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, 2014
Jun. 30, 2013
Cash flows from operating activities:    
Net (loss) income $ (4,299,000) $ 351,000
Adjustments to reconcile net (loss) income to net cash used in operating activities:    
Depreciation 55,000 44,000
Amortization of prepaid advisory fees 1,561,000 1,629,000
Inventory valuation adjustment (29,000) (77,000)
Change in fair value of warrant liability 330,000 (5,731,000)
Stock-based compensation 239,000 94,000
Stock issuance for services and director fees 152,000 134,000
Changes in operating assets and liabilities:    
Accounts receivable (127,000) 41,000
Inventories 104,000 653,000
Other current assets 47,000 (51,000)
Accounts payable (50,000) 77,000
Accrued expenses 8,000 (112,000)
Accrued interest (135,000) 116,000
Customer deposits (5,000) 3,000
Customer deposits from related party (2,000) (62,000)
Deferred revenue 0 (480,000)
Net cash used in operating activities (2,151,000) (3,371,000)
Cash flows from investing activities:    
Purchases of equipment (4,000) (41,000)
Proceeds from the sale of equipment 3,000 0
Net cash used in investing activities (1,000) (41,000)
Cash flows from financing activities:    
Proceeds from issuance of common shares from the exercise of employee stock options 0 22,000
Proceeds from the sale of common stock and warrants, net of offering costs paid 1,276,000 980,000
Proceeds from stockholders note payable and line of credit 972,000 1,618,000
Net cash provided by financing activities 2,248,000 2,620,000
Net increase (decrease) in cash 96,000 (792,000)
Cash, beginning of period 20,000 812,000
Cash, end of period 116,000 20,000
Supplemental disclosures of Non-cash Investing and Financing Activities:    
Stock issuance upon conversion of debt to equity 3,136,000 0
Conversion of accrued interest into equity 304,000 0
Issuance of warrants classified as derivative liabilities 0 931,000
Cash paid during the year for:    
Income taxes $ 0 $ 1,000