Annual report pursuant to Section 13 and 15(d)

Note 14 - Subsequent Events

Note 14 - Subsequent Events
12 Months Ended
Jun. 30, 2016
Notes to Financial Statements  
Subsequent Events [Text Block]
Management has evaluated events subsequent to June 30,
2016, through the date of this filing with the SEC for transactions and other events that may require adjustment of and/or disclosure in such financial statements.
On July 28, 2016, our Board of Directors increased the aggregate amount offered under our private placement to $4,000,000 or 100,000,000 shares of our common stock and extended the termination date to August 31, 2016.
During the period July 1, 2016 through August 31, 2016, we sold 36,875
,000 shares of common stock, at $0.04 per share, for a total purchase price of $1,475,000 to six (6) accredited investors of which $1,075,000 was received in cash and $400,000 was received via the settlement of outstanding liabilities. Esenjay, our controlling shareholder and primary credit line holder, participated in this subsequent tranche as an investor by purchasing 10,000,000 shares in exchange for the settlement of $400,000 of debt owed to Esenjay by the Company. Additionally, two (2) of the accredited investors who invested an aggregate of $200,000 are siblings of Mr. Johnson.

As a result of the additional investments under
the Offering the anti-dilution provision for warrant holders under our 2012 Private Placement was triggered (See Note 7) and as a result, the exercise price of such warrants was reduced from $0.15 to $0.14 per share. The remaining terms, including expiration dates, of all effected warrants remain unchanged.
36,875,000 shares discussed above have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. Such shares were offered and sold to the accredited investors in reliance upon exemptions from registration pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D.
On July 28, 2016
we entered into a Fourth Amendment to the Unrestricted Line of Credit with Esenjay, pursuant to which we
extended the maturity date of the Unrestricted Line of Credit to January 31, 2018.
On August 23, 2016 we offered our 2012 Warrant Holders the option to convert their 2012 Warrants for shares of our common stock at a conversion rate of 0.602 shares of common stock per warrant share (the "Warrant Exchange").  The Warrant Exchange was offered in order to eliminate the derivative liability accounting, valuation and reporting associated with the 2012 Warrant exercise price re-set provisions. As of September 26, 2016, one (1) 2012 Warrant Holder has accepted this offer and accordingly, we have converted his warrant to purchase 1,837,777 shares of common stock at an exercise price of $0.14 per share into 1,106,341 shares of common stock valued at $0.04 per share, or $44,254.  At September 26, 2016, warrants to purchase 1,069,570 shares of common stock remain available to convert into 643,881 shares of common stock.
During the period from July 1, 2016 through September 2
6, 2016 we borrowed an aggregate of $120,000 from Esenjay under our Unrestricted Line of Credit and settled $400,000 of the liability through our private placement as discussed above.  As of September 26, 2016, the amount outstanding under the Unrestricted Line of Credit was $920,000, with an aggregate of $2,580,000 available under the Unrestricted Line of Credit for future draws at Esenjay’s discretion. As of September 26, 2016, Esenjay owns approximately 64% of our issued and outstanding common stock (See Note 5).