XML 26 R14.htm IDEA: XBRL DOCUMENT v3.8.0.1
Notes Payable
12 Months Ended
Jun. 30, 2017
Notes Payable [Abstract]  
NOTES PAYABLE

8. NOTES PAYABLE

 

On August 21, 2015 the Company issued $180,000 convertible notes payable bearing interest at 10% p.a. repayable on February 21, 2017. The principal amount and accrued interest were convertible into common stock of the Company at the option of the holder at any time from the date of issuance at $1. The Company concluded that there is no beneficial conversion feature determined in accordance with the guidance provided in ASC 470. Accordingly, these notes were recognized as liability at the time of issuance. On September 30, 2015 all the Holders exercised their right to convert the outstanding principal amount of these notes, into the Company’s common stock at a price of $1.00 per stock (Note 10).

 

Outstanding notes payable of $51,794 on June 30, 2016 represents unsecured promissory notes amounting to $26,000 and $25,794 issued on April 1, 2015 and March 4, 2016, respectively bearing interest at 20% and 12% per annum, respectively, repayable within a year from issuance date. Interest accrued on these notes during the year ended June 30, 2016 amounted to $6,218. As explained in Note 4, as a result of loss of control, these notes were deconsolidated.

 

On June 28, 2017 the Company issued $20,000 of unsecured convertible promissory notes (“Notes”) against the balance Due to Shareholders. The Notes mature on February 28, 2018 and bear interest at a rate of 8% per annum. The Notes are convertible into the Common Stock of the Company at a fixed conversion rate of $0.75 per share at any time prior to the maturity date. The Company evaluated the terms and conditions of the Notes under the guidance of ASC 815, Derivatives and Hedging. The conversion feature met the definition of conventional convertible for purposes of applying the conventional convertible exemption. The definition of conventional contemplates a limitation on the number of shares issuable under the arrangement. The instrument was convertible into a fixed number of shares and there were no down round protection features contained in the contracts. The Company was required to consider whether the hybrid contracts embodied a beneficial conversion feature (“BCF”). The calculation of the effective conversion amount resulted in a BCF because the fair value of the conversion was greater than the Company’s stock price on the date of issuance and a BCF was recorded in the amount of $20,000 and accordingly the amount of $20,000 was credited to Additional Paid in Capital. The BCF which represents debt discount is accreted over the life of the loan using the effective interest rate. For the year ended June 30, 2017, the Company recorded no interest expense related to debt discount.