DERIVATIVE LIABILITIES

3 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

NOTE 8. DERIVATIVE LIABILITIES

Warrants

The Company determined that certain warrants that the Company issued contained provisions that protected holders from future issuances of the Company’s common stock at prices below such warrants’ respective exercise prices and these provisions could have resulted in modification of the warrants exercise price based on a variable that was not an input to the fair value of a “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 - 40. As of September 30, 2016 and June 30, 2016, all derivative warrant instruments had expired.

Activity for derivative warrant instruments during the three months ended September 30, 2015 was as follows:

			Decrease in
	Balance at		fair value of		Balance at
	June 30,		derivative		September 30,
	2015		liabilities		2015
Second 2010 Unit Offering warrants	$	-	$	15,147	$	15,147
Third 2010 Unit Offering warrants		-		27,464		27,464
Lender warrants		3,799		6,420		10,219
Warrants for advisory services and arranger warrants		241		349		590
	$	4,040	$	49,380	$	53,420

There were no warrants exercised during the three months ended September 30, 2015.

The following is a summary of the assumptions used in the modified lattice valuation model as of September 30, 2015:

	Valuation as of September 30,
	2015
Common stock issuable upon exercise of warrants		20,658,822
Market value of common stock on measurement date (1)	$	0.028
Adjusted exercise price	$	0.04-$0.24
Risk free interest rate (2)		0.08%-0.33	%
Warrant lives in years		0.1-0.6
Expected volatility (3)		197	%
Expected dividend yields (4)		None
Assumed stock offerings per year over next two years (5)		1
Probability of stock offering in any year over next two years (6)		100	%
Range of percentage of existing shares offered (7)		14	%
Offering price range (8)	$	0.03 - $0.04

(1) The market value of common stock is the stock price at the close of trading on the date of issuance or at period-end, as applicable.

(2) The risk-free interest rate was determined by management using the 0.5 or 1 - year Treasury Bill as of the respective offering or measurement date.

(3) The historical trading volatility was determined by the Company’s trading history.

(4) Management determined the dividend yield to be -0-% based upon its expectation that it will not pay dividends for the foreseeable future.

(5) Management estimates the Company will have at least one stock offering in the next two years.

(6) Management estimates that the probability of a stock offering is 100% during the next two years.

(7) Management estimates that the range of percentages of existing shares offered in each stock offering will be 14% of the shares outstanding.

(8) Represents the estimated offering price range in future offerings as determined by management.