iCoreConnect 10-Q10 Jun 142014 Q1 Quarterly reportFinancial data

Company Profile

Document_And_Entity_Informatio

Document And Entity Information	3 Months Ended
Document And Entity Information	Sep. 30, 2013	Jun. 01, 2014
Document and Entity Information [Abstract]	'	'
Entity Registrant Name	'iMedicor	'
Document Type	'10-Q	'
Current Fiscal Year End Date	'--06-30	'
Entity Common Stock, Shares Outstanding	'	1,116,299,589
Amendment Flag	'false	'
Entity Central Index Key	'0001408057	'
Entity Current Reporting Status	'Yes	'
Entity Voluntary Filers	'No	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Well-known Seasoned Issuer	'No	'
Document Period End Date	30-Sep-13	'
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q1	'

CONDENSED_CONSOLIDATED_BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2013	Jun. 30, 2013
Current assets:	'	'
Cash	$43,690	$513,272
Accounts receivable, net of allowance for doubtful accounts of $-0- and $-0- at September 30, 2013 and June 30, 2013, respectively	123,903	8,186
Total Current Assets	167,593	521,458
Total Assets	167,593	521,458
Liabilities:	'	'
Notes payable and accrued interest in default	4,902,872	4,820,361
Accounts payable and accrued expenses	1,201,746	1,852,851
Due to related party	692,225	638,785
Warrants - derivative liability	0	5,999,435
Total Liabilities	6,796,843	13,311,432
Commitments and Contingencies	'	'
Stockholders' Deficit	'	'
Preferred stock, value, issued	0	0
Common stock, par value $.001 per share, authorized 4,000,000,000 Issued and outstanding: 1,008,299,590 and 997,299,586 shares as of September 30, 2013 and June 30, 2013, respectively	1,008,300	997,299
Additional Paid in Capital	44,928,093	41,445,027
Accumulated deficit	-52,565,643	-55,232,300
Total Stockholders' Deficit	-6,629,250	-12,789,974
Total Liabilities and Stockholders' deficit	167,593	521,458
Series A Preferred Stock [Member]	'	'
Stockholders' Deficit	'	'
Preferred stock, value, issued	0	0
Series B Preferred Stock [Member]	'	'
Stockholders' Deficit	'	'
Preferred stock, value, issued	$0	$0

CONDENSED_CONSOLIDATED_BALANCE1

CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $)	Sep. 30, 2013	Jun. 30, 2013
Accounts Receivable, allowance for doubtful accounts (in Dollars)	$0	$0
Common stock, par value (in Dollars per share)	$0.00	$0.00
Common stock, shares authorized	4,000,000,000	4,000,000,000
Common stock, shares issued	1,008,299,590	997,299,586
Common stock, shares outstanding	1,008,299,590	997,299,586
Series A Preferred Stock [Member]	'	'
Preferred stock , par value (in Dollars per share)	$0.00	$0.00
Preferred stock , shares authorized	37	37
Preferred stock, shares issued	35.75	35.75
Preferred stock, shares outstanding	35.75	35.75
Series B Preferred Stock [Member]	'	'
Preferred stock , par value (in Dollars per share)	$0.00	$0.00
Preferred stock , shares authorized	63	63
Preferred stock, shares issued	52.19	42.02
Preferred stock, shares outstanding	52.19	42.02

CONDENSED_CONSOLIDATED_STATEME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	Sep. 30, 2013	Sep. 30, 2012
Income Statement [Abstract]	'	'
Revenues	$183,329	$10,500
Cost of Services	90,948	69
Gross Profit	92,381	10,431
Expenses:	'	'
General and administrative	734,261	344,551
Bad debt expenses	0	62,000
Total Expenses	734,261	406,551
Loss from operations	-641,880	-396,120
Other Income/(Expenses):	'	'
Gain on change in value - Derivative Warrants	2,966,493	779,974
Other income - litigation / debt settlement	499,387	0
Gain on debt redemption	0	-49,672
Interest expense	-103,903	-143,499
Loan extension fees	-53,440	0
Impairment of technology asset	0	-117,645
Financing costs	0	-404,176
Total other income/(expenses)	3,308,537	64,982
Net income/ (loss)	$2,666,657	($331,138)
Basic net income (loss) per share, available to common stockholders	$0	$0
Fully diluted net income (loss) per share, available to common stockholders	$0	$0
Weighted average number of shares, basic	1,003,016,981	552,436,922
Weighted average number of shares,Â Â diluted	2,360,276,375	0

CONDENSED_CONSOLIDATED_STATEME1

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	Sep. 30, 2013	Sep. 30, 2012
Cash Flows From Operating Activities	'	'
Net income (loss)	$2,666,657	($331,138)
Adjustments to reconcile net income to net cash provided by operating activities:	'	'
Depreciation expense	0	404,176
Share-based compensation expense	258,000	0
Gain on change in value - Derivative Warrant	-2,966,493	'
Gain on debt settlement	-499,387	-173,928
Bad debt	0	49,672
Excess and obsolete inventory	0	117,645
(Increase) decrease in:	'	'
Change in accounts receivable	-115,717	7,000
Change in derivative	0	-779,974
Change in accounts payable	-151,718	547,821
Change in accrued expenses	155,951	-51,319
Net Cash Used in Operating Activities	-652,707	-210,045
CASH FLOWS FROM INVESTING ACTIVITIES	'	'
Purchase of property & equipment	0	0
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	0	0
Cash Flows From Financing Activities	'	'
Proceeds from note payable	0	235,000
Paydown of note payable	-20,000	0
Proceeds from issuance of common stock	203,125	0
Net Cash Provided by Financing Activities	183,125	235,000
Net Increase(Decrease) in Cash	-469,582	24,955
CASH AND CASH EQUIVALENTS AT AT THE BEGINNING OF PERIOD	513,272	67
CASH AND CASH EQUIVALENTS AT AT END OF PERIOD	$43,690	$25,022

1_NATURE_OF_OPERATIONS_AND_BAS

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION	3 Months Ended
	Sep. 30, 2013
Disclosure Text Block [Abstract]	'
Organization, Consolidation and Presentation of Financial Statements	'
	iMedicor Inc., a Nevada Corporation, (the “Company” or “iMedicor”), builds cloud based software, healthcare records capture, storage, retrieval, transport and security related products. The Company’s focus presently is on three different revenue streams: (1) iMedicor’s cloud-based exchange, the iCoreExchange, which allows physicians, patients and other members of the healthcare community to exchange patient-specific healthcare information securely via the internet, while maintaining compliance with all current Health Insurance Portability and Accountability Act (“HIPAA”) regulations. (2) Customized EHR platform technology that is specifically tailored to provide specialized medical practices with a technology that conforms to workflows of that particular medical discipline such as ophthalmology, dentistry, orthopedic and other specialty practices. (3) iMedicor has developed a Meaningful Use Consulting Practice targeting both medical and dental healthcare providers to assist becoming “Meaningful Use” compliant and ultimately qualify for federal incentive funds under the Federal Meaningful Use Incentive Funds Program. iMedicor’s integrated software and service offering is unique in the healthcare space as it enables doctors to meet the increasing regulatory burden associated with secure HIPAA-compliant medical records transport with no change in healthcare delivery workflows at a very reasonable cost. The iCoreExchange provides security to records transport while the Company’s custom EHR software solutions allow healthcare providers to migrate to digital records capture, storage, retrieval and transport at an extremely affordable price. iMedicor’s software solutions are:

	●	Cloud based requiring no capital investment for equipment, servers, infrastructure or internal IT support

	●	Flexible, cloud-based and interoperable across virtually all EMRs/EHRs that use CCD/CCR standards

	●	Include patient-interactive capability that allows primary care and specialized physicians to include patients and other members of the medical ecosystem to engage in a virtually-real time discussion regarding a patient’s healthcare issues

	●	Highly affordable and suitable for dental and medical practices of any size

	●	Customized in a HIPAA-compliant manner to perform across all records capture, storage and retrieval environments

	The iCoreExchange is a HIPAA-compliant, online healthcare information data exchange and secure messaging portal for physicians, patients and other members of the healthcare community, to collaborate, exchange secure patient specific records and use the network as a broad based referral community. HIPAA, which stands for the Health Insurance Portability and Accountability Act of 1996, is a set of strict rules that must be followed by doctors, hospitals and other health care providers concerning the handling and privacy protection of vital patient medical data.

	The iCoreExchange allows Physicians to communicate securely with other doctors, sharing patient files, records and images quickly and securely in a HIPAA compliant environment. The exchange assists doctors and their staff members to use the network to securely communicate outside of the network for individual record transport/communication, collaboration and referrals.

	The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been included. Operating results for the three month period ended September 30, 2013, are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the financial statements of the Company for the year ended June 30, 2013 and notes thereto contained in the Annual Report on Form 10-K of the Company as filed with the SEC on February 24, 2014.

2_GOING_CONCERN

2. GOING CONCERN	3 Months Ended
2. GOING CONCERN	Sep. 30, 2013
Going Concern [Abstract]	'
Going Concern	'
	The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The Company has incurred operating losses to date and has an accumulated deficit, total stockholders’ deficit and net working capital deficit of $52,565,643, $6,629,250 and $6,629,250 at September 30, 2013, respectively. The Company’s activities have been primarily financed through convertible debentures, and private placements of equity securities. The Company intends to raise additional capital through the issuance of debt or equity securities to fund its operations. The financing may not be available on terms satisfactory to the Company, if at all. (See Note 14 - Subsequent Events).

	Currently, management is seeking to develop a vastly improved healthcare communications system and attract alliances with strategic partners to allow the Company to generate revenues that will enable the Company to be self-sustaining. While management believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. Management’s ability to continue as a going concern is ultimately dependent upon its ability to continually increase the Company’s customer base and realize increased revenues from signed contracts. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

3_SUMMARY_OF_SIGNIFICANT_ACCOU

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accepted accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company classifies highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at US banks are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk for cash on deposit.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consist primarily of amounts due to the Company from normal business activities. The Company maintains an allowance for doubtful accounts to reflect the expected non-collection of accounts receivable based on past collection history and specific risks identified within the portfolio. If the financial condition of the customers were to deteriorate resulting in an impairment of their ability to make payments, or if payments from customers are significantly delayed, additional allowances might be required.

The Company has not created an allowance for doubtful accounts due to the specific nature of the two businesses for which the Company generates revenue and maintains accounts receivable. The Company’s NextEMR business is billed in the month during which service is provided. In the event a customer does not remit payment within 30 days of invoicing, iMedicor places the service into read-only mode. Customers that have been converted to read only mode either remit payment immediately or cancel the service. The Company does not book revenue for accounts in read only mode and thus do not create a doubtful account receivable under that circumstance.

The Company has also not created an allowance for doubtful accounts for the Meaningful Use Consulting business. The funding source behind this business is the federal government and payments are made by states who administer the Meaningful Use Incentive Funds Program. iMedicor secures funds through this program for doctors who have had difficulty understanding the program or who were unaware of the program’s existence. When a state is prepared to issue a check to a doctor or dentist, iMedicor is notified in advance. iMedicor then notifies the doctor or dentist that a check will be forthcoming. When the doctor or dentist receives a check they have already been invoiced for iMedicor’s portion of the MU dollars and generally pay iMedicor within 30 days of receiving their check. The Company has not experienced a circumstance under which a client has refused or substantially delayed payment. The Company has experienced circumstances under which delays have occurred due to delays at the state level processing a specific attestation. While such delays may increase the time it takes to collect consulting fees, the Company has not experienced any non-payment by physicians after a state has dispersed a check. The Company believes that beyond iMedicor’s success securing funds on behalf of its clients, a provision of the MU program regulations provides a strong incentive for physicians to make payment to iMedicor after they have received funding. iMedicor reports payments by physicians to iMedicor to the state that made payment to the physician. In the event a state is notified that a physician has not remitted payment to iMedicor, the physician will no longer be eligible for the remaining 67% of MU incentive funds available over the remaining life of the program. In addition, a physician that does not remit payment will not become MU compliant and will, therefore, be subject to Medicare rate reductions of 1% or more. While this rate reduction does not yet apply to Medicaid-eligible physicians, the Company believes that such an incentive will be initiated in the coming months.

Reclassifications

Certain amounts in the financial statements for September 30, 2012 have been reclassified to conform to the September 30, 2013 presentation. These reclassifications have no effect on net loss, total assets, or stockholders’ equity as previously reported.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, ClariDIS Corporation. Inter-Company items and transactions have been eliminated in consolidation.

Revenue Recognition

iMedicor derives revenue from two primary sources. The first source is our Electronic Health Records (EHR) technology, NextEMR that was acquired in 2013. iMedicor continues to support the customers andbills these customers monthly for the services provided. The second source of revenue is the Meaningful Use Consulting business. This is a consultative business in which the Company is contracted by dentists and medical doctors to secure funds under the Federal Meaningful Use Incentive Program. The program is funded by the federal government and administered individually by each state. The work iMedicor provides consists of consulting with customers to determine if they are eligible for funds under the program and if not, what they might be able to do to become eligible. iMedicor contracts only with eligible doctors and dentists. Upon signing of a contract the Company works to compile the data and information required by the federal government to submit to the relevant state on behalf of its customer. The process is known as the “attestation process.” Each state manages its MU attestation process in a different manner and thus timing of payments to physicians may vary based upon the processes a particular state has in place. iMedicor is advised when the attestation has been accepted by the state and when payment will be made, at which time the Company notifies its clients that a check will be forthcoming. When the doctor or dentist receives their payment, they remit payment to iMedicor.

Revenue for each of the above two sources is considered realized when the services have been provided to the customer, the work has been accepted by the customer and collectability is reasonably assured. Furthermore, if an actual measurement of revenue cannot be determined, the Company defers all revenue recognition until such time that an actual measurement can be determined. If during the course of a contract management determines that losses are expected to be incurred, such costs are charged to operations in the period such losses are determined. Revenues are deferred when cash has been received from the customer but the revenue has not been earned.

Stock Based Compensation

The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation cost is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period. For options issued to employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit. Grants of stock options and stock to non-employees and other parties are accounted for in accordance with the ASC 505.

Property, Equipment and Depreciation

Property and Equipment are recorded at their historical cost. Depreciation and amortization are provided by the straight-line method over the useful lives of the assets, which vary from five to seven years. The cost of repairs and maintenance is charged to operations in the period incurred. Property and equipment were fully depreciated at September 30, 2013 and June 30, 2013.

Intangible Assets

The Company accounts for intangible assets in accordance with recently issued and adopted accounting pronouncements, which require that intangible assets with indefinite useful lives should not be amortized, but instead be tested for impairment at least annually at the reporting unit level. If impairment exists, a write-down to fair value (normally measured by discounting estimated future cash flows) is recorded. Intangible assets with finite lives are amortized primarily on a straight-line basis over their estimated useful lives and are reviewed for impairment.

Loan Acquisition Costs

Loan acquisition costs incurred in obtaining or modifying loans are capitalized and amortized over the life of the loan at origination or date of modification as applicable.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount that the carrying amount of the asset exceeds the fair value of the asset.

Related Party Transactions

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

The Company has accrued $150,000 for compensation due to Robert McDermott, the Company’s Chief Executive Officer, at September 30, 2013. The amount accrued relates to a compensation agreement between Mr. McDermott and the Company’s Board of Directors effective July 1, 2013, the date on which Mr. McDermott was appointed by the Board to the position of Chief Executive Officer.

Accounting for Derivative Instruments

The Company records all derivatives on the balance sheet at fair value. Entering the three months ended September 30, 2013, the Company had derivative liabilities that consisted of warrants issued by the Company which were deemed derivative instruments as the Company did not have sufficient authorized and unissued common stock to settle all common stock contracts outstanding during the periods to which the derivatives are outstanding. On July 13, 2013, the Company increased the number of authorized shares to 4,000,000,000 and accordingly, at such time, the Company was then able to assert that it did have sufficient authorized and unissued common stock to settle all common stock contracts outstanding. Thus, in accordance with ASC 815-40, the derivative liability was measured at fair value through earnings one last time on July 13, 2013 and then reclassified on such date to additional paid in capital. As a result, the Company recognized a gain on change in derivative of approximately $2.97 million for the three months ended September 30, 2013 and reclassified approximately $3.03 million from derivative liability to additional paid in capital on July 13, 2013.

The final derivative liability valuation at July 13, 2013 was valued using the Black Scholes Merton valuation model with the following estimates used significant inputs:

Exercise Price

0.01

–

0.5

Term

0.04

–

3.21 years

Volatility

79.25

–

300.91

Risk Free Rate of Return

0.02

–

0.66

Fair Value of Financial Instruments

Management believes that the carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to the short-term nature of these instruments. The carrying amount of the Company’s debt also approximates fair value, based on market quote values (where applicable) or discounted cash flow analyses. (See discussion of Fair Value Measurements below).

Fair Value Measurements

The Company follows applicable accounting guidance for measurements and disclosures about the fair value of its financial instruments. GAAP establishes a framework for measuring fair value and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, GAAP has established a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are described below:

Level 1 - Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2 - Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3 - Pricing inputs that are generally not observable and not corroborated by market data.

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, lattice models or similar techniques and at least one significant model assumption or input is unobservable.

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The Company’s Level 3 financial liabilities consisted of the derivative financial instruments for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. The Company valued the warrant derivatives using Black Scholes Merton valuation models. These models incorporate transaction details such as Company stock price, contractual terms, maturity, risk free rates, as well as assumptions about future volatility. The Company used Level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities; revalued its derivative liability at every reporting period; and recognized gains or losses in the Statements of Operations are attributable to the change in the fair value of the derivative liability.

Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

Summary of Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

Fair Value Measurement Using

30-Jun-13

Carrying Value

Level 1

Level 2

Level 3

Total

Derivative warrant liability

5,999,435

Income Taxes

Income tax benefit is based on reported loss before income taxes. Deferred income taxes reflect the effect of temporary differences between asset and liability amounts that are recognized for financial reporting purposes and the

amounts that are recognized for income tax purposes. These deferred taxes are measured by applying currently enacted tax laws where that company operates out of. The Company recognizes refundable and deferred assets to the extent that management has determined their realization.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

4_NET_EARNINGS_LOSS_PER_SHARE

4. NET EARNINGS (LOSS) PER SHARE	3 Months Ended
4. NET EARNINGS (LOSS) PER SHARE	Sep. 30, 2013
Earnings Per Share Reconciliation [Abstract]	'
Earnings Per Share Reconciliation Disclosure	'
	Basic net earnings (loss) per share are computed by dividing net income or loss by the weighted average number of shares of common stock outstanding for the period. In gain periods, diluted net income per share reflects the potential dilution of securities by adding other common stock equivalents, including stock options, warrants and convertible notes to the weighted-average number of common shares outstanding for a period, if dilutive. In loss periods, all anti-dilutive securities are excluded.

	As of September 30, 2013 and 2012 the Company had 300,361,000 and 197,616,000, respectively, warrants and options which may be converted into common shares. The Company had convertible debt and Series A and Series B convertible preferred shares that were convertible into 1,291,160,240 and 846,985,488 common shares at September 30, 2013 and 2012, respectively.

5_WARRANTS

5. WARRANTS	3 Months Ended
5. WARRANTS	Sep. 30, 2013
Disclosure Text Block Supplement [Abstract]	'
Shareholders' Equity and Share-based Payments	'
	During the three months ended September 30, 2013 and 2012, no warrants were exercised. During the three months ended September 30, 2013 and 2012, 11,066,667 and zero warrants expired, respectively.

	During the three months ended September 30, 2013 and 2012, the Company issued 3,500,000 and 110,000,000 warrants, respectively.

	Summary of the warrants is as follows:

		30-Sep-13						30-Sep-12
					Weighted						Weighted
		Warrants			Exercise Price Range			Warrants			Exercise Price Range
	Outstanding at beginning of the period		307,927,667		$	0.01 - 0.237			97,616,000		$	0.01 - 0.237
	Issued		3,500,000		$	0.01			100,000,000		$	0.01 - 0.040
	Exercised		-						-
	Forfeited		-						-
	Expired		(11,066,667	)	$	0.01 - (0.105	)		(-0	-)	$
	Outstanding at end of period		300,361,000		$	0.01 - 0.24			197,616,000		$	0.01 - 0.237
	Exercisable at end of period		300,361,000		$	0.01 - 0.24			197,616,000		$	0.01-0.237

	The intrinsic value of the outstanding warrants at September 30, 2013 is $2,926,931.

	Summary of Options:

	On July 1, 2013, the Company granted 100,000,000, four year options to Robert McDermott. The options vest as follows: 20,000,000 immediately, 20,000,000 on each July 1. For the three-months ended September 30, 2013, the Company recorded $258,000 of stock compensation expense using the Black Scholes option pricing model.

	Exercise Price	$	0.013		–
	Term	4 years			–
	Volatility		79.25	%	–
	Risk Free Rate of Return		3.4	%	–

	As of September 30, 2013, the remaining unamortized stock compensation expense is $1,032,000, which will be amortized through June 30, 2017.

6_TECHNOLOGY_AND_MEDICAL_SOFTW

6. TECHNOLOGY AND MEDICAL SOFTWARE	3 Months Ended
6. TECHNOLOGY AND MEDICAL SOFTWARE	Sep. 30, 2013
Disclosure Text Block [Abstract]	'
Intangible Assets	'
Intangible Assets	The Company had capitalized all acquisition costs associated with the acquisition of NuScribe Inc. In addition, we have elected to capitalize all related development costs associated with the completion of the iMedicor portal, which was included in the asset purchase of Nuscribe. The iMedicor portal was launched in late October 2007 and we are amortizing its cost on a straight line basis over 60 months. Intangible assets with finite lives are amortized primarily on a straight-line basis over their estimated useful lives and are reviewed for impairment. The Company evaluated the technology and medical software for impairment as of both fiscal year ends and has determined that the asset was impaired by $854,579 at June 30, 2012 and an additional $1,084,057 at June 30, 2013. The technology related to the portal to which these assets relate has changed considerably since their acquisition and development, resulting in a change in the estimate of remaining cash flows.

7_CONSULTING_AGREEMENT

7. CONSULTING AGREEMENT	3 Months Ended
7. CONSULTING AGREEMENT	Sep. 30, 2013
Constulting Agreement [Abstract]	'
Constulting Agreement	'
	In November 2012, the Company arranged with HITS Consulting and its owner Henry Denis to acquire access to Mr. Denis’ independent agents to increase our ability to execute on the Careington Meaningful Use contract. Mr. Denis is the CEO of that company and agreed to serve as a special consultant to the CEO of iMedicor. The value of the access to the independent agents was recorded as goodwill in the amount of $59,400 based upon the value of the common stock and warrants issued. At June 30, 2013, the goodwill was determined to be fully impaired.

	The consideration for the transaction was six million shares of common stock and six million warrants to purchase common stock, exercisable at $0.02 per share for a three-year period. A 90 day contract was signed after which both parties could re-engage to negotiate, in good faith, an extension with terms to be determined by and agreed upon by both parties. The Company agreed to pay $10,000 in monthly salary for Henry Denis. On or about June 30, 2013, Henry Denis and his entity HITS Consulting were terminated and not required to provide any further services to the Company.

8_ACQUISITIONS

8. ACQUISITIONS	3 Months Ended
8. ACQUISITIONS	Sep. 30, 2013
Business Combinations [Abstract]	'
Business Combination	'
	NextEMR/iPenMD – Software:
	On January 22, 2013, the Company purchased NextEMR (Electronic Medical Record) software including the iPenMD integrated hardware/software application. The purpose of the software purchase was its unique electronic Pen features allowing physicians to regain lost productivity during the transition from paper to electronic health records.

	In accordance with the January 22, 2013 asset purchase agreement the Company was required to issue a total of 34,834,156 shares of common stock. The technology asset was valued at $660,000 based upon the fair market value of the stock issued and $400,016 was expensed to acquisition costs.

	As of June 30, 2013, the Technology asset was deemed fully impaired.

	ClariDIS Corporation
	On March 18, 2013, the Company acquired all of the 275,000 outstanding shares of ClariDIS Corporation (a data mining and data aggregation business) in exchange for 10,526,316 common shares of iMedicor Inc. The transaction was valued at $421,053 based upon 10,526,316 of shares exchanged at the stock price of $0.04 on March 18, 2013 the date of closing. The acquisition value in shares was applied entirely to the acquired technology asset. The purpose of the ClariDIS acquisition was intended to strengthen the IT and security encryption capabilities of iMedicor's Social Health Information Exchange (HIE) Version 3.0, the most recent release iMedicor’s information technology exchange.

	As of June 30, 2013, the Technology asset was deemed fully impaired.

9_NOTES_PAYABLE_IN_DEFAULT

9. NOTES PAYABLE IN DEFAULT	3 Months Ended
	Sep. 30, 2013
Debt Disclosure [Abstract]	'
Debt	'
	Interest expense for the three months ended as of September 30, 2013 was $103,903 and for the three months ended September 30, 2012 was $143,499. Notes payable and accrued interest at September 30, 2013 and June 30, 2013 consisted of the following:

		September 30,		June 30,
		2013		2013
	(1) Convertible note bearing interest at 17.98% per annum, as amended due on June 30, 2008. This note is in default, was convertible at $1.00 per share or 150,000 common shares at September 30, 2013.	$	150,000	$	150,000
	(2) Convertible note bearing interest at 20% per annum with a conversion price of $0.05 per share representing 5,361,320 shares at September 30, 2013. The note is past due, was originally due on December 30, 2009 and is being actively negotiated between the Board of Directors and the holder of the note who is also the Chief Financial Officer of the Company and a member of the Board of Directors.		316,556		306,857
	(3) Convertible note bearing interest at 10% per annum with a conversion price of $0.05 per share representing 1,226,840 shares as of September 30, 2013. The note is past due and was originally due on July 26, 2010.		67,644		66,384
	(4) Secured convertible note bearing interest at10% per annum that converts into Series B Preferred shares at a price of $125,000 per share, amended on July 1, 2012 and again on June 30, 2013		1,531,814		1,513,964
	(5) Secured convertible note bearing interest at 8%per annum with a conversion into Preferred B series shares at a price of $125,000 per share. amended on July 1, 2012 and was due on June 30, 2013		1,889,710		1,836,473
	(6) Note executed in May 2002 bearing interest at 8% per annum, originally due in November 2008		375,513		370,200
	(7) Note executed in May 2002 bearing interest at 8% per annum, no maturity date		378,011		371,387
	(8) Four notes executed from September 22, 2009 through January 11, 2011		35,000		35,000
	(9) Note executed in July 2011 bearing interest at 18%, maturity extended to August 23, 2014		158,625		170,095
	Total notes payable, all deemed current, due to various defaults as discussed below	$	4,902,872	$	4,820,361


	(1) 17.98% - Hospice convertible debenture – Originally due on September 30, 2004. The note has been revised to accrue interest of $50,000 through September 30, 2004, the original due date. The effective interest rate is 17.98%. The debenture was to begin to be paid in January 2007 over a period of 18 months at a monthly amount of $8,333. The bondholder had agreed to no additional interest beyond September 30, 2004. The Company is in breach of this agreement as of January 2007 and thereafter as a result of not making payments and is in default. The Company has not received a response from the note holder regarding a settlement proposal. This note is unsecured and continues in default.

	(2) Schneller convertible notes (John Schneller is a member of the Board of Directors, appointed on July 3, 2013 and was appointed Chief Financial Officer on May 1, 2014.) originated on December 23, 2008 with a loan of $100,000 with a maturity date of December 31, 2009. If the loan was not repaid by the designated date a loan redemption fee of $50,000 was added to principle. The $100,000 bears a default simple interest rate of 20%. The accrued interest payable was $128,869 and $119,171 for September 30, 2013 and June 30, 2013. Since this note has been in default the Company has been accruing costs that reflect the value of common shares and warrants every 90 days that this note remains in default. The note holder earns every 90 days of default 2,672,000 of common shares and 2,672,000 warrants that are being recorded based on the stock value. As of September 30, 2013, 38,740,000 shares of common stock and 38,740,000 warrants to purchase common stock with a 5 year term were due to Schneller. The value of the accrued financing costs for the interest, 38,740,000 common shares and warrants as of September 30, 2013 was $692,813. See Commitments and Contingencies for further explanation. (Note 13).

	(3) Koeting convertible note payable, with simple interest at 10%, originated on March 26, 2010 with a loan to the Company of $50,000 payable on July 26, 2010. Accrued interest was payable as of September 30, 2013 and June 30, 2013 of $17,643 and $16,384, respectively. The Company is in default on this note as of July 26, 2010 and thereafter. The Company has sought an extension, has received a response and is considering options to renegotiate the terms of the note. The note is unsecured.

	(4) The note amount of $1,069,199 was lent by Sonoran Pacific Resources (a related party to a shareholder that has significant ownership in the Company) over the past several years at varying amounts to assist the Company for the purposes of funding operations. Interest payable had accrued in the amount of $462,614 at September 30, 2013 for a total note balance at such date of $1,531,813. Interest payable had accrued in the amount of $286,196 as of June 30, 2013 for a total note balance at such date of $1,513,965. As of July 1, 2012, an amended and restated loan agreement was signed which stated that the note was deemed not in default. The lender was awarded 100 million common shares and 100 million warrants in exchange for the amended and restated loan agreement. The interest rate from July 1, 2012 to June 30, 2014 was 10%. If the note is not repaid by June 30, 2014, the interest will increase to 18% until such latter default is cured. As part of the amended loan agreement the note was extended to June 30, 2014. This note and the one described below are convertible into Preferred B stock at $125,000 per share based on the total outstanding note balances at the dates of conversion. This note is secured by all assets of the Company.

	(5) The note amount of $1,190,458 was also lent by Sonoran Pacific Resources over the past several years at varying amounts to assist the Company to augment cash flow to fund operations. Interest payable had accrued in the amount of $699,252 at September 30, 2013 for a total note balance at such date of $1,899,710. There was accrued interest payable of $551,457 at June 30, 2012 for a total note balance at such date of $1,695,914. There was a Replacement Secured Convertible Promissory Note in the original amount of $1,395,452 having an original date of April 17, 2010 and a Replacement Date of January 1, 2011. As of July 1, 2012, an amended loan agreement was signed that the note was deemed not in default. The interest rate from July 1, 2012 to June 30, 2014 is 8%. If the note is not repaid by June 30, 2014, the interest will increase to 18% until such latter default is cured. This note is secured by all assets of the Company.

	The above convertible notes (5) and (6) are convertible into an aggregate of 23.33 shares of Series “B” preferred stock.

	(6) On October 20, 2005, the Company agreed to repurchase shares of several shareholders referred to as the Wellbrock Group; the shares were exchanged for a $300,000 three-year note to be amortized over ten years at 8%. The shares of stock are held in escrow until the notes are completely paid. If there are any late payments per the payment schedule, the shares are to be released from escrow and to revert back to the original shareholders. The first ten monthly payments of principal and interest were to be in installments of $1,000 and the remaining 26 payments were to be in installments of $3,640. The balloon payment of $272,076 was due on November 1, 2008. The balloon balance was subsequently paid down to $263,492, but no further payments were made. The Company continues to be in default on this note. The Company has sought an extension/modification and has not received a response. The Company continues to accrue interest at 8%. The accrued interest payable was $112,021 and $106,708 at September 30, 2013 and June 30, 2013, respectively. The total note balances at such dates were $375,513 and $370,200, respectively.

	(7) One of the Company’s former directors has lent funds in varying amounts beginning November 5, 2010. Outstanding principal totals were $237,194 and $344,576 at March 31, 2013 and June 30, 2012, respectively. The Company paid $150,000 on the note on January 3, 2013. Interest payable accrued at 8%. Total balances outstanding of $378,011 and $371,387, at September 30, 2013 and June 30, 2013, respectively. There is no maturity.

	(8) Three notes payable exist totaling $35,000 as of September 30, 2013.The amounts were lent on various dates. Two (2) of the three (3) are non-interest bearing and unsecured. One of the notes that had earned interest was converted from principal and interest of $71,250 into 4 million common shares in November 2012. The Company is in default on the other 2 notes, is in discussions to seek an extension on one of the notes and has not received a response from one of the note holders.

	(9) Genesis Finance Corporation loaned the Company $155,000 during fiscal 2012. The note accrues interest at 18%. The note was being paid in installments of $2,325 on the 25th of each month. On August 26, 2012 an amended promissory note extended the maturity date to February 27, 2013. On January 30, 2013 an additional extension of six months was granted through August 23, 2013. On August 2013, an extension was granted through February 23, 2014. The Company agreed to pay a 2% extension fee in the amount of $3,100 upon signing of each extension and to deposit $6,975 to be used to make monthly payments for March, April and May 2013 and August, September and October of 2013. In connection with the debt extensions, the Company agreed to issue an aggregate of 1,000,000 shares to Genesis, which shares were issued subsequently. The Company issued .5 unit of Preferred Series B in exchange for the note extension. This note is guaranteed by Sonoran Pacific Resources. Accrued interest expense was $15,057 and $6,920 at September 30, 2013 and June 30, 2013, respectively. The Company is current per the date of this filing and is negotiating an extension through August 23, 2014.

	During the three months ended September 30, 2013, the Company recorded income of $499,387 from the Company’s old accounts payable and accrued expenses meeting the statute of limitations. This amount is included in other income in the Company’s statement of operations.

10_COMMON_STOCK

10. COMMON STOCK	3 Months Ended
10. COMMON STOCK	Sep. 30, 2013
Stockholders' Equity Note [Abstract]	'
Stockholders' Equity	'
	As of September 30, 2013 and June 30, 2013, the Company had a total of 1,008,299,590 and 997,299,586 shares of common stock outstanding, respectively. On July 13, 2013, the Board of Directors amended the Articles of Incorporation to increase the authorized number of common shares in the Company to 4 billion shares from 2 billion shares previously authorized.

	During the three months ended September 30, 2013 the Company issued 1.50 Series B Preferred Shares 11,000,000 shares of common stock with 3,500,000 warrants for total consideration of $203,125. The warrants were valued at $64,641 utilizing the Black Scholes Merton valuation model.

	Warrants outstanding during the period were for the period July 1, 2013 through July 13, 2013 were valued and recorded as a derivative liability. The derivative liability was extinguished and became equity as a result of the Board of Directors increase in authorized shares outstanding on July 13, 2013.

	During the three months ended September 30, 2013, the Company issued no common shares or warrants for the conversion of debt and interest.

11_PREFERRED_STOCK

11. PREFERRED STOCK	3 Months Ended
	Sep. 30, 2013
Disclosure Text Block Supplement [Abstract]	'
Preferred Stock	'
	Pursuant to an amendment of the Articles of Incorporation on December 19, 2012, the Company was authorized to issue up to 100,000,000 shares of blank check preferred stock. The amended Articles of Incorporation authorized 37 and 63 shares of Series “A” and “B” preferred stock, respectively, of which 35.75 Series “A” and 52.19 Series “B” shares, respectively, were issued and outstanding as of September 30, 2013

	Each share of Series “A” Preferred Stock was convertible into a 1% ownership interest in the Company’s common stock on a non-dilutive basis, giving effect to the common stock issued and the exercise of all outstanding warrants to purchase common stock, on a post-exercised basis. Each share of Series “A” Preferred Stock may bear dividends when, as and if declared by the Board of Directors. The Series “A” Preferred is senior to the Series “B” Preferred and to the common stock with respect to liquidation.

	Each share of Series “B” Preferred Stock represented a 1% ownership interest in the Company’s common stock, on a non-dilutive basis, giving effect to the common stock issued and the exercise of all outstanding warrants to purchase common stock, on a post-exercised basis. Each share of Series “B” Preferred Stock may bear dividends when, as and if declared by the Board of Directors. The Series “B” Preferred is junior to the Series “A” Preferred, but senior to the common stock with respect to liquidation.

	Each of the Series A and Series B Preferred Stock has voting rights on all matters coming before stockholders, equal to the number of shares issuable upon conversion of the Series A and Series B Preferred Stock.

	If declared by Board of Directors, holders of shares of Series B Preferred Stock were entitled to receive dividends on the last day of each March, June, September and December in each year commencing on March 31, 2011. If declared, dividends were payable in shares of Common Stock on the holders total investment per share of Series B Preferred Stock at an annual variable rate, which decreased from an initial rate of 18% to 14% and then for calendar 2012 and thereafter to 10% on the last day of each March, June, September and December of each year until such time as the Series B Preferred Stock was either converted into shares of Common Stock as provided in the Series B designation or redeemed through the sale, acquisition or merger of the Company resulting from a change of ownership of the Company.

	If declared, on each quarterly dividend payment date the holder of each share of Series B Preferred Stock is to receive the following:

	1.	That number of shares of Common Stock, rounded to the nearest whole number, equal to the amount of such dividend payment divided by the Agreed Value of a share of Common Stock on such dividend payment date. For this purpose, the Agreed Value of a share of Common Stock shall be the amount equal to the average of the closing prices of a share of Common Stock as reported on the OTC Bulletin Board for each of the five trading days immediately preceding such dividend payment date. For example, if the Agreed Value on a Dividend Payment Date is $.10 per share the total number of shares of Common Stock to be issued on such dividend payment date shall be that number equal to the Investment Per Share of Series B Preferred Stock times the annual dividend rate divided by four divided by the Agreed Value. Regardless of the actual issuance of the stock certificate for the shares of Common Stock, the shares of Common Stock specifically authorized by the board will be deemed issued on the last day of the quarter.

	2.	A warrant to purchase that number of shares of Common Stock equal to the number of Dividend Shares issuable on such dividend date, exercisable at an exercise price per share equal to the Agreed Value.

	Notwithstanding the foregoing, no dividend was to be declared or paid to the holders of Series B Preferred Stock until the holders of Series A Preferred Stock received all of the dividends to which the holders of Series A Preferred Stock would be entitled to receive had the Board of Directors declared dividends on the Series A Preferred Stock and no dividend was to be declared or paid to the holders of Common Stock or any other series of Preferred Stock (other than the Series A Preferred Stock) until the holders of Series B Preferred Stock received all of the dividends to which the holders of Series B Preferred Stock were entitled to receive had the Board of Directors declared dividends on the Series B Preferred Stock. No dividends have been issued or declared by the Board of Directors on any shares of preferred stock.

	The Company issued a warrant to purchase 5 shares of Series B Preferred Stock to the newly appointed Chief Executive Officer (appointed June 1, 2013).

13_COMMITMENTS_AND_CONTINGENCI

13. COMMITMENTS AND CONTINGENCIES	3 Months Ended
13. COMMITMENTS AND CONTINGENCIES	Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]	'
Commitments and Contingencies	'
Commitments and Contingencies	There has been a dispute in regard to an agreement between the Company and investor John Schneller with respect to the number of common shares that are to be issued to him for each 90 day default period occurs. The agreement dated May 5, 2010, states that a certain number of shares are to be awarded to Schneller as a result of the Company not paying his note payable and related accrued interest payable. As a result of this dispute, the accounting records reflect a Financing fee accrual based on the common share value per each 90 day default period since May 2010. The accrued expense as of September 30, 2013 was $692,225. In July 2013, Mr. Schneller was appointed as Chairman of the Company’s Audit Committee. In May 2014, the Board of Directors of the Company and Mr. Schneller no longer held the note in dispute. The Board further resolved that Mr. McDermott would negotiate a settlement to be presented to the Board of Directors at a future date at such time as terms could be agreed between Mr. Schneller and the Company. Interest and penalty shares will continue to accrue.

14_SUBSEQUENT_EVENTS

14. SUBSEQUENT EVENTS	3 Months Ended
	Sep. 30, 2013
Subsequent Events [Abstract]	'
Subsequent Events	'

	The Company has evaluated subsequent events from the balance sheet date through the date the accompanying financial statements were available to be issued and has found the following material events to report.

	Common Stock, Series B Preferred Stock and Warrants to purchase Common Stock have been issued in the following amounts to investors subsequent to the close of the period ended September 30, 2013:

	●	On October 1, 2013 a third party individual purchased 2 Series B Preferred Shares, 12,000,000 Common Shares, and 4,000,000 Warrants to purchase Common Shares with a two-year expiration and a $0.01 strike price. The Company received proceeds of $250,000.

	●	On November 1, 2013, a third party individual purchased 1 Series B Preferred Share, 10,000,000 Common Shares, and 4,000,000 Warrants to purchase Common Shares with a 2-year expiration and a $0.01 strike price. The Company received proceeds of $125,000.

	●	On December 13, 2013, a third party investment company purchased 0.5 Series B Preferred Share, 3,000,000 Common Shares, and 1,000,000 Warrants to purchase Common Shares with a two year expiration and a $0.01 strike price. The Company received proceeds of $62,500.

	●	On March 14, 2014, a third party individual purchased 10,000,000 Common Shares. The Company received proceeds of $70,000.

	●	On April 14, 2014, a third party individual purchased 2,666,667 Common Shares. The Company received proceeds of $10,417.

	●	On April 14, 2014, a third party individual purchased 2,666,666 Common Shares. The Company received proceeds of $10,417.

	●	On April 14, 2014, a third party individual purchased 2,666,666 Common Shares. The Company received proceeds of $10,417.

	●	On May 20, 2014, a third party individual purchased 65,000,000 Common Shares and Warrants to Purchase 6,000,000 Common Shares with a two-year expiration and a $0.015 strike price. The Company received proceeds of $250,000.

	On May 1, 2014, the Board of Directors authorized the issuance of 3.25 warrants to the Company’s Chief Executive Officer, Robert McDermott, to purchase 3.25 shares of Series B Preferred Shares, with a cashless exercise price. The Company will record compensation expense in the fourth quarter of fiscal year 2014 for the Series B Preferred Shares warrant issuance.

	Employment Agreements:

	On June 1, 2013, Fred Zolla, Chief Executive Officer, entered into an Employment Agreement with the Company. Pursuant to the terms of the Employment Agreement, Mr. Zolla will assume the position of Executive Chairman of the Board of Directors for a period of two years. Mr. Zolla will receive an annual base salary of $200,000, plus an annual bonus up to 100% of his base salary, which bonus is to be determined by the Board. In addition, Mr. Zolla was awarded and vested in an option to acquire 100,000,000 shares of the Company’s common stock (the "Common Stock Option". The Common Stock Option: (i) has an exercise price of $.017 per share; (ii) is exercisable for the five year period from the date of the Employment Agreement; and, (iii) contains a provisions for a "cashless exercise" at the discretion of Mr. Zolla. The Common Stock option shall vest as follows: (X) one 1/3 of the Common Stock Shares at the execution of this agreement, (Y) 1/3 on the first year anniversary (June 1, 2014); and (Z) 1/3 on the second anniversary (June 1, 2015). Further, Mr. Zolla was awarded Warrants to acquire 5 shares of the Company’s Series B Preferred Stock, or their equivalent (the "Series B Warrants"). The Series B Warrants: (i) have an exercise price of $125,000 per share; and (ii) are exercisable from the date of vesting until the end of the five year period from the date of the Employment Agreement. The Series B Warrants become vested as follows: (x) one 1/3 of the Series B Warrants immediately, (y)1/3 on the first year anniversary date (June 1, 2014); and (z) 1/3 on the second anniversary date (June 1, 2015). All Series B Warrants will vest immediately in the case of change of control of the Company, death or permanent disability of Mr. Zolla Any Series B Warrants that are not vested at the time that Mr. Zolla is terminated for cause or he voluntarily terminates his employment with the Company, will be void. Mr. Zolla resigned on November 18, 2013.

	On July 1, 2013, Robert McDermott entered into an Employment Agreement (the "McDermott Agreement") with the Company Pursuant to the terms of the McDermott Agreement; Mr. McDermott has assumed the position of Chief Executive Officer of the Company. The McDermott Agreement is for a period of two years and Mr. McDermott is to receive a base annual salary of $200,000 plus an annual bonus up to 100% of his base salary. Additional bonus is to be determined by the Board. In addition, Mr. McDermott was awarded an option to acquire 100,000,000 shares of the Company’s common stock (the "McDermott Common Stock Option"). 20,000,000 of the McDermott Common Stock Option vested on July 1, 2013, with the remaining McDermott Common Stock Options to be vested at the rate of 20,000,000 each on the subsequent anniversary dates of the date of the McDermott Agreement. The Common Stock Option has an exercise price equal to the Ten (10) trading day closing price of the shares prior to the Effective Date (the effective date being June 1, 2013) and, (iii) contains a provisions for a "cashless exercise" at the discretion of Mr. McDermott. Further, Mr. McDermott was awarded 5 shares of the Company’s Series B Preferred Stock, or their equivalent (the "McDermott Series B Grant"). One share of the McDermott Series B Grant was vested on July 1, 2013, with the remaining McDermott Series B Shares to be vested at the rate of one each on the subsequent anniversary dates of July 1, 2013.

3_SUMMARY_OF_SIGNIFICANT_ACCOU1

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)