Note 4.

Warrants

In connection with the public offering in August 2013 we issued 2,200,000 warrants to purchase 2,200,000 shares of our common stock ("A Warrants") and an additional 2,200,000 warrants to purchase 1,100,000 shares of our common stock ("B Warrants"). Additionally we issued 330,000 A warrants to purchase 330,000 shares of common stock and 330,000 B warrants to purchase 165,000 of common stock to the underwriters in connection with the public offering. Each A Warrant is exercisable on or before August 16, 2018 for one share of common stock at an exercise price of $2.75 per share and two B Warrants were exercisable on or before May 16, 2014 for one share of common stock at an exercise price of $2.50 per share. Also, in connection with the public offering we issued 154,000 representative warrants to purchase 154,000 shares of common stock at an exercise price of $3.125 to the underwriters. The representative warrants were exercisable beginning May 16, 2014 and expire on August 16, 2016.

As of June 30, 2014 we received gross proceeds of $4,734,000 and incurred $175,000 of expenses related to the exercise of warrants. A summary of warrant activity for the nine months ended June 30, 2014 is presented in the following table:


	Number of Shares	Weighted Average Exercise Price Per Share
Outstanding at October 1, 2013	3,949,000	$2.68
Expired	(34,650)	$2.50
Exercised	(1,833,250)	$2.61
Outstanding at June 30, 2014	2,081,100	$2.78
Outstanding and exercisable at June 30, 2014	2,081,100	$2.78