Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENTS OF CASH FLOWS

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
 12 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Cash flows from operating activities:    
Net Income (loss) $ 351,000 $ (2,385,000)
Adjustments to reconcile net income (loss) to net cash used in operating activities:    
Depreciation 44,000 30,000
Amortization of prepaid advisory fees 1,719,000 68,000
Inventory valuation adjustment (77,000) (26,000)
Change in fair value of warrant liability (5,731,000) 526,000
Stock-based compensation 94,000 45,000
Changes in operating assets and liabilities:    
Accounts receivable 41,000 (13,000)
Inventories 653,000 1,263,000
Other current assets (7,000) 71,000
Accounts payable 77,000 284,000
Accrued expenses (112,000) 316,000
Accrued interest 116,000 23,000
Customer deposits 3,000 (207,000)
Customer deposits from related party (62,000) (167,000)
Deferred revenue (480,000) (1,322,000)
Net cash used in operating activities (3,371,000) (1,494,000)
Cash flows from investing activities:    
Purchases of equipment (41,000) (60,000)
Net cash used in investing activities (41,000) (60,000)
Cash flows from financing activities:    
Proceeds from stock options exercised 22,000 0
Issuance of common shares in financing 2,000 3,000
Proceeds from the sale of common stock and warrants, net of offering costs paid 978,000 1,123,000
Proceeds from stockholders note payable and line of credit 1,618,000 1,000,000
Net cash provided by financing activities 2,620,000 2,126,000
Net (decrease) increase in cash (792,000) 572,000
Cash, beginning of period 812,000 240,000
Cash, end of period 20,000 812,000
Supplemental disclosures of Non-cash Investing and Financing Activities::    
Conversion of debt 0 1,264,000
Issuance of warrants for advisory services 0 3,258,000
Issuance of common stock for services 134,000 0
Issuance of warrants to investors 931,000 1,159,000
Cash paid during the year for:    
Income taxes $ 1,000 $ 1,000