Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Oct. 10, 2014 | Dec. 31, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'Cavitation Technologies, Inc. | ' | ' |
Entity Central Index Key | '0001376793 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 30-Jun-14 | ' | ' |
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 | ' | 183,099,704 | ' |
Entity Public Float | ' | ' | $17,795,034 |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Current assets: | ' | ' |
Cash and cash equivalents | $1,226,508 | $241,976 |
Inventory, net | 116,644 | 107,735 |
Prepaid expenses and other current assets | 0 | 3,125 |
Total current assets | 1,343,152 | 352,836 |
Property and equipment, net | 137,095 | 166,068 |
Patents, net | 67,473 | 70,315 |
Other assets | 9,500 | 9,500 |
Total assets | 1,557,220 | 598,719 |
Current liabilities: | ' | ' |
Accounts payable and accrued expenses | 173,110 | 227,869 |
Accrued payroll and payroll taxes due officers | 1,030,031 | 1,016,223 |
Convertible notes payable, net of discount | 0 | 44,826 |
Related party payable | 1,147 | 1,147 |
Short-term loans | 0 | 34,521 |
Short-term loans, related party | 0 | 185,000 |
Advances from distributor | 734,956 | 1,215,663 |
Total current liabilities | 1,939,244 | 2,725,249 |
Commitments and contingencies | ' | ' |
Stockholders' deficit: | ' | ' |
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2014 and June 30, 2013, respectively | 0 | 0 |
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 177,906.365 shares and 158,439.702 shares are issued and outstanding as of June 30, 2014 and 2013, respectively | 177,906 | 158,440 |
Additional paid-in capital | 20,580,952 | 17,484,058 |
Common stock issuable, 9,029,251 shares | 812,633 | 0 |
Accumulated deficit | -21,953,515 | -19,769,028 |
Total stockholders' deficit | -382,024 | -2,126,530 |
Total liabilities and stockholders' deficit | $1,557,220 | $598,719 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
STOCKHOLDERS' EQUITY | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 177,906,365 | 158,439,702 |
Common stock, shares outstanding | 177,906,365 | 158,439,702 |
Common stock, shares issuable | 9,029,251 | 0 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Income Statement [Abstract] | ' | ' |
Revenue | $1,855,707 | $1,259,623 |
Cost of revenue | 120,170 | 31,175 |
Gross profit | 1,735,537 | 1,228,448 |
General and administrative expenses | 2,444,163 | 1,927,657 |
Research and development expenses | 40,820 | 140,326 |
Total operating expenses | 2,484,983 | 2,067,983 |
Loss from operations | -749,446 | -839,535 |
Interest expense and other | -1,435,041 | -148,591 |
Loss before income taxes | -2,184,487 | -988,126 |
Income taxes | 0 | 0 |
Net loss | ($2,184,487) | ($988,126) |
Net loss per share: | ' | ' |
Basic | ($0.01) | ($0.01) |
Diluted | ($0.01) | ($0.01) |
Weighted average shares outstanding: | ' | ' |
Basic | 160,625,090 | 160,479,640 |
Diluted | 160,625,090 | 160,479,640 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes In Stockholders' Deficit (USD $) | Series A Preferred Stock | Common Stock | Additional Paid-In Capital | Common Stock Issuable | Accumulated Deficit | Total |
Beginning Balance, amount at Jun. 30, 2012 | $0 | $165,970 | $16,650,960 | $0 | ($18,780,902) | ($1,963,972) |
Beginning Balance, shares at Jun. 30, 2012 | 0 | 165,969,569 | ' | ' | ' | ' |
Fair value of stock options issued for services | ' | ' | 113,233 | ' | ' | 113,233 |
Cost of shares of stock purchased and cancelled, shares | ' | -1,500,000 | ' | ' | ' | ' |
Cost of shares of stock purchased and cancelled, amount | ' | -1,500 | -23,960 | ' | ' | -25,460 |
Fair value of warrants issued to a former officer, net, shares | ' | -2,000,000 | ' | ' | ' | ' |
Fair value of warrants issued to a former officer, net, amount | ' | -2,000 | 98,974 | ' | ' | 96,974 |
Fair value of shares of common stock issued for services, shares | ' | 2,771,000 | ' | ' | ' | ' |
Fair value of shares of common stock issued for services, amount | ' | 2,771 | 111,159 | ' | ' | 113,930 |
Fair value of warrants issued with convertible note | ' | ' | 90,106 | ' | ' | 90,106 |
Fair value of options issued for the cancellation of shares of common stock, shares | ' | -6,800,858 | ' | ' | ' | ' |
Fair value of options issued for the cancellation of shares of common stock, amount | ' | -6,801 | 208,721 | ' | ' | 201,920 |
Adjustment for common stock issued, shares | ' | -9 | ' | ' | ' | ' |
Fair value of warrants issued to Directors, employees and consultants | ' | ' | 234,865 | ' | ' | 234,865 |
Net loss | ' | ' | ' | ' | -988,126 | -988,126 |
Ending Balance, amount at Jun. 30, 2013 | 0 | 158,440 | 17,484,058 | 0 | -19,769,028 | -2,126,530 |
Ending Balance, shares at Jun. 30, 2013 | 0 | 158,439,702 | ' | ' | ' | ' |
Common stock issued for cash, shares | ' | 15,133,330 | ' | ' | ' | ' |
Common stock issued for cash, amount | ' | 15,133 | 1,006,367 | 0 | 0 | 1,021,500 |
Common stock issued for conversion of note payable, shares | ' | 3,333,333 | ' | ' | ' | ' |
Common stock issued for conversion of note payable, amount | ' | 3,333 | 96,667 | ' | ' | 100,000 |
Fair value of vested options and warrants | ' | ' | 1,093,505 | ' | ' | 1,093,505 |
Fair value of shares of common stock issued for services, shares | ' | 1,000,000 | ' | ' | ' | ' |
Fair value of shares of common stock issued for services, amount | ' | 1,000 | 89,000 | ' | ' | 90,000 |
Fair value of warrants granted to settle notes payable, amount | ' | ' | 811,355 | ' | ' | 811,355 |
Fair value of common stock to be issued due to settle notes payable, amount | ' | ' | ' | 812,633 | ' | 812,633 |
Net loss | ' | ' | ' | ' | -2,184,487 | -2,184,487 |
Ending Balance, amount at Jun. 30, 2014 | $0 | $177,906 | $20,580,952 | $812,633 | ($21,953,515) | ($382,024) |
Ending Balance, shares at Jun. 30, 2014 | 0 | 177,906,365 | ' | ' | ' | ' |
Consolidated_Statement_of_Cash
Consolidated Statement of Cash Flows (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Operating activities: | ' | ' |
Net loss | ($2,184,487) | ($988,126) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 100,693 | 142,935 |
Amortization of convertible loan discoount | 55,174 | 54,548 |
Fair value of common stock issued for services | 90,000 | 113,930 |
Fair value of warrants issued to former officer | 0 | 96,974 |
Fair value of warrants issued for shares of common stock | 0 | 201,920 |
Fair value of options issued for services | 0 | 113,233 |
Fair value of options issued to Directors, Employees and Consultants | 1,093,505 | 234,865 |
Gain on change in fair value and extinguishment of derivatives liabilities, net | 0 | -21,420 |
Allowance for inventory obsolescence | 36,393 | 88,875 |
Excess of fair value of common stock and warrants issued in exchange of face amount of demand notes | 1,353,110 | -34,608 |
Effect of changes in: | ' | ' |
Inventory | -45,302 | -55,553 |
Prepaid expenses and other current assets | 3,125 | -3,125 |
Accounts payable and accrued expenses | -3,402 | -65,644 |
Accrued payroll and payroll taxes | 13,808 | 23,417 |
Advances from distributor | 1,375,000 | 1,090,663 |
Reduction in advances due to revenues from distributor | -1,855,707 | 0 |
Advances from customers | 0 | -136,533 |
Deferred revenue | 0 | -147,444 |
Net cash provided by operating activities | 31,910 | 708,907 |
Investing activities: | ' | ' |
Purchase of property and equipment | -43,254 | -90,058 |
Payments for patents | -25,624 | -30,487 |
Net cash used in investing activities | -68,878 | -120,545 |
Financing activities: | ' | ' |
Proceeds from (payments on) bank loan borrowings | 0 | -349,276 |
Proceeds from convertible notes payable | 0 | 153,000 |
Payments on convertible notes payable | 0 | -86,550 |
Proceeds from sale of common stock | 1,021,500 | 0 |
Payment of related party short-term loans | 0 | -100,000 |
Payments of short-term loans | 0 | -75,349 |
Purchase of common stock | 0 | -25,460 |
Net cash provided by (used in) financing activities | 1,021,500 | -483,635 |
Net increase in cash | 984,532 | 104,727 |
Cash, beginning of period | 241,976 | 137,249 |
Cash, end of period | 1,226,508 | 241,976 |
Supplemental disclosures of cash flow information: | ' | ' |
Cash paid for interest | 5,000 | 47,359 |
Cash paid for income taxes | 0 | 0 |
Supplemental disclosure of non-cash investing and financing activities: | ' | ' |
Fair value of warrants issued in connection with convertible note | 0 | 90,106 |
Conversion of accounts payable and accrued expenses to short-term loan | 0 | 20,349 |
Fair value of derivative liability recorded upon issuance of convertible note | 0 | 15,149 |
Conversion of convertible notes payable and accrued interest to common stock | 270,878 | 25,460 |
Common stock issued upon conversion of notes payable | $100,000 | $0 |
Note_1_Organization
Note 1 - Organization | 12 Months Ended |
Jun. 30, 2014 | |
Notes to Financial Statements | ' |
Note 1 - Organization | ' |
Note 1 - Organization | |
Hydrodynamic Technology, Inc. was incorporated January 29, 2007 as a California corporation. It is a wholly owned subsidiary of Cavitation Technologies, Inc. (referred to herein, unless otherwise indicated, as "the Company," "CTi," "we," "us," and "our") a Nevada corporation originally incorporated under the name Bio Energy, Inc. CTi has developed, patented, and commercialized proprietary technology that may be used in liquid processing applications. CTi's patented Nano Reactor® is the critical component of CTi Nano Neutralization® System which is commercially proven to reduce operating costs and increase yields in refining vegetable oils. CTi has five patented systems and has filed 25 national and international patents to employ its proprietary technology in applications including vegetable and oil refining, waste water treatment, algae oil extraction, and alcoholic beverage enhancement. | |
Note_2_Basis_of_Presentation_a
Note 2 - Basis of Presentation and Going Concern | 12 Months Ended |
Jun. 30, 2014 | |
Notes to Financial Statements | ' |
Note 2 - Basis of Presentation and Going Concern | ' |
Note 2 - Basis of Presentation and Going Concern | |
Management's Plan Regarding Going Concern | |
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern. During the year ended June 30, 2014, the Company incurred a net loss of $2,184,487. As of June 30, 2014, the Company had a working capital deficiency of $596,092 and a stockholders' deficit of $382,024. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. | |
The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from an inability of the Company to continue as a going concern. Management's plan is to generate income from operations by continuing to license its technology globally through our strategic partner, the Desmet Ballestra Group. Desmet has agreed to provide us monthly advances of $125,000 against future sales. During the year ended June 30, 2014, advances received from Desmet amounted to $1,375,000. We will also attempt to raise additional debt and/or equity financing to fund operations and to provide additional working capital. The Company raised $1,021,500 of equity financing during the year ended June 30, 2014 which significantly reduced our working capital deficiency and stockholders' deficit. Subsequent to June 30, 2014, the Company raised an additional $389,500 (See Note 13). However, there is no assurance that such financing will be available in the future or obtained in sufficient amounts necessary to meet the Company's needs, that the Company will be able to achieve profitable operations or that the Company will be able to meet its future contractual obligations. Should management fail to obtain such financing, the Company may curtail its operations. | |
Basis of Presentation | |
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") as promulgated in the United States of America ("U.S."). | |
Note_3_Significant_Accounting_
Note 3 - Significant Accounting Policies | 12 Months Ended | |||
Jun. 30, 2014 | ||||
Notes to Financial Statements | ' | |||
Note 3 - Significant Accounting Policies | ' | |||
Note 3 - Significant Accounting Policies | ||||
Principles of Consolidation | ||||
The consolidated financial statements include the accounts of Cavitation Technologies, Inc. and its wholly owned subsidiary Hydrodynamic Technology, Inc. Inter-company transactions and balances have been eliminated through consolidation. | ||||
Fair Value Measurement | ||||
FASB Accounting Standards Codification ("ASC") 820-10 requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet for which it is practicable to estimate fair value. ASC 820-10 defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. | ||||
In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are: | ||||
Level 1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. | ||||
Level 2 - inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||||
Level 3 - inputs are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. | ||||
As of June 30, 2014, the carrying value of certain accounts such as inventory, accounts payable, accrued expenses, accrued payroll and approximate fair value due to the short-term nature of such instruments. Debt balances are stated at historical amounts less principal payments, which approximate fair market value. The Company believes interest rates in its debt agreements are commensurate with lender risk profiles for similar companies | ||||
Use of Estimates | ||||
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing our stock options, warrants, convertible notes, and common stock issued for services, among other items. Actual results could differ from these estimates. | ||||
Revenue Recognition | ||||
Revenue from the sale of our Nano Reactor® Systems is recognized when persuasive evidence of an agreement exists; shipment has occurred, including transfer of title and risk of loss for product sales, or services have been rendered for service revenues; the price to the buyer is fixed or determinable; and collectability is reasonably assured. | ||||
The Company is also entitled to certain profit share from its distributor from the sale of the reactors. The profit share is non-refundable and is recorded upon shipment of the reactors to the distributor. | ||||
Cash | ||||
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash equivalents are carried at cost which approximates market value. The Company maintains cash and cash equivalents in bank deposit accounts which, at times, may exceed federally insured limits. The Company has never experienced losses in such accounts and believes it is not exposed to significant credit risk on cash and cash equivalents. | ||||
Inventory | ||||
Inventory, net of an allowance for excess quantities and obsolescence, is stated at the lower of cost or market. Cost is determined on a specific item basis. Inventory is composed of finished goods and represents costs incurred to manufacture our Nano Reactor® systems. | ||||
Property and Equipment | ||||
Property and equipment is presented at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Betterments, renewals, and extraordinary repairs that extend the life of the assets are capitalized; other repairs and maintenance charges are expensed as incurred. The cost and related accumulated depreciation applicable to retired assets are removed from the Company's accounts, and the gain or loss on dispositions, if any, is recognized in the consolidated statements of operations. | ||||
Property and equipment are recorded at cost and depreciated using the straight-line method over the following estimated useful lives. | ||||
Leasehold improvements | Shorter of life of asset or lease | |||
Furniture | 5-7 Years | |||
Office equipment | 5Years | |||
Lab equipment | 4 Years | |||
Skid systems (demo units) | 4 Years | |||
Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the years ended June 30, 2014 and 2013, the Company did not recognize any impairment for its property and equipment. | ||||
Patents | ||||
Capitalized patent costs represent legal fees associated with procuring and filing patent applications. The Company accounts for patents in accordance with ASC 350-30, General Intangibles Other Than Goodwill. The Company has five patents issued in fiscal 2013, 2012 and 2011. As of June 30, 2014, we have a total of 25 patents pending. The patents have duration of twenty years from filing date. We amortize our patents over a four year period which we believe is a reasonable estimate based upon our estimate of time until the next generation of reactors is developed or until other forms of competition appear. | ||||
As of June 30, 2014 and 2013, the Company had remaining unamortized patent costs of $67,473 and $70,315. At June 30, 2014, future estimated patent amortization costs are: | ||||
Year Ended | ||||
June 30, | Amount | |||
2015 | $ | 28,407 | ||
2016 | 21,323 | |||
2017 | 14,134 | |||
2018 | 3,609 | |||
Total | $ | 67,473 | ||
Impairment of Intangible and Long-Lived Assets | ||||
In accordance with ASC 350-30 (General Intangibles Other than Goodwill), the Company evaluates amortizable intangibles and long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. Based on the Company annual impairment tests, management believes there is no impairment of its intangibles and long-lived assets as of June 30, 2014 and 2013. There can be no assurance, however, that market conditions will not change or demand for the Company's products under development will continue. Either of these could result in future impairment of intangibles and long-lived assets. | ||||
Share-Based Compensation | ||||
The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. | ||||
The fair value of the Company's common stock option grant is estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods. | ||||
Income Taxes | ||||
The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. The Company recognizes deferred tax assets and liabilities to reflect the estimated future tax effects, calculated at anticipated future tax rates, of future deductible or taxable amounts attributable to events that have been recognized on a cumulative basis in the financial statements. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. | ||||
ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. The Company classifies interest and penalties as a component of interest and other expenses. To date, there have been no interest or penalties assessed or paid. | ||||
The Company measures and records uncertain tax positions by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. | ||||
Advertising costs | ||||
Advertising costs (including marketing expense) incurred in the normal course of operations are expensed as incurred. Advertising expenses amounted to $7,871 and $20,092 for the years ended June 30, 2014 and 2013 respectively. | ||||
Research and Development Costs | ||||
Research and development expenses relate primarily to the development, design, testing of preproduction prototypes and models, compensation, and consulting fees, and are expensed as incurred. | ||||
Warranty Policy | ||||
The Company provides a limited warranty with every set of reactors sold, typically 2 to 5 years. The Company has not experienced significant claims under its warranty policy, and management determined no accrual for warranty reserve was necessary at June 30, 2014 or 2013. | ||||
Net Income (Loss) Per Share | ||||
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share is computed similar to basic net income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive securities had been issued. At June 30, 2014 potentially dilutive securities include options to acquire 13,611,815 shares of common stock and warrants to acquire 63,066,514 shares of common stock. At June 30, 2013 potentially dilutive securities include options to acquire 13,611,815 shares of common stock and warrants to acquire 18,433,867 shares of common stock. | ||||
Net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period. Basic and diluted net loss per common share is the same for all periods presented with a net loss because all warrants and stock options outstanding are anti-dilutive. | ||||
Recent Accounting Pronouncements | ||||
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting. | ||||
In April 2014, the FASB issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. | ||||
In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. | ||||
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. | ||||
Dependence on Desmet Ballestra | ||||
Our revenue is almost entirely dependent on Desmet Ballestra who is our exclusive distribution agent with regard to the CTi Nano Neutralization® System for edible oils. During fiscal 2014 and 2013, 100% and 97%, respectively, of our revenue was derived from Desmet sales efforts (see Note 4). | ||||
Note_4_Agreement_with_Desmet_B
Note 4 - Agreement with Desmet Ballestra | 12 Months Ended |
Jun. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Note 4 - Agreement with Desmet Ballestra | ' |
Note 4 - Agreement with Desmet Ballestra | |
On May 14, 2012 we signed a global R and D, Marketing and Technology License Agreement with the n.v. Desmet Ballestra Group s.a. (Desmet), a Belgian company that is actively marketing the NANO Neutralization System, the key component of which is the Company's reactor to soybean and other vegetable oil refiners. The Agreement provides Desmet (licensee) a limited, exclusive license and right to develop, design and supply Nano Reactor® systems which incorporate Nano Reactor® devices on a global basis but is limited to oils and fats and oleo chemical applications. CTi (licensor) remains owner of the current patents and patent applications but Desmet will be co-owner of any new process patent applications jointly developed. Desmet has agreed to provide, under certain conditions, limited monthly advance payments of $125,000 against future sales to CTi. Desmet shall be entitled to immediately terminate the present agreement in case the claims of current US Patent Application Number 12/484,981 are not granted as such or are cancelled. In addition, Desmet may terminate the agreement on August 1 of any particular year if they have not installed at least 6 Nano Reactor® devices in the previous 12 month period. CTi may terminate the Agreement for material default. As of the date of this report, the 6 Nano Reactors has been installed and Desmet has not indicated any termination of the agreement. This Agreement supersedes a previous agreement dated November 1, 2010, amended on June 1, 2011 and on September 2, 2011. | |
Desmet, together with its affiliates, is a global engineering and equipment supply firm engaged in the development, design and supply of process equipment for oils and fats processing facilities including vegetable oil refining, biofuel, oleo chemical, seed crushing, surfactant and detergent markets. Desmet supplies these markets with competitive services based on the latest globally sourced technologies. | |
The Company and Desmet have worked together to determine the appropriate sales approach and installation process. The Company's Nano Neutralization is designed to be used as an add-on process to an existing neutralization system within soybean and other vegetable oil refineries. Desmet purchases Nano Reactor Systems from the Company and installs them at the refinery as part of an integrated neutralization system. We are therefore substantially dependent on Desmet to identify prospects, complete sales contracts, install the system and manage relationships with end-users. | |
During the years ended June 30, 2014 and 2013, we recorded revenues from Desmet amounting to $1,855,707 and $1,223,210. In addition, we received advances of $1,375,000 in each of the fiscal years 2014 and 2013 respectively. As of June 30, 2014 and 2013, Desmet has advanced to us an excess of funds of $734,956 and $1,215,663 which will be recognized as revenue as sales orders are shipped. | |
Note_5_Property_and_Equipment
Note 5 - Property and Equipment | 12 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Notes to Financial Statements | ' | ||||||
Note 5 - Property and Equipment | ' | ||||||
Note 5 - Property and Equipment | |||||||
Property and equipment consisted of the following as of June 30, 2014 and June 30, 2013: | |||||||
June 30, | June 30, | ||||||
2014 | 2013 | ||||||
Leasehold improvement | $ | 2,475 | $ | 2,475 | |||
Furniture | 26,837 | 26,837 | |||||
Office equipment | 1,499 | 1,499 | |||||
Equipment | 68,380 | 68,380 | |||||
Systems | 268,340 | 225,085 | |||||
367,531 | 324,276 | ||||||
Less: accumulated depreciation and amortization | -230,436 | -158,208 | |||||
Property & Equipment, net | $ | 137,095 | $ | 166,068 | |||
Depreciation expense for the years ended June 30, 2014 and 2013 amounted to $72,227 and $59,605, respectively. | |||||||
Note_6_Accrued_Payroll_and_Pay
Note 6 - Accrued Payroll and Payroll Taxes | 12 Months Ended |
Jun. 30, 2014 | |
Payables and Accruals [Abstract] | ' |
Note 6 - Accrued Payroll and Payroll Taxes | ' |
Note 6 - Accrued Payroll and Payroll Taxes | |
As of June 30, 2014 and 2013, the Company had accrued unpaid salaries to officers and former officers amounting to $1,030,331 and $1,016,223, respectively. | |
Note_7_Convertible_Notes
Note 7 - Convertible Notes | 12 Months Ended |
Jun. 30, 2014 | |
Notes to Financial Statements | ' |
Note 7 - Convertible Notes | ' |
Note 7 - Convertible Notes | |
On December 17, 2012 we issued a convertible promissory note payable to a private party, in the amount of $100,000 with an interest rate of 12% per annum and due May 31, 2014. The note is unsecured, convertible into shares of our common stock at a conversion price of $0.03 any time during the life of the note. Also, 3,333,333 fully vested warrants with a fair value of $90,106 were issued in connection with this note. The warrants are exercisable at $0.07/share and will expire in 3 years. The fair value of the warrants was recorded as a note discount and was being amortized to interest expense over the term of the note. As of June 30, 2013, the outstanding balance of note amounted to $100,000 less unamortized note discount of $55,174 resulting in a net balance of $44,826. | |
On December 2, 2013 the $100,000 Note was converted into 3,333,333 shares of the Company's common stock and the unamortized balance of the note discount of $55,174 was recognized as interest expense. | |
Note_8_Related_Party_ShortTerm
Note 8 - Related Party Short-Term Loan and Payables | 12 Months Ended |
Jun. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
Note 8 - Related Party Short-Term Loan and Payables | ' |
Note 8 - Related Party Short-Term Loan and Payables | |
As of June 30, 2012, we had received $185,000 from West Point Partners, LLC, whose managing partner is the Company's Principal Accounting Officer. These funds were due on demand, and accrued an annual interest rate of 12%. As of June 30, 2013, outstanding balance of the loan amounted to $185,000 and accrued interest of $26,650. | |
On April 1, 2014, we granted an aggregate of 7,610,000 shares of common stock with a fair value of $684,900 along with 7,610,000 warrants with a fair value of $683,983 to settle this demand note with a face value of $185,000 and accrued interest of $43,300. The shares have not been issued as June 30, 2014, and will be issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The shares were not offered via general solicitation to the public. The Company issued rule 144 shares in connection with these issuances. No sales commissions or other remuneration was paid in connection with this issuance. | |
Note_9_ShortTerm_Loans
Note 9 - Short-Term Loans | 12 Months Ended |
Jun. 30, 2014 | |
Notes to Financial Statements | ' |
Note 9 - Short-Term Loans | ' |
Note 9 - Short-Term Loans | |
As of June 30, 2012, we had received $34,521 from a third party, Strategic IR. These funds were due on demand and pay an annual interest rate of 12%. As of June 30, 2013, outstanding balance of the loan amounted to $34,521 and accrued interest of $4,950. | |
On April 1, 2014, we granted an aggregate of 1,419,251 shares of common stock to Strategic IR with a fair value of $127,733 along with 1,419,251 warrants with a fair value of $127,432 to settle this demand note with a face value of $34,521 and accrued interest of $8,057. The shares have not been issued as June 30, 2014, and will be issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The shares were not offered via general solicitation to the public. The Company issued rule 144 shares in connection with these issuances. No sales commissions or other remuneration was paid in connection with this issuance. | |
Note_10_Stockholders_Deficit
Note 10 - Stockholders' Deficit | 12 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
Notes to Financial Statements | ' | |||||||||||||
Note 10 - Stockholders' Deficit | ' | |||||||||||||
Note 10 - Stockholders' Deficit | ||||||||||||||
Common Stock | ||||||||||||||
Year ended June 30, 2014 | ||||||||||||||
During fiscal 2014, the Company issued 1,000,000 shares of common stock with a recorded value of $90,000 as payment to a service provider. These shares were valued at fair value at the date of issuance. | ||||||||||||||
On June 30, 2014 we issued 15,133,330 shares of common stock to various entities and individuals in exchange for net cash proceeds of $1,021,500. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The shares were not offered via general solicitation to the public. The Company issued rule 144 shares in connection with these issuances. | ||||||||||||||
The Company also issued 3,333,333 shares of common stock to convert $100,000 of outstanding principal under the convertible promissory notes (see Note 7). A total of 9,029,251 shares of common stock are issuable as of June 30, 2014 relating to the settlement of demand notes outstanding with a principal value of $219,521 and accrued interest balance of $51,357 (see Notes 8 and 9). | ||||||||||||||
Year ended June 30, 2013 | ||||||||||||||
In July and August 2012, the Company acquired previously issued 1,500,000 shares of common stock for a note conversion in the year ended June 30, 2013 for total costs of $25,460. The amount paid was reflected as a reduction to paid in capital. | ||||||||||||||
In October 2012, pursuant to a settlement agreement with a former officer, the former officer returned 2,000,000 shares of common stock and options to purchase 10,000,000 shares of commons stock granted to him in February 2012. In exchange for the return of these equity instruments, the Company granted the former officer warrants to purchase 7,500,000 shares of common stock with a fair value of $140,043 using a Black-Scholes Option Pricing Model. The warrants vested immediately, exercisable at $0.05/share and will expire in 10 years after grant. Furthermore, the Company also reversed previously recognized compensation expense of $43,069 pertaining to the unvested portion of the returned options. As result, the Company recognized a total cost of $96,974 pursuant to the settlement agreement which is included as part of General and Administrative Expense in the accompanying Statement of Operations for the year ended June 30, 2013. | ||||||||||||||
In December 2012 and May 2013, we issued an aggregate of 2,771,000 shares of common stock to a Director, employees and consultants with a fair value of $113,930. Included in this issuance was a 500,000 shares of common stock issued to a Director in exchange for the cancellation of his 500,000 fully vested options granted in February 2012. The shares of common stock issued were valued at the market price on the date of issuance. | ||||||||||||||
In December 2012 6,800,858 shares of common stock previously issued to the Company's Officers and a service provider were cancelled. In exchange for the cancellation, the Company issued options to purchase 6,800,858 shares of common stock with a fair value of $201,920 using a Black-Scholes Option Pricing Model. The options vest immediately, exercisable at $0.03/share and will expire in 10 years after grant. | ||||||||||||||
Preferred Stock | ||||||||||||||
On March 17, 2009, the Company filed Amended and Restated Articles of Incorporation and created two new series of preferred stock, the first of which is designated Series A Preferred Stock and the second of which is designated as Series B Preferred Stock. The total number of shares of Common Stock which this corporation shall have authority to issue is 1,000,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock of which 5,000,000 shares are designated as Series A Preferred Stock, and 5,000,000 shares are designated as Series B Preferred Stock, with the rights, preferences and privileges of the Series B Preferred Stock to be designated by the Board of Directors. Each share of Common Stock and Preferred Stock has a par value of $0.001. As of June 30, 2014 and 2013, there are no shares of Series A or Series B Preferred Stock outstanding. | ||||||||||||||
Stock Options | ||||||||||||||
The Company has not adopted a formal stock option plan, however, it has assumed outstanding stock options resulting from the acquisition of its wholly-owned subsidiary, Hydrodynamic Technology, Inc. In addition, the Company has made periodic non- plan grants. A summary of the stock option activity from June 30, 2014 and 2013 is as follows: | ||||||||||||||
Weighted- | ||||||||||||||
Average | ||||||||||||||
Weighted- | Remaining | |||||||||||||
Average | Contractual | |||||||||||||
Exercise | Life | |||||||||||||
Options | Price | (Years) | ||||||||||||
Outstanding June 30, 2012 | 13,560,957 | $ | 0.10 | 8.95 | ||||||||||
- Granted | 10,550,858 | 0.03 | 9.50 | |||||||||||
- Forfeited | -10,500,000 | - | - | |||||||||||
- Exercised | - | - | - | |||||||||||
- Expired | - | - | - | |||||||||||
Outstanding June 30, 2013 | 13,611,815 | 0.10 | 8.17 | |||||||||||
- Granted | - | - | - | |||||||||||
- Forfeited | - | - | - | |||||||||||
- Exercised | - | - | - | |||||||||||
- Expired | - | - | - | |||||||||||
Outstanding at June 30, 2014 | 13,611,815 | $ | 0.10 | 6.37 | ||||||||||
Exercisable at June 30, 2014 | 13,611,815 | $ | 0.10 | 6.37 | ||||||||||
Vested at June 30, 2014 | 13,611,815 | $ | 0.10 | 6.37 | ||||||||||
No options were issued in fiscal 2014, and 1,424,021 options previously granted to a former Officer and Director had either expired, were cancelled or replaced with warrants. | ||||||||||||||
In October 2012, pursuant to a settlement agreement with a former officer, the Company cancelled 10,000,000 options granted to the former officer in February 2012 (see Common Stock above for further discussion). | ||||||||||||||
In May 2013, the Company cancelled 500,000 options granted to a Director in February 2012 (see Common Stock above for further discussion). | ||||||||||||||
In December 2012 and May 2013, the Company granted options to employees to purchase a total of 3,750,000 shares of common stock with a fair value of $113,233 using the Black-Scholes Option Pricing Model. The options vest immediately, exercisable at $0.03/share and will expire in 10 years after grant. | ||||||||||||||
In December 2012, the Company granted options to purchase 6,800,858 shares of common stock to Officers and a service provider with a fair value of $74,189 using the Black-Scholes Option Pricing Model. | ||||||||||||||
The intrinsic value of the outstanding options was $590,043 and $0 as of June 30, 2014 and 2013, respectively. The following table summarizes additional information concerning options outstanding and exercisable at June 30, 2014. | ||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||
Weighted | Weighted | Weighted | ||||||||||||
Average | Average | Average | ||||||||||||
Exercise | Number | Remaining | Exercise | Number | Remaining | |||||||||
Price | of Shares | Life (Years) | Price | of Shares | Life (Years) | |||||||||
$ | 0.03 | 11,800,858 | 6.96 | $ | 0.03 | 11,800,858 | $ | 6.96 | ||||||
$ | 0.33 | 637,297 | 2.31 | $ | 0.33 | 637,297 | $ | 2.31 | ||||||
$ | 0.67 | 1,173,660 | 2.68 | $ | 0.67 | 1,173,660 | $ | 2.68 | ||||||
13,611,815 | 13,611,815 | |||||||||||||
Warrants | ||||||||||||||
A summary of the Company's warrant activity and related information from as of June 30, 2014 and 2013 is as follows. | ||||||||||||||
Weighted- | ||||||||||||||
Average | ||||||||||||||
Weighted- | Remaining | |||||||||||||
Average | Contractual | |||||||||||||
Exercise | Life | |||||||||||||
Warrants | Price | (Years) | ||||||||||||
Outstanding at June 30, 2012 | 11,222,287 | $ | 0.42 | 0.85 | ||||||||||
Granted | 15,703,933 | 0.05 | 7.76 | |||||||||||
Exercised | - | - | - | |||||||||||
Expired | -8,492,353 | 0.46 | - | |||||||||||
Outstanding at June 30, 2013 | 18,433,867 | 0.09 | 6.74 | |||||||||||
Granted | 47,362,581 | 0.07 | 7.40 | |||||||||||
Exercised | - | - | - | |||||||||||
Expired | -2,729,934 | 0.50 | - | |||||||||||
Outstanding at June 30, 2014 | 63,066,514 | $ | 0.06 | 6.91 | ||||||||||
Vested and expected to vest at June 30, 2014 | 59,774,848 | $ | 0.07 | 6.85 | ||||||||||
Exercisable at June 30, 2014 | 59,774,848 | $ | 0.07 | 6.85 | ||||||||||
2014 | ||||||||||||||
In October 2013, the Company granted employees warrants to purchase 9,100,000 shares of common stock at $0.04/share, vesting immediately and expiring in 5 and 10 years from grant date. The fair value of the warrants amounted to $363,882 using the Black-Scholes Merton valuation model with the following average assumptions: risk-free interest rate of 0.90%; dividend yield of 0%; volatility of 232%; and an expected life of 3.75 years. | ||||||||||||||
In October 2013, the Company granted consultants warrants to purchase 13,100,000 shares of common stock at prices ranging from $0.04 up to $0.045/share, vest over a period of one year and expiring in 5 and 10 years from grant date. The fair value of the warrants that vest during the current fiscal year amounted to $726,299 using the Black-Scholes Merton valuation model with the following average assumptions: risk-free interest rate of 2.58%; dividend yield of 0%; volatility of 200%; and an expected life of 9.75 years. | ||||||||||||||
In April 2014, the Company issued 9,029,251 warrants to demand note holders pursuant to a conversion agreement (see Notes 8 and 9). | ||||||||||||||
In April 2014, the Company granted a new Board member warrant to purchase 1,000,000 shares of common stock at $0.08/share which vest over a period of one year and expiring in 5 years from grant date. The fair value of the warrants that vest during the fiscal year ended June 30, 2014 amounted to $3,324 using the Black-Scholes Merton valuation model with the following average assumptions: risk-free interest rate of 3.34%; dividend yield of 0%; volatility of 185%; and an expected life of 9.75 years. | ||||||||||||||
In June of 2014, the Company issued warrants to purchase 15,133,330 shares of common stock to the purchasers of common stock offering at $0.12 per share, vesting immediately and expiring in 5 years from grant date. Pursuant to the term of the grant, the underlying shares of common stock must be registered with the SEC within one year after its purchase otherwise, the warrant will be considered cashless. | ||||||||||||||
2013 | ||||||||||||||
In October 2012, pursuant to settlement agreement with a former officer, Company issued 7,500,000 warrants (see Common Stock for further discussion). | ||||||||||||||
In December 2012, the Company issued 3,333,333 warrants to a note holder pursuant to convertible note offering (see Note 7). | ||||||||||||||
In May 2013, the Company granted warrants to Officers to purchase a total of 4,000,000 shares of common stock with a fair value of $197,549 using the Black-Scholes Option Pricing Model. The warrants vest immediately, exercisable at $0.05/share and will expire in 10 years after grant. | ||||||||||||||
In May 2013, the Company also granted warrants to an employee and a service provider to purchase a total of 870,600 shares of common stock with a fair value of $37,347 using the Black-Scholes Option Pricing Model. The warrants vest immediately, exercisable at $0.05/share up to $0.07/share and will expire in 3 to 10 years after grant. | ||||||||||||||
As of June 30, 2014, total compensation cost related to non-vested warrant award not yet recorded is approximately $262,535. The intrinsic value of the outstanding warrants was $1,551,329 and $0 as of June 30, 2014 and 2013, respectively. The following table summarizes additional information concerning warrants outstanding and exercisable at June 30, 2014. | ||||||||||||||
Warrants Outstanding | Warrants Exercisable | |||||||||||||
Weighted | Weighted | Weighted | ||||||||||||
Average | Average | Average | ||||||||||||
Exercise | Number | Remaining | Exercise | Number | Exercise | |||||||||
Price | of Shares | Life (Years) | Price | of Shares | Price | |||||||||
$ | 0.04 - 0.07 | 47,933,184 | 7.51 | $ | 0.05 | 44,641,518 | $ | 0.05 | ||||||
$ | 0.12 | 15,133,330 | 5 | $ | 0.12 | 15,133,330 | $ | 0.12 | ||||||
63,066,514 | 59,774,848 | |||||||||||||
The table below represents the assumptions for valuing the options and warrants granted in fiscal 2014 and 2013: | ||||||||||||||
Year Ended June 30, | ||||||||||||||
2014 | 2013 | |||||||||||||
Expected life in years | 10-Mar | 10-Mar | ||||||||||||
Stock price volatility | 185% - 232% | 211% - 225% | ||||||||||||
Risk free interest rate | 1.44% - 3.50% | 0.37% - 1.84% | ||||||||||||
Expected dividends | None | None | ||||||||||||
Forfeiture rate | 0% | 0% | ||||||||||||
The assumptions used in the Black Scholes models referred to above are based upon the following data: (1) The contractual life of the underlying non-employee options is the expected life. The expected life of the employee option is estimated by considering the contractual term of the option, the vesting period of the option, the employees' expected exercise behavior and the post-vesting employee turnover rate. (2) The expected stock price volatility was based upon the Company's historical stock price over the expected term of the option. (3) The risk free interest rate is based on published U.S. Treasury Department interest rates for the expected terms of the underlying options. (4) The expected dividend yield was based on the fact that the Company has not paid dividends to common shareholders in the past and does not expect to pay dividends to common shareholders in the future. (5) The expected forfeiture rate is based on historical forfeiture activity and assumptions regarding future forfeitures based on the composition of current grantees. | ||||||||||||||
Note_11_Income_Taxes
Note 11 - Income Taxes | 12 Months Ended | ||
Jun. 30, 2014 | |||
Notes to Financial Statements | ' | ||
Note 11 - Income Taxes | ' | ||
Note 11 - Income Taxes | |||
Total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 34% to income before income tax expense as a result of the NOL carry forward. Therefore, the company's effective tax rate is 0.0%. The Company files income tax returns in the United States ("Federal") and California ("State") jurisdictions. The Company is subject to Federal and State income tax examinations by tax authorities for all years since its inception. | |||
At June 30, 2014, the Company had Federal and State net operating loss carry forwards available to offset future taxable income of approximately $8.1 million and $8.1 million, respectively. These carry forwards will begin to expire in the years ending June 30, 2027 and June 30, 2017, respectively, subject to IRS limitations, including change in ownership. | |||
The Company periodically evaluates the likelihood of the realization of deferred tax assets, and adjusts the carrying amount of the deferred tax assets by a valuation allowance to the extent the future realization of the deferred tax assets is not judged to be more likely than not. The Company considers many factors when assessing the likelihood of future realization of our deferred tax assets, including recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income or loss, the carry-forward periods available to us for tax reporting purposes, and other relevant factors. | |||
At June 30, 2014, based on the weight of available evidence, including cumulative losses in recent years and expectations of future taxable income, the Company determined that it was more likely than not that its deferred tax assets would not be realized. Accordingly, the Company has recorded a valuation allowance for 100% of its cumulative deferred tax assets. | |||
As a result of the implementation of certain provisions of ASC 740-10, the Company performed an analysis of its previous tax filings and determined that there were no positions taken that it considered uncertain. Therefore, there were no unrecognized tax benefits as of June 30, 2014. | |||
Future changes in the unrecognized tax benefit are not expected to have an impact on the effective tax rate due to the existence of the valuation allowance. The Company estimates that the unrecognized tax benefit will not change within the next twelve months. The Company will continue to classify income tax penalties and interest, if any, as part of interest and other expenses in its consolidated statements of operations. There is no interest or penalties accrued as of June 30, 2014. | |||
The following summarizes the open tax years for each major jurisdiction: | |||
Jurisdiction | Open Tax Years | ||
Federal | 2009 - 2013 | ||
California | 2008 - 2013 | ||
The Company's net operating loss carry forwards are subject to IRS examination until they are utilized and such tax years are closed. | |||
Note_12_Commitments_and_Contin
Note 12 - Commitments and Contingencies | 12 Months Ended | |||
Jun. 30, 2014 | ||||
Notes to Financial Statements | ' | |||
Note 12 - Commitments and Contingencies | ' | |||
Note 12 - Commitments and Contingencies | ||||
Lease Agreements | ||||
The Company leases approximately 5,000 square feet of office and warehouse space at 10019 Canoga Ave in Chatsworth, California under a lease agreement which extends through February 1, 2016. Total rent expense was $54,130 for the years ended June 30, 2014 and 2013. Monthly payments are approximately $4,511 beginning May 2012. The Company has a security deposit of $9,500 associated with this lease. Future minimum lease payments under non-cancelable operating leases are: | ||||
For the Years Ended | ||||
June 30, | Amount | |||
2015 | $ | 54,132 | ||
2016 | 31,577 | |||
Total | $ | 85,709 | ||
Royalty Agreements | ||||
On July 1, 2008, our wholly owned subsidiary entered into Patent Assignment Agreements with two parties, our President as well as our former CEO and current CTO, where certain devices and methods involved in the hydrodynamic cavitation processes invented by the President and former CEO/current CTO have been assigned to the Company. In exchange, the Company agreed to pay a royalty of 5% of gross revenues to each of the CTO and President and former CEO for licensing of the technology and leasing of the related equipment embodying the technology. These agreements were subsequently assigned to Cavitation Technologies on May 13, 2010. The Company's CTO and President both waived their rights to receive royalty payments that have accrued, or that may accrue, on any gross revenue generated through June 30, 2014. | ||||
On April 30, 2008 (as amended November 22, 2010), our wholly owned subsidiary entered into an employment agreement with the Director of Chemical and Analytical Department (the "Inventor") who shall receive an amount equal to 5% of actual gross royalties received from the royalty stream in the first year in which the Company receives royalty payments from the patent which the Inventor was the legally named inventor, and 3% of actual gross royalties received by the Company resulting from the patent in each subsequent year. As of June 30, 2014, no patents have been granted in which this person is the legally named inventor. | ||||
Note_13_Subsequent_Events
Note 13 - Subsequent Events | 12 Months Ended |
Jun. 30, 2014 | |
Note 13 - Subsequent Events | ' |
Note 13 - Subsequent Events | ' |
Note 13 - Subsequent Events | |
In July of 2014 we issued additional 5,193,339 shares of common stock to various entities and individuals in exchange for net cash proceeds of $389,500. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The shares were not offered via general solicitation to the public. The Company issued rule 144 shares in connection with these issuances. In connection with this offering, , the Company issued to the purchasers warrants to purchase 5,193,339 shares of common stock at $0.12 per share, vesting immediately and expiring in 5 years from grant date. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | |||
Jun. 30, 2014 | ||||
Notes to Financial Statements | ' | |||
Going Concern Uncertainties | ' | |||
Management's Plan Regarding Going Concern | ||||
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern. During the year ended June 30, 2014, the Company incurred a net loss of $2,184,487. As of June 30, 2014, the Company had a working capital deficiency of $596,092 and a stockholders' deficit of $382,024. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. | ||||
The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from an inability of the Company to continue as a going concern. Management's plan is to generate income from operations by continuing to license its technology globally through our strategic partner, the Desmet Ballestra Group. Desmet has agreed to provide us monthly advances of $125,000 against future sales. During the year ended June 30, 2014, advances received from Desmet amounted to $1,375,000. We will also attempt to raise additional debt and/or equity financing to fund operations and to provide additional working capital. The Company raised $1,021,500 of equity financing during the year ended June 30, 2014 which significantly reduced our working capital deficiency and stockholders' deficit. Subsequent to June 30, 2014, the Company raised an additional $389,500 (See Note 13). However, there is no assurance that such financing will be available in the future or obtained in sufficient amounts necessary to meet the Company's needs, that the Company will be able to achieve profitable operations or that the Company will be able to meet its future contractual obligations. Should management fail to obtain such financing, the Company may curtail its operations. | ||||
Basis of Presentation | ' | |||
Basis of Presentation | ||||
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") as promulgated in the United States of America ("U.S."). | ||||
Principles of Consolidation | ' | |||
Principles of Consolidation | ||||
The consolidated financial statements include the accounts of Cavitation Technologies, Inc. and its wholly owned subsidiary Hydrodynamic Technology, Inc. Inter-company transactions and balances have been eliminated through consolidation. | ||||
Fair Value Measurement | ' | |||
Fair Value Measurement | ||||
FASB Accounting Standards Codification ("ASC") 820-10 requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet for which it is practicable to estimate fair value. ASC 820-10 defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. | ||||
In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are: | ||||
Level 1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. | ||||
Level 2 - inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||||
Level 3 - inputs are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. | ||||
As of June 30, 2014, the carrying value of certain accounts such as inventory, accounts payable, accrued expenses, accrued payroll and approximate fair value due to the short-term nature of such instruments. Debt balances are stated at historical amounts less principal payments, which approximate fair market value. The Company believes interest rates in its debt agreements are commensurate with lender risk profiles for similar companies | ||||
Use of Estimates | ' | |||
Use of Estimates | ||||
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing our stock options, warrants, convertible notes, and common stock issued for services, among other items. Actual results could differ from these estimates. | ||||
Revenue Recognition | ' | |||
Revenue Recognition | ||||
Revenue from the sale of our Nano Reactor® Systems is recognized when persuasive evidence of an agreement exists; shipment has occurred, including transfer of title and risk of loss for product sales, or services have been rendered for service revenues; the price to the buyer is fixed or determinable; and collectability is reasonably assured. | ||||
The Company is also entitled to certain profit share from its distributor from the sale of the reactors. The profit share is non-refundable and is recorded upon shipment of the reactors to the distributor. | ||||
Cash | ' | |||
Cash | ||||
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash equivalents are carried at cost which approximates market value. The Company maintains cash and cash equivalents in bank deposit accounts which, at times, may exceed federally insured limits. The Company has never experienced losses in such accounts and believes it is not exposed to significant credit risk on cash and cash equivalents. | ||||
Inventory | ' | |||
Inventory | ||||
Inventory, net of an allowance for excess quantities and obsolescence, is stated at the lower of cost or market. Cost is determined on a specific item basis. Inventory is composed of finished goods and represents costs incurred to manufacture our Nano Reactor® systems. | ||||
Property and Equipment | ' | |||
Property and Equipment | ||||
Property and equipment is presented at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Betterments, renewals, and extraordinary repairs that extend the life of the assets are capitalized; other repairs and maintenance charges are expensed as incurred. The cost and related accumulated depreciation applicable to retired assets are removed from the Company's accounts, and the gain or loss on dispositions, if any, is recognized in the consolidated statements of operations. | ||||
Property and equipment are recorded at cost and depreciated using the straight-line method over the following estimated useful lives. | ||||
Leasehold improvements | Shorter of life of asset or lease | |||
Furniture | 5-7 Years | |||
Office equipment | 5Years | |||
Lab equipment | 4 Years | |||
Skid systems (demo units) | 4 Years | |||
Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the years ended June 30, 2014 and 2013, the Company did not recognize any impairment for its property and equipment. | ||||
Patents | ' | |||
Patents | ||||
Capitalized patent costs represent legal fees associated with procuring and filing patent applications. The Company accounts for patents in accordance with ASC 350-30, General Intangibles Other Than Goodwill. The Company has five patents issued in fiscal 2013, 2012 and 2011. As of June 30, 2014, we have a total of 25 patents pending. The patents have duration of twenty years from filing date. We amortize our patents ouver a four year period which we believe is a reasonable estimate based upon our estimate of time until the next generation of reactors is developed or until other forms of competition appear. | ||||
As of June 30, 2014 and 2013, the Company had remaining unamortized patent costs of $67,473 and $70,315. At June 30, 2014, future estimated patent amortization costs are: | ||||
Year Ended | ||||
June 30, | Amount | |||
2015 | $ | 28,407 | ||
2016 | 21,323 | |||
2017 | 14,134 | |||
2018 | 3,609 | |||
Total | $ | 67,473 | ||
Impairment of Intangible and Long-Lived Assets | ' | |||
Impairment of Intangible and Long-Lived Assets | ||||
In accordance with ASC 350-30 (General Intangibles Other than Goodwill), the Company evaluates amortizable intangibles and long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. Based on the Company annual impairment tests, management believes there is no impairment of its intangibles and long-lived assets as of June 30, 2014 and 2013. There can be no assurance, however, that market conditions will not change or demand for the Company's products under development will continue. Either of these could result in future impairment of intangibles and long-lived assets. | ||||
Share-Based Compensation | ' | |||
Share-Based Compensation | ||||
The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. | ||||
The fair value of the Company's common stock option grant is estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods. | ||||
Income Taxes | ' | |||
Income Taxes | ||||
The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. The Company recognizes deferred tax assets and liabilities to reflect the estimated future tax effects, calculated at anticipated future tax rates, of future deductible or taxable amounts attributable to events that have been recognized on a cumulative basis in the financial statements. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. | ||||
ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. The Company classifies interest and penalties as a component of interest and other expenses. To date, there have been no interest or penalties assessed or paid. | ||||
The Company measures and records uncertain tax positions by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. | ||||
Advertising costs | ' | |||
Advertising costs | ||||
Advertising costs (including marketing expense) incurred in the normal course of operations are expensed as incurred. | ||||
Research and Development Costs | ' | |||
Research and Development Costs | ||||
Research and development expenses relate primarily to the development, design, testing of preproduction prototypes and models, compensation, and consulting fees, and are expensed as incurred. | ||||
Warranty Policy | ' | |||
Warranty Policy | ||||
The Company provides a limited warranty with every set of reactors sold, typically 2 to 5 years. The Company has not experienced significant claims under its warranty policy, and management determined no accrual for warranty reserve was necessary at June 30, 2014 or 2013. | ||||
Net Income (Loss) Per Share | ' | |||
Net Income (Loss) Per Share | ||||
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share is computed similar to basic net income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive securities had been issued. At June 30, 2014 potentially dilutive securities include options to acquire 13,611,815 shares of common stock and warrants to acquire 63,066,514 shares of common stock. At June 30, 2013 potentially dilutive securities include options to acquire 13,611,815 shares of common stock and warrants to acquire 18,433,867 shares of common stock. | ||||
Net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period. Basic and diluted net loss per common share is the same for all periods presented with a net loss because all warrants and stock options outstanding are anti-dilutive. | ||||
Recent Accounting Pronouncements | ' | |||
Recent Accounting Pronouncements | ||||
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting. | ||||
In April 2014, the FASB issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. | ||||
In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. | ||||
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. | ||||
Dependence on Desmet | ' | |||
Dependence on Desmet | ||||
Our revenue is almost entirely dependent on Desmet Ballestra who is our exclusive distribution agent with regard to the CTi Nano Neutralization® System for edible oils. During fiscal 2014 and 2013, 100% and 97%, respectively, of our revenue was derived from Desmet sales efforts (see Note 4). | ||||
Patents_Tables
Patents (Tables) | 12 Months Ended | |||
Jun. 30, 2014 | ||||
Patents Tables | ' | |||
Patents - future amortization expense | ' | |||
At June 30, 2014, future estimated patent amortization costs are: | ||||
Year Ended | ||||
June 30, | Amount | |||
2015 | $ | 28,407 | ||
2016 | 21,323 | |||
2017 | 14,134 | |||
2018 | 3,609 | |||
Total | $ | 67,473 | ||
Property_Plant_and_Equipment_T
Property, Plant and Equipment (Tables) | 12 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Property Plant And Equipment Tables | ' | ||||||
Components of Property, Plant and Equipment | ' | ||||||
Property and equipment consisted of the following as of June 30, 2014 and June 30, 2013: | |||||||
June 30, | June 30, | ||||||
2014 | 2013 | ||||||
Leasehold improvement | $ | 2,475 | $ | 2,475 | |||
Furniture | 26,837 | 26,837 | |||||
Office equipment | 1,499 | 1,499 | |||||
Equipment | 68,380 | 68,380 | |||||
Systems | 268,340 | 225,085 | |||||
367,531 | 324,276 | ||||||
Less: accumulated depreciation and amortization | -230,436 | -158,208 | |||||
Property & Equipment, net | $ | 137,095 | $ | 166,068 | |||
Stockholders_Deficit_Stock_Opt
Stockholders' Deficit (Stock Options) (Tables) | 12 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
Stockholders Deficit Stock Options Tables | ' | |||||||||||||
Summary of Share-Based Compensation Arrangements By Share-Based Payment Award (Tables) | ' | |||||||||||||
A summary of the stock option activity from June 30, 2014 and 2013 is as follows: | ||||||||||||||
Weighted- | ||||||||||||||
Average | ||||||||||||||
Weighted- | Remaining | |||||||||||||
Average | Contractual | |||||||||||||
Exercise | Life | |||||||||||||
Options | Price | (Years) | ||||||||||||
Outstanding June 30, 2012 | 13,560,957 | $ | 0.10 | 8.95 | ||||||||||
- Granted | 10,550,858 | 0.03 | 9.50 | |||||||||||
- Forfeited | -10,500,000 | - | - | |||||||||||
- Exercised | - | - | - | |||||||||||
- Expired | - | - | - | |||||||||||
Outstanding June 30, 2013 | 13,611,815 | 0.10 | 8.17 | |||||||||||
- Granted | - | - | - | |||||||||||
- Forfeited | - | - | - | |||||||||||
- Exercised | - | - | - | |||||||||||
- Expired | - | - | - | |||||||||||
Outstanding at June 30, 2014 | 13,611,815 | $ | 0.10 | 6.37 | ||||||||||
Exercisable at June 30, 2014 | 13,611,815 | $ | 0.10 | 6.37 | ||||||||||
Vested at June 30, 2014 | 13,611,815 | $ | 0.10 | 6.37 | ||||||||||
Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block] | ' | |||||||||||||
The following table summarizes additional information concerning options outstanding and exercisable at June 30, 2014. | ||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||
Weighted | Weighted | Weighted | ||||||||||||
Average | Average | Average | ||||||||||||
Exercise | Number | Remaining | Exercise | Number | Remaining | |||||||||
Price | of Shares | Life (Years) | Price | of Shares | Life (Years) | |||||||||
$ | 0.03 | 11,800,858 | 6.96 | $ | 0.03 | 11,800,858 | $ | 6.96 | ||||||
$ | 0.33 | 637,297 | 2.31 | $ | 0.33 | 637,297 | $ | 2.31 | ||||||
$ | 0.67 | 1,173,660 | 2.68 | $ | 0.67 | 1,173,660 | $ | 2.68 | ||||||
13,611,815 | 13,611,815 | |||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | ' | |||||||||||||
The table below represents the assumptions for valuing the options and warrants granted in fiscal 2014 and 2013: | ||||||||||||||
Year Ended June 30, | ||||||||||||||
2014 | 2013 | |||||||||||||
Expected life in years | 10-Mar | 10-Mar | ||||||||||||
Stock price volatility | 185% - 232% | 211% - 225% | ||||||||||||
Risk free interest rate | 1.44% - 3.50% | 0.37% - 1.84% | ||||||||||||
Expected dividends | None | None | ||||||||||||
Forfeiture rate | 0% | 0% | ||||||||||||
Stockholders_Deficit_Warrants_
Stockholders' Deficit (Warrants Outstanding) (Tables) | 12 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
Stockholders Deficit Warrants Outstanding Tables | ' | |||||||||||||
Warrants Outstanding (Tables) | ' | |||||||||||||
A summary of the Company's warrant activity and related information from as of June 30, 2014 and 2013 is as follows. | ||||||||||||||
Weighted- | ||||||||||||||
Average | ||||||||||||||
Weighted- | Remaining | |||||||||||||
Average | Contractual | |||||||||||||
Exercise | Life | |||||||||||||
Warrants | Price | (Years) | ||||||||||||
Outstanding at June 30, 2012 | 11,222,287 | $ | 0.42 | 0.85 | ||||||||||
Granted | 15,703,933 | 0.05 | 7.76 | |||||||||||
Exercised | - | - | - | |||||||||||
Expired | -8,492,353 | 0.46 | - | |||||||||||
Outstanding at June 30, 2013 | 18,433,867 | 0.09 | 6.74 | |||||||||||
Granted | 47,362,581 | 0.07 | 7.40 | |||||||||||
Exercised | - | - | - | |||||||||||
Expired | -2,729,934 | 0.50 | - | |||||||||||
Outstanding at June 30, 2014 | 63,066,514 | $ | 0.06 | 6.91 | ||||||||||
Vested and expected to vest at June 30, 2014 | 59,774,848 | $ | 0.07 | 6.85 | ||||||||||
Exercisable at June 30, 2014 | 59,774,848 | $ | 0.07 | 6.85 | ||||||||||
The following table summarizes additional information concerning warrants outstanding and exercisable at June 30, 2014. | ||||||||||||||
Warrants Outstanding | Warrants Exercisable | |||||||||||||
Weighted | Weighted | Weighted | ||||||||||||
Average | Average | Average | ||||||||||||
Exercise | Number | Remaining | Exercise | Number | Exercise | |||||||||
Price | of Shares | Life (Years) | Price | of Shares | Price | |||||||||
$ | 0.04 - 0.07 | 47,933,184 | 7.51 | $ | 0.05 | 44,641,518 | $ | 0.05 | ||||||
$ | 0.12 | 15,133,330 | 5 | $ | 0.12 | 15,133,330 | $ | 0.12 | ||||||
63,066,514 | 59,774,848 | |||||||||||||
income_Taxes_Tables
income Taxes (Tables) | 12 Months Ended | ||
Jun. 30, 2014 | |||
Income Taxes Tables | ' | ||
Summary of Income Tax Examinations [Table Text Block] | ' | ||
The following summarizes the open tax years for each major jurisdiction: | |||
Jurisdiction | Open Tax Years | ||
Federal | 2009 - 2013 | ||
California | 2008 - 2013 | ||
Commitments_Tables
Commitments (Tables) | 12 Months Ended | |||
Jun. 30, 2014 | ||||
Commitments Tables | ' | |||
Future minimum annual operating lease payments | ' | |||
Future minimum lease payments under non-cancelable operating leases are: | ||||
For the Years Ended | ||||
June 30, | Amount | |||
2015 | $ | 54,132 | ||
2016 | 31,577 | |||
Total | $ | 85,709 | ||
Going_Concern_Narrative_Detail
Going Concern (Narrative) (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
Jul. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Going Concern Narrative Details | ' | ' | ' | ' |
Net loss | ' | ($2,184,487) | ($988,126) | ' |
Working capital deficiency | ' | -596,092 | ' | ' |
Total stockholders' deficit | ' | -382,024 | -2,126,530 | -1,963,972 |
Minimum monthly advances from Desmet | ' | 125,000 | ' | ' |
Year-to-date advances from Desmet | ' | 1,375,000 | ' | ' |
Common stock issued for cash, amount | $389,500 | $1,021,500 | ' | ' |
Significant_Accounting_Policie
Significant Accounting Policies (Property and Equipment Lives) (Details) | 12 Months Ended |
Jun. 30, 2014 | |
Leasehold improvements | ' |
Property, Plant and Equipment, Estimated Useful Lives | ' |
Shorter of life of asset or lease | |
Furniture | ' |
Property, Plant and Equipment, Estimated Useful Lives | ' |
5-7 Years | |
Office equipment | ' |
Property, Plant and Equipment, Estimated Useful Lives | ' |
5 Years | |
Lab equipment | ' |
Property, Plant and Equipment, Estimated Useful Lives | ' |
4 Years | |
Skid systems (demo units) | ' |
Property, Plant and Equipment, Estimated Useful Lives | ' |
4 Years | |
Significant_Accounting_Policie1
Significant Accounting Policies (Impairment of Intangibles and Long-Lived Assets Narrative) (Details) (USD $) | 12 Months Ended |
Jun. 30, 2014 | |
Significant Accounting Policies Impairment Of Intangibles And Long-lived Assets Narrative Details | ' |
Impairment of Long-lived Assets | $0 |
Significant_Accounting_Policie2
Significant Accounting Policies (Patent Future Amortization) (Details) (USD $) | Jun. 30, 2014 |
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract] | ' |
2015 | $28,407 |
2016 | 21,323 |
2017 | 14,134 |
2018 | 3,609 |
Total | $67,473 |
Significant_Accounting_Policie3
Significant Accounting Policies (Patents Narrative) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Significant Accounting Policies Patents Narrative Details | ' | ' |
Number of patents grant in fiscal 2013, 2012 and 2011 | ' | 5 |
Number of patents granted in current fiscal year | 3 | ' |
Number of patents pending | 25 | ' |
Patent life from filing date, years | '20 years | ' |
Unamortized patent costs | $67,473 | $70,315 |
Significant_Accounting_Policie4
Significant Accounting Policies (Income Taxes Narrative) (Details) (USD $) | Jun. 30, 2014 |
Significant Accounting Policies Income Taxes Narrative Details | ' |
Accrued penalties and interest | $0 |
Significant_Accounting_Policie5
Significant Accounting Policies (Advertising and Promotion Costs Narrative) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Significant Accounting Policies Advertising And Promotion Costs Narrative Details | ' | ' |
Advertising and marketing expenses | $7,871 | $20,092 |
Significant_Accounting_Policie6
Significant Accounting Policies (Warranty Narrative) (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Significant Accounting Policies Warranty Narrative Details | ' | ' |
Warranty accrual | $0 | $0 |
Significant_Accounting_Policie7
Significant Accounting Policies Net Income (Loss) per Share - (Narrative) (Details) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Stock Options | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share | 13,611,815 | 13,611,815 |
Warrants | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share | 63,066,514 | 18,433,867 |
Significant_Accounting_Policie8
Significant Accounting Policies (Concentrations Narrative) (Details) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Significant Accounting Policies Concentrations Narrative Details | ' | ' |
Sales revenue, major customer, percentage | 100.00% | 97.00% |
Agreement_with_Desmet_Ballestr
Agreement with Desmet Ballestra ( Narrative) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Agreement With Desmet Ballestra Narrative Details | ' | ' |
Research and Development Arrangement, Contract to Perform for Others, Description and Terms | ' | ' |
On May 14, 2012 we signed a global R and D, Marketing and Technology License Agreement with the n.v. Desmet Ballestra Group s.a. (Desmet), a Belgian company that is actively marketing the NANO Neutralization System, the key component of which is the Company's reactor to soybean and other vegetable oil refiners. The Agreement provides Desmet (licensee) a limited, exclusive license and right to develop, design and supply Nano Reactor® systems which incorporate Nano Reactor® devices on a global basis but is limited to oils and fats and oleo chemical applications. CTi (licensor) remains owner of the current patents and patent applications but Desmet will be co-owner of any new process patent applications jointly developed. Desmet has agreed to provide, under certain conditions, limited monthly advance payments of $125,000 against future sales to CTi. Desmet shall be entitled to immediately terminate the present agreement in case the claims of current US Patent Application Number 12/484,981 are not granted as such or are cancelled. In addition, Desmet may terminate the agreement on August 1 of any particular year if they have not installed at least 6 Nano Reactor® devices in the previous 12 month period. CTi may terminate the Agreement for material default. This Agreement supersedes a previous agreement dated November 1, 2010, amended on June 1, 2011 and on September 2, 2011. | ||
Desmet, together with its affiliates, is a global engineering and equipment supply firm engaged in the development, design and supply of process equipment for oils and fats processing facilities including vegetable oil refining, biofuel, oleo chemical, seed crushing, surfactant and detergent markets. Desmet supplies these markets with competitive services based on the latest globally sourced technologies. | ||
The Company and Desmet have worked together to determine the appropriate sales approach and installation process. The Company's Nano Neutralization is designed to be used as an add-on process to an existing neutralization system within soybean and other vegetable oil refineries. Desmet purchases Nano Reactor Systems from the Company and installs them at the refinery as part of an integrated neutralization system. We are therefore substantially dependent on Desmet to identify prospects, complete sales contracts, install the system and manage relationships with end-users. | ||
Sales Revenue, Goods, Net | $1,855,707 | $1,223,210 |
Advances received from Desmet | 1,375,000 | 1,375,000 |
Advances from distributor | $734,956 | $1,215,663 |
Property_Plant_and_Equipment_D
Property, Plant and Equipment (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Balance Sheet Related Disclosures [Abstract] | ' | ' |
Leasehold improvement | $2,475 | $2,475 |
Furniture | 26,837 | 26,837 |
Office equipment | 1,499 | 1,499 |
Equipment | 68,380 | 68,380 |
Systems | 268,340 | 225,085 |
Property and equipment, gross | 367,531 | 324,276 |
Less: Accumulated depreciation | -230,436 | -158,208 |
Property, plant and equipment, net | $137,095 | $166,068 |
Property_Plant_and_Equipment_D1
Property, Plant and Equipment (Depreciation Expense Narrative) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Property Plant And Equipment Depreciation Expense Narrative Details | ' | ' |
Depreciation expense | $72,227 | $59,605 |
Accrued_Payroll_and_Payroll_Ta
Accrued Payroll and Payroll Taxes (Narrative) (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Accrued Payroll And Payroll Taxes Narrative Details | ' | ' |
Accrued salaries of officers | $1,030,331 | $1,016,223 |
Convertible_Notes_Payable_Narr
Convertible Notes Payable (Narrative) (Details) (Collins Note, USD $) | 1 Months Ended | ||
Dec. 31, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | |
Collins Note | ' | ' | ' |
Amount of Convertible Promissory Notes | ' | $0 | $100,000 |
Interest rate on convertible notes | ' | 12.00% | ' |
Debt instrument, description | ' | ' | ' |
On December 17, 2012 we issued a convertible promissory note payable to a private party, in the amount of $100,000 with an interest rate of 12% per annum and due May 31, 2014. The note is unsecured, convertible into shares of our common stock at a conversion price of $0.03 any time during the life of the note. Also, 3,333,333 fully vested warrants with a fair value of $90,106 were issued in connection with this note. The warrants are exercisable at $0.07/share and will expire in 3 years. The fair value of the warrants was recorded as a note discount and was being amortized to interest expense over the term of the note. As of June 30, 2013, the outstanding balance of note amounted to $100,000 less unamortized note discount of $55,174 resulting in a net balance of $44,826. | |||
On December 2, 2013 the $100,000 Note was converted into 3,333,333 shares of the Company's common stock and the unamortized balance of the note discount of $55,174 was recognized as interest expense. | |||
Debt Instrument, Maturity Date | 13-May-14 | ' | ' |
Conversion Price, per share | ' | $0.03 | ' |
Warrants issued in connection with note | ' | 3,333,333 | ' |
Unamortized note discount | ' | 0 | 55,174 |
Interest payable | ' | 0 | ' |
Interest expense | $55,174 | ' | ' |
Short_Term_Loans_Related_Parti
Short Term Loans - Related Parties (Narrative) (Details) (USD $) | 1 Months Ended | 12 Months Ended | |
Jul. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | |
Short-term loans, related party | ' | $0 | $185,000 |
Common stock issued, amount | 389,500 | 1,021,500 | ' |
West Point Partners, LLC | ' | ' | ' |
Related Party Transaction, Description of Transaction | ' | ' | ' |
As of June 30, 2012, we had received $185,000 from West Point Partners, LLC, whose managing partner is the Company's Principal Accounting Officer. These funds were due on demand, and accrued an annual interest rate of 12%. As of June 30, 2013, outstanding balance of the loan amounted to $185,000 and accrued interest of $26,650. | |||
On April 1, 2014, we granted an aggregate of 7,610,000 shares of common stock with a fair value of $684,900 along with 7,610,000 warrants with a fair value of $683,983 to settle this demand note with a face value of $185,000 and accrued interest of $43,300. The shares have not been issued as June 30, 2014, and will be issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The shares were not offered via general solicitation to the public. The Company issued rule 144 shares in connection with these issuances. No sales commissions or other remuneration was paid in connection with this issuance. | |||
Related Party Transaction, Rate | ' | 12.00% | ' |
Short Term Loan from Related Party | ' | 185,000 | ' |
Short-term loans, related party | ' | 0 | 185,000 |
Interest payable to related party | ' | 0 | 26,650 |
Warrants issued in connection with note | ' | 7,610,000 | ' |
Common stock issued, shares | ' | 7,610,000 | ' |
Common stock issued, amount | ' | $684,900 | ' |
Short_Term_Loans_Narrative_Det
Short Term Loans (Narrative) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Loan Balance Amount | $0 | $34,521 |
Strategic Party | ' | ' |
Interest rate | 12.00% | ' |
Loan Agreement, Face Amount | 34,521 | 34,521 |
Loan Balance Amount | 34,521 | 34,521 |
Short-term Debt, Terms | ' | ' |
As of June 30, 2012, we had received $34,521 from a third party, Strategic IR. These funds were due on demand and pay an annual interest rate of 12%. As of June 30, 2013, outstanding balance of the loan amounted to $34,521 and accrued interest of $4,950. | ||
On April 1, 2014, we granted an aggregate of 1,419,251 shares of common stock to Strategic IR with a fair value of $127,733 along with 1,419,251 warrants with a fair value of $127,432 to settle this demand note with a face value of $34,521 and accrued interest of $8,057. The shares have not been issued as June 30, 2014, and will be issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The shares were not offered via general solicitation to the public. The Company issued rule 144 shares in connection with these issuances. No sales commissions or other remuneration was paid in connection with this issuance. | ||
Interest payable | 8,057 | ' |
Interest expense | $3,107 | ' |
Stockholders_Deficit_Stock_Opt1
Stockholders' Deficit (Stock Options - Summary Of Option Activity) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Stockholders Deficit Stock Options - Summary Of Option Activity Details | ' | ' |
Outstanding at beginning of period | 13,611,815 | 13,560,957 |
Granted | 0 | 10,550,858 |
Exercised | 0 | ' |
Forfeited / Expired | 0 | -10,500,000 |
Outstanding at end of period | 13,611,815 | 13,611,815 |
Vested at June 30, 2014 | 13,611,815 | ' |
Exercisable at June 30, 2014 | 13,611,815 | ' |
Weighted-Average Exercise Prices, Granted | ' | $0.03 |
Weighted-Average Exercise Prices, Outstanding at end of period | $0.10 | ' |
Weighted-Average Exercise Prices, Vested and expected to vest | $0.10 | ' |
Weighted-Average Exercise Prices, Exercisable | $0.10 | ' |
Weighted-Average Remaining Contractual Life (in years), Outstanding at June 30, 2014 | '6 years 135 days | ' |
Weighted-Average Remaining Contractual Life (in years), Exercisable | '6 years 135 days | ' |
Weighted-Average Remaining Contractual Life (in years), Vested and expected to vest | '6 years 135 days | ' |
Stockholders_Deficit_Stock_Opt2
Stockholders' Deficit (Stock Options - Activity Summary Of Stock Options Outstanding and Exercisable) (Details) (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Options Outstanding, Number of Shares | 13,611,815 | 13,611,815 | 13,560,957 |
Options Outstanding, Weighted-Average Remaining Life (in years) | '6 years 135 days | ' | ' |
Options Outstanding, Weighted-Average Exercise Price Per Share | $0.10 | ' | ' |
Options Exercisable, Number of Shares | 13,611,815 | ' | ' |
Option, Exercisable, Weighted Average Remaining Contractual Term | '6 years 135 days | ' | ' |
$0.03 | ' | ' | ' |
Exercise Price | $0.03 | ' | ' |
Options Outstanding, Number of Shares | 11,800,858 | ' | ' |
Options Outstanding, Weighted-Average Remaining Life (in years) | '6 years 350 days | ' | ' |
Options Outstanding, Weighted-Average Exercise Price Per Share | $0.03 | ' | ' |
Options Exercisable, Number of Shares | 11,800,858 | ' | ' |
Option, Exercisable, Weighted Average Remaining Contractual Term | '6 years 350 days | ' | ' |
$0.33 | ' | ' | ' |
Exercise Price | $0.33 | ' | ' |
Options Outstanding, Number of Shares | 637,297 | ' | ' |
Options Outstanding, Weighted-Average Remaining Life (in years) | '2 years 113 days | ' | ' |
Options Outstanding, Weighted-Average Exercise Price Per Share | $0.33 | ' | ' |
Options Exercisable, Number of Shares | 637,297 | ' | ' |
Option, Exercisable, Weighted Average Remaining Contractual Term | '2 years 113 days | ' | ' |
$0.67 | ' | ' | ' |
Exercise Price | $0.67 | ' | ' |
Options Outstanding, Number of Shares | 1,173,660 | ' | ' |
Options Outstanding, Weighted-Average Remaining Life (in years) | '2 years 242 days | ' | ' |
Options Outstanding, Weighted-Average Exercise Price Per Share | $0.67 | ' | ' |
Options Exercisable, Number of Shares | 1,173,660 | ' | ' |
Option, Exercisable, Weighted Average Remaining Contractual Term | '2 years 242 days | ' | ' |
Stockholders_Deficit_Warrants_1
Stockholders' Deficit (Warrants - Summary Of Warrant Activity) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Stockholders Deficit Warrants - Summary Of Warrant Activity Details | ' | ' |
Warrants outstanding at beginning of period | 18,433,867 | 11,222,287 |
Granted | 47,362,581 | 15,703,933 |
Exercised | 0 | 0 |
Expired | -2,729,934 | -8,492,353 |
Warrants outstanding at end of period | 63,066,514 | 18,433,867 |
Weighted-average exercise price, beginning balance | $0.09 | $0.42 |
Weighted-average exercise price, granted | $0.07 | $0.05 |
Weighted-average exercise price, exercised during period | $0 | $0 |
Weighted-average exercise price, expired during period | $0.50 | $0.46 |
Weighted-average exercise price, ending balance | $0.06 | $0.09 |
Weighted-Average Remaining Contractual Life (in years), Outstanding at June 30, 2014 | '6 years 332 days | ' |
Vested and expected to vest at June 30, 2014 | 59,774,848 | ' |
Exercisable at June 30, 2014 | 59,774,848 | ' |
Weighted-Average Exercise Prices, Vested and expected to vest | $0.07 | ' |
Weighted-Average Exercise Prices, Exercisable | $0.07 | ' |
Weighted-Average Remaining Contractual Life (in years), Vested and expected to vest | 6.85 | ' |
Weighted-Average Remaining Contractual Life (in years), Exercisable | 6.85 | ' |
Stockholders_Deficit_Warrants_2
Stockholders' Deficit (Warrants - Outstanding and Exercisable Warrants) (Details) (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Warrants outstanding at June 30, 2014 | 63,066,514 | 18,433,867 | 11,222,287 |
Warrants outstanding, Weighted-average remaining life, in years | '6 years 332 days | ' | ' |
Warrants exercisable, at June 30, 2014 | 59,774,848 | ' | ' |
$0.04 - 0.07 | ' | ' | ' |
Range of Exercise Price, Minimum | 0.04 | ' | ' |
Range of Exercise Price, Maximum | 0.07 | ' | ' |
Warrants outstanding at June 30, 2014 | 47,933,184 | ' | ' |
Warrants outstanding, Weighted-average remaining life, in years | '7 years 186 days | ' | ' |
Warrants outstanding, Weighted-average exercise price | 0.05 | ' | ' |
Warrants exercisable, at June 30, 2014 | 44,641,518 | ' | ' |
Warrants exercisable, Weighted-average exercise price | 0.05 | ' | ' |
$0.12 | ' | ' | ' |
Range of Exercise Price, Minimum | 0.12 | ' | ' |
Range of Exercise Price, Maximum | 0.12 | ' | ' |
Warrants outstanding at June 30, 2014 | 15,133,330 | ' | ' |
Warrants outstanding, Weighted-average remaining life, in years | '5 years | ' | ' |
Warrants outstanding, Weighted-average exercise price | 0.12 | ' | ' |
Warrants exercisable, at June 30, 2014 | 15,133,330 | ' | ' |
Warrants exercisable, Weighted-average exercise price | 0.12 | ' | ' |
Stockholders_Deficit_Assumptio
Stockholders' Deficit (Assumptions for Valuing Stock Options and Warrants) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Stockholders Deficit Assumptions For Valuing Stock Options And Warrants Details | ' | ' |
Expected life, in years, minimum | '3 years 0 months 0 days | '53 years 0 months 0 days |
Expected life, in years, maximum | '10 years 0 months 0 days | '10 years 0 months 0 days |
Stock price volatility, minimum | 185.00% | 211.00% |
Stock price volatility, maximum | 232.00% | 225.00% |
Risk free interest rate, minimum | 1.44% | 0.37% |
Risk free interest rate, maximum | 3.50% | 1.84% |
Expected dividends | $0 | $0 |
Forfeiture rate | 0.00% | 0.00% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used | ' | ' |
The assumptions used in the Black Scholes models referred to above are based upon the following data: (1) The contractual life of the underlying non-employee options is the expected life. The expected life of the employee option is estimated by considering the contractual term of the option, the vesting period of the option, the employees' expected exercise behavior and the post-vesting employee turnover rate. (2) The expected stock price volatility was based upon the Company's historical stock price over the expected term of the option. (3) The risk free interest rate is based on published U.S. Treasury Department interest rates for the expected terms of the underlying options. (4) The expected dividend yield was based on the fact that the Company has not paid dividends to common shareholders in the past and does not expect to pay dividends to common shareholders in the future. (5) The expected forfeiture rate is based on historical forfeiture activity and assumptions regarding future forfeitures based on the composition of current grantees. |
Income_Taxes_Narrative_1_Detai
Income Taxes (Narrative 1) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Income Taxes Narrative 1 Details | ' | ' |
Income tax expense | $0 | $0 |
Income taxes payable | 0 | ' |
Unrecognized tax benefits | $0 | ' |
Income_Taxes_Narrative_2_Detai
Income Taxes (Narrative 2) (Details) (USD $) | 12 Months Ended |
Jun. 30, 2014 | |
Federal | ' |
Operating Loss Carryforwards | $8,100,000 |
Operating loss carryforwards, expiration dates | 30-Jun-27 |
Open Tax Years by Major Tax Jurisdiction | ' |
Federal: 2009-2013 | |
The Company's net operating loss carryforwards are subject to IRS examination until they are utilized and such tax years are closed. | |
California | ' |
Operating Loss Carryforwards | $8,100,000 |
Operating loss carryforwards, expiration dates | 30-Jun-17 |
Open Tax Years by Major Tax Jurisdiction | ' |
California 2008- 2013 | |
The Company's net operating loss carryforwards are subject to IRS examination until they are utilized and such tax years are closed. | |
Commitments_Operating_Leases_D
Commitments (Operating Leases) (Details) (USD $) | Jun. 30, 2014 |
Commitments Operating Leases Details | ' |
2015 | $54,132 |
2016 | 31,577 |
Total | $85,709 |
Commitments_and_Contingencies_
Commitments and Contingencies (Lease Agreements Narrative) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Commitments And Contingencies Lease Agreements Narrative Details | ' | ' |
Rent expense | $54,130 | $54,130 |
Future monthly rental payment | 4,511 | ' |
Lease expiration date | 1-Feb-16 | ' |
Security deposit | $9,500 | ' |
Commitments_and_Contingencies_1
Commitments and Contingencies (Royalty Agreements Narrative) (Details) (USD $) | 12 Months Ended |
Jun. 30, 2014 | |
Commitments And Contingencies Royalty Agreements Narrative Details | ' |
Royalty agreements description | ' |
Royalty Agreements | |
On July 1, 2008, our wholly owned subsidiary entered into Patent Assignment Agreements with two parties, our President as well as our former CEO and current CTO, where certain devices and methods involved in the hydrodynamic cavitation processes invented by the President and former CEO/current CTO have been assigned to the Company. In exchange, the Company agreed to pay a royalty of 5% of gross revenues to each of the CTO and President and former CEO for licensing of the technology and leasing of the related equipment embodying the technology. These agreements were subsequently assigned to Cavitation Technologies on May 13, 2010. The Company's CTO and President both waived their rights to receive royalty payments that have accrued, or that may accrue, on any gross revenue generated through June 30, 2014. | |
On April 30, 2008 (as amended November 22, 2010), our wholly owned subsidiary entered into an employment agreement with the Director of Chemical and Analytical Department (the "Inventor") who shall receive an amount equal to 5% of actual gross royalties received from the royalty stream in the first year in which the Company receives royalty payments from the patent which the Inventor was the legally named inventor, and 3% of actual gross royalties received by the Company resulting from the patent in each subsequent year. As of June 30, 2014, no patents have been granted in which this person is the legally named inventor. | |
Royalty expense | $0 |
Subsequent_Events_Narrative_De
Subsequent Events (Narrative) (Details) | 12 Months Ended |
Jun. 30, 2014 | |
Subsequent Events Narrative Details | ' |
Subsequent Event, Description | ' |
In April 2014, the Company granted a consultant 1 million shares of our common stock with a fair value of approximately $90,000 as an incentive for the consultant's continuous involvement with the Company. | |