On May 30, 2013, the Company issued common stock upon exercise of an employee stock option. The employee utilized a cashless conversion of 94,442 options, discussed in Note 5.

On June 21, 2013, the Company issued common stock upon exercise of an investor warrant. The investor utilized a cashless conversion of 210,600 warrants, discussed in Note 5.

Effective June 26, 2013, the Company issued warrants to purchase up to 13,004,316 shares of common stock to the holders of the Secured Notes. The warrants have a five-year term. The exercise price of the warrants is $0.715 per share. The warrants were valued using a binomial option pricing model. The calculated fair value of the warrants was $1,781,592. See Note 3.

Effective June 26, 2013, the Company issued warrants to purchase up to 844,444 shares of common stock to the private placements agents involved in the June 26, 2013 private placement transaction. The warrants were valued using the Black-Scholes option pricing model; the expected volatility was approximately 32% and the risk-free interest rate was approximately 1%, which resulted in a calculated fair value of $152,000.

Effective June 26, 2013, the Company issued a warrant to purchase 375,000 shares of common stock to the holder of the Company’s convertible promissory note dated December 31, 2012, in connection with the June 26, 2013 private placement transaction. The warrant has a five-year term. The exercise price of the warrant is $0.715 per share. The warrant was valued using the Black-Scholes option pricing model; the expected volatility was approximately 32% and the risk-free interest rate was approximately 1%, which resulted in a calculated fair value of $67,500.

No options expired or were cancelled during the three months ended September 30, 2013. During the six months ended September 30, 2013, approximately 5,600 options were cancelled. The options had an exercise price of $0.19. During the three months ended September, 30, 2013, 100,000 of investor warrants expired. The warrants had an exercise price of $0.30. During the six months ended September 30, 2013, 225,000 of investor warrants expired. The warrants had an exercise price of $0.30.

On July 15, 2013, the Company issued a stock option to a new employee under the Company’s equity incentive plan to purchase up to 150,000 shares of common stock. The option has a ten-year term. The exercise price of the option is $0.51 per share. The option was valued using a Black Scholes model. The calculated fair value of the options was $73,500.

The Company recorded $145,871 of share based compensation expense during the six months ended September 30, 2013. The following summarizes outstanding stock options at September 30, 2013:

	Number of Stock Options		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number of Stock Options Vested
Non-Plan Stock Options		100,714	.10 Years	$	41.27	100,714

2009 Equity Incentive Plan		6,773,582	5.44 Years	$	0.34	5,398,706

	Warrant Shares	Exercise Price Per Share		Date Issued	Expiration Date
Biosyn Warrants	4,105	$	57.97 - $173.92	October 22, 2004	January 4, 2014
Old Adamis Warrants	1,000,000	$	0.50	November 15, 2007	November 15, 2015
Consultant Warrants	10,800	$	0.20	January 29, 2010	January 29, 2015
2013 Private Placement	14,223,763		0.715	June 26, 2013	June 25, 2018
Consultant Warrants	300,000	$	0.22	July 11, 2011	July 11, 2016

Total Warrants	15,538,668

At September 30, 2013, the Company has reserved shares of common stock for issuance upon exercise of outstanding options and warrants, and options and other awards that may be granted in the future under the 2009 Equity Incentive Plan, as follows:


Warrants			15,538,668
Non-Plan Stock Options			100,714
2009 Equity Incentive Plan			23,239,344
Total Shares Reserved			38,878,726