Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2018 | May 14, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | CEREBAIN BIOTECH CORP. | |
Entity Central Index Key | 1,453,099 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 9,039,347 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2018 | Jun. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 30,064 | $ 11,345 |
Prepaid expenses | 95,396 | 225,517 |
Total current assets | 125,460 | 236,862 |
Total assets | 125,460 | 236,862 |
Current liabilities: | ||
Accounts payable | 1,030,237 | 926,131 |
Related party payables | 325,000 | 260,608 |
Accrued payroll | 160,995 | 115,810 |
Payroll taxes payable | 70,244 | 59,234 |
Convertible notes to stockholders, current portion | 360,000 | 100,000 |
Short term notes payable to stockholders | 364,000 | 289,000 |
Short term convertible notes payable, net of debt discount of approximately $261,250 and $0, respectively | 23,750 | |
Derivative liabilities | 320,000 | |
Warrant liabilities | 96,903 | |
Total current liabilities | 2,751,129 | 1,750,783 |
Long term liabilities: | ||
Convertible notes to stockholders, net of current portion and net of debt discount of approximately $7,049 and $12,053, respectively | 2,569,063 | 2,739,059 |
Total long-term liabilities | 2,569,063 | 2,739,059 |
Total liabilities | 5,320,192 | 4,489,842 |
Commitments and contingencies (Note 4) | ||
Stockholders' deficit | ||
Preferred stock ($0.001 par value: 1,000,000 shares authorized; none issued and outstanding) | ||
Common stock ($0.001 par value: 249,000,000 shares authorized; 9,039,347 and 7,880,347 shares issued and outstanding at March 31, 2018 and June 30, 2017, respectively) | 9,039 | 7,880 |
Additional paid in capital | 26,826,015 | 23,269,861 |
Accumulated deficit | (32,029,786) | (27,530,721) |
Total stockholders" deficit | (5,194,732) | (4,252,980) |
Total liabilities and stockholders" deficit | $ 125,460 | $ 236,862 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2018 | Jun. 30, 2017 |
Current liabilities: | ||
Convertible notes payable, net of debt discount | $ 261,250 | |
Long term liabilities: | ||
Net of debt discount Non current | $ 7,049 | $ 12,053 |
Stockholders' deficit | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized shares | 1,000,000 | 1,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, Authorized shares | 249,000,000 | 249,000,000 |
Common stock, Issued shares | 9,039,347 | 7,880,347 |
Common stock, outstanding shares | 9,039,347 | 7,880,347 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Operating Expenses | ||||
Selling, general and administrative expenses | $ 313,716 | $ 439,052 | $ 790,175 | $ 1,267,759 |
Research and development costs | 80,402 | 58,902 | 205,030 | 190,369 |
Patent Royalty Expense | 25,000 | 25,000 | 75,000 | 75,000 |
Marketing expenses | 2,440 | 1,630 | 8,642 | 9,782 |
Total operating expenses | 421,558 | 524,584 | 1,078,847 | 1,542,910 |
Other (income) expense | ||||
Accretion of debt discount | 25,418 | 1,944 | 28,754 | 11,500 |
Loss from extinguishment of debt | 3,102,134 | 13,778,649 | ||
Interest expense | 217,012 | 40,226 | 298,716 | 116,476 |
Change in fair value of derivative liabilities | (10,000) | (10,000) | ||
Change in fair value of warrant liabilities | 614 | 614 | ||
Total other expense, net | 233,044 | 42,170 | 3,420,218 | 13,906,625 |
Net loss | $ (654,602) | $ (566,754) | $ (4,499,065) | $ (15,449,535) |
Loss per share: | ||||
Basic and diluted loss per share | $ (0.07) | $ (0.07) | $ (0.54) | $ (2.08) |
Basic and diluted weighted average shares outstanding | 8,755,125 | 7,605,236 | 8,365,059 | 7,421,427 |
UNAUDITED CONDENSED CONSOLIDAT5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (4,499,065) | $ (15,449,535) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Accretion of debt discount | 28,754 | 11,500 |
Initial fair value of derivative liabilities included as interest expense | 173,039 | |
Change in derivative liabilities | (10,000) | |
Change in warrant liabilities | 614 | |
Loss from extinguishment of debt | 3,102,134 | 13,778,649 |
Stock based compensation | 115,179 | 263,792 |
Amortization of stock based prepaid consulting compensation | 186,447 | 578,511 |
Stock compensation for legal services | 15,000 | |
Changes in operating assets and liabilities: | ||
Prepaid expenses | (21,326) | (46,372) |
Accounts payable | 104,106 | 253,829 |
Related party payables | 64,392 | 163,898 |
Accrued payroll and taxes | 56,195 | |
Net cash used in operating activities | (684,531) | (445,728) |
Cash flows from financing activities: | ||
Proceeds from exercise of warrants | 31,000 | |
Proceeds from issuance of common stock and warrants | 290,000 | 50,000 |
Proceeds from short term notes to stockholders | 175,000 | |
Proceeds from convertible notes | 345,000 | |
Proceeds from short term convertible notes, net | 253,250 | |
Repayment of convertible notes | (15,000) | |
Net cash flows provided by financing activities: | 703,250 | 426,000 |
Net change in cash and cash equivalents | 18,719 | (19,728) |
Cash and cash equivalents- beginning of period | 11,345 | 20,245 |
Cash and cash equivalents- end of period | 30,064 | 517 |
Supplemental disclosure of non-cash activities: | ||
Cash paid during the period for: Interest | ||
Cash paid during the period for: Income tax | ||
Supplemental disclosure on non-cash investing and financing activities: | ||
Debt discount associated with convertible notes payable - beneficial conversion feature | 4,500 | |
Debt discount associated with convertible notes payable - warrant feature | 15,500 | |
Stock issued for prepaid services | 35,000 | 288,400 |
Warrants issued for prepaid services | 170,808 | |
Conversion of convertible notes payable into stock | 12,400 | |
Embedded derivative recorded as debt discount | 156,961 | |
Derivative warrant liability recorded as debt discount | 96,289 | |
Debt issuance cost recorded as debt discount | $ 18,650 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 9 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES | Description of Business Cerebain Biotech Corp. (Formerly Discount Dental Materials, Inc.) (Cerebain Biotech), was incorporated on December 18, 2007 under the laws of Nevada. The Company is a smaller reporting biomedical company and through its wholly owned subsidiary, Cerebain Operating, Inc. (Formerly Cerebain Biotech Corp.), the Companys business revolves around the discovery of products for the treatment of Alzheimers disease utilizing Omentum. The Company plans to produce products that will include both a medical device solution as well as a synthetic drug solution. Cerebain Operating, Inc. was incorporated on February 22, 2010, in the State of Nevada. The accompanying (a) condensed balance sheet at June 30, 2017 has been derived from audited statements and (b) unaudited interim condensed financial statements as of March 31, 2018 and for the nine-month and three-month periods ended March 31, 2018 and 2017 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended June 30, 2017 included on Form 10-K filed with the Securities and Exchange Commission on September 15, 2017. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 2 - BASIS OF PRESENTATION | The Company operates in one segment in accordance with accounting guidance Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 280, Segment Reporting Going Concern The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of approximately $32,000,000 and $27,500,000 at March 31, 2018 and June 30, 2017, respectively, and had a net loss of approximately $4,500,000 and $15,500,000 for the nine-month periods ended March 31, 2018 and 2017, respectively, and net cash used in operating activities of approximately $685,000 and $446,000 for the nine-month periods ended March 31, 2018 and 2017, respectively, with no revenue earned since inception, limited cash of approximately $30,000 and $11,000 at March 31, 2018 and June 30, 2017, respectively, and a lack of operational history. These matters raise substantial doubt about the Companys ability to continue as a going concern. While the Company is attempting to commence operations and generate revenues, the Companys cash position may not be significant enough to support the Companys daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Companys ability to further implement its business plan and generate revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | This summary of significant accounting policies of the Company is presented to assist in understanding the Companys condensed consolidated financial statements. The condensed consolidated financial statements and notes are representations of the Companys management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the condensed consolidated financial statements. Use of Estimates The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of net sales and expenses during the reported periods. Actual results may differ from those estimates and such differences may be material to the condensed consolidated financial statements. The more significant estimates and assumptions by management include among others: useful lives and residual values of long-lived assets, the valuation of equity instruments, the valuation of warrants and options, the valuation of derivative liabilities, and the valuation of warrant liabilities. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Cerebain Biotech Corp. and its wholly-owned subsidiary, Cerebain Operating, Inc. (collectively referred to as the Company). There are no material intercompany transactions. Advertising Costs Advertising costs are recorded as general and administrative expenses when they are incurred. Advertising costs charged to operations were approximately $8,600 and $9,800 for the nine-month periods ended March 31, 2018 and 2017, respectively and approximately $2,400 and $1,600 for the three-month periods ended March 31, 2018 and 2017, respectively. Research and Development The Company expenses the cost of research and development as incurred. Research and development costs charged to operations were approximately $205,000 and $190,000 for the nine-month periods ended March 31, 2018 and 2017, respectively, and approximately $80,400 and $59,000 for the three-month periods ended March 31, 2018 and 2018, respectively, and are included in research and development costs in the accompanying condensed consolidated statements of operations (See Note 4). Debt The Company issues debt that may have separate warrants, conversion features, or no equity-linked attributes. Debt with warrants In accordance with ASC Topic 470-20-25, when the Company issues debt with warrants, the Company treats the warrants as a debt discount, recorded as a contra-liability against the debt, and amortizes the balance over the life of the underlying debt as amortization of debt discount expense in the consolidated statements of operations. The offset to the contra-liability is recorded as additional paid in capital in the Companys consolidated balance sheets if the warrants are not treated as a derivative. The Company determines the value of the warrants using the Black-Scholes Option Pricing Model (Black-Scholes) using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the volatility of the stock. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense in the consolidated statements of operations. The debt is treated as conventional debt. Convertible debt derivative treatment When the Company issues debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative, as follows: a) one or more underlyings, typically the price of our common stock; b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; c) no initial net investment, which typically excludes the amount borrowed; and d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash. An embedded equity-linked component that meets the definition of a derivative does not have to be separated from the host instrument if the component qualifies for the scope exception for certain contracts involving an issuers own equity. The scope exception applies if the contract is both a) indexed to its own stock; and b) classified in shareholders equity in its statement of financial position. If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using the Monte Carlo Method upon the date of issuance. If the fair value of the convertible debt derivative is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the convertible debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The convertible debt derivative is revalued at the end of each reporting period and any change in fair value is recorded as a gain or loss in the statement of operations. The debt discount is amortized through interest expense over the life of the debt. Convertible debt beneficial conversion feature If the conversion feature is not treated as a derivative, the Company assesses whether it is a beneficial conversion feature (BCF). A BCF exists if the conversion price of the convertible debt instrument is less than the stock price on the commitment date. This typically occurs when the conversion price is less than the fair value of the stock on the date the instrument was issued. The value of a BCF is equal to the intrinsic value of the feature, the difference between the conversion price and the common stock into which it is convertible and is recorded as additional paid in capital and as a debt discount in the consolidated balance sheets. The Company amortizes the balance over the life of the underlying debt as amortization of debt discount expense in the consolidated statements of operations. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense in the consolidated statements of operations. If the conversion feature does not qualify for either the derivative treatment or as a BCF, the convertible debt is treated as traditional debt. Debt Modifications and Extinguishments When the Company modifies or extinguishes debt, it does so in accordance with ASC Topic 470-50-40, which requires modification to debt instruments to be evaluated to assess whether the modifications are considered substantial modifications. A substantial modification of terms shall be accounted for like an extinguishment. Based on the guidance relied upon and the analysis performed, if the Company believes the embedded conversion feature has no fair value on the date of issuance (measurement date) and the embedded conversion feature has no beneficial conversion feature, the embedded conversion feature does not meet the criteria in ASC 470-50-40-10 or 470-20-25 and the issuance of the convertible note payable is considered a modification, and not an extinguishment that would require the recognition of a gain or loss. If the Company determines the change in terms meet the criteria for substantial modification under ASC 470 it will treat the modification as extinguishment and recognize a loss from debt extinguishment. Fair Value of Financial Instruments The Company applies the provisions of accounting guidance, FASB Topic ASC 825 that requires all 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, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of March 31, 2018 and June 30, 2017, the fair value of cash, accounts payable, related party payables, and notes payable to stockholders approximated carrying value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates. Fair Value Measurements FASB ASC Topic 825 Financial Instruments, requires disclosure about fair value of financial instruments. The FASB ASC Topic 820, Fair Value Measurement The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below. · Level 1 observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets. · Level 2 other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.). · Level 3 significant unobservable inputs (including the Companys own assumptions in determining the fair value of investments). The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The warrant and derivative liabilities are recognized at fair value on a recurring basis at March 31, 2018 and are Level 3 measurements. There have been no transfers between levels. Concentrations, Risks, and Uncertainties The Company is a startup company subject to the substantial business risks and uncertainties inherent to such an entity, including the potential risk of business failure. Basic and Diluted Earnings Per Share Basic earnings (loss) per common share is computed by dividing net earnings applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, using the treasury stock method, consisting of shares that might be issued upon exercise of common stock warrants and conversion of convertible notes. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common shares equivalents, because their inclusion would be anti-dilutive. Basic earnings per share are based on the weighted-average number of shares of common stock outstanding. Diluted earnings per share is based on the weighted-average number of shares of common stock outstanding adjusted for the effects of common stock that may be issued as a result of the following types of potentially dilutive instruments: · Warrants, · Convertible notes, · Employee stock options, and · Other equity awards, which include long-term incentive awards. The FASB ASC Topic 260, Earnings Per Share Diluted earnings per share are based on the assumption that all dilutive options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options, warrants, and convertible notes are assumed to be exercised at the time of issuance, and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Basic and diluted earnings (loss) per share are the same since the Company had net losses for all periods presented and including the additional potential common shares would have an anti-dilutive effect. Recent Accounting Pronouncements The Company has evaluated new accounting pronouncements that have been issued and are not yet effective for the Company and determined that there are no such pronouncements expected to have a significant impact on the Companys future financial statements. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 4 - COMMITMENTS AND CONTINGENCIES | Commitments In September 2012, the Company entered into an agreement with Sonos Models, Inc. (Sonos) to build up to three medical device prototypes to be used for testing. In April 2014, the Company entered into an addendum to the agreement with Sonos, which included a commitment by the Company to pay Sonos up to One Million Dollars ($1,000,000) cash, excluding stock-based compensation, for research and development costs. These costs will be recognized in research and development expense as costs are incurred (See Note 3). To date, Sonos has been issued 325,000 restricted shares of the Companys stock and the Company has paid approximately $320,000, of which $165,000 has been incurred towards the Companys monetary commitment. To date, the results of the research suggest the Company has three options for implantable devices with a bias towards having them as non-invasive as possible. The options are comprised of two electro-stim types that have a multitude of variable test parameters that can be changed and modified externally as the testing facility conducts clinical trials on each patient. It is theorized that if a patients response to the Omentum stimulation is successful, the clinical facility should be able to perform various tests for the purpose of setting markers for the patient and then perform the standardized cognitive testing for Alzheimers patient with the intent of developing a testing matrix. It is the Companys objective to test various methods and modalities with the aim of developing an enormous matrix of input to direct us to the best solution. Consulting Agreements Between December 2016 and March 2018, the Company entered into service and consulting agreements with various vendors to provide assistance to the Company in several areas including the marketing of its biomedical products upon the availability of the device, capital markets and marketing strategies, research and development, advertising services and assistance in the introduction of the Company to medical device testing organization and to facilitate access to doctors in numerous countries, including Poland, Uzbekistan and China. They were compensated an approximate aggregate 1,935,000 shares of the Companys fully vested and non-forfeitable common stock. These contracts are for twelve to thirty-six months and may be renewed or extended for any period as may be agreed by the parties. As of March 31, 2018, the Company has extended some of the contracts for additional periods. Any of the parties may terminate their respective agreement by providing thirty (30) days written notice of such termination. The Company has recognized $30,000 in accounts payable which is in arrears with one contractual obligation and is in discussions with the consultant to renegotiate the terms of the contract. As these contracts are for a period of up to twelve months to thirty-six months, the Company recorded the original approximate $2,670,000 as the value of the shares issued to prepaid expense and is amortizing the expense associated with these issuances over a twelve to thirty-six-month period. For the nine-month periods ended March 31, 2018 and 2017, the Company amortized from prepaid expenses to selling, general and administrative expenses approximately $123,000 and $472,000, respectively, and for the three-month periods ended March 31, 2018 and 2017 approximately $20,000 and $192,000, respectively. The unamortized prepaid expenses of these contracts are approximately $6,000 and included in prepaid expenses on the consolidated balance sheets at March 31, 2018 compared to $215,000 for the nine-month period ended March 31, 2017. In January 2016, the Company entered into a consulting agreement with an individual to provide business consulting services for a period of thirty-six months. Compensation was issuance of 75,000 shares of the Companys stock and fully vested and non-forfeitable options to acquire up to 300,000 shares of the Companys common stock, at an exercise price of $0.33 per share. Fair Market Value of these options totaled approximately $83,500 and is being recognized ratably over the service period in selling, general and administrative expense. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 210%; risk-free interest rate of 1.07%; expected term of 3 years; and 0% dividend yield. For the nine-month periods ended March 31, 2018 and 2017, the Company amortized from prepaid expenses to selling, general and administrative expenses approximately $21,000 and $21,000, respectively, and for the three-month periods ended March 31, 2018 and 2017, approximately $7,000 and $7,000, respectively. The unamortized prepaid expense of this contract is approximately $28,000 and included in prepaid expenses on the consolidated balance sheets at March 31, 2018. In October 2016, the Company entered into a consulting agreement with an individual to provide business consulting services for a period of twelve months. Compensation was issuance of 300,000 shares of the Companys stock (See Note 7) and fully vested and non-forfeitable warrants to acquire up to 300,000 shares of the Companys common stock, at an exercise price of $0.40 per share. Fair Market Value of these warrants totaled approximately $171,000, and is to be recognized ratably over the service period in selling, general and administrative expense. The warrants were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 205%; risk-free interest rate of 0.63%; expected term of 1 year(s); and 0% dividend yield. For the nine-month periods ended March 31, 2018 and 2017, the Company amortized from prepaid expenses to selling, general and administrative expenses approximately $43,000 and $85,000, respectively, and for the three-month periods ended March 31, 2018 and 2017, approximately $0 and $43,000, respectively. The prepaid expense of this contract has been fully amortized as of March 31, 2018. As of March 31, 2018, future maturities of prepaid expenses on value of shares issued for consulting are as follows: Fiscal year ended June 30, 2018 $ 8,835 2019 25,235 Total $ 34,070 Legal On July 21, 2016, the Company was sued in the United States District Court for the Eastern District of Pennsylvania ( Miriam Weber Miller v. Cerebain Biotech Corp. and Eric Clemons The Company paid Ms. Miller the total gross amount of one hundred twenty thousand dollars ($120,000) as follows: a) One payment of twenty thousand dollars ($20,000) within thirty (30) days after March 29, 2017; and b) Beginning within ninety (90) days after March 29, 2017, the Company made monthly payments of fifteen thousand dollars ($15,000) to Ms. Millers representative until such time that Ms. Miller and her representative has received the gross amount of $120,000. Upon all payments being made pursuant to the terms set forth in the agreement, Ms. Miller has agreed to knowingly and voluntarily release and discharge the Company of and from all claims, demands, liabilities, obligations, promises, controversies, compensation, wages, bonuses, commissions, damages, rights, actions and causes of action known and unknown, at law or in equity, which Ms. Miller has or may have against the Company as of the date of execution of the settlement agreement. The Company had recognized an accrual in Accounts Payable for payment of the agreed upon settlement, but no accrual has been made for additional legal contingencies in the consolidated financial statements as of March 31, 2018. For the nine-month and three-month periods ended March 31, 2018, the Company paid Ms. Miller $85,000 and $0, respectively, as agreed in the settlement agreement. As of March 31, 2018, the terms of the settlement agreement have been met and Ms. Miller has been paid in full. |
PATENT RIGHTS
PATENT RIGHTS | 9 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 5 - PATENT RIGHTS | On June 10, 2010, the Company entered into a Patent License Agreement under which the Company acquired the exclusive rights to certain intellectual property related to using Omentum for treating dementia conditions. Under the agreement, the Company has paid rights fees of $50,000 to Dr. Saini, and the Company issued Dr. Saini 825,000 shares of the Companys common stock, valued at $6,600 (based on the fair market value on the date of grant) restricted in accordance with Rule 144. In addition, Dr. Saini will have the option to participate in the sale of equity by the Company in the future, up to ten percent (10%) of the money raised, in exchange for the applicable number of his shares. To date, Dr. Saini has not participated in any sales of equity. The Patent License agreement provides for a royalty payment of six (6) percent of the value of the net sales, as defined, generated from the sale of licensed products. The agreement also provides for yearly minimum royalty payments of $50,000 for the fourth (June 2014), fifth (June 2015), and sixth (June 2016) anniversary of the date of the agreement, and a yearly minimum royalty payment of $100,000 for each year thereafter during the term of the agreement. The Company has accrued the minimum patent royalty expense associated with the patent rights in accounts payable and is currently in arrears and in discussions to renegotiate the terms of the agreement. The term of the agreement shall continue until the patent in the intellectual property expires, unless terminated sooner under the provisions of the agreement, as defined. The patent will have an estimated useful life of 20 years based on the term of the patent. Amortization of the patent will begin when the patent is issued by the United States Patent and Trademark Office and put in use. Legal fees pertaining to the patent are recorded as general and administrative expenses when they are incurred. Legal fees charged to operations were approximately $4,000 and $5,100 for the nine-month periods ended March 31, 2018 and 2017, respectively, and approximately $2,400 and $1,300 for the three-month periods ended March 31, 2018 and 2017, respectively. The Company recognized a patent royalty expense of approximately $75,000 for the nine-month period ended March 31, 2018 compared to $75,000 for the nine-month period ended March 31, 2017 and approximately $25,000 for the three-month period ended March 31, 2018 compared to $25,000 for the three-month period ended March 31, 2017. The accrued payable of $325,000 pertaining to the patent royalty expense at March 31, 2018 is included in related party payables. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 6 - NOTES PAYABLE | Short Term Notes Payable to Stockholders Short Term Notes Payable to Stockholders March31, 2018 June 30, 2017 Short term notes payable (A) $ 114,000 $ 114,000 Short term notes payable (B) 250,000 175,000 Net total $ 364,000 $ 289,000 Short Term Notes Payable to Stockholders (A) In 2012, the Company issued a short term note payable to a non-affiliate stockholder. The note was scheduled to mature on December 31, 2013 and accrued interest at seven and one-half (7.5) percent per annum. In February 2016, the noteholder provided the Company with an additional $1,000. As of March 31, 2018, the outstanding balance was $114,000. The Company is currently in default and is in discussions with the noteholder to restructure the terms of the note. (B) In 2017, the Company issued short term notes payable to a non-affiliate stockholder. The notes were scheduled to mature on June 30, 2017 and accrued no interest. In addition, the Company issued to the noteholder 50,000 shares of the Companys common stock. In connection with the issuance of the 50,000 shares of stock, the Company recorded the approximate $26,000 value of the shares issued as debt discount cost. The expense has been fully amortized at June 30, 2017. The Company used a recent sale of stock to an independent third party for cash to determine the fair market value of the transaction. As of June 30, 2017, the outstanding principal balance was $175,000. On August 29, 2017, the Company issued a $250,000 amended and consolidated note payable. The amended and consolidated note payable is a consolidation of the $175,000 notes payable and an additional $75,000. The amended and consolidated promissory note was scheduled to mature on December 31, 2017 and accrues no interest. In addition, the Company issued to the noteholder 200,000 shares of the Companys common stock (see Note 7). In connection with the issuance of the 200,000 shares of stock, the Company recorded the approximate $30,000 value of the shares issued as loss on extinguishment of debt. The Company is currently in default and is in discussions with the noteholder to restructure the terms of the note. Short Term Convertible Notes Payable Short Term Convertible Notes Payable March31, 2018 June 30, 2017 Crown Bridge Partners $ 65,000 $ - Auctus Fund 110,000 - EMA Financial 110,000 - Subtotal 285,000 - Debt discount (261,250 ) - Net total $ 23,750 $ - Crown Bridge Partners On March 2, 2018, the Company held an initial closing under a Securities Purchase Agreement (the Crown SPA) and corresponding Convertible Promissory Note (the Crown Note) with Crown Bridge Partners, LLC (Crown), dated February 14, 2018. Under the Crown SPA and the Crown Note, Crown agreed to loan the Company up to One Hundred Thirty Thousand Dollars ($130,000) in tranches. The Crown Note has an original issuance discount of $13,000, meaning the maximum amount the Company can borrow under the Crown Note is $117,000. The initial tranche on March 2, 2018 was $65,000, with the Company receiving $58,500 and the remaining $6,500 being retained by Crown as the portion of the prorated original issuance discount. The Crown Note bears interest at Ten Percent (10%) per annum and matures twelve (12) months from the date of each tranche, with the initial tranche of $65,000 maturing on March 2, 2019. Under the terms of the Crown Note, Crown has the right, at any time to convert all or part of the amounts due to it under the Crown Note into shares of the Companys common stock. The conversion price is 55% of the lesser of (a) the lowest traded price or (b) the lowest closing bid price, of the Companys common stock on the twenty-five trading days prior to the conversion date. However, Crown may not convert the amounts due under the Note into shares of the Companys common stock if such conversion would cause it to own more than 4.99% of the Companys then-outstanding common stock, which limitation may be waived by Crown upon 61 days-notice. In the event the Company defaults under the terms of the Crown Note, the Company owes 150% of the principal amount then due under the Note, plus any unpaid interest, immediately. The Company may prepay the amounts loaned to the Company under the Crown Note as follows: (i) during the initial 60-day period after each tranche, at 125% multiplied by the amount the Company is prepaying, (ii) during the 61st through 120 days after each tranche, at 135% multiplied by the amount the Company is prepaying, and (iii) during the 121st through 180th day after each tranche, at 150% multiplied by the amount the Company is prepaying. Any prepayments are subject to Crowns written acceptance of such prepayment. After 180 days from each tranche the Company cannot prepay that tranche in cash. While this Note is outstanding, if the Company enters into a Section 3(a)(9) transaction, as defined by the Securities Act, (including but not limited to the issuance of new promissory notes or of a replacement promissory note), or Section 3(a)(10) transaction, as defined by the Securities Act, in which any 3rd party has the right to convert monies owed to that 3rd party (or receive shares pursuant to a settlement or otherwise) at a discount to market greater than the Variable Conversion Price in effect at that time (prior to all other applicable adjustments in the Note), then the Variable Conversion Price shall be automatically adjusted to such greater discount percentage (prior to all applicable adjustments in this Note) until this Note is no longer outstanding. Each time, while this Note is outstanding, the Company enters into a Section 3(a)(9) transaction, as defined by the Securities Act, (including but not limited to the issuance of new promissory notes or of a replacement promissory note), or Section 3(a)(10) transaction, as defined by the Securities Act, in which any 3rd party has a look back period greater than the look back period in effect under the Note at that time, then the Holders look back period shall automatically be adjusted to such greater number of days until this Note is no longer outstanding. In addition to issuing the Crown Note, the Company agreed to issue Crown a warrant with each funding tranche. Each warrant will be for the purchase of shares of the Companys common stock equal to 75% of the face value of the tranche divided by $0.50. For example, the first tranche of funding is for $65,000, the Company issued a warrant to purchase 97,500 shares of the Companys common stock at an exercise price of $0.50 per share. The warrant contains a cashless exercise provision. Each warrant expires five years after the date of issuance. In connection with the warrants, if the Company, at any time from and after the Issuance Date, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of, sell or issue (or announce any offer, sale, grant or any option to purchase or other disposition of) any Common Stock or Common Stock Equivalents entitling any person, firm, association or entity to acquire shares of Common Stock at an effective price per share less than the then-current Exercise Price (including but not limited to under the Note), as adjusted hereunder (any such issuance being referred to as a Dilutive Issuance Auctus Fund On March 8, 2018, the Company closed a Securities Purchase Agreement (the Auctus SPA) and corresponding Convertible Promissory Note (the Auctus Note) with Auctus Fund, LLC (Auctus), dated February 15, 2018. Under the Auctus SPA and the Auctus Note, Auctus agreed to loan the Company One Hundred Ten Thousand Dollars ($110,000). The Auctus Note bears interest at Ten Percent (10%) per annum and matures on November 15, 2018. Under the terms of the Auctus Note, Auctus has the right, at any time to convert all or part of the amounts due to it under the Auctus Note into shares of the Companys common stock. The conversion price is 55% multiplied by the lowest Trading Price during the twenty-five trading days prior to the conversion date. However, Auctus may not convert the amounts due under the Note into shares of the Companys common stock if such conversion would cause it to own more than 4.99% of the Companys then-outstanding common stock, which limitation may be waived by Auctus upon 61 days-notice. In the event the Company defaults under the terms of the Auctus Note, the Company owes 150% of the principal amount then due under the Note, plus any unpaid interest, immediately. The Company may prepay the amounts loaned to the Company under the Auctus Note as follows: (i) during the initial 90-day period after the issue date, at 135% multiplied by the amount the Company is prepaying, and (ii) from the 91st through the 180th day after the issue date, at 150% multiplied by the amount the Company is prepaying. Any prepayments are subject to Auctus written acceptance of such prepayment. After 180 days from the issue date the Company cannot prepay the Auctus Note. While this Note is outstanding, if the Company enters into a Section 3(a)(9) transaction, as defined by the Securities Act, (including but not limited to the issuance of new promissory notes or of a replacement promissory note), or Section 3(a)(10) transaction, as defined by the Securities Act, in which any 3rd party has the right to convert monies owed to that 3rd party (or receive shares pursuant to a settlement or otherwise) at a discount to market greater than the Variable Conversion Price in effect at that time (prior to all other applicable adjustments in the Note), then the Variable Conversion Price shall be automatically adjusted to such greater discount percentage (prior to all applicable adjustments in this Note) until this Note is no longer outstanding. Each time, while this Note is outstanding, the Company enters into a Section 3(a)(9) transaction, as defined by the Securities Act, (including but not limited to the issuance of new promissory notes or of a replacement promissory note), or Section 3(a)(10) transaction, as defined by the Securities Act, in which any 3rd party has a look back period greater than the look back period in effect under the Note at that time, then the Holders look back period shall automatically be adjusted to such greater number of days until this Note is no longer outstanding. In addition to issuing the Auctus Note, the Company agreed to issue Auctus a warrant to acquire 275,000 shares of the Companys common stock at an exercise price of $0.20 per share. The warrant contains a cashless exercise provision and expires on the fifth anniversary of the warrant. In connection with the warrants, if the Company, at any time from and after the Issuance Date, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of, sell or issue (or announce any offer, sale, grant or any option to purchase or other disposition of) any Common Stock or Common Stock Equivalents entitling any person, firm, association or entity to acquire shares of Common Stock at an effective price per share less than the then-current Exercise Price (including but not limited to under the Note), as adjusted hereunder (any such issuance being referred to as a Dilutive Issuance EMA Financial On March 8, 2018, the Company closed a Securities Purchase Agreement (the EMA SPA) and corresponding Convertible Promissory Note (the EMA Note) with EMA Financial, LLC (EMA), dated February 12, 2018. Under the EMA SPA and the EMA Note, EMA agreed to loan the Company One Hundred Ten Thousand Dollars ($110,000). The EMA Note has an original issuance discount of $6,600, meaning the amount the Company received at funding was $103,400. The EMA Note bears interest at Ten Percent (10%) per annum and matures on February 12, 2019. Under the terms of the EMA Note, EMA has the right, at any time to convert all or part of the amounts due to it under the EMA Note into shares of the Companys common stock. The conversion price is 55% multiplied by the lowest Trading Price during the twenty trading days prior to the conversion date. However, EMA may not convert the amounts due under the Note into shares of the Companys common stock if such conversion would cause it to own more than 4.99% of the Companys then-outstanding common stock, which limitation may be waived by EMA upon 61 days-notice. In the event the Company defaults under the terms of the EMA Note, the Company owes 150% of the principal amount then due under the Note, plus any unpaid interest, immediately. The Company may prepay the amounts loaned to the Company under the EMA Note as follows: (i) during the initial 90-day period after the issue date, at 135% multiplied by the amount the Company is prepaying, and (ii) from the 91st through the 180th day after the issue date, at 150% multiplied by the amount the Company is prepaying. Any prepayments are subject to EMAs written acceptance of such prepayment. After 180 days from the issue date the Company cannot prepay the EMA Note. While this Note is outstanding, if the Company enters into a Section 3(a)(9) transaction, as defined by the Securities Act, (including but not limited to the issuance of new promissory notes or of a replacement promissory note), or Section 3(a)(10) transaction, as defined by the Securities Act, in which any 3rd party has the right to convert monies owed to that 3rd party (or receive shares pursuant to a settlement or otherwise) at a discount to market greater than the Variable Conversion Price in effect at that time (prior to all other applicable adjustments in the Note), then the Variable Conversion Price shall be automatically adjusted to such greater discount percentage (prior to all applicable adjustments in this Note) until this Note is no longer outstanding. Each time, while this Note is outstanding, the Company enters into a Section 3(a)(9) transaction, as defined by the Securities Act, (including but not limited to the issuance of new promissory notes or of a replacement promissory note), or Section 3(a)(10) transaction, as defined by the Securities Act, in which any 3rd party has a look back period greater than the look back period in effect under the Note at that time, then the Holders look back period shall automatically be adjusted to such greater number of days until this Note is no longer outstanding. In addition to issuing the EMA Note, the Company agreed to issue EMA a warrant to acquire 137,500 shares of the Companys common stock at an exercise price of $0.40 per share. The warrant contains a cashless exercise provision and expires on the fifth anniversary of the warrant. In connection with the warrants, if the Company, at any time from and after the Issuance Date, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of, sell or issue (or announce any offer, sale, grant or any option to purchase or other disposition of) any Common Stock or Common Stock Equivalents entitling any person, firm, association or entity to acquire shares of Common Stock at an effective price per share less than the then-current Exercise Price (including but not limited to under the Note), as adjusted hereunder (any such issuance being referred to as a Dilutive Issuance Short Term Convertible Notes Conversion The Company evaluated the notes under the requirements of ASC 480 Distinguishing Liabilities From Equity (ASC 480) and concluded that the notes do not fall within the scope of ASC 480. The Company next evaluated the notes under the requirements of ASC 815 Derivatives and Hedging. Due to the existence of the anti-dilution provisions which reduces the purchasers conversion price in the event of subsequent dilutive issuances by the Company below the purchasers conversion price as described above, the conversion features do not meet the definition of indexed to the Companys stock, and the scope exception to ASC 815s derivative accounting provisions does not apply. The Company also evaluated the embedded derivative criteria in ASC 815, and concluded that the conversion features meet all the embedded derivative criteria in ASC 815, and therefore, the conversion features meet the definition of an embedded derivative that should be separated from the notes and accounted for as a derivative liabilities. The embedded derivatives were recorded as a derivative liabilities on the consolidated Balance Sheet at its fair value of $330,000 at the date of issuance. At each subsequent reporting date, the fair value of the embedded derivative liabilities will be remeasured and changes in the fair value will be recorded in the consolidated Statements of Operations. At March 31, 2018, the embedded derivatives were re-measured at fair value that was determined to be $320,000. During the three and nine months ended March 31, 2018, the Company recorded a gain on embedded derivative re-valuation of $10,000 and $10,000, respectively. The fair value of the embedded derivative liabilities are measured in accordance with ASC 820 Fair Value Measurement, using the Monte Carlo Method modeling incorporating the following inputs: March 31, March 2, Crown Bridge Partners 2018 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 260.0 % 255.0 % Risk-free interest rate 2.01 % 2.06 % Stock price $ 0.15 $ 0.18 Conversion price $ 0.05 $ 0.06 March 31, March 8, Auctus Fund 2018 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 255.0 % 275.0 % Risk-free interest rate 2.01 % 1.97 % Stock price $ 0.15 $ 0.16 Conversion price $ 0.05 $ 0.05 March 31, March 8, EMA Financial 2018 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 270.0 % 265.0 % Risk-free interest rate 2.01 % 2.05 % Stock price $ 0.15 $ 0.16 Conversion price $ 0.05 $ 0.06 Short Term Convertible Notes Warrants The Company evaluated the Warrants under ASC 480 Distinguishing Liabilities From Equity and ASC 815 Derivatives and Hedging. Due to the existence of the antidilution provision, which reduces the Exercise Price and Conversion Price in the event of subsequent issuances, the Warrants are not indexed to our common stock, and the Company has determined that the Warrants meet the definition of a derivative under ASC 815. Accordingly, the Warrants were recorded as derivative liabilities in the consolidated Balance Sheet at their fair value of $96,289 at the date of issuance. At each subsequent reporting date, the fair value of the Warrants will be remeasured and changes in the fair value will be reported in the consolidated Statements of Operations. At March 31, 2018, the warrant liability was re-measured at fair value that was determined to be $96,903. During the three and nine months ended March 31, 2018, the Company recorded a loss on warrant re-valuation of $614 and $614, respectively. The fair value of the Warrants is measured in accordance with ASC 820 Fair Value Measurement, using Monte Carlo simulation modeling, incorporating the following inputs: Crown Bridge Partners March 31, 2018 March 3, 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 215.0 % 215.0 % Risk-free interest rate 2.56 % 2.63 % Stock price $ 0.15 $ 0.18 Exercise price $ 0.20 $ 0.50 Auctus Fund March 31, 2018 March 8, 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 215.0 % 215.0 % Risk-free interest rate 2.56 % 2.63 % Stock price $ 0.15 $ 0.16 Exercise price $ 0.20 $ 0.20 EMA Financial March 31, 2018 March 8, 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 215.0 % 215.0 % Risk-free interest rate 2.56 % 2.63 % Stock price $ 0.15 $ 0.16 Exercise price $ 0.20 $ 0.40 Debt Discount The Company issued the notes with warrants that require liability treatment under ASC 815. As such, the proceeds of the notes were allocated, based on fair values, as follows: original issue discount of approximately $32,000, approximately $96,000 to the warrants granted, and approximately $330,000 to the embedded derivative, resulting in a debt discount to such notes of approximately $285,000 with the remaining amount of approximately $173,000 expensed at inception of the note. The debt discount is accreted to interest expense over the term of the note. The Company recorded debt discount accretion of approximately $24,000 and $0 to interest expense for the three and nine months ended March 31, 2018, respectively. The accretion of debt discount expense to be recognized in future years is approximately $261,000. Changes in the derivative and warrant liabilities were as follows: Derivative liabilities: March 2-8, 2018 $ 330,000 Increase (decrease) in fair value (10,000 ) March 31, 2018 $ 320,000 Warrant liabilities: March 2-8, 2018 $ 96,289 Increase in fair value 614 March 31, 2018 $ 96,903 Convertible Notes to Stockholders Convertible Notes Payable March31, 2018 June 30, 2017 Convertible notes payable (A) $ 116,000 $ 131,000 Convertible note payable (B) 260,000 260,000 Convertible notes payable (C) 2,560,112 2,460,112 Subtotal 2,936,112 2,851,112 Debt discount (7,049 ) (12,053 ) Net total $ 2,929,063 $ 2,839,059 Convertible Notes Payable (A) Between September 2013 and December 2017, the Company entered into various unsecured convertible promissory notes with non-affiliate stockholders for principal amounts of approximately $7,500 to $30,000, totaling approximately $157,000, offset by the conversion of convertible notes payable to shares of the Companys common stock of approximately $26,000 and the repayment of one note totaling $15,000, netting a balance of approximately $116,000. Under the terms of these notes, maturity dates range from June 2015 and July 2019, interest rates range from 7.5% to 8.0% per annum, and are convertible into shares of the Companys common stock at rates that range from $0.20 and $5.00 per share, but only if such conversion would not cause the noteholders to own more than 9.9% of the Companys outstanding common stock and contains piggyback registration rights. In addition, the Company granted to certain noteholders a cashless option to purchase one (1) share of the Companys common stock, $.001 par value, at the exercise price of $0.50 to $1.25 per share, for each share the noteholders are entitled pursuant to the promissory notes. The options are fully vested and shall expire from one to three years from date of execution. For the period ended March 31, 2018, the Company is in default approximately $47,500 on various notes. As a result, these notes are included in the current portion of convertible notes payable, and the Company is in discussions with the noteholders to restructure the terms of the notes. The Company determined that some of the notes had a beneficial conversion feature of approximately $38,000. The Company recognized an accretion of debt discount expense of approximately $5,000 and $11,500 for the nine-month periods ended March 31, 2018 and 2017, respectively, and approximately $1,700 and $2,000 for the three-month periods ended March 31, 2018 and 2017, respectively. The accretion of debt discount expense to be recognized in future years is approximately $7,000. Unsecured, Amended and Consolidated Convertible Note Payable (B) December 2014 Convertible Note In December 2014, the Company entered into an unsecured convertible promissory note with a non-affiliate stockholder for a principal amount of $200,000. The note payable accrued interest at 7.5% per annum and was convertible into shares of the Companys common stock at a conversion rates of $1.00 per share, but only if such conversion would not cause the noteholder to own more than 9.9% of the Companys outstanding common stock and contained piggyback registration rights. The note payable was extinguished in December 2015. In December 2014, the Company determined that the note had a beneficial conversion feature of approximately $90,000. December 2015 Convertible Note In December 2015, the Company entered into an unsecured amended and consolidated convertible promissory note with a non-affiliate stockholder for a principal amount of $260,000. In exchange, the Company extinguished a $10,000 short term note payable, the $200,000 convertible note payable issued in December 2014, and received cash of $50,000. The amended and consolidated note payable matures in October 2019, accrues interest at 7.5% per annum, and convertible into shares of the Companys common stock at a conversion rates of $0.20 per share, but only if such conversion would not cause the noteholder to own more than 9.9% of the Companys outstanding common stock, and contains piggyback registration rights. In addition, the Company granted to the noteholder a cashless warrant to purchase one (1) share of the Companys common stock, $.001 par value, at the exercise price of $0.50 per share, for each share the noteholder is entitled pursuant to the promissory note. The options are fully vested and shall expire three years from date of execution. The Company determined the estimated relative fair value discount of the warrants was approximately $128,000 which was valued using the Black-Scholes option pricing model with the following inputs: volatility of 240%; risk-free interest rate of 1.05%; expected term of 3 years; and 0% dividend yield. The Company determined that the note had a beneficial conversion feature of approximately $141,000. Unsecured, Amended and Consolidated Convertible Notes Payable (C) January 2017 Convertible Note In January 2017, the Company entered into an unsecured amended and consolidated convertible promissory note with a non-affiliate stockholder for a principal amount of approximately $2,460,000. In exchange, the Company modified the $2,410,112 convertible promissory note payable issued in November 2016 and received cash of $50,000. The amended and consolidated convertible note payable matures in January 2019, accrues interest at 5% per annum, and is convertible into shares of the Companys common stock at a conversion rate of $0.15 per share, but only if such conversion would not cause the noteholder to own more than 9.9% of the Companys outstanding common stock, and contains piggyback registration rights. The note payable was extinguished in October 2017. In connection with the $2,460,000 convertible note payable, the Company determined the embedded conversion feature does not meet the criteria in ASC 470-50-40-10 or 470-20-25, and the issuance of the convertible promissory note payable is considered a modification, and not an extinguishment that would require the recognition of a gain or loss. October 2017 Convertible Note In October 2017, the Company entered into an unsecured amended and consolidated convertible promissory note with a non-affiliate stockholder for a principal amount of approximately $2,560,000. In exchange, the Company modified the $2,460,112 convertible promissory note payable issued in January 2017 and received cash of $100,000. The amended and consolidated convertible promissory note matures in October 2019, accrues interest at 5% per annum and is convertible into shares of the Companys common stock at a conversion rate of $0.10 per share, but only if such conversion would not cause the noteholder to own more than 9.9% of the Companys outstanding common stock, and contains piggyback registration rights. In connection with the $2,560,000 convertible note, the Company determined the embedded conversion feature does meet the criteria in ASC 470-50-40-10 or 470-20-25, and the issuance of the convertible promissory note payable is considered an extinguishment that would require the recognition of a gain or loss. The Company recognized a loss from extinguishment of debt of approximately $0 and $3.1 million for the three-month and nine-month periods ended March 31, 2018, respectively. The Company recognized interest expense on all notes payable to stockholders of approximately $126,000 and $116,000 for the nine-month periods ended March 31, 2018 and 2017, respectively and approximately $44,000 and $40,000 for the three-month periods ended March 31, 2018 and 2017, respectively. Accrued interest on all notes payable to stockholders at March 31, 2018 and 2017 totaled approximately $382,000 and $219,000, respectively, and is included in accounts payable. As of March 31, 2018, future maturities of all notes payable are as follows: 2018 $ 724,000 2019 2,845,112 2020 16,000 Total outstanding notes 3,585,112 Debt Discount (268,299 ) Net Notes Payable $ 3,316,813 |
STOCK TRANSACTIONS
STOCK TRANSACTIONS | 9 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 7 - STOCK TRANSACTIONS | For the nine-month period ended March 31, 2018, the Company issued 144,000 shares of its common stock to a non-affiliate investor at $1.25 per share in exchange for $180,000. The investor had an existing stock purchase agreement with the Company that allowed him to purchase up to $2,000,000 worth of the Companys common stock at $1.25 per share. In addition to the 144,000 shares of the Companys common stock, the Company issued the investor a warrant to acquire 144,000 shares of the Companys common stock at $2.50 per share. The warrants have been accounted for as an equity transaction under GAAP. For the nine-month period ended March 31, 2018, the Company entered into stock purchase agreements with a non-affiliate stockholder, under which the Company issued 220,000 shares of its common stock, in exchange for $110,000. In connection with the stock purchase agreement, the Company issued 220,000 warrants at $1.00 per share. The warrants have been accounted for as an equity transaction under GAAP. For the nine-month period ended March 31, 2018, the Company issued 795,000 fully vested, nonforfeitable shares of common stock to various individuals as payment for legal services, consulting services, employee stock award and financing fee per agreements dated between July 2017 and March 2018. The aggregate fair market value of these shares was approximately $138,000 as the fair market value of the stock was between $0.15 and $0.20 per share. The Company used recent sales of stock to determine the fair market value of these transactions. On May 15, 2017, the Company issued a Private Placement Memorandum (PPM). The PPM authorizes the sale of up to 400 units, with each Unit consisting of one $10,000 Principal Amount Convertible Debenture and a warrant to purchase one share of the Companys common stock, at a price of $1.25 per Unit. Each Unit includes a warrant to purchase 25,000 shares of the Companys common stock, $.001 par value, at the exercise price of $0.80 per share. The Debentures will be convertible at Forty Cents ($0.40) per share. The Offering was to terminate on June 30, 2017, unless extended one or more times by us to a date not later than July 31, 2017. On August 18, 2017, by unanimous written consent of the Companys directors, the company extended the offering through December 31, 2017. The Company received no subscriptions and the offering closed effective December 31, 2017. |
OPTIONS AND WARRANTS
OPTIONS AND WARRANTS | 9 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 8 - OPTIONS AND WARRANTS | Options For the nine-month period ended March 31, 2018, the Company had 910,000 options outstanding at a weighted average exercise price of $1.45 and a weighted average contractual life of 7.69 years, with 682,000 options exercisable at a weighted average exercise price of $1.64 and a weighted average contractual life of 6.92 years. For the nine-month periods ended March 31, 2018 and 2017, the Company recognized an expense of approximately $48,000 and $285,000, respectively, and for the three-month periods ended March 31, 2018 and 2017, the Company recognized an expense of approximately $16,000 and $85,000, respectively, which was recorded as compensation expense. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $113,000. Warrants For the nine-month period ended March 31, 2018, the Company had approximately 3,200,000 warrants outstanding at an average exercise price of $0.78. For the nine-month periods ended March 31, 2018 and 2017, the Company recognized an accretion of debt discount related to warrants expense of approximately $3,900 and $2,800, respectively, and for the three-month periods ended March 31, 2018 and 2017, the Company recognized an accretion of debt discount related to warrants expense of approximately $1,300 and $1,300, respectively. The approximate expense expected to be recognized in future years is $5,900. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 9 - RELATED PARTY TRANSACTIONS | Employment Agreements Eric Clemons On October 1, 2014, the Company entered into an addendum to the employment agreement. The addendum had no accounting impact on the prior agreement. Terms of the addendum include included the following: · Extension of employment until December 31, 2017. The Company has entered into a new employment agreement with Mr. Clemons. · Annual salary of One Hundred Ninety-Five Thousand Dollars ($195,000). · Option to acquire up to 100,000 shares of the Companys common stock under the Companys 2014 Omnibus Stock Grant and Option Plan at an exercise price of $1.20 per share subject to a vesting schedule. Fair Market Value of these options totaled approximately $112,000 and is recognized ratably over the vesting period in selling, general and administrative expense. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 262%; risk-free interest rate of 1.69%; expected term of 5 years; and 0% dividend yield. As of March 31, 2018, 80,000 options to purchase the Companys common stock have vested. The Company recognized selling, general and administrative expense of approximately $16,500 for the nine-month periods ended March 31, 2018 and 2017, respectively and approximately $5,500 for the three-month periods ended March 31, 2018 and 2017, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $10,000. On March 1, 2015, the Company entered into an addendum to the employment agreement. The addendum had no accounting impact on the prior agreements. Terms of the addendum included a cash placement bonus equal to an amount up to 10% of the aggregate purchase price paid by each purchaser of the Companys Securities and Convertible Debt, where the purchaser of said Securities and Convertible Debt has been directly introduced to the Company by Mr. Clemons. For the nine-month periods ended March 31, 2018 and 2017, a cash placement bonus was earned of approximately $0 and $27,000, respectively, and for the three-month periods ended March 31, 2018 and 2017, a cash placement bonus was earned of approximately $0, respectively, which was recognized as a reduction of the proceeds from the sale of shares of common stock and debt issuances and recorded as an expense. On September 29, 2016, the Company issued Mr. Clemons an option to acquire up to 105,000 shares of the Companys common stock under the Companys 2014 Omnibus Stock Grant and Option Plan at an exercise price of $0.75 per share subject to a vesting schedule. Fair Market Value of these options totaled approximately $78,000 and is recognized ratably over the vesting period in selling, general and administrative expense. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 206%; risk-free interest rate of 1.13%; expected term of 6 years; and 0% dividend yield. As of March 31, 2018, 42,000 options to purchase the Companys common stock have vested. The Company recognized selling, general and administrative expense of approximately $12,000 and $27,000 for the nine-month periods ended March 31, 2018 and 2017, respectively, and approximately $4,000 for the three-month periods ended March 31, 2018 and 2017, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $35,000. On February 1, 2018, the Company entered into a new employment agreement with Eric Clemons, an officer of the company. The new contract had no accounting impact on the prior agreements. Terms of the agreement include the following: · Term of contract thirty-six months. · Annual salary of Two Hundred Fourteen Thousand Five Hundred Dollars ($214,500). · Stock grant of 800,000 of the Companys common restricted shares for services provided to the Company. Stock grant is subject to a vesting schedule, of which 160,000 shares of stock were issued on February 1, 2018 (See Note 7). The aggregate fair market value of these shares was approximately $144,000 as the fair market value of the stock was $0.18 per share. The Company used recent sales of stock to determine the fair market value of this transaction. As of March 31, 2018, 160,000 shares have been issued. The Company recognized selling, general and administrative expense of approximately $34,000 and $0 for the nine-month periods ended March 31, 2018 and 2017, respectively, and approximately $34,000 and $0 for the three-month periods ended March 31, 2018 and 2017, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $110,000. To date, employee and employer payroll taxes have been accrued but have not been remitted to taxing authorities by the Company for cash compensation paid. As a result, the Company is liable such payroll taxes and any related penalties and interest. Wesley Tate On October 1, 2014, the Company entered into an addendum to the employment agreement. The addendum had no accounting impact on the prior agreements. Terms of the agreement included the following: · Extension of employment until June 15, 2017. The Company entered into a new contract on October 1, 2015. · Annual salary of One Hundred Fifty-Six Thousand Dollars ($156,000). · Option to acquire up to 50,000 shares of the Companys common stock under the Companys 2014 Omnibus Stock Grant and Option Plan at an exercise price of $1.20 per share subject to a vesting schedule. Fair Market Value of these options totaled approximately $56,000 and is recognized ratably over the vesting period in selling, general and administrative expense. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 262%; risk-free interest rate of 1.69%; expected term of 5 years; and 0% dividend yield. As of March 31, 2018, 40,000 options to purchase the Companys common stock have vested. The Company recognized selling, general and administrative expense of approximately $8,000 for the nine-month periods ended March 31, 2018 and 2017, respectively and approximately $2,700 for the three-month periods ended March 31, 2018 and 2017, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $5,000. On September 29, 2016, the Company issued Mr. Tate an option to acquire up to 105,000 shares of the Companys common stock under the Companys 2014 Omnibus Stock Grant and Option Plan at an exercise price of $0.75 per share subject to a vesting schedule. Fair Market Value of these options totaled approximately $78,000 and is recognized ratably over the vesting period in selling, general and administrative expense. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 206%; risk-free interest rate of 1.13%; expected term of 6 years; and 0% dividend yield. As of March 31, 2018, 42,000 options to purchase the Companys common stock have vested. The Company recognized selling, general and administrative expense of approximately $12,000 and $27,000 for the nine-month periods ended March 31, 2018 and 2017, respectively, and approximately $4,000 for the three-month periods ended March 31, 2018 and 2017, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $35,000. On February 1, 2018, the Company entered into a new employment agreement with Wesley Tate, an officer of the company. The new contract had no accounting impact on the prior agreements. Terms of the agreement include the following: · Term of contract thirty-six months. · Annual salary of One Hundred Eighty-Seven Thousand Two Hundred Dollars ($187,200). · Stock grant of 800,000 of the Companys common restricted shares for services provided to the Company. Stock grant is subject to a vesting schedule of which 160,000 shares of stock were issued on February 1, 2018 (See Note 7). The aggregate fair market value of these shares was approximately $144,000 as the fair market value of the stock was $0.18 per share. The Company used recent sales of stock to determine the fair market value of this transaction. As of March 31, 2018, 160,000 shares have been issued. The Company recognized selling, general and administrative expense of approximately $34,000 and $0 for the nine-month periods ended March 31, 2018 and 2017, respectively, and approximately $34,000 and $0 for the three-month periods ended March 31, 2018 and 2017, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $110,000. To date, employee and employer payroll taxes have been accrued but have not been remitted to taxing authorities by the Company for cash compensation paid. As a result, the Company is liable such payroll taxes and any related penalties and interest. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 10 - EARNINGS PER SHARE | FASB ASC Topic 260, Earnings Per Share The total number of potential additional dilutive options and warrants outstanding was approximately 4.0 million and 2.6 million for the nine-month periods ended March 31, 2018 and 2017, respectively. In addition, the convertible notes convert at an exercise price of between $0.10 and $5.00 per share of common stock representing approximately 30 million shares. The options, warrants and shares underlying the convertible note were considered for the dilutive calculation but in periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. The following table sets forth the computation of basic and diluted net income per share: For The Nine Months ended March 31, For The Three Months ended March 31, 2018 2017 2018 2017 Net loss attributable to the common stockholders $ (4,499,065 ) (15,449,535 ) $ (654,602 ) $ (566,754 ) Basic weighted average outstanding shares of common stock 8,365,059 7,421,427 8,755,125 7,605,236 Dilutive effect of options and warrants - - - - Diluted weighted average common stock and common stock equivalents 8,365,059 7,421,427 8,755,125 7,605,236 Earnings (loss) per share: Basic and diluted $ (0.54 ) (2.08 ) $ (0.07 ) $ (0.07 ) |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 11 - SUBSEQUENT EVENTS | There have been no events which are required to be reported under this Note. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Mar. 31, 2018 | |
Summary Of Significant Accounting Policies Policies | |
Use of Estimates | The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of net sales and expenses during the reported periods. Actual results may differ from those estimates and such differences may be material to the condensed consolidated financial statements. The more significant estimates and assumptions by management include among others: useful lives and residual values of long-lived assets, the valuation of equity instruments, the valuation of warrants and options, the valuation of derivative liabilities, and the valuation of warrant liabilities. |
Principles of Consolidation | The accompanying condensed consolidated financial statements include the accounts of Cerebain Biotech Corp. and its wholly-owned subsidiary, Cerebain Operating, Inc. (collectively referred to as the Company). There are no material intercompany transactions. |
Advertising Costs | Advertising costs are recorded as general and administrative expenses when they are incurred. Advertising costs charged to operations were approximately $8,600 and $9,800 for the nine-month periods ended March 31, 2018 and 2017, respectively and approximately $2,400 and $1,600 for the three-month periods ended March 31, 2018 and 2017, respectively. |
Research and Development | The Company expenses the cost of research and development as incurred. Research and development costs charged to operations were approximately $205,000 and $190,000 for the nine-month periods ended March 31, 2018 and 2017, respectively, and approximately $80,400 and $59,000 for the three-month periods ended March 31, 2018 and 2018, respectively, and are included in research and development costs in the accompanying condensed consolidated statements of operations (See Note 4). |
Debt | The Company issues debt that may have separate warrants, conversion features, or no equity-linked attributes. Debt with warrants In accordance with ASC Topic 470-20-25, when the Company issues debt with warrants, the Company treats the warrants as a debt discount, recorded as a contra-liability against the debt, and amortizes the balance over the life of the underlying debt as amortization of debt discount expense in the consolidated statements of operations. The offset to the contra-liability is recorded as additional paid in capital in the Companys consolidated balance sheets if the warrants are not treated as a derivative. The Company determines the value of the warrants using the Black-Scholes Option Pricing Model (Black-Scholes) using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the volatility of the stock. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense in the consolidated statements of operations. The debt is treated as conventional debt. Convertible debt derivative treatment When the Company issues debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative, as follows: a) one or more underlyings, typically the price of our common stock; b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; c) no initial net investment, which typically excludes the amount borrowed; and d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash. An embedded equity-linked component that meets the definition of a derivative does not have to be separated from the host instrument if the component qualifies for the scope exception for certain contracts involving an issuers own equity. The scope exception applies if the contract is both a) indexed to its own stock; and b) classified in shareholders equity in its statement of financial position. If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using the Monte Carlo Method upon the date of issuance. If the fair value of the convertible debt derivative is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the convertible debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The convertible debt derivative is revalued at the end of each reporting period and any change in fair value is recorded as a gain or loss in the statement of operations. The debt discount is amortized through interest expense over the life of the debt. Convertible debt beneficial conversion feature If the conversion feature is not treated as a derivative, the Company assesses whether it is a beneficial conversion feature (BCF). A BCF exists if the conversion price of the convertible debt instrument is less than the stock price on the commitment date. This typically occurs when the conversion price is less than the fair value of the stock on the date the instrument was issued. The value of a BCF is equal to the intrinsic value of the feature, the difference between the conversion price and the common stock into which it is convertible and is recorded as additional paid in capital and as a debt discount in the consolidated balance sheets. The Company amortizes the balance over the life of the underlying debt as amortization of debt discount expense in the consolidated statements of operations. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense in the consolidated statements of operations. If the conversion feature does not qualify for either the derivative treatment or as a BCF, the convertible debt is treated as traditional debt. Debt Modifications and Extinguishments When the Company modifies or extinguishes debt, it does so in accordance with ASC Topic 470-50-40, which requires modification to debt instruments to be evaluated to assess whether the modifications are considered substantial modifications. A substantial modification of terms shall be accounted for like an extinguishment. Based on the guidance relied upon and the analysis performed, if the Company believes the embedded conversion feature has no fair value on the date of issuance (measurement date) and the embedded conversion feature has no beneficial conversion feature, the embedded conversion feature does not meet the criteria in ASC 470-50-40-10 or 470-20-25 and the issuance of the convertible note payable is considered a modification, and not an extinguishment that would require the recognition of a gain or loss. If the Company determines the change in terms meet the criteria for substantial modification under ASC 470 it will treat the modification as extinguishment and recognize a loss from debt extinguishment. |
Fair Value of Financial Instruments | The Company applies the provisions of accounting guidance, FASB Topic ASC 825 that requires all 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, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of March 31, 2018 and June 30, 2017, the fair value of cash, accounts payable, related party payables, and notes payable to stockholders approximated carrying value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates. |
Fair Value Measurements | FASB ASC Topic 825 Financial Instruments, requires disclosure about fair value of financial instruments. The FASB ASC Topic 820, Fair Value Measurement The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below. · Level 1 observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets. · Level 2 other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.). · Level 3 significant unobservable inputs (including the Companys own assumptions in determining the fair value of investments). The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The warrant and derivative liabilities are recognized at fair value on a recurring basis at March 31, 2018 and are Level 3 measurements. There have been no transfers between levels. |
Concentrations, Risks, and Uncertainties | The Company is a startup company subject to the substantial business risks and uncertainties inherent to such an entity, including the potential risk of business failure. |
Basic and Diluted Earnings Per Share | Basic earnings (loss) per common share is computed by dividing net earnings applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, using the treasury stock method, consisting of shares that might be issued upon exercise of common stock warrants and conversion of convertible notes. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common shares equivalents, because their inclusion would be anti-dilutive. Basic earnings per share are based on the weighted-average number of shares of common stock outstanding. Diluted earnings per share is based on the weighted-average number of shares of common stock outstanding adjusted for the effects of common stock that may be issued as a result of the following types of potentially dilutive instruments: · Warrants, · Convertible notes, · Employee stock options, and · Other equity awards, which include long-term incentive awards. The FASB ASC Topic 260, Earnings Per Share Diluted earnings per share are based on the assumption that all dilutive options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options, warrants, and convertible notes are assumed to be exercised at the time of issuance, and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Basic and diluted earnings (loss) per share are the same since the Company had net losses for all periods presented and including the additional potential common shares would have an anti-dilutive effect. |
Recent Accounting Pronouncements | The Company has evaluated new accounting pronouncements that have been issued and are not yet effective for the Company and determined that there are no such pronouncements expected to have a significant impact on the Companys future financial statements. |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Commitments And Contingencies Tables | |
Schedule of Future Maturity of Prepaid Expense | Fiscal year ended June 30, 2018 $ 8,835 2019 25,235 Total $ 34,070 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Future maturities of convertible notes payable | As of December 31, 2017, future maturities of all notes payable are as follows: 2018 $ 724,000 2019 2,575,112 2020 16,000 Total outstanding notes 3,315,112 Debt Discount (8,717 ) Net Notes Payable $ 3,306,395 |
Schedule changes in the derivative and warrant liabilities | Derivative liabilities: March 2-8, 2018 $ 330,000 Increase (decrease) in fair value (10,000 ) March 31, 2018 $ 320,000 Warrant liabilities: March 2-8, 2018 $ 96,289 Increase in fair value 614 March 31, 2018 $ 96,903 |
Short Term Convertible Warrants Conversion [Member] | |
Schedule of fair value of the embedded derivative liabilities | Crown Bridge Partners March 31, 2018 March 3, 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 215.0 % 215.0 % Risk-free interest rate 2.56 % 2.63 % Stock price $ 0.15 $ 0.18 Exercise price $ 0.20 $ 0.50 Auctus Fund March 31, 2018 March 8, 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 215.0 % 215.0 % Risk-free interest rate 2.56 % 2.63 % Stock price $ 0.15 $ 0.16 Exercise price $ 0.20 $ 0.20 EMA Financial March 31, 2018 March 8, 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 215.0 % 215.0 % Risk-free interest rate 2.56 % 2.63 % Stock price $ 0.15 $ 0.16 Exercise price $ 0.20 $ 0.40 |
Short Term Convertible Notes Conversion [Member] | |
Schedule of fair value of the embedded derivative liabilities | March 31, March 2, Crown Bridge Partners 2018 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 260.0 % 255.0 % Risk-free interest rate 2.01 % 2.06 % Stock price $ 0.15 $ 0.18 Conversion price $ 0.05 $ 0.06 March 31, March 8, Auctus Fund 2018 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 255.0 % 275.0 % Risk-free interest rate 2.01 % 1.97 % Stock price $ 0.15 $ 0.16 Conversion price $ 0.05 $ 0.05 March 31, March 8, EMA Financial 2018 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 270.0 % 265.0 % Risk-free interest rate 2.01 % 2.05 % Stock price $ 0.15 $ 0.16 Conversion price $ 0.05 $ 0.06 |
Short Term Notes Payable [Member] | |
Summary of note payable | Short Term Notes Payable to Stockholders March31, 2018 June 30, 2017 Short term notes payable (A) $ 114,000 $ 114,000 Short term notes payable (B) 250,000 175,000 Net total $ 364,000 $ 289,000 |
Convertible Notes Payable [Member] | |
Summary of note payable | Convertible Notes Payable March31, 2018 June 30, 2017 Convertible notes payable (A) $ 116,000 $ 131,000 Convertible note payable (B) 260,000 260,000 Convertible notes payable (C) 2,560,112 2,460,112 Subtotal 2,936,112 2,851,112 Debt discount (7,049 ) (12,053 ) Net total $ 2,929,063 $ 2,839,059 |
Short Term Convertible Notes Payable [Member] | |
Summary of note payable | Short Term Convertible Notes Payable March31, 2018 June 30, 2017 Crown Bridge Partners $ 65,000 $ - Auctus Fund 110,000 - EMA Financial 110,000 - Subtotal 285,000 - Debt discount (261,250 ) - Net total $ 23,750 $ - |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share Tables | |
Computation of basic and diluted net income per share | For The Nine Months ended March 31, For The Three Months ended March 31, 2018 2017 2018 2017 Net loss attributable to the common stockholders $ (4,499,065 ) (15,449,535 ) $ (654,602 ) $ (566,754 ) Basic weighted average outstanding shares of common stock 8,365,059 7,421,427 8,755,125 7,605,236 Dilutive effect of options and warrants - - - - Diluted weighted average common stock and common stock equivalents 8,365,059 7,421,427 8,755,125 7,605,236 Earnings (loss) per share: Basic and diluted $ (0.54 ) (2.08 ) $ (0.07 ) $ (0.07 ) |
ORGANIZATION AND PRINCIPAL AC21
ORGANIZATION AND PRINCIPAL ACTIVITIES (Details Narrative) | 9 Months Ended |
Mar. 31, 2018 | |
Organization And Principal Activities Details Narrative | |
State of incorporation | Nevada |
Date of incorporation | Dec. 18, 2007 |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | |
Basis Of Presentation Details Narrative | ||||||
Accumulated deficit | $ (32,029,786) | $ (32,029,786) | $ (27,530,721) | |||
Net loss | (654,602) | $ (566,754) | (4,499,065) | $ (15,449,535) | ||
Net cash used in operating activities | (684,531) | (445,728) | ||||
Cash and cash equivalents | $ 30,064 | $ 517 | $ 30,064 | $ 517 | $ 11,345 | $ 20,245 |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Summary Of Significant Accounting Policies Details Narrative | ||||
Advertising costs | $ 2,400 | $ 1,600 | $ 8,600 | $ 9,800 |
Research and development costs | $ 80,402 | $ 58,902 | $ 205,030 | $ 190,369 |
COMMITMENTS AND CONTINGENCIES24
COMMITMENTS AND CONTINGENCIES (Details) | Mar. 31, 2018USD ($) |
Commitments And Contingencies Details | |
2,018 | $ 8,835 |
2,019 | 25,235 |
Total | $ 34,070 |
COMMITMENTS AND CONTINGENCIES25
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Jun. 30, 2017 | |
Selling, general and administrative expense | $ 313,716 | $ 439,052 | $ 790,175 | $ 1,267,759 | |
Research and development costs | 80,402 | 58,902 | 205,030 | 190,369 | |
Accounts payable | 1,030,237 | 1,030,237 | $ 926,131 | ||
Prepaid expense | 95,396 | $ 95,396 | $ 225,517 | ||
October 2016 [Member] | Consulting Agreements [Member] | |||||
Common stock shares option | 300,000 | ||||
Fair market value option | $ 171,000 | ||||
Fair Value Volatility rate | 205.00% | ||||
Fair Value Risk-free interest rate | 0.63% | ||||
Fair Value Expected term | 1 year | ||||
Fair Value Dividend yield | 0.00% | ||||
Selling, general and administrative expense | 0 | 43,000 | $ 43,000 | 85,000 | |
Consulting Agreements [Member] | December 2016 and March 2018 [Member] | |||||
Common stock shares option | 1,935,000 | ||||
Selling, general and administrative expense | 20,000 | 192,000 | $ 123,000 | 472,000 | |
Prepaid expense unamortized | 6,000 | 215,000 | 6,000 | 215,000 | |
Accounts payable | 30,000 | 30,000 | |||
Prepaid expense | $ 2,670,000 | $ 2,670,000 | |||
Consulting Agreements [Member] | October 2016 [Member] | |||||
Eexercise price | $ 0.40 | $ 0.40 | |||
Compensation issuance shares | 300,000 | 300,000 | |||
Consulting Agreements [Member] | January 2016 [Member] | |||||
Common stock shares option | 300,000 | ||||
Eexercise price | $ 0.33 | $ 0.33 | |||
Fair market value option | $ 83,500 | ||||
Fair Value Volatility rate | 210.00% | ||||
Fair Value Risk-free interest rate | 1.07% | ||||
Fair Value Expected term | 3 years | ||||
Fair Value Dividend yield | 0.00% | ||||
Selling, general and administrative expense | $ 7,000 | $ 7,000 | $ 21,000 | $ 21,000 | |
Prepaid expense unamortized | $ 28,000 | $ 28,000 | |||
Compensation issuance shares | 75,000 | 75,000 | |||
Consulting Agreements [Member] | December 2013 and December 2017 [Member] | Maximum [Member] | |||||
Fair Value Expected term | 36 months | ||||
Consulting Agreements [Member] | December 2013 and December 2017 [Member] | Minimum [Member] | |||||
Fair Value Expected term | 12 months | ||||
Commitments [Member] | September 2012 [Member] | |||||
Research and development costs | $ 1,000,000 | ||||
Company paid approximately amount | 320,000 | ||||
Incurred balance | $ 165,000 | ||||
Commitments [Member] | September 2012 [Member] | Restricted Stock [Member] | |||||
Common stock shares option | 325,000 | ||||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller [Member] | |||||
Breach of contract damages | $ 400,000 | $ 400,000 | |||
Payment of accounts payable | 0 | 85,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller [Member] | Maximum [Member] | |||||
Breach of contract damages payable | 120,000 | 120,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller Two [Member] | Transaction One [Member] | |||||
Monthly payments | 20,000 | 20,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller One [Member] | |||||
Breach of contract damages payable | 120,000 | 120,000 | |||
Monthly payments | $ 15,000 | $ 15,000 |
PATENT RIGHTS (Details Narrativ
PATENT RIGHTS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2018 | Dec. 31, 2016 | Mar. 31, 2018 | Mar. 31, 2017 | Jun. 10, 2010 | |
Legal fees | $ 2,400 | $ 1,300 | $ 4,000 | $ 5,100 | |
Patent royalty expense | 25,000 | $ 25,000 | 75,000 | $ 75,000 | |
Accrued payable | 325,000 | 325,000 | |||
2,014 | 50,000 | 50,000 | |||
2,015 | 50,000 | 50,000 | |||
2,016 | 50,000 | 50,000 | |||
Thereafter | $ 100,000 | $ 100,000 | |||
Estimated useful life of patent | 20 years | ||||
Royalty payment percentage | 6.00% | 6.00% | |||
Dr. Saini [Member] | |||||
Patent license agreement fees | $ 50,000 | ||||
Stock issued | 825,000 | ||||
Market value on share issued | $ 6,600 | ||||
Equity participation percentage | 10.00% |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Mar. 31, 2018 | Jun. 30, 2017 |
Short term notes payable to stockholders | $ 364,000 | $ 289,000 |
Short term notes payable (A) [Member] | ||
Short term notes payable to stockholders | 114,000 | 114,000 |
Short term notes payable (B) [Member] | ||
Short term notes payable to stockholders | $ 250,000 | $ 175,000 |
NOTES PAYABLE (Details 1)
NOTES PAYABLE (Details 1) - USD ($) | Mar. 31, 2018 | Jun. 30, 2017 |
Subtotal | $ 285,000 | |
Debt discount | (261,250) | |
Short term convertible notes payable, net of debt discount of approximately $261,250 and $0, respectively | 23,750 | |
Short Term Convertible Notes Payable [Member] | Crown Bridge Partners [Member] | ||
Subtotal | 65,000 | |
Short Term Convertible Notes Payable [Member] | Auctus Fund [Member] | ||
Subtotal | 110,000 | |
Short Term Convertible Notes Payable [Member] | EMA Financial [Member] | ||
Subtotal | $ 110,000 |
NOTES PAYABLE (Details 2)
NOTES PAYABLE (Details 2) - Derivative Liabilities [Member] - $ / shares | 2 Months Ended | 3 Months Ended |
Mar. 08, 2018 | Mar. 31, 2018 | |
Crown Bridge Partners [Member] | ||
Expected dividend yield | 0.00% | |
Expected stock-price volatility | 260.00% | |
Risk-free interest rate | 2.01% | |
Stock price | $ 0.15 | |
Conversion price | $ 0.05 | |
Crown Bridge Partners [Member] | On March 2, 2018 [Member] | ||
Expected dividend yield | 0.00% | |
Expected stock-price volatility | 255.00% | |
Risk-free interest rate | 2.06% | |
Stock price | $ 0.18 | |
Conversion price | $ 0.06 | |
Auctus Fund [Member] | ||
Expected dividend yield | 0.00% | 0.00% |
Expected stock-price volatility | 275.00% | 255.00% |
Risk-free interest rate | 1.97% | 2.01% |
Stock price | $ 0.16 | $ 0.15 |
Conversion price | $ 0.05 | $ 0.05 |
EMA Financial [Member] | ||
Expected dividend yield | 0.00% | 0.00% |
Expected stock-price volatility | 265.00% | 270.00% |
Risk-free interest rate | 2.05% | 2.01% |
Stock price | $ 0.16 | $ 0.15 |
Conversion price | $ 0.06 | $ 0.05 |
NOTES PAYABLE (Details 3)
NOTES PAYABLE (Details 3) - Warrants [Member] - $ / shares | 2 Months Ended | 3 Months Ended | |
Mar. 08, 2018 | Mar. 03, 2018 | Mar. 31, 2018 | |
Crown Bridge Partners [Member] | |||
Expected dividend yield | 0.00% | 0.00% | |
Expected stock-price volatility | 215.00% | 215.00% | |
Risk-free interest rate | 2.63% | 2.56% | |
Stock price | $ 0.18 | $ 0.15 | |
Conversion price | $ 0.50 | $ 0.20 | |
Auctus Fund [Member] | |||
Expected dividend yield | 0.00% | 0.00% | |
Expected stock-price volatility | 215.00% | 215.00% | |
Risk-free interest rate | 2.63% | 2.56% | |
Stock price | $ 0.16 | $ 0.15 | |
Conversion price | $ 0.20 | $ 0.20 | |
EMA Financial [Member] | |||
Expected dividend yield | 0.00% | 0.00% | |
Expected stock-price volatility | 215.00% | 215.00% | |
Risk-free interest rate | 2.63% | 2.56% | |
Stock price | $ 0.16 | $ 0.15 | |
Conversion price | $ 0.40 | $ 0.20 |
NOTES PAYABLE (Details 4)
NOTES PAYABLE (Details 4) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Derivative liabilities: | |||||
Derivative liabilities, Beginning balance | |||||
Increase (decrease) in fair value | $ (10,000) | (10,000) | |||
Derivative liabilities, Outstanding balance | $ 320,000 | 320,000 | 320,000 | ||
Warrant liabilities: | |||||
Warrant liabilities, Beginning balance | |||||
Increase in fair value | 614 | 614 | |||
Warrant liabilities, Outstanding balance | 96,903 | 96,903 | 96,903 | ||
Warrants [Member] | |||||
Warrant liabilities: | |||||
Warrant liabilities, Beginning balance | 96,289 | ||||
Increase in fair value | 614 | ||||
Warrant liabilities, Outstanding balance | 96,903 | 96,903 | 96,903 | ||
Derivative Liabilities [Member] | |||||
Derivative liabilities: | |||||
Derivative liabilities, Beginning balance | 330,000 | ||||
Increase (decrease) in fair value | (10,000) | ||||
Derivative liabilities, Outstanding balance | $ 320,000 | $ 320,000 | $ 320,000 |
NOTES PAYABLE (Details 5)
NOTES PAYABLE (Details 5) - USD ($) | Mar. 31, 2018 | Jun. 30, 2017 |
Convertible Notes Payable | $ 2,936,112 | $ 2,851,112 |
Debt discount | (7,049) | (12,053) |
Convertible Notes to Stockholders | 2,929,063 | 2,839,059 |
Convertible Notes Payable (A) [Member] | ||
Convertible Notes Payable | 116,000 | 131,000 |
Convertible Notes Payable (B) [Member] | ||
Convertible Notes Payable | 260,000 | 260,000 |
Convertible Note Payable (C) [Member] | ||
Convertible Notes Payable | $ 2,560,112 | $ 2,460,112 |
NOTES PAYABLE (Details 6)
NOTES PAYABLE (Details 6) | Mar. 31, 2018USD ($) |
Notes Payable Details 6 | |
2,018 | $ 724,000 |
2,019 | 2,845,112 |
2,020 | 16,000 |
Total outstanding notes | 3,585,112 |
Debt Discount | (268,299) |
Net Notes Payable | $ 3,316,813 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | Mar. 08, 2018 | Mar. 02, 2018 | Aug. 29, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2012 | Dec. 31, 2017 | Feb. 28, 2016 |
Proceeds from related party debt | $ 175,000 | ||||||||||
Derivative liabilities | $ 330,000 | $ 320,000 | 320,000 | ||||||||
Warrant liabilities | $ 96,289 | 96,903 | 96,903 | ||||||||
Debt discount | 268,299 | 268,299 | |||||||||
Amortization of debt discount | 25,418 | $ 1,944 | 28,754 | 11,500 | |||||||
Related party short term notes payable | 364,000 | 364,000 | |||||||||
Convertible Notes Payable | $ 2,936,112 | $ 2,936,112 | $ 2,851,112 | ||||||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||
Beneficial conversion amount | 4,500 | ||||||||||
Loss from extinguishment of debt | (3,102,134) | (13,778,649) | |||||||||
Interest expense on notes payable | 217,012 | 40,226 | 298,716 | 116,476 | |||||||
Crown Bridge Partners [Member] | Securities Purchase Agreement [Member] | |||||||||||
Description of warrants issuable under agreement | the Company agreed to issue Crown a warrant with each funding tranche. Each warrant will be for the purchase of shares of the Companys common stock equal to 75% of the face value of the tranche divided by $0.50. For example, the first tranche of funding is for $65,000, the Company issued a warrant to purchase 97,500 shares of the Companys common stock at an exercise price of $0.50 per share. The warrant contains a cashless exercise provision. Each warrant expires five years after the date of issuance | ||||||||||
Convertible Notes Payable [Member] | Minimum [Member] | |||||||||||
Interest rate | 7.50% | ||||||||||
Unsecured promissory note | $ 7,500 | ||||||||||
Common stock rate, per share | $ 0.20 | ||||||||||
Excercise price | $ 0.50 | ||||||||||
Convertible Notes Payable [Member] | Maximum [Member] | |||||||||||
Interest rate | 8.00% | ||||||||||
Unsecured promissory note | $ 30,000 | ||||||||||
Common stock rate, per share | $ 5 | ||||||||||
Excercise price | $ 1.25 | ||||||||||
Short Term Notes Payable to Stockholders One [Member] | |||||||||||
Notes payable additional amount | $ 75,000 | ||||||||||
Related party short term notes payable | $ 250,000 | ||||||||||
Common stock, issued shares | 200,000 | ||||||||||
Maturity date | Dec. 31, 2017 | ||||||||||
Common stock issued to Convertible notes | 200,000 | ||||||||||
Notes payable included in consolidation | $ 175,000 | ||||||||||
Loss from extinguishment of debt | $ 30,000 | ||||||||||
Short Term Notes Payable to Stockholders [Member] | |||||||||||
Related party notes payable maturity date | Dec. 31, 2013 | ||||||||||
Accrued interest percentage | 7.50% | ||||||||||
Notes payable additional amount | $ 1,000 | ||||||||||
Related party short term notes payable | 114,000 | 114,000 | |||||||||
Revaluation of Liabilities [Member] | |||||||||||
Gain on embedded derivative liability re-valuation | 10,000 | 10,000 | |||||||||
Loss on re-valuation of warrant liability | $ 614 | $ 614 | |||||||||
Warrant [Member] | EMA Financial, LLC [Member] | Securities Purchase Agreement [Member] | |||||||||||
Common stock shares issuable upon exercise of warrants or rights | 137,500 | 275,000 | 275,000 | ||||||||
Exercise price | $ 0.40 | $ 0.20 | $ 0.20 | ||||||||
Warrant [Member] | Auctus Fund, LLC [Member] | Securities Purchase Agreement [Member] | |||||||||||
Common stock shares issuable upon exercise of warrants or rights | 275,000 | ||||||||||
Exercise price | $ 0.20 | ||||||||||
Warrant [Member] | Crown Bridge Partners [Member] | Securities Purchase Agreement [Member] | |||||||||||
Common stock shares issuable upon exercise of warrants or rights | 243,750 | ||||||||||
Exercise price | $ 0.20 | ||||||||||
Convertible Promissory Notes [Member] | |||||||||||
Original issue discount | $ 32,000 | $ 32,000 | |||||||||
Debt discount | 285,000 | 285,000 | |||||||||
Amortization of debt discount | 173,000 | ||||||||||
Accretion of debt discount | 24,000 | 0 | |||||||||
Accretion of debt discount to be recognized in future | 261,000 | 261,000 | |||||||||
Convertible Promissory Notes [Member] | Warrant [Member] | |||||||||||
Original issue discount | 96,000 | 96,000 | |||||||||
Convertible Promissory Notes [Member] | Derivative Liabilities [Member] | |||||||||||
Original issue discount | $ 330,000 | $ 330,000 | |||||||||
Convertible Promissory Note [Member] | EMA Financial, LLC [Member] | Securities Purchase Agreement [Member] | |||||||||||
Credit facility maximum borrowing capacity | $ 110,000 | ||||||||||
Original issue discount | 6,600 | ||||||||||
Credit facility maximum borrwing capcity net of debt discount | $ 103,400 | ||||||||||
Interest rate | 10.00% | ||||||||||
Maturity date description | The EMA Note bears interest at Ten Percent (10%) per annum and matures on February 12, 2019 | ||||||||||
Terms of conversion feature | The conversion price is 55% multiplied by the lowest Trading Price during the twenty trading days prior to the conversion date. However, EMA may not convert the amounts due under the Note into shares of the Companys common stock if such conversion would cause it to own more than 4.99% of the Companys then-outstanding common stock, which limitation may be waived by EMA upon 61 days-notice | ||||||||||
Description for event of default | In the event the Company defaults under the terms of the EMA Note, the Company owes 150% of the principal amount then due under the Note, plus any unpaid interest, immediately | ||||||||||
Description of prepayment of debt | The Company may prepay the amounts loaned to the Company under the EMA Note as follows: (i) during the initial 90-day period after the issue date, at 135% multiplied by the amount the Company is prepaying, and (ii) from the 91st through the 180th day after the issue date, at 150% multiplied by the amount the Company is prepaying. Any prepayments are subject to EMAs written acceptance of such prepayment. After 180 days from the issue date the Company cannot prepay the EMA Note | ||||||||||
Convertible Promissory Note [Member] | Auctus Fund, LLC [Member] | Securities Purchase Agreement [Member] | |||||||||||
Credit facility maximum borrowing capacity | $ 110,000 | ||||||||||
Interest rate | 10.00% | ||||||||||
Maturity date description | The Auctus Note bears interest at Ten Percent (10%) per annum and matures on November 15, 2018. Under the terms of the Auctus Note | ||||||||||
Terms of conversion feature | The conversion price is 55% multiplied by the lowest Trading Price during the twenty-five trading days prior to the conversion date. However, Auctus may not convert the amounts due under the Note into shares of the Companys common stock if such conversion would cause it to own more than 4.99% of the Companys then-outstanding common stock, which limitation may be waived by Auctus upon 61 days-notice | ||||||||||
Description for event of default | In the event the Company defaults under the terms of the Auctus Note, the Company owes 150% of the principal amount then due under the Note, plus any unpaid interest, immediately | ||||||||||
Description of prepayment of debt | The Company may prepay the amounts loaned to the Company under the Auctus Note as follows: (i) during the initial 90-day period after the issue date, at 135% multiplied by the amount the Company is prepaying, and (ii) from the 91st through the 180th day after the issue date, at 150% multiplied by the amount the Company is prepaying. Any prepayments are subject to Auctus written acceptance of such prepayment. After 180 days from the issue date the Company cannot prepay the Auctus Note | ||||||||||
Convertible Promissory Note [Member] | Crown Bridge Partners [Member] | Securities Purchase Agreement [Member] | |||||||||||
Credit facility maximum borrowing capacity | $ 130,000 | ||||||||||
Original issue discount | 13,000 | ||||||||||
Credit facility maximum borrwing capcity net of debt discount | $ 117,000 | ||||||||||
Interest rate | 10.00% | ||||||||||
Maturity date description | The Crown Note bears interest at Ten Percent (10%) per annum and matures twelve (12) months from the date of each tranche, with the initial tranche of $65,000 maturing on March 2, 2019 | ||||||||||
Terms of conversion feature | Under the terms of the Crown Note, Crown has the right, at any time to convert all or part of the amounts due to it under the Crown Note into shares of the Companys common stock. The conversion price is 55% of the lesser of (a) the lowest traded price or (b) the lowest closing bid price, of the Companys common stock on the twenty-five trading days prior to the conversion date. However, Crown may not convert the amounts due under the Note into shares of the Companys common stock if such conversion would cause it to own more than 4.99% of the Companys then-outstanding common stock, which limitation may be waived by Crown upon 61 days-notice | ||||||||||
Description for event of default | In the event the Company defaults under the terms of the Crown Note, the Company owes 150% of the principal amount then due under the Note, plus any unpaid interest, immediately | ||||||||||
Description of prepayment of debt | The Company may prepay the amounts loaned to the Company under the Crown Note as follows: (i) during the initial 60-day period after each tranche, at 125% multiplied by the amount the Company is prepaying, (ii) during the 61st through 120 days after each tranche, at 135% multiplied by the amount the Company is prepaying, and (iii) during the 121st through 180th day after each tranche, at 150% multiplied by the amount the Company is prepaying. Any prepayments are subject to Crowns written acceptance of such prepayment. After 180 days from each tranche the Company cannot prepay that tranche in cash | ||||||||||
Convertible Promissory Note [Member] | Crown Bridge Partners [Member] | Securities Purchase Agreement [Member] | Tranche 1 [Member] | |||||||||||
Original issue discount | $ 6,500 | ||||||||||
Proceeds from related party debt including portion attributable to debt discount | 65,000 | ||||||||||
Proceeds from related party debt | $ 58,500 | ||||||||||
October 2017 Convertible Note [Member] | |||||||||||
Accrued interest percentage | 5.00% | 5.00% | |||||||||
Unsecured promissory note | $ 2,560,000 | $ 2,560,000 | |||||||||
Convertible Notes Payable | $ 2,460,112 | $ 2,460,112 | |||||||||
Maturity date | Oct. 31, 2019 | ||||||||||
Common stock rate, per share | $ 0.10 | $ 0.10 | |||||||||
Note hoder acquire percentage | 9.90% | 9.90% | |||||||||
Cash received from notes payable | $ 100,000 | $ 100,000 | |||||||||
Loss from extinguishment of debt | 3,100,000 | 3,100,000 | |||||||||
Accounts payable related to accrued interest | 382,000 | 219,000 | 382,000 | 219,000 | |||||||
Interest expense on notes payable | $ 44,000 | 40,000 | $ 126,000 | 116,000 | |||||||
January 2017 Convertible Note [Member] | |||||||||||
Accrued interest percentage | 5.00% | ||||||||||
Unsecured promissory note | $ 2,460,000 | ||||||||||
Convertible Notes Payable | $ 2,410,112 | ||||||||||
Maturity date | Jan. 31, 2019 | ||||||||||
Common stock rate, per share | $ 0.15 | ||||||||||
Note hoder acquire percentage | 9.90% | ||||||||||
Cash received from notes payable | $ 50,000 | ||||||||||
December 2015 Convertible Note [Member] | |||||||||||
Accrued interest percentage | 7.50% | 7.50% | |||||||||
Related party short term notes payable | $ 10,000 | $ 10,000 | |||||||||
Unsecured promissory note | 260,000 | 260,000 | |||||||||
Convertible Notes Payable | $ 200,000 | $ 200,000 | |||||||||
Maturity date | Oct. 31, 2019 | ||||||||||
Common stock rate, per share | $ 0.20 | $ 0.20 | |||||||||
Note hoder acquire percentage | 9.90% | 9.90% | |||||||||
Common stock granted in cashless option | 1 | 1 | |||||||||
Common stock, par value | $ 0.001 | $ 0.001 | |||||||||
Excercise price | $ 0.50 | $ 0.50 | |||||||||
Beneficial conversion amount | $ 141,000 | ||||||||||
Cash received from notes payable | $ 50,000 | 50,000 | |||||||||
Estimated relative fair value discount | $ 128,000 | $ 128,000 | |||||||||
Volatility rate | 240.00% | ||||||||||
Risk-free interest rate | 1.05% | ||||||||||
Expected term | 3 years | ||||||||||
Dividend yield | 0.00% | ||||||||||
December 2015 Convertible Note [Member] | Unsecured, Amended and Consolidated Convertible Notes Payable [Member] | |||||||||||
Maturity date | Mar. 31, 2016 | ||||||||||
December 2014 Convertible Note [Member] | |||||||||||
Accrued interest percentage | 7.50% | 7.50% | |||||||||
Unsecured promissory note | $ 200,000 | $ 200,000 | |||||||||
Common stock rate, per share | $ 1 | $ 1 | |||||||||
Note hoder acquire percentage | 9.90% | 9.90% | |||||||||
Beneficial conversion amount | $ 90,000 | ||||||||||
Convertible Notes Payable (A) [Member] | |||||||||||
Accretion of debt discount | $ 1,700 | $ 2,000 | 5,000 | $ 11,500 | |||||||
Convertible Notes Payable | 157,000 | ||||||||||
Converted amount | 26,000 | ||||||||||
Repayment of debt | 15,000 | ||||||||||
Balance amount | $ 116,000 | ||||||||||
Note hoder acquire percentage | 9.90% | ||||||||||
Common stock granted in cashless option | 1 | ||||||||||
Common stock, par value | $ 0.001 | ||||||||||
Beneficial conversion amount | 38,000 | ||||||||||
Accretion of debt discount expense in future | 7,000 | ||||||||||
Debt default | $ 62,500 | $ 62,500 | |||||||||
Convertible Notes Payable (A) [Member] | Minimum [Member] | |||||||||||
Maturity date | Jun. 30, 2015 | ||||||||||
Fully vested options expire period | 1 year | ||||||||||
Convertible Notes Payable (A) [Member] | Maximum [Member] | |||||||||||
Maturity date | Jul. 31, 2019 | ||||||||||
Fully vested options expire period | 3 years | ||||||||||
In 2017 [Member] | Short Term Notes Payable to Stockholders One [Member] | |||||||||||
Related party short term notes payable | $ 175,000 | ||||||||||
Common stock, issued shares | 50,000 | ||||||||||
Debt discount cost | $ 26,000 |
STOCK TRANSACTIONS (Details Nar
STOCK TRANSACTIONS (Details Narrative) | May 15, 2017USD ($)Number$ / sharesshares | Mar. 31, 2018USD ($)$ / sharesshares | Mar. 31, 2017USD ($) | Dec. 31, 2017$ / shares | Mar. 31, 2018USD ($)$ / sharesshares | Mar. 31, 2017USD ($) | Jun. 30, 2017$ / sharesshares |
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Loss from extinguishment of debt | $ | $ (3,102,134) | $ (13,778,649) | |||||
Common stock shares issued | shares | 9,039,347 | 9,039,347 | 7,880,347 | ||||
Individuals [Member] | |||||||
Common stock issued for purchase, shares | shares | 795,000 | ||||||
Common stock issued for purchase, amount | $ | $ 138,000 | ||||||
Private Placement Memorandum [Member] | |||||||
Number of units authorized | Number | 400 | ||||||
Description of units authorized | Each Unit consisting of one $10,000 Principal Amount Convertible Debenture and a Warrant to purchase one share of our common stock, at a price of $1.25 per Unit | ||||||
Convertible debenture issuable for each unit | $ | $ 10,000 | ||||||
Common stock, par value | $ .001 | ||||||
Conversion price | 0.40 | ||||||
Warrant [Member] | Private Placement Memorandum [Member] | |||||||
Exercise price | 1.25 | ||||||
Non-cashless warrant [Member] | Private Placement Memorandum [Member] | |||||||
Exercise price | $ 0.80 | ||||||
Non-cashless warrant issuable for each unit | shares | 25,000 | ||||||
Maximum [Member] | |||||||
Exercise price | $ 5 | ||||||
Maximum [Member] | Individuals [Member] | |||||||
Exercise price | $ 0.20 | ||||||
Minimum [Member] | |||||||
Exercise price | $ 0.10 | ||||||
Minimum [Member] | Individuals [Member] | |||||||
Exercise price | $ 0.15 | ||||||
Stock Purchase Agreement [Member] | |||||||
Common stock issued for purchase, shares | shares | 144,000 | ||||||
Common stock issued for purchase, amount | $ | $ 180,000 | ||||||
Exercise price | $ 1.25 | ||||||
Additional share of common stocks | shares | 144,000 | ||||||
Stock Purchase Agreement [Member] | Warrant [Member] | |||||||
Warrants reserved for future issuance | shares | 144,000 | 144,000 | |||||
Share price | $ 2.50 | $ 2.50 | |||||
Stock Purchase Agreement [Member] | Maximum [Member] | |||||||
Common stock issued for purchase, amount | $ | $ 200,000 | ||||||
Exercise price | $ 1.25 | ||||||
Stock Purchase Agreement [Member] | Non Affiliate Stockholder [Member] | |||||||
Exercise price | $ 1 | ||||||
Common stock shares issued | shares | 220,000 | 220,000 | |||||
Common stock share exchange value | $ | $ 110,000 | $ 110,000 |
OPTIONS AND WARRANTS (Details N
OPTIONS AND WARRANTS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Accretion of debt discount | $ 25,418 | $ 1,944 | $ 28,754 | $ 11,500 | |
Option [Member] | |||||
Number of securities to be issued upon exercise of outstanding options, warrants and rights | 910,000 | 910,000 | |||
Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column (a)) | 682,000 | 682,000 | |||
Expense recognized | $ 16,000 | 85,000 | $ 48,000 | 285,000 | |
Compensation expected to be recognized | $ 113,000 | $ 113,000 | |||
Option [Member] | Options exercisable [Member] | |||||
Weighted-average exercise price of options, warrants and rights | $ 1.64 | $ 1.64 | |||
Weighted average contractual life | 6 years 11 months 1 day | ||||
Option [Member] | Options outstanding [Member] | |||||
Weighted-average exercise price of options, warrants and rights | $ 1.45 | $ 1.45 | |||
Weighted average contractual life | 7 years 8 months 8 days | ||||
Warrant [Member] | |||||
Number of securities to be issued upon exercise of outstanding options, warrants and rights | 3,200,000 | 3,200,000 | |||
Weighted-average exercise price of options, warrants and rights | $ 0.78 | $ 0.78 | |||
Compensation expected to be recognized | $ 5,900 | $ 5,900 | |||
Accretion of debt discount | $ 1,300 | $ 1,300 | $ 3,900 | $ 2,800 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Selling, general and administrative expense | $ 313,716 | $ 439,052 | $ 790,175 | $ 1,267,759 |
Employee Agreement with Wesley Tate [Member] | On February 1, 2018 [Member] | ||||
Annual salary | $ 187,200 | |||
Common stock shares option | 800,000 | |||
Stock options to purchase vested | 160,000 | 160,000 | ||
Eexercise price | $ 0.18 | $ 0.18 | ||
Fair market value option | $ 144,000 | |||
Selling, general and administrative expense | $ 34,000 | 0 | 34,000 | 0 |
Compensation expected to be recognized in future cost | $ 110,000 | $ 110,000 | ||
Terms of contract | 36 months | |||
Shares issued | 160,000 | 160,000 | ||
Employee Agreement with Wesley Tate [Member] | On September 29, 2016 [Member] | ||||
Common stock shares option | 105,000 | |||
Stock options to purchase vested | 42,000 | 42,000 | ||
Eexercise price | $ 0.75 | $ 0.75 | ||
Fair market value option | $ 78,000 | |||
Fair Value Volatility rate | 206.00% | |||
Fair Value Risk-free interest rate | 1.13% | |||
Fair Value Expected term | 6 years | |||
Fair Value Dividend yield | 0.00% | |||
Selling, general and administrative expense | $ 4,000 | 4,000 | $ 12,000 | 27,000 |
Compensation expected to be recognized in future cost | $ 35,000 | 35,000 | ||
Employee Agreement with Wesley Tate [Member] | On October 1, 2014 [Member] | ||||
Annual salary | $ 156,000 | |||
Common stock shares option | 50,000 | |||
Stock options to purchase vested | 40,000 | 40,000 | ||
Eexercise price | $ 1.20 | $ 1.20 | ||
Fair market value option | $ 56,000 | |||
Fair Value Volatility rate | 262.00% | |||
Fair Value Risk-free interest rate | 1.69% | |||
Fair Value Expected term | 5 years | |||
Fair Value Dividend yield | 0.00% | |||
Selling, general and administrative expense | $ 2,700 | 2,700 | $ 8,000 | 8,000 |
Compensation expected to be recognized in future cost | $ 5,000 | 5,000 | ||
Employee Agreement with Eric Clemons [Member] | On February 1, 2018 [Member] | ||||
Annual salary | $ 214,500 | |||
Common stock shares option | 800,000 | |||
Stock options to purchase vested | 160,000 | 160,000 | ||
Eexercise price | $ 0.18 | $ 0.18 | ||
Fair market value option | $ 144,000 | |||
Selling, general and administrative expense | $ 34,000 | 0 | 34,000 | 0 |
Compensation expected to be recognized in future cost | $ 110,000 | $ 110,000 | ||
Terms of contract | 36 months | |||
Shares issued | 160,000 | 160,000 | ||
Employee Agreement with Eric Clemons [Member] | On September 29, 2016 [Member] | ||||
Common stock shares option | 105,000 | |||
Stock options to purchase vested | 42,000 | 42,000 | ||
Eexercise price | $ 0.75 | $ 0.75 | ||
Fair market value option | $ 78,000 | |||
Fair Value Volatility rate | 206.00% | |||
Fair Value Risk-free interest rate | 1.13% | |||
Fair Value Expected term | 6 years | |||
Fair Value Dividend yield | 0.00% | |||
Selling, general and administrative expense | $ 4,000 | 4,000 | $ 12,000 | 27,000 |
Compensation expected to be recognized in future cost | 35,000 | 35,000 | ||
Employee Agreement with Eric Clemons [Member] | On March 1, 2015 [Member] | ||||
Cash placement bonus | $ 0 | 0 | $ 0 | 27,000 |
Aggregate purchase price | 10.00% | |||
Employee Agreement with Eric Clemons [Member] | Omnibus Stock Grant and Option Plan [Member] | ||||
Annual salary | $ 195,000 | |||
Common stock shares option | 100,000 | |||
Stock options to purchase vested | 80,000 | 80,000 | ||
Eexercise price | $ 1.20 | $ 1.20 | ||
Fair market value option | $ 112,000 | |||
Fair Value Volatility rate | 262.00% | |||
Fair Value Risk-free interest rate | 1.69% | |||
Fair Value Expected term | 5 years | |||
Fair Value Dividend yield | 0.00% | |||
Selling, general and administrative expense | $ 5,500 | $ 5,500 | $ 16,500 | $ 16,500 |
Compensation expected to be recognized in future cost | $ 10,000 | $ 10,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share Details | ||||
Net loss attributable to the common stockholders | $ (654,602) | $ (566,754) | $ (4,499,065) | $ (15,449,535) |
Basic weighted average outstanding shares of common stock | 8,755,125 | 7,605,236 | 8,365,059 | 7,421,427 |
Dilutive effect of options and warrants | ||||
Diluted weighted average common stock and common stock equivalents | 8,755,125 | 7,605,236 | 8,365,059 | 7,421,427 |
Earnings (loss) per share: | ||||
Basic and diluted | $ (0.07) | $ (0.07) | $ (0.54) | $ (2.08) |
EARNINGS PER SHARE (Details Nar
EARNINGS PER SHARE (Details Narrative) - $ / shares | 6 Months Ended | 9 Months Ended | |
Dec. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Total dilutive warrants | 4,000,000 | 2,600,000 | |
Common stock shares issuable upon conversion of convertible notes | 30,000,000 | ||
Minimum [Member] | |||
Exercise price of convertible notes | $ 0.10 | ||
Maximum [Member] | |||
Exercise price of convertible notes | $ 5 |