5. Stockholders' Deficit

12 Months Ended

Jun. 30, 2019

Equity [Abstract]

Stockholders' Deficit

Note 5 - Stockholders’ Deficit

Preferred Stock

On March 17, 2009, the Company filed an Amended and Restated Articles of Incorporation and created two new series of preferred stock, the first of which is designated Series A Preferred Stock and the second of which is designated as Series B Preferred Stock. The total number of shares of Common Stock which this corporation has authority to issue is 1,000,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock of which 5,000,000 shares are designated as Series A Preferred Stock, and 5,000,000 shares are designated as Series B Preferred Stock, with the rights, preferences and privileges of the Series B Preferred Stock to be designated by the Board of Directors. Each share of Common Stock and Preferred Stock has a par value of $0.001. As of June 30, 2019, and 2018, there are no shares of Series A or Series B Preferred Stock issued and outstanding.

Common Stock

During the year ended June 30, 2019, the Company did not issue any shares of common stock.

During the year ended June 30, 2018, the Company issued 400,000 shares of common stock with fair value of $16,000 for services rendered. These shares were valued at fair value at the date of issuance.

During the year ended June 30, 2018, the Company cancelled 200,000 shares of common stock issued to a member of the Company’s Board of Director in prior period.

Stock Options

The Company has not adopted a formal stock option plan. However, it has assumed outstanding stock options resulting from the acquisition of its wholly-owned subsidiary, Hydrodynamic Technology, Inc. In addition, the Company has made periodic non-plan grants. A summary of the stock option activity from June 30, 2019 and 2018 is as follows:

						Weighted-
						Average
				Weighted-		Remaining
				Average		Contractual
				Exercise		Life
	Options			Price		(Years)
Outstanding at June 30, 2017		11,685,852		$	0.37		2.41
- Granted		–			–		–
- Forfeited		–			–		–
- Exercised		–			–		–
- Expired		(307,098	)		–		–
Outstanding at June 30, 2018		11,378,754		$	0.31		2.23
- Granted		–			–		–
- Forfeited		–			–		–
- Exercised		–			–		–
- Expired		(378,754	)		–		–
Outstanding at June 30, 2019		11,000,000		$	0.03		3.36

As of June 30, 2019, all outstanding options were fully vested and exercisable. The intrinsic value of the outstanding options as of June 30, 2019 was zero. The following table summarizes additional information concerning options outstanding and exercisable at June 30, 2019.

		Options Outstanding				Options Exercisable
			Weighted		Weighted		Weighted
			Average		Average		Average
	Exercise	Number	Remaining		Exercise	Number	Remaining
	Price	of Shares	Life (Years)		Price	of Shares	Life (Years)
$	0.03	11,000,000	3.36	$	0.03	11,000,000	3.36
		11,000,000				11,000,000

Warrants

A summary of the Company’s warrant activity and related information from as of June 30, 2019 and 2018 is as follows.

						Weighted-
						Average
				Weighted-		Remaining
				Average		Contractual
				Exercise		Life
	Warrants			Price		(Years)
Outstanding at June 30, 2017		75,926,510		$	0.06		4.81
Granted		–			–		–
Exercised		–			–		–
Expired		–			–		–
Outstanding at June 30, 2018		75,926,510		$	0.06		3.81
Granted		4,336,666		$	0.03		4.49
Exercised		–			–		–
Expired		(1,000,000	)		–		–
Outstanding at June 30, 2019		79,263,176		$	0.07		4.45

As of June 30, 2019, all outstanding warrants were fully vested and exercisable. The intrinsic value of the outstanding warrants as of June 30, 2019 was none. The following table summarizes additional information concerning warrants outstanding and exercisable at June 30, 2019.

	Warrants Outstanding				Warrants Exercisable
		Weighted		Weighted			Weighted
		Average		Average			Average
Exercise	Number	Remaining		Exercise	Number		Exercise
Price	of Shares	Life (Years)		Price	of Shares		Price
$0.03 - $0.05	58,936,518	5.38	$	0.04	58,936,518	$	0.04
$0.08 - $0.12	20,326,658	3.39	$	0.12	20,326,658	$	0.12
	79,263,176				79,263,176

During the year ended June 30, 2019, the Company granted warrants to purchase 4,336,666 shares of common stock to consultants for services rendered. The warrants are fully vested, exercisable at $0.03 per share, and will expire in five years. Total fair value of these warrants amounted to $115,000 based upon a Black-Scholes Option Pricing model.

During the year ended June 30, 2019, the Company amended certain warrants granted in prior years to purchase approximately 19 million common shares in order to extend the term or life to five years. As a result of this modification, the Company recorded stock compensation expense of $334,000 to account for the incremental change in fair value of these warrants before and after the modification based upon a Black-Scholes Option Pricing model.

The fair value of the warrant awards was estimated using the Black-Scholes method based on the following weighted-average assumptions:

	June 30,
	2019
Risk-free interest rate		2.60%
Contractual terms (years)		4.82
Expected volatility		138%
Expected dividend yield		0%

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the award; the contractual term represents the weighted-average period of time the awards granted are expected to be outstanding giving consideration to vesting schedules, contractual terms, and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s Common Stock; and the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future.