are stated at the lower of cost or market, with cost determined using a first-in, first-out method.

Property and Equipment and Depreciation

Property and Equipment and Depreciation

Property and equipment is recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of 3 to 7 years. Leasehold improvements are amortized over the lesser of the lease term or the useful life of the improvements. Expenditures for maintenance and repairs are expensed as incurred.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company accounts for long-lived assets in accordance with the provisions of ASC 360-10. This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Fair Value of Financial Instruments and Fair Value Measurements

Fair Value of Financial Instruments and Fair Value Measurements

We measure our financial assets and liabilities in accordance with ASC 820 "Fair Value Measurements and Disclosures". For certain of our financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their short maturities. The carrying amount of our convertible and other debt approximates the fair value because the interest rate on those debts do not vary materially from the market rate for similar debt instruments.

Effective July 1, 2008, we adopted accounting guidance for fair value measurements of financial assets and liabilities and adopted the same guidance for non-financial assets and liabilities effective July 1, 2009. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1:

Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2:

Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3:

Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The Company had no financial or non-financial assets or liabilities measured at fair value and subject to this accounting standard as of June 30, 2013 or 2012.

Revenue Recognition

Revenue Recognition

Revenue from sales of products is recognized when persuasive evidence of an arrangement exists, products have been shipped to the customer, economic risk of loss has passed to the customer, the price is fixed or determinable, collection is reasonably assured, and any future obligations of the Company are insignificant.  Revenue is shown net of returns and allowances.  The Company does provide certain customers with the right of return for unsold product.  Sales to these customers are recorded as the customer sells the product, thus removing the right of return.

Products shipped from either our third-party fulfillment companies or our Jupiter, Florida or Irwindale, California locations are shipped FOB shipping point. Normal payment terms are net 30 or net 60 days depending on the arrangement we have with the customer. As such, revenue is recognized when product has been shipped from either the third-party fulfillment company or from the Jupiter, Florida or Irwindale, California locations.

The Company follows the guidance of ASC 605-50-25, "Revenue Recognition, Customer Payments". Accordingly, any incentives received from vendors are recognized as a reduction of the cost of products. Promotional products or samples given to customers or potential customers are recognized as a cost of goods sold.  However, products we utilize to perform demonstrations for potential customers are recorded as a marketing expense in operations.  During the fiscal years ended June 30, 2013 and 2012, these demonstration costs amounted to $10,889 and $50,622, respectively. Cash incentives provided to our customers are recognized as a reduction of the related sale price, and, therefore, are a reduction in sales.

Shipping and Handling Costs

Shipping and Handling Costs

Amounts invoiced to customers for shipping and handling are included in revenues. Shipping and handling costs related to sales of products are included in selling, general and administrative expenses and were $51,943 and $63,726 in 2013 and 2012, respectively.

Research and Development

Research and Development

In accordance with ASC 730-10 expenditures for research and development of the Company's products are expensed when incurred, and are included in operating expenses. The Company recognized research and development costs of $179,158 and $83,707 for the fiscal years ended June 30, 2013 and 2012, respectively.

Advertising

Advertising

The Company conducts advertising for the promotion of its products and services. In accordance with ASC 720-35, advertising costs are charged to operations when incurred; such amounts aggregated $26,931 in fiscal 2013 and $82,719 in fiscal 2012.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Significant estimates in fiscal 2013 and fiscal 2012 include the allowance for doubtful accounts, depreciation and amortization, valuation of inventories, valuation of the beneficial conversion features associated with convertible notes, valuation of options and warrants granted for services or settlements, valuation of common stock granted for services or for debt conversion, accruals for litigation losses and the valuation of deferred tax assets.

Net Earnings (Loss) per Share

Net Earnings (Loss) per Share

The Company computes net earnings (loss) per share in accordance with ASC 260-10. ASC 260-10 requires presentation of both basic and diluted earnings per share ("EPS") on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. For the years ended June 30, 2013 and 2012, there was no separate computation of dilutive net loss per share since the common stock equivalents outstanding were anti-dilutive due to the net losses. At June 30, 2013 there were options to purchase 8,097,840 shares and warrants to purchase 1,883,700 shares of common stock outstanding which may dilute future earnings per share. In addition, there are 6,336,267 shares reserved for issuance related to convertible note agreements.

Stock-Based Compensation

Stock-Based Compensation

 The Company accounts for stock-based compensation in accordance with ASC 718-10 "Compensation - Stock Compensation" which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options, restricted stock units, and  stock appreciation rights are based on estimated fair values. Stock option compensation expense recognized under ASC 718-10 for the years ended June 30, 2013 and 2012 was $1,497,534 and $1,371,519, respectively, related to employee, director and advisory board stock options, and is included in selling, general and administrative expenses in the consolidated statements of operations. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. At June 30, 2013, the total compensation cost for stock options not yet recognized was $1,752,879. This cost will be amortized on a straight-line basis over the remaining requisite service period of the options.

The Company accounts for non-employee stock based awards at fair value in accordance with the measurement and recognition criteria of ASC 505-50 "Equity Based payments to Non-Employees. Stock based compensation to non-employees recognized for the years ended June 30, 2013 and 2012 was $-0- and $322,850, respectively.

Income Taxes

Income Taxes

The Company accounts for income taxes pursuant to the provisions of ASC 740-10, "Accounting for Income Taxes," which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

The Company follows the provisions of the ASC 740 -10 related to, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.

Effective July 1, 2007, the Company adopted ASC 740-10-25 Definition of Settlement, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. As of June 30, 2013, the fiscal tax years ended June 30, 2010, 2011 and 2012 are still subject to audit.

Legal Costs and Contingencies

Legal Costs and Contingencies

In the normal course of business, the Company incurs costs to hire and retain external legal counsel to advise it on regulatory, litigation and other matters. The Company expenses these costs as the related services are received.

If a loss is considered probable and the amount can be reasonably estimated, the Company recognizes an expense for the estimated loss. If the Company has the potential to recover a portion of the estimated loss from a third party, the Company makes a separate assessment of recoverability and reduces the estimated loss, if recovery is also deemed probable.

New Accounting Pronouncements

New Accounting Pronouncements

ASUs which were not effective until after June 30, 2013 are not expected to have a significant effect on the Company's consolidated financial position or results of operations.

XML

RELATED PARTY TRANSACTIONS

12 Months Ended

Jun. 30, 2013

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

9.

RELATED PARTY TRANSACTIONS

In addition to the Chief Executive Officer (CEO) and the Chief Technology Officer (CTO) the following related parties are employed at GelTech:

· the CEO's wife as a bookkeeper at $1,400 per week,

· The CEO and CTO's father is a researcher at $2,200 per week, and

· The CEO and CTO's mother as a receptionist at $600 per week.

The Company has employment arrangements with its executive officers which are described in Note 10.

The Company has entered into a series of credit facilities with its largest principal stockholder as more fully described in Note 6.

In December 2011, the Company issued 441,177 shares of common stock to a director in settlement of a loan amount due to the director by the Company's predecessor company. The fair value of the shares issued was $300,000, calculated using the closing price on the date of the settlement, and was recorded as a loss on settlement. As further inducement to enter into the settlement, the Company offered to reduce the exercise price of warrants held by the director from $1.50 to $0.50 per share if the director exercised the options within a short period of time. The Company issued an additional 130,000 shares of common stock to the director in exchange for $65,000 in connection with the preceding offer. As a result, the Company recognized a loss on warrant repricing of $5,834 in other income (loss), representing the difference between the market value of the warrants exercised at an exercise price of $1.50 per share and the market value at the new exercise price of $0.50 per share.

In December 2011, the Company received short term advances from its Chief Executive Officer, its former President and its Chief Financial Officer in the amounts of $10,000, $29,380 and $50,000, respectively. The advances bore interest rates of 0.7%, 5.0% and 5.0%, respectively. In addition, as further inducement for the advance from the Chief Financial Officer, the Company approved the reduction in the exercise price of 150,000 options granted to the Chief Financial Officer from $1.95 to $0.60 per share. In connection with this repricing, the expense related to the vesting of these options was increased by $15,067 which will be recognized over the remaining service period. As of June 30, 2013, all amounts due under these notes have been repaid.

In September 2012,  the Company granted options to purchase 70,000 shares of the Company's common stock to the father of the Company's CEO and CTO as more fully described in Note 7.

In September 2012, the Company granted warrants to purchase 350,000 shares of the Company's common stock to a director as more fully described in Note 7.

Effective February 8, 2013, the Company's President and Director resigned from the Company to pursue other opportunities. In connection with his separation, the Company agreed to pay the former President $150,000 plus COBRA payments over 14 months. In addition, the Company agreed to issue the former President ten year fully vested options to purchase 112,500 shares of the Company's common stock at an exercise price of $0.39 per share, subject to a lockup agreement for the option shares and the other shares he currently owns. In addition, options and stock appreciation rights to purchase 2,125,000 shares of the Company's common stock at exercise prices from $0.45 to $1.22 per share, previously issued to him, were cancelled. The Company recognized a severance expense of $168,920 for the year ended June 30, 2013 representing the total liability to the Company under the severance agreement. As of June 30, 2013, the remaining liability under the agreement amounted to $102,056.

XML

FURNITURE, FIXTURES AND EQUIPMENT (Tables)

12 Months Ended

Jun. 30, 2013

FURNITURE, FIXTURES AND EQUIPMENT [Abstract]

Schedule of Furniture, Fixtures and Equipment

Furniture, fixtures and equipment consisted of the following as of June 30, 2013 and 2012:

	Estimated	June 30,
	Useful Life	2013			2012
Equipment	3 - 5 years	$	88,875		$	69,538
Storage facilities	3 years		20,802			19,717
Vehicles	5 - 7 years		164,232			189,897
Furniture and fixtures	5 years		20,420			20,420
			294,329			299,572
Accumulated depreciation			(136,145	)		(110,793	)
		$	158,184		$	188,779

XML

ACCOUNTS RECEIVABLE (Tables)

12 Months Ended

Jun. 30, 2013

ACCOUNTS RECEIVABLE [Abstract]

Schedule of Accounts Receivable

Accounts receivable at June 30, 2013 and 2012 was as follows:

	2013			2012
Accounts receivable	$	70,062		$	95,685
Allowance for doubtful accounts		(32,785	)		(40,525	)
	$	37,277		$	55,160

XML

Document and Entity Information (USD $)	12 Months Ended
	Jun. 30, 2013	Sep. 23, 2013	Dec. 31, 2012
Document and Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Entity Registrant Name	GelTech Solutions, Inc.
Entity Central Index Key	0001403676
Current Fiscal Year End Date	--06-30
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 5,700,000
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2013
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		34,001,101

XML

INVENTORIES (Tables)

12 Months Ended

Jun. 30, 2013

INVENTORIES [Abstract]

Schedule of Inventories

Inventories consisted of the following at June 30, 2013 and 2012:

	2013		2012
Finished goods	$	333,987	$	364,630
Raw materials		254,716		181,488
	$	588,703	$	546,118