Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Oct. 05, 2021 | Dec. 31, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | Cavitation Technologies, Inc. | ||
Entity Central Index Key | 0001376793 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2021 | ||
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 | $ 188,060,406 | ||
Entity Common Stock, Shares Outstanding | 220,339,229 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Entity Shell Company | false | ||
Entity Interactive Data Current | Yes | ||
Entity File Number | 000-53239 | ||
Entity Incorporation State Country Code | NV | ||
ICFR Auditor Attestation Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Current assets | ||
Cash and cash equivalents | $ 1,363,000 | $ 759,000 |
Accounts receivable | 6,000 | 104,000 |
Inventory | 25,000 | 47,000 |
Total current assets | 1,394,000 | 910,000 |
Property and equipment, net | 182,000 | 76,000 |
Operating lease right-of-use asset | 245,000 | 308,000 |
Other assets | 10,000 | 10,000 |
Total assets | 1,831,000 | 1,304,000 |
Current liabilities: | ||
Accounts payable and accrued expenses | 342,000 | 316,000 |
Accrued payroll and payroll taxes - related parties | 667,000 | 693,000 |
Related party payable | 1,000 | 1,000 |
Operating lease liability, current portion | 58,000 | 54,000 |
Customer advances | 727,000 | 368,000 |
Total current liabilities | 1,795,000 | 1,432,000 |
Notes payable, non-current | 254,000 | 104,000 |
Operating lease liability, non-current portion | 193,000 | 258,000 |
Total Liabilities | 2,242,000 | 1,794,000 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of June 30, 2021 and 2020, respectively | 0 | 0 |
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 208,267,444 and 196,997,906 shares issued and outstanding as June 30, 2021 and 2020, respectively | 208,000 | 197,000 |
Additional paid-in capital | 24,008,000 | 23,291,000 |
Accumulated deficit | (24,627,000) | (23,978,000) |
Total stockholders' deficit | (411,000) | (490,000) |
Total liabilities and stockholders' deficit | $ 1,831,000 | $ 1,304,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2021 | Jun. 30, 2020 |
Statement of Financial Position [Abstract] | ||
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 | 208,267,444 | 196,997,906 |
Common Stock, shares outstanding | 208,267,444 | 196,997,906 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement [Abstract] | ||
Revenue | $ 558,000 | $ 1,663,000 |
Cost of revenue | (20,000) | (40,000) |
Gross profit | 538,000 | 1,623,000 |
General and administrative expenses | 1,264,000 | 1,469,000 |
Research and development expenses | 21,000 | 18,000 |
Total operating expenses | 1,285,000 | 1,487,000 |
Income (loss) from operations | (747,000) | 136,000 |
Other Income (Expense) | ||
Loss on transfer of accrued payroll | 0 | (8,000) |
Gain on forgiveness of PPP loan | 104,000 | 0 |
Interest expense | (6,000) | 0 |
Total other Income (Expense) | 98,000 | (8,000) |
Income (loss) before income taxes | (649,000) | 128,000 |
Provision for income taxes | 0 | 0 |
Net income (loss) | $ (649,000) | $ 128,000 |
Net income (loss) per share, | ||
Basic and diluted | $ 0 | $ 0 |
Weighted average shares outstanding, | ||
Basic and diluted | 197,224,988 | 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, 2019 | 196,997,906 | |||
Beginning 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 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) |
Common stock issued for cash, shares | 11,269,538 | |||
Common stock issued for cash | $ 11,000 | 717,000 | 728,000 | |
Net loss | (649,000) | (649,000) | ||
Ending balance, shares at Jun. 30, 2021 | 208,267,444 | |||
Ending balance, value at Jun. 30, 2021 | $ 208,000 | $ 24,008,000 | $ (24,627,000) | $ (411,000) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Operating activities: | ||
Net income (loss) | $ (649,000) | $ 128,000 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 22,000 | 39,000 |
Fair value of common stock issued for services | 0 | 194,000 |
Fair value of vested warrants - stock compensation expense | 0 | 7,000 |
Amortization of operating lease right-of-use assets | 63,000 | 60,000 |
Gain on forgiveness of note payable | (104,000) | 0 |
Loss on transfer of accrued payroll | 0 | 8,000 |
Allowance for bad debts | 0 | 5,000 |
Effect of changes in: | ||
Accounts receivable | 98,000 | 131,000 |
Inventory | 22,000 | 10,000 |
Accounts payable and accrued expenses | 26,000 | (75,000) |
Accrued payroll and payroll taxes - related parties | (26,000) | (3,000) |
Customer advances | 359,000 | (392,000) |
Operating lease liabilities | (61,000) | (56,000) |
Net cash provided by (used in) operating activities | (250,000) | 56,000 |
Investing activities: | ||
Purchase of property and equipment | (128,000) | (50,000) |
Cash used in investing activities | (128,000) | (50,000) |
Financing activities: | ||
Proceeds from note payable | 254,000 | 104,000 |
Proceeds from sale of common stock | 728,000 | 0 |
Cash generated from financing activities | 982,000 | 104,000 |
Net increase in cash and cash equivalents | 604,000 | 110,000 |
Cash and cash equivalents, beginning of period | 759,000 | 649,000 |
Cash and cash equivalents, end of period | 1,363,000 | 759,000 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 0 | 0 |
Cash paid for income taxes | 0 | 0 |
Supplemental disclosures of cash flow information: | ||
Transfer of accrued payroll to accounts payable and accrued expenses | 0 | 204,000 |
Initial recognition of operating lease right-of-use assets and operating lease obligations upon adoption of ASC Topic 842 | $ 0 | $ 368,000 |
1. Organization and Summary of
1. Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2021 | |
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 used in our Nano Reactor® LPN™ 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 accompanying consolidated financial statements, during the year ended June 30, 2021, the Company incurred a net loss of $649,000 and at June 30, 2021 the Company had a stockholder deficit of $411,000 and working capital deficiency of $401,000. 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. As of June 30, 2021, the Company has cash in the amount of $1,363,000. 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. 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 During the year ended June 30, 2021, the COVID-19 pandemic did not have a material net impact on our operating results. 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, 2021, the Company has been following the recommendations of local health authorities to minimize exposure risk for its employees, including having employees work remotely and utilizing 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 reserves for inventory obsolescence, assumptions used in valuing our stock options, stock warrants and common stock issued for services and valuation allowance for our deferred tax asset, among other items. 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. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. 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, 2021, and 2020, 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 are generally recorded at the invoiced amounts net of an allowance for expected losses. 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. At June 30, 2021 and 2020, the Company had no reserve recorded for uncollectible accounts receivable. 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 ™ Property and Equipment Property and equipment is stated at cost. 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 the life of the 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, 2021 and 2020, 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 The Company accounts for its leases in accordance with the guidance of FASB Accounting Standards Codification (“ASC”) 842, Leases. The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments The Company adopted ASC 842 on July 1, 2019. There was no cumulative-effect adjustment to accumulated deficit (see Note 3). Fair Value Measurement FASB 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, 2021, and 2020, 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 We periodically issue stock options, warrants and common stock to employees and non-employees for services and capital raising transactions. We account for share-based payments under the guidance of ASC 718 , which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, officers, directors, and consultants, including employee stock options, based on estimated fair values. We estimate the fair value of stock option and warrant awards to employees and directors on the date of grant using an option-pricing model, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service period in our Statements of Operations. We estimate the fair value of restricted stock awards to employees and directors using the market price of our common stock on the date of grant, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service period in our Statements of Operations. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. Under ASC 718, the amount of cash or other assets transferred (or liabilities incurred) to repurchase an equity award shall be charged to equity, to the extent that the amount paid does not exceed the fair value of the equity instruments repurchased at the repurchase date. Any excess of the repurchase price over the fair value of the instruments repurchased shall be recognized as additional compensation cost. Advertising Costs Advertising costs, including marketing expense, incurred in the normal course of operations are expensed as incurred. Advertising expenses amounted to $12,000 and $20,000 for the years ended June 30, 2021 and 2020 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, 2021 and 2020 amounted to $21,000 and $18,000, 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, 2021 and 2020. Net Income (Loss) Per Share The Company’s computation of loss per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income available to common stockholders divided by the weighted average common shares outstanding for the period. Diluted income 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, 2021 2020 Net income (loss) $ (649,000 ) $ 128,000 Weighted average common shares – basic 197,224,988 196,997,906 Dilutive effect of outstanding stock options and warrants – – Weighted average shares – diluted 197,224,988 196,997,906 Net loss per common share: Basic and Diluted $ (0.00 ) $ (0.00 ) There were no adjustments to net income (loss) required for purposes of computing diluted earnings per share. At June 30, 2021 and 2020, 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, 2021 June 30, 2020 Options 11,000,000 11,000,000 Warrants 98,966,049 87,696,511 Concentrations During the year ended June 30, 2021, we recorded 96% of our revenue from Desmet Ballestra (Desmet) and 3% from Enviro Watertek, LLC (EW) (see Note 2). During the year ended June 30, 2020, we recorded 53% of our revenue from GEA Westfalia (GEA), 45% from Desmet and 2% from EW (see Note 2). At June 30, 2021 and 2020, 100% of accounts receivable were due from EW and Desmet, respectively. Segment As of June 30, 2021, 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 (“ASC 326”). ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 is effective for the Company beginning January 1, 2023, and early adoption is permitted. The Company does not believe the potential impact of the new guidance and related codification improvements will be material to its financial position, results of operations and cash flows. 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. ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify fora scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective July 1, 2024, for the Company. Early adoption is permitted, but no earlier than July 1, 2021, including interim periods within that year. Management is currently evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements, but currently does not believe ASU 2020-06 will have a significant impact on the Company. 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, 2021 | |
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 Ballestra (Desmet) for the sale and licensing of our reactors. This agreement was a continuation of an original agreement we signed with Desmet in 2012 and amended in 2016. As part of the October 2018 agreement, Desmet provided us monthly advances of $50,000 through October 1, 2021, to be applied against gross profit share from future sales. The agreement expired on October 1, 2021, and the Company is in negotiations with Desmet for a new agreement. 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 customer of which the reactors are an integral component. Such amount is subject to adjustment based on certain factors including costs over run. The Company has no control with regards to the sale and installation of Nano Reactor® Nano Neutralization® System During the year ended June 30, 2021, the Company recorded sales of $346,000 from Nano Reactor® During the year ended June 30, 2020, the Company recorded sales of $483,000 from Nano Reactor® As of June 30, 2021 and 2020, advances received from Desmet related to the Company’s share in gross profit amounted to $727,000 and $368,000, respectively. These advances will only be recognized as revenues once the condition for revenue recognition have been met. 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 ™ During the year ended June 30, 2021 and 2020, the Company recorded revenues of $17,000 and $38,000, respectively. Revenues from processing of frack water volumes and utilization will only be recognized upon collection from EW. 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 customer advances as they represent 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 was not renewed. 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. |
3. Operating Lease
3. Operating Lease | 12 Months Ended |
Jun. 30, 2021 | |
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, June 30, 2021 2020 Lease costs: Operating lease (included in general and administrative in the Company’s consolidated statement of operations) $ 74,000 $ 73,000 Other information: Cash paid for amounts included in the measurement of lease liabilities $ 71,000 $ 69,000 Weighted average remaining lease term – operating leases (in years) 3.6 4.6 Average discount rate – operating leases 4% 4% The supplemental balance sheet information related to leases for the period is as follows: Long-term right-of-use assets $ 245,000 $ 308,000 Short-term operating lease liabilities $ 58,000 $ 54,000 Long-term operating lease liabilities 193,000 258,000 Total operating lease liabilities $ 251,000 $ 312,000 Maturity of the Company’s lease liabilities are as follows: Operating Year Ending June 30: Lease 2022 $ 72,000 2023 75,000 2024 78,000 2025 47,000 2026 and thereafter – Total lease payments 272,000 Less: Imputed interest/present value (21,000 ) Present value of lease liabilities $ 251,000 |
4. Property and Equipment
4. Property and Equipment | 12 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 4 - Property and Equipment Property and equipment consist of the following as of June 30, 2021 and 2020: June 30, June 30, 2021 2020 Leasehold improvement $ 2,000 $ 2,000 Furniture 27,000 27,000 Office equipment 2,000 2,000 Equipment 484,000 356,000 Systems 187,000 187,000 702,000 574,000 Less: accumulated depreciation and amortization (520,000 ) (498,000 ) Property and equipment, net $ 182,000 $ 76,000 Depreciation expense for the years ended June 30, 2021 and 2020 amounted to $22,000 and $39,000, 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, 2021 | |
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. 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 totaled $204,000, and the Company recorded a loss on the transfer of the liability to SIR of $8,000. As of June 30, 2020, outstanding balance of accrued payroll and payroll taxes-related parties totaled $693,000. During the year ended June 30, 2021, the Company reduced accrued payroll by $26,000. As of June 30, 2021, accrued payroll and payroll taxes-related parties totaled $667,000. |
6. Notes Payable
6. Notes Payable | 12 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Note Payable | Note 6 – Notes Payable June 30, June 30, 2021 2020 A. $ 104,000 $ 104,000 B. 104,000 – C. 150,000 – Total $ 254,000 $ 104,000 A. On April 16, 2020, the Company was granted a loan for $104,000 (PPP #1) pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief and Economic Security Act (the “Cares Act”). PPP #1 loan was scheduled to mature in April 2022 had a 1% per annum interest rate, and was 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, to account for PPP #1 loan. The Company used the entire PPP #1 loan amount for qualifying expenses as described in the CARES Act, including qualifying payroll costs, qualifying group health care benefits, qualifying rent, and qualifying utilities. As of June 30, 2020, the outstanding balance of PPP #1 loan was $104,000. In May, 2021, the SBA approved the forgiveness of PPP #1 loan of $104,000, and we recognized a gain on extinguishment of PPP #1 loan of $104,000 during the year ended June 30, 2021. B. On March 26, 2021, the Company received a second loan of $104,000 pursuant to the PPP (PPP #2) that is scheduled to mature in March 2026. PPP #2 loan bears interest at 1% per annum, is unsecured, and guaranteed by the Small Business Administration (the “SBA”). Funds from PPP #2 loan may only be used for qualifying expenses as described in the CARES Act, including qualifying payroll costs, qualifying group health care benefits, qualifying rent and debt obligations, and qualifying utilities. The Company believes it used the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses. The Company was in compliance with the terms of PPP #2 loan as of June 30, 2021. C. In July 2020, the Company received a loan of $150,000 from the SBA under its Economic Injury Disaster Loan (EIDL) assistance program. The EIDL loan is payable over 30 years, bears interest at a rate of 3.75% per annum and secured by all tangible and intangible property of the Company. The Company was in compliance with the terms of the EIDL loan as of June 30, 2021 |
7. Stockholders' Deficit
7. Stockholders' Deficit | 12 Months Ended |
Jun. 30, 2021 | |
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, 2021, and 2020, there are no shares of Series A or Series B Preferred Stock issued and outstanding. Common Stock During the year ended June 30, 2021, the Company issued 11,269,538 shares of common stock and 11,269,538 fully vested warrants to purchase common stock over a period of five years with an exercise price of $0.09 per share in exchange for net cash proceeds of $728,000 or a selling price of $0.065 per unit. 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, 2021 and 2020 is as follows: Weighted- Average Weighted- Remaining Average Contractual Exercise Life Options Price (Years) 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 - Granted – – – - Forfeited – – – - Exercised – – – - Expired – – – Outstanding at June 30, 2021 11,000,000 $ 0.03 5.07 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 their 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, 2021, all outstanding options were fully vested and exercisable. The intrinsic value of the outstanding options as of June 30, 2021 was $330,000. The following table summarizes additional information concerning options outstanding and exercisable at June 30, 2021. 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 5.07 $ 0.03 11,000,000 5.07 11,000,000 11,000,000 Warrants A summary of the Company’s warrant activity and related information from as of June 30, 2021 and 2020 is as follows. Weighted- Average Weighted- Remaining Average Contractual Exercise Life Warrants Price (Years) 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 Granted 11,269.538 0.09 5.00 Exercised – Expired – Outstanding at June 30, 2021 98,966,049 $ 0.07 4.49 During the year ended June 30, 2021, the Company granted warrants to purchase 11,269,538 shares of common stock in relation to the issuance of common stock (see Common Stock above). During the year ended June 30, 2020, the Company granted warrants to purchase 9,800,000 shares of common stock to officers, directors, and employees for services rendered. The warrants are fully vested upon grant, exercisable at $0.03 per share, and will expire in ten years. Total fair value of these warrants amounted to $194,000 based upon a Black-Scholes Option Pricing model. Also, 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 their 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. As of June 30, 2021, all outstanding warrants were fully vested and exercisable. The intrinsic value of the outstanding warrants as of June 30, 2021 was $1,482,000. The following table summarizes additional information concerning warrants outstanding and exercisable at June 30, 2021. 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 6.02 $ 0.03 68,736,518 $ 0.03 $0.08 - $0.12 30,229,531 3.26 $ 0.10 30,229,531 $ 0.10 98,966,049 98,966,049 The fair value of the warrant awards was estimated using the Black-Scholes method based on the following weighted-average assumptions: June 30, 2020 Risk-free interest rate 0.56% Contractual terms (years) 5.99 Expected volatility 264% Expected dividend yield 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, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8 - Income Taxes For the year ended June 30, 2021, the Company recorded no provision for income taxes due to the Company’s taxable net loss position. For the year ended June 30, 2020, the Company recorded no provision for income taxes due to available Federal net operating loss (NOL) carryforwards that are available to reduce taxable income. 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, 2021, the Company had available Federal NOL carryforwards of approximately $9.8 million that are available to reduce future taxable income. The Federal NOL carry forward expires through 2036. The NOLs are 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, 2021 and 2020, 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 valuation, 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, 2021 and 2020, significant component of the Company’s deferred tax assets and liabilities are as follows: June 30, June 30, 2021 2020 Net Operating loss carryforwards $ 2,758,000 $ 2,620,000 Stock compensation expense 840,000 840,000 Total net deferred tax assets 3,598,000 3,460,000 Less valuation discount (3,598,000 ) (3,460,000 ) Net deferred tax assets $ – $ – A reconciliation of the effective income tax to statutory US federal income tax is as follows: June 30, June 30, 2021 2020 Federal statutory rate (21)% (21)% State income taxes, net of Federal benefit (7)% (7)% Valuation allowance 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 – 2020 California 2014 – 2020 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, 2021 | |
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, 2021 and 2020. 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, 2021, and 2020 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, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 10 – Subsequent Events Subsequent to June 30, 2021, the Company issued 12,071,785 shares of common stock and 12,071,785 fully vested warrants to purchase common stock over a period of five years with an exercise price of $0.09 per share in exchange for net cash proceeds of $785,000 or a selling price of $0.065 per share. Subsequent to June 30, 2021, the SBA forgave the Company’s PPP #2 loan payable of $104,000 obtained in March 2021. The Company will account for the forgiven loan as a gain on forgiveness of debt. |
1. Organization and Summary o_2
1. Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2021 | |
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 accompanying consolidated financial statements, during the year ended June 30, 2021, the Company incurred a net loss of $649,000 and at June 30, 2021 the Company had a stockholder deficit of $411,000 and working capital deficiency of $401,000. 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. As of June 30, 2021, the Company has cash in the amount of $1,363,000. 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. 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 During the year ended June 30, 2021, the COVID-19 pandemic did not have a material net impact on our operating results. 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, 2021, the Company has been following the recommendations of local health authorities to minimize exposure risk for its employees, including having employees work remotely and utilizing 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 reserves for inventory obsolescence, assumptions used in valuing our stock options, stock warrants and common stock issued for services and valuation allowance for our deferred tax asset, among other items. 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. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. 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, 2021, and 2020, 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 Accounts receivable are generally recorded at the invoiced amounts net of an allowance for expected losses. 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. At June 30, 2021 and 2020, the Company had no reserve recorded for uncollectible accounts receivable. |
Inventory | 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 ™ |
Property and Equipment | Property and Equipment Property and equipment is stated at cost. 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 the life of the 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, 2021 and 2020, 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 The Company accounts for its leases in accordance with the guidance of FASB Accounting Standards Codification (“ASC”) 842, Leases. The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments The Company adopted ASC 842 on July 1, 2019. There was no cumulative-effect adjustment to accumulated deficit (see Note 3). |
Fair Value Measurement | Fair Value Measurement FASB 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, 2021, and 2020, 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 We periodically issue stock options, warrants and common stock to employees and non-employees for services and capital raising transactions. We account for share-based payments under the guidance of ASC 718 , which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, officers, directors, and consultants, including employee stock options, based on estimated fair values. We estimate the fair value of stock option and warrant awards to employees and directors on the date of grant using an option-pricing model, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service period in our Statements of Operations. We estimate the fair value of restricted stock awards to employees and directors using the market price of our common stock on the date of grant, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service period in our Statements of Operations. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. Under ASC 718, the amount of cash or other assets transferred (or liabilities incurred) to repurchase an equity award shall be charged to equity, to the extent that the amount paid does not exceed the fair value of the equity instruments repurchased at the repurchase date. Any excess of the repurchase price over the fair value of the instruments repurchased shall be recognized as additional compensation cost. |
Advertising Costs | Advertising Costs Advertising costs, including marketing expense, incurred in the normal course of operations are expensed as incurred. Advertising expenses amounted to $12,000 and $20,000 for the years ended June 30, 2021 and 2020 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, 2021 and 2020 amounted to $21,000 and $18,000, 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, 2021 and 2020. |
Net Income (Loss) Per Share | Net Income (Loss) Per Share The Company’s computation of loss per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income available to common stockholders divided by the weighted average common shares outstanding for the period. Diluted income 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, 2021 2020 Net income (loss) $ (649,000 ) $ 128,000 Weighted average common shares – basic 197,224,988 196,997,906 Dilutive effect of outstanding stock options and warrants – – Weighted average shares – diluted 197,224,988 196,997,906 Net loss per common share: Basic and Diluted $ (0.00 ) $ (0.00 ) There were no adjustments to net income (loss) required for purposes of computing diluted earnings per share. At June 30, 2021 and 2020, 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, 2021 June 30, 2020 Options 11,000,000 11,000,000 Warrants 98,966,049 87,696,511 |
Concentrations | Concentrations During the year ended June 30, 2021, we recorded 96% of our revenue from Desmet Ballestra (Desmet) and 3% from Enviro Watertek, LLC (EW) (see Note 2). During the year ended June 30, 2020, we recorded 53% of our revenue from GEA Westfalia (GEA), 45% from Desmet and 2% from EW (see Note 2). At June 30, 2021 and 2020, 100% of accounts receivable were due from EW and Desmet, respectively. |
Segment | Segment As of June 30, 2021, 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 (“ASC 326”). ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 is effective for the Company beginning January 1, 2023, and early adoption is permitted. The Company does not believe the potential impact of the new guidance and related codification improvements will be material to its financial position, results of operations and cash flows. 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. ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify fora scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective July 1, 2024, for the Company. Early adoption is permitted, but no earlier than July 1, 2021, including interim periods within that year. Management is currently evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements, but currently does not believe ASU 2020-06 will have a significant impact on the Company. 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, 2021 | |
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, 2021 2020 Net income (loss) $ (649,000 ) $ 128,000 Weighted average common shares – basic 197,224,988 196,997,906 Dilutive effect of outstanding stock options and warrants – – Weighted average shares – diluted 197,224,988 196,997,906 Net loss per common share: Basic and Diluted $ (0.00 ) $ (0.00 ) |
Schedule of antidilutive shares | At June 30, 2021 and 2020, 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, 2021 June 30, 2020 Options 11,000,000 11,000,000 Warrants 98,966,049 87,696,511 |
3. Operating Lease (Tables)
3. Operating Lease (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Lessee Disclosure [Abstract] | |
Lease cost table | The components of lease expense and supplemental cash flow information related to leases for the period are as follows: June 30, June 30, 2021 2020 Lease costs: Operating lease (included in general and administrative in the Company’s consolidated statement of operations) $ 74,000 $ 73,000 Other information: Cash paid for amounts included in the measurement of lease liabilities $ 71,000 $ 69,000 Weighted average remaining lease term – operating leases (in years) 3.6 4.6 Average discount rate – operating leases 4% 4% The supplemental balance sheet information related to leases for the period is as follows: Long-term right-of-use assets $ 245,000 $ 308,000 Short-term operating lease liabilities $ 58,000 $ 54,000 Long-term operating lease liabilities 193,000 258,000 Total operating lease liabilities $ 251,000 $ 312,000 |
Schedule of lease liability maturities | Maturity of the Company’s lease liabilities are as follows: Operating Year Ending June 30: Lease 2022 $ 72,000 2023 75,000 2024 78,000 2025 47,000 2026 and thereafter – Total lease payments 272,000 Less: Imputed interest/present value (21,000 ) Present value of lease liabilities $ 251,000 |
4. Property and Equipment (Tabl
4. Property and Equipment (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule Property and Equipment | Property and equipment consist of the following as of June 30, 2021 and 2020: June 30, June 30, 2021 2020 Leasehold improvement $ 2,000 $ 2,000 Furniture 27,000 27,000 Office equipment 2,000 2,000 Equipment 484,000 356,000 Systems 187,000 187,000 702,000 574,000 Less: accumulated depreciation and amortization (520,000 ) (498,000 ) Property and equipment, net $ 182,000 $ 76,000 |
6. Notes Payable (Tables)
6. Notes Payable (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | June 30, June 30, 2021 2020 A. $ 104,000 $ 104,000 B. 104,000 – C. 150,000 – Total $ 254,000 $ 104,000 |
7. Stockholders' Deficit (Table
7. Stockholders' Deficit (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
Stock Option activity table | A summary of the stock option activity from June 30, 2021 and 2020 is as follows: Weighted- Average Weighted- Remaining Average Contractual Exercise Life Options Price (Years) 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 - Granted – – – - Forfeited – – – - Exercised – – – - Expired – – – Outstanding at June 30, 2021 11,000,000 $ 0.03 5.07 |
Schedule of options outstanding and exercisable | The following table summarizes additional information concerning options outstanding and exercisable at June 30, 2021. 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 5.07 $ 0.03 11,000,000 5.07 11,000,000 11,000,000 |
Schedule of warrant activity | A summary of the Company’s warrant activity and related information from as of June 30, 2021 and 2020 is as follows. Weighted- Average Weighted- Remaining Average Contractual Exercise Life Warrants Price (Years) 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 Granted 11,269.538 0.09 5.00 Exercised – Expired – Outstanding at June 30, 2021 98,966,049 $ 0.07 4.49 |
Schedule of warrants outstanding and exercisable | The following table summarizes additional information concerning warrants outstanding and exercisable at June 30, 2021. 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 6.02 $ 0.03 68,736,518 $ 0.03 $0.08 - $0.12 30,229,531 3.26 $ 0.10 30,229,531 $ 0.10 98,966,049 98,966,049 |
Assumptions | The fair value of the warrant awards was estimated using the Black-Scholes method based on the following weighted-average assumptions: June 30, 2020 Risk-free interest rate 0.56% Contractual terms (years) 5.99 Expected volatility 264% Expected dividend yield 0% |
8. Income Taxes (Tables)
8. Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets | At June 30, 2021 and 2020, significant component of the Company’s deferred tax assets and liabilities are as follows: June 30, June 30, 2021 2020 Net Operating loss carryforwards $ 2,758,000 $ 2,620,000 Stock compensation expense 840,000 840,000 Total net deferred tax assets 3,598,000 3,460,000 Less valuation discount (3,598,000 ) (3,460,000 ) 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, 2021 2020 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 – 2020 California 2014 – 2020 |
1. Organization and Summary o_4
1. Organization and Summary of Significant Accounting Policies (Details- Property and Equipment) | 12 Months Ended |
Jun. 30, 2021 | |
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, 2021 | Jun. 30, 2020 | |
Accounting Policies [Abstract] | ||
Net income (loss) | $ (649,000) | $ 128,000 |
Weighted average common shares - basic | 197,224,988 | 196,997,906 |
Dilutive effect of outstanding stock options and warrants | 0 | 0 |
Weighted average shares- diluted | 197,224,988 | 196,997,906 |
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, 2021 | Jun. 30, 2020 | |
Options [Member] | ||
Antidilutive shares | 11,000,000 | 11,000,000 |
Warrants [Member] | ||
Antidilutive shares | 98,966,049 | 87,696,511 |
1. Organization and Summary o_7
1. Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Net loss | $ (649,000) | $ 128,000 | |
Working capital | (401,000) | ||
Stockholders deficit | (411,000) | (490,000) | $ (819,000) |
Cash | 1,363,000 | ||
Impairment of property and equipment | 0 | 0 | |
Advertising expense | 12,000 | 20,000 | |
Research and development expense | $ 21,000 | $ 18,000 | |
Sales Revenue Net [Member] | Customer Concentration Risk [Member] | Desmet Ballestra [Member] | |||
Concentration risk percentage | 96.00% | 45.00% | |
Sales Revenue Net [Member] | Customer Concentration Risk [Member] | EW [Member] | |||
Concentration risk percentage | 3.00% | 2.00% | |
Sales Revenue Net [Member] | Customer Concentration Risk [Member] | GEA Westfalia [Member] | |||
Concentration risk percentage | 53.00% | ||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Desmet Ballestra [Member] | |||
Concentration risk percentage | 100.00% | ||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | EW [Member] | |||
Concentration risk percentage | 100.00% |
2. Contracts with Customers (De
2. Contracts with Customers (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Revenues | $ 558,000 | $ 1,663,000 |
Desmet Ballestra [Member] | ||
Revenues | 537,000 | 749,000 |
Advances from distributors | 727,000 | 368,000 |
Desmet Ballestra [Member] | Nano Reactor Sales [Member] | ||
Revenues | 346,000 | 483,000 |
Desmet Ballestra [Member] | Gross Profit Share [Member] | ||
Revenues | 191,000 | 266,000 |
Enviro Watertek [Member] | ||
Revenues | 17,000 | $ 38,000 |
GEA Westfalia [Member] | ||
Advances recognized | $ 877,000 |
3. Operating Lease (Details - L
3. Operating Lease (Details - Lease Cost) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Lessee Disclosure [Abstract] | ||
Operating lease cost | $ 74,000 | $ 73,000 |
Cash paid for amounts included in the measurement of lease liabilities | $ 71,000 | $ 69,000 |
Weighted average remaining lease term - operating leases (in years) | 3 years 7 months 6 days | 4 years 7 months 6 days |
Average discount rate - operating leases | 4.00% | 4.00% |
Long-term right-of-use assets | $ 245,000 | $ 308,000 |
Short-term operating lease liabilities | 58,000 | 54,000 |
Long-term operating lease liabilities | 193,000 | 258,000 |
Total operating lease liabilities | $ 251,000 | $ 312,000 |
3. Operating Lease (Details - O
3. Operating Lease (Details - Operating Lease Minimum payments) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Lessee Disclosure [Abstract] | ||
2022 | $ 72,000 | |
2023 | 75,000 | |
2024 | 78,000 | |
2025 | 47,000 | |
2026 and thereafter | 0 | |
Total lease payments | 272,000 | |
Less: imputed interest/present value discount | (21,000) | |
Operating Lease liability | $ 251,000 | $ 312,000 |
4. Property and Equipment (Deta
4. Property and Equipment (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Property and Equipment | $ 702,000 | $ 574,000 |
Less: Accumulated depreciation and amortization | (520,000) | (498,000) |
Property and equipment, net | 182,000 | 76,000 |
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 | 484,000 | 356,000 |
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, 2021 | Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 22,000 | $ 39,000 |
5. Related Party Transactions (
5. Related Party Transactions (Details Narrative) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Related Party Transactions [Abstract] | ||
Accrued payroll and payroll taxes | $ 667,000 | $ 693,000 |
6. Notes Payable (Details)
6. Notes Payable (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Notes Payable | $ 254,000 | $ 104,000 |
PPP Loan #1 [Member] | ||
Notes Payable | 104,000 | 104,000 |
PPP #2 [Member] | ||
Notes Payable | 104,000 | 0 |
EIDL [Member] | ||
Notes Payable | $ 150,000 | $ 0 |
6. Notes Payable (Details Narra
6. Notes Payable (Details Narrative) - USD ($) | 1 Months Ended | 11 Months Ended | 12 Months Ended | 14 Months Ended | ||
Jul. 31, 2020 | Apr. 16, 2020 | Mar. 26, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | |
Note payable | $ 254,000 | $ 104,000 | $ 254,000 | |||
Gain on forgiveness of note payable | 104,000 | 0 | ||||
PPP Loan #1 [Member] | ||||||
Proceeds from loan | $ 104,000 | |||||
Maturity date | Apr. 30, 2022 | |||||
Interest rate | 1.00% | |||||
Note payable | 104,000 | 104,000 | 104,000 | |||
Gain on forgiveness of note payable | 104,000 | |||||
PPP Loan #2 [Member] | ||||||
Proceeds from loan | $ 104,000 | |||||
Maturity date | Mar. 31, 2026 | |||||
Interest rate | 1.00% | |||||
Note payable | 104,000 | 0 | 104,000 | |||
EIDL [Member] | ||||||
Proceeds from loan | $ 150,000 | |||||
Interest rate | 3.75% | |||||
Note payable | $ 150,000 | $ 0 | $ 150,000 |
7. Stockholders' Deficit (Detai
7. Stockholders' Deficit (Details - Option activity) - Options [Member] - $ / shares | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Options | |||
Options outstanding, beginning balance | 11,000,000 | 11,000,000 | |
Options granted | 0 | 0 | |
Options forfeited | 0 | 0 | |
Options exercised | 0 | 0 | |
Options expired | 0 | 0 | |
Options outstanding, ending balance | 11,000,000 | 11,000,000 | 11,000,000 |
Weighted Average Exercise Price | |||
Weighted average exercise price, options outstanding, beginning price | $ 0.03 | $ 0.03 | |
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 | $ 0.03 |
Weighted Average Remaining Contractual Life (Years) | |||
Weighted average remaining contractual life, options outstanding | 5 years 26 days | 6 years 26 days | 3 years 4 months 9 days |
7. Stockholders' Deficit (Det_2
7. Stockholders' Deficit (Details - Options by exercise price) - $ / shares | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
$0.03 Exercise Price [Member] | |||
Number of shares outstanding | 11,000,000 | ||
Weighted average remaining life options outstanding | 5 years 26 days | ||
Weighted average exercise price options outstanding | $ 0.03 | ||
Number of shares exercisable | 11,000,000 | ||
Weighted average remaining life options exercisable | 5 years 26 days | ||
Options [Member] | |||
Number of shares outstanding | 11,000,000 | 11,000,000 | 11,000,000 |
Weighted average remaining life options outstanding | 5 years 26 days | 6 years 26 days | 3 years 4 months 9 days |
Weighted average exercise price options outstanding | $ 0.03 | $ 0.03 | $ 0.03 |
Number of shares exercisable | 11,000,000 |
7. Stockholders' Deficit (Det_3
7. Stockholders' Deficit (Details - Warrant activity) - $ / shares | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Warrants | |||
Warrants granted | 11,269,538 | ||
Weighted Average Exercise Price | |||
Weighted average exercise price, warrants outstanding, ending price | $ 0.09 | ||
Warrants [Member] | |||
Warrants | |||
Warrants outstanding, beginning balance | 87,696,511 | 79,263,176 | |
Warrants granted | 11,269.538 | 9,800,000 | |
Warrants exercised | 0 | 0 | |
Warrants expired | 0 | (1,366,665) | |
Warrants outstanding, ending balance | 98,966,049 | 87,696,511 | 79,263,176 |
Weighted Average Exercise Price | |||
Weighted average exercise price, warrants outstanding, beginning price | $ 0.07 | $ 0.07 | |
Weighted average exercise price, warrants granted | 0.09 | 0.03 | |
Weighted average exercise price, warrants outstanding, ending price | $ 0.07 | $ 0.07 | $ 0.07 |
Weighted Average Remaining Contractual Life | |||
Weighted average remaining contractual life | 4 years 5 months 27 days | 5 years 7 months 21 days | 4 years 5 months 12 days |
Weighted average remaing contractual life, warrants granted | 5 years | 10 years |
7. Stockholders' Deficit (Det_4
7. Stockholders' Deficit (Details - Warrants by exercise price) - $ / shares | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Weighted average exercise price warrants outstanding | $ 0.09 | ||
$0.03-$0.05 [Member] | |||
Number of warrant shares outstanding | 68,736,518 | ||
Weighted average remaining life warrants outstanding | 6 years 7 days | ||
Weighted average exercise price warrants outstanding | $ 0.03 | ||
Number of warrant shares exercisable | 68,736,518 | ||
Weighted average exercise price warrants exercisable | $ 0.03 | ||
$0.08 - $0.12 [Member] | |||
Number of warrant shares outstanding | 30,229,531 | ||
Weighted average remaining life warrants outstanding | 3 years 3 months 4 days | ||
Weighted average exercise price warrants outstanding | $ 0.10 | ||
Number of warrant shares exercisable | 30,229,531 | ||
Weighted average exercise price warrants exercisable | $ 0.10 | ||
Warrants [Member] | |||
Number of warrant shares outstanding | 98,966,049 | 87,696,511 | 79,263,176 |
Weighted average remaining life warrants outstanding | 4 years 5 months 27 days | 5 years 7 months 21 days | 4 years 5 months 12 days |
Weighted average exercise price warrants outstanding | $ 0.07 | $ 0.07 | $ 0.07 |
Number of warrant shares exercisable | 98,966,049 |
7. Stockholders' Deficit (Det_5
7. Stockholders' Deficit (Details - Assumptions) - Warrants [Member] | 12 Months Ended |
Jun. 30, 2020 | |
Risk free interest rate | 0.56% |
Expected term (years) | 5 years 11 months 26 days |
Expected volatility | 264.00% |
Expected dividend yield | 0.00% |
7. Stockholders' Deficit (Det_6
7. Stockholders' Deficit (Details Narrative) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stock issued new, shares | 11,269,538 | ||
Intrinsic value of options outstanding | $ 330,000 | ||
Intrinsic value of warrants | $ 1,482,000 | ||
Warrants granted to purchase common stock | 11,269,538 | ||
Warrant exercisable price per share | $ 0.09 | ||
Net cash proceeds | $ 728,000 | ||
Warrant selling price | $ 0.065 | ||
Options [Member] | |||
Stock based compensation expense due to modification of options | $ 2,000 | ||
Warrants [Member] | |||
Warrants granted to purchase common stock | 11,269.538 | 9,800,000 | |
Warrant exercisable price per share | $ 0.07 | $ 0.07 | $ 0.07 |
Stock based compensation expense due to modification of warrants | $ 5,000 |
8. Income Taxes (Details- Defer
8. Income Taxes (Details- Deferred Tax Assets and Liabilities) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Income Tax Disclosure [Abstract] | ||
Net Operating loss carryforwards | $ 2,758,000 | $ 2,620,000 |
Stock compensation expense | 840,000 | 840,000 |
Total net deferred tax assets | 3,598,000 | 3,460,000 |
Less valuation discounts | (3,598,000) | (3,460,000) |
Net deferred tax assets | $ 0 | $ 0 |
8. Income Taxes (Details- Tax R
8. Income Taxes (Details- Tax Reconciliation) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
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, 2021USD ($) | |
Income Tax Disclosure [Abstract] | |
Net operating loss | $ 9,800,000 |
Operating loss expiration date | Dec. 31, 2036 |