Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Dec. 31, 2014 | Feb. 11, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | STUDIO ONE MEDIA, INC. | |
Entity Central Index Key | 836809 | |
Document Type | 10-Q | |
Document Period End Date | 31-Dec-14 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -24 | |
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 Common Stock, Shares Outstanding | 85,865,569 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2015 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Current Assets | ||
Cash | $580,412 | $77,876 |
Other Receivable | 31,779 | 3,400 |
Other Current Assets | 9,111 | 20,499 |
Total Current Assets | 621,302 | 101,775 |
Property and Equipment, net | 99,271 | 133,730 |
Property and Equipment, yet to be placed in service | 93,750 | 31,250 |
Intangible Assets, net | 34,742 | 11,990 |
Other Assets | ||
Deposits | 122,307 | 107,057 |
Other assets | 41,877 | 0 |
Total Other Long-Term Assets | 164,184 | 107,057 |
Total Assets | 1,013,249 | 385,802 |
Current Liabilities | ||
Accounts payable and other accrued expenses | 712,670 | 951,563 |
Accrued interest | 96,766 | 74,483 |
Deferred Revenue | 206,000 | 3,500 |
Consulting Services - Related Party | 122,127 | 278,568 |
Lease Payable | 30,768 | 30,768 |
Notes Payable - Related Party | 625,000 | 610,000 |
Notes Payable | 40,488 | 40,488 |
Convertible notes payable - related party, net of dicount of $0 and $1,761 , repectively | 3,925,000 | 3,932,239 |
Convertible notes payable, net of discount of $35,005 and $161,043, repectively | 837,743 | 764,705 |
Total Current Liabilities | 6,596,562 | 6,686,314 |
Long-Term Liabilities | ||
Lease Payable, net of current portion | 41,699 | 55,374 |
Convertible related party notes payable, net of dicount of $0 and $561, repectively | 0 | 0 |
Total Liabilities | 6,638,261 | 6,741,688 |
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, 641,000 and 696,000 shares issued and outstanding, respectively | 641 | 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; 85,571,925 and 70,296,203 shares issued and outstanding, respectively | 85,577 | 70,297 |
Additional paid In capital | 46,049,020 | 40,557,726 |
Accumulated Deficit | -51,760,774 | -46,985,129 |
Total Stockholders' Deficit | -5,625,012 | -6,355,886 |
Total Liabilities and Stockholders' Deficit | $1,013,249 | $385,802 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Discount on related party convertible notes payable, current | $0 | $1,761 |
Discount on convertible notes payable | $35,005 | $161,043 |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 85,571,925 | 70,296,203 |
Common stock, outstanding shares | 85,571,925 | 70,296,203 |
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 $) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
REVENUES | ||||
Session Revenues | $2,310 | $6,240 | $3,730 | $26,922 |
AfterMaster Revenues | 24,505 | 36,459 | 52,245 | 70,893 |
Total Revenues | 26,815 | 42,699 | 55,975 | 97,815 |
COSTS AND EXPENSES | ||||
Cost of Revenues (Exclusive of Depreciation and Amortization) | 84,444 | 122,915 | 167,621 | 207,857 |
Depreciation and Amortization Expense | 9,537 | 26,880 | 43,893 | 54,794 |
General and Administrative Expenses | 1,600,667 | 797,494 | 2,501,592 | 1,585,574 |
Total Costs and Expenses | 1,694,648 | 947,289 | 2,713,106 | 1,848,225 |
Loss from Operations | -1,667,833 | -904,590 | -2,657,131 | -1,750,410 |
Other Expense | ||||
Interest Expense | -1,561,649 | -395,066 | -2,089,997 | -798,257 |
Gain (Loss) on Extinguishment of Debt | 0 | 27,713 | -28,517 | 27,713 |
Impairment of assets | 0 | 0 | 0 | -45,676 |
Total Other Expense | -1,561,649 | -367,353 | -2,118,514 | -816,220 |
Loss Before Income Taxes | -3,229,482 | -1,271,943 | -4,775,645 | -2,566,630 |
NET LOSS | -3,229,482 | -1,271,943 | -4,775,645 | -2,566,630 |
Preferred Stock Accretion and Dividends | -15,881 | -17,016 | -32,897 | -34,032 |
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS | ($3,245,363) | ($1,288,959) | ($4,808,542) | ($2,600,662) |
Basic and Diluted Loss Per Share of Common Stock | ($0.04) | ($0.02) | ($0.06) | ($0.05) |
Weighted Average Number of Shares Outstanding | 82,078,713 | 58,416,841 | 78,474,438 | 55,464,433 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 6 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
OPERATING ACTIVITIES | ||
Net Loss | ($4,775,645) | ($2,566,630) |
Adjustments to reconcile net loss to cash from operating activities: | ||
Depreciation and amortization | 42,608 | 54,794 |
Share-based compensation - Common Stock | 516,485 | 379,566 |
Share-based compensation - warrants | 1,275,119 | 114,626 |
Common stock issued for services and rent | 129,259 | 264,961 |
Common stock issued as incentive with Convertible debt | 10,261 | 0 |
Common stock issued for preferred dividends | 12,923 | 0 |
Common stock issued to extend the maturity dates on debt | 15,750 | 0 |
Amortization of debt discount and issuance costs | 624,798 | 254,160 |
(Gain)/Loss on extinguishment of debt | 28,517 | 0 |
Impairment on long lived assets and intangibles | 0 | 45,676 |
Changes in Operating Assets and Liabilities: | ||
Other receivables | -38,379 | -6,381 |
Other assets | -25,739 | 107,734 |
Accounts payable and accrued expenses and deferred revenue | 1,201,680 | 474,289 |
Net Cash Used in Operating Activities | -982,363 | -877,205 |
INVESTING ACTIVITIES | ||
Purchase of property and equipment | -93,401 | -9,836 |
Net Cash Used in Investing Activities | -93,401 | -9,836 |
FINANCING ACTIVITIES | ||
Common Stock issued for cash, net of offering costs of $20,125 and $15,935, respectively | 1,058,975 | 581,565 |
Proceeds from notes payable - related party | 50,000 | 0 |
Proceeds from convertible notes payable | 527,000 | 225,000 |
Repayments of convertible notes payable | -9,000 | -8,000 |
Repayments of notes payable | -35,000 | 0 |
Lease Payable | -13,675 | 0 |
Net Cash Provided by Financing Activities | 1,578,300 | 798,565 |
NET INCREASE (DECREASE) IN CASH | 502,536 | -88,476 |
CASH AT BEGINNING OF PERIOD | 77,876 | 165,258 |
CASH AT END OF PERIOD | 580,412 | 76,782 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 918 | 612 |
NON CASH FINANCING ACTIVITIES: | ||
Conversion of Notes and Interest into common stock | 1,922,230 | 0 |
Conversion of warrants for common stock | 10,000 | 0 |
Conversion of preferred stock for common stock | 100 | 0 |
Common Stock and warrants issued for prepaid services | 0 | 28,000 |
Common Stock and warrants issued for interest | 527,000 | 251,000 |
Warrants and beneficial conversion feature on issuance of convertible debt | $0 | $408,441 |
1_CONDENSED_FINANCIAL_STATEMEN
1. CONDENSED FINANCIAL STATEMENTS | 6 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
1. CONDENSED FINANCIAL STATEMENTS | The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at December 31, 2014, and for all periods presented herein, have been made. |
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's June 30, 2014 audited financial statements. The results of operations for the periods ended December 31, 2014 and June 2014 are not necessarily indicative of the operating results for the full years. |
2_GOING_CONCERN
2. GOING CONCERN | 6 Months Ended |
Dec. 31, 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 $51,760,774and 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 AfterMaster and ProMaster businesses. Management's plan to address these issues includes, (a) continued exercise of tight cost controls to conserve cash, (b) obtaining additional financing, and (c place in service the AfterMaster Chips and software in consumer products. | |
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_SUMMARY_OF_SIGNIFICANT_ACCOU
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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. | |
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. | |
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. | |
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 periods ended December 31, 2014 and 2013 of $32,897 and $34,032, 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 periods ended December 31, 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 20,863,133 and 12,200,097 at December 31, 2014 and 2013, respectively. | |
Fair Value Instruments | |
Cash is the Company’s only financial asset or liability required to be recognized at fair value and is measured using quoted prices for active markets for identical assets (Level 1 fair value hierarchy). The carrying amounts reported in the balance sheets for notes receivable and accounts payable and accrued expenses approximate their fair market value based on the short-term maturity of these instruments. | |
The fair value of the Company’s notes payable at December 31, 2014 is approximately $5,463,236. Market prices are not available for the Company’s loans due to related parties or its other notes payable, nor are market prices of similar loans available. The Company determined that the fair value of the notes payable based on its amortized cost basis due to the short term nature and current borrowing terms available to the Company for these instruments. | |
Income Taxes | |
There is no income tax provision for the six months ended December 31, 2014 and 2013 due to net operating losses for which there is no benefit currently available. | |
At December 31, 2014, the Company had deferred tax assets associated with state and federal net operating losses. The Company has recorded a corresponding full valuation allowance as it is more likely than not that some portion of all of the deferred tax assets will not be realized. | |
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. | |
Reclassification | |
Certain amounts disclosed in prior periods have been reclassified to conform to current presentation. Such reclassifications are for presentation purposes only and have no effect on the Company’s net loss or financial position in any of the periods presented. The Company has made adjustments to the Income Statement and Cash flows Statement in impairment of assets and disposal of assets, respectively. |
4_NOTES_PAYABLE
4. NOTES PAYABLE | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes Payable [Abstract] | |||||||||
4. 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 December 31, 2014 and June 30, 2014, respectively: | |||||||||
Convertible Notes Payable – Related Parties | |||||||||
December 31, | June 30, | ||||||||
2014 | 2014 | ||||||||
Various term notes with total face value of $3,925,000 issued from February 2010 to April 2013, interest rates range from 10% to 15%, net of unamortized discount of $0 and $1,761 as of December 31, 2014 and June 30, 2014, respectively. | $ | 3,925,000 | $ | 3,924,439 | |||||
$9,000 face value, of which $9,000 has been paid back. | - | 7,800 | |||||||
Total convertible notes payable – related parties | 3,925,000 | 3,932,239 | |||||||
Less current portion | 3,925,000 | 3,932,239 | |||||||
Convertible notes payable – related parties, long-term | $ | - | $ | - | |||||
The notes were amended on June 30, 2014 to extend the maturity date to September 30, 2014, amended again on September 30, 2014 to December 31, 2014, and amended again on December 31, 2014 to June 30, 2015. 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. | |||||||||
Convertible Notes Payable - Non-Related Parties | |||||||||
Convertible notes payable due to non-related parties consisted of the following as of December 31, 2014 and June 30, 2014, respectively: | |||||||||
Convertible Notes Payable - Non-Related Parties | |||||||||
December 31, | June 30, | ||||||||
2014 | 2014 | ||||||||
$100,000 face value, of which $100,000 has been converted. | $ | - | $ | 100,000 | |||||
$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 December 31, 2014 and June 30, 2014, respectively. | 15,000 | 15,000 | |||||||
$75,000 face value, of which $75,000 has been converted. | - | 75,000 | |||||||
$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 December 31, 2014 and June 30, 2014, respectively. | 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 December 31, 2014 and June 30, 2014, respectively. | 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 $0 as of December 31, 2014 and June 30, 2014, respectively. | 160,748 | 160,748 | |||||||
$30,000 face value, issued in February 2013, interest rate of 0%, matures in November 2013, net of unamortized discount of $0 and $0 as of December 31, 2014 and June 30, 2014, respectively. | 30,000 | 30,000 | |||||||
$20,000 face value, issued in April 2013, interest rate of -0-%, matures in October 2013, net of unamortized discount of $0 and $0 as of December 31, 2014 and June 30, 2014, respectively. | 20,000 | 20,000 | |||||||
$100,000 face value, of which $100,000 has been converted. | - | 100,000 | |||||||
$50,000 face value, of which $50,000 has been converted. | - | 50,000 | |||||||
$50,000 face value, of which $50,000 has been. | - | 50,000 | |||||||
$50,000 face value, of which $50,000 has been converted. | - | 46,132 | |||||||
$30,000 face value, issued in March 2014, interest rate of 0%, matures in September 2014, net of unamortized discount of $0 and $7,011 as of December 31, 2014 and June 30, 2014, respectively. | 30,000 | 22,989 | |||||||
$20,000 face value, of which $20,000 has been converted. | - | 20,000 | |||||||
$25,000 face value, of which $25,000 has been converted. | - | 9,563 | |||||||
$15,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $6,557 and $14,098 as of December 31, 2014 and June 30, 2014, respectively. | 15,000 | 902 | |||||||
$20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $8,743 and $18,798 as of December 31, 2014 and June 30, 2014, respectively. | 20,000 | 1,202 | |||||||
$30,000 face value, of which $30,000 has been converted. | - | 1,967 | |||||||
$20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $8,743 and $18,798 as of December 31, 2014 and June 30, 2014, respectively. | 20,000 | 1,202 | |||||||
$25,000 face value, issued in June 2014, interest rate of 6%, matures September 2014, net unamortized discount of $0 and $25,000 as of December 31, 2014 and June 30, 2014, respectively. | 25,000 | - | |||||||
$15,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $1,613 as of December 31, 2014. | 15,000 | - | |||||||
$10,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $1,087 as of December 31, 2014. | 10,000 | - | |||||||
$10,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $1,522 as of December 31, 2014. | 10,000 | - | |||||||
$7,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $1,065 as of December 31, 2014. | 7,000 | - | |||||||
$5,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $978 as of December 31, 2014. | 5,000 | - | |||||||
$10,000 face value, issued in August 2014, interest rate of 6%, matures November 2014, net unamortized discount of $5,326 as of December 31, 2014. | 10,000 | - | |||||||
$25,000 face value, of which $25,000 was converted. | - | - | |||||||
$10,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $7,253 as of December 31, 2014. | 10,000 | - | |||||||
$30,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $23,023 as of December 31, 2014. | 30,000 | - | |||||||
$100,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $79,121 as of December 31, 2014. | 100,000 | - | |||||||
$100,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $87,912 as of December 31, 2014. | 100,000 | - | |||||||
$40,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $40,000 as of December 31, 2014. | 40,000 | - | |||||||
$40,000 face value, issued in October 2014, interest rate of 6%, matures December 2014, net unamortized discount of $40,000 as of December 31, 2014. | 40,000 | - | |||||||
$40,000 face value, issued in October 2014, interest rate of 6%, matures January 2015, net unamortized discount of $40,000 as of December 31, 2014. | 37,391 | - | |||||||
$25,000 face value, of which $25,000 has been converted. | - | - | |||||||
$25,000 face value, issued in October 2014, interest rate of 6%, matures January 2015, net unamortized discount of $25,000 as of December 31, 2014. | 20,604 | - | |||||||
$35,000 face value, issued in November 2014, interest rate of 6%, matures January 2015, net unamortized discount of $35,000 as of December 31, 2014. | 7,000 | - | |||||||
Total convertible notes payable – non-related parties | 837,743 | 764,705 | |||||||
Less current portion | 837,743 | 764,705 | |||||||
Convertible notes payable – non-related parties, long-term | $ | - | $ | - | |||||
On August 15, 2014, the Company amended the convertible notes dated September 29, 2011 for $100,000 and January 6, 2012 for $75,000 to extend the maturity date to November 15, 2014 and issued 50,000 shares of the Company’s common stock valued at $15,750, as well as 50,000 warrants valued at $12,767. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did result in significant and consequential changes to the economic substance of the debt. The Company recorded a loss on extinguishment of debt of $28,517. On October 20, 2014, the note holder elected to convert the entire note of $175,000. | |||||||||
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. On August 14, 2014, the note holder elected to convert the entire note of $100,000. | |||||||||
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. On August 14, 2014, the note holder elected to convert the entire note of $50,000. | |||||||||
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. On July 19, 2014, the note holder elected to convert the entire note of $50,000 and $3,041 in accrued interest. | |||||||||
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. On August 14, 2014, the note holder elected to convert the entire note of $50,000. | |||||||||
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. On July 19, 2014, the note holder elected to convert the entire note of $20,000 and $603 in accrued interest. | |||||||||
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. On August 14, 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. On August 14, 2014, the note holder elected to convert the entire note of $30,000. | |||||||||
On July 9, 2014, the Company issued a convertible note to an unrelated individual for $15,000 that matures on October 10, 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 $13,333 and the debt discount related to the attached relative fair value of the restricted Common Stock was $1,667, for a total debt discount of $15,000. | |||||||||
On July 10, 2014, the Company issued a convertible note to an unrelated individual for $10,000 that matures on October 10, 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 5,000 shares of restricted Common Stock. The value of the BCF recorded was $8,889 and the debt discount related to the attached relative fair value of the restricted Common Stock was $1,111, for a total debt discount of $10,000. | |||||||||
On July 14, 2014, the Company issued a convertible note to an unrelated individual for $10,000 that matures on October 14, 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 5,000 shares of restricted Common Stock. The value of the BCF recorded was $8,929 and the debt discount related to the attached relative fair value of the restricted Common Stock was $1,071, for a total debt discount of $10,000. | |||||||||
On July 14, 2014, the Company issued a convertible note to an unrelated individual for $7,000 that matures on October 14, 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 3,500 shares of restricted Common Stock. The value of the BCF recorded was $6,222 and the debt discount related to the attached relative fair value of the restricted Common Stock was $778, for a total debt discount of $7,000. | |||||||||
On July 18, 2014, the Company issued a convertible note to an unrelated individual for $5,000 that matures on October 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 2,500 shares of restricted Common Stock. The value of the BCF recorded was $4,444 and the debt discount related to the attached relative fair value of the restricted Common Stock was $556, for a total debt discount of $5,000. | |||||||||
On August 18, 2014, the Company issued a convertible note to an unrelated individual for $10,000 that matures on November 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 5,000 shares of restricted Common Stock. The value of the BCF recorded was $8,529 and the debt discount related to the attached relative fair value of the restricted Common Stock was $1,471, for a total debt discount of $10,000. | |||||||||
On August 22, 2014, the Company issued a convertible note to an unrelated individual for $25,000 that matures on September 22, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.15 per share. On September 30, 2014, the note holder elected to convert the entire note of $25,000 and $160 in accrued interest. | |||||||||
In conjunction with the note, the Company issued to the holder 12,500 shares of restricted Common Stock. The value of the BCF recorded was $21,393 and the debt discount related to the attached relative fair value of the restricted Common Stock was $3,607, for a total debt discount of $25,000. | |||||||||
On September 5, 2014, the Company issued a convertible note to an unrelated individual for $10,000 that matures on December 5, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $10,000. | |||||||||
On September 10, 2014, the Company issued a convertible note to an unrelated individual for $30,000 that matures on December 5, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $30,000. | |||||||||
On September 11, 2014, the Company issued a convertible note to an unrelated individual for $100,000 that matures on December 11, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $100,000. | |||||||||
On September 19, 2014, the Company issued a convertible note to an unrelated individual for $100,000 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 $0.20 per share. The company valued a BCF related to the note valued at $100,000. | |||||||||
On September 30, 2014, the Company issued a convertible note to an unrelated individual for $40,000 that matures on December 29, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $40,000. | |||||||||
On October 3, 2014, the Company issued a convertible note to an unrelated individual for $40,000 that matures on December 2, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $40,000. | |||||||||
On October 6, 2014, the Company issued a convertible note to an unrelated individual for $40,000 that matures on January 6, 2015. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $40,000. | |||||||||
On October 20, 2014, the Company issued a convertible note to an unrelated individual for $25,000 that matures on April 20, 2015. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $25,000. On October 24, 2014, the note holder elected to convert the entire note of $25,000. | |||||||||
On October 16, 2014, the Company issued a convertible note to an unrelated individual for $25,000 that matures on January 16, 2015. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.20 per share. The company valued a BCF related to the note valued at $25,000. | |||||||||
On November 24, 2014, the Company issued a convertible note to an unrelated individual for $35,000 that matures on May 24, 2015. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.35 per share. The company valued a BCF related to the note valued at $35,000. | |||||||||
Notes Payable – Related Parties | |||||||||
Notes payable due to related parties consisted of the following as of December 31, 2014 and June 30, 2014, respectively: | |||||||||
Notes Payable – Related Parties | |||||||||
December 31, | June 30, | ||||||||
2014 | 2014 | ||||||||
Various term notes with total face value of $610,000 issued from April 11 to January 2014, interest rates range from 0% to 15%, net of unamortized discount of $0 as of December 31, 2014 and June 30, 2014, respectively, of which $35,000 has been paid. | $ | 575,000 | $ | 610,000 | |||||
Face value of $50,000, issued in December 2014, matures in January 2015, note bears interest at 0%. | 50,000 | - | |||||||
Total notes payable – related parties | 625,000 | 610,000 | |||||||
Less current portion | 625,000 | 610,000 | |||||||
Notes payable - related parties, long term | $ | - | $ | - | |||||
Notes Payable – Non-Related Parties | |||||||||
Notes payable due to non-related parties consisted of the following as of December 31, 2014 and June 30, 2014, respectively: | |||||||||
Notes Payable – Non-Related Parties | |||||||||
December 31, | June 30, | ||||||||
2014 | 2014 | ||||||||
Various term notes with total face value of $40,488 due upon demand, interest rates range from 0% 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 | $ | - | $ | - |
5_CONVERTIBLE_PREFERRED_STOCK
5. CONVERTIBLE PREFERRED STOCK | 6 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Equity [Abstract] | |||||||||||||
5. 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 | 2,762,931 | 641,000 | 712,021 | ||||||||||
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 | 6,087,931 | 1,165,044 | $ | 1,196,021 | |||||||||
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 six months ended December 31, 2014 and the fiscal year ended June 30, 2014, the Company issued -0- shares of Series A-1 Preferred Stock for $-0- in cash, net of $-0- of issuance costs, respectively. The Company had two conversions of 55,000 shares of Series A-1 Preferred Stock for 110,000 shares of Common Stock, and issued 41,987 shares of Common Stock of payment of $12,922 in accrued dividends. | |||||||||||||
During the six months ended December 31, 2014, the outstanding Preferred Stock accumulated $34,032 in dividends; in six months ended December 31, 2013 it accumulated $32,897 in dividends on outstanding Preferred Stock. The cumulative dividends in arrears through December 31, 2014 were approximately $623,058. |
6_COMMON_STOCK
6. COMMON STOCK | 6 Months Ended |
Dec. 31, 2014 | |
Text Block [Abstract] | |
6. COMMON STOCK | The Company has authorized 100,000,000 shares of $0.001 par value per share Common Stock, of which 85,571,925 and 70,296,203 were issued outstanding as of December 31, 2014 and June 30, 2014, respectively. The activity surrounding the issuances of the Common Stock is as follows: |
For the Six Months Ended December 31, 2014 | |
The Company issued 5,316,001 common shares for net cash proceeds of $1,058,975. The Company paid as offering costs $20,125 in cash offering costs. Offering costs have been recorded as reductions to additional paid-in capital from common stock proceeds and an increase in professional fees. Attached to the Common Shares, the Company issued 6,506,133 warrants to purchase shares of the Company’s Common Stock. The Company recognized $1,239,540 for the amortization of warrants issued in prior periods. | |
The Company also issued 43,500 shares of Common Stock as incentive to notes valued at $10,261 to extend terms on two convertible notes payable and recorded $527,000 in beneficial conversion features related to new issuances of debt. | |
The Company also issued 4,775,741 shares of Common Stock for the conversion of notes and accrued interest valued at $556,794. | |
The Company also issued 110,000 shares of Common Stock for the conversion of 55,000 shares of Series A-1 Preferred Stock and issued 41,987 shares of Common Stock of payment of $37,130 in accrued dividends. | |
The Company also issued 50,000 shares of Common Stock for the conversion warrants. | |
The Company issued 327,971 shares of Common Stock as payment for services and rent valued at $129,259. | |
As share-based compensation to employees and non-employees, the Company issued 2,440,138 shares of common stock valued at $516,485, based on the market price of the stock on the date of issuance. As interest expense on outstanding notes payable, the Company issued 2,120,384 shares of common stock valued at $1,369,746 based on the market price on the date of issuance. | |
For the Six Months Ended December 31, 2013 | |
The Company issued 5,975,000 common shares for net cash proceeds of $581,565. The Company paid as offering costs $15,935 in cash offering costs and 46,000 in common stock offering costs. Offering costs paid in cash have been recorded as reductions to additional paid-in capital from common stock proceeds and common stock issued for offering costs have been expensed as compensation expenses. Attached to the Common Shares, the Company issued 196,804 warrants to purchase shares of the Company’s Common Stock. The Company recognized $114,626 in employee stock option expense and for the amortization of warrants issued in prior periods. | |
The Company also issued 510,000 shares of Common Stock as additional incentive for notes of $141,049 to convertible notes payable and recorded $251,000 in beneficial conversion features related to new issuances of debt. | |
As share-based compensation to employees and non-employees, the Company issued 1,970,458 shares of common stock valued at $531,478, based on the market price of the stock on the date of issuance. As interest expense on outstanding notes payable, the Company issued 1,471,784 shares of common stock valued at $408,441 based on the market price on the date of issuance. | |
As interest expense on outstanding notes payable, the Company issued 886,344 shares of common stock valued at $444,217 based on the market price on the date of issuance. The Company also issued 1,234,040 shares of common stock for settlement of accrued interest on the convertible notes valued at $925,530 based on the market price on the date of issuance. |
7_STOCK_PURCHASE_OPTIONS_AND_W
7. STOCK PURCHASE OPTIONS AND WARRANTS | 6 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||
7. 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 six months ended December 31, 2014, the Company did not issue any 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. | |||||||||||||||||||||
The following table summarizes the changes in options outstanding of the Company during the six months ended December 31, 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, 2014 | 381,429 | $ | 0.55 | $ | 0.12 | 0.62 | $ | 209,643 | |||||||||||||
Granted | - | - | - | - | - | ||||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Cancelled/Expired | (301,429 | ) | (0.52 | ) | - | - | (156,743 | ) | |||||||||||||
Outstanding as of December 31, 2014 | 80,000 | $ | 0.66 | $ | 0.59 | 1.94 | $ | 52,900 | |||||||||||||
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 | |||||||||||||
Stock Purchase Warrants | |||||||||||||||||||||
During the six months ended December 31, 2014, the Company issued warrants to purchase a total of 6,506,133. The Company issued 50,000 warrants in conjunction to extended two convertible note payables and issued 4,456,133 warrants in conjunction to a consulting agreement entered into in July 2014. The Company also issued 1,000,000 warrants related to the B Booth agreements which were expensed during the current year. The company also issued 1,000,000 warrants as part of a private placement to extend the terms during the period, which were converted for cash proceed of $75,000 in exchange for 750,000 shares of 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. | |||||||||||||||||||||
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. | |||||||||||||||||||||
The following table presents the assumptions used to estimate the fair values of the stock warrants and options granted: | |||||||||||||||||||||
December 31, | June 30, | ||||||||||||||||||||
2014 | 2014 | ||||||||||||||||||||
Expected volatility | 106-125% | 113-132% | |||||||||||||||||||
Expected dividends | 0% | 0% | |||||||||||||||||||
Expected term | .25-5 Years | 2-10 Years | |||||||||||||||||||
Risk-free interest rate | 0.02-1.75% | 0.35-1.75% | |||||||||||||||||||
The following table summarizes the changes in warrants outstanding issued to employees and non-employees of the Company during the six months ended December 31, 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, 2014 | 8,332,579 | $ | 0.76 | $ | 0.7 | 2.96 | $ | 6,370,432 | |||||||||||||
Granted | 6,506,133 | 0.44 | 0.24 | 5.1 | 3,017,533 | ||||||||||||||||
Exercised | (1,050,000 | ) | (0.20 | ) | - | - | (210,000 | ) | |||||||||||||
Cancelled/Expired | (100,000 | ) | (0.50 | ) | - | - | (1,824,468 | ) | |||||||||||||
Outstanding as of December 31, 2014 | 13,688,712 | $ | 0.55 | $ | 0.52 | 2.93 | $ | 7,773,498 | |||||||||||||
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 |
8_COMMITMENTS_AND_CONTINGENCIE
8. COMMITMENTS AND CONTINGENCIES | 6 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
8. 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 also lease an office in Los Angeles for use by our audio team in connection with our AfterMaster product under a lease expiring on December 31, 2017. The total lease expense is approximately $5,600 per month, and the total remaining obligations under these leases at December 31, 2014 were approximately $289,866.96. | |||||
Rent expense for the six months ended December 31, 2014 was $134,933, of which $87,862 was paid in cash and $47,071 was paid in Common Stock. Rent expense for the six months December 31, 2013 was $39,640, of which $16,684 was paid in cash and $40,256 was paid in Common Stock. | |||||
Below is a table summarizing the annual operating lease obligations over the next 5 years: | |||||
Year | Lease Payments | ||||
2015 | $ | 93,432.00 | |||
2016 | $ | 96,234.96 | |||
2017 | $ | 100,200.00 | |||
Total | $ | 289,866.96 | |||
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 December 31, 2014 were approximately $686,905. | |||||
As of the date of this filing, the Company has not filed its tax return for the fiscal year ended 2013 and 2014. |
9_SUBSEQUENT_EVENTS
9. SUBSEQUENT EVENTS | 6 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
9. SUBSEQUENT EVENTS | As part of a private placement memorandum dated December 24, 2014, the Company intends to raise up to $550,000 through the sale of 1,100,000 shares of common stock at a price of $.50 per share. For every two shares of common stock purchased, the Company will issue a two year warrant with an exercise price of $.75. The Company issued 675,000 common shares subsequent to the period ended December 31, 2014 as part of the private placement for net cash proceeds of $337,500 and issued 337,500 warrant. The Company paid as offering costs $50,400 in cash offering costs. |
On January 1, 2015, the Company issued 270,000 warrants in conjunction with the private placement memorandum dated December 24, 2014. The warrants are have a term of two years, which vest immediately, exercisable at a price of $0.75 valued at $85,277. 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. | |
On January 14, 2015, the Company issued 32,500 warrants in conjunction with the private placement memorandum dated December 24, 2014. The warrants are have a term of two years, which vest immediately, exercisable at a price of $0.75 valued at $12,419. 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. | |
On January 20, 2015, the Company issued 12,500 warrants in conjunction with the private placement memorandum dated December 24, 2014. The warrants are have a term of two years, which vest immediately, exercisable at a price of $0.75 valued at $4,687. 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. | |
On January 25, 2015, the Company issued 22,500 warrants in conjunction with the private placement memorandum dated December 24, 2014. The warrants are have a term of two years, which vest immediately, exercisable at a price of $0.75 valued at $10,953. 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. |
3_SUMMARY_OF_SIGNIFICANT_ACCOU1
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
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. |
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. |
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 periods ended December 31, 2014 and 2013 of $32,897 and $34,032, 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 periods ended December 31, 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 20,863,133 and 12,200,097 at December 31, 2014 and 2013, respectively. | |
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 Value Instruments | Cash is the Company’s only financial asset or liability required to be recognized at fair value and is measured using quoted prices for active markets for identical assets (Level 1 fair value hierarchy). The carrying amounts reported in the balance sheets for notes receivable and accounts payable and accrued expenses approximate their fair market value based on the short-term maturity of these instruments. |
The fair value of the Company’s notes payable at December 31, 2014 is approximately $5,463,236. Market prices are not available for the Company’s loans due to related parties or its other notes payable, nor are market prices of similar loans available. The Company determined that the fair value of the notes payable based on its amortized cost basis due to the short term nature and current borrowing terms available to the Company for these instruments. | |
Income Taxes | There is no income tax provision for the six months ended December 31, 2014 and 2013 due to net operating losses for which there is no benefit currently available. |
At December 31, 2014, the Company had deferred tax assets associated with state and federal net operating losses. The Company has recorded a corresponding full valuation allowance as it is more likely than not that some portion of all of the deferred tax assets will not be realized. | |
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. |
Reclassification | Certain amounts disclosed in prior periods have been reclassified to conform to current presentation. Such reclassifications are for presentation purposes only and have no effect on the Company’s net loss or financial position in any of the periods presented. The Company has made adjustments to the Income Statement and Cash flows Statement in impairment of assets and disposal of assets, respectively. |
4_NOTES_PAYABLE_Tables
4. NOTES PAYABLE (Tables) | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Schedule of Convertible Notes Payable-Related Parties | Convertible Notes Payable – Related Parties | ||||||||
December 31, | June 30, | ||||||||
2014 | 2014 | ||||||||
Various term notes with total face value of $3,925,000 issued from February 2010 to April 2013, interest rates range from 10% to 15%, net of unamortized discount of $0 and $1,761 as of December 31, 2014 and June 30, 2014, respectively. | $ | 3,925,000 | $ | 3,924,439 | |||||
$9,000 face value, of which $9,000 has been paid back. | - | 7,800 | |||||||
Total convertible notes payable – related parties | 3,925,000 | 3,932,239 | |||||||
Less current portion | 3,925,000 | 3,932,239 | |||||||
Convertible notes payable – related parties, long-term | $ | - | $ | - | |||||
Schedule of Convertible Notes Payable-Non-Related Parties | Convertible Notes Payable - Non-Related Parties | ||||||||
December 31, | June 30, | ||||||||
2014 | 2014 | ||||||||
$100,000 face value, of which $100,000 has been converted. | $ | - | $ | 100,000 | |||||
$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 December 31, 2014 and June 30, 2014, respectively. | 15,000 | 15,000 | |||||||
$75,000 face value, of which $75,000 has been converted. | - | 75,000 | |||||||
$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 December 31, 2014 and June 30, 2014, respectively. | 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 December 31, 2014 and June 30, 2014, respectively. | 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 $0 as of December 31, 2014 and June 30, 2014, respectively. | 160,748 | 160,748 | |||||||
$30,000 face value, issued in February 2013, interest rate of 0%, matures in November 2013, net of unamortized discount of $0 and $0 as of December 31, 2014 and June 30, 2014, respectively. | 30,000 | 30,000 | |||||||
$20,000 face value, issued in April 2013, interest rate of -0-%, matures in October 2013, net of unamortized discount of $0 and $0 as of December 31, 2014 and June 30, 2014, respectively. | 20,000 | 20,000 | |||||||
$100,000 face value, of which $100,000 has been converted. | - | 100,000 | |||||||
$50,000 face value, of which $50,000 has been converted. | - | 50,000 | |||||||
$50,000 face value, of which $50,000 has been. | - | 50,000 | |||||||
$50,000 face value, of which $50,000 has been converted. | - | 46,132 | |||||||
$30,000 face value, issued in March 2014, interest rate of 0%, matures in September 2014, net of unamortized discount of $0 and $7,011 as of December 31, 2014 and June 30, 2014, respectively. | 30,000 | 22,989 | |||||||
$20,000 face value, of which $20,000 has been converted. | - | 20,000 | |||||||
$25,000 face value, of which $25,000 has been converted. | - | 9,563 | |||||||
$15,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $6,557 and $14,098 as of December 31, 2014 and June 30, 2014, respectively. | 15,000 | 902 | |||||||
$20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $8,743 and $18,798 as of December 31, 2014 and June 30, 2014, respectively. | 20,000 | 1,202 | |||||||
$30,000 face value, of which $30,000 has been converted. | - | 1,967 | |||||||
$20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $8,743 and $18,798 as of December 31, 2014 and June 30, 2014, respectively. | 20,000 | 1,202 | |||||||
$25,000 face value, issued in June 2014, interest rate of 6%, matures September 2014, net unamortized discount of $0 and $25,000 as of December 31, 2014 and June 30, 2014, respectively. | 25,000 | - | |||||||
$15,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $1,613 as of December 31, 2014. | 15,000 | - | |||||||
$10,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $1,087 as of December 31, 2014. | 10,000 | - | |||||||
$10,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $1,522 as of December 31, 2014. | 10,000 | - | |||||||
$7,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $1,065 as of December 31, 2014. | 7,000 | - | |||||||
$5,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $978 as of December 31, 2014. | 5,000 | - | |||||||
$10,000 face value, issued in August 2014, interest rate of 6%, matures November 2014, net unamortized discount of $5,326 as of December 31, 2014. | 10,000 | - | |||||||
$25,000 face value, of which $25,000 was converted. | - | - | |||||||
$10,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $7,253 as of December 31, 2014. | 10,000 | - | |||||||
$30,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $23,023 as of December 31, 2014. | 30,000 | - | |||||||
$100,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $79,121 as of December 31, 2014. | 100,000 | - | |||||||
$100,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $87,912 as of December 31, 2014. | 100,000 | - | |||||||
$40,000 face value, issued in August 2014, interest rate of 6%, matures December 2014, net unamortized discount of $40,000 as of December 31, 2014. | 40,000 | - | |||||||
$40,000 face value, issued in October 2014, interest rate of 6%, matures December 2014, net unamortized discount of $40,000 as of December 31, 2014. | 40,000 | - | |||||||
$40,000 face value, issued in October 2014, interest rate of 6%, matures January 2015, net unamortized discount of $40,000 as of December 31, 2014. | 37,391 | - | |||||||
$25,000 face value, of which $25,000 has been converted. | - | - | |||||||
$25,000 face value, issued in October 2014, interest rate of 6%, matures January 2015, net unamortized discount of $25,000 as of December 31, 2014. | 20,604 | - | |||||||
$35,000 face value, issued in November 2014, interest rate of 6%, matures January 2015, net unamortized discount of $35,000 as of December 31, 2014. | 7,000 | - | |||||||
Total convertible notes payable – non-related parties | 837,743 | 764,705 | |||||||
Less current portion | 837,743 | 764,705 | |||||||
Convertible notes payable – non-related parties, long-term | $ | - | $ | - | |||||
Schedule of Non-Convertible Notes Payable-Related Parties | Notes Payable – Related Parties | ||||||||
December 31, | June 30, | ||||||||
2014 | 2014 | ||||||||
Various term notes with total face value of $610,000 issued from April 11 to January 2014, interest rates range from 0% to 15%, net of unamortized discount of $0 as of December 31, 2014 and June 30, 2014, respectively, of which $35,000 has been paid. | $ | 575,000 | $ | 610,000 | |||||
Face value of $50,000, issued in December 2014, matures in January 2015, note bears interest at 0%. | 50,000 | - | |||||||
Total notes payable – related parties | 625,000 | 610,000 | |||||||
Less current portion | 625,000 | 610,000 | |||||||
Notes payable - related parties, long term | $ | - | $ | - | |||||
Schedule of Non-Convertible Notes Payable-Non-Related Parties | Notes Payable – Non-Related Parties | ||||||||
December 31, | June 30, | ||||||||
2014 | 2014 | ||||||||
Various term notes with total face value of $40,488 due upon demand, interest rates range from 0% 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 | $ | - | $ | - |
5_CONVERTIBLE_PREFERRED_STOCK_
5. CONVERTIBLE PREFERRED STOCK (Tables) | 6 Months Ended | ||||||||||||
Dec. 31, 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 | 2,762,931 | 641,000 | 712,021 | ||||||||||
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 | 6,087,931 | 1,165,044 | $ | 1,196,021 |
7_STOCK_PURCHASE_OPTIONS_AND_W1
7. STOCK PURCHASE OPTIONS AND WARRANTS (Tables) | 6 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||
Schedule of options activity | The following table summarizes the changes in options outstanding of the Company during the six months ended December 31, 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, 2014 | 381,429 | $ | 0.55 | $ | 0.12 | 0.62 | $ | 209,643 | |||||||||||||
Granted | - | - | - | - | - | ||||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Cancelled/Expired | (301,429 | ) | (0.52 | ) | - | - | (156,743 | ) | |||||||||||||
Outstanding as of December 31, 2014 | 80,000 | $ | 0.66 | $ | 0.59 | 1.94 | $ | 52,900 | |||||||||||||
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 | |||||||||||||
Schedule of Assumptions Used to Estimate Fair Value | December 31, | June 30, | |||||||||||||||||||
2014 | 2014 | ||||||||||||||||||||
Expected volatility | 106-125% | 113-132% | |||||||||||||||||||
Expected dividends | 0% | 0% | |||||||||||||||||||
Expected term | .25-5 Years | 2-10 Years | |||||||||||||||||||
Risk-free interest rate | 0.02-1.75% | 0.35-1.75% | |||||||||||||||||||
Schedule of Warrants | |||||||||||||||||||||
Date Issued | Number of Warrants | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Expiration Date (yrs) | Value if Exercised | ||||||||||||||||
Balance June 30, 2014 | 8,332,579 | $ | 0.76 | $ | 0.7 | 2.96 | $ | 6,370,432 | |||||||||||||
Granted | 6,506,133 | 0.44 | 0.24 | 5.1 | 3,017,533 | ||||||||||||||||
Exercised | (1,050,000 | ) | (0.20 | ) | - | - | (210,000 | ) | |||||||||||||
Cancelled/Expired | (100,000 | ) | (0.50 | ) | - | - | (1,824,468 | ) | |||||||||||||
Outstanding as of December 31, 2014 | 13,688,712 | $ | 0.55 | $ | 0.52 | 2.93 | $ | 7,773,498 | |||||||||||||
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 |
8_COMMITMENTS_AND_CONTINGENCIE1
8. COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Annual operating lease obligations | Year | Lease Payments | |||
2015 | $ | 93,432.00 | |||
2016 | $ | 96,234.96 | |||
2017 | $ | 100,200.00 | |||
Total | $ | 289,866.96 |
3_SUMMARY_OF_SIGNIFICANT_ACCOU2
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | Dec. 31, 2014 |
Summary Of Significant Accounting Policies Details Narrative | |
Fair value of notes payable | $5,463,236 |
4_NOTES_PAYABLE_Details
4. NOTES PAYABLE (Details) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Notes Payable Details | ||
Total convertible notes payable - related parties | $3,925,000 | $3,932,239 |
Less current portion | 3,925,000 | 3,932,239 |
Convertible related party notes payable, net of current portion | 0 | 0 |
Total convertible notes payable - non-related parties | 837,743 | 764,705 |
Less current portion | 837,743 | 764,705 |
Convertible notes payable - non-related parties, long-term | 0 | 0 |
Total non-convertible notes payable - related parties | 625,000 | 610,000 |
Less current portion | 625,000 | 610,000 |
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 |
5_CONVERTIBLE_PREFERRED_STOCK_1
5. CONVERTIBLE PREFERRED STOCK (Details) | Dec. 31, 2014 |
Shares Allocated | |
Series A Convertible Preferred | 100,000 |
Series A-1 Convertible Preferred | 2,762,931 |
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 | 6,087,931 |
Shares Outstanding | |
Series A Convertible Preferred | 15,500 |
Series A-1 Convertible Preferred | 641,000 |
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 | 1,165,044 |
Liquidation Preference | |
Series A Convertible Preferred | 0 |
Series A-1 Convertible Preferred | 712,021 |
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 | 1,196,021 |
5_CONVERTIBLE_PREFERRED_STOCK_2
5. CONVERTIBLE PREFERRED STOCK (Details Narrative) (USD $) | 6 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Equity [Abstract] | ||
Dividends on preferred stock | $34,032 | $32,897 |
Devidends in arrears | $623,058 |
6_COMMON_STOCK_Details_Narrati
6. COMMON STOCK (Details Narrative) (USD $) | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | |
Text Block [Abstract] | |||
Common stock, par value | $0.00 | $0.00 | |
Common stock, authorized shares | 100,000,000 | 100,000,000 | |
Common stock, issued shares | 85,571,925 | 70,296,203 | |
Common stock, outstanding shares | 85,571,925 | 70,296,203 | |
Proceeds from issuance of common stock | $1,058,975 | $581,565 | |
Offering costs | 20,125 | 15,935 | |
Common stock offering costs | 46,000 | ||
Warrants issued with common stock issuance | 6,506,133 | 196,804 | |
Employee stock option expense recognized including amortization of warrants issued in prior periods | $1,239,540 | $114,626 |
7_STOCK_PURCHASE_OPTIONS_AND_W2
7. STOCK PURCHASE OPTIONS AND WARRANTS (Details) (USD $) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2014 | Jun. 30, 2014 | |
Number of Options/Warrants Outstanding | 8,332,579 | 7,530,063 |
Number of Options/Warrants Granted | 6,506,133 | 1,366,016 |
Number of Options/Warrants Exercised | -1,050,000 | -65,000 |
Number of Options/Warrants Canceled/Expired | -100,000 | -498,500 |
Number of Options/Warrants Outstanding | 13,688,712 | 8,332,579 |
Weighted Average Exercise Price Outstanding, Beginning | $0.76 | $0.67 |
Weighted Average Exercise Price Granted | $0.44 | $1.30 |
Weighted Average Exercise Price Exercised | ($0.20) | ($0.25) |
Weighted Average Exercise Price Canceled/Expired | ($0.50) | ($0.70) |
Weighted Average Exercise Price Outstanding, Ending | $0.55 | $0.76 |
Weighted Average Grant Date Fair Value Outstanding beginning | $0.70 | $2.45 |
Weighted Average Grant Date Fair Value Outstanding, granted | $0.24 | $0.23 |
Weighted Average Grant Date Fair Value Outstanding, exercised | $0 | $0.14 |
Weighted Average Grant Date Fair Value Outstanding, cancelled | $0 | $0 |
Weighted Average Grant Date Fair Value Outstanding, ending | $0.52 | $0.70 |
Expiration Date outstanding, beginning | 2 years 11 months 16 days | 4 years 2 months 1 day |
Expiration Date, granted | 5 years 1 month 6 days | 5 years |
Expiration Date, ending | 2 years 11 months 5 days | 2 years 11 months 16 days |
Value if Exercised, Beginning | $6,370,432 | $4,770,713 |
Value if Exercised, Granted | 3,017,533 | 1,774,467 |
Value if Exercised | -210,000 | -16,250 |
Value if Exercised, Cancelled/Expired | -1,824,468 | -158,498 |
Value if Exercised, Ending | 7,773,498 | 6,370,432 |
Stock Options | ||
Number of Options/Warrants Outstanding | 381,429 | 613,429 |
Number of Options/Warrants Granted | 0 | 25,000 |
Number of Options/Warrants Exercised | 0 | 0 |
Number of Options/Warrants Canceled/Expired | -301,429 | -257,000 |
Number of Options/Warrants Outstanding | 80,000 | 381,429 |
Weighted Average Exercise Price Outstanding, Beginning | $0.55 | $0.85 |
Weighted Average Exercise Price Granted | $0 | $0.15 |
Weighted Average Exercise Price Exercised | $0 | $0 |
Weighted Average Exercise Price Canceled/Expired | ($0.52) | ($1.23) |
Weighted Average Exercise Price Outstanding, Ending | $0.66 | $0.55 |
Weighted Average Grant Date Fair Value Outstanding beginning | $0.12 | $1.20 |
Weighted Average Grant Date Fair Value Outstanding, granted | $0 | $0.24 |
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 | $0.59 | $0.12 |
Expiration Date outstanding, beginning | 7 months 13 days | 1 year 11 months 12 days |
Expiration Date, granted | 5 years | |
Expiration Date, ending | 1 year 11 months 8 days | 7 months 13 days |
Value if Exercised, Beginning | 209,643 | 522,843 |
Value if Exercised, Granted | 0 | 3,750 |
Value if Exercised | 0 | 0 |
Value if Exercised, Cancelled/Expired | -156,743 | -316,950 |
Value if Exercised, Ending | $52,900 | $209,643 |
7_STOCK_PURCHASE_OPTIONS_AND_W3
7. STOCK PURCHASE OPTIONS AND WARRANTS (Details 1) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2014 | Jun. 30, 2014 | |
Stock Purchase Options And Warrants Details 1 | ||
Expected volatility, minimum | 106.00% | 113.00% |
Expected volatility, maximum | 125.00% | 132.00% |
Expected dividends | 0.00% | 0.00% |
Expected term, minimum | 3 months | 2 years |
Expected term, maximum | 5 years | 10 years |
Risk-free interest rate, minimum | 0.02% | 0.35% |
Risk-free interest rate, maximum | 1.75% | 1.75% |
7_STOCK_PURCHASE_OPTIONS_AND_W4
7. STOCK PURCHASE OPTIONS AND WARRANTS (Details 2) (USD $) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2014 | Jun. 30, 2014 | |
Stock Purchase Options And Warrants Details 2 | ||
Number of Options/Warrants Outstanding | 8,332,579 | 7,530,063 |
Number of Warrants Granted | 6,506,133 | 1,366,016 |
Number of Warrants Exercised | -1,050,000 | -65,000 |
Number of Warrants Canceled/Expired | -100,000 | -498,500 |
Number of Options/Warrants Outstanding | 13,688,712 | 8,332,579 |
Weighted Average Exercise Price Outstanding, Beginning | $0.76 | $0.67 |
Weighted Average Exercise Price Granted | $0.44 | $1.30 |
Weighted Average Exercise Price Exercised | ($0.20) | ($0.25) |
Weighted Average Exercise Price Canceled/Expired | ($0.50) | ($0.70) |
Weighted Average Exercise Price Outstanding, Ending | $0.55 | $0.76 |
Weighted Average Grant Date Fair Value Outstanding beginning | $0.70 | $2.45 |
Weighted Average Grant Date Fair Value Outstanding, granted | $0.24 | $0.23 |
Weighted Average Grant Date Fair Value Outstanding, exercised | $0 | $0.14 |
Weighted Average Grant Date Fair Value Outstanding, cancelled | $0 | $0 |
Weighted Average Grant Date Fair Value Outstanding, ending | $0.52 | $0.70 |
Expiration Date outstanding, beginning | 2 years 11 months 16 days | 4 years 2 months 1 day |
Expiration Date, granted | 5 years 1 month 6 days | 5 years |
Expiration Date, ending | 2 years 11 months 5 days | 2 years 11 months 16 days |
Value if Exercised, Beginning | $6,370,432 | $4,770,713 |
Value if Exercised, Granted | 3,017,533 | 1,774,467 |
Value if Exercised | -210,000 | -16,250 |
Value if Exercised, Cancelled | -1,824,468 | -158,498 |
Value if Exercised, Ending | $7,773,498 | $6,370,432 |
7_STOCK_PURCHASE_OPTIONS_AND_W5
7. STOCK PURCHASE OPTIONS AND WARRANTS (Details Narrative) (USD $) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2014 | Jun. 30, 2014 | |
Notes to Financial Statements | ||
Stock purchase options issued | 25,000 | |
Stock purchase options issued, value | $6,045 | |
Employee stock option expense | $10,713 | |
Warrants issued | 6,506,133 | 1,366,016 |
Warrants expired | 498,500 |
8_COMMITMENTS_AND_CONTINGENCIE2
8. COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Dec. 31, 2014 |
Commitments And Contingencies Details | |
2015 | $93,432 |
2016 | 96,234 |
2017 | 100,200 |
Total | $289,866 |
8_COMMITMENTS_AND_CONTINGENCIE3
8. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 6 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Rent expense | $134,933 | $39,640 |
Dividends in arrears | 623,058 | |
Paid in Cash | ||
Rent expense | 87,862 | 16,684 |
Paid with Stock | ||
Rent expense | $47,071 | $40,256 |