Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Sep. 29, 2014 | Dec. 31, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'STUDIO ONE MEDIA, INC. | ' | ' |
Entity Central Index Key | '0000836809 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 30-Jun-14 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--06-30 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $31,633,291 |
Entity Common Stock, Shares Outstanding | ' | 70,296,203 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Current Assets | ' | ' |
Cash | $77,876 | $165,258 |
Other Receivable | 3,400 | 16,240 |
Other Current Assets | 20,499 | 19,547 |
Total Current Assets | 101,775 | 201,045 |
Property and Equipment, net | 133,730 | 326,242 |
Property and Equipment, yet to be placed in service | 31,250 | 93,357 |
Intangible Assets, net | 11,990 | 16,689 |
Other Assets | ' | ' |
Deposits | 107,057 | 161,229 |
Total Other Long-Term Assets | 107,057 | 161,229 |
Total Assets | 385,802 | 798,562 |
Current Liabilities | ' | ' |
Accounts payable and other accrued expenses | 951,562 | 753,115 |
Accrued interest | 74,483 | 50,725 |
Deferred Revenue | 3,500 | 24,182 |
Consulting Services - Related Party | 278,568 | 167,659 |
Lease Payable | 30,768 | 21,743 |
Notes Payable - Related Party | 610,000 | 575,000 |
Notes Payable | 40,488 | 40,488 |
Convertible notes payable - related party, net of dicount of $1,761 and $103,584, repectively | 3,932,239 | 2,096,416 |
Convertible notes payable, net of dicount of $161,043 and $44,034, repectively | 764,705 | 306,366 |
Total Current Liabilities | 6,686,313 | 4,035,694 |
Long-Term Liabilities | ' | ' |
Lease Payable, net of current portion | 55,374 | 73,134 |
Convertible related party notes payable, net of dicount of $0 and $561, repectively | 0 | 1,724,439 |
Total Liabilities | 6,741,687 | 5,833,267 |
Stockholders' Deficit | ' | ' |
Convertible Preferred stock, Series A; $0.001 par value; 100,000 shares authorized,15,500 shares issued and outstanding | 16 | 16 |
Convertible Preferred stock, Series A-1; $0.001 par value; 3,000,000 shares authorized, 696,000 shares issued and outstanding | 696 | 696 |
Convertible Preferred stock, Series B; $0.001 par value; 200,000 shares authorized, 3,500 shares issued and outstanding | 3 | 3 |
Convertible Preferred stock, Series C; $0.001 par value; 1,000,000 shares authorized, 13,404 shares issued and outstanding | 13 | 13 |
Convertible Preferred stock, Series D; $0.001 par value; 375,000 shares authorized, 130,000 shares issued and outstanding | 130 | 130 |
Convertible Preferred stock, Series E; $0.001 par value; 1,000,000 shares authorized, 275,000 shares issued and outstanding | 275 | 275 |
Convertible Preferred stock, Series P; $0.001 par value; 600,000 shares authorized, 86,640 shares issued and outstanding | 87 | 87 |
Convertible Preferred stock, Series S; $0.001 par value; 50,000 shares authorized, -0- shares issued and outstanding | 0 | 0 |
Common Stock, authorized 100,000,000 shares, par value $0.001; 70,296,203 and 51,244,242 shares issued and outstanding, respectively | 70,297 | 51,243 |
Additional Paid In Capital | 40,557,726 | 36,564,046 |
Accumulated Deficit | -46,985,129 | -41,651,214 |
Total Stockholders' Deficit | -6,355,886 | -5,034,705 |
Total Liabilities and Stockholders' Deficit | $385,801 | $798,562 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Discount on related party convertible notes payable, current | $1,761 | $103,584 |
Discount on convertible notes payable | 161,043 | 44,034 |
Discount on related party convertible notes payable, noncurrent | $0 | $561 |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 70,296,203 | 51,244,242 |
Common stock, outstanding shares | 70,296,203 | 51,244,242 |
Series A Convertible Preferred stock | ' | ' |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Convertible preferred stock, par value | $0.00 | $0.00 |
Convertible preferred stock, authorized shares | 100,000 | 100,000 |
Convertible preferred stock, issued shares | 15,500 | 15,500 |
Convertible preferred stock, outstanding shares | 15,500 | 15,500 |
Series A-1 Convertible Preferred stock | ' | ' |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Convertible preferred stock, par value | $0.00 | $0.00 |
Convertible preferred stock, authorized shares | 3,000,000 | 3,000,000 |
Convertible preferred stock, issued shares | 696,000 | 696,000 |
Convertible preferred stock, outstanding shares | 696,000 | 696,000 |
Series B Convertible Preferred stock | ' | ' |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Convertible preferred stock, par value | $0.00 | $0.00 |
Convertible preferred stock, authorized shares | 200,000 | 200,000 |
Convertible preferred stock, issued shares | 3,500 | 3,500 |
Convertible preferred stock, outstanding shares | 3,500 | 3,500 |
Series C Convertible Preferred stock | ' | ' |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Convertible preferred stock, par value | $0.00 | $0.00 |
Convertible preferred stock, authorized shares | 1,000,000 | 1,000,000 |
Convertible preferred stock, issued shares | 13,404 | 13,404 |
Convertible preferred stock, outstanding shares | 13,404 | 13,404 |
Series D Convertible Preferred stock | ' | ' |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Convertible preferred stock, par value | $0.00 | $0.00 |
Convertible preferred stock, authorized shares | 375,000 | 375,000 |
Convertible preferred stock, issued shares | 130,000 | 130,000 |
Convertible preferred stock, outstanding shares | 130,000 | 130,000 |
Series E Convertible Preferred stock | ' | ' |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Convertible preferred stock, par value | $0.00 | $0.00 |
Convertible preferred stock, authorized shares | 1,000,000 | 1,000,000 |
Convertible preferred stock, issued shares | 275,000 | 275,000 |
Convertible preferred stock, outstanding shares | 275,000 | 275,000 |
Series P Convertible Preferred stock | ' | ' |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Convertible preferred stock, par value | $0.00 | $0.00 |
Convertible preferred stock, authorized shares | 600,000 | 600,000 |
Convertible preferred stock, issued shares | 86,640 | 86,640 |
Convertible preferred stock, outstanding shares | 86,640 | 86,640 |
Series S Convertible Preferred stock | ' | ' |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Convertible preferred stock, par value | $0.00 | $0.00 |
Convertible preferred stock, authorized shares | 50,000 | 50,000 |
Convertible preferred stock, issued shares | 0 | 0 |
Convertible preferred stock, outstanding shares | 0 | 0 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
REVENUES | ' | ' |
Session Revenues | $36,192 | $192,205 |
AfterMaster Revenues | 146,307 | 85,532 |
Total Revenues | 182,499 | 277,737 |
COSTS AND EXPENSES | ' | ' |
Cost of Revenues (Exclusive of Depreciation and Amortization) | 381,780 | 322,973 |
Depreciation and Amortization Expense | 114,330 | 214,951 |
General and Administrative Expenses | 3,212,694 | 3,033,876 |
Total Costs and Expenses | 3,708,804 | 3,571,800 |
Loss from Operations | -3,526,305 | -3,294,063 |
Other Income (Expense) | ' | ' |
Interest Expense | -1,579,617 | -1,362,732 |
Gain (Loss) on Extinguishment of Debt | -25,787 | 188,436 |
Loss on Disposal of Property | 0 | -6,725 |
Impairment of assets | -202,206 | 0 |
Other Income | 0 | 1,500 |
Total Other Expense | -1,807,610 | -1,179,521 |
Loss Before Income Taxes | -5,333,915 | -4,473,584 |
NET LOSS | -5,333,915 | -4,473,584 |
Preferred Stock Accretion and Dividends | -68,064 | -68,066 |
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS | ($5,401,979) | ($4,541,650) |
Basic and Diluted Loss Per Share of Common Stock | ($0.09) | ($0.11) |
Weighted Average Number of Shares Outstanding | 60,147,906 | 40,990,041 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (Deficit) (USD $) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Amount at Jun. 30, 2012 | $1,220 | $36,413 | $33,696,207 | ($37,177,630) | ($3,443,790) |
Beginning Balance, Share at Jun. 30, 2012 | 1,220,044 | 36,412,601 | ' | ' | ' |
Common Stock issued as dividend on preferred stock, Amount | ' | ' | ' | ' | 17,016 |
Common shares issued for cash, net of offering costs, Shares | ' | 7,023,735 | ' | ' | ' |
Common shares issued for cash, net of offering costs, Amount | ' | 7,025 | 693,890 | ' | 700,915 |
Share-Based Compensation to Directors and Employees- Common shares, shares | ' | 4,592,744 | ' | ' | ' |
Share-Based Compensation to Directors and Employees- Common shares, Amount | ' | 4,590 | 1,045,000 | ' | 1,049,590 |
Share-based compensation - warrants and options | ' | ' | 10,914 | ' | 10,914 |
Shares Issued for Conversion of Debt and Interest, Shares | ' | 545,168 | ' | ' | ' |
Shares Issued for Conversion of Debt and Interest, Amount | ' | 545 | 116,359 | ' | 116,904 |
Warrants and common shares issued in advance of services, Amount | ' | ' | 37,840 | ' | 37,840 |
Warrants and common shares issued for interest expense, Shares | ' | 2,584,994 | ' | ' | ' |
Warrants and common shares issued for interest expense, Amount | ' | 2,585 | 740,757 | ' | 743,342 |
Beneficial conversion feature on issuance of convertible debt, Shares | ' | 85,000 | ' | ' | ' |
Beneficial conversion feature on issuance of convertible debt, Amount | ' | 85 | 217,900 | ' | 217,985 |
Warrants issued in connection to issuance of convertible debt | ' | ' | 5,179 | ' | 5,179 |
NET LOSS | ' | ' | ' | -4,473,584 | -4,473,584 |
Ending Balance, Amount at Jun. 30, 2013 | 1,220 | 51,243 | 36,564,046 | -41,651,214 | -5,034,705 |
Ending Balance, Shares at Jun. 30, 2013 | 1,220,044 | 51,244,242 | ' | ' | ' |
Common Stock issued as dividend on preferred stock, Amount | ' | ' | ' | ' | 49,790 |
Common shares issued for cash, net of offering costs, Shares | ' | 9,951,750 | ' | ' | ' |
Common shares issued for cash, net of offering costs, Amount | ' | 9,952 | 956,613 | ' | 966,565 |
Share-Based Compensation to Directors and Employees- Common shares, shares | ' | 2,272,495 | ' | ' | ' |
Share-Based Compensation to Directors and Employees- Common shares, Amount | ' | 2,272 | 614,518 | ' | 616,790 |
Share-Based Compensation for Consulting Services and Rent, shares | ' | 1,862,399 | ' | ' | ' |
Share-Based Compensation for Consulting Services and Rent, amount | ' | 1,862 | 466,530 | ' | 468,392 |
Common stock issued as incentive with Convertible debt, shares | ' | 229,250 | ' | ' | ' |
Common stock issued as incentive with Convertible debt, amount | ' | 230 | 46,053 | ' | 46,283 |
Share-based compensation - warrants and options | ' | ' | 289,791 | ' | 289,791 |
Shares Issued for Conversion of Debt and Interest, Shares | ' | 1,271,534 | ' | ' | ' |
Shares Issued for Conversion of Debt and Interest, Amount | ' | 1,272 | 125,881 | ' | 127,153 |
Common stock issued for conversion of cashless warrants/options, shares | ' | 43,758 | ' | ' | ' |
Common stock issued for conversion of cashless warrants/options, amount | ' | 44 | -44 | ' | ' |
Warrants and common shares issued in advance of services, Amount | ' | ' | ' | ' | 0 |
Warrants and common shares issued for interest expense, Shares | ' | 3,040,775 | ' | ' | ' |
Warrants and common shares issued for interest expense, Amount | ' | 3,041 | 769,268 | ' | 772,309 |
Common stock issued to extend the maturity dates on debt, shares | ' | 380,000 | ' | ' | ' |
Common stock issued to extend the maturity dates on debt, amount | ' | 381 | 104,844 | ' | 105,225 |
Beneficial conversion feature on issuance of convertible debt, Amount | ' | ' | 620,226 | ' | 620,226 |
NET LOSS | ' | ' | ' | -5,333,915 | -5,333,915 |
Ending Balance, Amount at Jun. 30, 2014 | $1,220 | $70,297 | $40,557,726 | ($46,985,129) | ($6,355,886) |
Ending Balance, Shares at Jun. 30, 2014 | 1,220,044 | 70,296,203 | ' | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
OPERATING ACTIVITIES | ' | ' |
Net Loss | ($5,333,915) | ($4,473,584) |
Adjustments to reconcile net loss to cash from operating activities: | ' | ' |
Depreciation and amortization | 114,330 | 214,952 |
Share-based compensation - Common Stock | 616,790 | 1,081,314 |
Share-based compensation - warrants | 289,791 | 10,913 |
Common stock issued for services and rent | 468,392 | 743,342 |
Common stock issued as incentive with Convertible debt | 20,446 | 0 |
Common stock issued to extend the maturity dates on debt | 105,225 | 0 |
Amortization of debt discount and issuance costs | 635,602 | 726,925 |
(Gain)/Loss on Disposal of assets | 0 | 45,653 |
(Gain)/Loss on extinguishment of debt | 25,837 | 0 |
Penalties accrued on convertible notes | 120,348 | 0 |
Impairment on long lived assets and intangibles | 202,206 | -183,257 |
Changes in Operating Assets and Liabilities: | ' | ' |
Other receivables | 12,840 | -4,370 |
Other assets | 53,220 | 116,036 |
Accounts payable and accrued expenses and deferred revenue | 1,086,176 | 62,707 |
Net Cash Used in Operating Activities | -1,582,712 | -1,659,369 |
INVESTING ACTIVITIES | ' | ' |
Purchase of property and equipment | -58,500 | -115,802 |
Net Cash Used in Investing Activities | -58,500 | -115,802 |
FINANCING ACTIVITIES | ' | ' |
Common Stock issued for cash, net of offering costs of $15,935 and $3,300, respectively | 966,565 | 700,915 |
Proceeds from notes payable - related party | 44,000 | 0 |
Proceeds from convertible notes payable - related party | 0 | 1,050,000 |
Proceeds from convertible notes payable | 624,000 | 205,000 |
Repayments of convertible notes payable | -72,000 | -210,000 |
Lease payable | -8,735 | 94,877 |
Net Cash Provided by Financing Activities | 1,553,830 | 1,840,792 |
NET INCREASE (DECREASE) IN CASH | -87,382 | 65,621 |
CASH AT BEGINNING OF PERIOD | 165,258 | 99,637 |
CASH AT END OF PERIOD | 77,876 | 165,258 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ' | ' |
Cash paid for interest | 918 | 9,125 |
NON CASH FINANCING ACTIVITIES: | ' | ' |
Common Stock issued to extinguish debt and liabilities | 0 | 85,179 |
Conversion of Notes and Interest into common stock | 127,153 | 0 |
Common Stock and warrants issued for prepaid services | 0 | 37,840 |
Common Stock and warrants issued for interest | 607,000 | 0 |
Warrants and beneficial conversion feature on issuance of convertible debt | $1,392,535 | $182,579 |
1_SUMMARY_OF_SIGNIFICANT_ACCOU
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |||
Jun. 30, 2014 | ||||
Notes to Financial Statements | ' | |||
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||
Description of Business | ||||
Studio One Media, Inc. (the “Company” or “Studio One”) was originally organized in Delaware on May 12, 1988, as Dimensional Visions Group, Ltd. The name was changed on January 15, 1998 to Dimensional Visions Incorporated. On February 8, 2006, it changed its name to Elevation Media, Inc., and on March 28, 2006 the Company’s name was changed to Studio One Media, Inc. as part of its overall plan to implement its revised business plan. | ||||
In April 2006, the Company entered into an agreement to purchase MyStudio HD Recording Studios, Inc. (formerly known as Studio One Entertainment, Inc.), a privately-held Scottsdale, Arizona-based company that designed and manufactured the recording studios currently in use by the Company (the “MyStudio Agreement”). | ||||
On April 17, 2007, the Company announced that it had finalized the reverse merger of MyStudio HD Recording Studios, Inc. through an all-stock transaction. The purchase was pursuant to an agreement entered into by the companies dated March 29, 2006. The reverse merger included the exchange of 7,000,000 restricted Common Shares of Studio One Media, Inc. for 100% of the issued and outstanding shares of MyStudio HD Recording Studios, Inc. The substance of the transaction resulted in a reverse merger wherein MyStudio HD Recording Studios, Inc. became the accounting acquirer of Studio One. Therefore, historical financial data reflects the operations and accumulated deficit of MyStudio HD Recording Studios, Inc. The transaction essentially is a recapitalization of MyStudio HD Recording Studios, Inc. The reverse merger includes all right, title and interest to MyStudio HD Recording Studio, Inc.’s proprietary interactive recording studios, business plan and intellectual property, including pending patents, foreign patent rights and federal trademark applications. MyStudio, Inc. continues to operate as a wholly owned subsidiary of Studio One. Accordingly, the financial statements present on a consolidated basis the operations of Studio One and MyStudio HD Recording Studios, Inc., as well its other wholly-owned subsidiary, AfterMaster HD Audio, Inc. | ||||
Accounting Basis | ||||
The Company’s financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States. The Company has elected a June 30 fiscal year end. | ||||
Principles of Consolidation | ||||
The consolidated financial statements include the accounts of Studio One Media, Inc. and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. | ||||
Use of Estimates | ||||
The preparation of financial statements in conformity with generally accepted accounting principles 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 dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates are made in relation to the allowance for doubtful accounts and the fair value of certain financial instruments. | ||||
Notes and Other Receivables | ||||
Notes and other receivables are stated at amounts management expects to collect. An allowance for doubtful accounts is provided for uncollectible receivables based upon management's evaluation of outstanding accounts receivable at each reporting period considering historical experience and customer credit quality and delinquency status. Delinquency status is determined by contractual terms. Bad debts are written off against the allowance when identified. | ||||
Fair Values, Inputs and Valuation Techniques for Financial Assets and Liabilities Disclosures | ||||
The fair value measurements and disclosure guidance defines fair value and establishes a framework for measuring fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In accordance with this guidance, the Company has categorized its recurring basis financial assets and liabilities into a three-level fair value hierarchy based on the priority of the inputs to the valuation technique. | ||||
The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. | ||||
The levels of the fair value hierarchy are described below: | ||||
• | Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. | |||
• | Level 2 inputs utilize other than quoted prices included in Level 1 that are observable for the asset, either directly or indirectly, for substantially the full term of the asset. Level 2 inputs include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active and inputs other than quoted prices that are observable in the marketplace for the asset. The observable inputs are used in valuation models to calculate the fair value for the asset. | |||
• | Level 3 inputs are unobservable but are significant to the fair value measurement for the asset, and include situations where there is little, if any, market activity for the asset. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset. | |||
A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. | ||||
Disclosures for Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis | ||||
The Company’s financial instruments mainly consist of cash, receivables, current assets, accounts payable and accrued expenses and debt. The carrying amounts of its cash, receivables, current asserts, accounts payable, accrued expenses and current debt approximates fair value due to the Short-Term nature of these instruments. The debt consists of lease payable and notes payables, the lease payables, which is due 24 months after June 30, 2014, therefore its carrying amount also approximates fair value. | ||||
Concentration of Risk | ||||
Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash. Our cash balances are maintained in accounts held by major banks and financial institutions located in the United States. The Company occasionally maintains amounts on deposit with a financial institution that are in excess of the federally insured limits. The risk is managed by maintaining all deposits in high quality financial institutions. | ||||
For the year ended June 30, 2014 there were no customers that accounted for a material portion of total revenues, and 2013 there was one customer that accounted for a material portion of total revenues. | ||||
Property and Equipment | ||||
Property and equipment is recorded at cost less accumulated depreciation. Depreciation and amortization is calculated using the straight-line method over the expected useful life of the asset, after the asset is placed in service. The Company generally uses the following depreciable lives for its major classifications of property and equipment: | ||||
Description | Useful Lives | |||
Office Equipment and Computers | 5 years | |||
Computer Software | 5 years | |||
Furniture and Office Equipment | 5 years | |||
Vehicles | 5 years | |||
Leasehold Improvements | Shorter of Useful Life or Lease Term | |||
Studios | 5 years | |||
Expenditures associated with upgrades and enhancements that improve, add functionality, or otherwise extend the life of property and equipment are capitalized, while expenditures that do not, such as repairs and maintenance, are expensed as incurred. | ||||
Property and Equipment Yet to be Placed in Service | ||||
The Company capitalizes direct costs associated with the production of a new studio as it is being built. Depreciation of these assets does not begin until the studio is complete and placed into service. | ||||
Intangible Assets | ||||
Intangible assets consist of intellectual property, website costs, video backgrounds, and patterns and molds. The Company’s intellectual property includes purchased patents and trademarks as well as other proprietary technologies. Website costs are costs incurred to develop the Company’s website. Video backgrounds are the costs incurred to develop video backgrounds for use in the Company’s recording studios. Patterns and molds are for the design and construction of the studios. The Company amortizes intangible assets over the following useful lives: | ||||
Description | Weighted-Average Amortization Period | |||
Intellectual Property | 5 years | |||
Website Costs | 5 years | |||
Video Backgrounds | 5 years | |||
Patterns and Molds | 5 years | |||
Valuation of Long-Lived Assets | ||||
Long-lived tangible assets and definite-lived intangible assets are reviewed for possible impairment annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses both an estimate of undiscounted future net cash flows of the assets over the remaining useful lives and a replacement cost method when determining their fair values. If the carrying values of the assets exceed the fair value of the assets, the Company recognizes an impairment loss equal to the difference between the carrying values of the assets and their fair values. Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash flows that are independent from other groups of assets. The evaluation of long-lived assets requires the Company to use estimates of future cash flows. However, actual cash flows may differ from the estimated future cash flows used in these impairment tests. | ||||
Revenue Recognition | ||||
The Company applies the provisions of FASB ASC 605, Revenue Recognition in Financial Statements, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue related to goods and services provided when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. | ||||
The Company's revenues are generated from the studio sessions, on-studio advertising, website advertising and fees from the AfterMaster services. Studio sessions are included in revenues as cash sales. Cash sales are recognized as revenue upon the earlier of the use of or expiration of the prepaid session. | ||||
Cost of Revenues | ||||
The Company’s cost of revenues includes studio lease expense, employee costs, and other nominal amounts. Depreciation is not included within cost of sales. | ||||
Research and Development | ||||
The Company follows the policy of expensing its research and development costs in the period in which they are incurred in accordance with ASC 730, Accounting for Research and Development Costs. The Company incurred research and development expenses of $31,450 and $643 during the years ended June 30, 2014 and 2013, respectively. | ||||
Advertising Expenses | ||||
The Company expenses advertising costs in the period in which they are incurred. Advertising expenses were $85,810 and $8,064 for the years ended June 30, 2014 and 2013, respectively, and have been included within general and administrative expenses. | ||||
Share-Based Compensation | ||||
The Company follows the provisions of ASC 718, Share-Based Payment, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The Company uses the Black-Scholes pricing model for determining the fair value of share-based compensation. | ||||
Equity instruments issued to non-employees for goods or services are accounted for at fair value and are marked to market until service is complete or a performance commitment date is reached, whichever is earlier. | ||||
Loss Per Share | ||||
Basic earnings (loss) per Common Share is computed by dividing losses attributable to Common shareholders by the weighted-average number of shares of Common Stock outstanding during the period. The losses attributable to Common shareholders was increased for accrued and deemed dividends on Preferred Stock during the years ended June 30, 2014 and 2013 of $68,064 and $68,066, respectively. | ||||
Diluted earnings per Common Share is computed by dividing income (loss) attributable to Common shareholders by the weighted-average number of Shares of Common Stock outstanding during the period increased to include the number of additional Shares of Common Stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding convertible Preferred Stock, stock options, warrants, and convertible debt. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s Common Stock can result in a greater dilutive effect from potentially dilutive securities. | ||||
For the years ended June 30, 2014 and 2013, all of the Company’s potentially dilutive securities (warrants, options, convertible preferred stock, and convertible debt) were excluded from the computation of diluted earnings per share as they were anti-dilutive. The total number of potentially dilutive Common Shares that were excluded were 15,895,075 and 11,591,124 at June 30, 2014 and 2013, respectively. | ||||
Income Taxes | ||||
The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The charge for taxation is based on the results for the year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. | ||||
In July, 2006, the FASB issued ASC 740, Accounting for Uncertainty in Income Taxes, which clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a return. ASC 740 provides guidance on the measurement, recognition, classification and disclosure of tax positions, along with accounting for the related interest and penalties. Under this pronouncement, the Company recognizes the financial statement benefit of a tax position only after determining that a position would more likely than not be sustained based upon its technical merit if challenged by the relevant taxing authority and taken by management to the court of the last resort. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon settlement with the relevant tax authority. | ||||
The Company’s policy is to recognize both interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties on unrecognized tax benefits expected to result in payment of cash within one year are classified as accrued liabilities, while those expected beyond one year are classified as other liabilities. The Company has not recorded any interest and penalties since its inception. | ||||
The Company files income tax returns in the U.S. federal tax jurisdiction and various state tax jurisdictions. The tax years for 2012 to 2014 remain open for federal and/or state tax jurisdictions. The Company is currently not under examination by any other tax jurisdictions for any tax years. | ||||
Recent Accounting Pronouncements | ||||
Management has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements. |
2_GOING_CONCERN
2. GOING CONCERN | 12 Months Ended |
Jun. 30, 2014 | |
Text Block [Abstract] | ' |
2. GOING CONCERN | ' |
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred losses since inception of $46,985,129 and currently has revenues which are insufficient to cover its operating costs, which raises substantial doubt about its ability to continue as a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. | |
The future of the Company as an operating business will depend on its ability to (1) obtain sufficient capital contributions and/or financing as may be required to sustain its operations and (2) to achieve adequate revenues from its MyStudio and AfterMaster businesses. Management's plan to address these issues includes, (a) continued exercise of tight cost controls to conserve cash, (b) obtaining additional financing, (c) placing in service additional studios (d) more widely commercializing the AfterMaster and ProMaster products, and (e) identifying and executing on additional revenue generating opportunities. | |
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations. |
3_PROPERTY_AND_EQUIPMENT
3. PROPERTY AND EQUIPMENT | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
3. PROPERTY AND EQUIPMENT | ' | ||||||||
The Company’s property and equipment are comprised of the following as of June 30, 2014 and 2013: | |||||||||
2014 | 2013 | ||||||||
Furniture and Office Equipment | $ | 25,912 | $ | 25,912 | |||||
Office Equipment and Computers | 233,564 | 230,930 | |||||||
Studios | 123,324 | 1,140,884 | |||||||
Vehicles | 60,524 | 60,524 | |||||||
Leasehold Improvements | 23,472 | 9,174 | |||||||
Computer Software | 56,166 | 56,166 | |||||||
Accumulated Depreciation | (357,982 | ) | (1,197,348 | ) | |||||
Property and Equipment, net | $ | 164,980 | $ | 336,242 | |||||
The Company also had $31,250 and $93,357 in equipment that was yet to be placed in service as of June 30, 2014 and 2013, respectively. Depreciation expense for the years ended June 30, 2014 and 2013 was $104,127 and $204,333, respectively. For the year ending June 30, 2014 the Company impaired assets related to the studios due to the decrease in revenue production and lack of use, totaling $202,206. |
4_INTANGIBLE_ASSETS
4. INTANGIBLE ASSETS | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||
4. INTANGIBLE ASSETS | ' | ||||||||
The Company’s intangible assets are comprised of the following on June 30, 2014 and June 30, 2013: | |||||||||
2014 | 2013 | ||||||||
Patterns and Molds | $ | 18,916 | $ | 18,916 | |||||
Website Costs | 100,410 | 91,375 | |||||||
Video Backgrounds | 16,172 | 16,172 | |||||||
Accumulated Amortization | (123,508 | ) | (109,774 | ) | |||||
Intangible Assets, Net | $ | 11,990 | $ | 16,689 | |||||
Amortization expense for the years ended June 30, 2014 and 2013 was $10,193 and $10,618, respectively. The Company’s future estimated amortization for the above intangible assets are as follows: | |||||||||
Year | Amortization | ||||||||
2015 | $ | 3,159 | |||||||
2016 | 4,970 | ||||||||
2017 | 3,861 | ||||||||
2018 | - | ||||||||
2019 | - | ||||||||
Total | $ | 11,990 |
5_ACCOUNTS_PAYABLE_AND_ACCRUED
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ' | ||||||||
A summary of accounts payable and accrued expenses as of June 30, 2014 and 2013 follows: | |||||||||
2014 | 2013 | ||||||||
Accounts Payable | $ | 822,006 | $ | 597,079 | |||||
Accrued Interest | 74,483 | 50,725 | |||||||
Deferred Revenue | 3,500 | 24,182 | |||||||
Other Accrued Expenses | 129,556 | 156,036 | |||||||
Consulting Services-Related Party | 278,568 | 167,659 | |||||||
Total | $ | 1,308,113 | $ | 995,681 | |||||
Other accrued expenses consist primarily of accrued payroll liabilities, consulting fees payable and other fees payable. |
6_NOTES_PAYABLE
6. NOTES PAYABLE | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Notes Payable [Abstract] | ' | ||||||||
6. NOTES PAYABLE | ' | ||||||||
Convertible Notes Payable | |||||||||
In accounting for its convertible notes payable, proceeds from the sale of a convertible debt instrument with Common Stock purchase warrants are allocated to the two elements based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance. The portions of the proceeds allocated to the warrants are accounted for as paid-in capital with an offset to debt discount. The remainder of the proceeds are allocated to the debt instrument portion of the transaction as prescribed by ASC 470-25-20. The Company then calculates the effective conversion price of the note based on the relative fair value allocated to the debt instrument to determine the fair value of any beneficial conversion feature (“BCF”) associated with the convertible note in accordance with ASC 470-20-30. The BCF is recorded to additional paid-in capital with an offset to debt discount. Both the debt discount related to the issuance of warrants and related to a BCF is amortized over the life of the note. | |||||||||
Convertible Notes Payable – Related Parties | |||||||||
Convertible notes payable due to related parties consisted of the following as of June 30, 2014 and 2013, respectively: | |||||||||
Convertible Notes Payable – Related Parties | |||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
$250,000 face value, issued in February 2010, interest rate of 12%, matures in February 2013, net of unamortized discount of $0 and $0 at June 30, 2014 and June 30,2013, respectively. | $ | 250,000 | $ | 250,000 | |||||
$250,000 face value, issued in May 2010, interest rate of 12%, matures in May 2013, net of unamortized discount of $0 and $0 at June 30, 2014 and June 30,2013, respectively. | 250,000 | 250,000 | |||||||
$250,000 face value, issued in August 2010, interest rate of 12%, matures in August 2013, net of unamortized discount of $0 and $24,559 at June 30, 2014 and June 30,2013, respectively. | 250,000 | 225,441 | |||||||
$250,000 face value, issued in December 2010, interest rate of 12%, matures in December 2013, net of unamortized discount of $0 and $40,148 at June, 2014 and June 30,2013, respectively. | 250,000 | 209,852 | |||||||
$250,000 face value, issued in November 2011, interest rate of 15%, matures in November 2012, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30,2013, respectively. | 250,000 | 250,000 | |||||||
$250,000 face value, issued in December 2011, interest rate of 15%, matures in June 2013, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30,2013, respectively. | 250,000 | 250,000 | |||||||
$100,000 face value, issued in December 2011, interest rate of 15%, matures in June 2013, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30,2013, respectively. | 100,000 | 100,000 | |||||||
$300,000 face value, issued in December 2011, interest rate of 15%, matures in June 2013, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30,2013, respectively. | 300,000 | 300,000 | |||||||
$100,000 face value, issued in February 2012, interest rate of 15%, matures in August 2013, net of unamortized discount of $0 and $1,168 as of June 30, 2014 and June 30,2013, respectively. | 100,000 | 98,832 | |||||||
$100,000 face value, issued in February 2012, interest rate of 15%, matures in August 2013, net of unamortized discount of $0 and $1,514 as of June 30, 2014 and June 30,2013, respectively. | 100,000 | 98,486 | |||||||
$150,000 face value, issued in March 2012, interest rate of 15%, matures in September 2013, net of unamortized discount of $0 and $1,111 as of June 30, 2014 and June 30,2013, respectively. | 150,000 | 148,889 | |||||||
$200,000 face value, issued in March 2012, interest rate of 15%, matures in September 2013, net of unamortized discount of $0 and $1,814 as of June 30, 2014 and June 30,2013, respectively. | 200,000 | 198,186 | |||||||
$200,000 face value, issued in April 2012, interest rate of 10%, matures in October 2013, net of unamortized discount of $0 and $2,450 as of June 30, 2014 and June 30,2013, respectively. | 200,000 | 197,550 | |||||||
$150,000 face value, issued in May 2012, interest rate of 10%, matures in November 2013, net of unamortized discount of $0 and $1,682 as of June 30, 2014 and June 30,2013, respectively. | 150,000 | 148,318 | |||||||
$125,000 face value, issued in June 2012, interest rate of 10%, matures in December 2013, net of unamortized discount of $0 and $1,897 as of June 30, 2014 and June 30,2013, respectively. | 125,000 | 123,103 | |||||||
$125,000 face value, issued in June 2012, interest rate of 10%, matures in December 2013, net of unamortized discount of $0 and $2,208 as of June 30, 2014 and June 30,2013, respectively. | 125,000 | 122,792 | |||||||
$50,000 face value, issued in August 2012, interest rate of 10%, matures in February 2014, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30, 2013. | 50,000 | 50,000 | |||||||
$50,000 face value, issued in September 2012, interest rate of 10%, matures in March 2014, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30, 2013. | 50,000 | 50,000 | |||||||
$100,000 face value, issued in October 2012, interest rate of 10%, matures in April 2014, net of unamortized discount of $0 and $2,662 as of June 30, 2014 and June 30, 2013. | 100,000 | 97,338 | |||||||
$100,000 face value, issued in October 2012, interest rate of 10%, matures in April 2014, net of unamortized discount of $0 and $2,786 as of June 30, 2014 and June 30, 2013. | 100,000 | 97,214 | |||||||
$50,000 face value, issued in October 2012, interest rate of 10%, matures in April 2014, net of unamortized discount of $0 and $1,192 as of June 30, 2014 and June 30, 2013. | 50,000 | 48,808 | |||||||
$75,000 face value, issued in November 2012, interest rate of 10%, matures in May 2014, net of unamortized discount of $0 and $1,804 as of June 30, 2014 and June 30, 2013. | 75,000 | 73,196 | |||||||
$25,000 face value, issued in November 2012, interest rate of 10%, matures in May 2014, net of unamortized discount of $0 and $1,159 as of June 30, 2014 and June 30, 2013. | 25,000 | 23,841 | |||||||
$50,000 face value, issued in November 2012, interest rate of 10%, matures in May 2014, net of unamortized discount of $0 and $2,358 as of June 30, 2014 and June 30, 2013. | 50,000 | 47,642 | |||||||
$50,000 face value, issued in December 2012, interest rate of 10%, matures in June 2014, net of unamortized discount of $0 and $2,502 as of June 30, 2014 and June 2013. | 50,000 | 47,498 | |||||||
$75,000 face value, issued in January 2013, interest rate of 10%, matures in July 2014, net of unamortized discount of $0 and $2,111 as ofJune 30, 2014 and June 30, 2013. | 75,000 | 72,889 | |||||||
$25,000 face value, issued in January 2013, interest rate of 10%, matures in July 2014, net of unamortized discount of $1 and $637 as of June 30, 2014 and June 30, 2013. | 24,999 | 24,363 | |||||||
$35,000 face value, issued in January 2013, interest rate of 10%, matures in July 2014, net of unamortized discount of $0 and $1,099 as of June 30, 2014 and June 30, 2013. | 35,000 | 33,901 | |||||||
$5,000 face value, issued in February 2013, interest rate of 10%, matures in August 2014, net of unamortized discount of $0 and $156 as of June 30, 2014 and June 30, 2013. | 5,000 | 4,844 | |||||||
$10,000 face value, issued in February 2013, interest rate of 10%, matures in August 2014, net of unamortized discount of $1 and $374 as of June 30, 2014 and June 30, 2013. | 9,999 | 9,626 | |||||||
$50,000 face value, issued in February 2013, interest rate of 10%, matures in August 2014, net of unamortized discount of $0 and $2,296 as of June 30, 2014 and June 30, 2013. | 50,000 | 47,704 | |||||||
$50,000 face value, issued in March 2013, interest rate of 10%, matures in September 2014, net of unamortized discount of $13 and $1,746 as of June 30, 2014 and June 30, 2013. | 49,987 | 48,254 | |||||||
$75,000 face value, issued in April 2013, interest rate of 10%, matures in October 2014, net of unamortized discount of $546 and $2,712 as of June 30, 2014 and June 30, 2013. | 74,454 | 72,288 | |||||||
$9,000 face value, issued in June 2014, interest rate of 0%, matures in July 2014, net of unamortized discount of $1,200 as of June 30, 2014 | 7,800 | - | |||||||
Total convertible notes payable – related parties | 3,932,239 | 3,820,855 | |||||||
Less current portion | 3,932,239 | 2,096,416 | |||||||
Convertible notes payable – related parties, long-term | $ | - | $ | 1,724,439 | |||||
In February 2010, the Company entered into a financing agreement with an unrelated third party to fund up to $1,000,000 in four equal increments. The proceeds of each advance by the lender to Studio One are to be used to manufacture, ship, install and operate MyStudios serving as collateral for such advances. Each advance is evidenced by a promissory note, bearing interest at 12% per annum and due in 3 years from the advance dates, and a security agreement granting the lender a first lien on specified studios. The principal and interest on these notes may be converted at the lender’s option into Common Stock based on a conversion price of fifty cents ($0.50) per share. The notes were issued on February 23, 2010, May 4, 2010, August 19, 2010, and December 23, 2010 in encruments of $250,000 per issuance. Additionally, the Company granted 200,000 warrants to the lender, which have an exercise price of $0.40 to $0.50 and expire in 5 years. The notes was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
On November 3, 2011, the Company issued a convertible note to a related party for $250,000 that matures one year after issuance. The note bears an interest rate of 15% per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.40 per share. This note includes the following priority repayment provisions: 1) the Company agrees to apply 50% of the first $600,000 of capital raised by the Company in the near term toward all outstanding notes the lender has outstanding with the Company; 2) the Company agrees to apply the first $825,000 of proceeds raised beyond the $600,000 to any outstanding notes the lender has outstanding with the Company; and 3) if the Company is unable to raise additional capital but a large marketing or sales agreement is entered into which provide for revenue in excess of $50,000, all funds received above $50,000 shall be applied to any notes the lender has outstanding with the Company at the time. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 60,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of BCF recorded was $118,455 and the debt discount related to the attached warrants was $24,705, for a total debt discount of $143,160. | |||||||||
On December 2, 2011, the Company issued a convertible note to a related party for $250,000 that matures in June 2013. The note bears an interest rate of 15% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. In the event the Company enters into a revenue sharing agreement as specified in the note, the holder, at its option, may accelerate payment of the note up to 50% of the gross revenues received by the Company under the revenue sharing agreement. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 112,500 shares of the Company’s Common Stock. The warrant has an exercise price of $0.50 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $61,998 and the debt discount related to the attached warrants was $41,998, for a total debt discount of $103,996. | |||||||||
On December 15, 2011, the Company issued a convertible note to a related party for $100,000 that matures in June 2013. The note bears an interest rate of 15% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. In the event the Company enters into a revenue sharing agreement as specified in the note, the holder, at its option, may accelerate payment of the note up to 50% of the gross revenues received by the Company under the revenue sharing agreement. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 50,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.50 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $24,020 and the debt discount related to the attached warrants was $18,020, for a total debt discount of $40,040. | |||||||||
On December 30, 2011, the Company issued a convertible note to a related party for $300,000 that matures in June 2013. The note bears an interest rate of 15% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. In the event the Company enters into a revenue sharing agreement as specified in the note, the holder, at its option, may accelerate payment of the note up to 50% of the gross revenues received by the Company under the revenue sharing agreement. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 150,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.50 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $54,934 and the debt discount related to the attached warrants was $51,934, for a total debt discount of $106,868. | |||||||||
On February 3, 2012, the Company issued a convertible note to a related party for $100,000 that matures in August 2013. The note bears an interest rate of 15% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. In the event the Company enters into a revenue sharing agreement as specified in the note, the holder, at its option, may accelerate payment of the note up to 50% of the gross revenues received by the Company under the revenue sharing agreement. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 25,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $9,400 and the debt discount related to the attached warrants was $9,400, for a total debt discount of $18,800. | |||||||||
On February 16, 2012, the Company issued a convertible note to a related party for $100,000 that matures in August 2013. The note bears an interest rate of 15% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. In the event the Company enters into a revenue sharing agreement as specified in the note, the holder, at its option, may accelerate payment of the note up to 50% of the gross revenues received by the Company under the revenue sharing agreement. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 25,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $8,310 and the debt discount related to the attached warrants was $9,310, for a total debt discount of $17,620. | |||||||||
On March 2, 2012, the Company issued a convertible note to a related party for $150,000 that matures in September 2013. The note bears an interest rate of 15% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. In the event the Company enters into a revenue sharing agreement as specified in the note, the holder, at its option, may accelerate payment of the note up to 50% of the gross revenues received by the Company under the revenue sharing agreement. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 37,500 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $9,525, for a total debt discount of $9,525. | |||||||||
On March 16, 2012, the Company issued a convertible note to a related party for $200,000 that matures in September 2013. The note bears an interest rate of 15% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. In the event the Company enters into a revenue sharing agreement as specified in the note, the holder, at its option, may accelerate payment of the note up to 50% of the gross revenues received by the Company under the revenue sharing agreement. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 50,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $12,761, for a total debt discount of $12,761. | |||||||||
On April 17, 2012, the Company issued a convertible note to a related party for $200,000 that matures in October 2013. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 25,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $12,315, for a total debt discount of $12,315. | |||||||||
On May 3, 2012, the Company issued a convertible note to a related party for $150,000 that matures in November 2013. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 25,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $7,331, for a total debt discount of $7,331. | |||||||||
On June 5, 2012, the Company issued a convertible note to a related party for $125,000 that matures in December 2013. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 25,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $6,577, for a total debt discount of $6,577. | |||||||||
On June 20, 2012, the Company issued a convertible note to a related party for $125,000 that matures in December 2013. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 25,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $6,993, for a total debt discount of $6,993. | |||||||||
On August 9, 2012, the Company issued a convertible note to a related party for $50,000 that matures in February 9, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 50,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.25 per share and a contractual life of 5 years from the issuance date. The value of the beneficial conversion feature (BCF) recorded was $2,356 and the debt discount related to the attached warrants was $2,356, for a total debt discount of $4,712. | |||||||||
On September 10, 2012, the Company issued a convertible note to a related party for $50,000 that matures in March 10, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 50,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.25 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $17,060 and the debt discount related to the attached warrants was $3,505, for a total debt discount of $20,120. | |||||||||
On October 10, 2012, the Company issued a convertible note to a related party for $100,000 that matures in April 10, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 25,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $5,126, for a total debt discount of $5,126. | |||||||||
On October 17, 2012, the Company issued a convertible note to a related party for $100,000 that matures in April 17, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 25,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $5,236, for a total debt discount of $5,236. | |||||||||
On October 25, 2012, the Company issued a convertible note to a related party for $50,000 that matures in April 25, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 12,500 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $2,181, for a total debt discount of $2,181. | |||||||||
On November 13, 2012, the Company issued a convertible note to a related party for $75,000 that matures in May 13, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 18,750 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $3,107, for a total debt discount of $3,107. | |||||||||
On November 23, 2012, the Company issued a convertible note to a related party for $25,000 that matures in May 23, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 6,250 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $1,936, for a total debt discount of $1,936. | |||||||||
On November 28, 2012, the Company issued a convertible note to a related party for $50,000 that matures in May 28, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 12,500 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $3,877, for a total debt discount of $3,877. | |||||||||
On December 17, 2012, the Company issued a convertible note to a related party for $50,000 that matures in June 17, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 12,500 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $3,886, for a total debt discount of $3,886. | |||||||||
On January 14, 2013, the Company issued a convertible note to a related party for $75,000 that matures in July 14, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 18,750 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $3,158, for a total debt discount of $3,158. | |||||||||
On January 23, 2013, the Company issued a convertible note to a related party for $25,000 that matures in July 14, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 6,250 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $953, for a total debt discount of $953. | |||||||||
On January 31, 2013, the Company issued a convertible note to a related party for $35,000 that matures in July 31, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 8,750 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $1,644, for a total debt discount of $1,644. | |||||||||
On February 5, 2013, the Company issued a convertible note to a related party for $5,000 that matures in August 5, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 1,250 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $234, for a total debt discount of $234. | |||||||||
On February 14, 2013, the Company issued a convertible note to a related party for $10,000 that matures in August 14, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 2,500 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $0 and the debt discount related to the attached warrants was $559, for a total debt discount of $559. | |||||||||
On February 22, 2013, the Company issued a convertible note to a related party for $50,000 that matures in August 22, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 18,750 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $3,434, for a total debt discount of $3,434. | |||||||||
On March 6, 2013, the Company issued a convertible note to a related party for $50,000 that matures in September 6, 2013. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 18,750 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $2,605, for a total debt discount of $2,605. | |||||||||
On April 8, 2013, the Company issued a convertible note to a related party for $75,000 that matures in October 8, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In conjunction with the note, the Company issued detachable warrants to purchase 18,750 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $3,252, for a total debt discount of $3,252. | |||||||||
On June 4, 2014, the Company issued a convertible note to a related party for $9,000 that matures in July 4, 2014. The note bears an interest rate of 0% per annum and is convertible, along with all accrued interest into shares of the Company’s Common Stock at $0.10 per share. The value the convertible note and recorded a BCF of 9,000. | |||||||||
Convertible Notes Payable - Non-Related Parties | |||||||||
Convertible notes payable due to non-related parties consisted of the following as of June 30, 2014, and 2013, respectively: | |||||||||
Convertible Notes Payable - Non-Related Parties | |||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
$100,000 face value, issued in September 2011, interest rate of 0%, originally matured in December 2011, extended to August 2014, net of unamortized discount of $-0- and $4,064 as of June 30, 2014 and June 30,2013. | $ | 100,000 | $ | 95,936 | |||||
$10,000 face value, of which $10,000 has been paid back, issued in October 2011, interest rate of 10%, matures in June 2012, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30,2013. | - | 10,000 | |||||||
$15,000 face value, issued in October 2011, interest rate of 10%, matures in June 2012, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30, 2013. | 15,000 | 15,000 | |||||||
$75,000 face value, issued in January 2012, interest rate of 12%, originally matured in June 2013, extended to August 2014, net of unamortized discount of $-0- and $3,017 as of June 30, 2014 and June 30,2013. | 75,000 | 71,983 | |||||||
$50,000 face value, issued in August 2012, interest rate of 10%, matures in February 2013, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30, 2013. | 50,000 | 50,000 | |||||||
$10,000 face value, issued in September 2012, interest rate of 10%, matures in March 2013, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30,2013. | 10,000 | 10,000 | |||||||
$50,000 face value of which $9,600 was converted leaving a $40,400 face value, issued in November 2012, interest rate of 10%, matures in November 2013 and an additional penalties were added to the principal of $120,348 bringing the face value to $160,748, net of unamortized discount of $0 and $13,789 as of June 30, 2014 and June 30, 2013. | 160,748 | 26,611 | |||||||
$30,000 face value, issued in February 2013, interest rate of 0%, matures in November 2013, net of unamortized discount of $0 and $10,487 as of June 30, 2014 and June 30, 2013. | 30,000 | 19,513 | |||||||
$20,000 face value, issued in April 2013, interest rate of -0-%, matures in October 2013, net of unamortized discount of $0 and $12,678 as of June 30, 2014 and June 30, 2013. | 20,000 | 7,322 | |||||||
$60,000 face value, of which $60,000 has been paid back, issued in July 2013, interest rate of 6%, matures in October 2013, net of unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
$100,000 face value, issued in September 2013, interest rate of 0%, matures in February 2014, net of unamortized discount of $0 as of June 30, 2014. | 100,000 | - | |||||||
$50,000 face value, issued in October 2013, interest rate of 0%, originally matured in November 2013, with an extended maturity date of May 2014, net of unamortized discount of $0 as of June 30, 2014. | 50,000 | - | |||||||
$50,000 face value, of which $10,000 was converted leaving a $0 face value, issued in November 2013, interest rate of 0%, matured in May 2014, net of unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
$25,000 face value, of which $25,000 was converted leaving a $0 face value, issued in November 2013, interest rate of 0%, matured in February 27, 2014, net of unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
$10,000 face value, of which $10,000 was converted leaving a $0 face value, issued in February 2014, interest rate of 10%, matures in March 2014, net of unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
$50,000 face value, issued in February 2014, interest rate of 10%, matures in April 2014, net of unamortized discount of $0 as of June 30, 2014. | 50,000 | - | |||||||
$50,000 face value, issued in February 2014, interest rate of 6%, matures in August 2014, net of unamortized discount of $3,868 as of June 30, 2014. | 46,132 | - | |||||||
$30,000 face value, issued in March 2014, interest rate of 0%, matures in September 2014, net of unamortized discount of $7,011 as of June 30, 2014. | 22,989 | - | |||||||
$20,000 face value, issued in March 2014, interest rate of 10%, matures in June 2014, net of unamortized discount of $0 as of June 30, 2014. | 20,000 | - | |||||||
$25,000 face value, issued in April 2014, interest rate of 6%, matures October 2014, net unamortized discount of $15,437 as of June 30, 2014. | 9,563 | - | |||||||
$5,000 face value, of which $5,000 was converted leaving a $0 face value, issued in May 2014, interest rate of 0%, matures August 2014, net unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
$25,000 face value, of which $25,000 was converted leaving a $0 face value, issued in May 2014, interest rate of 0%, matures in August 2014, net of unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
$15,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $14,098 as of June 30, 2014. | 902 | - | |||||||
$20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $18,798 as of June 30, 2014. | 1,202 | - | |||||||
$30,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $28,033 as of June 30, 2014. | 1,967 | - | |||||||
$20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $18,798 as of June 30, 2014. | 1,202 | - | |||||||
$25,000 face value, issued in June 2014, interest rate of 6%, matures September 2014, net unamortized discount of $25,000 as of June 30, 2014. | - | - | |||||||
$12,000 face value, of which $12,000 was converted leaving a $0 face value, issued in May 2014, interest rate of 6%, matures August 2014, net unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
Total convertible notes payable – non-related parties | 764,705 | 306,365 | |||||||
Less current portion | 764,705 | 306,365 | |||||||
Convertible notes payable – non-related parties, long-term | $ | - | $ | - | |||||
On September 29, 2011, the Company issued a convertible note for $100,000 with an original maturity date 90 days after issuance. All or any amount of the principal amount of the note together with the accrued interest may be converted into shares of the Company’s Common Stock at a conversion price of $0.50 per share. In lieu of interest payments during the 90 day term, the Company issued to the holder a warrant to purchase 50,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.50 per share and a contractual life of 5 years from the issuance date. At the option of the Company, the due date of this note could be extended for three consecutive thirty-day periods. In lieu of interest during the extension periods, the Company was required to grant the holder 16,667 five year warrants with a $0.50 exercise price. The value of the BCF recorded was $57,845 and the debt discount relate to the attached warrants was $21,844, for a total debt discount of $79,689. As of the date of the filing of this report, this note is in default. | |||||||||
Prior to December 29, 2011, the Company elected to extend the maturity date of the note in accordance with the extension provisions which extended the due date to March 28, 2012. On April 1, 2012, the Company negotiated an extension on the note to July 28, 2012. On September 29, 2012, the Company negotiated an extension on the note to May 1, 2013. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. As of the date of the filing of this report, this note is in default. | |||||||||
On October 5, 2011, the Company issued a convertible note for $100,000 that matures 90 days after issuance. The maturity date of the note can be extended, at the option of the holder, for a single 90 day period. The note bears an interest rate of 12% per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.50 per share. The value of the BCF recorded was $26,000. | |||||||||
On October 13, 2011, the Company issued a convertible note for $10,000 that matures 90 days after issuance. The note bears an interest rate of 10% per anum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.50 per share. The maturity date of the note can be extended, at the option of the holder, for two consecutive 30 day periods in exchange for a warrant equal to 20% of the initial amount of the note issued with a strike price of $0.50 per share for 5 years. As additional compensation, the Company issued to the holder a warrant to purchase 5,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.50 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $3,970 and the debt discount related to the attached warrants was $1,970, for a total debt discount of $5,940. As of the June 30, 2014, this note has been paid in full. | |||||||||
On April 1, 2012, the note holder agreed to extend the maturity date of the note to June 30, 2012. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. As of the date of the filing of this report, this note is in default. | |||||||||
On October 13, 2011, the Company issued a convertible note for $15,000 that matures 90 days after issuance. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.50 per share. The maturity date of the note can be extended, at the option of the holder, for two consecutive 30 day periods in exchange for a warrant equal to 20% of the initial amount of the note issued with a strike price of $0.50 per share for 5 years. As additional compensation, the Company issued to the holder a warrant to purchase 7,500 shares of the Company’s Common Stock. The warrant has an exercise price of $0.50 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $5,956 and the debt discount related to the attached warrants was $2,956, for a total debt discount of $8,912. As of the date of the filing of this report, this note is in default. | |||||||||
On April 1, 2012, the note holder agreed to extend the maturity date of the note to June 30, 2012. The Company evaluated amendment under ASC 470, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. As of the date of the filing of this report, this note is in default. | |||||||||
On December 9, 2011, the Company issued a convertible note to an unrelated individual for $15,000 that matures 90 days after issuance. The note bears an interest rate of 12% per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.50 per share. The maturity date of the note can be extended, at the option of the holder, for a single 90 day period. As additional compensation, the Company issued to the holder a warrant to purchase 7,500 shares of the Company’s Common Stock. The warrant has an exercise price of $0.50 per share and a contractual life of five (5) years from the issuance date. The value of the beneficial conversion feature recorded was $2,003 and the debt discount relate to the attached warrants was $1,703, for a total debt discount of $3,706. As of the date of the filing of this report, this note is in default. | |||||||||
On February 29, 2012, the note holder agreed to extend the maturity date of the note to May 29, 2012. The note holder elected to convert the note and accrued interest on June 6, 2013. | |||||||||
On December 14, 2011, the Company issued a convertible note for $10,000 that matures 90 days after issuance. The note bears an interest rate of 12% per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.50 per share. The maturity date of the note can be extended, at the option of the holder, for a single 90 day period. As additional compensation, the Company issued to the holder a warrant to purchase 5,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.50 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $1,222 and the debt discount related to the attached warrants was $1,122, for a total debt discount of $2,344. As of the date of the filing of this report, this note is in default. | |||||||||
On March 15, 2012, the note holder agreed to extend the maturity date of the note to June 13, 2012. The note holder elected to convert the note and accrued interest on June 6, 2013. | |||||||||
On January 6, 2012, the Company issued a convertible note for $75,000 that matures 90 days after issuance. In lieu of interest payments during the 90 day term, the Company issued to the holder a warrant to purchase 37,500 shares of the Company’s Common Stock. The warrant has an exercise price of $0.50 per share and a contractual life of 5 years from the issuance date. At the option of the Company, the due date of this note may be extended for three consecutive thirty-day periods by issuing a warrant to purchase 12,500 shares of the Company’s Common Stock. The warrant will have an exercise price of $0.50 per share and a contractual life of 5 years from the issuance date. The value of the warrants issued was $15,477 and has been capitalized as prepaid interest expense to be amortized over the 90 day life of the note. As of the date of the filing of this report, this note is in default. | |||||||||
On October 1, 2012, the note holder agreed to extend the maturity date of the note to June 30, 2013. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. As of the date of the filing of this report, this note is in default. | |||||||||
On August 16, 2012, the Company issued a convertible note to an unrelated individual for $10,000 that matures 30 days after issuance. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.50 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. As of the date of the filing of this report, this note is in default. | |||||||||
As additional compensation, the Company issued to the holder 10,000 shares of restricted Common Stock. The note holder elected to convert the note and accrued interest on November 14, 2012. The value of the debt discount relate to the attached common stock was $2,063. | |||||||||
On August 21, 2012, the Company issued a convertible note to an unrelated individual for $50,000 that matures six months after issuance. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.50 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. As of the date of the filing of this report, this note is in default. | |||||||||
As additional compensation, the Company issued to the holder 50,000 shares of restricted Common Stock. The value of the debt discount related to the attached Common Stock was $10,000. | |||||||||
On September 4, 2012, the Company issued a convertible note to an unrelated individual for $15,000 that matures six months after issuance. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.25 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The convertible note is in default and has been reclassified as current. | |||||||||
As additional compensation, the Company issued to the holder 15,000 shares of restricted Common Stock. The value of debt discount relate to the attached common stock was $3,889. | |||||||||
On September 4, 2012, the Company issued a convertible note to an unrelated individual for $10,000 that matures six months after issuance. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.50 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The convertible note is in default and has been reclassified as current. | |||||||||
As additional compensation, the Company issued to the holder 10,000 shares of restricted common stock. The value of the debt discount relate to the attached Common Stock was $2,481. | |||||||||
On November 28, 2012, the Company issued a convertible note to an unrelated individual for $50,000 that matures one year after issuance. The note bears an interest rate of 0% for the first 90 days and 10% after 90 days per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at the lesser of $0.18 per share or 60% of the lowest trade price in the 25 trading days previous to conversion. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $33,333. The note holder elected to convert $9,600 of the note and accrued interest on June 3, 2013. The convertible note is in default and has been reclassified as current. Per the agreement, the company accrued penalties of $120,348 which were added to the principal, see footnote 12. The balance of the note to date is $160,748. | |||||||||
On February 13, 2013, the Company issued a convertible note to an unrelated individual for $30,000 that matures on November 28, 2013. The note bears an interest rate of 0% for the first 90 days and 10% after 90 days per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at the lesser of $0.18 per share or 60% of the lowest trade price in the 25 trading days previous to conversion. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $30,000. The convertible note is in default and has been reclassified as current. As of the date of the filing of this report, this note is in default. | |||||||||
On March 7, 2013, the Company issued a convertible note to an unrelated individual for $65,000 that matures 60 days after issuance. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.25 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. | |||||||||
As additional compensation, the Company issued to the holder 65,000 shares of restricted common stock. The value of the debt discount relate to the attached Common Stock was $8,376. | |||||||||
On June 5, 2013, the company paid the full balance of the note and $1,603 of accrued interest related to the note. | |||||||||
On April 24, 2013, the Company issued a convertible note to an unrelated individual for $20,000 that matures on October 24, 2013. The note bears an interest rate of 0% for the first 90 days and 10% after 90 days per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at the lesser of $0.18 per share or 60% of the lowest trade price in the 25 trading days previous to conversion. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was$20,000. The convertible note is in default and has been reclassified as current. As of the date of the filing of this report, this note is in default. | |||||||||
On July 30, 2013, the Company issued a convertible note to an unrelated individual for $60,000 that matures on October 30, 2013. The note bears an interest rate of 6% per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.15 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $49,226. Subsequent to period end on October 1, 2013, the Company paid the note and interest in full. | |||||||||
On September 30, 2013, the Company issued a convertible note to an unrelated individual for $100,000 that matures on February 28, 2014. The note bears an interest rate of 0% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $100,000. The convertible note is in default and has been reclassified as current. | |||||||||
On October 17, 2013, the Company issued a convertible note to an unrelated individual for $50,000 with an original maturity date of November 17, 2013, the note bears an interest rate of 0% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the original BCF recorded was $50,000. The note was amended on November 17, 2013 to extend the maturity date to May 17, 2014 and issued 25,000 common stock and 25,000 warrants as incentive to extending the maturity date. Under ASC 470-60-55-12, the debt was deemed to be extinguished and the company recognized a loss on extinguishment of debt $25,787. As of the date of the filing of this report, this note is in default. | |||||||||
On November 5, 2013, the Company issued a convertible note to an unrelated individual for $50,000 that matures on May 5, 2014. The note bears an interest rate of 0% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $50,000. On June 30, 2014 the note holder elected to convert the entire note of $50,000. | |||||||||
On November 27, 2013, the Company issued a convertible note to an unrelated individual for $25,000 that matures on February 27, 2014. The note bears an interest rate of 0% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $25,000. On May 7, 2014, the note holder elected to convert the entire note of $25,000. As of the date of the filing of this report, this note is in default. | |||||||||
On February 3, 2014, the Company issued a convertible note to an unrelated individual for $10,000 that matures on March 31, 2014. The note bears an interest rate of 10% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. On March 31, 2014 the note holder elected to convert the entire note and accrued interest of $10,000 and $153 respectively. As of the date of the filing of this report, this note is in default. | |||||||||
In conjunction with the note, the Company issued to the holder 10,000 shares of restricted Common Stock. The value of the BCF recorded was $8,065 and the debt discount related to the attached relative fair value of the restricted Common Stock was $1,935, for a total debt discount of $10,000. | |||||||||
On February 3, 2014, the Company issued a convertible note to an unrelated individual for $50,000 that matures on April 10, 2014. The note bears an interest rate of 10% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The convertible note is in default and has been reclassified as current. | |||||||||
In conjunction with the note, the Company issued to the holder 25,000 shares of restricted Common Stock. The value of the BCF recorded was $44,444 and the debt discount related to the attached relative fair value of the restricted Common Stock was $5,556, for a total debt discount of $10,000. | |||||||||
On February 21, 2014, the Company issued a convertible note to an unrelated individual for $50,000 that matures on August 21, 2014. The note bears an interest rate of 6% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The convertible note is in default and has been reclassified as current. | |||||||||
In conjunction with the note, the Company issued to the holder 25,000 shares of restricted Common Stock. The value of the BCF recorded was $45,249 and the debt discount related to the attached relative fair value of the restricted Common Stock was $4,751, for a total debt discount of $50,000. | |||||||||
On March 6, 2014, the Company issued a convertible note to an unrelated individual for $30,000 that matures on September 6, 2014. The note bears an interest rate of 0% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The convertible note is in default and has been reclassified as current. | |||||||||
In conjunction with the note, the Company issued to the holder 15,000 shares of restricted Common Stock. The value of the BCF recorded was $26,786 and the debt discount related to the attached relative fair value of the restricted Common Stock was $3,214, for a total debt discount of $30,000. | |||||||||
On March 31, 2014, the Company issued a convertible note to an unrelated individual for $20,000 that matures on June 28, 2014. The note bears an interest rate of 10% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The convertible note is in default and has been reclassified as current. | |||||||||
In conjunction with the note, the Company issued to the holder 10,000 shares of restricted Common Stock. The value of the BCF recorded was $17,937 and the debt discount related to the attached relative fair value of the restricted Common Stock was $2,063, for a total debt discount of $20,000. | |||||||||
On April 21, 2014, the Company issued a convertible note to an unrelated individual for $25,000 that matures on October 21, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. | |||||||||
In conjunction with the note, the Company issued to the holder 12,300 shares of restricted Common Stock. The value of the BCF recorded was $22,422 and the debt discount related to the attached relative fair value of the restricted Common Stock was $2,578, for a total debt discount of $25,000. | |||||||||
On May 8, 2014, the Company issued a convertible note to an unrelated party for $12,000 that matures on August 8, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. On May 13, 2014 the note holder elected to convert the entire note and accrued interest of $12,000 and $10 respectively. | |||||||||
In conjunction with the note, the Company issued to the holder 3,000 shares of restricted Common Stock. The value of the BCF recorded was $11,294 and the debt discount related to the attached relative fair value of the restricted Common Stock was $706, for a total debt discount of $12,000. | |||||||||
On May 12, 2014, the Company issued a convertible note to an unrelated individual for $5,000 that matures on August 12, 2014. The note bears interest rate of 0% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. On June 30, 2014, the note holder elected to convert the entire note of $5,000. | |||||||||
In conjunction with the note, the Company issued to the holder 1,250 shares of restricted Common Stock. The value of the BCF recorded was $4,695 and the debt discount related to the attached relative fair value of the restricted Common Stock was $305, for a total debt discount of $5,000. | |||||||||
On May 23, 2014, the Company issued a convertible note to an unrelated individual for $25,000 that matures on August 23, 2014. The note bears interest rate of 0% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. The value of the BCF recorded was $25,000. On June 30, 2014 the note holder elected to convert the entire note of $25,000. | |||||||||
On June 18, 2014, the Company issued a convertible note to an unrelated individual for $30,000 that matures on December 18, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. | |||||||||
In conjunction with the note, the Company issued to the holder 15,000 shares of restricted Common Stock. The value of the BCF recorded was $26,786 and the debt discount related to the attached relative fair value of the restricted Common Stock was $3,214, for a total debt discount of $30,000. | |||||||||
On June 19, 2014, the Company issued a convertible note to an unrelated individual for $15,000 that matures on December 19, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. | |||||||||
In conjunction with the note, the Company issued to the holder 7,500 shares of restricted Common Stock. The value of the BCF recorded was $13,453 and the debt discount related to the attached relative fair value of the restricted Common Stock was $1,547, for a total debt discount of $15,000 | |||||||||
On June 19, 2014, the Company issued a convertible note to an unrelated individual for $20,000 that matures on December 19, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. | |||||||||
In conjunction with the note, the Company issued to the holder 10,000 shares of restricted Common Stock. The value of the BCF recorded was $17,937 and the debt discount related to the attached relative fair value of the restricted Common Stock was $2,063, for a total debt discount of $20,000. | |||||||||
On June 19, 2014, the Company issued a convertible note to an unrelated individual for $20,000 that matures on December 19, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. | |||||||||
In conjunction with the note, the Company issued to the holder 10,000 shares of restricted Common Stock. The value of the BCF recorded was $17,937 and the debt discount related to the attached relative fair value of the restricted Common Stock was $2,063, for a total debt discount of $20,000. | |||||||||
On June 30, 2014, the Company issued a convertible note to an unrelated individual for $25,000 that matures on September 30, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. | |||||||||
In conjunction with the note, the Company issued to the holder 25,000 shares of restricted Common Stock. The value of the BCF recorded was $20,325 and the debt discount related to the attached relative fair value of the restricted Common Stock was $4,675, for a total debt discount of $25,000. | |||||||||
Notes Payable – Related Parties | |||||||||
Notes payable due to related parties consisted of the following as of June 30, 2014 and 2013: | |||||||||
Notes Payable – Related Parties | |||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
Face value of $200,000, issued in April 2011, original maturity date of August 2011 extended to September 2014, 30,000 warrants per month were granted in lieu of interest through June 2011, warrants increased to 50,000 shares per month through August 2011, from September until maturity, the note bears interest at 12%. | $ | 200,000 | $ | 200,000 | |||||
Face value of $250,000, issued in September 2011, matures in September 2012 extended to September 2014, 25,000 warrants per month issued for first 90 days, note bears interest at 15% from December 2011 through maturity. | 250,000 | 250,000 | |||||||
Face value of $125,000, issued in October 2011, matures in October 2012 extended to September 2014, 30,000 warrants issued in lieu of interest through December 2011, note bears interest at 0% from December 2011 through maturity. | 125,000 | 125,000 | |||||||
Face value of $35,000, issued in January 2014, matures in February 2014 extended to September 2014,, note bears interest at 10%, interest is accrued monthly and paid quarterly by issuing restricted stock until the January 2015 and thereafter interest to be paid in cash. | 35,000 | - | |||||||
Total notes payable – related parties | 610,000 | 575,000 | |||||||
Less current portion | 610,000 | 575,000 | |||||||
Notes payable - related parties, long term | $ | - | $ | - | |||||
In April 2011, the Company executed a $200,000 note payable with a related party that matured 90 days following the date of the note. This note includes the following priority repayment provisions: 1) the Company agrees to apply 50% of the first $600,000 of capital raised by the Company in the near term toward all outstanding notes the lender has outstanding with the Company; 2) the Company agrees to apply the first $200,000 of proceeds raised beyond the $600,000 to any outstanding notes the lender has outstanding with the Company; and 3) if the Company is unable to raise additional capital but a large marketing or sales agreement is entered into which provide for revenue in excess of $50,000, all funds received above $50,000 shall be applied to any notes the lender has outstanding with the Company at the time. | |||||||||
The note provides for no interest but required the Company to issue to the lender, for each thirty day period of the original term, a warrant to purchase 30,000 shares of the Company’s common stock at a price of $0.60 per share over a contractual life of five years. The Company may also elect, at its option, to extend the maturity date for two 30-day periods upon notice of such election to the lender and the issuance of a warrant to purchase up to 50,000 shares of the Company’s Common Stock at a price of $0.60 per share with a contractual life of 5 years for each such extension. The note is not convertible and no warrant was issued in connection with the issuance of the note so there is no beneficial conversion feature value or debt discount applicable to the origination of the note. | |||||||||
On June 30, 2011 and July 30, 2011, the Company exercised its options on the above notes to extend the maturity dates, each time for 30 days, pursuant to the provision contained in the original financing agreement. Upon final maturity of the note payable at August 29, 2011, the Company and lender agreed to amend the original financing agreement in which the maturity date was extended to June 30, 2012 with an interest rate of 12% per annum. The lender could choose to have the accrued interest outstanding on the note be repaid in shares of the Company’s common stock in lieu of cash. For each instance where such election was made, the number of shares of the Company’s common stock to be issued was to be calculated at a discount based on seventy-five percent (75%) of the average of the closing prices of the Company’s Common Stock as reported by Bloomberg, L.P., or other independent reporting services acceptable to the lender and the Company for 10 trading days prior to the date such payment was due. | |||||||||
The Company evaluated the above amendment to extend the maturity date from August 29, 2011 to June 30, 2012 under the guidance of ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that such extension of the maturity date of the note did not result in a 10% or more change in the present value of the cash flow, and thus did not result in an extinguishment of the note. | |||||||||
On June 30, 2012, the note holder agreed to extend the maturity date of the note to June 30, 2013. No consideration was paid to extend the maturity date. The note was amended again on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In September 2011, the Company entered into a one-year note payable for $250,000 with a related party. The note provided for 0% interest per annum for the first 90 days. In lieu of interest for the first 90 days, the Company granted the lender a warrant to purchase 25,000 shares of Company’s Common Stock at an exercise price of $0.40 for a contractual period of 5 years for each 30 days or portion thereof the note remains outstanding. If the note remained outstanding beyond the first 90 days, the note provided for an interest rate of 15% per annum. This note includes the following priority repayment provisions: 1) the Company agrees to apply 50% of the first $600,000 of capital raised by the Company in the near term toward all outstanding notes the lender has outstanding with the Company; 2) the Company agrees to apply the first $450,000 of proceeds raised beyond the $600,000 to any outstanding notes the lender has outstanding with the Company; and 3) if the Company is unable to raise additional capital but a large marketing or sales agreement is entered into which provide for revenue in excess of $50,000, all funds received above $50,000 shall be applied to any notes the lender has outstanding with the Company at the time. | |||||||||
The Company was also required to provide to the lender or its representative online access, for viewing purposes only, to the accounting and financial data maintained by the Company. Online access shall be terminated once the loan and other funds advanced by the lender to the Company, including any accrued interest, have been fully paid. | |||||||||
Further, per the terms of the agreement, if the note was not fully repaid by October 31, 2011, which was subsequently extended to November 15, 2011, and the Company had not deployed and made operational certain designated studios, the Company would be obligated to issue to the lender a warrant to purchase 25,000 shares of the Company’s Common Stock at an exercise price of $0.40 per share with a contractual life of 5 years. Such warrant was issued in accordance with the terms of the note. | |||||||||
On October 1, 2012, the note holder agreed to extend the maturity date of the note to June 30, 2013. No consideration was paid to extend the maturity date. The note was amended again on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
In October 2011, the Company entered into a one-year note payable for $125,000 with a related party. The note provided for 0% interest per annum for the first 45 days. In lieu of interest for the first 45 days, the Company granted the lender a warrant to purchase 30,000 shares of Company’s Common Stock at an exercise price of $0.40 for a contractual period of 5 years. Effective December 1, 2011, the note bears interest of 15% per annum until paid. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
This note includes the following priority repayment provisions: 1) the Company agrees to apply 50% of the first $600,000 of capital raised by the Company in the near term toward all outstanding notes the lender has outstanding with the Company; 2) the Company agrees to apply the first $575,000 of proceeds raised beyond the $600,000 to any outstanding notes the lender has outstanding with the Company; and 3) if the Company is unable to raise additional capital but a large marketing or sales agreement is entered into which provide for revenue in excess of $50,000, all funds received above $50,000 shall be applied to any notes the lender has outstanding with the Company at the time. | |||||||||
In February 6, 2013, the Company entered into a two-week note payable for $50,000 with a related party. The note provided for 0% interest per annum. The note was paid in full on maturity date. | |||||||||
In January 2014, the Company entered into a one month note payable for $35,000 with a related party. The note provided for 10% interest per annum in restricted common stock calculated at 75% of the preceding 10-day running average closing price for the first year payable each quarter. Thereafter, interest is to be paid in cash. The note was amended on June 30, 2014 to extend the maturity date to September 30, 2014. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. | |||||||||
This note includes the following priority repayment provisions: 1) the Company agrees to apply the first and all subsequent funds raised by the company unless otherwise authorized by the holder; 2) the holder will approve all checks of the company before they are issued, until the note is repaid; and 3) if the terms are not complied with, the note will be due on demand. | |||||||||
Notes Payable – Non-Related Parties | |||||||||
Notes payable due to non-related parties consisted of the following as of June 30, 2014 and 2013: | |||||||||
Notes Payable – Non-Related Parties | |||||||||
2014 | 2013 | ||||||||
Various term notes with total face value of $40,488 due upon demand, interest rates range from 12% to 14%. | $ | 40,488 | $ | 40,488 | |||||
Total note payable – non-related parties | 40,488 | 40,488 | |||||||
Less current portion | 40,488 | 40,488 | |||||||
Notes payable – non-related parties, long-term | $ | - | $ | - |
7_CONVERTIBLE_PREFERRED_STOCK
7. CONVERTIBLE PREFERRED STOCK | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Equity [Abstract] | ' | ||||||||||||
7. CONVERTIBLE PREFERRED STOCK | ' | ||||||||||||
The Company has authorized 10,000,000 shares of $0.001 par value per share Preferred Stock, of which the following were issued outstanding: | |||||||||||||
Shares | Shares | Liquidation | |||||||||||
Allocated | Outstanding | Preference | |||||||||||
Series A Convertible Preferred | 100,000 | 15,500 | - | ||||||||||
Series A-1 Convertible Preferred | 3,000,000 | 696,000 | 773,115 | ||||||||||
Series B Convertible Preferred | 200,000 | 3,500 | 79,099 | ||||||||||
Series C Convertible Preferred | 1,000,000 | 13,404 | - | ||||||||||
Series D Convertible Preferred | 375,000 | 130,000 | 130,000 | ||||||||||
Series E Convertible Preferred | 1,000,000 | 275,000 | 275,000 | ||||||||||
Series P Convertible Preferred | 600,000 | 86,640 | - | ||||||||||
Series S Convertible Preferred | 50,000 | - | - | ||||||||||
Total Preferred Stock | 6,325,000 | 1,220,044 | $ | 1,257,214 | |||||||||
The Company's Series A Convertible Preferred Stock ("Series A Preferred") is convertible into Common Stock at the rate of 0.025 share of Common stock for each share of the Series A Preferred. Dividends of $0.50 per share annually from date of issue, are payable from retained earnings, but have not been declared or paid. | |||||||||||||
The Company’s Series A-1 Senior Convertible Redeemable Preferred Stock (“Series A-1 Preferred”) is convertible at the rate of 2 shares of Common Stock per share of Series A-1 Preferred. The dividend rate of the Series A-1 Senior Convertible Redeemable Preferred Stock is 6% per share per annum in cash, or commencing on June 30, 2009 in shares of the Company’s Common Stock (at the option of the Company). | |||||||||||||
Due to the fact that the Series A-1 Preferred has certain features of debt and is redeemable, the Company analyzed the Series A-1 Preferred in accordance with ASC 480 and ASC 815 to determine if classification within permanent equity was appropriate. Based on the fact that the redeemable nature of the stock and all cash payments are at the option of the Company, it is assumed that payments will be made in shares of the Company’s Common Stock and therefore, the instruments are afforded permanent equity treatment. | |||||||||||||
The Company's Series B Convertible 8% Preferred Stock ("Series B Preferred") is convertible at the rate of 0.067 share of Common Stock for each share of Series B Preferred. Dividends from date of issue are payable on June 30 from retained earnings at the rate of 8% per annum but have not been declared or paid. | |||||||||||||
The Company's Series C Convertible Preferred Stock ("Series C Preferred") is convertible at a rate of 0.007 share of Common Stock per share of Series C Preferred. Holders are entitled to dividends only to the extent of the holders of the Company’s Common Stock receive dividends. | |||||||||||||
The Company's Series D Convertible Preferred Stock ("Series D Preferred") is convertible at a rate of 0.034 share of Common Stock per share of Series D Preferred. Holders are entitled to a proportionate share of any dividends paid as though they were holders of the number of shares of Common Stock of the Company into which their shares of are convertible as of the record date fixed for the determination of the holders of Common Stock of the Company entitled to receive such distribution. | |||||||||||||
The Company's Series E Convertible Preferred Stock ("Series E Preferred") is convertible at a rate of 0.034 share of Common Stock per share of Series E Preferred. Holders are entitled to a proportionate share of any dividends paid as though they were holders of the number of shares of Common Stock of the Company into which their shares of are convertible as of the record date fixed for the determination of the holders of Common Stock of the Company entitled to receive such distribution. | |||||||||||||
The Company's Series P Convertible Preferred Stock ("Series P Preferred") is convertible at a rate of 0.007 share of Common Stock for each share of Series P Preferred. Holders are entitled to dividends only to the extent of the holders of the Company’s Common Stock receive dividends. | |||||||||||||
In the event of a liquidation, dissolution or winding up of the affairs of the Company, holders of Series A Preferred Stock, Series P Convertible Preferred Stock, Series C Convertible Preferred Stock have no liquidation preference over holders of the Company’s Common Stock. Holders of Second Series B Preferred Stock have a liquidation preference over holders of the Company’s Common Stock and the Company’s Series A Preferred Stock. Holders of Series D Preferred Stock are entitled to receive, before any distribution is made with respect to the Company’s Common Stock, a preferential payment at a rate per each whole share of Series D Preferred Stock equal to $1.00. Holders of Series E Preferred Stock are entitled to receive, after the preferential payment in full to holders of outstanding shares of Series D Preferred Stock but before any distribution is made with respect to the Company’s Common Stock, a preferential payment at a rate per each whole share of Series E Preferred Stock equal to $1.00. Holders of Series A-1 Preferred Stock are superior in rank to the Company’s Common Stock and to all other series of Preferred Stock heretofore designated with respect to dividends and liquidation. | |||||||||||||
The activity surrounding the issuances of the Preferred Stock is as follows: | |||||||||||||
During the fiscal years ended June 30, 2014 and 2013, the Company issued -0- shares of Series A-1 Preferred Stock for $-0- in cash, net of $-0- of issuance costs, respectively. | |||||||||||||
During the fiscal year ended June 30, 2011, 1,187,000 shares of Series A-1 Preferred Stock, and the dividends accrued thereon, were converted into 206,099 shares of Common Stock. In conjunction with this issuance, the Company recognized an associated beneficial conversion feature based on the convertibility of the Preferred Shares into Common Shares at a ratio of 2 to 1. This resulted in an effective exercise price of $0.50 per share. The value of the BCF was determined based on the stock price on the day of commitment, the number of convertible shares, and the difference between the effective conversion price and the fair value of the Common Stock on the dates of issuance and is capped at the face value of the offering, in this case $1,187,000. The conversion feature was recorded in additional paid-in capital and the Preferred Stock was accreted to face value over six months, the first date the note holder could convert the security. As of June 30, 2012, the BCF was fully amortized. | |||||||||||||
During the fiscal year ended June, 2012, the Company converted 416,000 shares of Convertible Preferred Stock and accrued dividends of $23,071 into 877,550 shares of Common Stock. | |||||||||||||
During the fiscal year ended June 30, 2012, the Company accrued dividends of $23,071 into 877,550 shares of Common Stock. | |||||||||||||
During the fiscal year ended June 30, 2014, the outstanding Preferred Stock accumulated 49,790 in dividends; in fiscal year ended June 30, 2013 it accumulated $17,016 in dividends on outstanding Preferred Stock. The cumulative dividends in arrears through June 30, 2014 were approximately $652,873. |
8_COMMON_STOCK
8. COMMON STOCK | 12 Months Ended |
Jun. 30, 2014 | |
Text Block [Abstract] | ' |
8. COMMON STOCK | ' |
The Company has authorized 100,000,000 shares of $0.001 par value per share Common Stock, of which 70,296,203 and 51,244,242 were issued outstanding as of June 30, 2014 and 2013, respectively. The activity surrounding the issuances of the Common Stock is as follows: | |
Fiscal Year Ended June 30, 2014 | |
The Company issued 9,825,000 shares of Common Stock for net cash proceeds of $966,565. The Company paid $15,935 in cash offering costs and issued 126,750 in stock offering costs. Offering costs have been recorded as reductions to additional paid-in capital from common stock proceeds. Attached to the Common Shares, the Company issued 1,366,016 warrants to purchase shares of the Company’s Common Stock. The Company recognized $289,791 in employee stock option expense and for the amortization of warrants issued in prior periods. | |
The Company also issued 1,271,534 shares of Common Stock for conversion of notes payable for $127,153, issued 229,250 shares as incentive to convertible debt for $46,283, and issued 380,000 shares of Common Stock to extend the maturity dates on debt for $105,225. The Company also issued 43,758 shares of Common Stock conversion of warrants for $0 and recorded $620,226 in beneficial conversion features related to new issuances of debt. | |
As share-based compensation to employees and non-employees, the Company issued 4,134,894 shares of common stock valued at $1,085,182, based on the market price of the stock on the date of issuance. As interest expense on outstanding notes payable, the Company issued 3,040,775 shares of common stock valued at $772,309 based on the market price on the date of issuance. | |
Fiscal Year Ended June 30, 2013 | |
The Company issued 7,023,735 shares of Common Stock for net cash proceeds of $700,915. The Company paid $44,085 in cash offering costs and issued 233,735 in stock offering costs. Offering costs have been recorded as reductions to additional paid-in capital from common stock proceeds. Attached to the Common Shares, the Company issued 1,395,732 warrants to purchase shares of the Company’s Common Stock. The Company recognized $14,090 in employee stock option expense and for the amortization of warrants issued in prior periods. | |
The Company also issued 505,856 shares of Common Stock to convert $44,600 in convertible notes payable and $45,454 in accrued liabilities. | |
As share-based compensation to employees and non-employees, the Company issued 4,592,744 shares of common stock valued at $951,301, based on the market price of the stock on the date of issuance. As interest expense on outstanding notes payable, the Company issued 2,584,994 shares of common stock valued at $759,435 based on the market price on the date of issuance. |
9_STOCK_PURCHASE_OPTIONS_AND_W
9. STOCK PURCHASE OPTIONS AND WARRANTS | 12 Months Ended | ||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||||||
9. STOCK PURCHASE OPTIONS AND WARRANTS | ' | ||||||||||||||||||||
The Board of Directors on June 10, 2009 approved the 2009 Long-Term Stock Incentive Plan. The purpose of the 2009 Long-term Stock Incentive Plan is to advance the interests of the Company by encouraging and enabling acquisition of a financial interest in the Company by employees and other key individuals. The 2009 Long-Term Stock Incentive Plan is intended to aid the Company in attracting and retaining key employees, to stimulate the efforts of such individuals and to strengthen their desire to remain with the Company. A maximum of 1,500,000 shares of the Company's Common Stock is reserved for issuance under stock options to be issued under the 2009 Long-Term Stock Incentive Plan. The Plan permits the grant of incentive stock options, nonstatutory stock options and restricted stock awards. The 2009 Long-Term Stock Incentive Plan is administered by the Board of Directors or, at its direction, a Compensation Committee comprised of officers of the Company. | |||||||||||||||||||||
Stock Purchase Options | |||||||||||||||||||||
During the fiscal year ended June 30, 2014, the Company issued 25,000 stock purchase options for a value of $6,045. The Company did recognize $10,713 in employee stock option expense during the fiscal year ended June 30, 2014 for options vested during the period that were issued in prior periods. | |||||||||||||||||||||
During the fiscal year ended June 30, 2013, the Company did not issue any stock purchase options. The Company did recognize $10,914 in employee stock option expense during the fiscal year ended June 30, 2013 for options vested during the period that were issued in prior periods. | |||||||||||||||||||||
The following table summarizes the changes in options outstanding of the Company during the fiscal year ended June 30, 2014. | |||||||||||||||||||||
Date Issued | Number of Options | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Expiration Date (yrs) | Value if Exercised | ||||||||||||||||
Balance June 30, 2013 | 613,429 | $ | 0.85 | $ | 1.2 | 1.95 | $ | 522,843 | |||||||||||||
Granted | 25,000 | 0.15 | 0.24 | 5 | 3,750 | ||||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Cancelled/Expired | (257,000 | ) | (1.23 | ) | - | - | (316,950 | ) | |||||||||||||
Outstanding as of June 30, 2014 | 381,429 | $ | 0.55 | $ | 0.12 | 0.62 | $ | 209,643 | |||||||||||||
The following table summarizes the changes in options outstanding of the Company during the fiscal year ended June 30, 2013. | |||||||||||||||||||||
Date Issued | Number of Options | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Expiration Date (yrs) | Value if Exercised | ||||||||||||||||
Balance June 30, 2012 | 698,429 | $ | 0.85 | $ | 1.2 | 2.95 | $ | 522,843 | |||||||||||||
Granted | - | - | - | - | - | ||||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Cancelled/Expired | (85,000 | ) | (0.80 | ) | - | - | - | ||||||||||||||
Outstanding as of June 30, 2013 | 613,429 | $ | 0.55 | $ | 1.2 | 1.95 | $ | 522,843 | |||||||||||||
Stock Purchase Warrants | |||||||||||||||||||||
During the fiscal year ended June 30, 2014, the Company issued warrants to purchase a total of 1,366,016 and expired 498,500 shares of the Company’s Common Stock. The Company issued 29,400 warrants in conjunction to a default clause in a convertible note payable and issued 311,616 warrants in conjunction to a consulting agreement entered into in July 2013. The Company also issued 500,000 warrants in conjunction to a consulting agreement entered into in October 2013.The Company issued 25,000 warrants in conjunction to an extension in a convertible note payable in conjunction with 50,000 shares of common stock. The Company issued 100,000 warrants in conjunction with a consulting agreement entered into January 2014. The Company issued 300,000 warrants in conjunction with an employment agreement entered into January 2014. The Company also issued 100,000 warrants as compensation for references purchased. The warrants were valued using the Black-Scholes pricing model under the assumptions noted below. The Company apportioned value to the warrants based on the relative fair market value of the Common Stock and warrants. | |||||||||||||||||||||
During the fiscal year ended June 30, 2013, the Company issued warrants to purchase a total of 1,395,732 and expired 395,000 shares of the Company’s Common Stock. As described in Note 6, the Company issued 495,000 warrants attached to Common Stock. The warrants were valued using the Black-Scholes pricing model under the assumptions noted below. The Company apportioned value to the warrants based on the relative fair market value of the Common Stock and warrants. | |||||||||||||||||||||
An additional 231,250 warrants were issued in conjunction with related party convertible notes payable. The warrants were valued using the Black-Scholes pricing model under the assumptions noted below. The fair market value of the warrants has been accounted for as debt discount. | |||||||||||||||||||||
An additional 574,482 warrants valued at $108,660, were issued for services to be expensed as services were performed. | |||||||||||||||||||||
An additional 95,000 warrants valued at $19,521, were issued in advance for services to be amortized over the term of the service period | |||||||||||||||||||||
The following table presents the assumptions used to estimate the fair values of the stock warrants and options granted: | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Expected volatility | 113-132% | 111-207% | |||||||||||||||||||
Expected dividends | 0% | 0% | |||||||||||||||||||
Expected term | 2-10 Years | 2-10 Years | |||||||||||||||||||
Risk-free interest rate | 0.35 – 1.75% | 0.41-2.52% | |||||||||||||||||||
The following table summarizes the changes in warrants outstanding issued to employees and non-employees of the Company during the fiscal year ended June 30, 2014. | |||||||||||||||||||||
Date Issued | Number of Warrants | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Expiration Date (yrs) | Value if Exercised | ||||||||||||||||
Balance June 30, 2013 | 7,530,063 | $ | 0.67 | $ | 2.45 | 4.17 | $ | 4,770,713 | |||||||||||||
Granted | 1,366,016 | 1.3 | 0.23 | 5 | 1,774,467 | ||||||||||||||||
Exercised | (65,000 | ) | (0.25 | ) | 0.14 | - | (16,250 | ) | |||||||||||||
Cancelled/Expired | (498,500 | ) | (0.70 | ) | - | - | (158,498 | ) | |||||||||||||
Outstanding as of June 30, 2014 | 8,332,579 | $ | 0.76 | $ | 0.7 | 2.96 | $ | 6,370,432 | |||||||||||||
The following table summarizes the changes in warrants outstanding issued to employees and non-employees of the Company during the fiscal year ended June 30, 2013. | |||||||||||||||||||||
Date Issued | Number of Warrants | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Expiration Date (yrs) | Value if Exercised | ||||||||||||||||
Balance June 30, 2012 | 6,529,331 | $ | 2.84 | $ | 3.55 | 1.95 | $ | 4,835,028 | |||||||||||||
Granted | 1,395,732 | 0.33 | 0.19 | 4.17 | 458,185 | ||||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Cancelled/Expired | (395,000 | ) | (0.82 | ) | - | - | (552,500 | ) | |||||||||||||
Outstanding as of June 30, 2013 | 7,530,063 | $ | 0.67 | $ | 2.45 | 4.17 | $ | 4,770,713 |
10_INCOME_TAXES
10. INCOME TAXES | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
10. INCOME TAXES | ' | ||||||||
The components of the income tax (benefit) provision are as follows: | |||||||||
As of | |||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
Current | |||||||||
Federal | $ | - | $ | - | |||||
State | - | - | |||||||
Total Current | - | - | |||||||
Deferred | |||||||||
Federal | - | - | |||||||
State | - | - | |||||||
Total Deferred | - | - | |||||||
Income tax provision | $ | - | $ | - | |||||
A reconciliation of the expected income tax benefit (provision) computed using the federal statutory income tax rate of 34% to the Company’s effective income tax rate is as follows: | |||||||||
As of | |||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
Income tax benefit based on federal statutory rate | $ | (1,123,000 | ) | $ | (2,405,000 | ) | |||
State income tax benefit, net of federal income tax | (444,000 | ) | (448,000 | ) | |||||
Change in deferred tax valuation allowance | 1,567,000 | 2,778,000 | |||||||
Other, net | - | - | |||||||
Income tax provision | $ | - | $ | - | |||||
The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and deferred tax liabilities are presented below: | |||||||||
As of | |||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Debt extinguishment | $ | 918,000 | $ | 298,000 | |||||
Impairment of fixed assets | 604,000 | 447,000 | |||||||
Domestic net operating loss carryforwards | 9.828,000 | 8,383,000 | |||||||
Total gross deferred tax assets | 11,350,000 | 9,128,000 | |||||||
Less valuation allowance on deferred tax assets | (11,350,000 | ) | (9,128,000 | ) | |||||
Net deferred tax assets | - | - | |||||||
Deferred tax liabilities: | |||||||||
Deferred costs | - | - | |||||||
Total deferred tax liabilities | - | - | |||||||
Net deferred taxes | $ | - | $ | - | |||||
Deferred income taxes result from temporary differences between income tax and financial reporting computed at the effective income tax rate. The Company has established a valuation allowance against its net deferred tax assets due to the uncertainty surrounding the realization of such assets. Management periodically evaluates the recoverability of the deferred tax assets. At such time it is determined that it is more likely than not that deferred tax assets are realizable, the valuation allowance will be reduced. | |||||||||
The Company files U.S. federal and Arizona income tax returns. Our major tax jurisdictions are U.S. federal and the State of Arizona and are subject to tax examinations for the open years from 2009 through 2012. As of the date of this filing, the Company has not filed its tax return for the fiscal year ended 2012. While none are anticipated, fines and/or penalties may be associated with the delinquent filing. | |||||||||
As of June 30, 2014 and 2013, the Company had net operating loss carry-forwards for federal and state income tax purposes of approximately $26.4 million and $22.3 million, respectively. Such carryforwards may be used to reduce taxable income, if any, in future year subject to limitations of Section 382 of the Internal Revenue Code for federal income and Arizona tax purposes. The Company believes an ownership change may have occurred, as defined by Sections 382 and 383 of the Internal Revenue Code, which could result in the forfeiture of a significant portion of its net operating loss carry-forwards. The Company is not using any tax attributes in the current year, but will analyze whether a change occurred and the related impact on its gross deferred tax assets, if needed. As the Company's analysis is not complete, the impact to its gross deferred tax assets is uncertain. If not utilized, the federal and state net operating loss carry-forwards will begin expiring in 2014. |
11_COMMITMENTS_AND_CONTINGENCI
11. COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||
Jun. 30, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
11. COMMITMENTS AND CONTINGENCIES | ' | ||||
Legal Proceedings | |||||
The Company may become involved in certain legal proceedings and claims which arise in the normal course of business. In addition, from time to time, third parties may assert intellectual property infringement claims against the Company in the form of letters and other forms of communication. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the Company’s results of operations, prospects, cash flows, financial position and brand. | |||||
In November 2012, the Company’s former Chief Financial Officer, Joseph Desiderio, signed a promissory note (“Note”) on behalf of the Company in favor of JMJ Financial or its Assignees. The Note provided, among other things, for the right on the part of the Lender to convert part of the debt to stock. Subsequently, the parties have disagreed on the validity and terms of the agreement. The Lender has filed suit in the state court in Dade County, Florida, seeking to enforce the agreement. The Company disputes the Lender’s position on the grounds that (1) the Note contains provisions that violate Florida’s usury laws, (2) there has been no default by Company under the Note, and (3) some provisions of the Note are void and unenforceable. The Company expects the matter to be resolved to its satisfaction. Except as described in the preceding paragraph, to the best knowledge of our management, there are no material litigation matters pending or threatened against us. | |||||
Lease Agreements | |||||
Pursuant to a lease originally dated January 2006, we currently occupy approximately 11,800 square feet of office space located at 7650 E. Evans Rd., Suite C, Scottsdale, Arizona on a month-to-month basis. The total lease expense is approximately $9,600 per month, payable in cash and Common Stock of the Company. | |||||
We are leasing office space on a month-to-month basis in West Hollywood, California. We also lease an office in Los Angeles for use by our audio team in connection with our AfterMaster product under a lease expiring on August 31, 2013. The total lease expense for both facilities is approximately $4,305 per month, after which, the Company has agreed to lease on a month to month basis, and the total remaining obligations under these leases at June 30, 2014 were approximately $0. | |||||
We lease space at mall locations for MyStudio generally pursuant to one-year leases. The monthly rent for these spaces is at market rates commensurate with other kiosk operations. As we expand, we will continue to secure space for our recording studios at various venues and locations throughout the country. | |||||
Rent expense for the year ended June 30, 2014 was $282,453, of which $202,287 was paid in cash and $80,166 was paid in Common Stock. Rent expense for the year ended June 30, 2013 was $396,412, of which $226,346 was paid in cash and $170,067 was paid in Common Stock. | |||||
Below is a table summarizing the annual operating lease obligations over the next 5 years: | |||||
Year | Lease Payments | ||||
2015 | $ | 52,110 | |||
Thereafter | - | ||||
Total | $ | 52,110 | |||
Other | |||||
The Company has not declared dividends on Series A or B Convertible Preferred Stock or its Series A-1 Convertible Preferred Stock. The cumulative dividends in arrears through June 30, 2014 were approximately $652,873. | |||||
As of the date of this filing, the Company has not filed its tax return for the fiscal year ended 2013 and 2014. |
12_NONCASH_FINANCING_ACTIVITIE
12. NON-CASH FINANCING ACTIVITIES | 12 Months Ended |
Jun. 30, 2014 | |
Supplemental Cash Flow Elements [Abstract] | ' |
12. NON-CASH FINANCING ACTIVITIES | ' |
Common Stock Issued to Extinguish Debt and Liabilities | |
The Company issued 1,271,534 and 425,168 shares of Common Stock for conversion notes payable for the years ended June 30, 2014 and 2013 totaling $127,153 and $85,179, respectively. | |
Common Stock and Warrants Issued for Prepaid Services | |
The Company recorded prepaid services for the years ended June 30, 2014 and 2013 totaling $-0- and $37,840, respectively. | |
Warrants, Stock, and Beneficial Conversion Feature on Issuance of Convertible Debt | |
The Company recorded $46,283 for beneficial conversion features in connection with the issuance of convertible debt for the year ended June 30, 2014. The Company recorded $1,852,579 for beneficial conversion features in connection with the issuance of convertible debt for the year ended June 30, 2013. | |
Common Stock Issued as Dividend on Preferred Stock | |
The Company issued -0- shares of Common Stock as dividends related to the Company’s preferred shares for the years ended June 30, 2014 and 2013, respectively. |
13_SUBSEQUENT_EVENTS
13. SUBSEQUENT EVENTS | 12 Months Ended |
Jun. 30, 2014 | |
Subsequent Events [Abstract] | ' |
13. SUBSEQUENT EVENTS | ' |
In accordance with ASC 855, Company’s management reviewed all material events through the date of this filing and determined that there are no material subsequent events to report. |
1_SUMMARY_OF_SIGNIFICANT_ACCOU1
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |||
Jun. 30, 2014 | ||||
Notes to Financial Statements | ' | |||
Description of Business | ' | |||
Studio One Media, Inc. (the “Company” or “Studio One”) was originally organized in Delaware on May 12, 1988, as Dimensional Visions Group, Ltd. The name was changed on January 15, 1998 to Dimensional Visions Incorporated. On February 8, 2006, it changed its name to Elevation Media, Inc., and on March 28, 2006 the Company’s name was changed to Studio One Media, Inc. as part of its overall plan to implement its revised business plan. | ||||
In April 2006, the Company entered into an agreement to purchase MyStudio HD Recording Studios, Inc. (formerly known as Studio One Entertainment, Inc.), a privately-held Scottsdale, Arizona-based company that designed and manufactured the recording studios currently in use by the Company (the “MyStudio Agreement”). | ||||
On April 17, 2007, the Company announced that it had finalized the reverse merger of MyStudio HD Recording Studios, Inc. through an all-stock transaction. The purchase was pursuant to an agreement entered into by the companies dated March 29, 2006. The reverse merger included the exchange of 7,000,000 restricted Common Shares of Studio One Media, Inc. for 100% of the issued and outstanding shares of MyStudio HD Recording Studios, Inc. The substance of the transaction resulted in a reverse merger wherein MyStudio HD Recording Studios, Inc. became the accounting acquirer of Studio One. Therefore, historical financial data reflects the operations and accumulated deficit of MyStudio HD Recording Studios, Inc. The transaction essentially is a recapitalization of MyStudio HD Recording Studios, Inc. The reverse merger includes all right, title and interest to MyStudio HD Recording Studio, Inc.’s proprietary interactive recording studios, business plan and intellectual property, including pending patents, foreign patent rights and federal trademark applications. MyStudio, Inc. continues to operate as a wholly owned subsidiary of Studio One. Accordingly, the financial statements present on a consolidated basis the operations of Studio One and MyStudio HD Recording Studios, Inc., as well its other wholly-owned subsidiary, AfterMaster HD Audio, Inc. | ||||
Accounting Basis | ' | |||
The Company’s financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States. The Company has elected a June 30 fiscal year end. | ||||
Principles of Consolidation | ' | |||
The consolidated financial statements include the accounts of Studio One Media, Inc. and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. | ||||
Use of Estimates | ' | |||
The preparation of financial statements in conformity with generally accepted accounting principles 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 dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates are made in relation to the allowance for doubtful accounts and the fair value of certain financial instruments. | ||||
Notes and Other Receivables | ' | |||
Notes and other receivables are stated at amounts management expects to collect. An allowance for doubtful accounts is provided for uncollectible receivables based upon management's evaluation of outstanding accounts receivable at each reporting period considering historical experience and customer credit quality and delinquency status. Delinquency status is determined by contractual terms. Bad debts are written off against the allowance when identified. | ||||
Fair Values, Inputs and Valuation Techniques for Financial Assets and Liabilities Disclosures | ' | |||
The fair value measurements and disclosure guidance defines fair value and establishes a framework for measuring fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In accordance with this guidance, the Company has categorized its recurring basis financial assets and liabilities into a three-level fair value hierarchy based on the priority of the inputs to the valuation technique. | ||||
The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. | ||||
The levels of the fair value hierarchy are described below: | ||||
• | Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. | |||
• | Level 2 inputs utilize other than quoted prices included in Level 1 that are observable for the asset, either directly or indirectly, for substantially the full term of the asset. Level 2 inputs include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active and inputs other than quoted prices that are observable in the marketplace for the asset. The observable inputs are used in valuation models to calculate the fair value for the asset. | |||
• | Level 3 inputs are unobservable but are significant to the fair value measurement for the asset, and include situations where there is little, if any, market activity for the asset. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset. | |||
A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. | ||||
Disclosure for Non-Financial Asssets Measured at Fair Value on a Non-Recurring Basis | ' | |||
The Company’s financial instruments mainly consist of cash, receivables, current assets, accounts payable and accrued expenses and debt. The carrying amounts of its cash, receivables, current asserts, accounts payable, accrued expenses and current debt approximates fair value due to the Short-Term nature of these instruments. The debt consists of lease payable and notes payables, the lease payables, which is due 24 months after June 30, 2014, therefore its carrying amount also approximates fair value. | ||||
Concentration of Risk | ' | |||
Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash. Our cash balances are maintained in accounts held by major banks and financial institutions located in the United States. The Company occasionally maintains amounts on deposit with a financial institution that are in excess of the federally insured limits. The risk is managed by maintaining all deposits in high quality financial institutions. | ||||
For the year ended June 30, 2014 there were no customers that accounted for a material portion of total revenues, and 2013 there was one customer that accounted for a material portion of total revenues. | ||||
Property and Equipment | ' | |||
Property and equipment is recorded at cost less accumulated depreciation. Depreciation and amortization is calculated using the straight-line method over the expected useful life of the asset, after the asset is placed in service. The Company generally uses the following depreciable lives for its major classifications of property and equipment: | ||||
Description | Useful Lives | |||
Office Equipment and Computers | 5 years | |||
Computer Software | 5 years | |||
Furniture and Office Equipment | 5 years | |||
Vehicles | 5 years | |||
Leasehold Improvements | Shorter of Useful Life or Lease Term | |||
Studios | 5 years | |||
Expenditures associated with upgrades and enhancements that improve, add functionality, or otherwise extend the life of property and equipment are capitalized, while expenditures that do not, such as repairs and maintenance, are expensed as incurred. | ||||
Property and Equipment Yet to be Placed in Service | ' | |||
The Company capitalizes direct costs associated with the production of a new studio as it is being built. Depreciation of these assets does not begin until the studio is complete and placed into service. | ||||
Intangible Assets | ' | |||
Intangible assets consist of intellectual property, website costs, video backgrounds, and patterns and molds. The Company’s intellectual property includes purchased patents and trademarks as well as other proprietary technologies. Website costs are costs incurred to develop the Company’s website. Video backgrounds are the costs incurred to develop video backgrounds for use in the Company’s recording studios. Patterns and molds are for the design and construction of the studios. The Company amortizes intangible assets over the following useful lives: | ||||
Description | Weighted-Average Amortization Period | |||
Intellectual Property | 5 years | |||
Website Costs | 5 years | |||
Video Backgrounds | 5 years | |||
Patterns and Molds | 5 years | |||
Valuation of Long-Lived Assets | ' | |||
Long-lived tangible assets and definite-lived intangible assets are reviewed for possible impairment annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses both an estimate of undiscounted future net cash flows of the assets over the remaining useful lives and a replacement cost method when determining their fair values. If the carrying values of the assets exceed the fair value of the assets, the Company recognizes an impairment loss equal to the difference between the carrying values of the assets and their fair values. Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash flows that are independent from other groups of assets. The evaluation of long-lived assets requires the Company to use estimates of future cash flows. However, actual cash flows may differ from the estimated future cash flows used in these impairment tests. | ||||
Revenue Recognition | ' | |||
The Company applies the provisions of FASB ASC 605, Revenue Recognition in Financial Statements, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue related to goods and services provided when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. | ||||
The Company's revenues are generated from the studio sessions, on-studio advertising, website advertising and fees from the AfterMaster services. Studio sessions are included in revenues as cash sales. Cash sales are recognized as revenue upon the earlier of the use of or expiration of the prepaid session. | ||||
Cost of Sales | ' | |||
The Company’s cost of revenues includes studio lease expense, employee costs, and other nominal amounts. Depreciation is not included within cost of sales. | ||||
Research and Development | ' | |||
The Company follows the policy of expensing its research and development costs in the period in which they are incurred in accordance with ASC 730, Accounting for Research and Development Costs. The Company incurred research and development expenses of $31,450 and $643 during the years ended June 30, 2014 and 2013, respectively. | ||||
Advertising Expenses | ' | |||
The Company expenses advertising costs in the period in which they are incurred. Advertising expenses were $85,810 and $8,064 for the years ended June 30, 2014 and 2013, respectively, and have been included within general and administrative expenses. | ||||
Share-Based Compensation | ' | |||
The Company follows the provisions of ASC 718, Share-Based Payment, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The Company uses the Black-Scholes pricing model for determining the fair value of share-based compensation. | ||||
Equity instruments issued to non-employees for goods or services are accounted for at fair value and are marked to market until service is complete or a performance commitment date is reached, whichever is earlier. | ||||
Loss Per Share | ' | |||
Basic earnings (loss) per Common Share is computed by dividing losses attributable to Common shareholders by the weighted-average number of shares of Common Stock outstanding during the period. The losses attributable to Common shareholders was increased for accrued and deemed dividends on Preferred Stock during the years ended June 30, 2014 and 2013 of $68,064 and $68,066, respectively. | ||||
Diluted earnings per Common Share is computed by dividing income (loss) attributable to Common shareholders by the weighted-average number of Shares of Common Stock outstanding during the period increased to include the number of additional Shares of Common Stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding convertible Preferred Stock, stock options, warrants, and convertible debt. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s Common Stock can result in a greater dilutive effect from potentially dilutive securities. | ||||
For the years ended June 30, 2014 and 2013, all of the Company’s potentially dilutive securities (warrants, options, convertible preferred stock, and convertible debt) were excluded from the computation of diluted earnings per share as they were anti-dilutive. The total number of potentially dilutive Common Shares that were excluded were 15,895,075 and 11,591,124 at June 30, 2014 and 2013, respectively. | ||||
Income Taxes | ' | |||
The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The charge for taxation is based on the results for the year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. | ||||
In July, 2006, the FASB issued ASC 740, Accounting for Uncertainty in Income Taxes, which clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a return. ASC 740 provides guidance on the measurement, recognition, classification and disclosure of tax positions, along with accounting for the related interest and penalties. Under this pronouncement, the Company recognizes the financial statement benefit of a tax position only after determining that a position would more likely than not be sustained based upon its technical merit if challenged by the relevant taxing authority and taken by management to the court of the last resort. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon settlement with the relevant tax authority. | ||||
The Company’s policy is to recognize both interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties on unrecognized tax benefits expected to result in payment of cash within one year are classified as accrued liabilities, while those expected beyond one year are classified as other liabilities. The Company has not recorded any interest and penalties since its inception. | ||||
The Company files income tax returns in the U.S. federal tax jurisdiction and various state tax jurisdictions. The tax years for 2012 to 2014 remain open for federal and/or state tax jurisdictions. The Company is currently not under examination by any other tax jurisdictions for any tax years. | ||||
Recent Accounting Pronouncements | ' | |||
Management has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements. |
3_PROPERTY_AND_EQUIPMENT_Table
3. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Schedule of Property and Equipment | ' | ||||||||
2014 | 2013 | ||||||||
Furniture and Office Equipment | $ | 25,912 | $ | 25,912 | |||||
Office Equipment and Computers | 233,564 | 230,930 | |||||||
Studios | 123,324 | 1,140,884 | |||||||
Vehicles | 60,524 | 60,524 | |||||||
Leasehold Improvements | 23,472 | 9,174 | |||||||
Computer Software | 56,166 | 56,166 | |||||||
Accumulated Depreciation | (357,982 | ) | (1,197,348 | ) | |||||
Property and Equipment, net | $ | 164,980 | $ | 336,242 |
4_INTANGIBLE_ASSETS_Tables
4. INTANGIBLE ASSETS (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||
Schedule of Intangible Assets | ' | ||||||||
2014 | 2013 | ||||||||
Patterns and Molds | $ | 18,916 | $ | 18,916 | |||||
Website Costs | 100,410 | 91,375 | |||||||
Video Backgrounds | 16,172 | 16,172 | |||||||
Accumulated Amortization | (123,508 | ) | (109,774 | ) | |||||
Intangible Assets, Net | $ | 11,990 | $ | 16,689 | |||||
Schedule of Amortization Expense | ' | ||||||||
Year | Amortization | ||||||||
2015 | $ | 3,159 | |||||||
2016 | 4,970 | ||||||||
2017 | 3,861 | ||||||||
2018 | - | ||||||||
2019 | - | ||||||||
Total | $ | 11,990 |
5_ACCOUNTS_PAYABLE_AND_ACCRUED1
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Schedule of Accounts Payable and Accrued Expenses | ' | ||||||||
2014 | 2013 | ||||||||
Accounts Payable | $ | 822,006 | $ | 597,079 | |||||
Accrued Interest | 74,483 | 50,725 | |||||||
Deferred Revenue | 3,500 | 24,182 | |||||||
Other Accrued Expenses | 129,556 | 156,036 | |||||||
Consulting Services-Related Party | 278,568 | 167,659 | |||||||
Total | $ | 1,308,113 | $ | 995,681 |
6_NOTES_PAYABLE_Tables
6. NOTES PAYABLE (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Convertible Notes Payable-Related Parties | ' | ||||||||
Convertible Notes Payable – Related Parties | |||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
$250,000 face value, issued in February 2010, interest rate of 12%, matures in February 2013, net of unamortized discount of $0 and $0 at June 30, 2014 and June 30,2013, respectively. | $ | 250,000 | $ | 250,000 | |||||
$250,000 face value, issued in May 2010, interest rate of 12%, matures in May 2013, net of unamortized discount of $0 and $0 at June 30, 2014 and June 30,2013, respectively. | 250,000 | 250,000 | |||||||
$250,000 face value, issued in August 2010, interest rate of 12%, matures in August 2013, net of unamortized discount of $0 and $24,559 at June 30, 2014 and June 30,2013, respectively. | 250,000 | 225,441 | |||||||
$250,000 face value, issued in December 2010, interest rate of 12%, matures in December 2013, net of unamortized discount of $0 and $40,148 at June, 2014 and June 30,2013, respectively. | 250,000 | 209,852 | |||||||
$250,000 face value, issued in November 2011, interest rate of 15%, matures in November 2012, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30,2013, respectively. | 250,000 | 250,000 | |||||||
$250,000 face value, issued in December 2011, interest rate of 15%, matures in June 2013, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30,2013, respectively. | 250,000 | 250,000 | |||||||
$100,000 face value, issued in December 2011, interest rate of 15%, matures in June 2013, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30,2013, respectively. | 100,000 | 100,000 | |||||||
$300,000 face value, issued in December 2011, interest rate of 15%, matures in June 2013, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30,2013, respectively. | 300,000 | 300,000 | |||||||
$100,000 face value, issued in February 2012, interest rate of 15%, matures in August 2013, net of unamortized discount of $0 and $1,168 as of June 30, 2014 and June 30,2013, respectively. | 100,000 | 98,832 | |||||||
$100,000 face value, issued in February 2012, interest rate of 15%, matures in August 2013, net of unamortized discount of $0 and $1,514 as of June 30, 2014 and June 30,2013, respectively. | 100,000 | 98,486 | |||||||
$150,000 face value, issued in March 2012, interest rate of 15%, matures in September 2013, net of unamortized discount of $0 and $1,111 as of June 30, 2014 and June 30,2013, respectively. | 150,000 | 148,889 | |||||||
$200,000 face value, issued in March 2012, interest rate of 15%, matures in September 2013, net of unamortized discount of $0 and $1,814 as of June 30, 2014 and June 30,2013, respectively. | 200,000 | 198,186 | |||||||
$200,000 face value, issued in April 2012, interest rate of 10%, matures in October 2013, net of unamortized discount of $0 and $2,450 as of June 30, 2014 and June 30,2013, respectively. | 200,000 | 197,550 | |||||||
$150,000 face value, issued in May 2012, interest rate of 10%, matures in November 2013, net of unamortized discount of $0 and $1,682 as of June 30, 2014 and June 30,2013, respectively. | 150,000 | 148,318 | |||||||
$125,000 face value, issued in June 2012, interest rate of 10%, matures in December 2013, net of unamortized discount of $0 and $1,897 as of June 30, 2014 and June 30,2013, respectively. | 125,000 | 123,103 | |||||||
$125,000 face value, issued in June 2012, interest rate of 10%, matures in December 2013, net of unamortized discount of $0 and $2,208 as of June 30, 2014 and June 30,2013, respectively. | 125,000 | 122,792 | |||||||
$50,000 face value, issued in August 2012, interest rate of 10%, matures in February 2014, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30, 2013. | 50,000 | 50,000 | |||||||
$50,000 face value, issued in September 2012, interest rate of 10%, matures in March 2014, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30, 2013. | 50,000 | 50,000 | |||||||
$100,000 face value, issued in October 2012, interest rate of 10%, matures in April 2014, net of unamortized discount of $0 and $2,662 as of June 30, 2014 and June 30, 2013. | 100,000 | 97,338 | |||||||
$100,000 face value, issued in October 2012, interest rate of 10%, matures in April 2014, net of unamortized discount of $0 and $2,786 as of June 30, 2014 and June 30, 2013. | 100,000 | 97,214 | |||||||
$50,000 face value, issued in October 2012, interest rate of 10%, matures in April 2014, net of unamortized discount of $0 and $1,192 as of June 30, 2014 and June 30, 2013. | 50,000 | 48,808 | |||||||
$75,000 face value, issued in November 2012, interest rate of 10%, matures in May 2014, net of unamortized discount of $0 and $1,804 as of June 30, 2014 and June 30, 2013. | 75,000 | 73,196 | |||||||
$25,000 face value, issued in November 2012, interest rate of 10%, matures in May 2014, net of unamortized discount of $0 and $1,159 as of June 30, 2014 and June 30, 2013. | 25,000 | 23,841 | |||||||
$50,000 face value, issued in November 2012, interest rate of 10%, matures in May 2014, net of unamortized discount of $0 and $2,358 as of June 30, 2014 and June 30, 2013. | 50,000 | 47,642 | |||||||
$50,000 face value, issued in December 2012, interest rate of 10%, matures in June 2014, net of unamortized discount of $0 and $2,502 as of June 30, 2014 and June 2013. | 50,000 | 47,498 | |||||||
$75,000 face value, issued in January 2013, interest rate of 10%, matures in July 2014, net of unamortized discount of $0 and $2,111 as ofJune 30, 2014 and June 30, 2013. | 75,000 | 72,889 | |||||||
$25,000 face value, issued in January 2013, interest rate of 10%, matures in July 2014, net of unamortized discount of $1 and $637 as of June 30, 2014 and June 30, 2013. | 24,999 | 24,363 | |||||||
$35,000 face value, issued in January 2013, interest rate of 10%, matures in July 2014, net of unamortized discount of $0 and $1,099 as of June 30, 2014 and June 30, 2013. | 35,000 | 33,901 | |||||||
$5,000 face value, issued in February 2013, interest rate of 10%, matures in August 2014, net of unamortized discount of $0 and $156 as of June 30, 2014 and June 30, 2013. | 5,000 | 4,844 | |||||||
$10,000 face value, issued in February 2013, interest rate of 10%, matures in August 2014, net of unamortized discount of $1 and $374 as of June 30, 2014 and June 30, 2013. | 9,999 | 9,626 | |||||||
$50,000 face value, issued in February 2013, interest rate of 10%, matures in August 2014, net of unamortized discount of $0 and $2,296 as of June 30, 2014 and June 30, 2013. | 50,000 | 47,704 | |||||||
$50,000 face value, issued in March 2013, interest rate of 10%, matures in September 2014, net of unamortized discount of $13 and $1,746 as of June 30, 2014 and June 30, 2013. | 49,987 | 48,254 | |||||||
$75,000 face value, issued in April 2013, interest rate of 10%, matures in October 2014, net of unamortized discount of $546 and $2,712 as of June 30, 2014 and June 30, 2013. | 74,454 | 72,288 | |||||||
$9,000 face value, issued in June 2014, interest rate of 0%, matures in July 2014, net of unamortized discount of $1,200 as of June 30, 2014 | 7,800 | - | |||||||
Total convertible notes payable – related parties | 3,932,239 | 3,820,855 | |||||||
Less current portion | 3,932,239 | 2,096,416 | |||||||
Convertible notes payable – related parties, long-term | $ | - | $ | 1,724,439 | |||||
Schedule of Convertible Notes Payable-Non-Related Parties | ' | ||||||||
Convertible Notes Payable - Non-Related Parties | |||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
$100,000 face value, issued in September 2011, interest rate of 0%, originally matured in December 2011, extended to August 2014, net of unamortized discount of $-0- and $4,064 as of June 30, 2014 and June 30,2013. | $ | 100,000 | $ | 95,936 | |||||
$10,000 face value, of which $10,000 has been paid back, issued in October 2011, interest rate of 10%, matures in June 2012, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30,2013. | - | 10,000 | |||||||
$15,000 face value, issued in October 2011, interest rate of 10%, matures in June 2012, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30, 2013. | 15,000 | 15,000 | |||||||
$75,000 face value, issued in January 2012, interest rate of 12%, originally matured in June 2013, extended to August 2014, net of unamortized discount of $-0- and $3,017 as of June 30, 2014 and June 30,2013. | 75,000 | 71,983 | |||||||
$50,000 face value, issued in August 2012, interest rate of 10%, matures in February 2013, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30, 2013. | 50,000 | 50,000 | |||||||
$10,000 face value, issued in September 2012, interest rate of 10%, matures in March 2013, net of unamortized discount of $0 and $0 as of June 30, 2014 and June 30,2013. | 10,000 | 10,000 | |||||||
$50,000 face value of which $9,600 was converted leaving a $40,400 face value, issued in November 2012, interest rate of 10%, matures in November 2013 and an additional penalties were added to the principal of $120,348 bringing the face value to $160,748, net of unamortized discount of $0 and $13,789 as of June 30, 2014 and June 30, 2013. | 160,748 | 26,611 | |||||||
$30,000 face value, issued in February 2013, interest rate of 0%, matures in November 2013, net of unamortized discount of $0 and $10,487 as of June 30, 2014 and June 30, 2013. | 30,000 | 19,513 | |||||||
$20,000 face value, issued in April 2013, interest rate of -0-%, matures in October 2013, net of unamortized discount of $0 and $12,678 as of June 30, 2014 and June 30, 2013. | 20,000 | 7,322 | |||||||
$60,000 face value, of which $60,000 has been paid back, issued in July 2013, interest rate of 6%, matures in October 2013, net of unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
$100,000 face value, issued in September 2013, interest rate of 0%, matures in February 2014, net of unamortized discount of $0 as of June 30, 2014. | 100,000 | - | |||||||
$50,000 face value, issued in October 2013, interest rate of 0%, originally matured in November 2013, with an extended maturity date of May 2014, net of unamortized discount of $0 as of June 30, 2014. | 50,000 | - | |||||||
$50,000 face value, of which $10,000 was converted leaving a $0 face value, issued in November 2013, interest rate of 0%, matured in May 2014, net of unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
$25,000 face value, of which $25,000 was converted leaving a $0 face value, issued in November 2013, interest rate of 0%, matured in February 27, 2014, net of unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
$10,000 face value, of which $10,000 was converted leaving a $0 face value, issued in February 2014, interest rate of 10%, matures in March 2014, net of unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
$50,000 face value, issued in February 2014, interest rate of 10%, matures in April 2014, net of unamortized discount of $0 as of June 30, 2014. | 50,000 | - | |||||||
$50,000 face value, issued in February 2014, interest rate of 6%, matures in August 2014, net of unamortized discount of $3,868 as of June 30, 2014. | 46,132 | - | |||||||
$30,000 face value, issued in March 2014, interest rate of 0%, matures in September 2014, net of unamortized discount of $7,011 as of June 30, 2014. | 22,989 | - | |||||||
$20,000 face value, issued in March 2014, interest rate of 10%, matures in June 2014, net of unamortized discount of $0 as of June 30, 2014. | 20,000 | - | |||||||
$25,000 face value, issued in April 2014, interest rate of 6%, matures October 2014, net unamortized discount of $15,437 as of June 30, 2014. | 9,563 | - | |||||||
$5,000 face value, of which $5,000 was converted leaving a $0 face value, issued in May 2014, interest rate of 0%, matures August 2014, net unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
$25,000 face value, of which $25,000 was converted leaving a $0 face value, issued in May 2014, interest rate of 0%, matures in August 2014, net of unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
$15,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $14,098 as of June 30, 2014. | 902 | - | |||||||
$20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $18,798 as of June 30, 2014. | 1,202 | - | |||||||
$30,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $28,033 as of June 30, 2014. | 1,967 | - | |||||||
$20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $18,798 as of June 30, 2014. | 1,202 | - | |||||||
$25,000 face value, issued in June 2014, interest rate of 6%, matures September 2014, net unamortized discount of $25,000 as of June 30, 2014. | - | - | |||||||
$12,000 face value, of which $12,000 was converted leaving a $0 face value, issued in May 2014, interest rate of 6%, matures August 2014, net unamortized discount of $0 as of June 30, 2014. | - | - | |||||||
Total convertible notes payable – non-related parties | 764,705 | 306,365 | |||||||
Less current portion | 764,705 | 306,365 | |||||||
Convertible notes payable – non-related parties, long-term | $ | - | $ | - | |||||
Schedule of Non-Convertible Notes Payable-Related Parties | ' | ||||||||
Notes Payable – Related Parties | |||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
Face value of $200,000, issued in April 2011, original maturity date of August 2011 extended to September 2014, 30,000 warrants per month were granted in lieu of interest through June 2011, warrants increased to 50,000 shares per month through August 2011, from September until maturity, the note bears interest at 12%. | $ | 200,000 | $ | 200,000 | |||||
Face value of $250,000, issued in September 2011, matures in September 2012 extended to September 2014, 25,000 warrants per month issued for first 90 days, note bears interest at 15% from December 2011 through maturity. | 250,000 | 250,000 | |||||||
Face value of $125,000, issued in October 2011, matures in October 2012 extended to September 2014, 30,000 warrants issued in lieu of interest through December 2011, note bears interest at 0% from December 2011 through maturity. | 125,000 | 125,000 | |||||||
Face value of $35,000, issued in January 2014, matures in February 2014 extended to September 2014,, note bears interest at 10%, interest is accrued monthly and paid quarterly by issuing restricted stock until the January 2015 and thereafter interest to be paid in cash. | 35,000 | - | |||||||
Total notes payable – related parties | 610,000 | 575,000 | |||||||
Less current portion | 610,000 | 575,000 | |||||||
Notes payable - related parties, long term | $ | - | $ | - | |||||
Schedule of Non-Convertible Notes Payable-Non-Related Parties | ' | ||||||||
Notes Payable – Non-Related Parties | |||||||||
2014 | 2013 | ||||||||
Various term notes with total face value of $40,488 due upon demand, interest rates range from 12% to 14%. | $ | 40,488 | $ | 40,488 | |||||
Total note payable – non-related parties | 40,488 | 40,488 | |||||||
Less current portion | 40,488 | 40,488 | |||||||
Notes payable – non-related parties, long-term | $ | - | $ | - |
7_CONVERTIBLE_PREFERRED_STOCK_
7. CONVERTIBLE PREFERRED STOCK (Tables) | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Convertible Preferred Stock Tables | ' | ||||||||||||
Schedule of Preferred Stock | ' | ||||||||||||
Shares | Shares | Liquidation | |||||||||||
Allocated | Outstanding | Preference | |||||||||||
Series A Convertible Preferred | 100,000 | 15,500 | - | ||||||||||
Series A-1 Convertible Preferred | 3,000,000 | 696,000 | 773,115 | ||||||||||
Series B Convertible Preferred | 200,000 | 3,500 | 79,099 | ||||||||||
Series C Convertible Preferred | 1,000,000 | 13,404 | - | ||||||||||
Series D Convertible Preferred | 375,000 | 130,000 | 130,000 | ||||||||||
Series E Convertible Preferred | 1,000,000 | 275,000 | 275,000 | ||||||||||
Series P Convertible Preferred | 600,000 | 86,640 | - | ||||||||||
Series S Convertible Preferred | 50,000 | - | - | ||||||||||
Total Preferred Stock | 6,325,000 | 1,220,044 | $ | 1,257,214 | |||||||||
9_STOCK_PURCHASE_OPTIONS_AND_W1
9. STOCK PURCHASE OPTIONS AND WARRANTS (Tables) | 12 Months Ended | ||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||||||
Schedule of Options | ' | ||||||||||||||||||||
Date Issued | Number of Options | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Expiration Date (yrs) | Value if Exercised | ||||||||||||||||
Balance June 30, 2013 | 613,429 | $ | 0.85 | $ | 1.2 | 1.95 | $ | 522,843 | |||||||||||||
Granted | 25,000 | 0.15 | 0.24 | 5 | 3,750 | ||||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Cancelled/Expired | (257,000 | ) | (1.23 | ) | - | - | (316,950 | ) | |||||||||||||
Outstanding as of June 30, 2014 | 381,429 | $ | 0.55 | $ | 0.12 | 0.62 | $ | 209,643 | |||||||||||||
Date Issued | Number of Options | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Expiration Date (yrs) | Value if Exercised | ||||||||||||||||
Balance June 30, 2012 | 698,429 | $ | 0.85 | $ | 1.2 | 2.95 | $ | 522,843 | |||||||||||||
Granted | - | - | - | - | - | ||||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Cancelled/Expired | (85,000 | ) | (0.80 | ) | - | - | - | ||||||||||||||
Outstanding as of June 30, 2013 | 613,429 | $ | 0.55 | $ | 1.2 | 1.95 | $ | 522,843 | |||||||||||||
Schedule of Assumptions Used to Estimate Fair Value | ' | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Expected volatility | 113-132% | 111-207% | |||||||||||||||||||
Expected dividends | 0% | 0% | |||||||||||||||||||
Expected term | 2-10 Years | 2-10 Years | |||||||||||||||||||
Risk-free interest rate | 0.35 – 1.75% | 0.41-2.52% | |||||||||||||||||||
Schedule of Warrants | ' | ||||||||||||||||||||
The following table summarizes the changes in warrants outstanding issued to employees and non-employees of the Company during the fiscal year ended June 30, 2014. | |||||||||||||||||||||
Date Issued | Number of Warrants | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Expiration Date (yrs) | Value if Exercised | ||||||||||||||||
Balance June 30, 2013 | 7,530,063 | $ | 0.67 | $ | 2.45 | 4.17 | $ | 4,770,713 | |||||||||||||
Granted | 1,366,016 | 1.3 | 0.23 | 5 | 1,774,467 | ||||||||||||||||
Exercised | (65,000 | ) | (0.25 | ) | 0.14 | - | (16,250 | ) | |||||||||||||
Cancelled/Expired | (498,500 | ) | (0.70 | ) | - | - | (158,498 | ) | |||||||||||||
Outstanding as of June 30, 2014 | 8,332,579 | $ | 0.76 | $ | 0.7 | 2.96 | $ | 6,370,432 | |||||||||||||
The following table summarizes the changes in warrants outstanding issued to employees and non-employees of the Company during the fiscal year ended June 30, 2013. | |||||||||||||||||||||
Date Issued | Number of Warrants | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Expiration Date (yrs) | Value if Exercised | ||||||||||||||||
Balance June 30, 2012 | 6,529,331 | $ | 2.84 | $ | 3.55 | 1.95 | $ | 4,835,028 | |||||||||||||
Granted | 1,395,732 | 0.33 | 0.19 | 4.17 | 458,185 | ||||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Cancelled/Expired | (395,000 | ) | (0.82 | ) | - | - | (552,500 | ) | |||||||||||||
Outstanding as of June 30, 2013 | 7,530,063 | $ | 0.67 | $ | 2.45 | 4.17 | $ | 4,770,713 |
10_INCOME_TAXES_Tables
10. INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Schedule of Income Tax (benefit) Provision | ' | ||||||||
As of | |||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
Current | |||||||||
Federal | $ | - | $ | - | |||||
State | - | - | |||||||
Total Current | - | - | |||||||
Deferred | |||||||||
Federal | - | - | |||||||
State | - | - | |||||||
Total Deferred | - | - | |||||||
Income tax provision | $ | - | $ | - | |||||
Schedule of reconciliation of the Expected Income Tax benefit (provision) | ' | ||||||||
As of | |||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
Income tax benefit based on federal statutory rate | $ | (1,123,000 | ) | $ | (2,405,000 | ) | |||
State income tax benefit, net of federal income tax | (444,000 | ) | (448,000 | ) | |||||
Change in deferred tax valuation allowance | 1,567,000 | 2,778,000 | |||||||
Other, net | - | - | |||||||
Income tax provision | $ | - | $ | - | |||||
Schedule of Deferred Tax Asset and Liabilities | ' | ||||||||
As of | |||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Debt extinguishment | $ | 918,000 | $ | 298,000 | |||||
Impairment of fixed assets | 604,000 | 447,000 | |||||||
Domestic net operating loss carryforwards | 9.828,000 | 8,383,000 | |||||||
Total gross deferred tax assets | 11,350,000 | 9,128,000 | |||||||
Less valuation allowance on deferred tax assets | (11,350,000 | ) | (9,128,000 | ) | |||||
Net deferred tax assets | - | - | |||||||
Deferred tax liabilities: | |||||||||
Deferred costs | - | - | |||||||
Total deferred tax liabilities | - | - | |||||||
Net deferred taxes | $ | - | $ | - |
11_COMMITMENTS_AND_CONTINGENCI1
11. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||
Jun. 30, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Annual operating lease obligations | ' | ||||
Year | Lease Payments | ||||
2015 | $ | 52,110 | |||
Thereafter | - | ||||
Total | $ | 52,110 |
1_SUMMARY_OF_SIGNIFICANT_ACCOU2
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Summary Of Significant Accounting Policies Details Narrative | ' | ' |
Research and development expenses | $31,450 | $643 |
Advertising expenses | $85,810 | $8,064 |
Anti-dilutive securities excluded from the computation of diluted earnings per share | 15,895,075 | 11,591,124 |
3_PROPERTY_AND_EQUIPMENT_DETAI
3. PROPERTY AND EQUIPMENT (DETAILS) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Property And Equipment Details | ' | ' |
Furniture and Office Equipment | $25,912 | $25,912 |
Office Equipment and Computers | 233,564 | 230,930 |
Studios | 123,324 | 1,140,884 |
Vehicles | 60,524 | 60,524 |
Leasehold Improvements | 23,472 | 9,174 |
Computer Software | 56,166 | 56,166 |
Accumulated Depreciation | -357,982 | -1,197,348 |
Property and Equipment, net | $164,980 | $336,242 |
Recovered_Sheet1
3. PROPERTY AND EQUIPMENT (Details Narrative) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Property And Equipment Details Narrative | ' | ' |
Depreciation Expense | $104,127 | $204,333 |
Property and Equipment, yet to be placed in service | $31,250 | $93,357 |
4_INTANGIBLE_ASSETS_Details
4. INTANGIBLE ASSETS (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Intangible Assets Details | ' | ' |
Patterns and Molds | $18,916 | $18,916 |
Website Costs | 100,410 | 91,375 |
Video Backgrounds | 16,172 | 16,172 |
Accumulated Amortization | -123,508 | -109,774 |
Intangible Assets, Net | $11,990 | $16,689 |
4_INTANGIBLE_ASSETS_Details_1
4. INTANGIBLE ASSETS (Details 1) (USD $) | Jun. 30, 2014 |
Intangible Assets Details 1 | ' |
2015 | $3,159 |
2016 | 4,970 |
2017 | 3,861 |
2018 | 0 |
2019 | 0 |
Total | $11,990 |
4_INTANGIBLE_ASSETS_Details_Na
4. INTANGIBLE ASSETS (Details Narrative) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Intangible Assets Details Narrative | ' | ' |
Amortization expense | $10,193 | $10,618 |
5_ACCOUNTS_PAYABLE_AND_ACCRUED2
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Accounts Payable And Accrued Expenses Details | ' | ' |
Accounts Payable | $822,006 | $597,079 |
Accrued Interest | 74,483 | 50,725 |
Deferred Revenue | 3,500 | 24,182 |
Other Accrued Expenses | 129,556 | 156,036 |
Consulting Services-Related Party | 278,568 | 167,659 |
Total | $1,308,113 | $995,681 |
6_NOTES_PAYABLE_Details
6. NOTES PAYABLE (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Notes Payable Details | ' | ' |
Total convertible notes payable - related parties | $3,932,239 | $3,820,855 |
Less current portion | 3,932,239 | 2,096,416 |
Convertible related party notes payable, net of current portion | 0 | 1,724,439 |
Total convertible notes payable - non-related parties | 764,705 | 306,366 |
Less current portion | 764,705 | 306,366 |
Convertible notes payable - non-related parties, long-term | 0 | 0 |
Total non-convertible notes payable - related parties | 610,000 | 575,000 |
Less current portion | 610,000 | 575,000 |
Non-convertible notes payable - related parties, long term | 0 | 0 |
Total non-convertible note payable - non-related parties | 40,488 | 40,488 |
Less current portion | 40,488 | 40,488 |
Non-convertible notes payable - non-related parties, long-term | $0 | $0 |
7_CONVERTIBLE_PREFERRED_STOCK_1
7. CONVERTIBLE PREFERRED STOCK (Details) | Jun. 30, 2014 |
Shares Allocated | ' |
Series A Convertible Preferred | 100,000 |
Series A-1 Convertible Preferred | 3,000,000 |
Series B Convertible Preferred | 200,000 |
Series C Convertible Preferred | 1,000,000 |
Series D Convertible Preferred | 375,000 |
Series E Convertible Preferred | 1,000,000 |
Series P Convertible Preferred | 600,000 |
Series S Convertible Preferred | 50,000 |
Total Preferred Stock | 6,325,000 |
Shares Outstanding | ' |
Series A Convertible Preferred | 15,500 |
Series A-1 Convertible Preferred | 696,000 |
Series B Convertible Preferred | 3,500 |
Series C Convertible Preferred | 13,404 |
Series D Convertible Preferred | 130,000 |
Series E Convertible Preferred | 275,000 |
Series P Convertible Preferred | 86,640 |
Series S Convertible Preferred | 0 |
Total Preferred Stock | 1,220,044 |
Liquidation Preference | ' |
Series A Convertible Preferred | 0 |
Series A-1 Convertible Preferred | 773,115 |
Series B Convertible Preferred | 79,099 |
Series C Convertible Preferred | 0 |
Series D Convertible Preferred | 130,000 |
Series E Convertible Preferred | 275,000 |
Series P Convertible Preferred | 0 |
Series S Convertible Preferred | 0 |
Total Preferred Stock | 1,257,214 |
7_CONVERTIBLE_PREFERRED_STOCK_2
7. CONVERTIBLE PREFERRED STOCK (Details Narrative) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Equity [Abstract] | ' | ' |
Dividends on preferred stock | $49,790 | $17,016 |
Dividends in arrears | $652,873 | ' |
9_STOCK_PURCHASE_OPTIONS_AND_W2
9. STOCK PURCHASE OPTIONS AND WARRANTS (Details) (Stock Options, USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Stock Options | ' | ' |
Number of Options/Warrants Outstanding, Beginning | 613,429 | 698,429 |
Number of Options/Warrants Granted | 25,000 | 0 |
Number of Options/Warrants Exercised | 0 | 0 |
Number of Options/Warrants Canceled/Expired | -257,000 | -85,000 |
Number of Options/Warrants Outstanding, Ending | 381,429 | 613,429 |
Weighted Average Exercise Price Outstanding, Beginning | $0.55 | $0.85 |
Weighted Average Exercise Price Granted | $0.15 | $0 |
Weighted Average Exercise Price Exercised | $0 | $0 |
Weighted Average Exercise Price Canceled/Expired | ($1.23) | ($0.80) |
Weighted Average Exercise Price Outstanding, Ending | $0.55 | $0.55 |
Weighted Average Grant Date Fair Value Outstanding beginning | $1.20 | $1.20 |
Weighted Average Grant Date Fair Value Outstanding, granted | $0.24 | $0 |
Weighted Average Grant Date Fair Value Outstanding, exercised | $0 | $0 |
Weighted Average Grant Date Fair Value Outstanding, cancelled | $0 | $0 |
Weighted Average Grant Date Fair Value Outstanding, ending | $0.12 | $1.20 |
Expiration Date outstanding, beginning | '1 year 11 months 12 days | '2 years 11 months 12 days |
Expiration Date, granted | '5 years | ' |
Expiration Date, ending | '7 months 13 days | '1 year 11 months 12 days |
Value if Exercised, Beginning | $522,843 | $522,843 |
Value if Exercised, Granted | 3,750 | 0 |
Value if Exercised | 0 | 0 |
Value if Exercised, Cancelled | -316,950 | 0 |
Value if Exercised, Ending | $209,643 | $522,843 |
9_STOCK_PURCHASE_OPTIONS_AND_W3
9. STOCK PURCHASE OPTIONS AND WARRANTS (Details 1) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Stock Purchase Options And Warrants Details 1 | ' | ' |
Expected volatility, minimum | 113.00% | 111.00% |
Expected volatility, maximum | 132.00% | 207.00% |
Expected dividends | 0.00% | 0.00% |
Expected term, minimum | '2 years | '2 years |
Expected term, maximum | '10 years | '10 years |
Risk-free interest rate, minimum | 0.35% | 0.41% |
Risk-free interest rate, maximum | 1.75% | 2.52% |
9_STOCK_PURCHASE_OPTIONS_AND_W4
9. STOCK PURCHASE OPTIONS AND WARRANTS (Details 2) (Warrants, USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Warrants | ' | ' |
Number of Options/Warrants Outstanding, Beginning | 7,530,063 | 6,529,331 |
Number of Options/Warrants Granted | 1,366,016 | 1,395,732 |
Number of Options/Warrants Exercised | -65,000 | 0 |
Number of Options/Warrants Canceled/Expired | -498,500 | -395,000 |
Number of Options/Warrants Outstanding, Ending | 8,332,579 | 7,530,063 |
Weighted Average Exercise Price Outstanding, Beginning | $0.67 | $2.84 |
Weighted Average Exercise Price Granted | $1.30 | $0.33 |
Weighted Average Exercise Price Exercised | ($0.25) | $0 |
Weighted Average Exercise Price Canceled/Expired | ($0.70) | ($0.82) |
Weighted Average Exercise Price Outstanding, Ending | $0.76 | $0.67 |
Weighted Average Grant Date Fair Value Outstanding beginning | $2.45 | $3.55 |
Weighted Average Grant Date Fair Value Outstanding, granted | $0.23 | $0.19 |
Weighted Average Grant Date Fair Value Outstanding, exercised | $0.14 | $0 |
Weighted Average Grant Date Fair Value Outstanding, cancelled | $0 | $0 |
Weighted Average Grant Date Fair Value Outstanding, ending | $0.70 | $2.45 |
Expiration Date outstanding, beginning | '4 years 2 months 1 day | '1 year 11 months 12 days |
Expiration Date, granted | '5 years | '4 years 2 months 1 day |
Expiration Date, ending | '2 years 11 months 16 days | '4 years 2 months 1 day |
Value if Exercised, Beginning | $4,770,713 | $4,835,028 |
Value if Exercised, Granted | 1,774,467 | 458,185 |
Value if Exercised | -16,250 | 0 |
Value if Exercised, Cancelled | -158,498 | -522,500 |
Value if Exercised, Ending | $6,370,432 | $4,770,713 |
9_STOCK_PURCHASE_OPTIONS_AND_W5
9. STOCK PURCHASE OPTIONS AND WARRANTS (Details Narrative) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Notes to Financial Statements | ' | ' |
Stock purchase options issued | 25,000 | ' |
Stock purchase options issued, value | $6,045 | ' |
Employee stock option expense | $10,713 | $10,914 |
10_INCOME_TAXES_Details
10. INCOME TAXES (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Current | ' | ' |
Federal | $0 | $0 |
State | 0 | 0 |
Total Current | 0 | 0 |
Deferred | ' | ' |
Federal | 0 | 0 |
State | 0 | 0 |
Total Deferred | 0 | 0 |
Income tax provision | $0 | $0 |
10_INCOME_TAXES_Details_1
10. INCOME TAXES (Details 1) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Income Taxes Details 1 | ' | ' |
Income tax benefit based on federal statutory rate | ($1,123,000) | ($2,405,000) |
State income tax benefit, net of federal income tax | -444,000 | -448,000 |
Change in deferred tax valuation allowance | 1,567,000 | 2,778,000 |
Other, net | 0 | 0 |
Income tax provision | $0 | $0 |
10_INCOME_TAXES_Details_2
10. INCOME TAXES (Details 2) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Deferred tax assets: | ' | ' |
Debt extinguishment | $918,000 | $298,000 |
Impairment of fixed assets | 604,000 | 447,000 |
Domestic net operating loss carryforwards | 9,828,000 | 8,383,000 |
Total gross deferred tax assets | 11,350,000 | 9,128,000 |
Less valuation allowance on deferred tax assets | -11,350,000 | -9,128,000 |
Net deferred tax assets | 0 | 0 |
Deferred tax liabilities: | ' | ' |
Deferred costs | 0 | 0 |
Total deferred tax liabilities | 0 | 0 |
Net deferred taxes | $0 | $0 |
11_COMMITMENTS_AND_CONTINGENCI2
11. COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
2015 | $52,110 | ' |
Thereafter | 0 | ' |
Total | 52,110 | ' |
Rent expense | 282,453 | 396,412 |
Paid in Cash | ' | ' |
Rent expense | 202,287 | 226,346 |
Paid with Stock | ' | ' |
Rent expense | $80,166 | $170,067 |