iBio Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Accounting Policies, by Policy (Policies)

Accounting Policies, by Policy (Policies)

3 Months Ended

Sep. 30, 2012

Earnings Per Share, Policy [Policy Text Block]

(Loss) Earnings Per Share

Basic (loss) earnings per share is computed by dividing net (loss) income allocated to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income allocated to common shares by the weighted average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock options and warrants using the treasury stock method. For the three months ended September 30, 2012, the Company incurred a loss; therefore, basic and diluted earnings per share were the same, since the common shares issuable pursuant to the exercise of stock options and warrants in the calculation of diluted net loss per common share have been excluded given that the effect would have been anti-dilutive.

There were 27,620,796 and 10,009,769 options and warrants as of September 30, 2012 and 2011, respectively, that were excluded from the calculation of dilutive earnings per share since they were anti-dilutive.

The following table summarizes basic and diluted earnings per share computations for the three months ended September 30, 2012 and 2011:


	Three Months Ended September 30,

	2012			2011

Net (loss) income for basic and diluted earnings per share calculation	$	(2,051,427	)	$	383,143


Weighted average shares for basic earnings per share calculation		47,767,095			32,382,095
Dilutive effect of options and warrants		0			2,288,838

Weighted average shares for diluted earnings per share calculation		47,767,095			34,670,933


Basic net (loss) income per share	$	(0.04	)	$	0.01

Dilutive effect of options and warrants per share calculation	$	N/A		$	0.00

Diluted net (loss) income per share	$	(0.04	)	$	0.01

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

The Company’s financial instruments primarily include cash, accounts receivable, other receivable, other current assets and accounts payable. Due to the short-term nature of cash, accounts receivable, other receivable, other current assets and accounts payable, the carrying amounts of these assets and liabilities approximate their fair value.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company categorizes its derivative financial instrument liability in Level 2 of the hierarchy. The derivative financial liability relating to a warrant with an anti-dilution feature is valued using the Black-Scholes option pricing model. The fair value of the derivative financial liability is based principally on Level 2 inputs. For this liability, the Company developed its own assumptions based on observable inputs or available market data to support the fair value.

The following table sets forth the Company’s liabilities measured at fair value on a recurring basis, by input level, in the balance sheets at September 30, 2012 and June 30, 2012:


	Fair value measurement at reporting date using

	Quoted prices In Active Market for Identical assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total

At September 30, 2012:
Liabilities:
Recurring

Derivative financial liability - related to a warrant with anti-dilution provisions	$	—	$	760,608	$	—	$	760,608


At June 30, 2012:
Liabilities:
Recurring

Derivative financial liability - related to a warrant with anti-dilution provisions	$	—	$	519,725	$	—	$	519,725

The valuations above were determined using Level 2 observable inputs, as described above.

The reconciliation of the derivative financial liability measured at fair value on a recurring basis using observable inputs (Level 2) is as follows:



	2012		2011

Balance, June 30,	$	519,725	$	4,187,769
Change in fair value of derivative financial liability		240,883		(2,704,492	)


Balance, September 30,	$	760,608	$	1,483,277

The fair value of the derivative financial instrument liability is determined using the Black-Scholes option pricing model and is affected by changes in inputs to that model including the Company’s stock price, expected stock price, volatility, the contractual term, and the risk-free interest rate.

The assumptions made in calculating the fair value of these derivative instruments as of September 30, 2012, June 30 2012 and September 30, 2011 were as follows:

The assumptions made in calculating the fair value of these derivative instruments as of September 30, 2012, June 30, 2012 and September 30, 2011 were as follows:


	September 30, 2012			June 30, 2012			September 30, 2011

Common stock price	$	1.03		$	0.76		$	1.60
Risk-free interest rate		0.2	%		0.2	%		0.2	%
Dividend yield		None			None			None
Volatility		101.0	%		100.0	%		94.8	%
Remaining contractual term (in years)		0.9			1.2			1.9

- Definition

Disclosure of accounting policy for computing basic and diluted earnings or loss per share for each class of common stock and participating security. Addresses all significant policy factors, including any antidilutive items that have been excluded from the computation and takes into account stock dividends, splits and reverse splits that occur after the balance sheet date of the latest reporting period but before the issuance of the financial statements.

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