AfterMaster (AFTM) 10-Q 16 Feb 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2015	Feb. 16, 2016
Document And Entity Information
Entity Registrant Name	AFTERMASTER, INC.
Entity Central Index Key	836,809
Document Type	10-Q
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		99,554,270
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,016

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Dec. 31, 2015	Jun. 30, 2015
Current Assets
Cash	$ 853,675	$ 2,185,702
Accounts receivable	8,015	4,500
Note receivable	10,000	10,000
Prepaid expenses	2,712,619	3,319,258
Total Current Assets	3,584,309	5,519,460
Property and Equipment, net	141,411	169,954
Intangible Assets, net	41,220	22,853
Deposits	13,675	13,675
Available for sale securities	30,000	0
Prepaid expenses, net of current	22,739	1,092,038
Total Assets	3,833,354	6,817,980
Current Liabilities
Accounts payable and other accrued expenses	248,821	344,451
Accrued interest	63,081	93,762
Deferred revenue	304,305	2,500
Accrued Consulting services - related party	84,158	82,267
Lease Payable	16,448	36,426
Derivative Liability	0	12,814,941
Notes Payable - Related Party	625,000	625,000
Notes Payable	40,488	40,488
Convertible notes payable - related party, net of discount of $0 and $0 , respectively	3,925,000	3,925,000
Convertible notes payable, net of discount of $77,473 and $0, respectively	724,527	572,400
Total Current Liabilities	6,031,828	18,537,235
Long-Term Liabilities
Total Liabilities	6,031,828	18,537,235
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, 1,035,000 and 616,000 shares issued and outstanding, respectively	1,035	616
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 250,000,000 shares, par value $0.001; 99,554,270 and 95,280,257 shares issued and outstanding, respectively	99,559	95,287
Subscription payable	0	35,000
Additional paid In capital	56,700,563	46,314,765
Accumulated other comprehensive income	(1,770,000)	0
Accumulated Deficit	(57,230,155)	(58,165,447)
Total Stockholders' Equity (Deficit)	(2,198,474)	(11,719,255)
Total Liabilities and Stockholders' Deficit	$ 3,833,354	$ 6,817,980

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($)	Dec. 31, 2015	Jun. 30, 2015
LIABILITIES AND STOCKHOLDERS' EQUITY
Discount on related party convertible notes payable, current	$ 0	$ 0
Discount on convertible notes payable	$ 77,473	$ 0
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized shares	250,000,000	250,000,000
Common stock, issued shares	99,554,270	95,280,257
Common stock, outstanding shares	99,554,270	95,280,257
Series A Convertible Preferred stock
LIABILITIES AND STOCKHOLDERS' EQUITY
Convertible preferred stock, par value	$ 0.001	$ 0.001
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	$ 0.001	$ 0.001
Convertible preferred stock, authorized shares	3,000,000	3,000,000
Convertible preferred stock, issued shares	1,035,000	616,000
Convertible preferred stock, outstanding shares	1,035,000	616,000
Series B Convertible Preferred stock
LIABILITIES AND STOCKHOLDERS' EQUITY
Convertible preferred stock, par value	$ 0.001	$ 0.001
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	$ 0.001	$ 0.001
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	$ 0.001	$ 0.001
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	$ 0.001	$ 0.001
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	$ 0.001	$ 0.001
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	$ 0.001	$ 0.001
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 Oper

Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
REVENUES
Session Revenues	$ 0	$ 2,310	$ 0	$ 3,730
AfterMaster Revenues	36,154	24,505	55,934	52,245
Licensing Revenues	0	0	1,800,000	200,000
Total Revenues	36,154	26,815	1,855,934	255,975
COSTS AND EXPENSES
Cost of Revenues (Exclusive of Depreciation and Amortization)	108,949	84,444	202,083	167,621
Depreciation and Amortization Expense	17,983	9,537	35,001	43,893
General and Administrative Expenses	2,604,198	1,600,667	4,770,762	2,501,592
Total Costs and Expenses	2,731,130	1,694,648	5,007,846	2,713,106
Loss from Operations	(2,694,976)	(1,667,833)	(3,151,912)	(2,457,131)
Other Expense
Interest Expense	(250,345)	(1,561,649)	(430,725)	(2,089,997)
Derivative Expense	0	(66,381)	0	(126,126)
Change in Fair Value of Derivative	0	(725,593)	4,374,585	(753,138)
Gain (Loss) on Extinguishment of Debt	47,897	0	143,344	(28,517)
Total Other Income (Expense)	(202,448)	(2,353,623)	4,087,204	(2,997,778)
Income (Loss) Before Income Taxes	(2,897,424)	(4,021,456)	935,292	(5,454,909)
Income Tax Expense	0	0	0	0
NET INCOME (LOSS)	(2,897,424)	(4,021,456)	935,292	(5,454,909)
Preferred Stock Accretion and Dividends	(16,789)	(15,881)	(19,427)	(32,897)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$ (2,914,213)	$ (4,037,337)	$ 915,865	$ (5,487,806)
Basic Income (Loss) Per Share of Common Stock	$ (0.03)	$ (0.05)	$ 0.01	$ (0.07)
Weighted Average Number of Shares Outstanding	98,587,644	82,078,713	97,041,083	78,474,438
Diluted Income Per Share of Common Stock	$ (.03)	$ (.05)	$ 0.01	$ (.07)
Diluted Weighted Average Number of Shares Outstanding	98,587,644	82,078,713	113,212,421	78,474,438
Other Comprehensive Income, net of tax
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$ (2,914,213)	$ (4,037,337)	$ 915,865	$ (5,487,806)
Unrealized loss on AFS Securities	(1,170,000)	0	(1,770,000)	0
COMPREHENSIVE INCOME (LOSS)	$ (4,084,213)	$ (4,037,337)	$ (854,135)	$ (5,487,806)

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
OPERATING ACTIVITIES
Net Profit (Loss)	$ 935,292	$ (5,454,909)
Adjustments to reconcile net loss to cash from operating activities:
Depreciation and amortization	35,001	42,608
Share-based compensation - Common Stock	158,537	516,485
Share-based compensation - warrants	452,960	1,275,119
Common stock issued for services and rent	208,959	129,259
Common stock issued as incentive with Convertible debt	0	10,261
Common stock issued for preferred dividends	11,981	12,923
Common stock issued to extend the maturity dates on debt	0	15,750
Closing fees	15,000	0
Amortization of debt discount and issuance costs	22,527	624,798
(Gain)/Loss on extinguishment of debt	(143,344)	28,517
Derivative Expense	0	59,745
Gain (loss) on derivative	(4,374,585)	753,138
Licensing Revenue paid for with AFS Securities	(1,800,000)	0
Changes in Operating Assets and Liabilities:
Other receivables	(3,515)	(38,379)
Other assets	1,675,938	(25,739)
Accounts payable and accrued expenses and deferred revenue	616,436	1,001,680
Net Cash Used in Operating Activities	(2,188,813)	(982,363)
INVESTING ACTIVITIES
Purchase of property and equipment	(24,825)	(93,401)
Net Cash Used in Investing Activities	(24,825)	(93,401)
FINANCING ACTIVITIES
Offering costs for Common shares sold	(104,910)	0
Common Stock issued for cash	0	1,058,975
A-1 Preferred Stock issued for cash	439,000	50,000
Proceeds from convertible notes payable	585,000	527,000
Repayments of convertible notes payable	(17,500)	(9,000)
Repayments of notes payable	0	(35,000)
Lease Payable	(19,978)	(13,675)
Net Cash Provided by Financing Activities	881,612	1,578,300
NET INCREASE (DECREASE) IN CASH	(1,332,027)	502,536
CASH AT BEGINNING OF PERIOD	2,185,702	77,876
CASH AT END OF PERIOD	853,675	580,412
CASH PAID FOR:
Interest	0	918
NON CASH FINANCING ACTIVITIES:
Conversion of Notes and Interest into common stock	783,606	585,496
Conversion of warrants for common stock	0	10,000
Conversion of preferred stock for common stock	50	0
Common Stock and warrants issued for interest	0	527,000
Derivative Liability	8,443,357	1,199,245
Original Issue Discount	100,000	0
Initial Derivative Liability	0	1,277,479
Conversion of Derivative Liability	0	(78,230)
Finder's Fee	35,000	0
MTM on AFS Securities	$ 1,770,000	$ 0

1. CONDENSED FINANCIAL STATEMEN

1. CONDENSED FINANCIAL STATEMENTS	6 Months Ended
	Dec. 31, 2015
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, 2015, 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, 2015 audited financial statements. The results of operations for the periods ended December 31, 2015 and 2014 are not necessarily indicative of the operating results for the full years.

2. GOING CONCERN

2. GOING CONCERN	6 Months Ended
	Dec. 31, 2015
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 an accumulated deficit of $57,230,155, negative working capital of $2,457,519, and currently has revenues which are insufficient to cover its operating costs, which raises substantial doubt about its ability to continue as a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The future of the Company as an operating business will depend on its ability to (1) obtain sufficient capital contributions and/or financing as may be required to sustain its operations and (2) to achieve adequate revenues from its MyStudio and AfterMaster businesses. Management's plan to address these issues includes, (a) continued exercise of tight cost controls to conserve cash, (b) obtaining additional financing, (c) placing in service additional studios (d) more widely commercializing the AfterMaster and ProMaster products, and (e) identifying and executing on additional revenue generating opportunities. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

3. SUMMARY OF SIGNIFICANT ACCOU

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Dec. 31, 2015
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 AfterMaster, Inc. and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. Investments Investment securities consist of readily marketable equity securities. Unrealized gains or losses on securities classified as available-for-sale are generally recorded in shareholders’ equity. If an available-for-sale security is other than temporarily impaired, the loss is charged to either earnings or shareholders’ equity depending on our intent and ability to retain the security until we recover the full cost basis and the extent of the loss attributable to the creditworthiness of the issuer. Investments in certain companies over which we exert significant influence, but do not control the financial and operating decisions, are accounted for as equity method investments. 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, 2015 is approximately $5,315,015. 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. Derivative Liabilities The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares. Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to August 14, 2014 are derivative liabilities. The Company values these convertible notes payable using the multinomial lattice method that values the derivative liability within the notes based on a probability weighted discounted cash flow model. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations. Income Taxes There is no income tax provision for the six months ended December 31, 2015 and 2014 due to net operating losses for which there is no benefit currently available. At December 31, 2015, 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.

4. SECURITIES AVAILABLE-FOR-SAL

4. SECURITIES AVAILABLE-FOR-SALE	6 Months Ended
	Dec. 31, 2015
Securities Available-for-sale Tables
4. SECURITIES AVAILABLE-FOR-SALE	On November 10, 2014, the Company received 600,000 shares of b Booth stock as part of an Asset License agreement with b Booth. The following table presents the amortized cost, gross unrealized gains, gross unrealized losses, and fair market value of available-for-sale equity securities, nearly all of which are attributable to the Company's investment in b Booth stock, as follows: December 31, 2015 Amortized cost Gross unrealized gains Gross unrealized losses Fair value Equity securities $ 1,800,000 $ - $ (1,770,000 ) $ 30,000 June 30, 2015 Amortized cost Gross unrealized gains Gross unrealized losses Fair value Equity securities $ - $ - $ - $ -

5. NOTES PAYABLE

5. NOTES PAYABLE	6 Months Ended
	Dec. 31, 2015
Notes Payable [Abstract]
5. 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, 2015 and June 30, 2015, respectively: December 31, June 30, 2015 2015 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 as of December 31, 2015 and June 30, 2015. $ 3,925,000 $ 3,925,000 Total convertible notes payable – related parties 3,925,000 3,925,000 Less current portion 3,925,000 3,925,000 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, amended again on December 31, 2014 to June 30, 2015, amended again on June 30, 2015 to August 31, 2015, amended again on September 30, 2015 to October 15, 2015, amendedand again on November 10, 2015 to November 30, 2015, and again on February 15, 2016 to March 16, 2016. 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, 2015 and June 30, 2015, respectively: December 31, June 30, 2015 2015 $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, 2015 and June 30, 2015, respectively. $ 15,000 $ 15,000 $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, 2015 and June 30, 2015, 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, 2015 and June 30, 2015, respectively. 10,000 10,000 $50,000 face value of which $17,500 was paid, $9,600 was converted, and $22,900 was forgiven. - 40,400 $30,000 face value of which $30,000 was forgiven. - 30,000 $20,000 face value of which $20,000 was forgiven. - 20,000 $30,000 face value of which $30,000 was converted. - 30,000 $15,000 face value of which $15,000 was converted. - 15,000 $20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $0 and $0 as of December 31, 2015 and June 30, 2015, respectively. 20,000 20,000 $20,000 face value of which $20,000 was converted. - 20,000 $25,000 face value of which $25,000 was converted. - 25,000 $10,000 face value of which $10,000 was converted. - 10,000 $7,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $0 and $0 as of December 31, 2015 and June 30, 2015, respectively. 7,000 7,000 $5,000 face value of which $5,000 was converted. - 5,000 $100,000 face value of which $100,000 was converted. - 100,000 $100,000 face value of which $100,000 was converted. - 100,000 $40,000 face value of which $40,000 was converted. - 40,000 $35,000 face value of which $35,000 was converted. - 35,000 $100,000 face value, issued in October 2015, interest rate of 6%, matures February 2016. 100,000 - $600,000 face value, issued in November 2015, interest rate of 0%, an OID of $100,000, matures May 2016, net unamortized discount of $77,473 of December 31, 2015. 522,527 - Total convertible notes payable – non-related parties 724,527 572,400 Less current portion 724,527 572,400 Convertible notes payable – non-related parties, long-term $ - $ - On November 28, 2012, the Company issued a convertible note to a related party for $50,000 that matures in November 28, 2013, of which $9,600 was converted in the previous period. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. On August 3, 2015, the company settled the debt for $17,500 and recorded a gain on settlement of debt of $22,900 for the remaining principal and $9,670 for the accrued interest. On February 13, 2013, the Company issued a convertible note to a related party for $30,000 that matures in November 28, 2013. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. On August 3, 2015, the company settled the debt and recorded a gain on settlement of debt of $30,000 for the remaining principal and $12,707 for the accrued interest. On April 24, 2013, the Company issued a convertible note to a related party for $20,000 that matures in October 24, 2013. The note bears an interest rate of 10% per annum and is convertible after 180 days into shares of the Company’s Common Stock at $0.10 per share. On August 3, 2015, the company settled the debt and recorded a gain on settlement of debt of $20,000 for the remaining principal and $170 for the accrued interest. On March 6, 2014, the Company issued a convertible note to an unrelated individual for $30,000 that matures on September 6, 2014. The note bears no interest rate and is convertible into shares of the Company’s Common stock at $0.10 per share. On September 30, 2015, the note holder elected to convert the entire note of $30,000. On June 19, 2014, the Company issued a convertible note to an unrelated individual for $15,000 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 September 30, 2015, the note holder elected to convert the entire note of $15,000 and $1,154 in accrued interest. On June 19, 2014, the Company issued a convertible note to an unrelated individual for $20,000 that matures on December 19, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. On September 30, 2015, the note holder elected to convert the entire note of $20,000 and $1,538 in accrued interest. 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. On July 29, 2015, the note holder elected to convert the entire note of $10,000 and $633 in accrued interest. 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. On July 30, 2015, the note holder elected to convert the entire note of $5,000 and $312 in accrued interest. On October 6, 2014, the Company issued a convertible note to an unrelated individual for $40,000 that matured 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 September 30, 2015, the note holder elected to convert the entire note of $40,000 and $2,361 in accrued interest. On September 11, 2014, the Company issued a convertible note to an unrelated individual for $100,000 that matured 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. On October 7, 2015, the note holder elected to convert the entire note of $100,000 and $6,427 in accrued interest. On June 30, 2014, the Company issued a convertible note to an unrelated individual for $25,000 that matured on September 30, 2014. The note bears interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.10 per share. On October 8, 2015, the note holder elected to convert the entire note of $25,000 and $3,185 in accrued interest. On November 24, 2014, the Company issued a convertible note to an unrelated individual for $35,000 that matured 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. On October 8, 2015, the note holder elected to convert the entire note of $35,000 and $1,829 in accrued interest. On October 27, 2015, the Company issued a convertible note to an unrelated individual for $100,000 that matures on February 27, 2016. The note bears 6% per annum and in convertible into shares of the Company’s Common stock at $0.50 per share. Additionally, the Company granted 50,000 warrants in conjunction with this note (see Note 8 – Stock Purchase Options and Warrants). On September 19, 2014, the Company issued a convertible note to an unrelated individual for $100,000 that matured 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. On November 16, 2015, the note holder elected to convert the entire note of $100,000 and $6,953 in accrued interest. On November 20, 2015, the Company issued a convertible note to an unrelated company for $600,000 that matures on May 20, 2016. The note bears 0% interest and had an original issue discount (OID) of $100,000. This note is not convertible unless there is a default event, so no BCF was valued. As of December 31, 2015 the balance of unamortized OID was $77,473. Notes Payable – Related Parties Notes payable due to related parties consisted of the following as of December 31, 2015 and June 30, 2015, respectively: December 31, June 30, 2015 2015 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 June 30, 2015 and June 30, 2014, respectively, of which $35,000 has been paid. $ 575,000 $ 575,000 Face value of $50,000, issued in December 2014, matures in January 2015, note bears interest at 0%. 50,000 50,000 Total notes payable – related parties 625,000 625,000 Less current portion 625,000 625,000 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, 2015 and June 30, 2015, respectively: December 31, June 30, 2015 2015 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 $ - $ -

6. CONVERTIBLE PREFERRED STOCK

6. CONVERTIBLE PREFERRED STOCK	6 Months Ended
	Dec. 31, 2015
Equity [Abstract]
6. CONVERTIBLE PREFERRED STOCK	The Company has authorized 10,000,000 shares of $0.001 par value per share Preferred Stock, of which the following were issued outstanding: Shares Shares Liquidation Allocated Outstanding Preference Series A Convertible Preferred 100,000 15,500 - Series A-1 Convertible Preferred 3,000,000 1,035,000 1,149,675 Series B Convertible Preferred 200,000 3,500 79,099 Series C Convertible Preferred 1,000,000 13,404 - Series D Convertible Preferred 375,000 130,000 130,000 Series E Convertible Preferred 1,000,000 275,000 275,000 Series P Convertible Preferred 600,000 86,640 - Series S Convertible Preferred 50,000 - - Total Preferred Stock 6,325,000 1,559,044 $ 1,633,774 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, 2015 and the fiscal years ended June 30, 2015 the Company issued 469,000 and -0- shares of Series A-1 Preferred Stock for $469,000 and $-0- in cash, respectively. The Company had one conversion of 50,000 shares of Series A-1 Preferred Stock for 100,000 shares of Common Stock, and issued 27,863 shares of Common Stock of payment of $12,932 in accrued dividends. During the six months ended December 31, 2015 and 2014, the outstanding Preferred Stock accumulated $40,147 and $34,032 in dividends on outstanding Preferred Stock. The cumulative dividends in arrears as of December 31, 2015 were approximately $662,518.

7. COMMON STOCK

7. COMMON STOCK	6 Months Ended
	Dec. 31, 2015
Text Block [Abstract]
7. COMMON STOCK	The Company has authorized 250,000,000 shares of $0.001 par value per share Common Stock, of which 99,554,270 and 95,280,257 were issued outstanding as of December 31, 2015 and June 30, 2015, respectively. The Company amended its articles of incorporation on August 28, 2015 to increase the number of authorized shares to 250,000,000. The activity surrounding the issuances of the Common Stock is as follows: For the Six Months Ended December 31, 2015 The Company issued 2,489,398 shares of Common Stock for the conversion of notes and accrued interest valued at $403,113. The Company also issued 100,000 shares of Common Stock for the conversion of 50,000 shares of Series A-1 Preferred Stock . The Company issued 463,229 shares of Common Stock as payment for services and rent valued at $208,959. As share-based compensation to employees and non-employees, the Company issued 350,628 shares of common stock valued at $158,537, based on the market price of the stock on the date of issuance. As interest expense on outstanding notes payable, the Company issued 842,895 shares of common stock valued at $380,493 based on the market price on the date of issuance. 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 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.

8. STOCK PURCHASE OPTIONS AND W

8. STOCK PURCHASE OPTIONS AND WARRANTS	6 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
8. 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, 2015 and fiscal year ended June 30, 2015, the Company did not issue any stock purchase options. The following table summarizes the changes in options outstanding of the Company during the six months ended December 31, 2015. Date Issued Number of Options Weighted Average Exercise Price Weighted Average Grant Date Fair Value Expiration Date (yrs) Value if Exercised Balance June 30, 2015 80,000 $ 0.66 $ 0.59 1.20 $ 52,900 Granted - - - - - Exercised - - - - - Cancelled/Expired (25,000 ) 0.85 - - (21,250 ) Outstanding as of December 31, 2015 55,000 $ 0.58 $ 0.55 1.21 $ 31,650 The following table summarizes the changes in options outstanding of the Company during the fiscal year ended June 30, 2015. 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 June 30, 2015 80,000 $ 0.66 $ 0.59 1.20 $ 52,900 Stock Purchase Warrants During the six months ended December 31, 2015, the Company issued warrants to purchase a total of 2,088,000. The Company issued 100,000 warrants in conjunction to an employment agreement entered into in July 2015 and 1,000,000 warrants in conjunction with a consulting agreement entered into December 2015. The Company issued 50,000 warrants in conjunction with a promissory note executed in October 2015. The company also issued 938,000 warrants as part of a private placement. 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, 2015, the Company issued warrants to purchase a total of 26,434,199. The Company issued 50,000 warrants in conjunction to extended two convertible note payables and issued 5,876,133 warrants in conjunction to a consulting agreement entered into in July 2014 and 150,000 warrants issued in conjunction with a financial advisory agreement entered into on January 2015. 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 8,657,701 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. The following table presents the assumptions used to estimate the fair values of the stock warrants and options granted: December, 31 2015 June 30, 2015 Expected volatility 104-114% 71-142% Expected dividends 0% 0% Expected term 3-5 Years 0.25-10 Years Risk-free interest rate 0.65-1.70% 0.00-2.35% The following table summarizes the changes in warrants outstanding issued to employees and non-employees of the Company during the three months ended December 31, 2015. Number of Warrants Weighted Average Exercise Price Weighted Average Grant Date Fair Value Expiration Date (yrs) Value if Exercised Outstanding as of June 30, 2015 31,951,788 $ 0.43 $ 0.50 4.98 $ 13,585,289 Granted 2,088,000 0.61 0.36 4.03 1,273,850 Exercised - - - - - Cancelled/Expired (370,000 ) - - - (177,300 ) Outstanding as of December 31, 2015 33,669,788 $ 0.44 $ 0.48 4.50 $ 14,681,839 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, 2015. Number of Warrants Weighted Average Exercise Price Weighted Average Grant Date Fair Value Expiration Date (yrs) Value if Exercised Outstanding as of June 30, 2014 8,332,579 $ 0.76 $ 0.70 2.96 $ 6,370,432 Granted 26,434,199 0.24 0.25 5.56 9,821,607 Exercised (750,000 ) - - - (160,000 ) Cancelled/Expired (2,065,000 ) - - - (2,446,750 ) Outstanding as of June 30, 2015 31,951,778 $ 0.43 $ 0.50 4.98 $ 13,585,289

9. FINANCIAL INSTRUMENTS

9. FINANCIAL INSTRUMENTS	6 Months Ended
	Dec. 31, 2015
Financial Instruments
9. FINANCIAL INSTRUMENTS	The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company has estimated the fair value of these embedded derivatives for convertible debentures and associated warrants using a multinomial lattice model as of December 31, 2015 and June 30, 2015. On August 28, 2015, the Company increased the number of authorized common shares from 100,000,000 to 250,000,000, which removed the derivative using the sequencing policy. The fair values of the derivative instruments are measured each quarter, which resulted in a gain (loss) of $4,374,585 and $(753,138), and derivative expense of $-0- and $126,126 during the six months ended December 31, 2015 and 2014, respectively. As of December 31, 2015 and June 30, 2015, the fair market value of the derivatives aggregated $-0- and $12,814,941, respectively, using the following assumptions: estimated 10-0.10 year term, estimated volatility of 142.75 -70.62%, and a discount rate of 2.35-0.00%.

10. FAIR VALUE MEASUREMENTS

10. FAIR VALUE MEASUREMENTS	6 Months Ended
	Dec. 31, 2015
Fair Value Measurements
10. FAIR VALUE MEASUREMENTS	For asset and liabilities measured at fair value, the Company uses the following hierarchy of inputs: ● Level one — Quoted market prices in active markets for identical assets or liabilities; ● Level two — Inputs other than level one inputs that are either directly or indirectly observable; and ● Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. Liabilities measured at fair value on a recurring basis at December 31, 2015, are summarized as follows: Level 1 Level 2 Level 3 Total Fair value of derivatives $ - $ - $ - $ - Securities available-for-sale $ 30,000 $ - $ - $ 30,000 Liabilities measured at fair value on a recurring basis at June 30, 2015, are summarized as follows: Level 1 Level 2 Level 3 Total Fair value of derivatives $ - $ 12,814,941 $ - $ 12,814,941 Securities available-for-sale $ - $ - $ - $ -

11. COMMITMENTS AND CONTINGENCI

11. COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
11. COMMITMENTS AND CONTINGENCIES	Legal Proceedings The Company may become involved in certain legal proceedings and claims which arise in the normal course of business. The Company is not a party to any litigation. To the best of the knowledge of our management, there are no material litigation matters pending or threatened against us. Lease Agreements We lease offices in Hollywood, California for corporate, research, engineering and mastering services. The lease expires on December 31, 2017. The total lease expense for the facility is approximately $8,670 per month, and the total remaining obligations under these leases at December 31, 2015 were approximately $226,783. Pursuant to a lease originally dated January, 2006, we currently occupy approximately 11,800 square feet of office and warehouse space located at 7650 E. Evans Rd., Suite C, Scottsdale, Arizona on a month-by month basis. The total lease expense is approximately $9,609 per month, payable in cash and Common Stock of the Company. Rent expense for the six months ended December 31, 2015 was $119,167, of which $86,584 was paid in cash and $32,583 was paid in Common Stock. 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. Below is a table summarizing the annual operating lease obligations over the next 5 years: Year Lease Payments 2015 $ 59,476 2016 130,493 Thereafter 103,006 Total $ 292,975 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, 2015 were approximately $662,518. As of the date of this filing, the Company has not filed its tax return for the fiscal year ended 2014 and 2015.

12. SUBSEQUENT EVENTS

12. SUBSEQUENT EVENTS	6 Months Ended
	Dec. 31, 2015
Subsequent Events [Abstract]
12. SUBSEQUENT EVENTS	In accordance with ASC 855, Company’s management reviewed all material events through the date of this filing and determined that there were the following material subsequent events to report: O n January 18, 2016, the Company issued 25,000 warrants as payment for services. The warrants are have a term of two years, which vest immediately, exercisable at a price of $0.50 valued at $12,500. On January 27, 2016, the Company entered into a lease agreement for warehouse space located at 8260 E Gelding Dr. Suite 102, Scottsdale, AZ 85260 consisting of approximately 2,098 square feet for a term of three (3) years. The total lease obligation for the three (3) years is approximately $66,191.90.

3. SUMMARY OF SIGNIFICANT ACC18

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Dec. 31, 2015
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 AfterMaster, Inc. and its subsidiaries. All significant inter-company accounts and transactions have been eliminated.
Investments	Investment securities consist of readily marketable equity securities. Unrealized gains or losses on securities classified as available-for-sale are generally recorded in shareholders’ equity. If an available-for-sale security is other than temporarily impaired, the loss is charged to either earnings or shareholders’ equity depending on our intent and ability to retain the security until we recover the full cost basis and the extent of the loss attributable to the creditworthiness of the issuer. Investments in certain companies over which we exert significant influence, but do not control the financial and operating decisions, are accounted for as equity method investments
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, 2015 is approximately $5,315,015. 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.
Derivative Liabilities	The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares. Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to August 14, 2014 are derivative liabilities. The Company values these convertible notes payable using the multinomial lattice method that values the derivative liability within the notes based on a probability weighted discounted cash flow model. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.
Income Taxes	There is no income tax provision for the six months ended December 31, 2015 and 2014 due to net operating losses for which there is no benefit currently available. At December 31, 2015, 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.

4. SECURITIES AVAILABLE-FOR-S19

4. SECURITIES AVAILABLE-FOR-SALE (Tables)	6 Months Ended
	Dec. 31, 2015
Securities Available-for-sale Tables
Securities Available-for-Sale	December 31, 2015 Amortized cost Gross unrealized gains Gross unrealized losses Fair value Equity securities $ 1,800,000 $ - $ (1,770,000 ) $ 30,000 June 30, 2015 Amortized cost Gross unrealized gains Gross unrealized losses Fair value Equity securities $ - $ - $ - $ -

5. NOTES PAYABLE (Tables)

5. NOTES PAYABLE (Tables)	6 Months Ended
	Dec. 31, 2015
Debt Disclosure [Abstract]
Schedule of Convertible Notes Payable-Related Parties	December 31, June 30, 2015 2015 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 as of December 31, 2015 and June 30, 2015. $ 3,925,000 $ 3,925,000 Total convertible notes payable – related parties 3,925,000 3,925,000 Less current portion 3,925,000 3,925,000 Convertible notes payable – related parties, long-term $ - $ -
Schedule of Convertible Notes Payable-Non-Related Parties	December 31, June 30, 2015 2015 $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, 2015 and June 30, 2015, respectively. $ 15,000 $ 15,000 $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, 2015 and June 30, 2015, 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, 2015 and June 30, 2015, respectively. 10,000 10,000 $50,000 face value of which $17,500 was paid, $9,600 was converted, and $22,900 was forgiven. - 40,400 $30,000 face value of which $30,000 was forgiven. - 30,000 $20,000 face value of which $20,000 was forgiven. - 20,000 $30,000 face value of which $30,000 was converted. - 30,000 $15,000 face value of which $15,000 was converted. - 15,000 $20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $0 and $0 as of December 31, 2015 and June 30, 2015, respectively. 20,000 20,000 $20,000 face value of which $20,000 was converted. - 20,000 $25,000 face value of which $25,000 was converted. - 25,000 $10,000 face value of which $10,000 was converted. - 10,000 $7,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $0 and $0 as of December 31, 2015 and June 30, 2015, respectively. 7,000 7,000 $5,000 face value of which $5,000 was converted. - 5,000 $100,000 face value of which $100,000 was converted. - 100,000 $100,000 face value of which $100,000 was converted. - 100,000 $40,000 face value of which $40,000 was converted. - 40,000 $35,000 face value of which $35,000 was converted. - 35,000 $100,000 face value, issued in October 2015, interest rate of 6%, matures February 2016. 100,000 - $600,000 face value, issued in November 2015, interest rate of 0%, an OID of $100,000, matures May 2016, net unamortized discount of $77,473 of December 31, 2015. 522,527 - Total convertible notes payable – non-related parties 724,527 572,400 Less current portion 724,527 572,400 Convertible notes payable – non-related parties, long-term $ - $ -
Schedule of Non-Convertible Notes Payable-Related Parties	December 31, June 30, 2015 2015 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 June 30, 2015 and June 30, 2014, respectively, of which $35,000 has been paid. $ 575,000 $ 575,000 Face value of $50,000, issued in December 2014, matures in January 2015, note bears interest at 0%. 50,000 50,000 Total notes payable – related parties 625,000 625,000 Less current portion 625,000 625,000 Notes payable - related parties, long term $ - $ -
Schedule of Non-Convertible Notes Payable-Non-Related Parties	December 31, June 30, 2015 2015 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 $ - $ -

6. CONVERTIBLE PREFERRED STOCK

6. CONVERTIBLE PREFERRED STOCK (Tables)	6 Months Ended
	Dec. 31, 2015
Convertible Preferred Stock Tables
Schedule of Preferred Stock	Shares Shares Liquidation Allocated Outstanding Preference Series A Convertible Preferred 100,000 15,500 - Series A-1 Convertible Preferred 3,000,000 1,035,000 1,149,675 Series B Convertible Preferred 200,000 3,500 79,099 Series C Convertible Preferred 1,000,000 13,404 - Series D Convertible Preferred 375,000 130,000 130,000 Series E Convertible Preferred 1,000,000 275,000 275,000 Series P Convertible Preferred 600,000 86,640 - Series S Convertible Preferred 50,000 - - Total Preferred Stock 6,325,000 1,559,044 $ 1,633,774

8. STOCK PURCHASE OPTIONS AND22

8. STOCK PURCHASE OPTIONS AND WARRANTS (Tables)	6 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
Schedule of options activity	Date Issued Number of Options Weighted Average Exercise Price Weighted Average Grant Date Fair Value Expiration Date (yrs) Value if Exercised Balance June 30, 2015 80,000 $ 0.66 $ 0.59 1.20 $ 52,900 Granted - - - - - Exercised - - - - - Cancelled/Expired (25,000 ) 0.85 - - (21,250 ) Outstanding as of December 31, 2015 55,000 $ 0.58 $ 0.55 1.21 $ 31,650 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 June 30, 2015 80,000 $ 0.66 $ 0.59 1.20 $ 52,900
Schedule of Assumptions Used to Estimate Fair Value	December, 31 2015 June 30, 2015 Expected volatility 104-114% 71-142% Expected dividends 0% 0% Expected term 3-5 Years 0.25-10 Years Risk-free interest rate 0.65-1.70% 0.00-2.35%
Schedule of Warrants	Number of Warrants Weighted Average Exercise Price Weighted Average Grant Date Fair Value Expiration Date (yrs) Value if Exercised Outstanding as of June 30, 2015 31,951,788 $ 0.43 $ 0.50 4.98 $ 13,585,289 Granted 2,088,000 0.61 0.36 4.03 1,273,850 Exercised - - - - - Cancelled/Expired (370,000 ) - - - (177,300 ) Outstanding as of December 31, 2015 33,669,788 $ 0.44 $ 0.48 4.50 $ 14,681,839 Number of Warrants Weighted Average Exercise Price Weighted Average Grant Date Fair Value Expiration Date (yrs) Value if Exercised Outstanding as of June 30, 2014 8,332,579 $ 0.76 $ 0.70 2.96 $ 6,370,432 Granted 26,434,199 0.24 0.25 5.56 9,821,607 Exercised (750,000 ) - - - (160,000 ) Cancelled/Expired (2,065,000 ) - - - (2,446,750 ) Outstanding as of June 30, 2015 31,951,778 $ 0.43 $ 0.50 4.98 $ 13,585,289

10. FAIR VALUE MEASUREMENTS (Ta

10. FAIR VALUE MEASUREMENTS (Tables)	6 Months Ended
	Dec. 31, 2015
Fair Value Measurements Tables
Schedule or fair value measurements	Liabilities measured at fair value on a recurring basis at December 31, 2015, are summarized as follows: Level 1 Level 2 Level 3 Total Fair value of derivatives $ - $ - $ - $ - Securities available-for-sale $ 30,000 $ - $ - $ 30,000 Liabilities measured at fair value on a recurring basis at June 30, 2015, are summarized as follows: Level 1 Level 2 Level 3 Total Fair value of derivatives $ - $ 12,814,941 $ - $ 12,814,941 Securities available-for-sale $ - $ - $ - $ -

11. COMMITMENTS AND CONTINGEN24

11. COMMITMENTS AND CONTINGENCIES (Tables)	6 Months Ended
	Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
Annual operating lease obligations	Year Lease Payments 2015 $ 59,476 2016 130,493 Thereafter 103,006 Total $ 292,975

3. SUMMARY OF SIGNIFICANT ACC25

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
Summary Of Significant Accounting Policies Details Narrative
Deemed dividends on Preferred Stock	$ 16,789	$ 15,881	$ 19,427	$ 32,897
Fair value of notes payable	$ 5,315,015		$ 5,315,015

4. SECURITIES AVAILABLE-FOR-S26

4. SECURITIES AVAILABLE-FOR-SALE (Details) - USD ($)	6 Months Ended	12 Months Ended
	Dec. 31, 2015	Jun. 30, 2015
Fair value	$ 30,000	$ 0
Securities Available-for-sale
Amortized cost	1,800,000	0
Gross unrealized gains	0	0
Gross unrealized losses	(1,770,000)	0
Fair value	$ 30,000	$ 0

5. NOTES PAYABLE (Details)

5. NOTES PAYABLE (Details) - USD ($)	Dec. 31, 2015	Jun. 30, 2015
Total convertible notes payable - related parties	$ 3,925,000	$ 3,925,000
Less current portion	3,925,000	3,925,000
Convertible related party notes payable, net of current portion	0	0
Convertible Notes Payable [Member]
Total convertible notes payable - related parties	$ 3,925,000	$ 3,925,000

5. NOTES PAYABLE (Details 1)

5. NOTES PAYABLE (Details 1) - USD ($)	Dec. 31, 2015	Jun. 30, 2015
Notes Payable Details 1
Total convertible notes payable - non-related parties	$ 724,527	$ 572,400
Less current portion	724,527	572,400
Convertible notes payable - non-related parties, long-term	$ 0	$ 0

5. NOTES PAYABLE (Details 2)

5. NOTES PAYABLE (Details 2) - USD ($)	Dec. 31, 2015	Jun. 30, 2015
Notes payable - related parties	$ 625,000	$ 625,000
Less current portion	625,000	625,000
Notes payable - related parties, long term	0	0
Convertible Notes Payable [Member]
Notes payable - related parties	575,000	575,000
Convertible Notes Payable One [Member]
Notes payable - related parties	$ 50,000	$ 50,000

5. NOTES PAYABLE (Details 3)

5. NOTES PAYABLE (Details 3) - USD ($)	Dec. 31, 2015	Jun. 30, 2015
Note payable - non-related parties	$ 40,488	$ 40,488
Less current portion	40,488	40,488
Notes payable - non-related parties, long-term	0	0
Convertible Notes Payable [Member]
Note payable - non-related parties	$ 40,488	$ 40,488

6. CONVERTIBLE PREFERRED STOC31

6. CONVERTIBLE PREFERRED STOCK (Details)	Dec. 31, 2015shares
Shares Allocated
Series A Convertible Preferred	100,000
Series A-1 Convertible Preferred	3,000,000
Series B Convertible Preferred	200,000
Series C Convertible Preferred	1,000,000
Series D Convertible Preferred	375,000
Series E Convertible Preferred	1,000,000
Series P Convertible Preferred	600,000
Series S Convertible Preferred	50,000
Total Preferred Stock	6,325,000
Shares Outstanding
Series A Convertible Preferred	15,500
Series A-1 Convertible Preferred	1,035,000
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	1,559,044
Liquidation Preference
Series A Convertible Preferred	0
Series A-1 Convertible Preferred	1,149,675
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	1,633,774

6. CONVERTIBLE PREFERRED STOC32

6. CONVERTIBLE PREFERRED STOCK (Details Narrative) - USD ($)	6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Equity [Abstract]
Dividends on preferred stock	$ 40,147	$ 34,032
Dividends in arrears	$ 662,518

7. COMMON STOCK (Details Narrat

7. COMMON STOCK (Details Narrative) - $ / shares	Dec. 31, 2015	Jun. 30, 2015
Text Block [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized shares	250,000,000	250,000,000
Common stock, issued shares	99,554,270	95,280,257
Common stock, outstanding shares	99,554,270	95,280,257

8. STOCK PURCHASE OPTIONS AND34

8. STOCK PURCHASE OPTIONS AND WARRANTS (Details) - Stock Options - USD ($)	6 Months Ended	12 Months Ended
	Dec. 31, 2015	Jun. 30, 2015
Number of Options/Warrants Outstanding	80,000	381,429
Number of Options/Warrants Granted	0	0
Number of Options/Warrants Exercised	0	0
Number of Options/Warrants Canceled/Expired	(25,000)	(301,429)
Number of Options/Warrants Outstanding	55,000	80,000
Weighted Average Exercise Price Outstanding, Beginning	$ .66	$ 0.55
Weighted Average Exercise Price Granted	0	0
Weighted Average Exercise Price Exercised	0	0
Weighted Average Exercise Price Canceled/Expired	0.85	0.52
Weighted Average Exercise Price Outstanding, Ending	0.58	.66
Weighted Average Grant Date Fair Value Outstanding beginning	0.59	0.12
Weighted Average Grant Date Fair Value Outstanding, ending	$ 0.55	$ 0.59
Expiration Date outstanding, beginning	1 year 2 months 12 days	7 months 13 days
Expiration Date, ending	1 year 2 months 16 days	1 year 2 months 12 days
Value if Exercised, Beginning	$ 52,900	$ 209,643
Value if Exercised, Granted	0	0
Value if Exercised	0	0
Value if Exercised, Cancelled/Expired	(21,250)	(156,743)
Value if Exercised, Ending	$ 31,650	$ 52,900

8. STOCK PURCHASE OPTIONS AND35

8. STOCK PURCHASE OPTIONS AND WARRANTS (Details 1)	6 Months Ended	12 Months Ended
	Dec. 31, 2015	Jun. 30, 2015
Stock Purchase Options And Warrants Details 1
Expected volatility, minimum	104.00%	71.00%
Expected volatility, maximum	114.00%	142.00%
Expected dividends	0.00%	0.00%
Expected term, minimum	3 years	3 months
Expected term, maximum	5 years	10 years
Risk-free interest rate, minimum	0.65%	0.00%
Risk-free interest rate, maximum	1.70%	2.35%

8. STOCK PURCHASE OPTIONS AND36

8. STOCK PURCHASE OPTIONS AND WARRANTS (Details 2) - Warrants - USD ($)	6 Months Ended	12 Months Ended
	Dec. 31, 2015	Jun. 30, 2015
Number of Options/Warrants Outstanding	31,951,778	8,332,579
Number of Warrants Granted	2,088,000	26,434,199
Number of Warrants Exercised	0	(750,000)
Number of Warrants Canceled/Expired	(370,000)	(2,065,000)
Number of Options/Warrants Outstanding	33,699,788	31,951,778
Weighted Average Exercise Price Outstanding, Beginning	$ 0.43	$ 0.76
Weighted Average Exercise Price Granted	0.61	0.24
Weighted Average Exercise Price Exercised	0	0
Weighted Average Exercise Price Canceled/Expired	0	0
Weighted Average Exercise Price Outstanding, Ending	.44	0.43
Weighted Average Grant Date Fair Value Outstanding beginning	0.50	0.70
Weighted Average Grant Date Fair Value Outstanding, granted	0.36	0.25
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	$ 0.48	$ 0.50
Expiration Date outstanding, beginning	4 years 11 months 23 days	2 years 11 months 16 days
Expiration Date, granted	4 years 11 days	5 years 6 months 22 days
Expiration Date, ending	4 years 6 months	4 years 11 months 23 days
Value if Exercised, Beginning	$ 13,585,289	$ 6,370,432
Value if Exercised, Granted	1,273,850	9,821,607
Value if Exercised	0	(160,000)
Value if Exercised, Cancelled	(177,300)	(2,446,750)
Value if Exercised, Ending	$ 14,681,839	$ 13,585,289

8. STOCK PURCHASE OPTIONS AND37

8. STOCK PURCHASE OPTIONS AND WARRANTS (Details Narrative) - shares	6 Months Ended	12 Months Ended
	Dec. 31, 2015	Jun. 30, 2015
Notes to Financial Statements
Warrants issued	2,088,000	26,434,199

9. FINANCIAL INSTRUMENTS (Detai

9. FINANCIAL INSTRUMENTS (Details Narrative) - USD ($)	6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Jun. 30, 2015
Gain (loss) from derivative instruments	$ 4,374,585	$ (753,138)
Fair market value of the derivatives	$ 0		$ 12,814,941
Maximum [Member]
Estimated term	10 years
Estimated volatility	142.75%
Discount rate	2.35%
Minimum [Member]
Estimated term	1 month 6 days
Estimated volatility	70.62%
Discount rate	0.00%

10. FAIR VALUE MEASUREMENTS (De

10. FAIR VALUE MEASUREMENTS (Details) - USD ($)	Dec. 31, 2015	Jun. 30, 2015
Fair value of derivatives	$ 0	$ 12,814,941
Securities available-for-sale	30,000	0
Level 1 [Member]
Fair value of derivatives	0	0
Securities available-for-sale	30,000	0
Level 2 [Member]
Fair value of derivatives	0	12,814,941
Securities available-for-sale	0	0
Level 3 [Member]
Fair value of derivatives	0	0
Securities available-for-sale	$ 0	$ 0

11. COMMITMENTS AND CONTINGEN40

11. COMMITMENTS AND CONTINGENCIES (Details)	Dec. 31, 2015USD ($)
Commitments And Contingencies Details
2,015	$ 59,476
2,016	130,493
Thereafter	103,006
Total	$ 292,975

11. COMMITMENTS AND CONTINGEN41

11. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Remaining obligations under lease	$ 226,783
Rent expense	119,167	$ 134,933
Paid in Cash
Rent expense	86,584	87,862
Paid with Stock
Rent expense	$ 32,583	$ 47,071