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Note 6. Other Liabilities
12 Months Ended
Jun. 30, 2012
Other Liabilities Disclosure [Text Block]
6.     OTHER LIABILITIES:

During the year ended June 30, 2011, the Company entered into subscription agreements to sell 2011 UNITS for $2.50 each, with each 2011 UNIT consisting of one share (the “2011 Share”) of the Company’s restricted common stock and one warrant (the “2011 Warrant”) to purchase one half of a common share for $3.00 per 2011 Share until December 31, 2016 (collectively the 2011 Shares and the 2011 Warrant are the 2011 UNITS).  As of June 30, 2011, the Company had issued 306,000 2011 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 year ended June 30, 2012, the Company issued an additional 110,000 2011 UNITS for proceeds of $275,000, bringing the total proceeds from the sale of 2011 UNITS through June 30, 2012 to $1,040,000.

The 2011 UNIT holders, at their election, had 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 2011 Shares issued in the 2011 UNITS would be cancelled, but the 2011 UNIT holder retains the 2011 Warrants previously purchased.

The Company determined that the issuance of 2011 UNITS created a liability due to the option provision. The Company allocated the proceeds from the 2011 UNITS to the 2011 Shares and the 2011 Warrants based upon their relative fair values using the share price of the 2011Shares on the day each of the subscription agreements were entered into and the fair value of the 2011 Warrants, which was determined to be $0.20 per 2011 Warrant.  As a result, $37,175 ($9,526 during the year ended June 30, 2012) was allocated to the 2011 Warrants, which was recorded as additional paid-in capital and $1,009,389 was allocated to the liability.  During March 2012, the Company provided the 2011 UNIT holders the option to amend their subscription agreements to apply the amount paid for the 2011 UNITS against the Company’s 2012 A UNIT offering.  The Company’s 2012 A UNIT offering, for $2.50 each, consisted of one share (the “2012 A Share”) of the Company’s restricted common stock and one warrant (the “2012 A Warrant”) to purchase one half of a Share for $3.10 per Share until December 31, 2014 (collectively the 2012 A Shares and the 2012 A Warrants are the “2012 A UNITS”).  All of the 2011 UNIT holders, including Mr. Bassani and Mr. Smith, elected to amend their subscription agreements and as the 2011 UNIT and 2012 A UNIT prices were both $2.50 per unit, the net effect of the amendments was the issuance of an additional 208,000 warrants and the reclassification of other liabilities of $1,029,861 to additional paid in capital. Mr. Bassani and Mr. Smith each received 30,000 additional warrants pursuant to their elections. The Company allocated the proceeds from the 2012 A UNITS to the 2012 A Shares and the 2012 A Warrants based upon their relative fair values using the share price of the 2012 A Shares on the day each of the subscription agreements were amended and the fair value of the 2012 A Warrants, which was determined to be $0.10 per warrant.  As a result, $20,472 was allocated to the 2012 A Warrants, which was recorded as interest expense.