Fair Value of Financial Instruments

6 Months Ended

Dec. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Financial Instruments

NOTE 4 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2011-04 “Fair Value Measurement” as it relates to financial assets and financial liabilities, which defines fair value, establishes a framework for measuring fair value under GAAP and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements.

This guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Hierarchical levels, as defined in this guidance and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities are as follows:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – Valuations based on unobservable inputs reflecting management’s assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

As of December 31, 2018, and June 30, 2018, the fair value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, approximates book value due to the short maturity of these instruments. Based upon borrowing rates currently available to the Company for loans with similar terms, the carrying value of its debt obligations approximates fair value. As of December 31, 2018, and June 30, 2018, the Company held no investments. The Company hired an independent resource to value its derivative liability as follows (unaudited):

Fair Value Table	Balance at December 31, 2018		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Derivative Liability	$	25,895	$	-	$	-	$	25,895
Note Payable		20,000		-		20,000		-
Convertible debentures		3,887,103		-		3,887,103		-
	$	3,932,998	$	-	$	3,907,103	$	25,895

Level Three Roll-forward	Derivative Liability			Total
Balance June 30, 2018	$	-		$	-
Fair value of derivative liability reclassified from equity		98,645			98,645
Settlement of derivative liabilities		(178,618	)		(178,618	)
Change in fair value		105,868			105,868
Balance December 31, 2018	$	25,895		$	25,895

Convertible Debentures

The Company measured the estimated fair value of the convertible debentures using significant other observable inputs, representative of a Level 2 fair value measurement, including the interest and conversion rates for the instruments. The following table sets forth the fair value of the Company’s convertible debentures as of December 31, 2018, and June 30, 2018:

	December 31, 2018				June 30, 2018
	(unaudited)
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Convertible debentures issued in September 2014	$	25,050	$	30,151	$	25,050	$	27,977
Convertible debentures issued in January 2015		500,000		543,525		500,000		504,342
Convertible debentures issued in April - June 2016		1,075,000		1,244,550		1,075,000		1,154,831
Convertible debenture issued in August 2016		200,000		244,594		200,000		226,961
Convertible debentures issued in January - March 2017		60,000		69,121		60,000		64,138
Convertible promissory notes issued in March 2017		222,350		278,787		222,350		258,689
Convertible debenture issued in June 2017		100,000		106,604		100,000		98,919
Convertible debenture issued in July 2017		100,000		106,604		100,000		98,919
Convertible debenture issued in September 2017		150,000		159,906		150,000		148,378
Convertible debenture issued in September 2017		495,000		528,978		495,000		490,844
Convertible debenture issued in November 2017		27,000		27,532		27,000		25,547
Convertible debenture issued in November 2017		247,500		264,489		247,500		245,422
Convertible debenture issued in December 2017		75,000		78,121		75,000		72,489
Convertible debenture issued in February 2018		45,000		47,835		45,000		44,387
Convertible debentures issued in March 2018		65,000		68,115		65,000		63,205
Convertible debentures issued in April 2018		150,000		141,657		150,000		131,446
Convertible debentures issued in June 2018		40,000		43,200		40,000		40,086
Convertible debentures issued in July 2018		45,000		47,991		-		-
Convertible debentures issued in August 2018		30,000		31,248		-		-
Convertible debentures issued in September 2018		25,000		25,714		-		-
Convertible promissory note issued in September 2018		20,000		20,622		-		-
Convertible debentures issued in December 2018		52,000		42,180		-		-
Convertible promissory note issued in December 2018		350,000		297,130		-		-

The Company is not a party to any hedge arrangements or commodity swap agreement.