XML 29 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
Other Liabilities
6 Months Ended
Dec. 31, 2011
Other Liabilities [Abstract]  
Other Liabilities

7. OTHER LIABILITIES:

During the year ended June 30, 2011, the Company entered into subscription agreements to sell Units of its securities for $2.50 per Unit, with each Unit consisting of one share (the "Share") of the Company's restricted common stock and one warrant (the "Warrant") to purchase one half of a Share for $3.00 per Share until December 31, 2016 (collectively the Share and the Warrant are the "Units"). As of June 30, 2011, the Company had issued 306,000 Units for total proceeds of $765,000, comprised of $565,000 in cash and $200,000 in subscriptions receivable, which were collected in July 2011. During the six months ended December 31, 2011, the Company issued an additional 110,000 Units for proceeds of $275,000, bringing the total proceeds from the sale of Units through December 31, 2011 to $1,040,000.

The Unit holders, at their election, have the option to participate in the purchase of the Company's securities at the price of the Company's next private offering, by amending their subscription agreement to apply the purchase price to such purchase. In the event of such election, the Shares issued in the Units will be cancelled, but the Unit holder will keep the Warrants purchased in the Units.

The Company determined that the issuance of Units created a liability due to the option provision. The Company allocated the value of the Shares and the Warrants based upon their relative fair value of the total value of the issuances using the share price of the Shares on the day each of the subscription agreements were entered into and the fair value of the Warrants, which was determined to be $0.20 per Warrant. As a result, $37,175 ($9,526 during the six months ended December 31, 2011) was allocated to the Warrants, which was recorded as additional paid-in capital and $1,009,389 was allocated to the liability as of December 31, 2011. The liability will become equity once the option to participate in the Company's next private offering is exercised or expires.