0001213900-20-003982.txt : 20200214 0001213900-20-003982.hdr.sgml : 20200214 20200214165447 ACCESSION NUMBER: 0001213900-20-003982 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 45 CONFORMED PERIOD OF REPORT: 20191231 FILED AS OF DATE: 20200214 DATE AS OF CHANGE: 20200214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Hypersolar, Inc. CENTRAL INDEX KEY: 0001481028 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 000000000 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-54437 FILM NUMBER: 20621427 BUSINESS ADDRESS: STREET 1: 10 E. YANONALI, SUITE 36 CITY: SANTA BARBARA STATE: CA ZIP: 93101 BUSINESS PHONE: 805-966-6566 MAIL ADDRESS: STREET 1: 10 E. YANONALI, SUITE 36 CITY: SANTA BARBARA STATE: CA ZIP: 93101 10-Q 1 f10q1219_hypersolarinc.htm QUARTERLY REPORT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

☒   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended December 31, 2019

 

or

 

☐   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File Number: 000-54437

 

HYPERSOLAR, INC.

(Name of registrant in its charter)

 

Nevada   26-4298300

(State or other jurisdiction of

  (I.R.S. Employer
incorporation or organization)   Identification No.)

 

10 E. Yanonali, Suite 36, Santa Barbara, CA 93101

(Address of principal executive offices) (Zip Code)

 

Issuer’s telephone Number: (805) 966-6566

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class  Ticker symbol(s)  Name of each exchange on which registered
N/A  N/A  N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

  Large accelerated filer Accelerated filer
  Non-accelerated filer Smaller reporting company
      Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

 

The number of shares of registrant’s common stock outstanding, as of February 14, 2020 was 1,628,662,630.

 

 

 

 

 

 

HYPERSOLAR, INC.

INDEX

 

  Page
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS 1
  Condensed Balance Sheets 1
  Condensed Statements of Operations 2
  Condensed Statements of Shareholders’ Deficit 3
  Condensed Statements of Cash Flows 4
  Notes to the Condensed Financial Statements 5
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 15
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 19
ITEM 4: CONTROLS AND PROCEDURES 19
PART II: OTHER INFORMATION  
ITEM 1 LEGAL PROCEEDINGS 20
ITEM 1A: RISK FACTORS 20
ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 20
ITEM 3: DEFAULTS UPON SENIOR SECURITIES 20
ITEM 4: MINE SAFETY DISCLOSURES 20
ITEM 5: OTHER INFORMATION 20
ITEM 6: EXHIBITS 21
SIGNATURES 22

 

i

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

HYPERSOLAR, INC.

CONDENSED BALANCE SHEETS

 

  

December 31,

2019

   June 30,
2019
 
         
ASSETS        
         
CURRENT ASSETS        
Cash  $57,120   $35,074 
Prepaid expense   9,400    15,000 
           
TOTAL CURRENT ASSETS   66,520    50,074 
           
PROPERTY & EQUIPMENT          
Computers and peripherals   2,664    1,883 
Less: accumulated depreciation   (1,161)   (837)
           
NET PROPERTY AND EQUIPMENT   1,503    1,046 
           
OTHER ASSETS          
Domain, net of amortization of $4,046 and $3,868, respectively   1,269    1,447 
Patents, net of amortization of $14,394 and $10,648, respectively   94,240    97,986 
           
TOTAL OTHER ASSETS   95,509    99,433 
           
TOTAL ASSETS  $163,532   $150,553 
           
LIABILITIES AND SHAREHOLDERS' DEFICIT          
           
CURRENT LIABILITIES          
Accounts payable  $104,819   $125,085 
Accrued expenses   659,489    592,327 
Derivative liability   7,306,889    3,905,721 
Convertible promissory notes, net of debt discount of $230,503 and $66,335, respectively   119,797    256,103 
           
TOTAL CURRENT LIABILITIES   8,190,994    4,879,236 
           
LONG TERM LIABILITIES          
Convertible promissory notes, net of debt discount of $0 and $38,514, respectively   1,730,000    1,782,600 
           
TOTAL LONG TERM LIABILITIES   1,730,000    1,782,600 
           
TOTAL LIABILITIES   9,920,994    6,661,836 
           
COMMIMENTS AND CONTINGENCIES (SEE NOTE 8)   -    - 
           
SHAREHOLDERS' DEFICIT          
Preferred Stock, $0.001 par value;          

5,000,000 authorized preferred shares, no shares issued or outstanding

   -    - 
Common Stock, $0.001 par value;          

3,000,000,000 authorized common shares

1,524,835,977 and 852,458,018 shares issued and outstanding, respectively

   1,524,836    1,077,319 
Additional Paid in Capital   11,271,901    10,432,575 
Accumulated deficit   (22,554,199)   (18,021,177)
           
TOTAL SHAREHOLDERS' DEFICIT   (9,757,462)   (6,511,283)
           
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT  $163,532   $150,553 

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

1

 

 

HYPERSOLAR, INC.

CONDENSED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2019 AND 2018

(Unaudited) 

                 
   Three Months Ended   Six Months Ended 
   December 31, 2019   December 31, 2018   December 31, 2019   December 31, 2018 
                 
REVENUE  $-   $-   $-   $- 
                     
OPERATING EXPENSES                    
General and administrative expenses   343,353    273,042    713,645    412,731 
Research and development cost   104,839    67,982    248,234    142,570 
Depreciation and amortization   2,038    1,839    4,247    3,064 
                     
TOTAL OPERATING EXPENSES   450,230    342,863    966,126    558,365 
                     
LOSS FROM OPERATIONS BEFORE  OTHER INCOME (EXPENSES)   (450,230)   (342,863)   (966,126)   (558,365)
                     
OTHER INCOME/(EXPENSES)                    
Gain (Loss) on conversion of debt   623,594    -    -    (234,834)
Loss on change in derivative liability   (3,269,549)   (3,505,767)   (3,080,361)   (434,373)
Interest expense   (184,101)   (167,175)   (486,535)   (293,002)
                     
TOTAL OTHER INCOME (EXPENSES)   (2,830,056)   (3,672,942)   (3,566,896)   (962,209)
                     
NET INCOME (LOSS)  $(3,280,286)  $(4,015,805)  $(4,533,022)  $(1,520,574)
                     
BASIC AND DILUTED LOSS PER SHARE  $(0.00)  $(0.00)  $(0.00)  $(0.00)
                     
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING                
BASIC AND DILUTED   1,444,116,446    886,221,972    1,308,918,562    873,771,485 

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

2

 

 

HYPERSOLAR, INC.

CONDENSED STATEMENTS OF SHAREHOLDERS’ DEFICIT

FOR THE SIX MONTHS ENDED DECEMBER 31, 2019 AND 2018

(Unaudited)

 

   SIX MONTHS ENDED DECEMBER 31, 2018 
                   Additional         
   Preferred stock   Common stock   Paid-in   Accumulated     
   Shares   Amount   Shares   Amount   Capital   Deficit   Total 
Balance at June 30, 2018       -       -    852,458,018   $852,458   $8,131,620   $(21,999,514)  $(13,015,436)
                                    
Issuance of common stock for conversion of debt and accrued interest   -    -    32,615,769    32,616    260,926    -    293,542 
                                    
Issuance of common stock for services   -    -    9,603,000    9,603    91,229    -    100,832 
                                    
Stock based compensation expense   -    -    -    -    28,714    -    28,714 
                                    
Net Income   -    -    -    -    -    (1,520,574)   (1,520,574)
                                    
Balance at December 31, 2018 (unaudited)   -   $-    894,676,787   $894,677   $8,512,489   $

(23,520,088

)  $(14,112,922)
  

 

SIX MONTHS ENDED DECEMBER 31, 2019

 
                   Additional         
   Preferred stock   Common stock   Paid-in   Accumulated     
   Shares   Amount   Shares   Amount   Capital   Deficit   Total 
Balance at June 30, 2019        -    -    1,077,319,339   $1,077,319   $10,432,575   $(18,021,177)  $(6,511,283)
                                    
Issuance of common stock for conversion of debt and accrued interest   -    -    390,468,995    390,469    285,606    -    676,075 
                                    
Issuance of common stock for services   -    -    57,047,643    57,048    121,162    -    178,210 
                                    
Stock based compensation expense   -    -    -    -    432,558    -    432,558 
                                    
Net Loss   -    -    -    -    -    (4,533,022)   (4,533,022)
                                    
Balance at December 31, 2019 (unaudited)   -   $-    1,524,835,977   $1,524,836   $11,271,901   $(22,554,199)  $(9,757,462)

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

3

 

 

HYPERSOLAR, INC.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2019 AND 2018

(UNAUDITED)

 

   Six Months Ended 
   December 31, 2019   December 31, 2018 
CASH FLOWS FROM OPERATING ACTIVITIES:        

Net loss

  $(4,533,022)  $(1,520,574)
Adjustment to reconcile net loss to net cash (used in) provided by operating activities          
Depreciation & amortization expense   4,248    3,064 
Stock based compensation expense   432,558    28,714 
Stock issued for services   178,210    100,832 
Loss on change in derivative liability   3,080,361    434,373 
Loss on conversion of debt   -    234,834 
Amortization of debt discount recorded as interest expense   372,088    186,851 
(Increase) Decrease in change in assets:          
Prepaid expense   5,600    746 
Increase (Decrease) in change in liabilities :          
Accounts payable   (20,266)   (23,335)
Accrued expenses   156,550    105,645 
           
NET CASH USED IN OPERATING ACTIVITIES   (323,673)   (448,850)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of tangible assets   (781)   (13,062)
           
NET CASH USED IN INVESTING ACTIVITIES:   (781)   (13,062)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from convertible notes payable   346,500    415,500 
           
NET CASH PROVIDED BY FINANCING ACTIVITIES   346,500    415,500 
           
NET INCREASE (DECREASE)  IN CASH   22,046    (46,412)
           
CASH, BEGINNING OF PERIOD   35,074    97,326 
           
CASH, END OF PERIOD  $57,120   $50,914 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION          
Interest paid  $416   $507 
Taxes paid  $-   $- 
          
SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS          
Fair value of common stock upon conversion of convertible notes and accrued interest  $676,075   $293,542 
Fair value of common stock issued for services  $178,210   $100,832 

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

4

 

 

HYPERSOLAR, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS - UNAUDITED

DECEMBER 31, 2019 AND 2018

 

1.Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the six months ended December 31, 2019 are not necessarily indicative of the results that may be expected for the year ended June 30, 2020. For further information refer to the financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended June 30, 2019.

 

Going Concern

 

The accompanying condensed unaudited financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying condensed unaudited financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company does not generate revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. The Company has historically obtained funds through private placement offerings of equity and debt. Management believes that it will be able to continue to raise funds by sale of its securities to its existing shareholders and prospective new investors to provide the additional cash needed to meet the Company’s obligations as they become due and will allow the development of its core business. There is no assurance that the Company will be able to continue raising the required capital.

 

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

This summary of significant accounting policies of HyperSolar, Inc. is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

 

Cash and Cash Equivalent

 

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

 

Use of Estimates

 

In accordance with accounting principles generally accepted in the United States, management utilizes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates and assumptions relate to useful lives and impairment of tangible and intangible assets, accruals, income taxes, stock-based compensation expense, Binomial lattice valuation model inputs, derivative liabilities and other factors. Management believes it has exercised reasonable judgment in deriving these estimates. Consequently, a change in conditions could affect these estimates.

 

Intangible Assets

 

The Company has patent applications to protect the inventions and processes behind its proprietary bio-based back-sheet, a protective covering for the back of photovoltaic solar modules traditionally made from petroleum-based film. Intangible assets that have finite useful lives continue to be amortized over their useful lives.

 

The Company recognized amortization expense of $3,923 and $3,064 for the six months ended December 31, 2019 and 2018, respectively.

 

Net Earnings (Loss) per Share Calculations

 

Net earnings (Loss) per share dictates the calculation of basic earnings (loss) per share and diluted earnings per share. Basic earnings (loss) per share are computed by dividing by the weighted average number of common shares outstanding during the year. Diluted net earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the effect of stock options and stock based awards (Note 4), plus the assumed conversion of convertible debt (Note 5).

 

For the six months ended December 31, 2019, the Company calculated the dilutive impact of the outstanding stock options of 196,250,000, and the convertible debt of $2,080,300, which is convertible into shares of common stock. The stock options and convertible debt were not included in the calculation of net earnings per share, because their impact was antidilutive.

 

For the six months ended December 31, 2018, the Company calculated the dilutive impact of the outstanding stock options of 10,250,000, and the convertible debt of $2,295,800, which is convertible into shares of common stock. The stock options and the convertible debt were not included in the calculation of net earnings per share, because their impact was antidilutive.

 

5

 

 

HYPERSOLAR, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS - UNAUDITED

DECEMBER 31, 2019 AND 2018

 

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Equity Incentive Plan and Stock Options

 

Equity Incentive Plan

 

On December 17, 2018, the Board of Directors approved and adopted the 2019 Equity Incentive Plan (“the Plan”), with 300,000,000 shares set aside and reserved for issuance pursuant to the Plan. The purpose of the Plan is to promote the success of the Corporation and to increase stockholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons. The awards are performance-based compensation that are granted under the Plan as incentive stock options (ISO) or nonqualified stock options. The per share exercise price for each option shall not be less than 100% of the fair market value of a share of common stock on the date of grant of the option. The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing cost. The Company accounts for stock option grants issued and vesting to employees and non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested, and the total stock-based compensation charge is recorded in the period of the measurement date.

 

As of December 31, 2019, the Company has granted 186,000,000 shares of convertible equity incentive stock options leaving a reserve of 114,000,000. The shares are convertible into common stock.

 

Stock based Compensation

 

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. As of December 31, 2019, the Company has granted 10,250,000 shares of convertible stock based compensation stock options, which are convertible into common stock.

 

Fair Value of Financial Instruments

 

Fair value of financial instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of December 31, 2019, the amounts reported for cash, accrued interest and other expenses, notes payables, convertible notes, and derivative liability approximate the fair value because of their short maturities.

 

We adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

 

Fair value is defined 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. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

 

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

 

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

 

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 

6

 

 

HYPERSOLAR, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS - UNAUDITED

DECEMBER 31, 2019 AND 2018

 

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Fair Value of Financial Instruments (Continued)

 

We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at December 31, 2019 (See Note 6):

 

   Total   (Level 1)   (Level 2)   (Level 3) 
Liabilities                    
Derivative liability measured at fair value at 12/31/19  $7,306,889   $-   $-   $7,306,889 

 

The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:

 

Balance as of June 30, 2019

   3,905,721 
Fair value of derivative liabilities issued   320,807 

Loss on change in derivative liability

   3,080,361 
Balance as of  December 31, 2019  $7,306,889 

 

Research and Development

 

Research and development costs are expensed as incurred.  Total research and development costs were $248,234 and $142,570 for the six months ended December 31, 2019 and 2018, respectively

 

Accounting for Derivatives

 

The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average series Binomial lattice formula pricing models to value the derivative instruments at inception and on subsequent valuation dates.

 

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

 

Recently Issued Accounting Pronouncements

 

In August 2017, FASB issued accounting standards update ASU-2017-12, (Topic 815) – “Targeted Improvements to Accounting for Hedging Activities”, to require an entity to present the earnings effect of the hedging instrument in the same statement line item in which the earnings effect of the hedged item is reported. The amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods with the fiscal years beginning after December 15, 2020. Early adoption is permitted in any interim period after issuance of the update. The Company does not believe the adoption of ASU-2017 would have a material impact on the Company’s financial statements.

 

In June 2018, FASB issued accounting standards update ASU 2018-07, (Topic 505) – “Shared-Based Payment Arrangements with Nonemployees”, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees will be aligned with the requirements for share-based payments granted to employees. Under the ASU 2018-07, the measurement of equity-classified nonemployee share-based payments will be fixed on the grant date, as defined in ASC 718, and will use the term nonemployee vesting period, rather than requisite service period. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted if financial statements have not yet been issued. The Company is currently evaluating the impact of the adoption of ASU 2018-07 on the Company’s financial statements. 

 

7

 

 

HYPERSOLAR, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS - UNAUDITED

DECEMBER 31, 2019 AND 2018

 

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Recently Issued Accounting Pronouncements (Continued)

 

In August 2018, the FASB issued to accounting standards update ASU 2018-13, (Topic 820) - “Fair Value Measurement”, which changes the unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance. The Company is currently evaluation the impact of the adoption of ASU 2018-13, on the Company’s financial statements. 

 

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial statements.

 

3.CAPITAL STOCK

 

Six months ended December 31, 2019

 

During the six months ended December 31, 2019, the Company issued 390,468,995 shares of common stock upon conversion of convertible notes in the amount of $586,686 in principal, plus accrued interest of $83,889 and other fees of $5,500 based upon conversion prices ranging from $0.00102 - $0.00296.

 

During the six months ended December 31, 2019, the Company issued 57,047,643 shares of common stock for services rendered at fair value prices based on the closing market prices for the applicable period of $0.002 - $0.004 per share in the amount of $178,210.

 

Six months ended December 31, 2018

 

During the six months ended December 31, 2018, the Company issued 32,615,769 shares of common stock upon conversion of convertible notes in the amount of $44,500, plus accrued interest of $14,208, with an aggregate fair value loss on conversion of debt of $234,834, based upon a conversion price of $0.009, which was based on the fair value of the shares granted.

 

During the six months ended December 31, 2018, the Company issued 9,603,000 shares of common stock under the 2019 Equity Incentive Plan for services rendered at a fair value price based on the closing market price for the applicable period of $0.0105 per share in the amount of $100,832.

 

4.OPTIONS

 

Stock Option Plans

 

As of December 31, 2019, 10,250,000 non-qualified common stock options were outstanding. Each option expires on the date specified in the option agreement, which date is not later than the fifth (5th) anniversary from the grant date of the options. As of March 31, 2018, 250,000 options are fully vested with a maturity date of March 31, 2020, and are exercisable at an exercise price of $0.02245 per share; 10,000,000 non-qualified common stock options, which vest one-third immediately, and one-third the second and third year, whereby, the options are fully vested with a maturity date of October 2, 2022, and are exercisable at an exercise price of $0.01 per share.

 

On January 23, 2019, the Company issued 170,000,000 stock options, which one-third (1/3) vest immediately, and the remaining shall vest one-twenty fourth (1/24) after the date of these options (remaining block). The first block shall become exercisable immediately and is exercisable for a period of seven (7) years. The options fully vest by January 23, 2022.

 

8

 

 

HYPERSOLAR, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS - UNAUDITED

DECEMBER 31, 2019 AND 2018

 

4.OPTIONS (Continued)

 

Stock Option Plans (Continued)

 

On January 31, 2019, the Company issued 6,000,000 stock options, two-thirds (2/3) of which vested immediately, and the remaining shall vest equally in one-twelfth (1/12) increments per month commencing [one month from the date of grant]. The first block shall become exercisable immediately and is exercisable for a period of seven (7) years. The options fully vest on January 31, 2020.

 

On July 22, 2019, the Company issued 10,000,000 stock options, one-thirds (1/3)  of which vested immediately, and the remaining shall vest equally in one-twenty fourth (1/24) increments per month commencing [one month from the date of grant]. The first block shall become exercisable immediately and is exercisable for a period of seven (7) years. The options fully vest on July 22, 2020.

 

A summary of the Company’s stock option activity and related information follows:

 

   12/31/2019   12/31/2018 
       Weighted       Weighted 
   Number   average   Number   average 
   of   exercise   of   exercise 
   Options   price   Options   price 
Outstanding, beginning of period   186,250,000   $0.01    10,250,000   $0.01 
Granted   10,000,000   $0.01    -   $0.01 
Exercised   -    -    -    - 
Forfeited/Expired   -    -    -    - 
Outstanding, end of period   196,250,000   $0.01    10,250,000   $0.01 
Exercisable at the end of period   163,988,812   $0.01    6,916,667   $0.01 

 

The weighted average remaining contractual life of options outstanding as of December 31, 2019 and 2018 was as follows:

 

12/31/2019   12/31/2018 
Exercisable
Price
   Stock Options Outstanding   Stock Options Exercisable   Weighted Average Remaining Contractual Life (years)   Exercisable Price   Stock Options Outstanding   Stock Options Exercisable   Weighted Average Remaining Contractual Life (years) 
$0.02    250,000    250,000    0.25   $0.02    250,000    250,000    1.50 
$0.01    10,000,000    10,000,000    2.76   $0.01    10,000,000    3,333,333    4.01 
$0.0097-0.0099    176,000,000    148,926,027     6.07 - 6.09   $-    -    -    - 
$0.0046    10,000,000    4,812,785    6.56    -    -    -    - 
      196,250,000    163,988,812              10,250,000    3,583,333      

 

The stock based compensation expense recognized in the statement of operations during the six months ended December 31, 2019 and 2018, related to the granting of these options was $432,558 and $28,714, respectively.

 

9

 

 

HYPERSOLAR, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS - UNAUDITED

DECEMBER 31, 2019 AND 2018

 

5.CONVERTIBLE PROMISSORY NOTES

 

As of December 31, 2019, the outstanding convertible promissory notes, net of debt discount of $230,503 are summarized as follows:

 

Convertible Promissory Notes, net of debt discount  $1,849,797 
Less current portion   119,797 
Total long-term liabilities  $1,730,000 

 

Maturities of long-term debt net of debt discount for the next four years are as follows:

     
Period Ended December 31,  Amount 
2020   350,300 
2021   540,000 
2022   605,000 
2023   585,000 
   $2,080,300 
Less debt discount   (230,503)
Long-term debt net of debt discount  $1,849,797 

 

At December 31, 2019, the Company had $2,080,300 in convertible promissory notes that had a remaining debt discount of $230,503, leaving a net balance of $1,849,797.

 

On April 9, 2015, the Company issued a 10% convertible promissory note (the “April 2015 Note”) in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $50,000. The Company received additional tranches in the amount of $450,000 for an aggregate sum of $500,000. The April 2015 Note matured nine (9) months from the effective dates of each respective tranche. A second extension was granted to October 9, 2016. On January 19, 2017, the investor extended the April 2015 Note for an additional (60) months from the effective date of each tranche, which matures on April 9, 2020.The April 2015 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective advance or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the April 2015 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event, that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. During the six months ended December 31, 2019, the Company issued 147,662,611 shares of common stock upon conversion of $148,800 in principal, plus accrued interest of $56,890. The balance of the April 2015 Note as of December 31, 2019 was $43,800.

 

10

 

 

HYPERSOLAR, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS - UNAUDITED

DECEMBER 31, 2019 AND 2018

 

5.CONVERTIBLE PROMISSORY NOTES (Continued)

 

On January 28, 2016, the Company issued a 10% convertible promissory note (the “Jan 2016 Note”) in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $10,000. The Company received additional tranches in the amount of $490,000 for an aggregate sum of $500,000. The Jan 2016 Note matures twelve (12) months from the effective dates of each respective tranche. On January 19, 2017, the investor extended the Jan 2016 Note for an additional sixty (60) months from the effective date of each tranche, which matures on January 27, 2022. The Jan 2016 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Jan 2016 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The balance of the Jan 2016 Note as of December 31, 2019 was $500,000.

 

On February 3, 2017, the Company issued a 10% convertible promissory note (the “Feb 2017 Note”) in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $60,000. The Company received additional tranches in the amount of $440,000 for an aggregate sum of $500,000. The Feb 2017 Note matures twelve (12) months from the effective dates of each respective tranche. The Feb 2017 Note matures on February 3, 2018, with an automatic extension of sixty (60) months from the effective date of each tranche. The Feb 2017 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Feb 2017 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event, that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The balance of the Feb 2017 Note as of December 31, 2019 was $500,000.

 

On November 9, 2017, for the sale of a 10% convertible promissory note (the “Nov 2017 Note”) in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $45,000. The Company received additional tranches in the amount of $455,000 for an aggregate sum of $500,000. The Nov 2017 Note matures twelve (12) months from the effective dates of each respective tranche. The Nov 2017 Note matures on November 9, 2018, with an automatic extension of sixty (60) months from the effective date of each tranche. The Nov 2017 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Nov 2017 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The balance of the Nov 2017 Note as of December 31, 2019 was $500,000.

 

11

 

 

HYPERSOLAR, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS - UNAUDITED

DECEMBER 31, 2019 AND 2018

 

5.CONVERTIBLE PROMISSORY NOTES (Continued)

 

On June 27, 2018, for the sale of a 10% convertible promissory note (the “Jun 2018 Note”) in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $50,000. On October 9, 2018, the Company received another tranche of $40,000, for a total aggregate of $90,000 as of December 31, 2019. The Jun 2018 Note matures twelve (12) months from the effective dates of each respective tranche. The Jun 2018 Note matured on June 27, 2019, which was automatically extended for sixty (60) months from the effective date of each tranche. The Jun 2018 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Jun 2018 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event, that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $2,823 during the six months ended December 31, 2019. The balance of the Jun 2018 Note as of December 31, 2019 was $90,000.

 

On August 10, 2018, the Company entered into a convertible promissory note with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the “Aug 2018 Note”) in the aggregate principal amount of up to $100,000. The Aug 2018 Note matures on August 10, 2019, with an extension of sixty (60) months from the date of the note. The Aug 2018 Note may be converted into shares of the Company’s common stock at a conversion price of the lesser of a) $0.005 per share or b) sixty-one (61%) percent of the lowest trading price per common stock recorded on any trade day after the effective date. The conversion feature of the Aug 2018 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $11,233 during the six months ended December 31, 2019. The balance of the Aug 2018 Note as of December 31, 2019 was $100,000.

 

From February 14, 2019 through August 12, 2019, the Company entered into convertible promissory notes with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the “Feb-Aug Notes”) in the aggregate principal amount of up to $249,000. The Feb-Aug Notes matures on February 14, 2020 thru August 12, 2020. The Feb-Aug Notes may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Feb-Aug Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Notes. During the six months ended December 31, 2019, the Company issued 29,277,330 shares of common stock upon conversion of principal in the amount of $78,000, plus accrued interest of $3,900, with a fair value loss on conversion of debt in the amount of $51,821. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $76,880 during the six months ended December 31, 2019. The balance of the Feb-Aug Notes as of December 31, 2019 was $53,000. 

 

On December 14, 2018, January 18, 2019, and July 3, 2019, the Company entered into convertible promissory notes with an investor, providing for the sale by the Company of 10% unsecured convertible notes (the “Dec-Jul Notes”) in the total aggregate principal amount of $86,500. During the six months ended December 31, 2019, an aggregate of $78,886 in principal, plus accrued interest of $8,650, and legal fees of $4,000 in connection with the notes issued in December 2018 and January 2019 were converted into an aggregate of 63,957,592 shares of the Company’s common stock, which represented a conversion price equal to sixty-one (61%) percent of the lowest trading price per common stock during the twenty five (25) trading days prior to the conversion date of each note. The remaining note issued on July 3, 2019 matures on July 3, 2020 and may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest trading price per common stock during the twenty five (25) trading days prior to the conversion date. The conversion feature of the Dec-Jul Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $66,960 during the six months ended December 31, 2019. The balance of the Dec-Jul Notes as of December 31, 2019 was $53,500.

 

On January 31, 2019 and March 6, 2019, the Company entered into convertible promissory notes with an investor, providing for the sale by the Company of 10% unsecured convertible notes (the “Jan-Mar Notes”) in the total aggregate principal amount of $160,000. The Jan-Mar Notes mature on January 31, 2020 and March 6, 2020, respectively, and may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the average of the two lowest (2) trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Jan-Mar Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Jan-Mar Notes. The Company issued 76,592,777 shares of common stock upon the conversion of principal in the amount of $160,000, plus accrued interest of $8,399, and legal fees of $1,500, with a fair value loss on conversion of debt in the amount of $189,237. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $101,698 during the six months ended December 31, 2019. The balance of the Jan-Mar Notes as of December 31, 2019 was $0.

 

12

 

 

HYPERSOLAR, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS - UNAUDITED

DECEMBER 31, 2019 AND 2018

 

5.CONVERTIBLE PROMISSORY NOTES (Continued)

 

On August 28, 2019, the Company entered into a convertible promissory note (the “Aug Note”) with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the “Aug Note”) in the principal amount of $80,000. The Company received funds of $78,000, less other fees of $2,000. The Aug Note matures on August 28, 2020. The Aug Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Aug Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Aug Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $5,305 during the six months ended December 31, 2019. The balance of the Aug Note as of December 31, 2019 was $80,000.

 

On October 2, 2019, the Company entered into a convertible promissory note with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the “Oct Note”) in the principal amount of $80,000. The Company received funds of $78,000, less other fees of $2,000. The Oct Note matures on October 2, 2020. The Oct Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Oct Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Oct Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $19,672 during the six months ended December 31, 2019. The balance of the Oct Note as of December 31, 2019 was $80,000.

 

On December 2, 2019, the Company entered into convertible promissory note with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the “Dec Note”) in the principal amount of $80,000. The Company received funds of $78,000, less other fees of $2,000. The Dec Note matures on December 2, 2020. The Dec Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Dec Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Dec Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $5,902 during the six months ended December 31, 2019. The balance of the Dec Note as of December 31, 2019 was $80,000.

 

6.DERIVATIVE LIABILITIES

 

ASC Topic 815 provides guidance applicable to convertible debt issued by the Company in instances where the number into which the debt can be converted is not fixed. For example, when a convertible debt converts at a discount to market based on the stock price on the date of conversion, ASC Topic 815 requires that the embedded conversion option of the convertible debt be bifurcated from the host contract and recorded at their fair value. In accounting for derivatives under accounting standards, the Company recorded a liability representing the estimated present value of the conversion feature considering the historic volatility of the Company’s stock, and a discount representing the imputed interest associated with the embedded derivative. The discount is amortized over the life of the convertible debt, and the derivative liability is adjusted periodically according to stock price fluctuations.

 

The convertible notes (the “Notes”) issued do not have fixed settlement provisions because their conversion prices are not fixed. The conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

 

During the six months ended December 31, 2019, as a result of the Notes issued that were accounted for as derivative liabilities, we determined that the fair value of the conversion feature of the convertible notes at issuance was $320,807, based upon the Binomial lattice formula. We recorded the full value of the derivative as a liability at issuance with an offset to valuation discount, which will be amortized over the life of the Notes.

 

During the six months ended December 31, 2019, the Company recorded a net loss in change in derivative of $3,080,361 in the statement of operations due to the change in fair value of the remaining notes, for the six months ended December 31, 2019. At December 31, 2019, the fair value of the derivative liability was $7,306,889.

 

For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used the Binomial lattice formula. The significant assumptions used in the Binomial lattice formula of the derivatives are as follows:

 

Risk free interest rate 

1.59% - 1.69%

Stock volatility factor  94.0% - 135.0%
Weighted average expected option life 3 months - 5 year
Expected dividend yield  None

 

13

 

 

HYPERSOLAR, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS - UNAUDITED

DECEMBER 31, 2019 AND 2018

 

7.SUBSEQUENT EVENTS

 

Management evaluated subsequent events as of the date of the financial statements pursuant to ASC TOPIC 855, and reported the following events:

 

On January 2, 2020, the Company filed an amendment to its Articles of Incorporation, as amended, with the Secretary of State of Nevada, to increase the Company’s authorized capital stock from 3,005,000,000 to 5,005,000,000, of which (i) 5,000,000,000 shall be shares of common stock, par value $0.001 per share, and (ii) 5,000,000 shall be shares of preferred stock, par value $0.001 per share. 

 

On January 6, 2019, the Company issued 9,000,000 shares of common stock upon conversion of principal in the amount of $14,147 and other fees of $1,000.

 

On January 8, 2020, the Company issued 7,632,051 shares of common stock for services in the amount of $29,765.  

 

On January 20, 2020, the Company received $80,000 on a 10% convertible promissory note. The Note is convertible into shares of common stock of the Company at 61% of the market price equal to the lowest trading price during the previous fifteen (15) trading days to the date of conversion. The Note matures on January 20, 2021.

 

On January 14, 2020, the Company issued 20,621,081 shares of common stock upon conversion of principal in the amount of $14,000, plus accrued interest of $5,590. 

 

On January 14, 2020, the Company issued 21,750,771 shares of common stock upon conversion of principal in the amount of $14,800, plus accrued interest of $5,863.

 

On January 14, 2020, the Company issued 22,044,701 shares of common stock upon conversion of principal in the amount of $15,000, plus accrued interest of $5,942.

 

On January 21, 2020, the Company issued 6,500,000 shares of common stock upon conversion of principal in the amount of $9,277, plus other fees of $1,000.

 

On February 4, 2020, the Company issued 11,400,000 shares of common stock upon conversion of principal in the amount of $17,023, plus other fees of $1,000.

 

On February 12, 2020, the Company issued 4,878,049 shares of common stock upon conversion of principal in the amount of $20,000.

 

14

 

  

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Cautionary Statement Regarding Forward-Looking Statements

 

The information in this discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business strategy and expectations. Any statements that are not of historical fact may be deemed to be forward-looking statements. These forward-looking statements involve substantial risks and uncertainties. In some cases you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue”, the negative of the terms or other comparable terminology. Actual events or results may differ materially from the anticipated results or other expectations expressed in the forward-looking statements. In evaluating these statements, you should consider various factors, including the risks included from time to time in other reports or registration statements filed with the United States Securities and Exchange Commission. These factors may cause our actual results to differ materially from any forward-looking statements. We disclaim any obligation to publicly update these statements, or disclose any difference between actual results and those reflected in these statements.

 

Unless the context otherwise requires, references in this Form 10-Q to “we,” “us,” “our,” or the “Company” refer to Hypersolar, Inc.

 

Overview

 

At HyperSolar, Inc., our goal is to replace all forms of energy on earth with renewable energy.

 

We refer to our technology as the HyperSolar H2Generator which is comprised of the following components:

 

  1. The Generator Housing - Novel (patent pending) device design is the first of its type to safely separate oxygen and hydrogen in the water splitting process without sacrificing efficiency. This device houses the water, the solar particles/cells and is designed with inlets and outlets for water and gasses. Utilizing a special membrane for separating the oxygen side from the hydrogen side, proton transport is increased which is the key to safely increasing solar-to-hydrogen efficiency. Our design can be scaled up and manufactured for commercial use.

 

  2. The NanoParticle or Solar Cell - Our patented nanoparticle consists of thousands of tiny solar cells that are electrodeposited into one tiny structure to provide the charge that splits the water molecule when the sun excites the electron. In the process of optimizing our nanoparticles to be efficient and only use earth abundant materials (an ongoing process), we experimented with commercially available triple junction silicon solar cells to perform tests with our generator housing and other components. Through this experimentation, our discovery leads us to believe that we can bring a system to market utilizing these readily available cells while our nanoparticles are still being optimized. These solar cells also absorb the sunlight and produce the necessary charge for splitting the water molecule into hydrogen and oxygen.

 

  3. Oxygen Evolution Catalyst - This proprietary catalyst developed at the University of Iowa lab is uniformly applied onto the solar cell or nanoparticle and efficiently oxidize water molecule to generate oxygen gas. The oxygen evolution catalyst must be robust to withstand the long operating hours of the hydrogen generation device to ensure long lifetime. It must be stable in alkaline, neutral and acidic environments.

 

  4. Hydrogen Evolution Catalyst - Necessary for collecting electrons to reduce protons for generating hydrogen gas, we have successfully integrated a low-cost hydrogen catalyst into our generator system successfully coating a triple junction solar cell with a catalyst comprised primarily of ruthenium, carbon and nitrogen that can function as well as platinum, the current catalyst used for hydrogen production, but at one twentieth of the cost.

 

15

 

 

  5. Coating Technologies - Two major coating technologies were developed to protect the nanoparticles and solar cells from photocorrosion under water. A transparent conducive coating to protect our nanoparticles and solar cells from photo corrosion and efficiently transfer charges to catalysts for oxygen and hydrogen evolution reactions. A polymer combination that protects the triple junction solar cells from any corrosive water environments for long lifetime of the hydrogen generation device.

 

  6. A concentrator equal to two suns - This inexpensive Fresnel lens concentrator to increase sunlight to equal two suns reduces our necessary footprint for a 1000 KG per day system by 40%.

 

Our business and commercialization plan calls for two generations of our panels or generators. The first generation utilizes readily available commercial solar cells, coated with a stability polymer and catalysts and inserted into our proprietary panels to efficiently and safely split water into hydrogen and oxygen to produce very pure and green hydrogen that can be piped off the panel, pressurized, and stored for use in a fuel cell to power anything electric.

 

The second generation of our panels will feature a nanoparticle based technology where billions of autonomous solar cells are electrodeposited onto porous alumina sheets and manufactured in a roll to roll process and inserted into our proprietary panels. For this generation, we have received multiple patents and it is estimated that it will produce hydrogen for less than $4 per kilogram before pressurization.

 

Our team at the University of Iowa, led by our CTO Dr. Joun Lee, has reached a milestone of 1000 consecutive hours of continuous hydrogen production utilizing completely immersed solar cells with no external biases achieving simulated production equal to one year. We believe this to be a record for completely immersed cells. Now ready to take our technology out of the lab, we are working with several vendors to commercialize and manufacturer our first generation of renewable hydrogen panels that use sunlight and water to generate hydrogen. We are currently working towards building a pilot plant in mid 2020 adjacent to a large company distribution or fulfillment center so they can power their fuel cell forklifts and materials handling equipment with completely renewable hydrogen vs. having to transport steam-reformed hydrogen where the production process emits tons of harmful emissions and must be transported.

 

We anticipate that the HyperSolar H2Generator will be a self-contained renewable hydrogen production system that requires only sunlight and any source of water. As a result, it can be installed almost anywhere to produce hydrogen fuel at or near the point of distribution, for local use. We believe this model of hydrogen production addresses one of the biggest challenges of using clean hydrogen fuel on a large scale - the transportation of hydrogen.

 

Each stage of the HyperSolar H2Generator can be scaled independently according to the hydrogen demands and length of storage required for a specific application. A small-scale system can be used to produce continuous renewable electricity for a small house, or a large scale system can be used to produce hydrogen to power a community. 

 

Critical Accounting Policies

 

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to impairment of property, plant and equipment, intangible assets, deferred tax assets and fair value computation using the Binomial valuation option pricing model. We base our estimates on historical experience and on various other assumptions, such as the trading value of our common stock and estimated future undiscounted cash flows, that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items, are reasonable.

 

16

 

 

Use of Estimates

 

In accordance with accounting principles generally accepted in the United States, management utilizes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates and assumptions relate to useful lives and impairment of tangible and intangible assets, accruals, income taxes, stock-based compensation expense, Binomial lattice valuation model inputs, derivative liabilities and other factors. Management believes it has exercised reasonable judgment in deriving these estimates. Consequently, a change in conditions could affect these estimates.

 

Fair Value of Financial Instruments

 

Fair value of financial instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of December 31, 2019, the amounts reported for cash, accrued interest and other expenses, notes payables, and derivative liability approximate the fair value because of their short maturities.

 

We adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

 

Recently Issued Accounting Pronouncements

 

Management reviewed currently issued pronouncements during the six months ended December 31, 2019, and does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial statements. Pronouncements disclosed in notes to the financials.

 

Results of Operations for the Three Months Ended December 31, 2019 Compared to the Three Months Ended December 31, 2018.

 

Operating Expenses

 

Operating expenses for the three months ended December 31, 2019 were $450,230 and $342,863 for the prior period ended December 31, 2018. The net increase of $107,367 in operating expenses consisted primarily of an increase in non-cash stock compensation expense and consulting fees of $156,851, an increase in research and development of $36,857, with an overall decrease in operating expenses of $86,341.

 

Other Income/(Expenses)

 

Other income and (expenses) for the three months ended December 31, 2019 were $(2,830,056) and $(3,672,942) and for the prior period ended December 31, 2018. The decrease in other expenses of $842,886 in other income and (expenses) was the result of a decrease in non-cash loss in net change in derivative of $396,288, a decrease in non-cash net change in settlement of debt of $623,594, with an increase in interest expense of $16,926, which includes non-cash amortization of debt discount of $17,664.

 

Net Income/(Loss)

 

For the three months ended December 31, 2019, our net loss was $(3,280,286) as compared to $(4,015,805) for the prior period December 31, 2018. The majority of the decrease in net loss of $735,519 was related primarily to the decrease in net change of derivative instruments estimated each period. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price, volatility, variable conversion prices based on market prices defined in the respective agreements and probabilities of certain outcomes based on managements’ estimates. These inputs are subject to significant changes from period to period, therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material. The Company has not generated any revenues.

 

17

 

 

Results of Operations for the Six Months Ended December 31, 2019 Compared to the Six Months Ended December 31, 2018.

 

Operating Expenses

 

Operating expenses for the six months ended December 31, 2019 were $966,120  and $558,365 for the prior period ended December 31, 2018. The net increase of $407,755  in operating expenses consisted primarily of an increase in non-cash stock compensation expense and consulting fees of $403,845, an increase in research and development of $105,665, and other operating expenses of $4,832, with an overall decrease in investor relations of $106,587.

 

Other Income/(Expenses)

 

Other income and (expenses) for the six months ended December 31, 2019 were $(3,566,896) and $(962,209) and for the prior period ended December 31, 2018. The increase in other expenses of $2,604,687 in other income and (expenses) was the result of an increase in non-cash loss in net change in derivative instruments of $2,645,988, a decrease in non-cash net change in conversion of debt of $234,834, with an increase in interest expense of $193,532, which includes non-cash amortization of debt discount of $185,237.

 

Net Income/(Loss)

 

For the six months ended December 31, 2019, our net loss was $4,533,022 as compared to $1,520,574 for the prior period ended December 31, 2018. The majority of the decrease in net income of $3,012,448, was related primarily to the increase in net change of derivative instruments estimated each period. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price, volatility, variable conversion prices based on market prices defined in the respective agreements and probabilities of certain outcomes based on managements’ estimates. These inputs are subject to significant changes from period to period, therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material. The Company has not generated any revenues.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

 

As of December 31, 2019, we had a working capital deficit of $8,124,474 as compared to $4,829,162 as of June 30, 2019. This increase in working capital deficit of $3,295,312 was due primarily to an increase in cash, accrued expenses, derivative liability, with a decrease in prepaid expenses, accounts payable, and convertible promissory notes.

 

Cash used in operating activities was $323,673 for the six months ended December 31, 2019 and $448,850 for the prior period ended December 31, 2018. The decrease in cash used in operating activities was primarily due to an decrease in research and development cost and insurance, with an overall decrease in operating expenses. The Company has had no revenues.

 

Cash used in investing activities during the six months ended December 31, 2019 and 2018 was $781 and $13,062, respectively. The decrease in investing activities was due to less fixed assets purchased in the current period.

 

18

 

 

Cash provided by financing activities during the six months ended December 31, 2019 and 2018 was $346,500 and $415,500, respectively. The decrease is a result of an decrease in equity financing. Our ability to continue as a going concern is dependent upon raising capital through financing transactions and future revenue. Our capital needs have primarily been met from the proceeds of private placements of our security, as we currently have not generated any revenues.

 

The condensed unaudited financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying unaudited condensed financial statements do not reflect any adjustments that might result if we are unable to continue as a going concern. During the six months ended December 31, 2019, we did not generate any revenues, incurred net loss of $4,533,022, which was primarily associated with the net change in derivative instruments. We had a working capital deficiency of $8,124,474 and a shareholders’ deficit of $9,757,462. These factors, among others raise substantial doubt about our ability to continue as a going concern. Our independent auditors, in their report on our audited financial statements for the year ended June 30, 2018, expressed substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern ultimately is dependent on our ability to generate revenue, which is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies and, ultimately, achieve profitable operations. We have historically obtained funds from our shareholders through the sale of our securities. Management believes that we will be able to continue to raise funds through the sale of our securities to existing and new investors. Management believes that funding from existing and prospective new investors and future revenue will provide the additional cash needed to meet our obligations as they become due, and will allow the development of our core business operations.

 

PLAN OF OPERATION AND FINANCING NEEDS

 

Our plan of operation within the next twelve months is to further research, develop, and protect our technology.

 

We believe that our current cash balances will be sufficient to support development activity, intellectual property protection, and all general and administrative expenses for the next 30 days. Management estimates that we will require additional cash resources for the remainder of 2020, based upon our current operating plan and condition. We are investigating additional financing alternatives, including continued equity and/or debt financing. There can be no assurance that capital in any form would be available to us, and if available, on terms and conditions that are acceptable. If we are unable to obtain sufficient funds, we may be forced to reduce the size of our operations, which could have a material adverse impact on, or cause us to curtail and/or cease the development of our products.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, result of operations, liquidity or capital expenditures.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required for Smaller Reporting Companies.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting

 

There was no change to our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

19

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We are not currently a party to, nor is any of our property currently the subject of, any pending legal proceeding that will have a material adverse effect on our business.

 

ITEM 1A. RISK FACTORS

 

There are no material changes from the risk factors previously disclosed in our annual report on Form 10-K filed with the SEC on September 27, 2019.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the three months ended December 31, 2019, the Company issued 172,827,849 shares of common stock upon conversion of principal in the amount of $197,800, plus accrued interest of $26,294 and other fees of $2,000.

 

During the three months ended December 31, 2019, the Company issued 34,052,500 shares of common stock for services with a fair value of $88,760.

 

The Company relied upon an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, in connection with the foregoing issuances.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

No disclosure required.

 

ITEM 5. OTHER INFORMATION

 

None.


 

20

 

 

ITEM 6. EXHIBITS

 

Exhibit No.   Description
3.1   Certificate of Designation of Series B Preferred Stock (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 26, 2019)
3.2   Certificate of Amendment to Articles of Incorporation (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 3, 2020)
31.1*   Certification by Chief Executive Officer and Acting Chief Financial Officer pursuant to Sarbanes-Oxley Section 302 (filed herewith).
32.1*   Certification by Chief Executive Officer and Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (filed herewith).
EX-101.INS**   XBRL Instance Document
EX-101.SCH**   XBRL Taxonomy Extension Schema Document
EX-101.CAL**   XBRL Taxonomy Extension Calculation Linkbase
EX-101.DEF**   XBRL Taxonomy Extension Definition Linkbase
EX-101.LAB**   XBRL Taxonomy Extension Labels Linkbase
EX-101.PRE**   XBRL Taxonomy Extension Presentation Linkbase

 

* Filed herewith
** Furnished herewith

 

21

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

February 14, 2019 HYPERSOLAR, INC.
     
  By: /s/ Timothy Young
   

Timothy Young

Chief Executive Officer and
Acting Chief Financial Officer

(Principal Executive Officer and
Acting Principal Financial Officer and
Accounting Officer)

 

 

22

 

EX-31.1 2 f10q1219ex31-1_hypersolarinc.htm CERTIFICATION

EXHIBIT 31.1

 

CERTIFICATION

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Timothy Young, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Hypersolar, Inc. for the fiscal quarter ended December 31, 2019;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d – 15(f)) for the registrant and have:

 

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: February 14, 2020

 

By: /s/ Timothy Young  
  Timothy Young  
 

Chief Executive Officer & Acting Chief Financial Officer

(Principal Executive Officer)

(Principal Accounting and Financial Officer)

 

EX-32.1 3 f10q1219ex32-1_hypersolarinc.htm CERTIFICATION

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Hypersolar, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended December 31, 2019, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Timothy Young, Chief Executive Officer & Acting Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: February 14, 2020 /s/ Timothy Young
  By: Timothy Young
  Its: Chief Executive Officer & Acting Chief Financial Officer
  (Principal Executive Officer)
(Principal Accounting and Financial Officer)

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Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the six months ended December 31, 2019 are not necessarily indicative of the results that may be expected for the year ended June 30, 2020. 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Actual results could differ from those estimates. These estimates and assumptions relate to useful lives and impairment of tangible and intangible assets, accruals, income taxes, stock-based compensation expense, Binomial lattice valuation model inputs, derivative liabilities and other factors. Management believes it has exercised reasonable judgment in deriving these estimates. 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5.CONVERTIBLE PROMISSORY NOTES

 

As of December 31, 2019, the outstanding convertible promissory notes, net of debt discount of $230,503 are summarized as follows:

 

Convertible Promissory Notes, net of debt discount  $1,849,797 
Less current portion   119,797 
Total long-term liabilities  $1,730,000 

 

Maturities of long-term debt net of debt discount for the next four years are as follows:

     
Period Ended December 31,  Amount 
2020   350,300 
2021   540,000 
2022   605,000 
2023   585,000 
   $2,080,300 
Less debt discount   (230,503)
Long-term debt net of debt discount  $1,849,797 

 

At December 31, 2019, the Company had $2,080,300 in convertible promissory notes that had a remaining debt discount of $230,503, leaving a net balance of $1,849,797.

 

On April 9, 2015, the Company issued a 10% convertible promissory note (the "April 2015 Note") in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $50,000. The Company received additional tranches in the amount of $450,000 for an aggregate sum of $500,000. The April 2015 Note matured nine (9) months from the effective dates of each respective tranche. A second extension was granted to October 9, 2016. On January 19, 2017, the investor extended the April 2015 Note for an additional (60) months from the effective date of each tranche, which matures on April 9, 2020.The April 2015 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective advance or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the April 2015 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event, that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. During the six months ended December 31, 2019, the Company issued 147,662,611 shares of common stock upon conversion of $148,800 in principal, plus accrued interest of $56,890. The balance of the April 2015 Note as of December 31, 2019 was $43,800.

 

On January 28, 2016, the Company issued a 10% convertible promissory note (the "Jan 2016 Note") in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $10,000. The Company received additional tranches in the amount of $490,000 for an aggregate sum of $500,000. The Jan 2016 Note matures twelve (12) months from the effective dates of each respective tranche. On January 19, 2017, the investor extended the Jan 2016 Note for an additional sixty (60) months from the effective date of each tranche, which matures on January 27, 2022. The Jan 2016 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Jan 2016 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The balance of the Jan 2016 Note as of December 31, 2019 was $500,000.

 

On February 3, 2017, the Company issued a 10% convertible promissory note (the "Feb 2017 Note") in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $60,000. The Company received additional tranches in the amount of $440,000 for an aggregate sum of $500,000. The Feb 2017 Note matures twelve (12) months from the effective dates of each respective tranche. The Feb 2017 Note matures on February 3, 2018, with an automatic extension of sixty (60) months from the effective date of each tranche. The Feb 2017 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Feb 2017 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event, that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The balance of the Feb 2017 Note as of December 31, 2019 was $500,000.

 

On November 9, 2017, for the sale of a 10% convertible promissory note (the "Nov 2017 Note") in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $45,000. The Company received additional tranches in the amount of $455,000 for an aggregate sum of $500,000. The Nov 2017 Note matures twelve (12) months from the effective dates of each respective tranche. The Nov 2017 Note matures on November 9, 2018, with an automatic extension of sixty (60) months from the effective date of each tranche. The Nov 2017 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Nov 2017 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The balance of the Nov 2017 Note as of December 31, 2019 was $500,000.

 

On June 27, 2018, for the sale of a 10% convertible promissory note (the "Jun 2018 Note") in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $50,000. On October 9, 2018, the Company received another tranche of $40,000, for a total aggregate of $90,000 as of December 31, 2019. The Jun 2018 Note matures twelve (12) months from the effective dates of each respective tranche. The Jun 2018 Note matured on June 27, 2019, which was automatically extended for sixty (60) months from the effective date of each tranche. The Jun 2018 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Jun 2018 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event, that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $2,823 during the six months ended December 31, 2019. The balance of the Jun 2018 Note as of December 31, 2019 was $90,000.

 

On August 10, 2018, the Company entered into a convertible promissory note with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the "Aug 2018 Note") in the aggregate principal amount of up to $100,000. The Aug 2018 Note matures on August 10, 2019, with an extension of sixty (60) months from the date of the note. The Aug 2018 Note may be converted into shares of the Company's common stock at a conversion price of the lesser of a) $0.005 per share or b) sixty-one (61%) percent of the lowest trading price per common stock recorded on any trade day after the effective date. The conversion feature of the Aug 2018 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $11,233 during the six months ended December 31, 2019. The balance of the Aug 2018 Note as of December 31, 2019 was $100,000.

 

From February 14, 2019 through August 12, 2019, the Company entered into convertible promissory notes with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the "Feb-Aug Notes") in the aggregate principal amount of up to $249,000. The Feb-Aug Notes matures on February 14, 2020 thru August 12, 2020. The Feb-Aug Notes may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Feb-Aug Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Notes. During the six months ended December 31, 2019, the Company issued 29,277,330 shares of common stock upon conversion of principal in the amount of $78,000, plus accrued interest of $3,900, with a fair value loss on conversion of debt in the amount of $51,821. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $76,880 during the six months ended December 31, 2019. The balance of the Feb-Aug Notes as of December 31, 2019 was $53,000. 

 

On December 14, 2018, January 18, 2019, and July 3, 2019, the Company entered into convertible promissory notes with an investor, providing for the sale by the Company of 10% unsecured convertible notes (the "Dec-Jul Notes") in the total aggregate principal amount of $86,500. During the six months ended December 31, 2019, an aggregate of $78,886 in principal, plus accrued interest of $8,650, and legal fees of $4,000 in connection with the notes issued in December 2018 and January 2019 were converted into an aggregate of 63,957,592 shares of the Company's common stock, which represented a conversion price equal to sixty-one (61%) percent of the lowest trading price per common stock during the twenty five (25) trading days prior to the conversion date of each note. The remaining note issued on July 3, 2019 matures on July 3, 2020 and may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the lowest trading price per common stock during the twenty five (25) trading days prior to the conversion date. The conversion feature of the Dec-Jul Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $66,960 during the six months ended December 31, 2019. The balance of the Dec-Jul Notes as of December 31, 2019 was $53,500.

 

On January 31, 2019 and March 6, 2019, the Company entered into convertible promissory notes with an investor, providing for the sale by the Company of 10% unsecured convertible notes (the "Jan-Mar Notes") in the total aggregate principal amount of $160,000. The Jan-Mar Notes mature on January 31, 2020 and March 6, 2020, respectively, and may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two lowest (2) trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Jan-Mar Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Jan-Mar Notes. The Company issued 76,592,777 shares of common stock upon the conversion of principal in the amount of $160,000, plus accrued interest of $8,399, and legal fees of $1,500, with a fair value loss on conversion of debt in the amount of $189,237. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $101,698 during the six months ended December 31, 2019. The balance of the Jan-Mar Notes as of December 31, 2019 was $0.

 

On August 28, 2019, the Company entered into a convertible promissory note (the "Aug Note") with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the "Aug Note") in the principal amount of $80,000. The Company received funds of $78,000, less other fees of $2,000. The Aug Note matures on August 28, 2020. The Aug Note may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Aug Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Aug Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $5,305 during the six months ended December 31, 2019. The balance of the Aug Note as of December 31, 2019 was $80,000.

 

On October 2, 2019, the Company entered into a convertible promissory note with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the "Oct Note") in the principal amount of $80,000. The Company received funds of $78,000, less other fees of $2,000. The Oct Note matures on October 2, 2020. The Oct Note may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Oct Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Oct Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $19,672 during the six months ended December 31, 2019. The balance of the Oct Note as of December 31, 2019 was $80,000.

 

On December 2, 2019, the Company entered into convertible promissory note with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the "Dec Note") in the principal amount of $80,000. The Company received funds of $78,000, less other fees of $2,000. The Dec Note matures on December 2, 2020. The Dec Note may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Dec Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Dec Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $5,902 during the six months ended December 31, 2019. The balance of the Dec Note as of December 31, 2019 was $80,000.

XML 16 R2.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Condensed Balance Sheets - USD ($)
Dec. 31, 2019
Jun. 30, 2019
CURRENT ASSETS    
Cash $ 57,120 $ 35,074
Prepaid expense 9,400 15,000
TOTAL CURRENT ASSETS 66,520 50,074
PROPERTY & EQUIPMENT    
Computers and peripherals 2,664 1,883
Less: accumulated depreciation (1,161) (837)
NET PROPERTY AND EQUIPMENT 1,503 1,046
OTHER ASSETS    
Domain, net of amortization of $4,046 and $3,868, respectively 1,269 1,447
Patents, net of amortization of $14,394 and $10,648, respectively 94,240 97,986
TOTAL OTHER ASSETS 95,509 99,433
TOTAL ASSETS 163,532 150,553
CURRENT LIABILITIES    
Accounts payable 104,819 125,085
Accrued expenses 659,489 592,327
Derivative liability 7,306,889 3,905,721
Convertible promissory notes, net of debt discount of $230,503 and $66,335, respectively 119,797 256,103
TOTAL CURRENT LIABILITIES 8,190,994 4,879,236
LONG TERM LIABILITIES    
Convertible promissory notes, net of debt discount of $0 and $38,514, respectively 1,730,000 1,782,600
TOTAL LONG TERM LIABILITIES 1,730,000 1,782,600
TOTAL LIABILITIES 9,920,994 6,661,836
COMMIMENTS AND CONTINGENCIES (SEE NOTE 8)
SHAREHOLDERS' DEFICIT    
Preferred Stock, $0.001 par value; 5,000,000 authorized preferred shares, no shares issued or outstanding
Common Stock, $0.001 par value; 3,000,000,000 authorized common shares 1,524,835,977 and 852,458,018 shares issued and outstanding, respectively 1,524,836 1,077,319
Additional Paid in Capital 11,271,901 10,432,575
Accumulated deficit (22,554,199) (18,021,177)
TOTAL SHAREHOLDERS' DEFICIT (9,757,462) (6,511,283)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 163,532 $ 150,553
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Condensed Statements of Cash Flows (Unaudited) - USD ($)
6 Months Ended
Dec. 31, 2019
Dec. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (4,533,022) $ (1,520,574)
Adjustment to reconcile net loss to net cash (used in) provided by operating activities    
Depreciation & amortization expense 4,248 3,064
Stock based compensation expense 432,558 28,714
Stock issued for services 178,210 100,832
Loss on change in derivative liability 3,080,361 434,373
Loss on conversion of debt 234,834
Amortization of debt discount recorded as interest expense 372,088 186,851
(Increase) Decrease in change in assets:    
Prepaid expense 5,600 746
Increase (Decrease) in change in liabilities :    
Accounts payable (20,266) (23,335)
Accrued expenses 156,550 105,645
NET CASH USED IN OPERATING ACTIVITIES (323,673) (448,850)
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of tangible assets (781) (13,062)
NET CASH USED IN INVESTING ACTIVITIES: (781) (13,062)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from convertible notes payable 346,500 415,500
NET CASH PROVIDED BY FINANCING ACTIVITIES 346,500 415,500
NET INCREASE (DECREASE) IN CASH 22,046 (46,412)
CASH, BEGINNING OF PERIOD 35,074 97,326
CASH, END OF PERIOD 57,120 50,914
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION    
Interest paid 416 507
Taxes paid
SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS    
Fair value of common stock upon conversion of convertible notes and accrued interest 676,075 293,542
Fair value of common stock issued for services $ 178,210 $ 100,832
XML 18 R15.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Summary of Significant Accounting Policies (Tables)
6 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Schedule of measurement of assets and liabilities at fair value on recurring basis
   Total   (Level 1)   (Level 2)   (Level 3) 
Liabilities                    
Derivative liability measured at fair value at 12/31/19  $7,306,889   $-   $-   $7,306,889 
Schedule of reconciliation of the derivative liability

 

Balance as of June 30, 2019

   3,905,721 
Fair value of derivative liabilities issued   320,807 

Loss on change in derivative liability

   3,080,361 
Balance as of  December 31, 2019  $7,306,889 

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Options
6 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
OPTIONS
4.OPTIONS

 

Stock Option Plans

 

As of December 31, 2019, 10,250,000 non-qualified common stock options were outstanding. Each option expires on the date specified in the option agreement, which date is not later than the fifth (5th) anniversary from the grant date of the options. As of March 31, 2018, 250,000 options are fully vested with a maturity date of March 31, 2020, and are exercisable at an exercise price of $0.02245 per share; 10,000,000 non-qualified common stock options, which vest one-third immediately, and one-third the second and third year, whereby, the options are fully vested with a maturity date of October 2, 2022, and are exercisable at an exercise price of $0.01 per share.

 

On January 23, 2019, the Company issued 170,000,000 stock options, which one-third (1/3) vest immediately, and the remaining shall vest one-twenty fourth (1/24) after the date of these options (remaining block). The first block shall become exercisable immediately and is exercisable for a period of seven (7) years. The options fully vest by January 23, 2022.

 

On January 31, 2019, the Company issued 6,000,000 stock options, two-thirds (2/3) of which vested immediately, and the remaining shall vest equally in one-twelfth (1/12) increments per month commencing [one month from the date of grant]. The first block shall become exercisable immediately and is exercisable for a period of seven (7) years. The options fully vest on January 31, 2020.

 

On July 22, 2019, the Company issued 10,000,000 stock options, one-thirds (1/3)  of which vested immediately, and the remaining shall vest equally in one-twenty fourth (1/24) increments per month commencing [one month from the date of grant]. The first block shall become exercisable immediately and is exercisable for a period of seven (7) years. The options fully vest on July 22, 2020.

 

A summary of the Company's stock option activity and related information follows:

 

   12/31/2019   12/31/2018 
       Weighted       Weighted 
   Number   average   Number   average 
   of   exercise   of   exercise 
   Options   price   Options   price 
Outstanding, beginning of period   186,250,000   $0.01    10,250,000   $0.01 
Granted   10,000,000   $0.01    -   $0.01 
Exercised   -    -    -    - 
Forfeited/Expired   -    -    -    - 
Outstanding, end of period   196,250,000   $0.01    10,250,000   $0.01 
Exercisable at the end of period   163,988,812   $0.01    6,916,667   $0.01 

 

The weighted average remaining contractual life of options outstanding as of December 31, 2019 and 2018 was as follows:

 

12/31/2019   12/31/2018 
Exercisable
Price
   Stock Options Outstanding   Stock Options Exercisable   Weighted Average Remaining Contractual Life (years)   Exercisable Price   Stock Options Outstanding   Stock Options Exercisable   Weighted Average Remaining Contractual Life (years) 
$0.02    250,000    250,000    0.25   $0.02    250,000    250,000    1.50 
$0.01    10,000,000    10,000,000    2.76   $0.01    10,000,000    3,333,333    4.01 
$0.0097-0.0099    176,000,000    148,926,027     6.07 - 6.09   $-    -    -    - 
$0.0046    10,000,000    4,812,785    6.56    -    -    -    - 
      196,250,000    163,988,812              10,250,000    3,583,333      

 

The stock based compensation expense recognized in the statement of operations during the six months ended December 31, 2019 and 2018, related to the granting of these options was $432,558 and $28,714, respectively.

XML 22 R3.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Condensed Balance Sheets (Parenthetical) - USD ($)
Dec. 31, 2019
Jun. 30, 2019
Statement of Financial Position [Abstract]    
Amortization of domain $ 4,046 $ 3,868
Amortization of patents 14,394 10,648
Convertible promissory notes, net of debt discount for current liabilities 230,503 66,335
Convertible promissory notes, net of debt discount for long term liabilities $ 0 $ 38,514
Preferred Stock, par value $ 0.001 $ 0.001
Preferred Stock, shares authorized 5,000,000 5,000,000
Preferred Stock, shares issued
Preferred Stock, shares outstanding
Common Stock, par value $ 0.001 $ 0.001
Common Stock, shares authorized 3,000,000,000 3,000,000,000
Common Stock, shares issued 1,524,835,977 852,458,018
Common Stock, shares outstanding 1,524,835,977 852,458,018
XML 23 R7.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Basis of Presentation
6 Months Ended
Dec. 31, 2019
Basis of Presentation [Abstract]  
Basis of Presentation
1.Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the six months ended December 31, 2019 are not necessarily indicative of the results that may be expected for the year ended June 30, 2020. For further information refer to the financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended June 30, 2019.

 

Going Concern

 

The accompanying condensed unaudited financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying condensed unaudited financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company does not generate revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. The Company has historically obtained funds through private placement offerings of equity and debt. Management believes that it will be able to continue to raise funds by sale of its securities to its existing shareholders and prospective new investors to provide the additional cash needed to meet the Company’s obligations as they become due and will allow the development of its core business. There is no assurance that the Company will be able to continue raising the required capital.

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Cash and Cash Equivalent

Cash and Cash Equivalent

 

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Use of Estimates

Use of Estimates

 

In accordance with accounting principles generally accepted in the United States, management utilizes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates and assumptions relate to useful lives and impairment of tangible and intangible assets, accruals, income taxes, stock-based compensation expense, Binomial lattice valuation model inputs, derivative liabilities and other factors. Management believes it has exercised reasonable judgment in deriving these estimates. Consequently, a change in conditions could affect these estimates.

Intangible Assets

Intangible Assets

 

The Company has patent applications to protect the inventions and processes behind its proprietary bio-based back-sheet, a protective covering for the back of photovoltaic solar modules traditionally made from petroleum-based film. Intangible assets that have finite useful lives continue to be amortized over their useful lives.

 

The Company recognized amortization expense of $3,923 and $3,064 for the six months ended December 31, 2019 and 2018, respectively.

Net Earnings (Loss) per Share Calculations

Net Earnings (Loss) per Share Calculations

 

Net earnings (Loss) per share dictates the calculation of basic earnings (loss) per share and diluted earnings per share. Basic earnings (loss) per share are computed by dividing by the weighted average number of common shares outstanding during the year. Diluted net earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the effect of stock options and stock based awards (Note 4), plus the assumed conversion of convertible debt (Note 5).

 

For the six months ended December 31, 2019, the Company calculated the dilutive impact of the outstanding stock options of 196,250,000, and the convertible debt of $2,080,300, which is convertible into shares of common stock. The stock options and convertible debt were not included in the calculation of net earnings per share, because their impact was antidilutive.

 

For the six months ended December 31, 2018, the Company calculated the dilutive impact of the outstanding stock options of 10,250,000, and the convertible debt of $2,295,800, which is convertible into shares of common stock. The stock options and the convertible debt were not included in the calculation of net earnings per share, because their impact was antidilutive.

Equity Incentive Plan and Stock Options

Equity Incentive Plan and Stock Options

 

Equity Incentive Plan

 

On December 17, 2018, the Board of Directors approved and adopted the 2019 Equity Incentive Plan (“the Plan”), with 300,000,000 shares set aside and reserved for issuance pursuant to the Plan. The purpose of the Plan is to promote the success of the Corporation and to increase stockholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons. The awards are performance-based compensation that are granted under the Plan as incentive stock options (ISO) or nonqualified stock options. The per share exercise price for each option shall not be less than 100% of the fair market value of a share of common stock on the date of grant of the option. The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing cost. The Company accounts for stock option grants issued and vesting to employees and non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested, and the total stock-based compensation charge is recorded in the period of the measurement date.

 

As of December 31, 2019, the Company has granted 186,000,000 shares of convertible equity incentive stock options leaving a reserve of 114,000,000. The shares are convertible into common stock.

Stock based Compensation

Stock based Compensation

 

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. As of December 31, 2019, the Company has granted 10,250,000 shares of convertible stock based compensation stock options, which are convertible into common stock.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

Fair value of financial instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of December 31, 2019, the amounts reported for cash, accrued interest and other expenses, notes payables, convertible notes, and derivative liability approximate the fair value because of their short maturities.

 

We adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

 

Fair value is defined 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. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

 

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

 

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

 

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 

We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at December 31, 2019 (See Note 6):

 

   Total   (Level 1)   (Level 2)   (Level 3) 
Liabilities                    
Derivative liability measured at fair value at 12/31/19  $7,306,889   $-   $-   $7,306,889 

 

The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:

 

Balance as of June 30, 2019

   3,905,721 
Fair value of derivative liabilities issued   320,807 

Loss on change in derivative liability

   3,080,361 
Balance as of  December 31, 2019  $7,306,889 
Research and Development

Research and Development

 

Research and development costs are expensed as incurred.  Total research and development costs were $248,234 and $142,570 for the six months ended December 31, 2019 and 2018, respectively

Accounting for Derivatives

Accounting for Derivatives

 

The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average series Binomial lattice formula pricing models to value the derivative instruments at inception and on subsequent valuation dates.

 

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

 

In August 2017, FASB issued accounting standards update ASU-2017-12, (Topic 815) – “Targeted Improvements to Accounting for Hedging Activities”, to require an entity to present the earnings effect of the hedging instrument in the same statement line item in which the earnings effect of the hedged item is reported. The amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods with the fiscal years beginning after December 15, 2020. Early adoption is permitted in any interim period after issuance of the update. The Company does not believe the adoption of ASU-2017 would have a material impact on the Company’s financial statements.

 

In June 2018, FASB issued accounting standards update ASU 2018-07, (Topic 505) – “Shared-Based Payment Arrangements with Nonemployees”, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees will be aligned with the requirements for share-based payments granted to employees. Under the ASU 2018-07, the measurement of equity-classified nonemployee share-based payments will be fixed on the grant date, as defined in ASC 718, and will use the term nonemployee vesting period, rather than requisite service period. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted if financial statements have not yet been issued. The Company is currently evaluating the impact of the adoption of ASU 2018-07 on the Company’s financial statements. 

 

In August 2018, the FASB issued to accounting standards update ASU 2018-13, (Topic 820) - “Fair Value Measurement”, which changes the unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance. The Company is currently evaluation the impact of the adoption of ASU 2018-13, on the Company’s financial statements. 

 

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial statements.

XML 25 R18.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Derivative Liabilities (Tables)
6 Months Ended
Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of fair market value of the derivative liability

 

Risk free interest rate 

1.59% - 1.69%

Stock volatility factor  94.0% - 135.0%
Weighted average expected option life 3 months - 5 year
Expected dividend yield  None

XML 26 R22.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Capital Stock (Details) - USD ($)
6 Months Ended
Jan. 06, 2019
Dec. 31, 2019
Dec. 31, 2018
Capital Stock (Textual)      
Common stock value issued for services   $ 178,210  
Common stock shares issued for services   57,047,643  
Minimum [Member]      
Capital Stock (Textual)      
Fair value closing market price per share   $ 0.002  
Maximum [Member]      
Capital Stock (Textual)      
Fair value closing market price per share   $ 0.004  
Common Stock [Member]      
Capital Stock (Textual)      
Issuance of common stock (in shares)   390,468,995 32,615,769
Principal amount of partial convertible promissory note   $ 586,686 $ 44,500
Issuance of common stock on payment of accrued interest for convertible notes   83,889 14,208
Aggregate fair value loss on settlement     $ 234,834
Other fees   $ 5,500  
Fair value closing market price per share     $ 0.0105
Common Stock Issued For Equity Incentive plan, Shares     9,603,000
Common Stock Issued For Equity Incentive plan     $ 100,832
Common Stock [Member]      
Capital Stock (Textual)      
Issuance of common stock (in shares) 9,000,000    
Principal amount of partial convertible promissory note $ 14,147    
Other fees $ 1,000    
Conversion prices ranging     $ 0.009
Common Stock [Member] | Minimum [Member]      
Capital Stock (Textual)      
Conversion prices ranging   $ 0.00102  
Common Stock [Member] | Maximum [Member]      
Capital Stock (Textual)      
Conversion prices ranging   $ 0.00296  
XML 27 R26.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Convertible Promissory Notes (Details)
Dec. 31, 2019
USD ($)
Debt Disclosure [Abstract]  
Convertible Promissory Notes, net of debt discount $ 1,849,797
Less current portion 119,797
Total long-term liabilities $ 1,730,000
XML 28 R31.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Subsequent Events (Details) - USD ($)
1 Months Ended
Feb. 12, 2020
Feb. 04, 2020
Jan. 14, 2020
Jan. 08, 2020
Jan. 06, 2019
Jan. 21, 2020
Jan. 20, 2020
Jan. 02, 2020
Dec. 31, 2019
Maximum [Member]                  
Subsequent Events (Textual)                  
Authorized capital share ,par value                 $ 0.004
Minimum [Member]                  
Subsequent Events (Textual)                  
Authorized capital share ,par value                 $ 0.002
Subsequent Event [Member]                  
Subsequent Events (Textual)                  
Description of convertible promissory note             The Company received $80,000 on a 10% convertible promissory note. The Note is convertible into shares of common stock of the Company at 61% of the market price equal to the lowest trading price during the previous fifteen (15) trading days to the date of conversion. The Note matures on January 20, 2021.    
Subsequent Event [Member] | Maximum [Member]                  
Subsequent Events (Textual)                  
Authorized capital stock               5,005,000,000  
Subsequent Event [Member] | Minimum [Member]                  
Subsequent Events (Textual)                  
Authorized capital stock               3,005,000,000  
Common Stock [Member]                  
Subsequent Events (Textual)                  
Common stock company issued         9,000,000        
Conversion of principal amount         $ 14,147        
Other fees         $ 1,000        
Common Stock [Member] | Subsequent Event [Member]                  
Subsequent Events (Textual)                  
Authorized capital stock               5,000,000,000  
Authorized capital share ,par value               $ 0.001  
Common Stock 1 [Member] | Subsequent Event [Member]                  
Subsequent Events (Textual)                  
Common stock company issued       7,632,051          
Conversion of principal amount       $ 29,765          
Common Stock2 [Member] | Subsequent Event [Member]                  
Subsequent Events (Textual)                  
Common stock company issued     20,621,081            
Conversion of principal amount     $ 14,000            
Accrued interest     $ 5,590            
Common Stock3 [Member] | Subsequent Event [Member]                  
Subsequent Events (Textual)                  
Common stock company issued     21,750,771            
Conversion of principal amount     $ 14,800            
Accrued interest     $ 5,863            
Common Stock4 [Member] | Subsequent Event [Member]                  
Subsequent Events (Textual)                  
Common stock company issued     22,044,701            
Conversion of principal amount     $ 15,000            
Accrued interest     $ 5,942            
Common Stock7 [Member] | Subsequent Event [Member]                  
Subsequent Events (Textual)                  
Common stock company issued 4,878,049 11,400,000       6,500,000      
Conversion of principal amount $ 20,000 $ 17,023       $ 9,277      
Other fees   $ 1,000       $ 1,000      
Preferred Stock [Member] | Subsequent Event [Member]                  
Subsequent Events (Textual)                  
Authorized capital stock               5,000,000  
Authorized capital share ,par value               $ 0.001  
XML 29 R12.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Derivative Liabilities
6 Months Ended
Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE LIABILITIES
6.DERIVATIVE LIABILITIES

 

ASC Topic 815 provides guidance applicable to convertible debt issued by the Company in instances where the number into which the debt can be converted is not fixed. For example, when a convertible debt converts at a discount to market based on the stock price on the date of conversion, ASC Topic 815 requires that the embedded conversion option of the convertible debt be bifurcated from the host contract and recorded at their fair value. In accounting for derivatives under accounting standards, the Company recorded a liability representing the estimated present value of the conversion feature considering the historic volatility of the Company's stock, and a discount representing the imputed interest associated with the embedded derivative. The discount is amortized over the life of the convertible debt, and the derivative liability is adjusted periodically according to stock price fluctuations.

 

The convertible notes (the "Notes") issued do not have fixed settlement provisions because their conversion prices are not fixed. The conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

 

During the six months ended December 31, 2019, as a result of the Notes issued that were accounted for as derivative liabilities, we determined that the fair value of the conversion feature of the convertible notes at issuance was $320,807, based upon the Binomial lattice formula. We recorded the full value of the derivative as a liability at issuance with an offset to valuation discount, which will be amortized over the life of the Notes.

 

During the six months ended December 31, 2019, the Company recorded a net loss in change in derivative of $3,080,361 in the statement of operations due to the change in fair value of the remaining notes, for the six months ended December 31, 2019. At December 31, 2019, the fair value of the derivative liability was $7,306,889.

 

For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used the Binomial lattice formula. The significant assumptions used in the Binomial lattice formula of the derivatives are as follows:

 

Risk free interest rate 

1.59% - 1.69%

Stock volatility factor  94.0% - 135.0%
Weighted average expected option life 3 months - 5 year
Expected dividend yield  None
XML 30 R1.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Document and Entity Information - shares
6 Months Ended
Dec. 31, 2019
Feb. 14, 2020
Document and Entity Information [Abstract]    
Entity Registrant Name Hypersolar, Inc.  
Entity Central Index Key 0001481028  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Document Type 10-Q  
Document Period End Date Dec. 31, 2019  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2020  
Entity Filer Category Non-accelerated Filer  
Entity Emerging Growth Company false  
Entity Small Business true  
Entity Shell Company false  
Entity Current Reporting Status Yes  
Entity File Number 000-54437  
Entity Interactive Data Current Yes  
Entity Incorporation State Country Code NV  
Entity Common Stock, Shares Outstanding   1,628,662,630
XML 31 R5.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Condensed Statements of Shareholders' Deficit (Unaudited) - USD ($)
Preferred stock
Common stock
Additional Paid-in Capital
Accumulated Deficit
Total
Balance at Jun. 30, 2018 $ 852,458 $ 8,131,620 $ (21,999,514) $ (13,015,436)
Balance, Shares at Jun. 30, 2018 852,458,018      
Issuance of common stock for conversion of debt and accrued interest $ 32,616 260,926 293,542
Issuance of common stock for conversion of debt and accrued interest, Shares 32,615,769      
Issuance of common stock for services   $ 9,603 91,229   100,832
Issuance of common stock for services, Shares   9,603,000      
Stock based compensation expense     28,714   28,714
Net Income (Loss) (1,520,574) (1,520,574)
Balance at Dec. 31, 2018 $ 894,677 8,512,489 (23,520,088) (14,112,922)
Balance, Shares at Dec. 31, 2018 894,676,787      
Balance at Jun. 30, 2019 $ 1,077,319 10,432,575 (18,021,177) (6,511,283)
Balance, Shares at Jun. 30, 2019 1,077,319,339      
Issuance of common stock for conversion of debt and accrued interest $ 390,469 285,606 676,075
Issuance of common stock for conversion of debt and accrued interest, Shares 390,468,995      
Issuance of common stock for services $ 57,048 121,162 178,210
Issuance of common stock for services, Shares 57,047,643      
Stock based compensation expense 432,558 432,558
Net Income (Loss) (4,533,022) (4,533,022)
Balance at Dec. 31, 2019 $ 1,524,836 $ 11,271,901 $ (22,554,199) $ (9,757,462)
Balance, Shares at Dec. 31, 2019 1,524,835,977      
XML 32 R16.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Options (Tables)
6 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
Schedule of the Company's stock option activity and related information
   12/31/2019   12/31/2018 
       Weighted       Weighted 
   Number   average   Number   average 
   of   exercise   of   exercise 
   Options   price   Options   price 
Outstanding, beginning of period   186,250,000   $0.01    10,250,000   $0.01 
Granted   10,000,000   $0.01    -   $0.01 
Exercised   -    -    -    - 
Forfeited/Expired   -    -    -    - 
Outstanding, end of period   196,250,000   $0.01    10,250,000   $0.01 
Exercisable at the end of period   163,988,812   $0.01    6,916,667   $0.01 
Schedule of weighted average remaining contractual life of options outstanding
12/31/2019   12/31/2018 
Exercisable
Price
   Stock Options Outstanding   Stock Options Exercisable   Weighted Average Remaining Contractual Life (years)   Exercisable Price   Stock Options Outstanding   Stock Options Exercisable   Weighted Average Remaining Contractual Life (years) 
$0.02    250,000    250,000    0.25   $0.02    250,000    250,000    1.50 
$0.01    10,000,000    10,000,000    2.76   $0.01    10,000,000    3,333,333    4.01 
$0.0097-0.0099    176,000,000    148,926,027     6.07 - 6.09   $-    -    -    - 
$0.0046    10,000,000    4,812,785    6.56    -    -    -    - 
      196,250,000    163,988,812              10,250,000    3,583,333      
XML 33 R9.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Capital Stock
6 Months Ended
Dec. 31, 2019
Equity [Abstract]  
CAPITAL STOCK
3.CAPITAL STOCK

 

Six months ended December 31, 2019

 

During the six months ended December 31, 2019, the Company issued 390,468,995 shares of common stock upon conversion of convertible notes in the amount of $586,686 in principal, plus accrued interest of $83,889 and other fees of $5,500 based upon conversion prices ranging from $0.00102 - $0.00296.

 

During the six months ended December 31, 2019, the Company issued 57,047,643 shares of common stock for services rendered at fair value prices based on the closing market prices for the applicable period of $0.002 - $0.004 per share in the amount of $178,210.

 

Six months ended December 31, 2018

 

During the six months ended December 31, 2018, the Company issued 32,615,769 shares of common stock upon conversion of convertible notes in the amount of $44,500, plus accrued interest of $14,208, with an aggregate fair value loss on conversion of debt of $234,834, based upon a conversion price of $0.009, which was based on the fair value of the shares granted.

 

During the six months ended December 31, 2018, the Company issued 9,603,000 shares of common stock under the 2019 Equity Incentive Plan for services rendered at a fair value price based on the closing market price for the applicable period of $0.0105 per share in the amount of $100,832.

XML 34 R28.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Convertible Promissory Notes (Details Textual) - USD ($)
1 Months Ended 2 Months Ended 6 Months Ended
Dec. 02, 2019
Aug. 12, 2019
Jul. 03, 2019
Mar. 06, 2019
Jan. 31, 2019
Dec. 14, 2018
Aug. 10, 2018
Feb. 03, 2017
Jan. 28, 2016
Apr. 09, 2015
Aug. 28, 2019
Feb. 14, 2019
Jun. 27, 2018
Nov. 09, 2017
Oct. 02, 2019
Dec. 31, 2019
Dec. 31, 2018
Jan. 18, 2019
Convertible Promissory Notes (Textual)                                    
Convertible promissory note principal amount                               $ 1,730,000    
Amount of tranches received                               $ 346,500 $ 415,500  
Convertible promissory notes [Member]                                    
Convertible Promissory Notes (Textual)                                    
Percentage of beneficial ownership                               4.99%    
Convertible debt                               $ 2,080,300    
Debt discount                               230,503    
Net balance of convertible debt                               1,849,797    
10% Convertible Promissory Note [Member] | April 2015 Note [Member]                                    
Convertible Promissory Notes (Textual)                                    
Convertible promissory note principal amount                   $ 500,000           43,800    
Convertible notes, interest rate                   10.00%                
Amount of tranches received                   $ 50,000                
Amount of additional tranches received                   450,000                
Interest expense amount                               $ 56,890    
Aggregate principal amount                   $ 500,000                
Conversion price                   $ 0.01           $ 148,800    
Percentage of trading price                   50.00%                
Debt instrument, term                   9 months                
Debt instrument, maturity date description                   On January 19, 2017, the investor extended the April 2015 Note for an additional (60) months from the effective date of each tranche.                
Maturity date                   Apr. 09, 2020                
Debt instrument, convertible, terms of conversion feature                   Price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective advance or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock.                
Percentage of beneficial ownership                   4.99%                
Penalty amount                   $ 1,500                
Issuance of common stock (in shares)                               147,662,611    
Convertible notes payable                               $ 148,800    
Convertible debt                               56,890    
10% Convertible Promissory Note [Member] | Jan 2016 Note [Member]                                    
Convertible Promissory Notes (Textual)                                    
Convertible promissory note principal amount                 $ 500,000             500,000    
Convertible notes, interest rate                 10.00%                  
Amount of tranches received                 $ 10,000                  
Amount of additional tranches received                 490,000                  
Aggregate principal amount                 $ 500,000                  
Conversion price                 $ 0.01                  
Percentage of trading price                 50.00%                  
Debt instrument, term                 12 months                  
Debt instrument, maturity date description                 January 19, 2017, the investor extended the Jan 2016 Note for an additional sixty (60) months from the effective date of each tranche.                  
Maturity date                 Jan. 27, 2022                  
Debt instrument, convertible, terms of conversion feature                 Price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock.                  
Percentage of beneficial ownership                 4.99%                  
Penalty amount                 $ 1,500                  
10% Convertible Promissory Note [Member] | Feb 2017 Note [Member]                                    
Convertible Promissory Notes (Textual)                                    
Convertible promissory note principal amount               $ 500,000                    
Convertible notes, interest rate               10.00%                    
Amount of tranches received               $ 60,000                    
Amount of additional tranches received               440,000                    
Aggregate principal amount               $ 500,000                    
Conversion price               $ 0.01                    
Percentage of trading price               50.00%                    
Debt instrument, term               12 months                    
Debt instrument, maturity date description               The Feb 2017 Note matures on February 3, 2018, with an automatic extension of sixty (60) months from the effective date of each tranche.                    
Maturity date               Feb. 03, 2018                    
Debt instrument, convertible, terms of conversion feature               Price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock.                    
Percentage of beneficial ownership               4.99%                    
Penalty amount               $ 1,500                    
10% Convertible Promissory Note [Member] | Nov 2017 Note [Member]                                    
Convertible Promissory Notes (Textual)                                    
Convertible promissory note principal amount                           $ 500,000   500,000    
Convertible notes, interest rate                           10.00%        
Amount of tranches received                           $ 45,000        
Amount of additional tranches received                           455,000        
Aggregate principal amount                           $ 500,000        
Conversion price                           $ 0.01        
Percentage of trading price                           50.00%        
Debt instrument, term                           12 months        
Debt instrument, maturity date description                           The Nov 2017 Note matures on November 9, 2018, with an automatic extension of sixty (60) months from the effective date of each tranche.        
Maturity date                           Nov. 09, 2018        
Debt instrument, convertible, terms of conversion feature                           price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock.        
Percentage of beneficial ownership                           4.99%        
Penalty amount                           $ 1,500        
10% Convertible Promissory Note [Member] | Jun 2018 Note [Member]                                    
Convertible Promissory Notes (Textual)                                    
Convertible promissory note principal amount                         $ 500,000     90,000    
Convertible notes, interest rate                         10.00%          
Amount of tranches received                         $ 50,000          
Interest expense amount                               2,823    
Aggregate principal amount                               90,000    
Conversion price                         $ 0.01          
Percentage of trading price                         50.00%          
Debt instrument, term                         12 months          
Debt instrument, maturity date description                         Note matures twelve (12) months from the effective dates of each respective tranche.          
Maturity date                         Jun. 27, 2019          
Debt instrument, convertible, terms of conversion feature                         price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock.          
Percentage of beneficial ownership                         4.99%          
Penalty amount                         $ 1,500          
10% Convertible Promissory Note [Member] | August 28, 2019 note [Member]                                    
Convertible Promissory Notes (Textual)                                    
Convertible promissory note principal amount                     $ 80,000         80,000    
Convertible notes, interest rate                     10.00%              
Interest expense amount                               5,305    
Debt instrument, maturity date description                     The Aug Note may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date.              
Maturity date                     Aug. 28, 2020              
Amount received From Funds                     $ 78,000              
Other Fees                     $ 2,000              
10% Convertible Promissory Note [Member] | Oct 2, 2019 note [Member]                                    
Convertible Promissory Notes (Textual)                                    
Convertible promissory note principal amount                             $ 80,000 80,000    
Convertible notes, interest rate                             10.00%      
Interest expense amount                               19,672    
Debt instrument, maturity date description                             The Oct Note may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date.      
Maturity date                             Oct. 02, 2020      
Amount received From Funds                             $ 78,000      
Other Fees                             $ 2,000      
10% Convertible Promissory Note [Member] | Dec 2, 2019 note [Member]                                    
Convertible Promissory Notes (Textual)                                    
Convertible promissory note principal amount                               $ 80,000    
Convertible notes, interest rate                               10.00%    
Interest expense amount                               $ 5,902    
Debt instrument, maturity date description The Dec Note may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date.                                  
Maturity date Dec. 02, 2020                                  
Amount received From Funds $ 78,000                                  
Other Fees $ 2,000                                  
10% Unsecured Convertible Note [Member] | Aug 2018 Note [Member]                                    
Convertible Promissory Notes (Textual)                                    
Convertible promissory note principal amount                               100,000    
Convertible notes, interest rate             10.00%                      
Interest expense amount                               $ 11,233    
Aggregate principal amount             $ 100,000                      
Conversion price             $ 0.005                      
Debt instrument, term             60 months                      
Debt instrument, maturity date description             The Aug 2018 Note matures on August 10, 2019, with an extension of sixty (60) months from the date of the note.                      
Maturity date             Aug. 10, 2019                      
Debt instrument, convertible, terms of conversion feature             The Aug 2018 Note may be converted into shares of the Company's common stock at a conversion price of the lesser of a) $0.005 per share or b) sixty-one (61%) percent of the lowest trading price per common stock recorded on any trade day after the effective date.                      
10% Unsecured Convertible Note [Member] | Oct 2018 Note [Member]                                    
Convertible Promissory Notes (Textual)                                    
Convertible notes, interest rate   10.00%                   10.00%            
Aggregate principal amount   $ 249,000                                
Debt instrument, maturity date description   The Feb-Aug Notes may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date.                   The Feb-Aug Notes may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date.            
Maturity date   Feb. 14, 2020                   Feb. 14, 2019            
Issuance of common stock (in shares)                               29,277,330    
Convertible notes payable                               $ 78,000    
Convertible debt                       $ 249,000            
Net balance of convertible debt                               174,000    
Accrued interest                               76,880    
10% Unsecured Convertible Note [Member] | Feb-Aug Notes [Member]                                    
Convertible Promissory Notes (Textual)                                    
Convertible promissory note principal amount                               53,000    
Interest expense amount                               3,900    
Aggregate fair value loss                               51,821    
10% Unsecured Convertible Note [Member] | Oct-May Notes [Member]                                    
Convertible Promissory Notes (Textual)                                    
Interest expense amount                               174,000    
Debt discount                               76,880    
10% Unsecured Convertible Note [Member] | Dec-Jul Notes [Member]                                    
Convertible Promissory Notes (Textual)                                    
Convertible notes, interest rate           10.00%                        
Interest expense amount                               $ 66,960    
Aggregate principal amount     $ 86,500     $ 86,500                        
Debt instrument, maturity date description           The notes issued in December 2018 and January 2019 were converted into an aggregate of 63,957,592 shares of the Company's common stock, which represented a conversion price equal to sixty-one (61%) percent of the lowest trading price per common stock during the twenty five (25) trading days prior to the conversion date of each note. The remaining note issued on July 3, 2019 matures on July 3, 2020 and may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the lowest trading price per common stock during the twenty five (25) trading days prior to the conversion date.                        
Maturity date     Jan. 18, 2020                              
Issuance of common stock (in shares)                               63,957,592    
Convertible notes payable                               $ 78,886    
Net balance of convertible debt                               53,500    
Legal fees                               4,000    
10% Unsecured Convertible Note [Member] | Jan-Mar Note [Member]                                    
Convertible Promissory Notes (Textual)                                    
Convertible promissory note principal amount                               160,000    
Convertible notes, interest rate       10.00% 10.00%                          
Interest expense amount                               $ 8,399    
Aggregate principal amount       $ 160,000 $ 160,000                          
Conversion price                               $ 0    
Debt instrument, maturity date description       The Jan-Mar Notes mature on January 31, 2020 and March 6, 2020, respectively, and may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two lowest (2) trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The Jan-Mar Notes mature on January 31, 2020 and March 6, 2020, respectively, and may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two lowest (2) trading prices per common stock during the fifteen (15) trading days prior to the conversion date.                          
Maturity date       Mar. 06, 2020 Jan. 31, 2020                          
Issuance of common stock (in shares)         76,592,777                          
Convertible debt                               $ 189,237    
Debt discount                               $ 101,698    
Legal fees         $ 1,500                          
10% Unsecured Convertible Note [Member] | Jan 18, 2019 Note [Member]                                    
Convertible Promissory Notes (Textual)                                    
Aggregate principal amount                                   $ 86,500
XML 35 R20.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Summary of Significant Accounting Policies (Details 1) - USD ($)
6 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Accounting Policies [Abstract]    
Beginning balance $ 3,905,721  
Fair value of derivative liabilities issued 320,807  
Loss on change in derivative liability 3,080,361 $ 434,373
Ending balance $ 7,306,889  
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Options (Details 1) - Stock option [Member] - $ / shares
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Options outstanding    
Stock Options Outstanding 196,250,000 10,250,000
Stock Options Exercisable 163,988,812 3,583,333
0.02 [Member]    
Options outstanding    
Exercise Price $ 0.02 $ 0.02
Stock Options Outstanding 250,000 250,000
Stock Options Exercisable 250,000 250,000
Weighted Average Remaining Contractual Life (years) 2 months 30 days 1 year 6 months
0.01 [Member]    
Options outstanding    
Exercise Price $ 0.01 $ 0.01
Stock Options Outstanding 10,000,000 10,000,000
Stock Options Exercisable 10,000,000 3,333,333
Weighted Average Remaining Contractual Life (years) 2 years 9 months 3 days 4 years 4 days
0.0097-0.0099 [Member]    
Options outstanding    
Stock Options Outstanding 176,000,000  
Stock Options Exercisable 148,926,027  
0.0097-0.0099 [Member] | Maximum [Member]    
Options outstanding    
Exercise Price $ 0.0099  
Weighted Average Remaining Contractual Life (years) 6 years 1 month 2 days  
0.0097-0.0099 [Member] | Minimum [Member]    
Options outstanding    
Exercise Price $ 0.0097  
Weighted Average Remaining Contractual Life (years) 6 years 26 days  
0.0046 [Member]    
Options outstanding    
Exercise Price $ 0.0046  
Stock Options Outstanding 10,000,000  
Stock Options Exercisable 4,812,785  
Weighted Average Remaining Contractual Life (years) 6 years 6 months 21 days  
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Summary of Significant Accounting Policies (Details Textual) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended
Dec. 17, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Summary of Significant Accounting Policies (Textual)          
Amortization expense       $ 3,923 $ 3,064
2019 Equity Incentive Plan aside and reserved   $ 114,000,000   $ 114,000,000  
Convertible equity incentive stock options       186,000,000  
Total research and development costs   104,839 $ 67,982 $ 248,234 142,570
Equity Incentive [Member]          
Summary of Significant Accounting Policies (Textual)          
Issuance pursuant to the Plan 300,000,000        
Stock Options [Member]          
Summary of Significant Accounting Policies (Textual)          
Convertible debt   $ 2,080,300 $ 2,295,800 $ 2,080,300 $ 2,295,800
Dilutive impact of outstanding stock options       196,250,000 10,250,000
Convertible stock based compensation stock options       10,250,000  
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Options (Details Textual) - USD ($)
6 Months Ended
Jul. 22, 2019
Jan. 31, 2019
Jan. 23, 2019
Dec. 31, 2019
Dec. 31, 2018
Options (Textual)          
Stock compensation expense       $ 432,558 $ 28,714
Stock option, Description The Company issued 10,000,000 stock options, two-thirds (1/3) of which vested immediately, and the remaining shall vest equally in one-twenty fourth (1/24) increments per month commencing [one month from the date of grant]. The first block shall become exercisable immediately and is exercisable for a period of seven (7) years. The options fully vest on July 22, 2020. The Company issued 6,000,000 stock options, two-thirds (2/3) of which vested immediately, and the remaining shall vest equally in one-twelfth (1/12) increments per month commencing [one month from the date of grant]. The first block shall become exercisable immediately and is exercisable for a period of seven (7) years. The options fully vest on January 31, 2020. The Company issued 170,000,000 stock options, which one-third (1/3) vest immediately, and the remaining shall vest one-twenty fourth (1/24) after the date of these options (remaining block). The first block shall become exercisable immediately and is exercisable for a period of seven (7) years. The options fully vest by January 23, 2022.    
Non-qualified Common Stock Options [Member]          
Options (Textual)          
Non-qualified common stock outstanding       10,250,000  
Exercisable price       $ 0.02245  
Options expration date       Mar. 31, 2020  
Stock option vested exercisable       250,000  
Non-qualified Common Stock Options [Member]          
Options (Textual)          
Exercisable price       $ 0.01  
Options expration date       Oct. 02, 2022  
Non-qualified common stock issued options       10,000,000  
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Derivative Liabilities (Details)
6 Months Ended
Dec. 31, 2019
Derivative [Line Items]  
Risk free interest rate, minimum 1.59%
Risk free interest rate, maximum 1.69%
Stock volatility factor, minimum 94.00%
Stock volatility factor, maximum 135.00%
Expected dividend yield 0.00%
Maximum [Member]  
Derivative [Line Items]  
Weighted average expected option life 5 years
Minimum [Member]  
Derivative [Line Items]  
Weighted average expected option life 3 months
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Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Jun. 30, 2019
Derivative Liabilities (Textual)          
Fair value of the derivative liability $ 7,306,889   $ 7,306,889   $ 3,905,721
Net loss in change in derivative $ (3,269,549) $ (3,505,767) (3,080,361) $ (434,373)  
Convertible Notes [Member]          
Derivative Liabilities (Textual)          
Convertible notes     $ 320,807    
XML 43 R8.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Summary of Significant Accounting Policies
6 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

This summary of significant accounting policies of HyperSolar, Inc. is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

 

Cash and Cash Equivalent

 

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

 

Use of Estimates

 

In accordance with accounting principles generally accepted in the United States, management utilizes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates and assumptions relate to useful lives and impairment of tangible and intangible assets, accruals, income taxes, stock-based compensation expense, Binomial lattice valuation model inputs, derivative liabilities and other factors. Management believes it has exercised reasonable judgment in deriving these estimates. Consequently, a change in conditions could affect these estimates.

 

Intangible Assets

 

The Company has patent applications to protect the inventions and processes behind its proprietary bio-based back-sheet, a protective covering for the back of photovoltaic solar modules traditionally made from petroleum-based film. Intangible assets that have finite useful lives continue to be amortized over their useful lives.

 

The Company recognized amortization expense of $3,923 and $3,064 for the six months ended December 31, 2019 and 2018, respectively.

 

Net Earnings (Loss) per Share Calculations

 

Net earnings (Loss) per share dictates the calculation of basic earnings (loss) per share and diluted earnings per share. Basic earnings (loss) per share are computed by dividing by the weighted average number of common shares outstanding during the year. Diluted net earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the effect of stock options and stock based awards (Note 4), plus the assumed conversion of convertible debt (Note 5).

 

For the six months ended December 31, 2019, the Company calculated the dilutive impact of the outstanding stock options of 196,250,000, and the convertible debt of $2,080,300, which is convertible into shares of common stock. The stock options and convertible debt were not included in the calculation of net earnings per share, because their impact was antidilutive.

 

For the six months ended December 31, 2018, the Company calculated the dilutive impact of the outstanding stock options of 10,250,000, and the convertible debt of $2,295,800, which is convertible into shares of common stock. The stock options and the convertible debt were not included in the calculation of net earnings per share, because their impact was antidilutive.

 

Equity Incentive Plan and Stock Options

 

Equity Incentive Plan

 

On December 17, 2018, the Board of Directors approved and adopted the 2019 Equity Incentive Plan ("the Plan"), with 300,000,000 shares set aside and reserved for issuance pursuant to the Plan. The purpose of the Plan is to promote the success of the Corporation and to increase stockholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons. The awards are performance-based compensation that are granted under the Plan as incentive stock options (ISO) or nonqualified stock options. The per share exercise price for each option shall not be less than 100% of the fair market value of a share of common stock on the date of grant of the option. The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing cost. The Company accounts for stock option grants issued and vesting to employees and non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested, and the total stock-based compensation charge is recorded in the period of the measurement date.

 

As of December 31, 2019, the Company has granted 186,000,000 shares of convertible equity incentive stock options leaving a reserve of 114,000,000. The shares are convertible into common stock.

 

Stock based Compensation

 

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. As of December 31, 2019, the Company has granted 10,250,000 shares of convertible stock based compensation stock options, which are convertible into common stock.

 

Fair Value of Financial Instruments

 

Fair value of financial instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of December 31, 2019, the amounts reported for cash, accrued interest and other expenses, notes payables, convertible notes, and derivative liability approximate the fair value because of their short maturities.

 

We adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

 

Fair value is defined 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. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

 

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

 

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

 

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 

We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at December 31, 2019 (See Note 6):

 

   Total   (Level 1)   (Level 2)   (Level 3) 
Liabilities                    
Derivative liability measured at fair value at 12/31/19  $7,306,889   $-   $-   $7,306,889 

 

The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:

 

Balance as of June 30, 2019

   3,905,721 
Fair value of derivative liabilities issued   320,807 

Loss on change in derivative liability

   3,080,361 
Balance as of  December 31, 2019  $7,306,889 

 

Research and Development

 

Research and development costs are expensed as incurred.  Total research and development costs were $248,234 and $142,570 for the six months ended December 31, 2019 and 2018, respectively

 

Accounting for Derivatives

 

The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average series Binomial lattice formula pricing models to value the derivative instruments at inception and on subsequent valuation dates.

 

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

 

Recently Issued Accounting Pronouncements

 

In August 2017, FASB issued accounting standards update ASU-2017-12, (Topic 815) – "Targeted Improvements to Accounting for Hedging Activities", to require an entity to present the earnings effect of the hedging instrument in the same statement line item in which the earnings effect of the hedged item is reported. The amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods with the fiscal years beginning after December 15, 2020. Early adoption is permitted in any interim period after issuance of the update. The Company does not believe the adoption of ASU-2017 would have a material impact on the Company's financial statements.

 

In June 2018, FASB issued accounting standards update ASU 2018-07, (Topic 505) – "Shared-Based Payment Arrangements with Nonemployees", which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees will be aligned with the requirements for share-based payments granted to employees. Under the ASU 2018-07, the measurement of equity-classified nonemployee share-based payments will be fixed on the grant date, as defined in ASC 718, and will use the term nonemployee vesting period, rather than requisite service period. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted if financial statements have not yet been issued. The Company is currently evaluating the impact of the adoption of ASU 2018-07 on the Company's financial statements. 

 

In August 2018, the FASB issued to accounting standards update ASU 2018-13, (Topic 820) - "Fair Value Measurement", which changes the unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance. The Company is currently evaluation the impact of the adoption of ASU 2018-13, on the Company's financial statements. 

 

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial statements.

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Subsequent Events
6 Months Ended
Dec. 31, 2019
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS
7.SUBSEQUENT EVENTS

 

Management evaluated subsequent events as of the date of the financial statements pursuant to ASC TOPIC 855, and reported the following events:

 

On January 2, 2020, the Company filed an amendment to its Articles of Incorporation, as amended, with the Secretary of State of Nevada, to increase the Company's authorized capital stock from 3,005,000,000 to 5,005,000,000, of which (i) 5,000,000,000 shall be shares of common stock, par value $0.001 per share, and (ii) 5,000,000 shall be shares of preferred stock, par value $0.001 per share. 

 

On January 6, 2019, the Company issued 9,000,000 shares of common stock upon conversion of principal in the amount of $14,147 and other fees of $1,000.

 

On January 8, 2020, the Company issued 7,632,051 shares of common stock for services in the amount of $29,765.  

 

On January 20, 2020, the Company received $80,000 on a 10% convertible promissory note. The Note is convertible into shares of common stock of the Company at 61% of the market price equal to the lowest trading price during the previous fifteen (15) trading days to the date of conversion. The Note matures on January 20, 2021.

 

On January 14, 2020, the Company issued 20,621,081 shares of common stock upon conversion of principal in the amount of $14,000, plus accrued interest of $5,590. 

 

On January 14, 2020, the Company issued 21,750,771 shares of common stock upon conversion of principal in the amount of $14,800, plus accrued interest of $5,863.

 

On January 14, 2020, the Company issued 22,044,701 shares of common stock upon conversion of principal in the amount of $15,000, plus accrued interest of $5,942.

 

On January 21, 2020, the Company issued 6,500,000 shares of common stock upon conversion of principal in the amount of $9,277, plus other fees of $1,000.

 

On February 4, 2020, the Company issued 11,400,000 shares of common stock upon conversion of principal in the amount of $17,023, plus other fees of $1,000.

 

On February 12, 2020, the Company issued 4,878,049 shares of common stock upon conversion of principal in the amount of $20,000.

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Condensed Statements of Operations (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Income Statement [Abstract]        
REVENUE
OPERATING EXPENSES        
General and administrative expenses 343,353 273,042 713,645 412,731
Research and development cost 104,839 67,982 248,234 142,570
Depreciation and amortization 2,038 1,839 4,247 3,064
TOTAL OPERATING EXPENSES 450,230 342,863 966,126 558,365
LOSS FROM OPERATIONS BEFORE OTHER INCOME (EXPENSES) (450,230) (342,863) (966,126) (558,365)
OTHER INCOME/(EXPENSES)        
Gain (Loss) on conversion of debt 623,594 (234,834)
Loss on change in derivative liability (3,269,549) (3,505,767) (3,080,361) (434,373)
Interest expense (184,101) (167,175) (486,535) (293,002)
TOTAL OTHER INCOME (EXPENSES) (2,830,056) (3,672,942) (3,566,896) (962,209)
NET INCOME (LOSS) $ (3,280,286) $ (4,015,805) $ (4,533,022) $ (1,520,574)
BASIC AND DILUTED LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00)
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED 1,444,116,446 886,221,972 1,308,918,562 873,771,485
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Convertible Promissory Notes (Tables)
6 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Schedule of convertible promissory notes

 

Convertible Promissory Notes, net of debt discount  $1,849,797 
Less current portion   119,797 
Total long-term liabilities  $1,730,000 

Schedule of maturities of long-term debt

 

     
Period Ended December 31,  Amount 
2020   350,300 
2021   540,000 
2022   605,000 
2023   585,000 
   $2,080,300 
Less debt discount   (230,503)
Long-term debt net of debt discount  $1,849,797