Vapor Hub International (VHUBD) 10-Q 16 Feb 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	6 Months Ended
	Dec. 31, 2015shares
Document and Entity Information:
Entity Registrant Name	VAPOR HUB INTERNATIONAL INC.
Document Type	10-Q
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Entity Central Index Key	1,515,718
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding	76,265,606
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q2
Trading Symbol	vhub

Vapor Hub International Inc. -

Vapor Hub International Inc. - Condensed Consolidated Balance Sheets - USD ($)		Dec. 31, 2015	Jun. 30, 2015
Current Assets:
Cash		$ 442,942	$ 351,081
Accounts Receivable		11,832	9,511
Inventory		397,505	323,784
Prepaid expenses		140,939	61,269
Deferred finance costs		246,922	39,258
Other current assets		4,906	9,474
Total Current Assets		1,245,046	794,377
Fixed assets, net		149,752	159,546
Deposits		14,341	6,895
Total Assets		1,409,139	960,818
Current Liabilities:
Accounts payable and accrued expenses		391,288	509,618
Deferred income		9,830	82,499
Notes payable- short term		326,902	384,769
Loans from related parties		86,178	96,312
Equipment leases payable		3,243	5,440
Current portion of, convertible notes payable, net of unamortized debt discount, current		231,496	192,091
Derivative liabilities, current		560,890	68,584
Total Current Liabilities		1,609,827	1,333,873
Long Term Liabilities:
Equipment leases payable		3,243	5,440
Notes payable- long term		26,193	29,189
Convertible notes payable, net of current portion and unamortized debt discount		88,409
Derivative liabilities		398,120
Long term liabilities		512,722	34,629
TOTAL LIABILITIES		$ 2,122,549	$ 1,368,502
Stockholders' Deficit
Preferred stock	[1]
Common stock	[2]	$ 76,266	$ 72,456
Additional paid-in capital		656,524	557,463
Accumulated deficit		(1,446,200)	(1,037,603)
Total Stockholders Deficit		(713,410)	(407,684)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$ 1,409,139	$ 960,818
[1]	$0.001 par value, 10,000,000 authorized, 0 issued and outstanding as of December 31, 2015 and June 30, 2015
[2]	$0.001 par value, 1,010,000,000 shares authorized, 76,265,606 and 72,455,606 issued and outstanding as of December 31, 2015 and June 30, 2015, respectively.

Statement of Financial Position

Statement of Financial Position - Parenthetical - $ / shares	Dec. 31, 2015	Jun. 30, 2015
Statement of Financial Position
Preferred Stock, Par Value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par Value	$ 0.001	$ 0.001
Common Stock, Shares Authorized	1,010,000,000	1,010,000,000
Common Stock, Shares Issued	76,265,606	72,455,606
Common Stock, Shares Outstanding	76,265,606	72,455,606

Vapor Hub International Inc. -4

Vapor Hub International Inc. - Unaudited Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
Income Statement
Revenue	$ 1,295,138	$ 1,127,473	$ 3,257,483	$ 2,499,023
Cost of revenue	599,951	670,164	1,803,793	1,413,486
Gross Profit	695,187	457,309	1,453,690	1,085,537
General and administrative expenses	744,687	627,561	1,446,428	1,192,615
Net income (loss) from operations	(49,500)	(170,252)	7,262	(107,078)
Other expense:
Interest expense	(55,802)	(19,657)	(88,487)	(37,544)
Finance fees	(10,508)		(20,273)
Interest expense- amortization of debt discount	(70,946)		(113,128)
Loss on extinguishment of debt	(93,336)		(93,336)
Change in fair value of derivative liabilities	(54,352)		(99,835)
Other expense	(284,944)	(19,657)	(415,059)	(37,544)
Loss before taxes	(334,444)	(189,909)	(407,797)	(144,622)
Income tax provision			800	800
Net loss	$ (334,444)	$ (189,909)	$ (408,597)	$ (145,422)
Net loss per share:
Net income per share, basic	$ 0	$ 0	$ (0.01)	$ 0
Net income per share, diluted	$ 0	$ 0	$ (0.01)	$ 0
Weighted average shares outstanding:
Weighted average shares outstanding, basic	72,786,910	68,060,001	72,621,258	68,060,001
Weighted average shares outstanding, diluted	72,786,910	68,060,001	72,621,258	68,060,001

Vapor Hub International Inc. -5

Vapor Hub International Inc. - Unaudited Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
OPERATING ACTIVITIES:
Net loss	$ (408,597)	$ (145,422)
Adjustments to reconcile net loss to net cash provided used in operating activities:
Depreciation	15,528	8,760
Amortization of debt discount	113,128
Amortization of deferred finance costs	20,273
Loss on extinguishment	93,336
Change in derivative liability	99,835
Changes in operating assets and liabilities:
Accounts receivable, increase decrease	(2,321)
Inventory, increase decrease	(73,720)	(167,607)
Prepaid expenses and other current long term assets, increase decrease	(1,943)	(46,798)
Security deposit, increase decrease	(7,446)
Deferred income, increase decrease	(72,670)	(307,135)
Accounts payable and accrued expenses, increase decrease	(118,328)	207,832
Net Cash used in Operating Activities	(342,925)	(450,370)
INVESTING ACTIVITIES:
Collection of security deposit		4,633
Purchase of property and equipment	(5,734)	(1,596)
Net cash (used in) provided by investing activities	(5,734)	3,037
FINANCING ACTIVITIES:
Payments on leased property loans	(2,196)	(2,186)
Payments on finances of insurance premiums	(76,089)
Payment on related party loans	(10,134)	(2,386)
Proceeds from convertible notes payable	699,350	200,000
Payments on convertible notes payable	(218,759)
Proceeds from short term notes payable	330,000
Payments on short term notes payable	(278,655)
Payments on auto loan payable	(2,997)
Net cash provided by financing activities	440,520	195,428
Net change in cash	91,861	(251,905)
Cash, beginning of period	351,081	307,567
Cash, end of period	442,942	$ 55,602
Supplemental disclosure of cash flow information:
Cash paid for interest	74,797
Cash paid for income taxes	800
Non-cash transactions:
Insurance premium financing	146,909
Advisory fee paid in common stock	102,870
Derivative liability	$ 805,110

Note 1- Incorporation, Nature o

Note 1- Incorporation, Nature of Operations and Acquisition	6 Months Ended
	Dec. 31, 2015
Notes
Note 1- Incorporation, Nature of Operations and Acquisition	NOTE 1- INCORPORATION, NATURE OF OPERATIONS AND ACQUISITION Vapor Hub International Inc. (formerly DogInn, Inc.) (hereinafter known as “the Company”) was incorporated in the State of Nevada on July 15, 2010. On February 14, 2014, the Company entered into a Share Exchange Agreement with Vapor Hub Inc., a California corporation (“Vapor”), Delite Products, Inc., a California corporation (“Delite”) and the shareholders of both companies (the “Exchange Agreement”). Pursuant to the terms of Exchange Agreement, the Company agreed to acquire all 30,000 of the issued and outstanding shares of Vapor’s common stock, as well as all 30,000 of the issued and outstanding shares of Delite’s common stock in exchange for the issuance by the Company of 38,000,001 shares of common stock to the shareholders of both companies. On March 14, 2014, the Company completed the acquisition of Vapor and issued all of the 38,000,001 shares of its stock to the shareholders of Vapor, who are also the shareholders of Delite. On March 26, 2014, the Company completed the acquisition of Delite. As a result of the closing of the transactions contemplated by the Exchange Agreement, Vapor and Delite became the Company’s wholly owned subsidiaries and the Company now carries on the business of developing, producing, marketing and selling the next generation of electronic cigarettes, known as vaping devices, and related accessories, including e-liquids, batteries and atomizers. The transaction with Vapor was accounted for as a reverse acquisition (recapitalization) whereby Vapor was deemed to be the accounting acquirer, and the Company the legal acquirer. Prior to the Company’s acquisition of Vapor, the Company existed as a “shell company” with nominal assets whose sole business was to identify, evaluate and investigate various companies to acquire or with which to merge. The transaction with Delite was accounted for as a business acquisition and the Company assumed the assets and liabilities of Delite as of March 26, 2014 and the activity of Delite was included from that date forward. Upon the Company’s acquisition of Vapor, Robin Looban resigned as the Company’s sole director, president, secretary, treasurer, Chief Financial Officer and Chairman of the Board of Directors and management members from Vapor were appointed to serve as directors and officers of the Company. As a condition of the closing of the acquisition of Vapor, the Company cancelled 50,928,984 outstanding common shares and retired them in treasury.

Note 2 -summary of Significant

Note 2 -summary of Significant Accounting Policies	6 Months Ended
	Dec. 31, 2015
Notes
Note 2 -summary of Significant Accounting Policies	NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying (a) condensed consolidated balance sheet at June 30, 2015 has been derived from audited statements and (b) the condensed consolidated unaudited financial statements as of and for the periods ended December 31, 2015 and 2014, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, and should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2015 (the “2015 Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on October 13, 2015. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments), have been made which are necessary for a fair financial statements presentation. The financial statements include all material adjustments (consisting of normal recurring accruals) necessary to make the financial statements not misleading as required by Regulation S-X, Rule 10-01. Operating results for the three months and six months ended December 31, 2015 are not necessarily indicative of the results of operations expected for the year ending June 30, 2016. This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to US GAAP and have been consistently applied in the preparation of the unaudited condensed consolidated financial statements. The Company operates in one segment in accordance with accounting guidance Financial Accounting Standards Board (“FASB”) ASC Topic 280, Segment Reporting. The Company’s Chief Executive Officer has been identified as the chief operating decision maker as defined by FASB ASC Topic 280. Going Concern The Company’s unaudited condensed consolidated financial statements have been presented on the basis that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company’s cash balance as of December 31, 2015 along with its net loss and negative cash flow from operations, raise substantial doubt about its ability to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. The Company continues to face liquidity and capital resources constraints and does not believe that the proceeds from its debt facilities (see Note 7) along with its operating cash flows will be sufficient to meet its financing needs for the next twelve months. The extent of the Company’s future capital requirements will depend on many factors, including the Company’s results from operations and the growth rate of the Company’s business. The Company’s near term objective is to raise debt or equity capital to fund its immediate cash needs and to finance its longer term growth. The Company is also pursuing various means to increase revenues, reduce operating costs and to improve overall cash flow. The Company presently does not have any arrangements for additional financing. However, the Company continues to evaluate various financing strategies to support its current operations and fund its future growth. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates significant estimates and assumptions related to its accounts receivable allowance, accounts payable, deferred income tax asset valuation allowances, fair value of derivative liability, fair value of stock options, useful life of fixed assets, inventory reserves, estimates of sales return and accrual for potential liabilities. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Concentration of Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash. The Company places its cash with high quality banking institutions. The Company relied on one manufacturer to make all of the Company’s Mods during the three month period ended December 31, 2015. Financial Instruments and Fair Value Measurement Pursuant to ASC 820, Fair Value Measurements and Disclosures Level 1 Level 2 Level 3 The Company’s financial instruments consist principally of cash, accounts payable, accrued liabilities, amounts due to related parties, derivative liabilities and convertible notes payable. Pursuant to ASC 820, the fair value of the Company’s cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. Pursuant to ASC 820, the fair value of the Company’s derivative liability is determined based on “Level 3” inputs, which consist of unobservable inputs. The Company believes that the recorded values of all of its other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. Revenue Recognition The Company recognizes revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable. For retail transactions, revenue is recognized at the point of sale. For wholesale and online transactions, revenue is recognized at the time goods are shipped. Deferred Revenue The Company accrues deferred revenue when customer payments are received, but product has not yet shipped. As of December 31, 2015 and June 30, 2015, the Company had recorded $9,830 and $82,499, respectively for deferred income as a result of prepayments for product made by customers. Those prepayments are recognized into revenue at the point those prepaid products have subsequently shipped. The Company has recognized the $82,499 during the six months ended December 31, 2015 and expects to recognize the $9,830 into revenue during the fiscal year ending June 30, 2016. Advertising Expense Advertising costs are expensed as incurred. Advertising expense for the six months ended December 31, 2014 and 2015 were $48,358 and $54,232, respectively and are included in general and administrative expenses. Deferred Finance Costs, Net Costs with respect to the issuance of common stock, warrants, stock options or debt instruments by the Company are initially deferred and ultimately offset against the proceeds from such equity transactions or amortized to interest expense over the term of any debt funding, if successful, or expensed if the proposed equity or debt transaction is unsuccessful. For the six months ended December 31, 2015, the Company incurred $250,400 in costs in connection with the negotiation of a financing transaction with TCA Global Credit Master Fund, LP which amount is included in deferred finance costs as of December 31, 2015 (see Note 7). The unamortized finance costs for the six months ended December 31, 2015 were $246,922. Basic and Diluted Net Loss per Share The Company computes net income per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants or debentures. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of December 31, 2015 and 2014, there were no dilutive securities. Recent Accounting Pronouncements In January 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities." This update impacts the accounting for financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. ASU 2016-01 is to be applied prospectively and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company has not yet determined the impact of ASU 2016-01 on its consolidated results of operations, financial condition, or cash flows. The Company has reviewed all other recent accounting pronouncements issued to date of the issuance of these unaudited condensed consolidated financial statements, and does not believe any of those pronouncements will have a material impact on the Company’s unaudited condensed consolidated financial statements.

Note 3 - Officers' Loans Payabl

Note 3 - Officers' Loans Payable	6 Months Ended
	Dec. 31, 2015
Notes
Note 3 - Officers' Loans Payable	NOTE 3 – OFFICERS’ LOANS PAYABLE As of December 31, 2015 and June 30, 2015, the Company had a balance of $86,178 and $96,312 respectively, outstanding as related party loans from Kyle Winther, the Company’s CEO, Lori Winther, the Company’s CFO and Winther & Company, CPAs (an entity owned by Lori Winther, and her husband, Niels Winther, CPA, who is a director of the Company), as well as a Chase Bank Line of Credit (which was extended to the Company, though owed personally by Niels & Lori Winther). The outstanding balances are unsecured, non-interest bearing and repayable upon demand.

Note 4 - Inventories

Note 4 - Inventories	6 Months Ended
	Dec. 31, 2015
Notes
Note 4 - Inventories	NOTE 4 – INVENTORIES As of December 31, 2015 and June 30, 2015, the Company had a balance of $397,505 and $323,784, respectively, as inventories which consist of vaping devices, electronic cigarettes, e-liquid, related supplies, and accessories. There is no reserve for inventory obsolescence as of December 31, 2015 and June 30, 2015.

Note 5 - Lease Commitments

Note 5 - Lease Commitments	6 Months Ended
	Dec. 31, 2015
Notes
Note 5 - Lease Commitments	NOTE 5 – LEASE COMMITMENTS The Company entered into a lease agreement with S. J. Real Estate Group, LLC to lease a retail space in Chatsworth, California, effective September 13, 2013. The lease term was for two years with a monthly lease payment of $2,214. Effective October 15, 2015, the Company and the landlord agreed to terminate the lease and the Company closed its retail store located at the location. The Company has no further obligation due under the lease agreement. On February 28, 2015, the Company entered into a lease agreement with landlord Samantha Carrington to provide retail space for its Simi Valley retail location and on April 1, 2015, the Simi Valley retail location opened at the new premises. The lease term extends through March 31, 2017 with a monthly lease payment of $3,190. The Company has a commitment under this lease of $57,420 and a security deposit of $6,380 was paid to the landlord in relation to this lease. The Company entered into a lease agreement with S.B.P.W., LLC to lease warehouse and office space in Simi Valley, California effective August 5, 2013 which agreement was subsequently amended on February 20, 2014. The lease term extended through April 30, 2015 with a monthly lease payment of $2,035 which increased to $4,070 effective July 1, 2014. On September 1, 2015, the Company terminated this lease and surrendered its facility at 67 W Easy St., Unit 115, Simi Valley, CA 93065 in favor of entering into a lease with Winther Family Trust for executive, sales, and warehouse space at 1871 Tapo Street, Simi Valley, CA 93063. The trustees of the trust are Niels Winther, CPA, a director of the Company, as well as Lori Winther, the Chief Financial Officer, a shareholder and director of the Company. The lease term extends through August 31, 2020 with a monthly lease payment of $5,650. The Company has a commitment under this lease of $333,350 and a security deposit of $5,650 was paid to the landlord in relation to this lease. On September 15, 2015, the Company entered into a lease agreement with Santa Susana Business Center, LLC to lease warehouse and office space at 4685 Runway Street, Unit D, Simi Valley, CA 93063. The lease term extends through September 30, 2016 with a monthly lease payment of $1,716. The Company has a commitment under this lease of $20,592 and a security deposit of $1,716 was paid to the landlord in relation to this lease.

Note 6 - Related Parties

Note 6 - Related Parties	6 Months Ended
	Dec. 31, 2015
Notes
Note 6 - Related Parties	NOTE 6 – RELATED PARTIES As of December 31, 2015 and June 30, 2015, the Company had a balance of $86,178 and $96,312, respectively, outstanding as related party loans from Kyle Winther, the Company’s CEO, Lori Winther, the Company’s CFO and Winther & Company, CPAs (an entity owned by Lori Winther, and her husband, Niels Winther, CPA, who is a director of the Company), as well as Chase Bank Line of Credit (which was extended to the Company, though owed personally by Niels & Lori Winther). The outstanding balances are unsecured, non-interest bearing and repayable upon demand. From time to time the Company will engage the services of Winther & Co. an accounting firm owned by the husband of the Company’s CFO. Winther & Co. provides bookkeeping, accounting and tax services to the Company. For the six months ended December 31, 2015 the Company incurred approximately $46,503 in fees with Winther & Co. As of December 31, 2015 and June 30, 2015 the Company had Accounts Payable outstanding to related parties for accounting fees of $14,552 and $12,369, respectively. The Company leases its headquarters from the Winther Family Trust. See Note 5 for further discussion.

Note 7 - Convertible Notes Paya

Note 7 - Convertible Notes Payable	6 Months Ended
	Dec. 31, 2015
Notes
Note 7 - Convertible Notes Payable	NOTE 7 – CONVERTIBLE NOTES PAYABLE Note Holder Balance December 31, 2015 Unamortized Original Derivative Discount Convertible Notes Net of Derivative Discount Modified November Notes 52,443 (25,461) 26,981 Modified June Note 281,750 (136,792) 144,958 TCA Global Loan Payable 320,229 (260,672) 59,557 Total Convertible Notes Payable, current portion 654,422 (422,926) 231,496 TCA Global Loan Payable 429,771 (341,362) 88,409 Total Convertible Notes Payable, net of current portion 1,084,193 (764,288) 319,905 Typenex Co-Investment November 2014 Note On November 4, 2014, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with Typenex Co-Investment, LLC, a Utah limited liability company (the “Investor”), pursuant to which the Company concurrently issued to Investor a Secured Convertible Promissory Note in a principal amount of $1,687,500 (the “Company Note”). The principal amount includes an original issue discount of $80,000 plus an additional $7,500 to cover Investor's due diligence and legal fees in connection with the transaction. In consideration for the Company Note, Investor issued a series of promissory notes aggregating to the sum of $1,600,000 (the “Purchase Price”), consisting of an initial cash disbursement of $200,000 and the issuance to the Company of ten promissory notes, the first two promissory notes in a principal amount of $100,000 each and the remaining eight promissory notes in a principal amount of $150,000 (each an “Investor Note” and collectively, the “Investor Notes”). The Company Note and the Investor Notes each bear interest at the rate of 10% per annum and mature on April 4, 2019 and the Company’s obligations under the Company Note are secured by liens on the Investor Notes pursuant to the terms of a Security Agreement entered into by the Company in favor of the Investor. Subject to certain conditions, the Company may prepay the Company Note by making a payment equal to 125% of the then outstanding balance (including interest and other fees and amounts due). Each of the Investor Notes may be prepaid (and the Company may receive additional funds under the facility in excess of the initial $200,000 cash proceeds) only upon the mutual agreement of the parties. On January 16, 2015, upon the mutual agreement of the parties, the Investor paid to the Company the sum of $102,028 as a prepayment of all of its obligations owed to the Company under the first Investor Note in the original principal amount of $100,000 dated November 4, 2014, issued by the Investor in favor of the Company. The first two tranches (the “November Notes”) were issued with an original issue discount of $20,472, of which $2,137 was amortized to interest expense for the six months ended December 31, 2015. As of December 31, 2015 the unamortized balance was $0. The Company recognized an additional debt discount of $48,975 on the first two tranches for the original fair value recognition of the derivative liability (discussed further below), of which $5,201 was amortized to interest expense for the six months ended December 31, 2015. As of December 31, 2015 the unamortized balance was $0. Beginning on May 4, 2015, the Company was required to repay the outstanding balance on the Company Note in monthly installments of approximately $35,000 per month plus all unpaid interest and other costs, fees or charges under the Company Note. Payment may be made in cash or, subject to certain conditions, in shares of the Company’s common stock or any combination of cash and shares. If payments are made in shares (each, an “Installment Conversion”), such installments or portions thereof are, subject to certain conditions, convertible into shares of the Company’s common stock at the lesser of (i) a conversion price of $0.10, subject to adjustment or (ii) a price that is equal to 70% of the average of the three lowest closing bid prices of the Company’s common stock in the twenty trading days immediately preceding such conversion, subject to a floor of $0.01. In addition, on the date that is twenty trading days from the date the Company delivers installment shares to Investor, there is a true-up where the Company is required to deliver additional shares if the installment conversion price as of the true-up date is less than the installment conversion price used to deliver the initial shares. Beginning on May 4, 2015, all or any amount of a conversion eligible tranche (as described below) under the Company Note is convertible, at the option of the Investor (each, a “Lender Conversion”), into shares of the Company’s common stock at a conversion price of $0.10 per share, subject to customary anti-dilution adjustments and other adjustments described in the Company Note (the “Conversion Price”). The Company Note is convertible into shares of the Company’s common stock by Investor in eleven tranches consisting of an initial tranche of $217,500 plus interest and other amounts due which may be converted into shares of the Company’s common stock at the Conversion Price at any time on or after May 4, 2015 and ten additional tranches (each a “Subsequent Tranche”), two of which are in the amount of $105,000 plus interest and other amounts due and eight of which are in the amount of $157,500 plus interest and other amounts due. Each Subsequent Tranche may not be converted into shares of the Company’s common stock unless the Investor has paid in full the Investor Note corresponding to such tranche, which payment requires the Company’s consent. On January 16, 2015, the Investor paid to the Company the sum of $102,028 as a prepayment of all of its obligations owed to the Company under the first Investor Note and consequently the first Subsequent Tranche of $105,000 plus interest and other amounts due may be converted into shares of the Company’s common stock at the Conversion Price at the option of the Investor at any time on or after May 4, 2015. Subject to certain conditions based on the trading volume and trading price of the Company’s common stock, the Company may also elect to convert the entire outstanding balance under the Company Note into shares of the Company’s common stock at the Conversion Price. If the Company fails to repay the Company Note when due, or if the Company is otherwise in default under the Company Note, at the option of Investor a default interest rate of 22% per annum will apply on all conversion eligible portions of the Company Note while the default continues. In the event the Company is in default under the Company Note, the Investor also has the option to accelerate the note with the outstanding balance becoming immediately due and payable or increase the outstanding balance of the note by an amount of 5% or 15% depending on the particular default. In addition, if the Company fails to issue stock to the Investor within three trading days of receipt of a notice of conversion, the Company must pay a penalty equal to the greater of (i) $500 per day; or (ii) 2% of the product of (A) the number of shares to which Investor was entitled that were not issued on a timely basis; and (B) the closing sale price of the common stock on the trading day immediately preceding the last day for us to timely issue the shares. The Company Note provides that the Investor maintains a right of offset that, under certain circumstances, permits the Investor to deduct amounts owed by the Company under the Company Note from amounts otherwise owed by Investor under the Investor Notes. In addition, the Company is permitted at any time to deduct and offset any amount owing by the Investor under the Investor Notes from any amount owed by the Company under the Company Note. Since the Company Note and the Investor Notes may be offset against each other, they are recorded on a net basis in the Consolidated Balance Sheet. On June 30, 2015 pursuant to the terms of the Company Note, the Company elected to deduct and offset the principal amount of $1,300,000 and all accrued interest thereon owing by the Investor under the remaining nine Investor Notes from the amount owed by the Company under the Company Note, leaving an outstanding balance of $252,188 under the Company Note as of June 30, 2015 and total unamortized debt discount of $60,096. The Company Note provides that Investor may not convert the Company Note in an amount which would cause Investor to own more than 4.99%, or if the Company’s market capitalization (as defined in the Company Note) is less than $10,000,000, more than 9.99%, of the Company’s outstanding common stock. The Company paid MSC-BD, LLC $20,000 as a finder’s fee (equal to 10% of the gross proceeds) in connection with the first closing and $10,020 in connection with the second closing and paid additional finder’s fees of $16,000 to MSC-BD, LLC in connection with the June Note discussed below. The total finder’s fee of $46,020 was capitalized as deferred finance costs and amortized over the term of the respective notes. As of December 31, 2015 unamortized deferred finance costs related to these instruments were $0. On December 15, 2015 the Company entered into a Note Settlement Agreement modifying the terms of the November Notes and the June Note (discussed below). This modification was treated as a debt extinguishment under ASC 470-50-40. See Note 10 for further discussion. The Company also determined that the Lender Conversion feature of the modified November Notes meets the definition of an embedded derivative that should be separated and accounted for as a derivative liability. See Note 11. Typenex Co-Investment June 2015 Note On June 4, 2015, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”) with Typenex Co-Investment, LLC, a Utah limited liability company, pursuant to which the Company concurrently issued to the investor an unsecured non-convertible Promissory Note in a principal amount of $245,000 (the “June Note”). The principal amount includes an original issue discount of $40,000 plus an additional $5,000 to cover the investor’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the transaction. The original issue discount was recorded as debt discount and amortized to interest expense over the life of the note. In consideration for the June Note, the investor paid an aggregate cash purchase price of $200,000, computed as follows: $245,000 original principal balance, less the original issue discount of $40,000, and less the transaction costs. The June Note matured on December 4, 2015 and, as further described below, on December 15, 2015 the company entered into a Note Settlement Agreement relating to the June Note. Interest does not accrue on the unpaid principal balance of the June Note unless an event of default occurs. Upon the occurrence of an event of default, the outstanding balance of the June Note will bear interest at the lesser of the rate of 18% per annum or the maximum rate permitted by applicable law. In addition, if an event of default occurs under the June Note, the investor may declare all unpaid principal, plus all accrued interest and other amounts due under the June Note to be immediately due and payable at an amount equal to 115% of the outstanding balance of the June Note as of the date of the applicable event of default, plus all interest, fees and charges that may accrue on such outstanding balance thereafter. The Company paid MSC-BD, LLC $16,000 as a finder’s fee (equal to 8% of the net proceeds) in connection with financing from the investor. On December 15, 2015 the Company entered into a Note Settlement Agreement modifying the terms of the November Notes (discussed above) and the June Note. This Note Settlement Agreement modified the terms of the June Note to mirror the terms of the November Notes, thus making it a convertible instrument. This modification was treated as a debt extinguishment under ASC 470-50-40. See Note 10 for further discussion. The Company also determined that the Lender Conversion feature of the modified June Note meets the definition of an embedded derivative that should be separated and accounted for as a derivative liability. See Note 11. TCA Global Credit Master Fund , LP Note December 2015 On December 24, 2015, the Company entered into a Senior Secured Credit Facility Agreement with TCA Global Credit Master Fund, LP (“TCA”). At the initial closing on December 24, 2015, the Company received gross proceeds of $750,000 and issued to TCA a Convertible Promissory Note in the principal amount of $750,000 (the “TCA Note”). The TCA Note is scheduled to mature on June 24, 2017 (the “Maturity Date”). At any time prior to the Maturity Date or the earlier termination of the Loan Agreement, the Company can request up to $9,250,000 of additional loans, which additional loans may be made in the sole discretion of TCA. The Company may prepay borrowings at any time, in whole or in part, without penalty. The loan will accrue interest on the unpaid principal balance at an annual rate of 18%. The Company will make interest only payments of $11,250 on each of January 24, February 24 and March 24, 2016, and thereafter, will make payments of approximately $56,208 of principal and interest per month until the Maturity Date. In the event the Company is in default under the loan agreement with TCA or any related transaction document, including as a result of a default in the Company’s payment obligations, any amount due to TCA under the facility will, at TCA’s option, bear interest from the date due until such past due amount is paid in full at an annual rate of 22%. In addition, upon the occurrence and during the continuance of an event of default under the transaction documents, TCA may terminate its commitments to the Company and declare all of the Company’s obligations to TCA to be immediately due and payable. While the Note is outstanding, but only upon the occurrence of (i) an event of default under the loan agreement with TCA or any related transaction document or (ii) the Company’s mutual agreement with TCA, TCA may convert, subject to certain beneficial ownership limitations, all or any portion of the outstanding principal, accrued and unpaid interest and any other sums due and payable under the Note or any other transaction document (such total amount, the “Conversion Amount”) into a number of shares of the Company’s common stock equal to: (i) the Conversion Amount divided by (ii) eighty-five percent (85%) of the lowest of the daily volume weighted average price of the Company’s common stock during the five business days immediately prior to the conversion date (the “Conversion Shares”). Upon liquidation by TCA of Conversion Shares, if TCA realizes a net amount from such liquidation equal to less than the Conversion Amount, the Company is obligated to issue to TCA additional shares of the Company’s common stock equal to: (a) the Conversion Amount minus the net realized amount, divided by (b) the average volume weighted average price of the Company’s common stock during the five business days immediately prior to the date upon which TCA requests additional shares. The payment and performance of all the Company’s indebtedness and other obligations to TCA, including all borrowings under the loan agreement and related agreements, are secured by liens on substantially all of the Company’s assets pursuant to a Security Agreement. Of the proceeds received at the initial closing, approximately $106,000 was used to pay in full all indebtedness outstanding under the Company’s Business Loan and Security Agreement with B of I Federal Bank (the “Bank”), entered into on November 3, 2015. Upon repayment of the Company’s indebtedness under the Business Loan and Security Agreement, the Bank released its liens on the Company’s assets. After the payment of approximately $51,000 of fees and cash expenses to TCA in connection with the loan transaction, the Company received net proceeds of approximately $593,000. In connection with the Loan Agreement, the Company agreed to pay to TCA a fee for advisory services provided to us prior to the entry into the loan agreement in the amount of $126,000 (the “Advisory Fee”). As partial payment of the Advisory Fee, the Company issued to TCA 3,810,000 shares of the Company’s common stock on December 24, 2015 (the “Advisory Fee Shares”), representing 4.99% of the Company’s issued and outstanding shares of common stock on such date. In the event that TCA receives net proceeds from the sale of such shares that are less than the Advisory Fee, TCA may require the Company to issue additional shares of common stock in an amount sufficient such that, when sold and the net proceeds from such sale are added to the net proceeds from the sale of any of the previously issued and sold Advisory Fee Shares, TCA shall have received total net funds equal to the Advisory Fee. Notwithstanding the foregoing, subject to certain conditions, the Company has the right to redeem the Advisory Fee Shares then in TCA’s possession for an amount payable in cash equal to the Advisory Fee, less any net cash proceeds received by TCA from previous sales of Advisory Fee Shares. In the event TCA has not realized net proceeds from the sale of Advisory Fee Shares equal to at least the Advisory Fee by the earlier to occur of: (i) December 24, 2016; (ii) the occurrence of an event of default under the transaction documents; or (iii) the Maturity Date, then at any time thereafter, TCA has the right to require the Company to redeem all of the Advisory Fee Shares then in TCA’s possession for cash equal to the Advisory Fee, less any cash proceeds received by TCA from any previous sales of Advisory Fee Shares. See Note 11 and Note 12 for further discussion. The Company also determined that the Conversion feature of the TCA Note and the Advisory Fee meets the definition of an embedded derivative that should be separated and accounted for as a derivative liability. See Note 11.

Note 8 - Notes Payable

Note 8 - Notes Payable	6 Months Ended
	Dec. 31, 2015
Notes
Note 8 - Notes Payable	NOTE 8 – NOTES PAYABLE Note Holder Balance December 31, 2015 Unamortized Original Issue Discount Balance, net of Discount December 31, 2015 Iliad Unsecured Short Term 245,000 (9,131) 235,869 Capital Premium 27,077 - 27,077 AFCO Insurance 56,745 - 56,745 Bank of the West - short term portion 7,211 - 7,211 Total Short Term Notes Payable $ 336,033 $ (9,131) $ 326,902 Bank of the West - long term $ 26,193 $ - $ 27,698 Total Long Term Notes Payable $ 26,193 $ - $ 27,698 Bank of the West On December 29, 2014, Kyle Winther, the Company’s CEO, entered into a vehicle financing agreement with the Bank of the West. Pursuant to the agreement, the amount financed was $39,275, payable in 48 monthly payments plus accrued interest at a rate of 3.9%. In January 2015, the Company agreed to assume the payments on this loan and capitalized the vehicle. As of December 31, 2015 and June 30, 2015 the outstanding balance was $33,404 and $36,400, respectively, with $7,211 classified as short term and $26,193 and $29,189, respectively, classified as long term. Facilities with B of I Federal Bank On January 2, 2015, the Company entered into a Business Loan and Security Agreement with B of I Federal Bank (the “Bank”). Pursuant to the agreement, the Company borrowed $200,000 from the Bank and received net proceeds of $195,000 USD after deducting an origination fee of $5,000. The loan was payable in 147 payments of $1,728 due each business day beginning on and after January 5, 2015, with the initial total repayment amount (subject to certain exceptions) being equal to $254,000. On June 2, 2015, the Company entered into a new Business Loan and Security Agreement with the Bank. Pursuant to the agreement, the Company borrowed $175,000 from the Bank and received net proceeds of $104,071 after deducting an origination fee of $1,875 and the repayment of $69,054 in full satisfaction of the Company’s remaining obligations under that certain Business Loan and Security Agreement entered into with the Bank on January 2, 2015. The new loan was payable in 126 payments of $1,708 due each business day beginning on June 3, 2015, with the total repayment amount (subject to certain exceptions) being equal to $215,249 (the “Total Repayment Amount”). As of December 31, 2015 and June 30, 2015 the outstanding balance was $0 and $153,655, respectively. On November 3, 2015, the Company entered into a new Business Loan and Security Agreement with the Bank. Pursuant to the agreement, the Company borrowed $125,000 from the Bank and received net proceeds of $93,615 after deducting an origination fee of $3,023 and the repayment of $28,361 in full satisfaction of the Company’s remaining obligations under that certain Business Loan and Security Agreement entered into with the Bank on June 2, 2015. The new loan was payable in 126 payments of $1,220 due each business day beginning on November 4, 2015, with the total repayment amount (subject to certain exceptions) being equal to $153,750. On December 24, 2015, the loan balance of $106,000 was paid off upon the closing of the financing transaction with TCA Global Credit Master Fund, LP. Iliad Co-Investment Note On August 12, 2015, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”) with Iliad Research & Trading, L.P, a Utah limited liability partnership, pursuant to which the Company concurrently issued to the investor an unsecured non-convertible Promissory Note in a principal amount of $245,000 (the “August Note”). The principal amount includes an original issue discount of $40,000 plus an additional $5,000 to cover the investor’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the transaction. In consideration for the August Note, the investor paid an aggregate cash purchase price of $200,000, computed as follows: $245,000 original principal balance, less the original issue discount of $40,000, and less the transaction costs. The August Note matures on February 12, 2016. The Company may prepay all or a portion of the amount owed earlier than it is due without penalty. The original issue discount and issuance costs for both the June Note (see Note 7) and the August Note were recorded as debt discount and amortized to interest expense over the life of the notes. As of December 31, 2015 and June 30, 2015 the outstanding balance of the August Note was $245,000 and zero, respectively. Interest does not accrue on the unpaid principal balance of the August Note unless an event of default occurs. Upon the occurrence of an event of default, the outstanding balance of the August Note will bear interest at the lesser of the rate of 18% per annum or the maximum rate permitted by applicable law. In addition, if an event of default occurs under the August Note, the investor may declare all unpaid principal, plus all accrued interest and other amounts due under the August Note to be immediately due and payable at an amount equal to 115% of the outstanding balance of the August Note as of the date of the applicable event of default, plus all interest, fees and charges that may accrue on such outstanding balance thereafter. Other short term facilities Effective May 29, 2015, the Company entered into an Agreement to finance its annual Workers Compensation insurance coverage. The insurance coverage is provided through The Hartford. The amount of the policy is $18,871 with $18,871 being financed at 2.2% over 12 months with an initial payment of $4,425 and 10 monthly payments of $1,444. The Company cancelled the policy with the Hartford Group and started the new policy as of October 1, 2015. At December 31, 2015 and June 30, 2015, the premium obligation due under the Agreement was $0 and $13,001, respectively. Effective July 10, 2014, the Company entered into an Agreement to finance its annual General Liability insurance coverage. The insurance coverage is provided through Lloyds of London. The amount of the policy is $52,359 with $43,953 being financed at 11% over 10 months with a monthly payment of $4,620. At June 30, 2015, the remaining premium obligation due under the Agreement was $0. Effective July 10, 2015 the Company entered into a new agreement to finance its General Liability insurance coverage. The amount of the policy is $70,848 with $53,159 financed over 10 months at 9% interest with a monthly payment of $5,538. At December 31, 2015, the remaining premium obligation is $27,706. As of August 22, 2015, the Company entered into an insurance contract with AFCO for Director’s and Officer’s insurance coverage. The amount of the policy is $129,000 with $93,750 being financed at 5.3% over 10 months with a monthly payment of $9,604. At December 31, 2015, the remaining balance is $56,745.

Note 9 - Loss Per Common Share

Note 9 - Loss Per Common Share	6 Months Ended
	Dec. 31, 2015
Notes
Note 9 - Loss Per Common Share	NOTE 9 – LOSS PER COMMON SHARE A summary of the net loss and shares used to compute net loss per share for the six months ended December 31, 2015 and 2014 is as follows: December 31, 2015 December 31, 2014 Net income (loss) for computation of basic and dilutive net income (loss) per share $ (408,597) $ (145,622) Basic and dilutive net income (loss) per share $ (0.01) $ 0.00 Basic and dilutive weighted average shares outstanding 72,621,258 68,060,001

Note 10 - Debt Extinguishment

Note 10 - Debt Extinguishment	6 Months Ended
	Dec. 31, 2015
Notes
Note 10 - Debt Extinguishment	NOTE 10 – DEBT EXTINGUISHMENT On December 15, 2015, the Company and Typenex Co-Investment, LLC (the “Investor”) entered into a Note Settlement Agreement. The Note Settlement Agreement relates to the November Notes and the June Note (collectively, the “Modified Notes”)(see Note 7). The Note Settlement Agreement restructures the payment provision of the Notes, including the June Note which was due and payable in full on December 4, 2015. The agreement provides that the Company is to make the following payments to Investor notwithstanding the terms of the Modified Notes (the “Restructure”): (a) a payment in the amount of $50,000 on or before December 15, 2015; (b) a payment in the amount of $50,000 on or before January 15, 2016; (c) a payment in the amount of $50,000 on or before February 15, 2016; and (d) a payment equal to the remaining aggregate outstanding balance of the Modified Notes on or before March 15, 2016 (collectively, the “Note Payments”). Unless specified otherwise by Investor in a written notice delivered to Company, all Note Payments shall be applied first against the outstanding balance of the November Note until the November Note has been paid in full and thereafter against the June Note until the June Note is paid in full. Note Payments may be made in cash or, subject to certain conditions, shares of the Company’s Common Stock. As consideration for Investor’s agreement to enter into the Note Settlement Agreement, the Company agreed to increase the outstanding balance of each Note by 15% (the “Restructure Effect”). Following the application of the Restructure Effect and including a $5,000 transaction expense fee, the outstanding balance of the November Note was $107,528 and the outstanding balance of the June Note was $281,750. After giving effect to the December 15, 2015 payment of $50,000, the outstanding balance of the November Note was $57,608. Upon satisfaction of the Company’s obligations under the Note Settlement Agreement, the Company shall be deemed to have paid the entire outstanding balance of each of the Modified Notes in full and shall have no further obligations under either Note. In addition, subject to the Company’s compliance with the terms and conditions of the Note Settlement Agreement, the Investor waives the default caused by the non-payment of the June Note on December 4, 2015. In the event that the Company fails to comply with the conditions of the Note Settlement Agreement, the Restructure, the waiver of the June Note default, and all other accommodations given in the Note Settlement Agreement will be deemed withdrawn and the Investor will be entitled to all remedies available to it as provided in the Modified Notes, the other Transaction Documents, and the Note Settlement Agreement. The Company evaluated the Note Settlement Agreement under ASC 470-50-40 “Extinguishments of Debt” (“ASC 470”). ASC 470 requires modifications to debt instruments to be evaluated to assess whether the modifications are considered “substantial modifications”. A substantial modification of terms shall be accounted for like an extinguishment. For extinguished debt, a difference between the re-acquisition price and the net carrying amount of the extinguished debt shall be recognized currently in income of the period of extinguishment as losses or gains. The Company noted the change in terms per the Note Settlement Agreement, met the criteria for substantial modification under ASC 470, and accordingly treated the modification as extinguishment of the original November Notes and June Note, replaced by the new convertible notes under the modified terms. The Company recorded a loss on extinguishment of debt of $93,336 during the six months ended December 31, 2015.

Note 11 - Derivative Liabilitie

Note 11 - Derivative Liabilities	6 Months Ended
	Dec. 31, 2015
Notes
Note 11 - Derivative Liabilities	NOTE 11 – DERIVATIVE LIABILITIES The Company evaluated the Modified Notes, the TCA Note and the TCA Advisory Fee under the requirements of ASC 480 “Distinguishing Liabilities from Equity” and concluded that the notes and advisory fee do not fall within the scope of ASC 480. The Company then evaluated the Modified Notes, the TCA Note and the TCA Advisory Fee under the requirements of ASC 815 “Derivatives and Hedging”. Due to the existence of the anti-dilution provisions in the Modified Notes, which reduces the Lender Conversion Price in the event of subsequent dilutive issuances by the Company, the Company determined that the Lender Conversion feature does not meet the definition of “indexed to” the Company’s stock, and the scope exception to ASC 815’s derivative accounting provisions does not apply. The Company also determined that the Lender Conversion feature in the Modified Notes meets the definition of an embedded derivative that should be separated from the Modified Notes and accounted for as a derivative liability. Due to the conversion provisions of the TCA Note and the TCA Advisory Fee, the Company determined that the Conversion feature does not meet the definition of “indexed to” the Company’s stock, and the scope exception to ASC 815’s derivative accounting provisions does not apply. The Company also determined that the Conversion feature of the TCA Note and the TCA Advisory Fee meets the definition of an embedded derivative that should be separated from the TCA Note and TCA Advisory Fee, respectively and accounted for as a derivative liability. The Company recorded an original valuation for the Modified Notes of $194,596 for the derivative liability. As of December 31, 2015, the Company had a derivative liability of $183,964. The Company recorded an original valuation for the TCA Note of $610,514 for the derivative liability. As of December 31, 2015, the Company had a derivative liability for the TCA Note of $694,766. The Company recorded an original valuation for the TCA Advisory Fee of $80,280 for the derivative liability. As of December 31, 2015, the Company had a derivative liability for the TCA Advisory Fee of $80,280. The Company has recorded the fair value of each derivative as described above as a current liability as of December 31, 2015. The change in fair value was recorded as other income (expense) in operations for the six months ended December 31, 2015. In arriving at fair-value estimates, the Company utilizes the most observable inputs available for the valuation technique employed. If a fair-value measurement reflects inputs at multiple levels within the fair value hierarchy, the fair-value measurement is characterized based upon the lowest level input. For the Company, recurring fair-value measurements are performed for the derivative liability. The Company does not have any liabilities that reduce risk associated with hedging exposure and has not designated the derivative liability as a hedge instrument. The Company did not have any derivatives valued using Level 1 and Level 2 inputs as of December 31, 2015. The Company categorized the derivative liability as Level 3 using the Black-Scholes pricing model with a fair value of $959,010 as of December 31, 2015. The Company used the following input ranges: stock price $0.0260-$0.0281; expected term 0.21-1.50 years; risk-free rate 0.16%-1.06%; and volatility 155.1%-155.6%. Unobservable inputs were the prevailing interest rates, the Company’s stock volatility and the expected term. There have been no transfers between Level 1, Level 2, or Level 3 categories. Level 3 additions for the six months ended December 31, 2015 were $99,835 for valuation adjustments during the period.

Note 12 - Equity

Note 12 - Equity	6 Months Ended
	Dec. 31, 2015
Notes
Note 12 - Equity	NOTE 12 – EQUITY Unregistered Sales of Equity Securities Pursuant to the TCA Note, the Company issued to TCA 3,810,000 Advisory Fee Shares on December 24, 2015 as partial consideration for advisory services provided by TCA and the Company may be required to issue an unknown number of additional Advisory Fee Shares and/or Conversion Shares in accordance with the terms of the transaction documents. The Note and Advisory Shares were issued to TCA in reliance upon the exemption from registration set forth in Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D thereunder for transactions not involving a public offering. TCA represented that it is an “accredited investor” as defined in Regulation D. These shares were valued at $0.027 per share, which was the closing market price the Company’s shares at December 24, 2015. The initial valuation of these shares was recorded to deferred finance fees and is being amortized to expense over the life of the related instrument.

Note 2 -summary of Significan18

Note 2 -summary of Significant Accounting Policies: Going Concern (Policies)	6 Months Ended
	Dec. 31, 2015
Policies
Going Concern	Going Concern The Company’s unaudited condensed consolidated financial statements have been presented on the basis that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company’s cash balance as of December 31, 2015 along with its net loss and negative cash flow from operations, raise substantial doubt about its ability to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. The Company continues to face liquidity and capital resources constraints and does not believe that the proceeds from its debt facilities (see Note 7) along with its operating cash flows will be sufficient to meet its financing needs for the next twelve months. The extent of the Company’s future capital requirements will depend on many factors, including the Company’s results from operations and the growth rate of the Company’s business. The Company’s near term objective is to raise debt or equity capital to fund its immediate cash needs and to finance its longer term growth. The Company is also pursuing various means to increase revenues, reduce operating costs and to improve overall cash flow. The Company presently does not have any arrangements for additional financing. However, the Company continues to evaluate various financing strategies to support its current operations and fund its future growth.

Note 2 -summary of Significan19

Note 2 -summary of Significant Accounting Policies: Use of Estimates (Policies)	6 Months Ended
	Dec. 31, 2015
Policies
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates significant estimates and assumptions related to its accounts receivable allowance, accounts payable, deferred income tax asset valuation allowances, fair value of derivative liability, fair value of stock options, useful life of fixed assets, inventory reserves, estimates of sales return and accrual for potential liabilities. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Note 2 -summary of Significan20

Note 2 -summary of Significant Accounting Policies: Concentration of Risk (Policies)	6 Months Ended
	Dec. 31, 2015
Policies
Concentration of Risk	Concentration of Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash. The Company places its cash with high quality banking institutions. The Company relied on one manufacturer to make all of the Company’s Mods during the three month period ended December 31, 2015.

Note 2 -summary of Significan21

Note 2 -summary of Significant Accounting Policies: Financial Instruments and Fair Value Measurement (Policies)	6 Months Ended
	Dec. 31, 2015
Policies
Financial Instruments and Fair Value Measurement	Financial Instruments and Fair Value Measurement Pursuant to ASC 820, Fair Value Measurements and Disclosures Level 1 Level 2 Level 3 The Company’s financial instruments consist principally of cash, accounts payable, accrued liabilities, amounts due to related parties, derivative liabilities and convertible notes payable. Pursuant to ASC 820, the fair value of the Company’s cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. Pursuant to ASC 820, the fair value of the Company’s derivative liability is determined based on “Level 3” inputs, which consist of unobservable inputs. The Company believes that the recorded values of all of its other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

Note 2 -summary of Significan22

Note 2 -summary of Significant Accounting Policies: Revenue Recognition (Policies)	6 Months Ended
	Dec. 31, 2015
Policies
Revenue Recognition	Revenue Recognition The Company recognizes revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable. For retail transactions, revenue is recognized at the point of sale. For wholesale and online transactions, revenue is recognized at the time goods are shipped.

Note 2 -summary of Significan23

Note 2 -summary of Significant Accounting Policies: Deferred Revenue (Policies)	6 Months Ended
	Dec. 31, 2015
Policies
Deferred Revenue	Deferred Revenue The Company accrues deferred revenue when customer payments are received, but product has not yet shipped. As of December 31, 2015 and June 30, 2015, the Company had recorded $9,830 and $82,499, respectively for deferred income as a result of prepayments for product made by customers. Those prepayments are recognized into revenue at the point those prepaid products have subsequently shipped. The Company has recognized the $82,499 during the six months ended December 31, 2015 and expects to recognize the $9,830 into revenue during the fiscal year ending June 30, 2016.

Note 2 -summary of Significan24

Note 2 -summary of Significant Accounting Policies: Advertising Expense (Policies)	6 Months Ended
	Dec. 31, 2015
Policies
Advertising Expense	Advertising Expense Advertising costs are expensed as incurred. Advertising expense for the six months ended December 31, 2014 and 2015 were $48,358 and $54,232, respectively and are included in general and administrative expenses.

Note 2 -summary of Significan25

Note 2 -summary of Significant Accounting Policies: Deferred Finance Costs, Net (Policies)	6 Months Ended
	Dec. 31, 2015
Policies
Deferred Finance Costs, Net	Deferred Finance Costs, Net Costs with respect to the issuance of common stock, warrants, stock options or debt instruments by the Company are initially deferred and ultimately offset against the proceeds from such equity transactions or amortized to interest expense over the term of any debt funding, if successful, or expensed if the proposed equity or debt transaction is unsuccessful. For the six months ended December 31, 2015, the Company incurred $250,400 in costs in connection with the negotiation of a financing transaction with TCA Global Credit Master Fund, LP which amount is included in deferred finance costs as of December 31, 2015 (see Note 7). The unamortized finance costs for the six months ended December 31, 2015 were $246,922.

Note 2 -summary of Significan26

Note 2 -summary of Significant Accounting Policies: Basic and Diluted Net Loss Per Share (Policies)	6 Months Ended
	Dec. 31, 2015
Policies
Basic and Diluted Net Loss Per Share	Basic and Diluted Net Loss per Share The Company computes net income per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants or debentures. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of December 31, 2015 and 2014, there were no dilutive securities.

Note 2 -summary of Significan27

Note 2 -summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies)	6 Months Ended
	Dec. 31, 2015
Policies
Recent Accounting Pronouncements	Recent Accounting Pronouncements In January 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities." This update impacts the accounting for financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. ASU 2016-01 is to be applied prospectively and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company has not yet determined the impact of ASU 2016-01 on its consolidated results of operations, financial condition, or cash flows. The Company has reviewed all other recent accounting pronouncements issued to date of the issuance of these unaudited condensed consolidated financial statements, and does not believe any of those pronouncements will have a material impact on the Company’s unaudited condensed consolidated financial statements.

Note 7 - Convertible Notes Pa28

Note 7 - Convertible Notes Payable: Schedule of Convertible Notes Payable Text Block (Tables)	6 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Convertible Notes Payable Text Block	Note Holder Balance December 31, 2015 Unamortized Original Derivative Discount Convertible Notes Net of Derivative Discount Modified November Notes 52,443 (25,461) 26,981 Modified June Note 281,750 (136,792) 144,958 TCA Global Loan Payable 320,229 (260,672) 59,557 Total Convertible Notes Payable, current portion 654,422 (422,926) 231,496 TCA Global Loan Payable 429,771 (341,362) 88,409 Total Convertible Notes Payable, net of current portion 1,084,193 (764,288) 319,905

Note 8 - Notes Payable_ Schedul

Note 8 - Notes Payable: Schedule of Notes Payable Text Block (Tables)	6 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Notes Payable Text Block	Note Holder Balance December 31, 2015 Unamortized Original Issue Discount Balance, net of Discount December 31, 2015 Iliad Unsecured Short Term 245,000 (9,131) 235,869 Capital Premium 27,077 - 27,077 AFCO Insurance 56,745 - 56,745 Bank of the West - short term portion 7,211 - 7,211 Total Short Term Notes Payable $ 336,033 $ (9,131) $ 326,902 Bank of the West - long term $ 26,193 $ - $ 27,698 Total Long Term Notes Payable $ 26,193 $ - $ 27,698

Note 9 - Loss Per Common Share_

Note 9 - Loss Per Common Share: Schedule of Earnings Per Share, Basic and Diluted (Tables)	6 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Earnings Per Share, Basic and Diluted	December 31, 2015 December 31, 2014 Net income (loss) for computation of basic and dilutive net income (loss) per share $ (408,597) $ (145,622) Basic and dilutive net income (loss) per share $ (0.01) $ 0.00 Basic and dilutive weighted average shares outstanding 72,621,258 68,060,001

Note 1- Incorporation, Nature31

Note 1- Incorporation, Nature of Operations and Acquisition (Details) - shares	6 Months Ended
	Dec. 31, 2015	Jun. 30, 2015	Mar. 14, 2014	Feb. 14, 2014
Common Stock, Shares Issued	76,265,606	72,455,606
Delite
Common Stock, Other Shares, Outstanding				30,000
Common Stock, Shares Issued			38,000,001
Treasury Stock, Shares, Retired	50,928,984

Note 2 -summary of Significan32

Note 2 -summary of Significant Accounting Policies: Deferred Revenue (Details) - USD ($)	Dec. 31, 2015	Jun. 30, 2015
Details
Deferred Revenue	$ 9,830	$ 82,499

Note 2 -summary of Significan33

Note 2 -summary of Significant Accounting Policies: Advertising Expense (Details) - USD ($)	6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Details
Advertising Expense	$ 54,232	$ 48,358

Note 3 - Officers' Loans Paya34

Note 3 - Officers' Loans Payable (Details) - USD ($)	Dec. 31, 2015	Jun. 30, 2015
Details
Related Party Loan Outstanding	$ 86,178	$ 96,312

Note 4 - Inventories (Details)

Note 4 - Inventories (Details) - USD ($)	Dec. 31, 2015	Jun. 30, 2015
Details
Inventory	$ 397,505	$ 323,784

Note 5 - Lease Commitments (Det

Note 5 - Lease Commitments (Details) - USD ($)	1 Months Ended	6 Months Ended	11 Months Ended	25 Months Ended
	Sep. 30, 2015	Dec. 31, 2015	Jun. 30, 2014	Sep. 30, 2015	Aug. 30, 2015	Sep. 15, 2015	Feb. 28, 2015	Aug. 06, 2013
S.J. Real Estate Group, LLC
Operating Leases, Rent Expense				$ 2,214
Other Commitment							$ 57,420
Security Deposit							$ 6,380
S.B.P.W., LLC
Operating Leases, Rent Expense			$ 4,070		$ 2,035
Winther Family Trust
Other Commitment								$ 333,350
Security Deposit						$ 1,716		$ 5,650
Monthly Lease and Rental Expense		$ 5,650
Susana Business Center, LLC
Other Commitment						$ 20,592
Monthly Lease and Rental Expense	$ 1,716

Note 6 - Related Parties (Detai

Note 6 - Related Parties (Details) - USD ($)	6 Months Ended
	Dec. 31, 2015	Jun. 30, 2015
Details
Due to Related Parties, Current	$ 86,178	$ 96,312
Professional Fees	46,503
Accrued Professional Fees, Current	$ 14,552	$ 12,369

Note 7 - Convertible Notes Pa38

Note 7 - Convertible Notes Payable: Schedule of Convertible Notes Payable Text Block (Details) - USD ($)	Dec. 31, 2015	Jun. 30, 2015
Current portion of, convertible notes payable, net of unamortized debt discount, current	$ 231,496	$ 192,091
Modified November Notes | Balance 12/31/2015
Current portion of, convertible notes payable, net of unamortized debt discount, current	52,443
Modified November Notes | Unamortized Original Derivative Discount
Current portion of, convertible notes payable, net of unamortized debt discount, current	(25,461)
Modified November Notes | Convertible Notes, Net of Derivative Discount
Current portion of, convertible notes payable, net of unamortized debt discount, current	26,981
Modified June Note | Balance 12/31/2015
Current portion of, convertible notes payable, net of unamortized debt discount, current	281,750
Modified June Note | Unamortized Original Derivative Discount
Current portion of, convertible notes payable, net of unamortized debt discount, current	(136,792)
Modified June Note | Convertible Notes, Net of Derivative Discount
Current portion of, convertible notes payable, net of unamortized debt discount, current	144,958
TCA Global Loan Payable 1 | Balance 12/31/2015
Current portion of, convertible notes payable, net of unamortized debt discount, current	320,229
TCA Global Loan Payable 1 | Unamortized Original Derivative Discount
Current portion of, convertible notes payable, net of unamortized debt discount, current	(260,672)
TCA Global Loan Payable 1 | Convertible Notes, Net of Derivative Discount
Current portion of, convertible notes payable, net of unamortized debt discount, current	59,557
Total Convertible Notes Payable | Balance 12/31/2015
Current portion of, convertible notes payable, net of unamortized debt discount, current	654,422
Total Convertible Notes Payable | Unamortized Original Derivative Discount
Current portion of, convertible notes payable, net of unamortized debt discount, current	(422,926)
Total Convertible Notes Payable | Convertible Notes, Net of Derivative Discount
Current portion of, convertible notes payable, net of unamortized debt discount, current	231,496
TCA Global Loan Payable 2 | Balance 12/31/2015
Current portion of, convertible notes payable, net of unamortized debt discount, current	429,771
TCA Global Loan Payable 2 | Unamortized Original Derivative Discount
Current portion of, convertible notes payable, net of unamortized debt discount, current	(341,362)
TCA Global Loan Payable 2 | Convertible Notes, Net of Derivative Discount
Current portion of, convertible notes payable, net of unamortized debt discount, current	88,409
Total | Balance 12/31/2015
Current portion of, convertible notes payable, net of unamortized debt discount, current	1,084,193
Total | Unamortized Original Derivative Discount
Current portion of, convertible notes payable, net of unamortized debt discount, current	(764,288)
Total | Convertible Notes, Net of Derivative Discount
Current portion of, convertible notes payable, net of unamortized debt discount, current	$ 319,905

Note 7 - Convertible Notes Pa39

Note 7 - Convertible Notes Payable (Details) - USD ($)	6 Months Ended
	Dec. 31, 2015	Dec. 24, 2015	Jun. 04, 2015	Jan. 16, 2015	Nov. 04, 2014
Amortization of Other Deferred Charges	$ 20,472
Interest Expense, Other	2,137
Unamortized Debt	0
Amortization of Financing Costs and Discounts	$ 48,975
Other Short-term Borrowings		$ 750,000
Typenex Co- Investment, LLC
Convertible Notes Payable					$ 1,687,500
Prepayment of Note Obligation				$ 102,028
Principal Amount of Note					$ 100,000
Other Short-term Borrowings			$ 245,000

Note 8 - Notes Payable_ Sched40

Note 8 - Notes Payable: Schedule of Notes Payable Text Block (Details)	Dec. 31, 2015USD ($)
Iliad Unsecured Short Term | Balance 12/31/2015
Other Notes Payable	$ 245,000
Iliad Unsecured Short Term | Unamortized Original Issue Discount
Other Notes Payable	(9,131)
Iliad Unsecured Short Term | Balance, net of Discount 12/31/2015
Other Notes Payable	235,869
Capital Premium | Balance 12/31/2015
Other Notes Payable	27,077
Capital Premium | Balance, net of Discount 12/31/2015
Other Notes Payable	27,077
AFCO Insurance | Balance 12/31/2015
Other Notes Payable	56,745
AFCO Insurance | Balance, net of Discount 12/31/2015
Other Notes Payable	56,745
Bank of the West- short term portion | Balance 12/31/2015
Other Notes Payable	7,211
Bank of the West- short term portion | Balance, net of Discount 12/31/2015
Other Notes Payable	7,211
Total Short Term Notes Payable | Balance 12/31/2015
Other Notes Payable	336,033
Total Short Term Notes Payable | Unamortized Original Issue Discount
Other Notes Payable	(9,131)
Total Short Term Notes Payable | Balance, net of Discount 12/31/2015
Other Notes Payable	326,902
Bank of the West- long term portion | Balance 12/31/2015
Other Notes Payable	26,193
Bank of the West- long term portion | Balance, net of Discount 12/31/2015
Other Notes Payable	27,698
Total Long Term Notes Payable | Balance 12/31/2015
Other Notes Payable	26,193
Total Long Term Notes Payable | Balance, net of Discount 12/31/2015
Other Notes Payable	$ 27,698

Note 8 - Notes Payable (Details

Note 8 - Notes Payable (Details) - USD ($)	Dec. 31, 2015	Dec. 24, 2015	Nov. 03, 2015	Aug. 22, 2015	Jul. 10, 2015	Jun. 30, 2015	Jun. 02, 2015	May. 29, 2015	Jan. 02, 2015	Jul. 10, 2014
Other Short-term Borrowings		$ 750,000
Worker's Compensation Insurance
Workers' Compensation Liability, Current	$ 0					$ 13,001		$ 18,871
General Liability Insurance
General Liability Insurance					$ 53,159					$ 43,953
General Liability Insurance Coverage	27,706					$ 0
Director's and Officer's Insurance- AFCO
Workers' Compensation Liability, Current				$ 93,750
Director's and Officer's Insurance- Loyds of London
General Liability Insurance Coverage	$ 56,745
B of I Federal Bank- Loan 1
Other Short-term Borrowings									$ 200,000
Net Proceeds									195,000
Unamortized Loan Commitment and Origination Fees and Unamortized Discounts or Premiums			$ 3,023						5,000
Short-term Bank Loans and Notes Payable									$ 1,728
B of I Federal Bank- Loan 2
Other Short-term Borrowings			125,000				$ 175,000
Net Proceeds			93,615				104,071
Unamortized Loan Commitment and Origination Fees and Unamortized Discounts or Premiums							1,875
Short-term Bank Loans and Notes Payable			$ 1,220				$ 1,708

Note 9 - Loss Per Common Shar42

Note 9 - Loss Per Common Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)	6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Details
Net loss for computation of basic and dilutive net (loss) per share	$ (408,597)	$ (145,622)
Earnings Per Share, Basic and Diluted	$ (0.01)	$ 0
Weighted Average Number of Shares Outstanding, Basic and Diluted	72,621,258	68,060,001

Note 10 - Debt Extinguishment (

Note 10 - Debt Extinguishment (Details)	6 Months Ended
	Dec. 31, 2015USD ($)
Details
Gains (Losses) on Extinguishment of Debt	$ 93,336

Note 11 - Derivative Liabilit44

Note 11 - Derivative Liabilities (Details)	Dec. 31, 2015USD ($)
Derivative liabilities	$ 398,120
Modified Notes
Derivative Liability, Original Valuation	194,596
Derivative liabilities	183,964
TCA Note
Derivative Liability, Original Valuation	610,514
Derivative liabilities	694,766
TCA Advisory Fee
Derivative Liability, Original Valuation	80,280
Derivative liabilities	$ 80,280