Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2016 | Feb. 14, 2017 | |
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, 2016 | |
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 | 109,550,477 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2016 | Jun. 30, 2016 |
Current Assets | ||
Cash | $ 224,120 | $ 394,325 |
Accounts receivable, net | 17,198 | 11,389 |
Inventory | 330,077 | 0 |
Available for sale securities | 48,000 | 63,600 |
Prepaid expenses | 804,778 | 1,078,819 |
Total Current Assets | 1,424,173 | 1,548,133 |
Property and Equipment, net | 318,994 | 294,557 |
Intangible Assets, net | 117,024 | 99,186 |
Deposits | 33,363 | 33,363 |
Prepaid expenses, net of current | 13,623 | 18,217 |
Total Assets | 1,907,177 | 1,993,456 |
Current Liabilities | ||
Accounts payable and other accrued expenses | 244,069 | 225,001 |
Accrued interest | 105,047 | 77,335 |
Deferred revenue | 762,658 | 740,200 |
Accrued consulting services - related party | 47,066 | 28,561 |
Lease Payable | 22,536 | 984 |
Derivative Liability | 0 | 0 |
Notes Payable - Related Party | 580,000 | 575,000 |
Notes Payable | 40,488 | 40,488 |
Convertible notes payable - related party | 3,925,000 | 3,925,000 |
Convertible notes payable, net of discount of $6,495 and $22,282, respectively | 2,131,269 | 1,029,718 |
Total Current Liabilities | 7,858,133 | 6,642,287 |
Long-Term Liabilities | ||
Total Liabilities | 7,858,133 | 6,642,287 |
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 2,735,000 and 2,185,000 shares issued and outstanding, respectively | 2,735 | 2,185 |
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; 108,854,548 and 102,133,344 shares issued and outstanding, respectively | 108,861 | 102,140 |
Additional paid In capital | 62,070,833 | 58,997,912 |
Accumulated other comprehensive income | 18,000 | 33,600 |
Accumulated Deficit | (68,151,909) | (63,785,192) |
Total Stockholders' Deficit | (5,950,956) | (4,648,831) |
Total Liabilities and Stockholders' Deficit | $ 1,907,177 | $ 1,993,456 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2016 | Jun. 30, 2016 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Discount on convertible notes payable | $ 6,495 | $ 22,282 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized shares | 250,000,000 | 250,000,000 |
Common stock, issued shares | 108,854,548 | 102,133,344 |
Common stock, outstanding shares | 108,854,548 | 102,133,344 |
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 | 2,735,000 | 2,185,000 |
Convertible preferred stock, outstanding shares | 2,735,000 | 2,185,000 |
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 | 50,000 | 0 |
Convertible preferred stock, outstanding shares | 50,000 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
REVENUES | ||||
AfterMaster Revenues | $ 48,739 | $ 36,154 | $ 103,225 | $ 55,934 |
Licensing Revenues | 0 | 0 | 0 | 1,800,000 |
Total Revenues | 48,739 | 36,154 | 103,225 | 1,855,934 |
COSTS AND EXPENSES | ||||
Cost of Revenues (Exclusive of Depreciation and Amortization) | 157,680 | 108,949 | 319,775 | 202,083 |
Depreciation and Amortization Expense | 45,015 | 17,983 | 85,554 | 35,001 |
Research and Development | 26,020 | 42,300 | 93,015 | 69,085 |
Advertising and Promotion Expense | 2,565 | 142,867 | 17,644 | 144,385 |
Legal and Professional Expense | 30,804 | 130,678 | 55,070 | 257,412 |
Non-Cash Consulting Expense | 659,938 | 1,307,966 | 1,531,909 | 2,187,511 |
General and Administrative Expenses | 915,206 | 980,387 | 1,628,042 | 2,112,369 |
Total Costs and Expenses | 1,837,228 | 2,731,130 | 3,731,009 | 5,007,846 |
Loss from Operations | (1,788,489) | (2,694,976) | (3,627,784) | (3,151,912) |
Other Expense | ||||
Interest Expense | (378,522) | (250,345) | (747,595) | (430,725) |
Change in Fair Value of Derivative | (463) | 0 | (574) | 4,374,585 |
Loss on Available for Sale Securities | 0 | (1,770,000) | 0 | (1,770,000) |
Gain Loss on Extinguishment of Debt | 9,236 | 47,897 | 9,236 | 143,344 |
Total Other Expense | (369,749) | (1,972,448) | (738,933) | 2,317,204 |
Loss Before Income Taxes | (2,158,238) | (4,667,424) | (4,366,717) | (834,708) |
Income Tax Expense | 0 | 0 | 0 | 0 |
NET LOSS | (2,158,238) | (4,667,424) | (4,366,717) | (834,708) |
Preferred Stock Accretion and Dividends | (45,620) | (16,789) | (87,858) | (19,427) |
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS | $ (2,203,858) | $ (4,684,213) | $ (4,454,575) | $ (854,135) |
Basic and Diluted Loss Per Share of Common Stock | $ (0.02) | $ (0.05) | $ (0.04) | $ (0.01) |
Weighted Average Number of Shares Outstanding | 104,726,332 | 98,587,644 | 104,045,562 | 97,041,083 |
Other Comprehensive Income, net of tax | ||||
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS | $ (2,203,858) | $ (4,684,213) | $ (4,454,575) | $ (854,135) |
Unrealized loss on AFS Securities | (39,000) | 0 | (15,600) | 0 |
COMPREHENSIVE LOSS | $ (1,788,489) | $ (2,694,976) | $ (3,627,784) | $ (3,151,912) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
OPERATING ACTIVITIES | ||
Net Income (Loss) | $ (4,366,717) | $ (834,708) |
Adjustments to reconcile net loss to cash from operating activities: | ||
Depreciation and amortization | 85,554 | 35,001 |
Share-based compensation - Common Stock | 218,538 | 158,537 |
Share-based compensation - warrants and options | 23,976 | 0 |
Share-based compensation - warrants | 13,204 | 452,960 |
Common stock issued for services and rent | 18,897 | 208,959 |
Common stock issued for preferred dividends | 0 | 11,981 |
Common stock issued to extend the maturity dates on debt | 120,000 | 0 |
Closing fees | 0 | 15,000 |
Amortization of debt discount and issuance costs | 152,513 | 22,527 |
(Gain)/Loss on extinguishment of debt | (9,236) | (143,344) |
Gain (loss) remeasurement of derivative | 574 | (4,374,585) |
Loss on Available for Sale Securities | 0 | 1,770,000 |
Licensing Revenue from the issuance of AFS Securities | 0 | (1,800,000) |
Changes in Operating Assets and Liabilities: | ||
Accounts receivable | (5,809) | (3,515) |
Inventory | (330,077) | 0 |
Other assets | 1,086,909 | 1,675,938 |
Accounts payable and accrued expenses | 19,068 | 320,304 |
Accrued interest | 437,950 | (7,564) |
Deferred revenue | 22,458 | 301,805 |
Accrued consulting services - related party | 18,505 | 1,891 |
Net Cash Used in Operating Activities | (2,493,693) | (2,188,813) |
INVESTING ACTIVITIES | ||
Purchase of property and equipment | (96,029) | (24,825) |
Purchase of intangible assets | (31,800) | 0 |
Net Cash Used in Investing Activities | (127,829) | (24,825) |
FINANCING ACTIVITIES | ||
Offering costs for Common shares sold | 0 | (104,910) |
Common Stock issued for cash, conversion of options/warrants | 906,224 | 0 |
A-1 Preferred Stock issued for cash | 373,541 | 439,000 |
Proceeds from convertible notes payable - related party | 17,500 | 0 |
Repayments of convertible notes payable - related party | (12,500) | 0 |
Proceeds from convertible notes payable | 1,160,000 | 585,000 |
Repayments of convertible notes payable | (15,000) | (17,500) |
Lease Payable | 21,552 | (19,978) |
Net Cash Provided by Financing Activities | 2,451,317 | 881,612 |
NET INCREASE (DECREASE) IN CASH | (170,205) | (1,332,026) |
CASH AT BEGINNING OF PERIOD | 394,325 | 2,185,702 |
CASH AT END OF PERIOD | 224,120 | 853,676 |
CASH PAID FOR: | ||
Interest | 0 | 0 |
NON CASH FINANCING ACTIVITIES: | ||
Conversion of Notes and Interest into common stock | 580,238 | 783,606 |
Conversion of preferred stock for common stock | 0 | 50 |
Beneficial conversion feature | 30,519 | 0 |
Original Issue Discount | 0 | 100,000 |
Initial Derivative Liability | 72,858 | 0 |
Conversion of Derivative Liability | 73,432 | 8,443,357 |
MTM on AFS securities | 15,600 | 0 |
Common Stock issued as incentive with convertible debt | 33,349 | 0 |
Common stock issued for prepaid expenses | 808,274 | 0 |
Finder's Fee | $ 0 | $ 35,000 |
1. CONDENSED FINANCIAL STATEMEN
1. CONDENSED FINANCIAL STATEMENTS | 6 Months Ended |
Dec. 31, 2016 | |
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, 2016, 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, 2016 audited financial statements. The results of operations for the periods ended December 31, 2016 and 2015 are not necessarily indicative of the operating results for the full years. |
2. GOING CONCERN
2. GOING CONCERN | 6 Months Ended |
Dec. 31, 2016 | |
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 $68,151,909, negative working capital of $6,433,960, 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 ProMaster 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) more widely commercializing the AfterMaster and ProMaster products, and (d) 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, 2016 | |
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 Our available for securities are considered Level 1. Realized gains and losses on these securities are included in “Other income (expense) – net” in the consolidated statements of income using the specific identification method. Unrealized gains and losses, on available-for-sale securities are recorded in accumulated other comprehensive income (accumulated OCI). Unrealized losses that are considered other than temporary are recorded in other income (expense) – net, with the corresponding reduction to the carrying basis of the investment. Our short-term investments are recorded at amortized cost, and the respective carrying amounts approximate fair values. Our available for securities maturing within one year are recorded in “Other current assets,” on the balance sheets. Accounts Receivables Accounts 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 accounts 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, 2016 is approximately $6,676,757. 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. Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses. 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, the Company used this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to July 5, 2016 until the note was converted on the same day were derivative liabilities. The Company again used this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to August 19, 2016 until the note was converted on August 22, 2016 were 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, 2016 and 2015 due to net operating losses for which there is no benefit currently available. At December 31, 2016, 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. Revenue Recognition The Company applies the provisions of FASB ASC 605, Revenue Recognition in Financial Statements 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 three and six months ended December 31, 2016 and 2015 of $45,620 and $16,789 and $87,858 and $19,427, 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 six months ended December 31, 2016 and 2015, 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 26,336,572 and 13,658,151 at December 31, 2016 and 2015, respectively. 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, 2016 | |
Securities Available-for-sale Tables | |
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, 2016 Amortized cost Gross unrealized gains Gross unrealized losses Gross realized gains Gross realized losses Fair value Equity securities $ 63,600 $ - $ (15,600) $ - $ - $ 48,000 June 30, 2016 Amortized cost Gross unrealized gain Gross unrealized losses Gross realized gains Gross realized losses Fair value Equity securities $ 1,800,000 33,600 $ - $ - $ (1,770,000 ) $ 63,600 |
5. NOTES PAYABLE
5. NOTES PAYABLE | 6 Months Ended |
Dec. 31, 2016 | |
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, 2016 and June 30, 2016, respectively: December 31, June 30, 2016 2016 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, 2016 and June 30, 2016. $ 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 February 15, 2016 to March 16, 2016. The Company evaluated amendment under ASC 470-50, “ Debt - Modification and Extinguishment” Convertible Notes Payable - Non-Related Parties Convertible notes payable due to non-related parties consisted of the following as of December 31, 2016 and June 30, 2016, respectively: Convertible Notes Payable - Non-Related Parties December 31, June 30, 2016 2016 $15,000 face value, issued in October 2011, interest rate of 10% and a default rate of 15%, matures in June 2012, net of unamortized discount of $0 as of December 31, 2016 and June 30, 2016, respectively. The note is currently in default. $ 15,000 $ 15,000 $50,000 face value of which $50,000 was converted. - 50,000 $20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $0 as of December 31, 2016 and June 30, 2016, respectively. The note is currently in default. 20,000 20,000 $7,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $0 as of December 31, 2016 and June 30, 2016, respectively. The note is currently in default. 7,000 7,000 $100,000 face value, issued in October 2015, interest rate of 6%, matures February 2017. 100,000 100,000 $600,000 face value, issued in November 2015, interest rate of 0%, an OID of $100,000, matures Jan 2017, net unamortized discount of $0 of December 31, 2016 and June 30, 2016, respectively. 600,000 600,000 $100,000 face value, issued in February 2016, interest rate of 10%, matures February 2017, net unamortized discount of $438 and $2,993 as of December 31, 2016 and June 30, 2016, respectively. 99,562 97,007 $15,000 face value, issued in February 2016, interest rate of 10%, matures February 2017, net unamortized discount of $65 and $462 as of December 31, 2016 and June 30, 2016, respectively. 14,935 14,538 $25,000 face value, issued in February 2016, interest rate of 10%, matures February 2017, net unamortized discount of $110 and $3,354 as of December 31, 2016 and June 30, 2016, respectively. 24,890 21,646 $10,000 face value, issued in February 2016, interest rate of 10%, matures February 2017, net unamortized discount of $147 and $1,382 as of December 31, 2016 and June 30, 2016, respectively. 9,853 8,618 $100,000 face value, issued in March 2016, interest rate of 10%, matures March 2017, net unamortized discount of $5,214 and $13,765 as of December 31, 2016 and June 30, 2016, respectively. 94,786 86,235 $10,000 face value, issued in March 2016, interest rate of 10%, matures March 2017, net unamortized discount of $521 and $462 and $326 as of December 31, 2016 and June 30, 2016, respectively. 9,479 9,674 $50,000 face value, issued in July 2016, interest rate of 0%, matures January 2017, a gain on extinguishment of debt was recorded totaling $5,418 net unamortized discount of $0 as of December 31, 2016. 44,582 - $30,000 face value, issued in August 2016, interest rate of 0%, matures January 2017, net unamortized discount of $0 as of December 31, 2016. 15,000 - $50,000 face value, issued in August 2016, interest rate of 0%, matures August 2017. 50,000 - $30,000 face value, issued in August 2016, interest rate of 0%, matures January 2017, a gain on extinguishment of debt was recorded totalling$3,818 net unamortized discount of $0 as of December 31, 2016. The note is currently in default. 26,182 - $1,000,000 face value, issued in September 2016, interest rate of 10%, matures December 2016, net unamortized discount of $0 as of December 31, 2016. 1,000,000 - Total convertible notes payable – non-related parties 2,131,269 1,029,718 Less current portion 2,131,269 1,029,718 Convertible notes payable – non-related parties, long-term $ - $ - 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 interest rate of 6% per annum and is convertible into shares of the Company’s Common stock at $0.50 per share. The note was amended on May 23, 2016 to extend the maturity date to July 23, 2016 and amended again on November 15, 2016 to extend the maturity date to January 31, 2017. The Company evaluated amendment under ASC 470-50, “ Debt - Modification and Extinguishment” On July 26, 2016, the Company issued a convertible note to an unrelated individual for $50,000 that matures on September 26, 2016. The note bears interest rate of 0% per annum and is convertible into shares of the Company’s Common stock at $0.40 per share, as part of the note the company issued options to purchase 35,000 shares of 144 restricted common stock at an exercise price $0.50 for a two-year period. The note was amended on November 21, 2016 to extend the maturity date to January 31, 2017. The Company evaluated amendment under ASC 470-50, “ Debt - Modification and Extinguishment” On August 08, 2016, the Company issued a convertible note to an unrelated individual for $30,000 that matures on October 08, 2016. The note bears interest rate of 0% per annum and is convertible into shares of the Company’s Common stock at $0.40 per share, as part of the note the company issued options to purchase 21,000 shares of 144 restricted common stock at an exercise price $0.50 for a two-year period. The note was amended on November 21, 2016 to extend the maturity date to January 31, 2017. The Company evaluated amendment under ASC 470-50, “ Debt - Modification and Extinguishment” On August 11, 2016, the Company issued a convertible note to an unrelated individual for $30,000 that matures on October 11, 2016. The note bears interest rate of 0% per annum and is convertible into shares of the Company’s Common stock at $0.40 per share, as part of the note the company issued options to purchase 21,000 shares of 144 restricted common stock at an exercise price $0.50 for a two-year period. The Company paid $15,000 of principal. The note was amended on November 15, 2016 to extend the maturity date to January 31, 2017. The Company evaluated amendment under ASC 470-50, “ Debt - Modification and Extinguishment” On August 26, 2016, the Company issued a convertible note to an unrelated individual for $50,000 that matures on August 26, 2017. The note bears interest rate of 10% per annum and is convertible into shares of the Company’s Common stock at $0.40 per share. On September 1, 2016, an unrelated individual converted a convertible note entered into on August 21, 2012, with a principal balance of $50,000 and $21,164 in accrued interest at a rate of $0.25 per share of the Company’s Common stock for 280,650 shares. On September 27, 2016, the Company issued a convertible note to an unrelated individual for $1,000,000 that matures on December 22, 2016. The note was amended subsequently in February 2, 2017 to extend the maturity date to February 2, 2020. The fund will be used for the manufacturing of the companies AfterMaster Pro TV box. The note bears interest rate of 10% per annum and is convertible into shares of the Company’s Common stock at $0.40, per share, as part of the note the company issued 100,000 shares of 144 restricted common stock for a value of $33,349. Notes Payable – Related Parties Notes payable due to related parties consisted of the following as of December 31, 2016 and June 30, 2016, respectively: December 31, June 30, 2016 2016 Various term notes with total face value of $627,500, of which, $610,000 was issued from April 2011 to January 2014 with a maturity date of June 2015, and $17,500 issued in November 2016 payable on demand, interest rates range from 0% to 15%, net of unamortized discount of $0 as of December 31, 2016 and June 30, 2016, respectively, of which $47,500 has been paid. The notes issued from April 2011 to January 2014 are currently in default. $ 580,000 $ 575,000 Total notes payable – related parties 580,000 575,000 Less current portion 580,000 575,000 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, 2016 and June 30, 2016, respectively: December 31, June 30, 2016 2016 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, 2016 | |
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 2,735,000 290,668 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 3,259,044 $ 774,767 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, 2016 the Company issued 550,000 shares of Series A-1 Preferred Stock for $550,000 in cash and paid $176,459 in cash offering costs During the fiscal years ended June 30, 2016 the Company issued 1,669,000 shares of Series A-1 Preferred Stock for $1,382,390 in cash, net of $286,610 of issuance costs, respectively. The Company had two conversions of 100,000 shares of Series A-1 Preferred Stock for 200,000 shares of Common Stock, and issued 59,326 shares of Common Stock of payment of $26,769 in accrued dividends. During the six months ended December 31, 2016 and 2015, the outstanding Preferred Stock accumulated $45,620 and $16,789 in dividends on outstanding Preferred Stock. The cumulative dividends in arrears as of December 31, 2016 were approximately $810,451. |
7. COMMON STOCK
7. COMMON STOCK | 6 Months Ended |
Dec. 31, 2016 | |
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 108,854,548 and 102,133,344 were issued outstanding as of December 31, 2016 and June 30, 2016, 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, 2016 The Company issued 848,755 shares of Common Stock for the conversion of notes and accrued interest valued at $190,164. The Company also issued 100,000 shares of Common Stock as incentive to notes valued at $33,349 and recorded $30,519 in beneficial conversion features related to new issuances of debt. The Company issued 1,149,860 shares of Common Stock as payment for services and rent valued at $451,130. The Company issued 3,020,750 shares of Common Stock for the conversion warrants valued at $906,225. As share-based compensation to employees and non-employees, the Company issued 575,951 shares of common stock valued at $218,538, based on the market price of the stock on the date of issuance. As interest expense on outstanding notes payable, the Company issued 1,025,888, shares of common stock valued at $390,073 based on the market price on the date of issuance. Fiscal Year Ended June 30, 2016 The Company issued 2,667,919 shares of Common Stock for the conversion of notes and accrued interest valued at $446,757. The Company also issued 200,000 shares of Common Stock for the conversion of 100,000 . The Company also issued 886,098 shares of Common Stock for the conversion warrants valued at $175,914. The Company also issued 26,000 shares of Common Stock as incentive to notes valued at $10,284 and recorded $22,375 in beneficial conversion features related to new issuances of debt. The Company issued 496,137 shares of Common Stock as payment for services and rent valued at $225,413. As share-based compensation to employees and non-employees, the Company issued 812,804 shares of common stock valued at $364,851, based on the market price of the stock on the date of issuance. As interest expense on outstanding notes payable, the Company issued 1,704,803 shares of common stock valued at $762,076 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, 2016 | |
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, 2016 and fiscal year ended June 30, 2016, 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, 2016. Date Issued Number of Options Weighted Average Exercise Price Weighted Average Grant Date Fair Value Expiration Date (yrs) Value if Exercised Balance June 30, 2016 25,000 $ 0.15 $ 0.24 2.00 $ 3,750 Granted - - - - - Exercised - - - - - Cancelled/Expired - - - - - Outstanding as of December 31, 2016 25,000 $ 0.15 $ 0.24 1.50 $ 3,750 The following table summarizes the changes in options outstanding of the Company during the fiscal year ended June 30, 2016. 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 (55,000 ) 0.89 - - (49,150 ) Outstanding as of June 30, 2016 25,000 $ 0.15 $ 0.24 2.00 $ 3,750 Stock Purchase Warrants During the six months ended December 31, 2016, the Company issued warrants to purchase a total of . The Company issued 77,000 warrants in conjunction with three promissory notes executed in July 2016 and August 2016. The Company also issued. 1,100,000 warrants as part of a private placement. The Company modified and exercised 3,020,750 warrants and recorded 10,797 in prepaid expenses and $13,204 in interest expenses and received $906,225 in cash. 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, 2016, the Company issued warrants to purchase a total of . The Company issued 100,000 warrants in conjunction to an employment agreement entered into in July 2015 and 1,244,000 warrants in conjunction with a consulting agreement entered into December 2015 to June 2016. The Company issued 75,000 warrants in conjunction with a promissory note executed in October 2015. The Company issued 50,000 warrants as part of a commission’s agreement, 175,000 warrants as part of four advisory agreements. The Company also issued 3,338,000 warrants as part of a private placement and 190,000 warrants as part a finder’s fee agreement. 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, 2016 June 30, 2016 Expected volatility 98-104% 106-114% Expected dividends 0% 0% Expected term 3 Years 2-5 Years Risk-free interest rate 0.76-0.92% 0.71-1.01% 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, 2016. Number of Warrants Weighted Average Exercise Price Weighted Average Grant Date Fair Value Expiration Date (yrs) Value if Exercised Outstanding as of June 30, 2016 35,034,550 $ 0.36 $ 0.45 4.31 $ 12,767,108 Granted 2,639,000 0.43 0.34 2.02 706,433 Exercised (3,020,750 ) - - - - Cancelled/Expired (1,695,199 ) 0.34 - - (1,698,921 ) Outstanding as of December 31, 2016 32,957,601 $ 0.36 $ 0.62 4.15 $ 11,774,620 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, 2016. 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 31,981,778 $ 0.43 $ 0.50 4.98 $ 13,585,289 Granted 5,172,000 0.45 0.33 3.52 2,316,000 Exercised (813,360 ) - - - (630,364 ) Cancelled/Expired (1,175,868 ) 0.53 - - (2,513,817 ) Outstanding as of June 30, 2016 35,034,550 $ 0.36 $ 0.45 4.31 $ 12,767,108 |
9. FINANCIAL INSTRUMENTS
9. FINANCIAL INSTRUMENTS | 6 Months Ended |
Dec. 31, 2016 | |
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, 2016 and 2015. The fair values of the derivative instruments are measured each quarter, which resulted in a gain (loss) of $(574) and $4,374,585, and derivative expense of $0 and $0 during the six months ended December 31, 2016 and 2015, respectively. As of December 31, 2016 and June 30, 2016, the fair market value of the derivatives aggregated $0 and $0, respectively, using the following assumptions: estimated 3-0 year term, estimated volatility of 104.34 -71.93%, and a discount rate of 0.88-0.24%. |
10. FAIR VALUE MEASUREMENTS
10. FAIR VALUE MEASUREMENTS | 6 Months Ended |
Dec. 31, 2016 | |
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, 2016, are summarized as follows: Level 1 Level 2 Level 3 Total Fair value of derivatives $ - $ - $ - $ - Securities available-for-sale $ 48,000 $ - $ - $ 48,000 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 $ - $ - $ - $ - Securities available-for-sale $ 63,600 $ - $ - $ 63,600 |
11. COMMITMENTS AND CONTINGENCI
11. COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Dec. 31, 2016 | |
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 (located at 6671 Sunset Blvd., Suite 1520, 1518 and 1550, Hollywood, California, 90028) for corporate, research, engineering and mastering services. The lease expires on December 31, 2017. The total lease expense for the facility is approximately $15,375 per month, and the total remaining obligations under these leases at December 31, 2016, were approximately $226,769 We lease a warehouse space located at 8260 E Gelding Drive, Suite 102, Scottsdale, Arizona, 85260. The lease expires on February 28, 2019. The total lease expense for the facility is approximately $1,821 per month, and the total remaining obligations under these leases at December 31, 2016 were approximately $56,685 We lease corporate offices located at 7825 E Gelding Drive, Suite 101, Scottsdale, Arizona, 85260. The lease expires on April 30, 2021. The total lease expense for the facility is approximately $7,148 per month, and the total remaining obligations under these leases at December 31, 2016 were approximately $437,455 Below is a table summarizing the annual operating lease obligations over the next 5 years: Year Lease Payments 2017 142,992 2018 208,117 2019 108,068 2020 94,547 2021 97,315 Total $ 651,039 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, 2016 were approximately $810,451. As of the date of this filing, the Company has not filed its tax return for the fiscal year ended 2015 and 2016. |
12. SUBSEQUENT EVENTS
12. SUBSEQUENT EVENTS | 6 Months Ended |
Dec. 31, 2016 | |
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: 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. The Company extended the maturity date for the sixth time by issuing additional $30,000 convertible notes on January 1, 2017 to February 15, 2017 the company saying they are not derivatives until it becomes convertible on the original note, however the $30,000 addition for the extension is to be considered derivatives. St. George released a clarification of amendments to convertible promissory notes that explained the $30,000 extension fees are the only portion that is to be considered as convertible and converts within 2 days of issuance. The intent of the amendment agreements were to insure the original note dated November 20, 2015 in the amount of $600,000 remain current and is not convertible until the borrower defaulted under the amendment agreement dated January 1, 2017. Due to the conversion into 145,929 shares of common stock on January 1, 2017 (extension date) and January 3, 2017 (conversion date) sequencing is required on other instruments. Because the terms do not dictate a maximum numbers of convertible shares, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability Under ASC 815-40.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. During the extension and conversion day period no additional convertible instruments were issued, therefore on the extension was considered in the derivative calculation. On February 2, 2017, the Company amended the convertible note dated September 27, 2016 for $1,000,000 to extend the maturity date to February 2, 2020 and issued 20,000 warrants valued at $31,822. The Company evaluated amendment under ASC 470-50, “ Debt - Modification and Extinguishment” On February 3, 2017, the Company issued a convertible note to an unrelated company for $258,000 that matures on August 3, 2017. The note bears 12% interest per annum and is convertible into shares of the Company’s common stock at 57.5% of the lowest price of the Company’s Common Stock during the thirty (30) trading days immediately prior to the conversion date. Additionally, the note contains a ratchet provision. he Company determined under ASC 815, that the embedded conversion feature (if offering of common stock is at no consideration or at a price that is lower than the effective conversion price on the date shares are offered for sale, then a ratchet down of effective exercise price to price per share offered for common stock would be used to determine additional shares to be issued). The Company has determined that this ratchet provision indicates that these shares, if issued, are not indexed to the Company’s own stock and, therefore, is an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value. In conjunction with the note, the Company issued to the holder 550,000 shares of restricted Common Stock. The value of the BCF recorded was $163,749 and the debt discount related to the attached relative fair value of the restricted Common Stock was $94,251, for a total debt discount of $258,000, and a derivative expense of $65,750. |
3. SUMMARY OF SIGNIFICANT ACC18
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Dec. 31, 2016 | |
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 | Our available for securities are considered Level 1. Realized gains and losses on these securities are included in “Other income (expense) – net” in the consolidated statements of income using the specific identification method. Unrealized gains and losses, on available-for-sale securities are recorded in accumulated other comprehensive income (accumulated OCI). Unrealized losses that are considered other than temporary are recorded in other income (expense) – net, with the corresponding reduction to the carrying basis of the investment. Our short-term investments are recorded at amortized cost, and the respective carrying amounts approximate fair values. Our available for securities maturing within one year are recorded in “Other current assets,” on the balance sheets. |
Notes and Other Receivables | Accounts 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 accounts 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, 2016 is approximately $6,676,757. 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. |
Reclassifications | Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses. |
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, the Company used this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to July 5, 2016 until the note was converted on the same day were derivative liabilities. The Company again used this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to August 19, 2016 until the note was converted on August 22, 2016 were 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, 2016 and 2015 due to net operating losses for which there is no benefit currently available. At December 31, 2016, 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. |
Revenue Recognition | The Company applies the provisions of FASB ASC 605, Revenue Recognition in Financial Statements |
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 three and six months ended December 31, 2016 and 2015 of $45,620 and $16,789 and $87,858 and $19,427, 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 six months ended December 31, 2016 and 2015, 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 26,336,572 and 13,658,151 at December 31, 2016 and 2015, respectively. |
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, 2016 | |
Securities Available-for-sale Tables | |
Securities Available-for-Sale | December 31, 2016 Amortized cost Gross unrealized gains Gross unrealized losses Gross realized gains Gross realized losses Fair value Equity securities $ 63,600 $ - $ (15,600) $ - $ - $ 48,000 June 30, 2016 Amortized cost Gross unrealized gain Gross unrealized losses Gross realized gains Gross realized losses Fair value Equity securities $ 1,800,000 33,600 $ - $ - $ (1,770,000 ) $ 63,600 |
5. NOTES PAYABLE (Tables)
5. NOTES PAYABLE (Tables) | 6 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes Payable-Related Parties | Convertible Notes Payable – Related Parties December 31, June 30, 2016 2016 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, 2016 and June 30, 2016. $ 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, 2016 2016 $15,000 face value, issued in October 2011, interest rate of 10% and a default rate of 15%, matures in June 2012, net of unamortized discount of $0 as of December 31, 2016 and June 30, 2016, respectively. The note is currently in default. $ 15,000 $ 15,000 $50,000 face value of which $50,000 was converted. - 50,000 $20,000 face value, issued in June 2014, interest rate of 6%, matures December 2014, net unamortized discount of $0 as of December 31, 2016 and June 30, 2016, respectively. The note is currently in default. 20,000 20,000 $7,000 face value, issued in July 2014, interest rate of 6%, matures October 2014, net unamortized discount of $0 as of December 31, 2016 and June 30, 2016, respectively. The note is currently in default. 7,000 7,000 $100,000 face value, issued in October 2015, interest rate of 6%, matures February 2017. 100,000 100,000 $600,000 face value, issued in November 2015, interest rate of 0%, an OID of $100,000, matures Jan 2017, net unamortized discount of $0 of December 31, 2016 and June 30, 2016, respectively. 600,000 600,000 $100,000 face value, issued in February 2016, interest rate of 10%, matures February 2017, net unamortized discount of $438 and $2,993 as of December 31, 2016 and June 30, 2016, respectively. 99,562 97,007 $15,000 face value, issued in February 2016, interest rate of 10%, matures February 2017, net unamortized discount of $65 and $462 as of December 31, 2016 and June 30, 2016, respectively. 14,935 14,538 $25,000 face value, issued in February 2016, interest rate of 10%, matures February 2017, net unamortized discount of $110 and $3,354 as of December 31, 2016 and June 30, 2016, respectively. 24,890 21,646 $10,000 face value, issued in February 2016, interest rate of 10%, matures February 2017, net unamortized discount of $147 and $1,382 as of December 31, 2016 and June 30, 2016, respectively. 9,853 8,618 $100,000 face value, issued in March 2016, interest rate of 10%, matures March 2017, net unamortized discount of $5,214 and $13,765 as of December 31, 2016 and June 30, 2016, respectively. 94,786 86,235 $10,000 face value, issued in March 2016, interest rate of 10%, matures March 2017, net unamortized discount of $521 and $462 and $326 as of December 31, 2016 and June 30, 2016, respectively. 9,479 9,674 $50,000 face value, issued in July 2016, interest rate of 0%, matures January 2017, a gain on extinguishment of debt was recorded totaling $5,418 net unamortized discount of $0 as of December 31, 2016. 44,582 - $30,000 face value, issued in August 2016, interest rate of 0%, matures January 2017, net unamortized discount of $0 as of December 31, 2016. 15,000 - $50,000 face value, issued in August 2016, interest rate of 0%, matures August 2017. 50,000 - $30,000 face value, issued in August 2016, interest rate of 0%, matures January 2017, a gain on extinguishment of debt was recorded totalling$3,818 net unamortized discount of $0 as of December 31, 2016. The note is currently in default. 26,182 - $1,000,000 face value, issued in September 2016, interest rate of 10%, matures December 2016, net unamortized discount of $0 as of December 31, 2016. 1,000,000 - Total convertible notes payable – non-related parties 2,131,269 1,029,718 Less current portion 2,131,269 1,029,718 Convertible notes payable – non-related parties, long-term $ - $ - |
Schedule of Non-Convertible Notes Payable-Related Parties | Notes Payable – Related Parties December 31, June 30, 2016 2016 Various term notes with total face value of $627,500, of which, $610,000 was issued from April 2011 to January 2014 with a maturity date of June 2015, and $17,500 issued in November 2016 payable on demand, interest rates range from 0% to 15%, net of unamortized discount of $0 as of December 31, 2016 and June 30, 2016, respectively, of which $47,500 has been paid. The notes issued from April 2011 to January 2014 are currently in default. $ 580,000 $ 575,000 Total notes payable – related parties 580,000 575,000 Less current portion 580,000 575,000 Notes payable - related parties, long term $ - $ - |
Schedule of Non-Convertible Notes Payable-Non-Related Parties | Notes Payable – Non-Related Parties December 31, June 30, 2016 2016 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, 2016 | |
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 2,735,000 290,668 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 3,259,044 $ 774,767 |
8. STOCK PURCHASE OPTIONS AND22
8. STOCK PURCHASE OPTIONS AND WARRANTS (Tables) | 6 Months Ended |
Dec. 31, 2016 | |
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, 2016 25,000 $ 0.15 $ 0.24 2.00 $ 3,750 Granted - - - - - Exercised - - - - - Cancelled/Expired - - - - - Outstanding as of December 31, 2016 25,000 $ 0.15 $ 0.24 1.50 $ 3,750 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 (55,000 ) 0.89 - - (49,150 ) Outstanding as of June 30, 2016 25,000 $ 0.15 $ 0.24 2.00 $ 3,750 |
Schedule of Assumptions Used to Estimate Fair Value | December 31, 2016 June 30, 2016 Expected volatility 98-104% 106-114% Expected dividends 0% 0% Expected term 3 Years 2-5 Years Risk-free interest rate 0.76-0.92% 0.71-1.01% |
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, 2016 35,034,550 $ 0.36 $ 0.45 4.31 $ 12,767,108 Granted 2,639,000 0.43 0.34 2.02 706,433 Exercised (3,020,750 ) - - - - Cancelled/Expired (1,695,199 ) 0.34 - - (1,698,921 ) Outstanding as of December 31, 2016 32,957,601 $ 0.36 $ 0.62 4.15 $ 11,774,620 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 31,981,778 $ 0.43 $ 0.50 4.98 $ 13,585,289 Granted 5,172,000 0.45 0.33 3.52 2,316,000 Exercised (813,360 ) - - - (630,364 ) Cancelled/Expired (1,175,868 ) 0.53 - - (2,513,817 ) Outstanding as of June 30, 2016 35,034,550 $ 0.36 $ 0.45 4.31 $ 12,767,108 |
10. FAIR VALUE MEASUREMENTS (Ta
10. FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Dec. 31, 2016 | |
Fair Value Measurements Tables | |
Schedule or fair value measurements | Level 1 Level 2 Level 3 Total Fair value of derivatives $ - $ - $ - $ - Securities available-for-sale $ 48,000 $ - $ - $ 48,000 Level 1 Level 2 Level 3 Total Fair value of derivatives $ - $ - $ - $ - Securities available-for-sale $ 63,600 $ - $ - $ 63,600 |
11. COMMITMENTS AND CONTINGEN24
11. COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Annual operating lease obligations | Year Lease Payments 2017 142,992 2018 208,117 2019 108,068 2020 94,547 2021 97,315 Total $ 651,039 |
3. SUMMARY OF SIGNIFICANT ACC25
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | Dec. 31, 2016USD ($) |
Summary Of Significant Accounting Policies Details Narrative | |
Fair value of notes payable | $ 6,676,757 |
4. SECURITIES AVAILABLE-FOR-S26
4. SECURITIES AVAILABLE-FOR-SALE (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
Fair value | $ 0 | $ 63,600 |
Securities Available-for-sale | ||
Amortized cost | 63,600 | 1,800,000 |
Gross unrealized gains | 0 | 33,600 |
Gross unrealized losses | (15,600) | 0 |
Gross realized gains | 0 | 0 |
Gross realized losses | 0 | (1,770,000) |
Fair value | $ 48,000 | $ 63,600 |
5. NOTES PAYABLE (Details)
5. NOTES PAYABLE (Details) - USD ($) | Dec. 31, 2016 | Jun. 30, 2016 |
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 One [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, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Total convertible notes payable - non-related parties | $ 1,029,718 | $ 2,131,269 | |
Less current portion | $ 2,131,269 | 1,029,718 | 2,131,269 |
Convertible notes payable - non-related parties, long-term | 0 | $ 0 | |
Convertible Notes Payable One [Member] | |||
Total convertible notes payable - non-related parties | 15,000 | 15,000 | |
Convertible Notes Payable Two [Member] | |||
Total convertible notes payable - non-related parties | 0 | 50,000 | |
Convertible Notes Payable Three [Member] | |||
Total convertible notes payable - non-related parties | 20,000 | 20,000 | |
Convertible Notes Payable Four [Member] | |||
Total convertible notes payable - non-related parties | 7,000 | 7,000 | |
Convertible Notes Payable Five [Member] | |||
Total convertible notes payable - non-related parties | 100,000 | 100,000 | |
Convertible Notes Payable Six [Member] | |||
Total convertible notes payable - non-related parties | 600,000 | 600,000 | |
Convertible Notes Payable Seven [Member] | |||
Total convertible notes payable - non-related parties | 99,562 | 97,007 | |
Convertible Notes Payable Eight [Member] | |||
Total convertible notes payable - non-related parties | 14,935 | 14,538 | |
Convertible Notes Payable Nine [Member] | |||
Total convertible notes payable - non-related parties | 24,890 | 21,646 | |
Convertible Notes Payable Ten [Member] | |||
Total convertible notes payable - non-related parties | 9,853 | 8,618 | |
Convertible Notes Payable Eleven [Member] | |||
Total convertible notes payable - non-related parties | 94,786 | 86,235 | |
Convertible Notes Payable Twelve [Member] | |||
Total convertible notes payable - non-related parties | 9,479 | 9,674 | |
Convertible Notes Payable Thirteen [Member] | |||
Total convertible notes payable - non-related parties | 44,582 | 0 | |
Convertible Notes Payable Fourteen [Member] | |||
Total convertible notes payable - non-related parties | 15,000 | 0 | |
Convertible Notes Payable Fifteen [Member] | |||
Total convertible notes payable - non-related parties | 50,000 | 0 | |
Convertible Notes Payable Sixteen [Member] | |||
Total convertible notes payable - non-related parties | 26,182 | 0 | |
Convertible Notes Payable Seventeen [Member] | |||
Total convertible notes payable - non-related parties | $ 1,000,000 | $ 0 |
5. NOTES PAYABLE (Details 2)
5. NOTES PAYABLE (Details 2) - USD ($) | Dec. 31, 2016 | Jun. 30, 2016 |
Notes payable - related parties | $ 580,000 | $ 575,000 |
Less current portion | 580,000 | 575,000 |
Notes payable - related parties, long term | 0 | 0 |
Convertible Notes Payable One [Member] | ||
Notes payable - related parties | $ 580,000 | $ 575,000 |
5. NOTES PAYABLE (Details 3)
5. NOTES PAYABLE (Details 3) - USD ($) | Dec. 31, 2016 | Jun. 30, 2016 |
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, 2016shares |
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 | 2,735,000 |
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 | 3,259,044 |
Liquidation Preference | |
Series A Convertible Preferred | 0 |
Series A-1 Convertible Preferred | 290,668 |
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 | 774,767 |
6. CONVERTIBLE PREFERRED STOC32
6. CONVERTIBLE PREFERRED STOCK (Details Narrative) - USD ($) | 6 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Equity [Abstract] | ||
Dividends on preferred stock | $ 45,620 | $ 16,789 |
Dividends in arrears | $ 810,541 |
7. COMMON STOCK (Details Narrat
7. COMMON STOCK (Details Narrative) - USD ($) | 6 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | |
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 | 108,854,548 | 102,133,344 | |
Common stock, outstanding shares | 108,854,548 | 102,133,344 | |
Common stock issued for convertible note, shares | 100,000 | ||
Common stock issued for convertible note, value | $ 33,349 | ||
Beneficial conversion feature | $ 30,519 | ||
Share based compensation to employees and non-employees, shares issued | 575,951 | 812,804 | |
Share based compensation to employees and non-employees, value of shares issued | $ 218,538 | $ 364,581 | |
Shares issued for interest expense on outstanding notes payable | 1,025,888 | 1,704,803 | |
Value of shares issued for interest expense on outstanding notes payable | $ 390,073 | $ 762,076 | |
Common stock issued for services and rent | 1,149,860 | 496,137 | |
Common stock issued for services and rent value | $ 451,130 | $ 225,413 | |
Common Stock issued for the conversion warrants, shares | 3,020,750 | 886,098 | |
Common Stock issued for the conversion warrants, value | $ 906,225 | $ 175,914 | |
Common stock issued for conversion of notes and accrued interest, shares | 848,755 | 2,667,919 | |
Common stock issued for conversion of notes and accrued interest, value | $ 190,164 | $ 446,757 |
8. STOCK PURCHASE OPTIONS AND34
8. STOCK PURCHASE OPTIONS AND WARRANTS (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
Number of Options/Warrants Outstanding | 25,000 | 80,000 |
Number of Options/Warrants Granted | 0 | 0 |
Number of Options/Warrants Exercised | 0 | 0 |
Number of Options/Warrants Canceled/Expired | 0 | (55,000) |
Number of Options/Warrants Outstanding | 25,000 | 25,000 |
Weighted Average Exercise Price Outstanding, Beginning | $ 0.15 | $ 0.66 |
Weighted Average Exercise Price Granted | 0 | 0 |
Weighted Average Exercise Price Exercised | 0 | 0 |
Weighted Average Exercise Price Canceled/Expired | 0 | 0.89 |
Weighted Average Exercise Price Outstanding, Ending | 0.15 | 0.15 |
Weighted Average Grant Date Fair Value Outstanding beginning | 0.24 | 0.59 |
Weighted Average Grant Date Fair Value Outstanding, granted | 0 | 0 |
Weighted Average Grant Date Fair Value Outstanding, exercised | 0 | 0 |
Weighted Average Grant Date Fair Value Outstanding, cancelled | 0 | 0 |
Weighted Average Grant Date Fair Value Outstanding, ending | $ 0.24 | $ 0.24 |
Expiration Date outstanding, beginning | 2 years | 1 year 2 months 12 days |
Expiration Date, ending | 1 year 6 months | 2 years |
Value if Exercised, Beginning | $ 3,750 | $ 52,900 |
Value if Exercised, Granted | 0 | 0 |
Value if Exercised | 0 | 0 |
Value if Exercised, Cancelled/Expired | 0 | (49,150) |
Value if Exercised, Ending | $ 3,750 | $ 3,750 |
Stock Options | ||
Number of Options/Warrants Outstanding | 35,034,550 | 31,981,778 |
Number of Options/Warrants Granted | 2,639,000 | 5,172,000 |
Number of Options/Warrants Exercised | (3,020,750) | (813,360) |
Number of Options/Warrants Canceled/Expired | (1,695,199) | (175,868) |
Number of Options/Warrants Outstanding | 32,957,601 | 35,034,550 |
Weighted Average Exercise Price Outstanding, Beginning | $ 0.36 | $ 0.43 |
Weighted Average Exercise Price Granted | 0.43 | 0.45 |
Weighted Average Exercise Price Exercised | 0 | 0 |
Weighted Average Exercise Price Canceled/Expired | 0.34 | 0.53 |
Weighted Average Exercise Price Outstanding, Ending | 0.36 | 0.36 |
Weighted Average Grant Date Fair Value Outstanding beginning | 0.45 | 0.50 |
Weighted Average Grant Date Fair Value Outstanding, granted | 0.34 | 0.33 |
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 | $ 0.62 | $ 0.45 |
Expiration Date outstanding, beginning | 4 years 3 months 22 days | 4 years 11 months 23 days |
Expiration Date, granted | 2 years 7 days | 3 years 6 months 7 days |
Expiration Date, ending | 4 years 1 month 24 days | 4 years 3 months 22 days |
Value if Exercised, Beginning | $ 12,767,108 | $ 13,585,289 |
Value if Exercised, Granted | 706,443 | 2,316,000 |
Value if Exercised | 0 | (630,364) |
Value if Exercised, Cancelled/Expired | (1,698,921) | (2,513,817) |
Value if Exercised, Ending | $ 11,774,620 | $ 12,767,108 |
8. STOCK PURCHASE OPTIONS AND35
8. STOCK PURCHASE OPTIONS AND WARRANTS (Details 1) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
Stock Purchase Options And Warrants Details 1 | ||
Expected volatility, minimum | 98.00% | 106.00% |
Expected volatility, maximum | 104.00% | 114.00% |
Expected dividends | 0.00% | 0.00% |
Expected term, minimum | 3 years | 2 years |
Expected term, maximum | 5 years | |
Risk-free interest rate, minimum | 0.76% | 0.71% |
Risk-free interest rate, maximum | 0.92% | 1.01% |
8. STOCK PURCHASE OPTIONS AND36
8. STOCK PURCHASE OPTIONS AND WARRANTS (Details 2) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
Stock Purchase Options And Warrants Details 2 | ||
Number of Options/Warrants Outstanding | 25,000 | 80,000 |
Number of Warrants Granted | 0 | 0 |
Number of Warrants Exercised | 0 | 0 |
Number of Warrants Canceled/Expired | 0 | (55,000) |
Number of Options/Warrants Outstanding | 25,000 | 25,000 |
Weighted Average Exercise Price Outstanding, Beginning | $ 0.15 | $ 0.66 |
Weighted Average Exercise Price Granted | 0 | 0 |
Weighted Average Exercise Price Exercised | 0 | 0 |
Weighted Average Exercise Price Canceled/Expired | 0 | 0.89 |
Weighted Average Exercise Price Outstanding, Ending | 0.15 | 0.15 |
Weighted Average Grant Date Fair Value Outstanding beginning | 0.24 | 0.59 |
Weighted Average Grant Date Fair Value Outstanding, granted | 0 | 0 |
Weighted Average Grant Date Fair Value Outstanding, exercised | 0 | 0 |
Weighted Average Grant Date Fair Value Outstanding, cancelled | 0 | 0 |
Weighted Average Grant Date Fair Value Outstanding, ending | $ 0.24 | $ 0.24 |
Expiration Date outstanding, beginning | 2 years | 1 year 2 months 12 days |
Expiration Date, ending | 1 year 6 months | 2 years |
Value if Exercised, Beginning | $ 3,750 | $ 52,900 |
Value if Exercised, Granted | 0 | 0 |
Value if Exercised | 0 | 0 |
Value if Exercised, Cancelled | 0 | (49,150) |
Value if Exercised, Ending | $ 3,750 | $ 3,750 |
8. STOCK PURCHASE OPTIONS AND37
8. STOCK PURCHASE OPTIONS AND WARRANTS (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
Notes to Financial Statements | ||
Stock purchase options issued | 0 | |
Stock purchase options issued, value | $ 0 | |
Warrants issued | 2,639,000 | 5,172,000 |
9. FINANCIAL INSTRUMENTS (Detai
9. FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) | 6 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | |
Gain (loss) from derivative instruments | $ (574) | $ 4,374,585 | |
Fair market value of the derivatives | $ 0 | $ 0 | |
Minimum [Member] | |||
Estimated term | 0 years | ||
Estimated volatility | 71.93% | ||
Discount rate | 0.24% | ||
Maximum [Member] | |||
Estimated term | 3 years | ||
Estimated volatility | 104.34% | ||
Discount rate | 0.88% |
10. FAIR VALUE MEASUREMENTS (De
10. FAIR VALUE MEASUREMENTS (Details) - USD ($) | Dec. 31, 2016 | Jun. 30, 2016 |
Fair value of derivatives | $ 0 | $ 0 |
Securities available-for-sale | 0 | 63,600 |
Level 1 [Member] | ||
Fair value of derivatives | 0 | 0 |
Securities available-for-sale | 48,000 | 63,600 |
Level 2 [Member] | ||
Fair value of derivatives | 0 | 0 |
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, 2016USD ($) |
Commitments And Contingencies Details | |
2,017 | $ 142,992 |
2,018 | 208,117 |
2,019 | 108,068 |
2,020 | 94,547 |
2,021 | 97,315 |
Total | $ 651,039 |
11. COMMITMENTS AND CONTINGEN41
11. COMMITMENTS AND CONTINGENCIES (Details Narrative) | Dec. 31, 2016USD ($) |
Lease One | |
Remaining obligations under lease | $ 226,769 |
Lease Three | |
Remaining obligations under lease | 56,685 |
Lease Two | |
Remaining obligations under lease | $ 437,455 |