Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2020 | Oct. 05, 2020 | Dec. 31, 2019 | |
Cover [Abstract] | |||
Entity Registrant Name | Cavitation Technologies, Inc. | ||
Entity Central Index Key | 0001376793 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2020 | ||
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 | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Public Float | $ 5,077,000 | ||
Entity Common Stock, Shares Outstanding | 196,997,906 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Entity Shell Company | false | ||
Entity Interactive Data Current | Yes | ||
Entity File Number | 000-53239 | ||
Entity Incorporation State Country Code | NV |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Jun. 30, 2019 |
Current assets | ||
Cash | $ 759,000 | $ 649,000 |
Accounts receivable, net of allowance for doubtful accounts of $5,000 and $0, respectively | 104,000 | 240,000 |
Inventory | 47,000 | 57,000 |
Total current assets | 910,000 | 946,000 |
Property and equipment, net | 76,000 | 65,000 |
Right-of-use assets, net of accumulated amortization of $60,000 | 308,000 | 0 |
Other assets | 10,000 | 10,000 |
Total assets | 1,304,000 | 1,021,000 |
Current liabilities: | ||
Accounts payable and accrued expenses | 316,000 | 187,000 |
Accrued payroll and payroll taxes related parties | 693,000 | 892,000 |
Related party payable | 1,000 | 1,000 |
Operating lease liability, current portion | 54,000 | 0 |
Advances from distributors | 368,000 | 760,000 |
Total current liabilities | 1,432,000 | 1,840,000 |
Operating lease liability, net of current portion | 258,000 | 0 |
Note payable, non-current | 104,000 | 0 |
Total Liabilities | 1,794,000 | 1,840,000 |
Stockholders' deficit: | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of June 30, 2020 and 2019, respectively | 0 | 0 |
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 196,997,906 shares issued and outstanding as of June 30, 2020 and 2019, respectively | 197,000 | 197,000 |
Additional paid-in capital | 23,291,000 | 23,090,000 |
Accumulated deficit | (23,978,000) | (24,106,000) |
Total stockholders' deficit | (490,000) | (819,000) |
Total liabilities and stockholders' deficit | $ 1,304,000 | $ 1,021,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 5,000 | $ 0 |
Amortization of operating lease right-of-use assets | $ 60,000 | $ 0 |
Preferred Stock, par value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common Stock, shares issued | 196,997,906 | 196,997,906 |
Common Stock, shares outstanding | 196,997,906 | 196,997,906 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||
Revenue | $ 1,663,000 | $ 1,090,000 |
Cost of revenue | (40,000) | (69,000) |
Gross profit | 1,623,000 | 1,021,000 |
General and administrative expenses | 1,469,000 | 1,719,000 |
Research and development expenses | 18,000 | 25,000 |
Total operating expenses | 1,487,000 | 1,744,000 |
Income (loss) from operations | 136,000 | (723,000) |
Loss on transfer of accrued payroll | (8,000) | 0 |
Income (loss) before income taxes | 128,000 | (723,000) |
Provision for income taxes | 0 | 0 |
Net income (loss) | $ 128,000 | $ (723,000) |
Net income (loss) per share, Basic and Diluted | $ 0 | $ 0 |
Weighted average shares outstanding, Basic and Diluted | 196,997,906 | 196,997,906 |
Consolidated Statements Of Chan
Consolidated Statements Of Changes In Stockholders' Deficit - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Jun. 30, 2018 | 196,997,906 | |||
Beginning balance, value at Jun. 30, 2018 | $ 197,000 | $ 22,641,000 | $ (23,383,000) | $ (545,000) |
Fair value of warrants granted for services | 115,000 | 115,000 | ||
Fair value of amended options and warrants | 334,000 | 334,000 | ||
Net loss | (723,000) | (723,000) | ||
Ending balance, shares at Jun. 30, 2019 | 196,997,906 | |||
Ending balance, value at Jun. 30, 2019 | $ 197,000 | 23,090,000 | (24,106,000) | (819,000) |
Fair value of warrants granted for services | 194,000 | 194,000 | ||
Fair value of amended options and warrants | 7,000 | 7,000 | ||
Net loss | 128,000 | 128,000 | ||
Ending balance, shares at Jun. 30, 2020 | 196,997,906 | |||
Ending balance, value at Jun. 30, 2020 | $ 197,000 | $ 23,291,000 | $ (23,978,000) | $ (490,000) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 128,000 | $ (723,000) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 39,000 | 41,000 |
Fair value of warrants granted for services | 194,000 | 115,000 |
Fair value of amended options and warrants | 7,000 | 334,000 |
Amortization of operating lease right-of-use assets | 60,000 | 0 |
Loss on transfer of accrued payroll | 8,000 | 0 |
Allowance for bad debts | 5,000 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 131,000 | (240,000) |
Inventory | 10,000 | (23,000) |
Accounts payable and accrued expenses | (75,000) | (120,000) |
Accrued payroll and payroll taxes due to officers | (3,000) | 3,000 |
Advances from distributor | (392,000) | 333,000 |
Operating lease liability | (56,000) | 0 |
Net cash provided by (used in) operating activities | 56,000 | (280,000) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (50,000) | (16,000) |
Net cash used in investing activities | (50,000) | (16,000) |
Cash flows from financing activities: | ||
Proceeds from note payable | 104,000 | 0 |
Net cash provided by financing activities | 104,000 | 0 |
Net increase (decrease) in cash and cash equivalents | 110,000 | (296,000) |
Cash and cash equivalents, beginning of period | 649,000 | 945,000 |
Cash and cash equivalents, end of period | 759,000 | 649,000 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 0 | 0 |
Cash paid for income taxes | 0 | 0 |
Supplemental disclosures on non-cash investing and financing activities | ||
Transfer of accrued payroll to accounts payable and accrued expenses | 204,000 | 0 |
Initial recognition of operating lease right-of-use assets and operating lease obligations upon adoption of ASC Topic 842 | $ 368,000 | $ 0 |
1. Organization and Summary of
1. Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Accounting Policies | Note 1 – Organization and Summary of Significant Accounting Policies Cavitation Technologies, Inc. (“the Company,” “CTi,” “we,” “us,” and “our”) is a Nevada corporation originally incorporated in January 2007 under the name Bio Energy, Inc. The Company has developed, patented, and commercialized proprietary technology that may be used in liquid processing applications. Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, at June 30, 2020, the Company had a stockholders’ deficit of $490,000 and a working capital deficiency of $522,000. 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 that may result from an inability of the Company to continue as a going concern. At June 30, 2020, the Company had cash in the amount of $759,000. The Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its business plan. Currently, management’s plan is to increase revenues by continuing to license its technology globally. While the Company believes in the viability of its strategy to increase revenues, there can be no assurances to that effect. Currently, we have a R&D, Marketing and Technology License agreement with Desmet in which Desmet provides advances to the Company of $50,000 per month through October 2021. The Company may also attempt to raise additional debt and/or equity financing to fund operations and to provide additional working capital. 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. COVID-19 In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, has adversely affected workforces, customers, economies, and financial markets globally. It has also disrupted the normal operations of many businesses. This outbreak could decrease spending, adversely affect demand for the Company’s products, and harm the Company’s business and results of operations. During the year ended June 30, 2020, the Company believes the COVID-19 pandemic did not materially impact its operating results due to the nature of the Company’s business and its operations. The Company has not observed any impairments of its assets or a significant change in the fair value of its assets due to the COVID-19 pandemic. At this time, it is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or results of operations, financial condition, or liquidity. As of June 30, 2020, the Company has been following the recommendations of local health authorities to minimize exposure risk for its employees, including the temporary closure of its corporate office and having employees work remotely. Most vendors have transitioned to electronic submission of invoices and payments. Principles of Consolidation The consolidated financial statements include the accounts of Cavitation Technologies, Inc. and its wholly owned subsidiary Hydrodynamic Technology, Inc. Intercompany transactions and balances have been eliminated in consolidation. 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 include estimates for allowance for doubtful accounts, reserves for inventory obsolescence, assumptions used in valuing our stock options, stock warrants and common stock issued for services, the valuation allowance for our deferred tax asset, and the accrual of potential liabilities. Actual results could differ from these estimates. Revenue Recognition The Company follows the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers Revenue from sale of our Nano Reactors is recognized when products are shipped from our manufacturing facilities as this is our sole performance obligation under these contracts and we have no continuing obligation to the customer. The Company also recognizes revenue from its share of gross profit to be earned from distributors, as defined, which we treat as variable consideration and recognize using the most likely amount method. Estimates are available from our distributor which are considered in the determination of the most likely amount. However, given the lack of control over the sale to the end customer and the lack of history of prior sales, the amount of gross profit revenue recognized is limited to the actual amount of cash received under the contract which the Company has determined is not refundable and that a significant future reversal of cumulative revenue under the contract will not occur. In addition, the Company also recognizes revenues from usage fees of certain reactors. Usage fees are recognized based on actual usage by the customer. Cash and Cash Equivalents The Company considers 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 its cash with one domestic financial institution. From time to time, cash balances in this domestic bank may exceed federally insured limits provided by the Federal Deposit Insurance Corporation (“FDIC”) of up to $250,000. As of June 30, 2020, and 2019, Company had deposits in excess of federally insured limit with one bank. The Company believes that no significant concentration of credit risk exists with respect to this cash balances because of its assessment of the creditworthiness and financial viability of this financial institution. Accounts Receivable The Company evaluates the collectability of our trade accounts receivable based on a number of factors. In circumstances where it becomes aware of a specific customer’s inability to meet its financial obligations to us, a specific reserve for bad debts is estimated and recorded which reduces the recognized receivable to the estimated amount that management believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on our historical losses and an overall assessment of past due trade accounts receivable outstanding. As of June 30, 2020, the Company recorded an allowance for doubtful accounts of $5,000. There was no allowance for doubtful accounts recorded as of June 30, 2019. Inventory Inventory is stated at the lower of cost or net realizable value. Cost is determined on a specific item basis. Inventory is composed of finished goods and represents costs incurred to manufacture the Company’s Nano Reactor® LPN ™ There was no recorded allowance for excess quantities and obsolescence as of June 30, 2020 and 2019. 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 term Furniture 5-7 Years Office equipment 5 Years Lab equipment 4 Years Skid systems 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, 2020 and 2019, the Company did not recognize any impairment for its property and equipment. Income Taxes The Company follows the asset and liability method of accounting for 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. Leases Prior to July 1, 2019, the Company accounted for leases under Accounting Standards Codification (“ASC”) 840, Accounting for Leases. Effective July 1, 2019, the Company adopted the guidance of ASC 842, Leases (“ASC 842”), which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its office lease as a single lease component. Lease expense is recognized on a straight-line basis over the lease term. The adoption of ASC 842 on July 1, 2019 resulted in the initial recognition of operating lease right-of-use assets of $368,000, lease liabilities for operating leases of $368,000, and a zero cumulative-effect adjustment to accumulated deficit (see Note 3). 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, 2020, and 2019, the carrying value of certain accounts such as accounts receivable, inventory, accounts payable, accrued expenses and accrued payroll approximates their fair value due to the short-term nature of such instruments. Share-Based Compensation The Company accounts for share-based awards to employees and nonemployees and consultants in accordance with the provisions of ASC 718, Compensation-Stock Compensation. Stock-based compensation cost is measured at fair value on the grant date and that fair value is recognized as expense over the requisite service, or vesting, period. In periods through June 30, 2019, the Company accounted for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity - Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated, and the percentage of completion is applied to that estimate to determine the cumulative expense recorded. On July 1, 2019, the Company adopted ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 simplifies the accounting for share-based transactions by expanding the scope of Topic 718 from only being applicable to share-based payments to employees to also include share-based payment transactions for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions are measured by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance conditions. The adoption of ASU 2018-07 did not have a material impact on the Company’s financial statements for the year ended June 30, 2020 or the previously reported financial statements. The Company values its equity awards using the Black-Scholes option pricing model, and accounts for forfeitures when they occur. Use of the Black-Scholes option pricing model requires the input of subjective assumptions including expected volatility, expected term, and a risk-free interest rate. The Company estimates volatility using a blend of its own historical stock price volatility as well as that of market comparable entities since the Company's common stock has limited trading history and limited observable volatility of its own. The expected term of the options is estimated by using the simplified method to estimate expected term. The risk-free interest rate is estimated using comparable published federal funds rates. Advertising Costs Advertising costs, including marketing expense, incurred in the normal course of operations are expensed as incurred. Advertising expenses amounted to $20,000 and $16,000 for the years ended June 30, 2020 and 2019 respectively and was reported as part of General and administrative expenses in the accompanying Consolidated Statements of Operations. 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. Total research and development costs recorded during the years ended June 30, 2020 and 2019 amounted to $18,000 and $25,000, respectively. 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, 2020 and 2019. Net Income (Loss) Per Share The Company’s computation of net income (loss) per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common stockholders divided by the weighted average common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution, using the treasury stock method, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company as if they had been converted at the beginning of the periods presented, or issuance date, if later. In computing diluted income per share, the treasury stock method assumes that outstanding options and warrants were exercised and the proceeds are used to purchase common stock at the average market price during the period. Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. The following table sets forth the computation of basic and diluted loss per common share. June 30, 2020 2019 Net income (loss) $ 128,000 $ (723,000 ) Weighted average common shares – basic 196,997,906 197,997,906 Dilutive effect of outstanding stock options and warrants – – Weighted average shares – diluted 196,997,906 197,997,906 Net loss per common share: Basic and Diluted $ (0.00 ) $ (0.00 ) There were no adjustments to net loss required for purposes of computing diluted earnings per share. At June 30, 2020 and 2019, the Company excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock, from its calculation of its diluted earnings per share, as their effect would have been anti-dilutive. June 30, 2020 June 30, 2019 Options 11,000,000 11,000,000 Warrants 87,696,511 79,263,176 Concentrations During the year ended June 30, 2020 we recorded revenues of 53% from GEA, 45% Desmet and 2% EW, compared to 97% of recorded revenues from Desmet an 3% EW in Fiscal 2019. from (see Note 2). At June 30, 2020, 100% of accounts receivable were due from Desmet. Segment As of June 30, 2020, the Company operated one reportable business segment. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements. Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. 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. |
2. Contracts with Customers
2. Contracts with Customers | 12 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Contracts with Customers | Note 2 – Contracts with Customers Desmet Ballestra Agreement In October 2018, we signed a three-year global R and D, Marketing and Technology License Agreement with Desmet for the sale and licensing of our reactors. This agreement is a continuation of an original agreement we signed with Desmet in fiscal 2012 and amended in fiscal 2016. As part of the October 2018 agreement, Desmet agreed to provide us monthly advances of $50,000 through October 1, 2021 to be applied against our gross profit share from future sales. The Company recognizes revenue from sale of reactors upon shipment and acceptance by Desmet, as the Company has no further obligations to Desmet other than the reactor’s two-year standard warranty. In accordance with ASC 606, the Company recognizes the revenue from the sale of reactors at the time of shipment of the Nano reactor hardware as such shipment is deemed to be the Company’s only performance obligation and the Company has no more continuing obligation. Desmet pays for such reactors on credit terms and the amount of the sale is recorded as a receivable upon acceptance by Desmet. The Company also receives a share in gross profit, as defined, from the sale of Desmet’s integrated neutralization system to its customers of which the reactors are an integral component. Such amount is subject to adjustment based on certain factors including cost overruns. The Company has no control with regards to the sale and installation of Nano Reactor® Nano Neutralization® System During the year ended June 30, 2020, the Company recorded sales of $483,000 from Nano Reactor® During the year ended June 30, 2019, the Company recorded sales of $533,000 from Nano Reactor® As of June 30, 2020 and 2019, advances received from Desmet related to the Company’s share in gross profit amounted to $367,000 and $33,000, respectively. These advances will only be recognized as revenues once the condition for revenue recognition have been met. GEA Westfalia Agreement In January 2017 the Company entered into a global technology license, R&D and marketing agreement with GEA Westfalia (GEA). Under the agreement, GEA was granted a worldwide exclusive license to integrate our patented technology into water treatment application, milk and juice pasteurization, and certain food related processes. The agreement with GEA was for three years, and provided for non-refundable payments of $300,000 per year that were to be applied to future license fees, or the Company’s share of gross profit from the sale of GEA’s system to its customers. From January 2017 through December 2019, the Company received total non-refundable payments of $877,000 from GEA. For the years ending June 30, 2017 through June 30, 2019, the Company accounted for these payments as deferred profit sharing revenue in anticipation of future sales of the Company’s reactors to GEA. The agreement with GEA expired in December 2019 and during the term of the agreement, the Company did not sell any reactors to GEA. The Company determined that its for the year ending June 30, 2020, the Company recognized the $877,000 of non-refundable payments received in 2017 to 2019 as revenue. Enviro Watertek, LLC Agreement In April 2019, the Company entered into a licensing and service contract agreement with Enviro Watertek, LLC (“EW”). This agreement covers the Company’s industrial treatment process for produced and frack water. The Company’s Low Pressure Nano Reactor ( LPN ™ Revenues from sale of reactors is recognized upon shipment of the reactors while usage fees from processing of frack water volumes and utilization will only be recognized upon actual usage and collectability is deemed certain. During the year ended June 30, 2020, the Company recognized $5,000 from sale of reactors and usage fees of $33,000 for a total of $38,000. During the year ended June 30, 2019, the Company recognized $40,000 from sale of reactors. There were no usage fees recognized in 2019. |
3. Operating Lease
3. Operating Lease | 12 Months Ended |
Jun. 30, 2020 | |
Lessee Disclosure [Abstract] | |
Operating Lease | Note 3 – Operating Lease The Company leases certain warehouse and corporate office space under an operating lease agreement. We determine if an arrangement is a lease at inception. Lease assets are presented as operating lease right-of-use assets and the related liabilities are presented as lease liabilities in our consolidated balance sheets. Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in lease arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. The components of lease expense and supplemental cash flow information related to leases for the period are as follows: June 30, 2020 Lease costs: Operating lease (included in general and administrative in the Company’s consolidated statement of operations) $ 73,000 Other i Cash paid for amounts included in the measurement of lease liabilities $ 69,000 Weighted average remaining lease term – operating leases (in years) 4.6 Average discount rate – operating leases 4% The supplemental balance sheet information related to leases for the period is as follows: Long-term right-of-use assets $ 308,000 Short-term operating lease liabilities $ 54,000 Long-term operating lease liabilities 258,000 Total operating lease liabilities $ 312,000 Maturity of the Company’s lease liabilities are as follows: Year Ending June 30: Operating Lease 2021 $ 71,000 2022 72,000 2023 75,000 2024 78,000 2025 and thereafter 47,000 Total lease payments 343,000 Less: Imputed interest/present value (31,000 ) Present value of lease liabilities $ 312,000 |
4. Property and Equipment
4. Property and Equipment | 12 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 4 - Property and Equipment Property and equipment consist of the following as of June 30, 2020 and 2019: June 30, June 30, 2020 2019 Leasehold improvement $ 2,000 $ 2,000 Furniture 27,000 27,000 Office equipment 2,000 2,000 Equipment 356,000 306,000 Systems 187,000 187,000 574,000 524,000 Less: accumulated depreciation and amortization (498,000 ) (459,000 ) Property and equipment, net $ 76,000 $ 65,000 Depreciation expense for the years ended June 30, 2020 and 2019 amounted to $39,000 and $41,000, respectively and was recorded as part of General and Administrative expenses in the accompanying Consolidated Statements of Operations. |
5. Related Party Transactions
5. Related Party Transactions | 12 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 5 – Related Party Transactions Accrued Payroll and Payroll Taxes In prior periods, the Company accrued salaries and estimated payroll taxes due to current and former officers of the Company. As of June 30, 2019, total accrued payroll and payroll taxes-related parties amounted to $892,000. During the year ended June 30, 2020, the Company reduced accrued payroll by $3,000. In addition, $196,000 due to a former officer was acquired from the former officer by Strategic IR (SIR), an unrelated party. The former officer, SIR, and the Company agreed that the amount of the accrued payroll $204,000, and the Company recorded a loss on the transfer of the liability to SIR of $8,000. As of June 30, 2020, accrued payroll and payroll taxes-related parties totaled $693,000. |
6. Note Payable
6. Note Payable | 12 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Note Payable | Note 6 – Note Payable On April 16, 2020, the Company received loan proceeds in the amount of $104,000 pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief and Economic Security Act (the “Cares Act”), which was enacted on March 27, 2020. The note is scheduled to mature in April 2022 and has a 1% interest rate and is subject to the terms and conditions applicable to loans administered by the Small Business Administration (SBA) under the CARES Act. The Company applied ASC 470, Debt As of June 30, 2020, the outstanding balance of the note payable amounted to $104,000. The Company is currently in the process of applying for forgiveness of the entire PPP loan with respect to these qualifying expenses, however, the Company cannot assure that such forgiveness of any portion of the PPP loan will occur. As for the potential loan forgiveness, once the PPP loan is, in part or wholly, forgiven and a legal release is received, the liability would be reduced by the amount forgiven and a gain on extinguishment would be recorded. |
7. Stockholders' Deficit
7. Stockholders' Deficit | 12 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Deficit | Note 7 - Stockholders’ Deficit Preferred Stock On March 17, 2009, the Company filed an 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 has 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, 2020, and 2019, there are no shares of Series A or Series B Preferred Stock issued and outstanding. Common Stock During the years ended June 30, 2020 and 2019 the Company did not issue any shares of common stock. 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, 2020 and 2019 is as follows: Weighted Average Weighted Remaining Average Contractual Exercise Life Option Price (Years) Outstanding at June 30, 2018 11,378,754 $ 0.31 2.23 - Granted – – – - Forfeited – – – - Exercised – – – - Expired (378,754 ) – – Outstanding at June 30, 2019 11,000,000 $ 0.03 3.36 - Granted – – – - Forfeited – – – - Exercised – – – - Expired – – Outstanding at June 30, 2020 11,000,000 $ 0.03 6.07 During the year ended June 30, 2020, stock options granted in prior years to purchase 8,500,000 shares of common stock were modified to increase its expiration period to ten years. All other terms of the original grant did not change. As a result of this modification, the Company recorded stock compensation expense of $2,000 to account for the incremental change in fair value of these options before and after the modification based upon a Black-Scholes Option Pricing model. As of June 30, 2020, all outstanding options were fully vested and exercisable. The intrinsic value of the outstanding options as of June 30, 2020 was zero as the exercise prices of these options were greater than the trading price of the Company’s stock. The following table summarizes additional information concerning options outstanding and exercisable at June 30, 2020. 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 11,000,000 6.07 $ 0.01 11,000,000 6.07 Warrants A summary of the Company’s warrant activity and related information from as of June 30, 2020 and 2019 is as follows. Weighted- Average Weighted- Remaining Average Contractual Exercise Life Warrants Price (Years) Outstanding at June 30, 2018 75,926,510 $ 0.06 3.81 Granted 4,336,666 0.03 4.49 Exercised – Expired (1,000,000 ) Outstanding at June 30, 2019 79,263,176 0.07 4.45 Granted 9,800,000 0.03 10.00 Exercised – Expired (1,366,665 ) Outstanding at June 30, 2020 87,696,511 $ 0.07 5.64 During the year ended June 30, 2020, stock warrants granted in prior years to purchase 27,100,000 shares of common stock were modified to increase its expiration period to ten years. All other terms of the original grant did not change. As a result of this modification, the Company recorded stock compensation expense of $5,000 to account for the incremental change in fair value of these warrants before and after the modification based upon a Black-Scholes Option Pricing model. During the year ended June 30, 2019, the Company granted warrants to purchase 4,336,666 shares of common stock to consultants for services rendered. The warrants are fully vested, exercisable at $0.03 per share, and will expire in five years. Total fair value of these warrants amounted to $115,000 based upon a Black-Scholes Option Pricing model. In addition, the Company amended certain warrants granted in prior years to purchase approximately 19 million common shares in order to extend the term or life to five years. As a result of this modification, the Company recorded stock compensation expense of $334,000 to account for the incremental change in fair value of these warrants before and after the modification based upon a Black-Scholes Option Pricing model. As of June 30, 2020, all outstanding warrants were fully vested and exercisable. The intrinsic value of the outstanding warrants as of June 30, 2020 was zero as the exercise prices of these options were greater than the trading price of the Company’s stock. The following table summarizes additional information concerning warrants outstanding and exercisable at June 30, 2020. 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 $0.03 - $0.05 68,736,518 7.80 $ 0.04 68,736,518 $ 0.04 $0.12 18,959,993 3.49 $ 0.12 18,959,993 $ 0.12 87,696,511 87,696,511 The fair value of the warrant awards was estimated using the Black-Scholes method based on the following weighted-average assumptions: June 30, June 30, 2020 2019 Risk-free interest rate 0.56% 2.60% Contractual terms (years) 6.75 4.82 Expected volatility 264% 138% Expected dividend yield 0% 0% The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the award; the contractual term represents the weighted-average period of time the awards granted are expected to be outstanding giving consideration to vesting schedules, contractual terms, and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s Common Stock; and the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future. |
8. Income Taxes
8. Income Taxes | 12 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8 - Income Taxes For the year ended June 30, 2020 the Company recorded no provision for income taxes due to available Federal net operating loss (NOL) carryforwards of approximately $9.8 million that are available to reduce taxable income. For the year ended June 30, 2019, the Company has no provision for income taxes due to net losses incurred. Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The components of deferred tax assets are presented below. At June 30, 2020, the Company had available Federal NOL carryforwards of approximately $9.8 million that are available to reduce future taxable income. The Federal carryforward expires in 2036. The NOL is subject to statutory limitations under Internal Revenue Code Section 382 regarding substantial changes in ownership of companies with loss carry forwards. During the year ended June 30, 2020 and 2019, management has determined that it is more likely than not that the Company will not be able to realize the tax benefit of the carryforwards due to recurring operating losses. Based on their evaluation, the Company determined that the net deferred tax assets, do not meet the requirements to realize, and as such, the Company has provided a full valuation allowance against them. At June 30, 2029 and 2019, significant component of the Company’s deferred tax assets and liabilities are as follows: June 30, June 30, 2020 2019 Net Operating loss carryforwards $ 2,620,000 $ 2,827,000 Stock compensation expense 840,000 783,000 Amortization of patents 48,000 48,000 Other 46,000 46,000 Total deferred tax assets 3,554,000 3,704,000 Less valuation discount (3,554,000 ) (3,704,000 ) Net deferred tax assets $ – $ – A reconciliation of the effective income tax to statutory US federal income tax is as follows: June 30, June 30, 2020 2019 Federal statutory rate (21)% (21)% State income taxes, net of Federal benefit (7)% (7)% Net operating loss/carryforward 28 % 28 % Income tax provision – – Accounting rules 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. The following summarizes the open tax years for each major jurisdiction: Jurisdiction Open Tax Years Federal 2014 – 2019 California 2014 – 2019 The Company’s net operating loss carry forwards are subject to IRS examination until they are utilized and such tax years are closed. |
9. Commitments and Contingencie
9. Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9 – Commitments and Contingencies Royalty Agreements On July 1, 2008, the Company’s wholly owned subsidiary entered into Patent Assignment Agreements with two parties, its President as well as its former Chief Executive Officer (CEO) and current Technology Senior Manager, where certain devices and methods involved in the hydrodynamic cavitation processes invented by the President and former CEO/ current Technology Senior Manager have been assigned to the Company. In exchange, the Company agreed to pay a royalty of 5% of gross revenues to each of the President and former CEO/ current Technology Senior Manager 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 former CEO/ current Technology Senior Manager 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, 2020 and 2019. On April 30, 2008 (as amended November 22, 2010), the Company’s wholly owned subsidiary entered into an employment agreement with the Director of Chemical and Analytical Department (the “Inventor”) providing that the Inventor 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, 2020, and 2019, no patents have been granted in which this person is the legally named inventor. |
10. Subsequent Events
10. Subsequent Events | 12 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 10 – Subsequent Events In July 2020, the Company executed a loan agreement with the U.S. Small Business Administration (SBA) under the Economic Injury Disaster Loan program in the amount of $150,000. The loan is secured by all tangible and intangible assets of the Company and payable over 30 years at an interest rate of 3.75% per annum. Installment payments, including principal and interest, will begin on July 2021. |
1. Organization and Summary o_2
1. Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Going Concern | Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, at June 30, 2020, the Company had a stockholders’ deficit of $490,000 and a working capital deficiency of $522,000. 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 that may result from an inability of the Company to continue as a going concern. At June 30, 2020, the Company had cash in the amount of $759,000. The Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its business plan. Currently, management’s plan is to increase revenues by continuing to license its technology globally. While the Company believes in the viability of its strategy to increase revenues, there can be no assurances to that effect. Currently, we have a R&D, Marketing and Technology License agreement with Desmet in which Desmet provides advances to the Company of $50,000 per month through October 2021. The Company may also attempt to raise additional debt and/or equity financing to fund operations and to provide additional working capital. 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. |
COVID-19 | COVID-19 In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, has adversely affected workforces, customers, economies, and financial markets globally. It has also disrupted the normal operations of many businesses. This outbreak could decrease spending, adversely affect demand for the Company’s products, and harm the Company’s business and results of operations. During the year ended June 30, 2020, the Company believes the COVID-19 pandemic did not materially impact its operating results due to the nature of the Company’s business and its operations. The Company has not observed any impairments of its assets or a significant change in the fair value of its assets due to the COVID-19 pandemic. At this time, it is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or results of operations, financial condition, or liquidity. As of June 30, 2020, the Company has been following the recommendations of local health authorities to minimize exposure risk for its employees, including the temporary closure of its corporate office and having employees work remotely. Most vendors have transitioned to electronic submission of invoices and payments. |
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. Intercompany transactions and balances have been eliminated in consolidation. |
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 include estimates for allowance for doubtful accounts, reserves for inventory obsolescence, assumptions used in valuing our stock options, stock warrants and common stock issued for services, the valuation allowance for our deferred tax asset, and the accrual of potential liabilities. Actual results could differ from these estimates. |
Revenue Recognition | Revenue Recognition The Company follows the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers Revenue from sale of our Nano Reactors is recognized when products are shipped from our manufacturing facilities as this is our sole performance obligation under these contracts and we have no continuing obligation to the customer. The Company also recognizes revenue from its share of gross profit to be earned from distributors, as defined, which we treat as variable consideration and recognize using the most likely amount method. Estimates are available from our distributor which are considered in the determination of the most likely amount. However, given the lack of control over the sale to the end customer and the lack of history of prior sales, the amount of gross profit revenue recognized is limited to the actual amount of cash received under the contract which the Company has determined is not refundable and that a significant future reversal of cumulative revenue under the contract will not occur. In addition, the Company also recognizes revenues from usage fees of certain reactors. Usage fees are recognized based on actual usage by the customer. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers 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 its cash with one domestic financial institution. From time to time, cash balances in this domestic bank may exceed federally insured limits provided by the Federal Deposit Insurance Corporation (“FDIC”) of up to $250,000. As of June 30, 2020, and 2019, Company had deposits in excess of federally insured limit with one bank. The Company believes that no significant concentration of credit risk exists with respect to this cash balances because of its assessment of the creditworthiness and financial viability of this financial institution. |
Accounts Receivable | Accounts Receivable The Company evaluates the collectability of our trade accounts receivable based on a number of factors. In circumstances where it becomes aware of a specific customer’s inability to meet its financial obligations to us, a specific reserve for bad debts is estimated and recorded which reduces the recognized receivable to the estimated amount that management believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on our historical losses and an overall assessment of past due trade accounts receivable outstanding. As of June 30, 2020, the Company recorded an allowance for doubtful accounts of $5,000. There was no allowance for doubtful accounts recorded as of June 30, 2019. |
Inventory | Inventory Inventory 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 the Company’s Nano Reactor® LPN ™ There was no recorded allowance for excess quantities and obsolescence as of June 30, 2020 and 2019. |
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 term Furniture 5-7 Years Office equipment 5 Years Lab equipment 4 Years Skid systems 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, 2020 and 2019, the Company did not recognize any impairment for its property and equipment. |
Income Taxes | Income Taxes The Company follows the asset and liability method of accounting for 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. |
Leases | Leases Prior to July 1, 2019, start of our fiscal year, the Company accounted for leases under Accounting Standards Codification (“ASC”) 840, Accounting for Leases. Effective July 1, 2019, the Company adopted the guidance of ASC 842, Leases (“ASC 842”), which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its office lease as a single lease component. Lease expense is recognized on a straight-line basis over the lease term. The adoption of ASC 842 on July 1, 2019 resulted in the initial recognition of operating lease right-of-use assets of $368,000, lease liabilities for operating leases of $368,000, and a zero cumulative-effect adjustment to accumulated deficit (see Note 3). |
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, 2020, and 2019, the carrying value of certain accounts such as accounts receivable, inventory, accounts payable, accrued expenses and accrued payroll approximates their fair value due to the short-term nature of such instruments. |
Share-Based Compensation | Share-Based Compensation The Company accounts for share-based awards to employees and nonemployees and consultants in accordance with the provisions of ASC 718, Compensation-Stock Compensation. Stock-based compensation cost is measured at fair value on the grant date and that fair value is recognized as expense over the requisite service, or vesting, period. In periods through June 30, 2019, the Company accounted for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity - Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated, and the percentage of completion is applied to that estimate to determine the cumulative expense recorded. On July 1, 2019, the Company adopted ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 simplifies the accounting for share-based transactions by expanding the scope of Topic 718 from only being applicable to share-based payments to employees to also include share-based payment transactions for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions are measured by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance conditions. The adoption of ASU 2018-07 did not have a material impact on the Company’s financial statements for the year ended June 30, 2020 or the previously reported financial statements. The Company values its equity awards using the Black-Scholes option pricing model, and accounts for forfeitures when they occur. Use of the Black-Scholes option pricing model requires the input of subjective assumptions including expected volatility, expected term, and a risk-free interest rate. The Company estimates volatility using a blend of its own historical stock price volatility as well as that of market comparable entities since the Company's common stock has limited trading history and limited observable volatility of its own. The expected term of the options is estimated by using the simplified method to estimate expected term. The risk-free interest rate is estimated using comparable published federal funds rates. |
Advertising Costs | Advertising Costs Advertising costs, including marketing expense, incurred in the normal course of operations are expensed as incurred. Advertising expenses amounted to $20,000 and $16,000 for the years ended June 30, 2020 and 2019 respectively and was reported as part of General and administrative expenses in the accompanying Consolidated Statements of Operations. |
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. Total research and development costs recorded during the years ended June 30, 2020 and 2019 amounted to $18,000 and $25,000, respectively. |
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, 2020 and 2019. |
Net Loss Per Share | Net Income (Loss) Per Share The Company’s computation of net income (loss) per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common stockholders divided by the weighted average common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution, using the treasury stock method, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company as if they had been converted at the beginning of the periods presented, or issuance date, if later. In computing diluted income per share, the treasury stock method assumes that outstanding options and warrants were exercised and the proceeds are used to purchase common stock at the average market price during the period. Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. The following table sets forth the computation of basic and diluted loss per common share. June 30, 2020 2019 Net income (loss) $ 128,000 $ (723,000 ) Weighted average common shares – basic 196,997,906 197,997,906 Dilutive effect of outstanding stock options and warrants – – Weighted average shares – diluted 196,997,906 197,997,906 Net loss per common share: Basic and Diluted $ (0.00 ) $ (0.00 ) There were no adjustments to net loss required for purposes of computing diluted earnings per share. At June 30, 2020 and 2019, the Company excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock, from its calculation of its diluted earnings per share, as their effect would have been anti-dilutive. June 30, 2020 June 30, 2019 Options 11,000,000 11,000,000 Warrants 87,696,511 79,263,176 |
Concentrations | Concentrations During the year ended June 30, 2020 we recorded revenues of 53% from GEA, 45% Desmet and 2% EW, compared to 97% of recorded revenues from Desmet an 3% EW in Fiscal 2019. from (see Note 2). At June 30, 2020, 100% of accounts receivable were due from Desmet. |
Segment | Segment As of June 30, 2020, the Company operated one reportable business segment. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. 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. |
1. Organization and Summary o_3
1. Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Property and equipment useful life | 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 term Furniture 5-7 Years Office equipment 5 Years Lab equipment 4 Years Skid systems 4 Years |
Basic and diluted loss per common share | The following table sets forth the computation of basic and diluted loss per common share. June 30, 2020 2019 Net income (loss) $ 128,000 $ (723,000 ) Weighted average common shares – basic 196,997,906 197,997,906 Dilutive effect of outstanding stock options and warrants – – Weighted average shares – diluted 196,997,906 197,997,906 Net loss per common share: Basic and Diluted $ (0.00 ) $ (0.00 ) |
Schedule of antidilutive shares | At June 30, 2020 and 2019, the Company excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock, from its calculation of its diluted earnings per share, as their effect would have been anti-dilutive. June 30, 2020 June 30, 2019 Options 11,000,000 11,000,000 Warrants 87,696,511 79,263,176 |
3. Operating Lease (Tables)
3. Operating Lease (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Lessee Disclosure [Abstract] | |
Lease cost table | June 30, 2020 Lease costs: Operating lease (included in general and administrative in the Company’s consolidated statement of operations) $ 73,000 Other i Cash paid for amounts included in the measurement of lease liabilities $ 69,000 Weighted average remaining lease term – operating leases (in years) 4.6 Average discount rate – operating leases 4% The supplemental balance sheet information related to leases for the period is as follows: Long-term right-of-use assets $ 308,000 Short-term operating lease liabilities $ 54,000 Long-term operating lease liabilities 258,000 Total operating lease liabilities $ 312,000 |
Schedule of lease liability maturities | Year Ending June 30: Operating Lease 2021 $ 71,000 2022 72,000 2023 75,000 2024 78,000 2025 and thereafter 47,000 Total lease payments 343,000 Less: Imputed interest/present value (31,000 ) Present value of lease liabilities $ 312,000 |
4. Property and Equipment (Tabl
4. Property and Equipment (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule Property and Equipment | Property and equipment consist of the following as of June 30, 2020 and 2019: June 30, June 30, 2020 2019 Leasehold improvement $ 2,000 $ 2,000 Furniture 27,000 27,000 Office equipment 2,000 2,000 Equipment 356,000 306,000 Systems 187,000 187,000 574,000 524,000 Less: accumulated depreciation and amortization (498,000 ) (459,000 ) Property and equipment, net $ 76,000 $ 65,000 |
7. Stockholders' Deficit (Table
7. Stockholders' Deficit (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stock Option activity table | A summary of the stock option activity from June 30, 2020 and 2019 is as follows: Weighted Average Weighted Remaining Average Contractual Exercise Life Option Price (Years) Outstanding at June 30, 2018 11,378,754 $ 0.31 2.23 - Granted – – – - Forfeited – – – - Exercised – – – - Expired (378,754 ) – – Outstanding at June 30, 2019 11,000,000 $ 0.03 3.36 - Granted – – – - Forfeited – – – - Exercised – – – - Expired – – Outstanding at June 30, 2020 11,000,000 $ 0.03 6.07 |
Schedule of options outstanding and exercisable | The following table summarizes additional information concerning options outstanding and exercisable at June 30, 2020. 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 11,000,000 6.07 $ 0.01 11,000,000 6.07 |
Schedule of warrant activity | A summary of the Company’s warrant activity and related information from as of June 30, 2020 and 2019 is as follows. Weighted- Average Weighted- Remaining Average Contractual Exercise Life Warrants Price (Years) Outstanding at June 30, 2018 75,926,510 $ 0.06 3.81 Granted 4,336,666 0.03 4.49 Exercised – Expired (1,000,000 ) Outstanding at June 30, 2019 79,263,176 0.07 4.45 Granted 9,800,000 0.03 10.00 Exercised – Expired (1,366,665 ) Outstanding at June 30, 2020 87,696,511 $ 0.07 5.64 |
Schedule of warrants outstanding and exercisable | The following table summarizes additional information concerning warrants outstanding and exercisable at June 30, 2020. 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 $0.03 - $0.05 68,736,518 7.80 $ 0.04 68,736,518 $ 0.04 $0.12 18,959,993 3.49 $ 0.12 18,959,993 $ 0.12 87,696,511 87,696,511 |
Assumptions | The fair value of the warrant awards was estimated using the Black-Scholes method based on the following weighted-average assumptions: June 30, June 30, 2020 2019 Risk-free interest rate 0.56% 2.60% Contractual terms (years) 6.75 4.82 Expected volatility 264% 138% Expected dividend yield 0% 0% |
8. Income Taxes (Tables)
8. Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets | At June 30, 2029 and 2019, significant component of the Company’s deferred tax assets and liabilities are as follows: June 30, June 30, 2020 2019 Net Operating loss carryforwards $ 2,620,000 $ 2,827,000 Stock compensation expense 840,000 783,000 Amortization of patents 48,000 48,000 Other 46,000 46,000 Total deferred tax assets 3,554,000 3,704,000 Less valuation discount (3,554,000 ) (3,704,000 ) Net deferred tax assets $ – $ – |
Income Tax Provision | A reconciliation of the effective income tax to statutory US federal income tax is as follows: June 30, June 30, 2020 2019 Federal statutory rate (21)% (21)% State income taxes, net of Federal benefit (7)% (7)% Net operating loss/carryforward 28 % 28 % Income tax provision – – |
Open Tax Years | The following summarizes the open tax years for each major jurisdiction: Jurisdiction Open Tax Years Federal 2014 – 2019 California 2014 – 2019 |
1. Organization and Summary o_4
1. Organization and Summary of Significant Accounting Policies (Details- Property and Equipment) | 12 Months Ended |
Jun. 30, 2020 | |
Leasehold improvements | |
Property and equipment useful life | Shorter of life of asset or lease term |
Furniture | |
Property and equipment useful life | 5-7 years |
Office Equipment [Member] | |
Property and equipment useful life | 5 Years |
Lab Equipment [Member] | |
Property and equipment useful life | 4 Years |
Skid Systems[Member] | |
Property and equipment useful life | 4 Years |
1. Organization and Summary o_5
1. Organization and Summary of Significant Accounting Policies (Details- Net Loss Per Share) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Accounting Policies [Abstract] | ||
Net income (loss) | $ 128,000 | $ (723,000) |
Weighted average common shares - basic | 196,997,906 | 197,997,906 |
Dilutive effect of outstanding stock options and warrants | 0 | 0 |
Weighted average shares- diluted | 196,997,906 | 197,997,906 |
Net loss per common share basic and diluted | $ 0 | $ 0 |
1. Organization and Summary o_6
1. Organization and Summary of Significant Accounting Policies (Details - Antidilutive shares) - shares | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Options [Member] | ||
Antidilutive shares | 11,000,000 | 11,000,000 |
Warrants [Member] | ||
Antidilutive shares | 87,696,511 | 79,263,176 |
1. Organization and Summary o_7
1. Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jul. 02, 2019 | Jun. 30, 2018 | |
Working capital | $ (522,000) | |||
Stockholders deficit | (490,000) | $ (819,000) | $ (545,000) | |
Cash | 759,000 | 649,000 | ||
Allowance for doubtful accounts | 5,000 | 0 | ||
Inventory obsolescence | 0 | 0 | ||
Impairment of property and equipment | 0 | 0 | ||
Advertising expense | 20,000 | 16,000 | ||
Research and development expense | 18,000 | 25,000 | ||
Warranty reserve | 0 | 0 | ||
Right of use operating asset | 308,000 | $ 0 | ||
Right of use operating lease liability | $ 312,000 | |||
Sales Revenue Net [Member] | GEA [Member] | ||||
Concentration risk percentage | 53.00% | |||
Sales Revenue Net [Member] | Desmet [Member] | ||||
Concentration risk percentage | 45.00% | 97.00% | ||
Sales Revenue Net [Member] | EW [Member] | ||||
Concentration risk percentage | 2.00% | 3.00% | ||
Accounts Receivable [Member] | Desmet [Member] | ||||
Concentration risk percentage | 100.00% | |||
Paycheck Protection Program [Member] | ||||
Proceeds from loan | $ 104,000 | |||
Desmet [Member] | ||||
Proceeds from advances | 600,000 | |||
Deferred revenue recognized during period | $ 266,000 | |||
ASC 842 [Member] | ||||
Right of use operating asset | $ 368,000 | |||
Right of use operating lease liability | $ 368,000 |
2. Contracts with Customers (De
2. Contracts with Customers (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues | $ 1,663,000 | $ 1,090,000 |
Desmet Ballestra [Member] | ||
Revenues | 749,000 | 1,050,000 |
Advances from distributors | 367,000 | 33,000 |
Desmet Ballestra [Member] | Nano Reactor Sales [Member] | ||
Revenues | 483,000 | 533,000 |
Desmet Ballestra [Member] | Gross Profit Share [Member] | ||
Revenues | 266,000 | 517,000 |
GEA Westfalia [Member] | ||
Advances recognized | 877,000 | |
Enviro Watertek [Member] | ||
Revenues | 38,000 | |
Enviro Watertek [Member] | Nano Reactor Sales [Member] | ||
Revenues | 5,000 | 40,000 |
Enviro Watertek [Member] | Usage fees [Member] | ||
Revenues | $ 33,000 | $ 0 |
3. Operating Lease (Details - L
3. Operating Lease (Details - Lease Cost) | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Lessee Disclosure [Abstract] | |
Operating lease cost | $ 73,000 |
Cash paid for amounts included in measurement of lease liabilities | $ 69,000 |
Weighted average remaining lease term- operating leases (in years) | 4 years 7 months 6 days |
Average discount rate- operating leases | 4.00% |
3. Operating Lease (Details - O
3. Operating Lease (Details - Operating Leases) - USD ($) | Jun. 30, 2020 | Jun. 30, 2019 |
Lessee Disclosure [Abstract] | ||
Long-term right-of-use assets | $ 308,000 | $ 0 |
Short-term operating lease liabilities | 54,000 | 0 |
Long-term operating lease liabilities | 258,000 | $ 0 |
Total operating lease liabilities | $ 312,000 |
3. Operating Lease (Details -_2
3. Operating Lease (Details - Operating Lease Minimum payments) | Jun. 30, 2020USD ($) |
Lessee Disclosure [Abstract] | |
2021 | $ 71,000 |
2022 | 72,000 |
2023 | 75,000 |
2024 | 78,000 |
2025 and thereafter | 47,000 |
Total lease payments | 343,000 |
Less: imputed interest/present value discount | (31,000) |
Operating Lease liability | $ 312,000 |
4. Property and Equipment (Deta
4. Property and Equipment (Details) - USD ($) | Jun. 30, 2020 | Jun. 30, 2019 |
Property and Equipment | $ 574,000 | $ 524,000 |
Less: Accumulated depreciation and amortization | (498,000) | (459,000) |
Property and equipment, net | 76,000 | 65,000 |
Leasehold Improvements [Member] | ||
Property and Equipment | 2,000 | 2,000 |
Furniture [Member] | ||
Property and Equipment | 27,000 | 27,000 |
Office Equipment [Member] | ||
Property and Equipment | 2,000 | 2,000 |
Equipment [Member] | ||
Property and Equipment | 356,000 | 306,000 |
Systems [Member] | ||
Property and Equipment | $ 187,000 | $ 187,000 |
4. Property and Equipment (De_2
4. Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 39,000 | $ 41,000 |
5. Related Party Transactions (
5. Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Accrued payroll and payroll taxes | $ 693,000 | $ 892,000 |
Former Officer [Member] | ||
Payment for settlement of debt | $ 204,000 |
6. Note Payable (Details Narrat
6. Note Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Note payable | $ 104,000 | $ 0 |
Paycheck Protection Program [Member] | ||
Proceeds from loan | $ 104,000 | |
Maturity date | Apr. 30, 2022 | |
Interest rate | 1.00% |
7. Stockholders' Deficit (Detai
7. Stockholders' Deficit (Details - Option activity) - Options [Member] - $ / shares | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Options | |||
Options outstanding, beginning balance | 11,000,000 | 11,378,754 | |
Options granted | 0 | 0 | |
Options forfeited | 0 | 0 | |
Options exercised | 0 | 0 | |
Options expired | 0 | (378,754) | |
Options outstanding, ending balance | 11,000,000 | 11,000,000 | 11,378,754 |
Weighted Average Exercise Price | |||
Weighted average exercise price, options outstanding, beginning price | $ 0.03 | $ 0.31 | |
Weighted average exercise price, options granted | |||
Weighted average exercise price, options forfeited | |||
Weighted average exercise price, options exercised | |||
Weighted average exercise price, options expired | |||
Weighted average exercise price, options outstanding, ending price | $ 0.03 | $ 0.03 | $ 0.31 |
Weighted Average Remaining Contractual Life (Years) | |||
Weighted average remaining contractual life, options outstanding | 6 years 26 days | 3 years 4 months 9 days | 2 years 2 months 23 days |
7. Stockholders' Deficit (Det_2
7. Stockholders' Deficit (Details - Options by exercise price) - $ / shares | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
$0.03 Exercise Price [Member] | |||
Weighted average remaining life options outstanding | 6 years 26 days | ||
Weighted average exercise price options outstanding | $ 0.01 | ||
Weighted average remaining life options exercisable | 6 years 26 days | ||
Options [Member] | |||
Number of shares outstanding | 11,000,000 | 11,000,000 | 11,378,754 |
Weighted average remaining life options outstanding | 6 years 26 days | 3 years 4 months 9 days | 2 years 2 months 23 days |
Weighted average exercise price options outstanding | $ 0.03 | $ 0.03 | $ 0.31 |
Number of shares exercisable | 11,000,000 |
7. Stockholders' Deficit (Det_3
7. Stockholders' Deficit (Details - Warrant activity) - Warrants [Member] - $ / shares | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Warrants | |||
Warrants outstanding, beginning balance | 79,263,176 | 75,926,510 | |
Warrants granted | 9,800,000 | 4,336,666 | |
Warrants exercised | 0 | 0 | |
Warrants expired | (1,366,665) | (1,000,000) | |
Warrants outstanding, ending balance | 87,696,511 | 79,263,176 | 75,926,510 |
Weighted Average Exercise Price | |||
Weighted average exercise price, warrants outstanding, beginning price | $ 0.07 | $ 0.06 | |
Weighted average exercise price, warrants granted | 0.03 | 0.03 | |
Weighted average exercise price, warrants outstanding, ending price | $ 0.07 | $ 0.07 | $ 0.06 |
Weighted Average Remaining Contractual Life | |||
Weighted average remaining contractual life | 5 years 7 months 21 days | 4 years 5 months 12 days | 3 years 9 months 22 days |
Weighted average remaing contractual life, warrants granted | 10 years | 4 years 5 months 27 days |
7. Stockholders' Deficit (Det_4
7. Stockholders' Deficit (Details - Warrants by exercise price) - $ / shares | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
$0.03-$0.05 [Member] | |||
Number of warrant shares outstanding | 68,736,518 | ||
Weighted average remaining life warrants outstanding | 7 years 9 months 18 days | ||
Weighted average exercise price warrants outstanding | $ 0.04 | ||
Number of warrant shares exercisable | 68,736,518 | ||
Weighted average exercise price warrants exercisable | $ 0.04 | ||
$0.12 [Member] | |||
Number of warrant shares outstanding | 18,959,993 | ||
Weighted average remaining life warrants outstanding | 3 years 5 months 27 days | ||
Weighted average exercise price warrants outstanding | $ 0.12 | ||
Number of warrant shares exercisable | 18,959,993 | ||
Weighted average exercise price warrants exercisable | $ 0.12 | ||
Warrants [Member] | |||
Number of warrant shares outstanding | 87,696,511 | 79,263,176 | 75,926,510 |
Weighted average remaining life warrants outstanding | 5 years 7 months 21 days | 4 years 5 months 12 days | 3 years 9 months 22 days |
Weighted average exercise price warrants outstanding | $ 0.07 | $ 0.07 | $ 0.06 |
Number of warrant shares exercisable | 87,696,511 |
7. Stockholders' Deficit (Det_5
7. Stockholders' Deficit (Details - Assumptions) - Warrants [Member] | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Risk free interest rate | 0.56% | 2.60% |
Expected term (years) | 6 years 9 months | 4 years 9 months 25 days |
Expected volatility | 264.00% | 138.00% |
Expected dividend yield | 0.00% | 0.00% |
7. Stockholders' Deficit (Det_6
7. Stockholders' Deficit (Details Narrative) - USD ($) | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Stock issued new, shares | 0 | 0 | |
Options [Member] | |||
Stock based compensation expense due to modification of options | $ 2,000 | ||
Intrinsic value of options outstanding | 0 | ||
Warrants [Member] | |||
Intrinsic value of warrants | $ 0 | ||
Warrants granted to purchase common stock | 9,800,000 | 4,336,666 | |
Warrant exercisable price per share | $ 0.07 | $ 0.07 | $ 0.06 |
Stock based compensation expense due to modification of warrants | $ 5,000 | $ 334,000 | |
Warrants [Member] | Consultants [Member] | |||
Warrants granted to purchase common stock | 4,336,666 | ||
Warrant exercisable price per share | $ 0.03 | ||
Warrant term | 5 years | ||
Fair value of warrants issued | $ 115,000 |
8. Income Taxes (Details- Defer
8. Income Taxes (Details- Deferred Tax Assets and Liabilities) - USD ($) | Jun. 30, 2020 | Jun. 30, 2019 |
Income Tax Disclosure [Abstract] | ||
Net Operating loss carryforwards | $ 2,620,000 | $ 2,827,000 |
Stock compensation expense | 840,000 | 783,000 |
Amortization of patents | 48,000 | 48,000 |
Other | 46,000 | 46,000 |
Gross deferred tax assets | 3,554,000 | 3,704,000 |
Less valuation discounts | (3,554,000) | (3,704,000) |
Net deferred tax assets | $ 0 | $ 0 |
8. Income Taxes (Details- Tax R
8. Income Taxes (Details- Tax Reconciliation) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
Federal statutory rate | (21.00%) | (21.00%) |
State income taxes, net of Federal benefit | (7.00%) | (7.00%) |
Net operating loss/carryforward | 28.00% | 28.00% |
Income tax provision | 0.00% | 0.00% |
8. Income Taxes (Details Narrat
8. Income Taxes (Details Narrative) | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Income Tax Disclosure [Abstract] | |
Net operating loss | $ 9,800,000 |
Operating loss expiration date | Dec. 31, 2036 |