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Long-Term Convertible Notes Payable
9 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Long-Term Convertible Notes Payable

The Company received $200,000 in loan proceeds from a third party investor pursuant to the terms of a Convertible Promissory Note in the principal amount of $500,000 (“Convertible Note”). The Convertible Note has an interest rate of 12% during the first year and 10% for the second year through the maturity date of February 21, 2018. The accrued interest at March 31, 2016 was $1,315.

 

The holder has the right to convert any or the entire outstanding principal of the Convertible Note into shares of common stock at the rate of $0.02 per share.

 

The Company recorded debt discount in the amount of $80,698 to be amortized ratably over two years. The accumulated amortization recorded on this discount as of March 31, 2016 was $2,751.

 

The Company signed a second Convertible Promissory Note with a third party investor in the amount of $500,000, with the same terms and conditions as the Convertible Note.   No funds were received during the quarter ended March 31, 2016 under either the Convertible Note or the Convertible Promissory Note (together, the “Notes”); however, the Company received $440,000 from the Convertible Promissory Note subsequent to the end of the quarter.

 

Each of the Notes, as executed, require the Company issue warrants for up to a total of 37,500,000 shares of common stock rather than 25,000,000 shares, respectively, within a three-year term at an exercise price equal to $0.04 per share.  However, management believes that the number of shares issuable upon exercise of each of the warrants was calculated in error without objection from the holders thereof, and that the number of shares issuable upon exercise of each warrant should be 25,000,000 shares. As a result, the value of the warrants as recorded reflects the value of 25,000,000 shares rather than 37,500,000 shares.  See Note 8 – Capital Stock, for disclosure regarding the valuation of the warrants, including the method and assumptions utilized by management in determining valuation.