Commitments and Contingencies

3 Months Ended

Sep. 30, 2015

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

4. COMMITMENTS AND CONTINGENCIES

COMMITMENTS

Our corporate headquarters is located at an office in Clifton, New Jersey for $4,132 per month through August 1, 2016.

The Company entered into a conditional lease for a production facility located in Passaic, New Jersey, the commencement of which is contingent upon the Company obtaining funding from investors pursuant to an economic development program within governmental guidelines. The Company paid $9,000 in November 2014 as the security deposit and the annual base lease cost approximates $30,000 per year for a period of five years with escalations each year up to almost $35,000 in year five, and is subject to final acceptance or cancelation by the Company initially to be determined on or before January 31, 2015, which has now been extended until May 31, 2015. During the three months ended September 30, 2015 the Company canceled this lease and received the deposit.

CONTINGENCIES

The Company had been in litigation with John Fife with respect to a Convertible Note originally issued on September 13, 2011 in the principal amount of $557,000. Fife sought damages on a Motion for Summary Judgment in the amount in excess of $1,300,000 attorney’s fees. On December 15, 2014 the federal district court in the North East District of Illinois found in favor of Fife on a motion for Summary Judgment. The Company has entered into a Forbearance Agreement with Fife as a result of negotiations to settle such Judgment.

The value of the forbearance obligation on September 30, 2015 is $859,618. At September 30, 2015, the derivative liability was estimated to be $483,746, and as such a total of $1,343,364 liabilities have been recorded in the financial statements to reflect this obligation, $408,560 included in current liabilities and $939,804 in non-current liabilities. The value of the judgment totaled approximately $1.38 million as of September 30, 2015 and bears a punitive interest rate of 16%, and would become payable in full if the Company defaults under the forbearance obligation. The Forbearance agreement requires the Company to place, and the Company has done so, 1,000,000,000 shares in reserve with its transfer agent, to satisfy the conversion provisions for any unpaid monthly cash payments.

The terms of the agreement, as amended, provide for interest to accrue on the unpaid portion at 9% per annum with monthly payments in cash or conversions into common stock of the Company; commencing with an initial $15,000 payment due on February 15, 2015, and thereafter and on or before the 15^th day of each month thereafter the Company agrees to pay to Holder the following amounts ; $30,000.00 per month on each of the following dates: March 15, 2015, April 15, 2015, May 15, 2015, June 15, 2015, and July 15, 2015; $15,000.00 per month on each of the following dates: August 15, 2015 and September 15, 2015; $20,000.00 per month on each of the following dates: October 15, 2015, November 15, 2015, and December 15, 2015; $35,000.00 per month on each of the following dates: January 15, 2016 and February 15, 2016 and March 15, 2016; and $50,000.00 per month thereafter until the Forbearance Amount has been paid in full. The Company has been able to meet its monthly payment obligations through September, 2015.

The Company has not issued any stock for conversions since entering into the forbearance agreement and during the year ended June 30, 2015 the Company repaid $69,081 of principle and $41,019 of interest under the agreement. During the three months ended September 30, 2015 the Company repaid $42,635 of principle and $17,365 of interest under the agreement. As of September 30, 2015 this forbearance obligation would only be convertible for monthly obligations the Company elects to/or does not pay in cash in part or in full, for: (i) up to 62,500,000 shares, for the satisfaction of the next required monthly payment, (ii) up to 1,276,750,000 shares, for the satisfaction of the next 12 required monthly payments; and (iii) up to 2,686,304,250 shares of our common stock should the entire obligation be converted.

The Company has Convertible Debt agreements which if all were converted to equity would exceed the available shares of common stock authorized at this time.