13. COMMITMENTS AND CONTINGENCIES

12 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

13. 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 in any litigation. To the best of the knowledge of our management, there are no material litigation matters pending or threatened against us.

Lease Agreements

We lease offices in Hollywood, California for corporate, research, engineering and mastering services. The lease expires on December 31, 2017.  The total lease expense for the facility is approximately $

8,670 per month, and the total remaining obligations under these leases at June 30, 2015 were approximately $260,100.

Pursuant to a lease originally dated January, 2006, we currently occupy approximately 11,800 square feet of office and warehouse space located at 7650 E. Evans Rd., Suite C, Scottsdale, Arizona on a month-by month basis.  The total lease expense is approximately $9,609 per month, payable in cash and Common Stock of the Company. 

Rent expense for the year ended June 30, 2015 was $258,796, of which $175,399 was paid in cash and $83,397 was paid in Common Stock.  Rent expense for the year ended June 30, 2014 was $282,453, of which $202,287 was paid in cash and $80,166 was paid in Common Stock.

Below is a table summarizing the annual operating lease obligations over the next 5 years:

Year	Lease Payments
2015	$	59,693
2016		96,235
Thereafter		100,200
Total	$	256,128

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 June 30, 2015 were approximately $648,236.

As of the date of this filing, the Company has not filed its tax return for the fiscal year ended 2014 and 2015.