DELAWARE
|
23-2517953
|
(State or other jurisdiction of incorporation or
organization)
|
(IRS Employer Identification No.)
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☒
|
Emerging growth company
|
☐
|
|
|
|
AFTERMASTER, INC.
|
|
|
|
|
|
INDEX
|
|
|
PART I - FINANCIAL INFORMATION
|
|
|
|
PAGE NUMBER
|
Item 1.
|
Consolidated Financial Statements
|
3
|
|
|
|
|
Condensed Consolidated Balance Sheets – March 31, 2018
(unaudited) and June 30, 2017
|
3
|
|
|
|
|
Condensed Consolidated Statements of Operations - For the three and
nine months ended March 31, 2018 and 2017 (unaudited)
|
4
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows - For the nine
months ended March 31, 2018 and 2017 (unaudited)
|
5
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements
(unaudited)
|
6
|
|
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
30
|
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosure About Market
Risks
|
40
|
|
|
|
Item 4T.
|
Controls and Procedures
|
40
|
|
PART II - OTHER INFORMATION
|
|
|
|
|
Item 1.
|
Legal Proceedings
|
40
|
|
|
|
Item 1A.
|
Risk Factors
|
40
|
|
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of
Proceeds
|
40
|
|
|
|
Item 3.
|
Defaults Upon Senior Securities
|
40
|
|
|
|
Item 4.
|
Submission of Matters to a Vote of Security Holders
|
40
|
|
|
|
Item 5.
|
Other Information
|
41
|
|
|
|
Item 6.
|
Exhibits
|
41
|
|
|
|
|
SIGNATURES
|
42
|
AFTERMASTER, INC.
|
||
Consolidated
Balance Sheets
|
||
|
|
|
|
March
31,
|
June
30,
|
|
2018
|
2017
|
|
(Restated
and unaudited)
|
|
ASSETS
|
||
|
|
|
Current
Assets
|
|
|
Cash
|
$180,291
|
$250,728
|
Accounts
receivable
|
70,978
|
97,103
|
Inventory,
net
|
122,940
|
104,891
|
Available
for sale securities
|
-
|
123,600
|
Prepaid
expenses
|
450,740
|
507,254
|
|
|
|
Total
Current Assets
|
824,949
|
1,083,576
|
|
|
|
Property
and equipment, net
|
168,969
|
266,040
|
|
|
|
Intangible
assets, net
|
82,580
|
102,243
|
|
|
|
Deposits
|
18,717
|
33,363
|
Prepaid
expenses, net of current
|
-
|
9,104
|
|
|
|
Total
Assets
|
$1,095,215
|
$1,494,326
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||
|
|
|
Current
Liabilities
|
|
|
Accounts
payable and other accrued expenses
|
$631,716
|
$459,975
|
Accrued
interest
|
315,596
|
185,509
|
Deferred
revenue
|
-
|
270,623
|
Accrued
consulting services - related party
|
81,342
|
22,064
|
Lease
payable
|
-
|
1,937
|
Derivative
Liability
|
3,401,887
|
2,145,065
|
Notes
payable - related party
|
75,500
|
610,000
|
Notes
payable, net of discount of $88,889 and $0,
respectively
|
371,111
|
40,488
|
Convertible
notes payable - related party, net of discount of $5,673 and $0,
respectively
|
108,827
|
3,951,182
|
Convertible
notes payable, net of discount of $635,408 and
$549,737, respectively
|
3,033,942
|
2,267,845
|
|
|
|
Total
Current Liabilities
|
7,659,921
|
9,954,688
|
|
|
|
|
|
|
Total
Liabilities
|
7,659,921
|
9,954,688
|
|
|
|
Stockholders'
Deficit
|
|
|
Convertible
preferred stock, Series A; $0.001 par value; 100,000 shares
authorized, 15,500 shares issued and outstanding
|
16
|
16
|
Convertible
preferred stock, Series A-1; $0.001 par value; 3,000,000 shares
authorized 2,585,000 shares issued and outstanding,
respectively
|
2,585
|
2,585
|
Convertible
preferred stock, Series B; $0.001 par value; 200,000 shares
authorized, 3,500 shares issued and outstanding
|
3
|
3
|
Convertible
preferred stock, Series C; $0.001 par value; 1,000,000 shares
authorized, 13,404 shares issued and outstanding
|
13
|
13
|
Convertible
preferred stock, Series D; $0.001 par value; 375,000 shares
authorized, 130,000 shares issued and outstanding
|
130
|
130
|
Convertible
preferred stock, Series E; $0.001 par value; 1,000,000 shares
authorized, 275,000 shares issued and outstanding
|
275
|
275
|
Convertible
preferred stock, Series P; $0.001 par value; 600,000 shares
authorized, 86,640 shares issued and outstanding
|
87
|
87
|
Convertible
preferred stock, Series S; $0.001 par value; 50,000 shares
authorized, -0- shares issued and outstanding
|
-
|
-
|
Common
stock, authorized 250,000,000 shares,
|
|
|
par
value $0.001, 132,147,996 and 118,486,728 shares
issued
|
|
|
and
outstanding, respectively
|
132,155
|
118,493
|
Additional
paid In capital
|
65,768,141
|
63,627,987
|
Accumulated
other comprehensive income
|
-
|
93,600
|
Accumulated
Deficit
|
(72,468,111)
|
(72,303,551)
|
|
|
|
Total
Stockholders' Deficit
|
(6,564,706)
|
(8,460,362)
|
|
|
|
Total
Liabilities and Stockholders' Deficit
|
$1,095,215
|
$1,494,326
|
|
|
|
The
accompanying notes are an integral part of these consolidated
financial statements.
|
AFTERMASTER, INC.
|
||||
Consolidated
Statements of Operations and Comprehensive Loss
|
||||
|
|
|
|
|
|
For the
Three Months Ended
|
For the
Nine Months Ended
|
||
|
March
31,
|
March
31,
|
||
|
2018
|
2017
|
2018
|
2017
|
|
(Restated and
unaudited)
|
(Unaudited)
|
(Restated and
unaudited)
|
(Unaudited)
|
REVENUES
|
|
|
|
|
AfterMaster
Revenues
|
$132,291
|
$266,621
|
$371,910
|
$369,844
|
Product
Revenues
|
308,905
|
-
|
529,748
|
-
|
Total
Revenues
|
441,196
|
266,621
|
901,658
|
369,844
|
|
|
|
|
|
COSTS
AND EXPENSES
|
|
|
|
|
Cost
of Revenues (Exclusive of Depreciation and
Amortization)
|
365,407
|
243,628
|
876,747
|
563,403
|
Depreciation
and Amortization Expense
|
41,800
|
46,322
|
125,307
|
131,876
|
Research
and Development
|
8,793
|
45,972
|
10,987
|
138,987
|
Advertising
and Promotion Expense
|
28,939
|
24,865
|
47,604
|
42,509
|
Legal
and Professional Expense
|
28,915
|
61,360
|
66,105
|
116,430
|
Non-Cash
Consulting Expense
|
75,914
|
427,499
|
167,949
|
1,959,408
|
General
and Administrative Expenses
|
588,816
|
653,160
|
2,193,848
|
2,281,202
|
|
|
|
|
|
Total
Costs and Expenses
|
1,138,584
|
1,502,806
|
3,488,547
|
5,233,815
|
|
|
|
|
|
Loss
from Operations
|
(697,388)
|
(1,236,185)
|
(2,586,889)
|
(4,863,971)
|
|
|
|
|
|
Other Income
(Expense)
|
|
|
|
|
Interest
Expense
|
(734,221)
|
(401,829)
|
(2,199,709)
|
(1,149,424)
|
Derivative
Expense
|
(1,328,142)
|
(197,200)
|
(1,668,421)
|
(197,200)
|
Change
in Fair Value of Derivative
|
169,584
|
(434,125)
|
1,278,948
|
(434,699)
|
Gain
Available for Sale Securities
|
240,000
|
-
|
240,000
|
-
|
Gain
Loss on Extinguishment of Debt
|
4,681,469
|
-
|
4,771,511
|
9,236
|
|
|
|
|
|
Total
Other Income (Expense)
|
3,028,690
|
(1,033,154)
|
2,422,329
|
(1,772,087)
|
|
|
|
|
|
Income
(Loss) Before Income Taxes
|
2,331,302
|
(2,269,339)
|
(164,560)
|
(6,636,058)
|
Income
Tax Expense
|
-
|
-
|
-
|
-
|
NET
INCOME(LOSS)
|
$ 2,331,302
|
$(2,269,339)
|
$ (164,560)
|
$(6,636,058)
|
|
|
|
|
|
Preferred
Stock Accretion and Dividends
|
(56,367)
|
(41,999)
|
(169,101)
|
(129,855)
|
|
|
|
|
|
NET
INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
|
$ 2,274,935
|
$(2,311,338)
|
$ (333,661)
|
$(6,765,913)
|
|
|
|
|
|
Basic
Income (Loss) Per Share of Common Stock
|
$0.02
|
$(0.02)
|
$ (0.00)
|
$(0.06)
|
|
|
|
|
|
Weighted
Average Number of Shares Outstanding
|
130,950,689
|
109,468,240
|
124,785,081
|
106,238,848
|
|
|
|
|
|
Diluted
Income (Loss) Per Share of Common Stock
|
$0.01
|
$(0.02)
|
$ (0.00)
|
$(0.06)
|
|
|
|
|
|
Diluted
-Weighted Average Number of Shares Outstanding
|
182,810,706
|
109,468,240
|
124,785,081
|
106,238,848
|
Other
Comprehensive Income, net of tax
|
|
|
|
|
NET
Income(LOSS) AVAILABLE TO COMMON SHAREHOLDERS
|
2,274,935
|
(2,311,338)
|
(333,661)
|
(6,765,913)
|
Unrealized
Gain (Loss) on AFS Securities
|
64,800
|
15,000
|
-
|
(600)
|
COMPREHENSIVE
INCOME(LOSS)
|
$ 2,339,735
|
$(2,296,338)
|
$ (333,661)
|
$(6,766,513)
|
The
accompanying notes are an integral part of these consolidated
financial statements.
|
AFTERMASTER,
INC.
|
||
Consolidated Statements of Cash
Flows
|
||
|
|
|
|
For the Nine Months Ended
|
|
|
March 31,
|
|
|
2018
|
2017
|
|
(Restated and unaudited)
|
(Unaudited)
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
Net
Loss
|
$ (164,560)
|
$(6,636,058)
|
Adjustments
to reconcile net loss to cash from operating
activities:
|
|
|
Depreciation
and amortization
|
125,308
|
131,876
|
Share-based
compensation - Common Stock
|
252,128
|
328,128
|
Share-based
compensation - warrants and options
|
-
|
27,607
|
Common
stock issued for services and rent
|
-
|
25,383
|
Common
stock issued to extend the maturity dates on debt
|
16,897
|
184,105
|
Common
stock issued as incentive with Convertible debt
|
-
|
127,500
|
Amortization
of debt discount and issuance costs
|
1,338,202
|
170,168
|
(Gain)/Loss
on extinguishment of debt
|
(4,714,005)
|
(9,236)
|
Derivative
expense
|
1,668,421
|
197,200
|
(Gain)/Loss
remeasurement of derivative
|
(1,278,948)
|
434,699
|
Gain
on Available for Sale Securities
|
(220,000)
|
-
|
Changes
in Operating Assets and Liabilities:
|
|
|
Accounts
receivables
|
26,125
|
(106,911)
|
Inventory
|
(18,049)
|
(506,566)
|
Other
assets
|
129,554
|
1,530,910
|
Deposits
|
-
|
-
|
Accounts
payable and accrued expenses
|
235,862
|
275,651
|
Accrued
interest
|
984,73
|
690,844
|
Deferred
revenue
|
(270,623)
|
(77,802)
|
Accrued
consulting services - related party
|
59,278
|
119,369
|
|
|
|
Net
Cash Used in Operating Activities
|
(1,829,679)
|
(3,193,133)
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
Purchase
of property and equipment
|
(5,424)
|
(124,223)
|
Sale
of available for sale securities
|
250,000
|
-
|
Purchase
of intangible assets
|
(3,150)
|
(31,800)
|
|
|
|
Net
Cash Used in Investing Activities
|
241,426
|
(156,023)
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
Common
Stock issued for cash
|
413,750
|
359,000
|
Common
Stock issued for conversion of options/warrants
|
-
|
906,224
|
A-1
Preferred Stock issued for cash
|
-
|
353,148
|
Proceeds
from notes payable
|
694,375
|
-
|
Repayments
of notes payable
|
(255,000)
|
-
|
Proceeds
from notes payable - related party
|
85,500
|
17,500
|
Repayments
of notes payable - related party
|
(245,000)
|
(12,500)
|
Proceeds
from convertible notes payable - related party
|
84,500
|
-
|
Proceeds
from convertible notes payable
|
1,511,085
|
1,703,000
|
Repayments
of convertible notes payable
|
(650,000)
|
(215,000)
|
Payment
made on accrued interest
|
(119,457)
|
-
|
Lease
Payable
|
(1,937)
|
12,913
|
Net
Cash Provided by Financing Activities
|
1,517,816
|
3,124,285
|
|
|
|
NET
CHANGE IN CASH
|
(70,437)
|
(224,871)
|
CASH
AT BEGINNING OF PERIOD
|
250,728
|
394,325
|
|
|
|
CASH
AT END OF PERIOD
|
$180,291
|
$169,454
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
|
|
CASH
PAID FOR:
|
|
|
Interest
|
$-
|
$-
|
Taxes
|
$-
|
$-
|
|
|
|
NON
CASH FINANCING ACTIVITIES:
|
|
|
Beneficial
conversion feature
|
$ 188,521
|
$30,519
|
Conversion
of notes and Interest into common stock
|
$277,265
|
$220,164
|
Conversion
of preferred stock for common stock
|
$-
|
$105
|
Derivative
Liability
|
$ 907,001
|
$-
|
Conversion
of Derivative Liability
|
$437,607
|
$95,492
|
MTM
on AFS securities
|
$64,800
|
$600
|
Common
stock issued with notes payable
|
$317,261
|
$-
|
Common
stock issued with convertible debt
|
$-
|
$33,349
|
Common
stock issued for prepaid expenses
|
$49,290
|
$822,233
|
Cancellation
of common shares as part of settlement of debt
|
$14,838
|
$-
|
Original
Issue Discount
|
$115,365
|
$88,000
|
Conversion
of accrued interest into common stock
|
$217,628
|
$597,882
|
Warrants
issued for prepaid expenses
|
$-
|
$376,041
|
|
|
|
The accompanying notes are an integral part of
these consolidated financial statements.
|
|
March 31, 2018
|
|||||
|
Amortized cost
|
Gross unrealized gains
|
Gross unrealized losses
|
Gross realized
gains
|
Gross realized losses
|
Fair value
|
|
|
|
|
|
|
|
Equity
securities
|
$123,600
|
$-
|
$(93,600)
|
$-
|
$(30,000)
|
$
|
|
June 30, 2017
|
|||||
|
Amortized cost
|
Gross unrealized
gains
|
Gross unrealized losses
|
Gross realized
gains
|
Gross realized
losses
|
Fair value
|
|
|
|
|
|
|
|
Equity
securities
|
$63,600
|
$60,000
|
$-
|
$-
|
$-
|
$123,600
|
Convertible Notes Payable
– Related Parties
|
|
|
|
March
31,
|
June
30,
|
|
2018
|
2017
|
Various term notes
with total face value of $3,925,000 issued from February 2010 to
April 2013, interest rates range from 10% to 15%, net of
unamortized discount of $0 as of March 31, 2018 and June 30, 2017,
of which $3,925,000 was extinguished.
|
$-
|
$3,925,000
|
$30,000
face value, issued in August 2016, interest rate of 0%, matures
January 2017, a gain on extinguishment of debt was recorded
totaling $3,818 net unamortized discount of $0 as of March 31, 2018
and June 30, 2017.
|
30,000
|
26,182
|
$10,000
face value, issued in November 2017, interest rate of 0%, matures
November 2018, net amortized discount of $0 as of March 31,
2018.
|
10,000
|
-
|
$25,000
face value, issued in December 2017, interest rate of 0%, matures
December 2018, net amortized discount of $3,750 as of March 31,
2018.
|
22,175
|
-
|
$10,000
face value, issued in January 2018, interest rate of 0%, matures
January 2019, net unamortized discount of $784 as of March 31,
2018.
|
9,216
|
-
|
$15,000
face value, issued in January 2018, interest rate of 0%, matures
January 2019, net unamortized discount of $2,064 as of March 31,
2018.
|
12,936
|
-
|
$24,500
face value, issued in February 2018, interest rate of 0%, matures
February 2019, net unamortized discount of $0 as of March 31,
2018.
|
24,500
|
-
|
Total convertible
notes payable – related parties
|
108,827
|
3,951,182
|
Less current
portion
|
108,827
|
3,951,182
|
Convertible notes
payable – related parties, long-term
|
$-
|
$-
|
Convertible Notes Payable
- Non-Related Parties
|
|
|
|
March
31,
|
June
30,
|
|
2018
|
2017
|
$7,000
face value, issued in July 2014, interest rate of 6%, matures
October 2017, net unamortized discount of $0 as of March 31, 2018
and June 30, 2017, respectively.
|
$7,000
|
$7,000
|
$600,000
face value, issued in November 2015, interest rate of 0%, an OID of
$190,000, matures January 2018, net unamortized discount of $0 of
March 31, 2018 and June 30, 2017, respectively, of which $335,000
has been paid.
|
355,000
|
430,000
|
$100,000
face value, issued in February 2016, interest rate of 10%, matures
March 2018, net unamortized discount of $0 as of March 31, 2018 and
June 30, 2017, respectively.
|
100,000
|
100,000
|
$25,000
face value, issued in February 2016, interest rate of 10%, matures
February 2017, net unamortized discount of $0 as of March 31, 2018
and June 30, 2017, respectively.
|
25,000
|
25,000
|
$100,000
face value, issued in March 2016, interest rate of 10%, matures
June 2017, net unamortized discount of $0 as of March 31, 2018 and
June 30, 2017, respectively.
|
100,000
|
100,000
|
$10,000
face value, issued in March 2016, interest rate of 10%, matures
March 2018, net unamortized discount $0 of March 31, 2018 and June
30, 2017, respectively.
|
10,000
|
10,000
|
$50,000
face value, issued in July 2016, interest rate of 0%, matures
October 2017, net unamortized discount of $0 of March 31, 2018 and
June 30, 2017, respectively.
|
50,000
|
50,000
|
$50,000
face value, issued in August 2016, interest rate of 0%, matures
September which was amended to January 2018, net unamortized
discount of $1,403 and $5,418 of March 31, 2018 and June 30, 2017,
respectively.
|
50,000
|
44,582
|
$1,000,000
face value, issued in September 2016, interest rate of 10%, matures
June 2017, net unamortized discount of $0 as of March 31, 2018 and
June 30, 2017, respectively.
|
1,000,000
|
1,000,000
|
$149,000
face value, issued in February 2017, interest rate of 10%, matures
February 2018, net amortized discount of $0 and $59,740 as of March
31, 2018 and June 30, 2017, respectively, of which $30,000 has been
paid.
|
119,000
|
89,260
|
$224,000
face value, issued in February 2017, interest rate of 10%, matures
February 2018, net amortized discount of $32,452 and $119,795 as of
March 31, 2018 and June 30, 2017, respectively, of which $57,337
has been paid.
|
166,663
|
104,205
|
$258,000
face value, issued in February 2017, interest rate of 12%, matures
August 2017, net amortized discount of $0 and $48,464 as of March
31, 2018 and June 30, 2017, respectively, of which $258,000 has
been paid.
|
-
|
209,536
|
$55,000
face value, issued in June 2017, interest rate of 10%, matures
April 2018, with additional fees of $20,000 net amortized discount
of $3,341 and $50,631 as of March 31, 2018 and June 30, 2017,
respectively, of which $30,000 has been paid.
|
45,000
|
4,369
|
$100,000
face value, issued in June 2017, interest rate of 7%, matures June
2018, net amortized discount of $13,043 and $52,317 as of March 31,
2018 and June 30, 2017, respectively.
|
86,957
|
47,683
|
$265,000
face value, issued in May 2017, interest rate of 10%, matures
February 2018, net amortized discount of $45,267 and $218,790 as of
March 31, 2018 and June 30, 2017, respectively, of which $62,238
has been paid.
|
202,362
|
46,210
|
$78,000
face value, issued in July 2017, interest rate of 12%, matures May
2018, net amortized discount of $848 as of March 31, 2018, of which
$72,000 has been paid.
|
5,152
|
-
|
$50,000
face value, issued in August 2017, interest rate of 0%, matures
October 2017, net amortized discount of $0 as of March 31, 2018, of
which $34,000 has been converted and $16,000 was transferred to a
new note
|
-
|
-
|
$60,500
face value, issued in August 2017, interest rate of 12%, matures
August 2018, net amortized discount of $0 as of March 31, 2018, of
which $60,500 has been paid.
|
-
|
-
|
$10,000
face value, issued in August 2017, interest rate of 0%, matures
August 2018, net amortized discount of $2,621 as of March 31,
2018.
|
7,376
|
-
|
$82,250 face value,
issued in August 2017, interest rate of 12%, matures May 2018, net
amortized discount of $14,304 as of March 31,
2018.
|
32,946
|
-
|
$53,000 face value,
issued in August 2017, interest rate of 12%, matures June 2018, net
amortized discount of 13,424 as of March 31, 2018.
|
39,576
|
-
|
$65,000 face value,
issued in September 2017, interest rate of 12%, matures March 2018,
net amortized discount of $0 as of March 31, 2018, of which $65,000
has been paid.
|
-
|
-
|
$10,000 face value,
issued in September 2017, interest rate of 10%, matures September
2018, net amortized discount of $6,145 as of March 31,
2018.
|
3,855
|
-
|
$5,000 face value,
issued in September 2017, interest rate of 0%, matures March 2018,
net amortized discount of $1,354 as of March 31, 2018.
|
3,646
|
-
|
$50,000 face value,
issued in September 2017, interest rate of 0%, matures November
2017, net amortized discount of $0 as of March 31, 2018, of which
$50,000 was transferred to a new note.
|
-
|
-
|
$110,000 face
value, issued in October 2017, interest rate of 10%, matures July
2018, net amortized discount of $43,114 as of March 31,
2018.
|
66,886
|
-
|
$100,000 face
value, issued in October 2017, interest rate of 10%, matures
October 2018, net amortized discount of $39,129 as of March 31,
2018.
|
60,871
|
-
|
$115,000 face
value, issued in November 2017, interest rate of 10%, matures
August 2018, net amortized discount of $67,214 as of
March 31, 2018.
|
47,786
|
-
|
$50,000 face value,
issued in November 2017, interest rate of 10%, matures January
2018, net amortized discount of $0.00 as of March 31,
2018.
|
50,000
|
-
|
$66,000 face value,
issued in November 2017, interest rate of 10%, matures November
2018, net amortized discount of $28,190 as of March 31,
2018.
|
37,810
|
-
|
$100,000 face
value, issued in November 2017, interest rate of 10%, matures
November 2018, net amortized discount of $64,384 as of March 31,
2018.
|
35,616
|
-
|
$5,000 face value,
issued in November 2017, interest rate of 10%, matures November
2018, net amortized discount of $3,127 as of March 31,
2018.
|
1,873
|
-
|
$53,000 face value,
issued in November 2017, interest rate of 12%, matures July 2018,
net amortized discount of $30,206 as of March 31,
2018.
|
22,794
|
-
|
$100,000 face
value, issued in December 2017, interest rate of 10%, matures
December 2018, net amortized discount of $30,853 as of March 31,
2018.
|
69,147
|
-
|
$20,000 face value,
issued in December 2017, interest rate of 10%, matures December
2018, net amortized discount of $7,141 as of March 31,
2018.
|
12,859
|
-
|
$75,000 face value,
issued in December 2017, interest rate of 10%, matures December
2018, net amortized discount of $34,644 as of March 31,
2018.
|
40,356
|
-
|
$20,000 face value,
issued in December 2017, interest rate of 10%, matures December
2018, net amortized discount of $9,238 as of March 31,
2018.
|
10,762
|
-
|
$6,000 face value,
issued in February 2018, interest rate of 10%, matures April 2018,
net amortized discount of $0.00 as of March 31, 2018.
|
6,000
|
-
|
$20,000 face value,
issued in February 2018, interest rate of 10%, matures February
2019, net amortized discount of $6,732 as of March 31,
2018.
|
13,268
|
-
|
$10,000 face value,
issued in March 2018, interest rate of 10%, matures March 2019, net
amortized discount of $3,109 as of March 31, 2018.
|
6,891
|
-
|
$15,000 face value,
issued in March 2018, interest rate of 10%, matures March 2019, net
amortized discount of $3,800as of March 31, 2018.
|
11,200
|
-
|
$100,000 face
value, issued in March 2018, interest rate of 10%, matures March
2019, net amortized discount of $29,438 as of March 31,
2018.
|
70,562
|
-
|
$115,000 face
value, issued in January 2018, interest rate of 10%, matures
October 2018, net amortized discount of $81,300 as of
March 31, 2018.
|
33,700
|
-
|
$75,075 face value,
issued in February 2018, interest rate of 10%, matures November
2018, net amortized discount of $63,250 as of March
31, 2018.
|
11,825
|
-
|
$53,000 face value,
issued in January 2018, interest rate of 12%, matures November
2018, net amortized discount of $38,797 as of March
31, 2018.
|
14,203
|
-
|
Total convertible
notes payable – non-related parties
|
3,033,942
|
2,267,845
|
Less current
portion
|
3,033,942
|
2,267,845
|
Convertible notes
payable – non-related parties, long-term
|
$-
|
$-
|
Notes Payable –
Related Parties
|
|
|
|
|
|
|
March
31,
|
June
30,
|
|
2018
|
2017
|
|
|
|
Various term notes
with total face value of $585,000 issued from April 11 to June 17,
interest rates range from 0% to 15%, net of unamortized discount of
$0 as of March 31, 2018 and June 30, 2017, respectively, of which
$210,000 has been paid and 375,000 had been
extinguished.
|
$-
|
$585,000
|
$5,000
face value, issued in November 2016, interest rate of 0%, with no
maturity date.
|
5,000
|
5,000
|
$25,000
face value, issued in February 2017, interest rate of 0%, matures
October 2017, of which $5,000 has been paid.
|
20,000
|
20,000
|
$18,000
face value, issued in September 2017, interest rate of 0%, matures
November 2017.
|
18,000
|
-
|
$15,000
face value, issued in October 2017, interest rate of 0%, matures
October 2018.
|
15,000
|
-
|
$25,000
face value, issued in December 2017, interest rate of 0%, matures
December 2018.
|
25,000
|
-
|
$35,000
face value, issued in December 2017, interest rate of 0%, matures
December 2018, of which $35,000 has been paid.
|
-
|
-
|
$7,500
face value, issued in March 2018, interest rate of 0%, matures
March 2019.
|
7,500
|
-
|
$10,000
face value, issued in March 2018, interest rate of 0%, matures
March 2019.
|
10,000
|
-
|
Total notes payable
– related parties
|
75,500
|
610,000
|
Less current
portion
|
75,500
|
610,000
|
Notes payable -
related parties, long term
|
$-
|
$-
|
Notes
Payable – Non-Related Parties
|
|
|
|
March
31,
|
June
30,
|
|
2018
|
2017
|
Various term notes
with total face value of $40,488 due upon demand, interest rates
range from 0% to 14%, of which $40,488 have been
extinguished.
|
$-
|
$40,488
|
$52,000
face value, issued in August 2017, interest rate of 0%, matures
October 2017 net of unamortized discount of $0 as of March 31,
2018.
|
52,000
|
-
|
$52,000
face value, issued in August 2017, interest rate of 0%, matures
October 2017 net of unamortized discount of $5,463 as of March 31,
2018.
|
46,537
|
-
|
$81,000
face value, issued in September 2017, interest rate of 8% per
month, matures March 2018 net of unamortized discount of $0 as of
March 31, 2018.
|
81,000
|
-
|
$255,000
face value, issued in October 2017, interest rate of 2.5% per
month, matures February 2018 net of unamortized discount of $0 as
of March 31, 2018, of which $255,000 has been paid.
|
-
|
-
|
$50,000 face value,
issued in March 2018, interest rate of 10%, matures March 2019, net
amortized discount of $0 as of March 31,
2018.
|
50,000
|
-
|
$225,000
face value, issued in March 2018, interest rate of 30% , matures
March 2019 net of unamortized discount of $83,426 as
of March 31, 2018.
|
141,574
|
-
|
Total note payable
– non-related parties
|
371,111
|
40,488
|
Less current
portion
|
371,111
|
40,488
|
Notes payable
– non-related parties, long-term
|
$-
|
$-
|
|
Shares
|
Shares
|
Liquidation
|
|
Allocated
|
Outstanding
|
Preference
|
Series
A Convertible Preferred
|
100,000
|
15,500
|
-
|
Series
A-1 Convertible Preferred
|
3,000,000
|
2,585,000
|
3,581,964
|
Series
B Convertible Preferred
|
200,000
|
3,500
|
35,000
|
Series
C Convertible Preferred
|
1,000,000
|
13,404
|
-
|
Series
D Convertible Preferred
|
375,000
|
130,000
|
-
|
Series
E Convertible Preferred
|
1,000,000
|
275,000
|
-
|
Series
P Convertible Preferred
|
600,000
|
86,640
|
-
|
Series
S Convertible Preferred
|
50,000
|
-
|
-
|
Total
Preferred Stock
|
6,325,000
|
3,109,044
|
$3,616,964
|
Date
Issued
|
Number
of Options
|
Weighted
Average Exercise Price
|
Weighted
Average Grant Date Fair Value
|
Expiration
Date (yrs)
|
Value
if Exercised
|
Balance
June 30, 2017
|
525,000
|
$0.18
|
$0.16
|
4.81
|
$93,750
|
Granted
|
-
|
-
|
-
|
-
|
-
|
Exercised
|
-
|
-
|
-
|
-
|
-
|
Cancelled/Expired
|
-
|
-
|
-
|
-
|
-
|
Outstanding
as of March 31, 2018
|
525,000
|
$0.05
|
$0.16
|
4.06
|
$28,750
|
|
|
March 31, 2018
|
|
June 30, 2017
|
Expected volatility
|
|
105-304%
|
|
92-126%
|
Expected dividends
|
|
0%
|
|
0%
|
Expected term
|
|
0-5 Years
|
|
0-5 Years
|
Risk-free interest rate
|
|
0.96-2.48%
|
|
0.74-1.89%
|
|
Number
of Warrants
|
Weighted
Average Exercise Price
|
Weighted
Average Grant Date Fair Value
|
Expiration
Date (yrs)
|
Value
if Exercised
|
Outstanding
as of June 30, 2017
|
39,927,097
|
$0.38
|
$0.45
|
3.38
|
$15,144,835
|
Granted
|
2,175,000
|
0.11
|
0.08
|
3.11
|
244,250
|
Exercised
|
-
|
-
|
-
|
-
|
-
|
Cancelled/Expired
|
(2,591,250)
|
0.49
|
-
|
-
|
(1,262,438)
|
Outstanding
as of March 31, 2018
|
39,510,847
|
$0.36
|
$0.42
|
2.86
|
$14,126,647
|
●
|
Level
one — Quoted market prices in active markets for identical
assets or liabilities;
|
|
|
●
|
Level
two — Inputs other than level one inputs that are either
directly or indirectly observable; and
|
|
|
●
|
Level
three — Unobservable inputs developed using estimates and
assumptions, which are developed by the reporting entity and
reflect those assumptions that a market participant would
use.
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Fair
value of derivatives
|
$-
|
$-
|
$3,041,887
|
$3,041,887
|
Securities
available-for-sale
|
$-
|
$-
|
$-
|
$-
|
Year
|
Lease
Payments
|
2018
|
36,336
|
2019
|
137,792
|
2020
|
122,688
|
2021
|
99,746
|
2022
|
-
|
Total
|
$396,562
|
AFTERMASTER,
INC.
|
|||
Consolidated Balance
Sheets
|
|||
|
|
|
|
|
March
31,
|
|
March
31,
|
|
2018
|
|
2018
|
|
As
Reported
|
Correction
|
As
Restated
|
Derivative
Liability
|
3,407,690
|
(365,803)
|
3,041,887
|
Notes
payable, net of discount of $83,295 and $0,
respectively
|
376,705
|
(5,594)
|
371,111
|
Convertible
notes payable, net of discount of $521,668 and $549,737,
respectively
|
3,147,681
|
(113,739)
|
3,033,942
|
Total
Current Liabilities
|
8,145,057
|
(485,136)
|
7,659,921
|
Total
Liabilities
|
8,145,057
|
(485,136)
|
7,659,921
|
Additional
paid In capital
|
65,761,141
|
7,000
|
65,768,141
|
Accumulated
Deficit
|
(72,946,247)
|
478,136
|
(72,468,111)
|
Total
Stockholders' Deficit
|
(7,049,842)
|
485,136
|
(6,564,706)
|
AFTERMASTER,
INC.
|
|||
Consolidated
Statements of Operations and Comprehensive Loss
(Unaudited)
|
|
For
the nine
Months
Ended
March
31, 2018
|
|
For
the nine
Months
Ended
March
31, 2018
|
|
As
Reported
|
Correction
|
As
Restated
|
AfterMaster
Revenues
|
$ 371,910
|
$ -
|
$ 371,910
|
AfterMaster
Product Revenues
|
1,019,748
|
(490,000)
|
529,748
|
Total
Revenues
|
1,391,658
|
(490,000)
|
901,658
|
Cost
of Revenues (Exclusive of Depreciation and
Amortization)
|
1,366,747
|
(490,000)
|
876,747
|
Total
Costs and Expenses
|
3,978,547
|
(490,000)
|
3,488,547
|
Interest
Expense
|
(2,382,084)
|
182,375
|
(2,199,709)
|
Derivative
Expense
|
(1,613,231)
|
(55,190)
|
(1,668,421)
|
Change
in Fair Value of Derivative
|
927,997
|
350,951
|
1,278,948
|
Total
Other Expense
|
1,944,193
|
478,136
|
2,422,329
|
Loss Before Income
Taxes
|
(642,696)
|
478,136
|
(164,560)
|
NET
LOSS
|
$ (642,696)
|
$ 478,136
|
$ (164,560)
|
NET
LOSS AVAILABLE TO COMMON SHAREHOLDERS
|
$ (811,797)
|
$ 478,136
|
$ (333,661)
|
Basic
and diluted Loss Per Share of Common Stock
|
$ (0.01)
|
$ 0.00
|
$ (0.00)
|
NET
LOSS AVAILABLE TO COMMON SHAREHOLDERS
|
(811,797)
|
478,136
|
(333,661)
|
COMPREHENSIVE
LOSS
|
$ (811,797)
|
$ 478,136
|
$ (333,661)
|
AFTERMASTER,
INC.
|
|||
Consolidated
Statements of Cash Flows (Unaudited)
|
|||
|
|
|
|
|
For
the nine
|
|
For
the nine
|
|
Months
Ended
|
|
Months
Ended
|
|
March 31, 2018
|
|
March 31, 2018
|
|
As
Reported
|
Correction
|
As
Restated
|
Net
Loss
|
$ (642,696)
|
$ 478,136
|
$ (164,560)
|
Amortization
of debt discount and issuance costs
|
1,457,536
|
(119,334)
|
1,338,202
|
Derivative
expense
|
1,676,273
|
(7,852)
|
1,668,421
|
(Gain)/Loss
remeasurement of derivative
|
(927,998)
|
(350,950)
|
(1,278,948)
|
Beneficial
conversion feature
|
$ 181,521
|
$ 7,000
|
$ 188,521
|
Derivative
Liability
|
$ 917,001
|
$ (10,000)
|
$ 907,001
|
|
●
|
the sufficiency of existing capital resources and our ability to
raise additional capital to fund cash requirements
for future
operations;
|
|
●
|
uncertainties involved in growth and growth rate of our operations,
business, revenues, operating margins, costs, expenses and acceptance of
any products or services;
|
|
●
|
uncertainties involved in growth and growth rate of our operations,
business, revenues, operating margins, costs, expenses and acceptance of
any products or services;
|
|
●
|
volatility of the stock market, particularly within the technology
sector;
|
|
●
|
our dilution related to all equity grants to employees and
non-employees;
|
|
●
|
that we will continue to make significant capital expenditure
investments;
|
|
●
|
that we will continue to make investments and
acquisitions;
|
|
●
|
the sufficiency of our existing cash and cash generated from
operations;
|
|
●
|
the increase of sales and marketing and general and administrative
expenses in the future;
|
|
●
|
the growth in advertising revenues from our websites and studios
will be achievable and sustainable;
|
|
●
|
that seasonal fluctuations in Internet usage and traditional
advertising seasonality are likely to affect our business;
and
|
|
●
|
general economic conditions.
|
RESULTS OF OPERATIONS
|
|
|
|
|
|
Revenues
|
|
|
|
For the
Nine Months Ended
|
|
|
March
31,
|
|
|
2018
|
2017
|
AfterMaster
Revenues
|
$371,910
|
$369,844
|
Product
Revenues
|
529,748
|
-
|
Total
Revenues
|
$901,658
|
$369,844
|
Revenues
|
|
|
|
For the
Three Months Ended
|
|
|
March
31,
|
|
|
2018
|
2017
|
AfterMaster
Revenues
|
$132,291
|
$266,621
|
Product
Revenues
|
308,905
|
-
|
Total
Revenues
|
$441,196
|
$266,621
|
Cost of Revenues
|
|
|
|
For the
Nine Months Ended
|
|
|
March
31,
|
|
|
2018
|
2017
|
Cost
of Revenues (excluding depreciation and amortization)
|
$876,747
|
$563,403
|
|
For the
Three Months Ended
|
|
|
March
31,
|
|
|
2018
|
2017
|
Cost
of Revenues (excluding depreciation and amortization)
|
$365,407
|
$243,628
|
Other Operating Expenses
|
|
|
|
|
|
|
For the
Nine Months Ended
|
|
|
March
31,
|
|
|
2018
|
2017
|
Depreciation
and Amortization Expense
|
$125,307
|
$131,876
|
Research
and Development
|
10,987
|
138,987
|
Advertising
and Promotion Expense
|
47,604
|
42,509
|
Legal
and Professional Expense
|
66,105
|
116,430
|
Non-Cash
Consulting Expense
|
167,949
|
1,959,408
|
General
and Administrative Expenses
|
2,193,848
|
2,281,202
|
Total
|
$2,611,800
|
$4,670,412
|
Other Operating Expenses
|
|
|
|
For the
Three Months Ended
|
|
|
March
31,
|
|
|
2018
|
2017
|
Depreciation
and Amortization Expense
|
$41,800
|
$46,322
|
Research
and Development
|
8,793
|
45,972
|
Advertising
and Promotion Expense
|
28,939
|
24,865
|
Legal
and Professional Expense
|
28,915
|
61,360
|
Non-Cash
Consulting Expense
|
75,914
|
427,499
|
General
and Administrative Expenses
|
588,816
|
653,160
|
Total
|
$773,177
|
$1,259,178
|
Other Income (Expense)
|
|
|
|
For the
Nine Months Ended
|
|
|
March
31,
|
|
|
2018
|
2017
|
Interest
Expense
|
$ (2,199,709)
|
$(1,149,424)
|
Derivative
Expense
|
(1,668,421)
|
(197,200)
|
Change in Fair
Value of Derivative
|
1,278,948
|
(434,699)
|
Gain on Available
for Sale Securities
|
240,000
|
-
|
Gain
on Extinguishment of Debt
|
4,771,511
|
9,236
|
Total
|
$ 2,422,329
|
$(1,772,087)
|
Other Income (Expense)
|
|
|
|
For the
Three Months Ended
|
|
|
March
31,
|
|
|
2018
|
2017
|
Interest
Expense
|
$ (734,221)
|
$(401,829)
|
Derivative
Expense
|
(1,328,142)
|
(197,200)
|
Change in Fair
Value of Derivative
|
169,584
|
(434,125)
|
Gain on Available
for Sale Securities
|
240,000
|
-
|
Gain
on Extinguishment of Debt
|
4,681,469
|
-
|
Total
|
$ 3,028,690
|
$(1,033,154)
|
Net Loss
|
|
|
|
For the
Nine Months Ended
|
|
|
March
31,
|
|
|
2018
|
2017
|
Net
Loss
|
$ (164,560)
|
$(6,636,058)
|
Net Income (Loss)
|
|
|
|
For the
Three Months Ended
|
|
|
March
31,
|
|
|
2018
|
2017
|
Net
Income (Loss)
|
$2,331,302
|
$(2,269,339)
|
NO.
|
TITLE
|
101.INS*
|
XBRL Instance Document
|
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema
|
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
AFTERMASTER, INC.
|
|
|
|
|
Date: October 18, 2018
|
By:
|
/s/ Larry Ryckman
|
|
Larry Ryckman,
|
|
|
Title: President and Chief Executive Officer
|
|
|
|
|
AFTERMASTER, INC.
|
|
|
|
|
Date: October 18, 2018
|
By:
|
/s/ Larry Ryckman
|
|
Larry Ryckman,
|
|
|
Title: Director, President, Chief Executive Officer
|
|
|
|
|
AFTERMASTER, INC.
|
|
|
|
|
Date: October 18, 2018
|
By:
|
/s/ Mirella Chavez
|
|
Mirella Chavez
|
|
|
Title: Chief Financial Officer, Secretary
|
1.
|
I have reviewed
this quarterly report on Form 10-Q/A
of AfterMaster, Inc.;
|
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 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 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.
|
1.
|
I have reviewed
this quarterly report on Form 10-Q/A for
AfterMaster, Inc.;
|
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 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 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.
|
(1)
|
The Quarterly
Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information
contained in the Quarterly Report fairly presents, in all material
respects, the financial condition and result of operations of the
Company.
|
|
|
|
|
AFTERMASTER,
INC.
|
|
|
|
|
Date: October
18, 2018
|
By:
|
/s/
Larry Ryckman
|
|
Larry
Ryckman
|
|
|
President and Chief
Executive Officer
|
|
|
|
|
AFTERMASTER,
INC.
|
|
|
|
|
Date: October
18, 2018
|
By:
|
/s/
Mirella Chavez
|
|
Mirella
Chavez
|
|
|
Chief Financial
Officer and Chief Accounting Officer
|
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
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Mar. 31, 2018 |
May 15, 2018 |
|
Document And Entity Information | ||
Entity Registrant Name | AFTERMASTER, INC. | |
Entity Central Index Key | 0000836809 | |
Document Type | 10-Q/A | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | true | |
Amendment Description | <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">On October 12, 2018, the Board of Directors (the “Board”) of Aftermaster, Inc. (the “Company”), upon the recommendation of management, determined that the consolidated financial statements (the "Previously Issued Financial Statements") presented in the Company's transitional report for the quarterly period ended March 31, 2018, as set forth in the Company's previously filed quarterly report on Form 10-Q and 10-QA, filed with the Securities and Exchange Commission (the “SEC”) on May 18, 2018 (the “Revised Period”), should no longer be relied upon.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the September 30, 2017 quarter, the Company sold $400,000 of its product to its manufacturer for $400,000 and recorded it as gross revenue. The transaction eliminated $400,000 in short term debt. During the course of the audit it was determined that the transaction should have been classified as net sales. Accordingly, the Company should not have (i) recognized gross revenue of $400,000 for the sale related to 4,000 units to the Company’s manufacturer, (ii) recognized the cost of sales related to 4,000 units of Company products sold<font style="font-family: Times New Roman, Times, Serif"> </font>to that manufacturer in the amount of $400,000.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company also determined that it erroneously overstated the derivative liability as of September 30, 2017 and it should be reduced by $485,031.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the December 31, 2017 quarter, the Company sold $90,000 of its product to its manufacturer for $120,000 and recorded it as gross revenue. The transaction eliminated $90,000 in short term debt. During the course of the audit it was determined that the transaction should have been classified as net sales. Accordingly, the Company should not have (i) recognized gross revenue of $120,000 for the sale related to the 1,000 units to the Company’s manufacturer and should have only recognized $30,000 in net revenue, (ii) recognized the cost of sales of $90,000 related to 1,000 units of Company product sold to that manufacturer, or (iii) decreased derivative liabilities by $356,396 by including in the derivative liability calculation convertible debt that did not include elements that would trigger derivative treatment. </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the March 31, 2018 quarter, the Company is (i) recording changes made in the September 30, 2017 and the December 31, 2017 quarters, and (ii) increasing derivative liabilities by $365,803 due to the Company using the incorrect discounted conversion rate to arrive at the conversion price and number of shares that could be issued and using an incorrect maturity date to estimate the useful life on several notes used in the derivative liability calculation.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">The Company financial statements have been restated conform to the current period presentation. These reclassifications had an effect on reported losses.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">No other changes have been made to the Quarterly Report except as noted above. This Amendment to the Quarterly Report speaks as of the original filing date of the Quarterly Report, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Quarterly Report except that changes have been made to the cover page, NOTE 2 – Going Concern, NOTE 5 – Notes Payable–, and NOTE 10 – Fair Value Measurements. In addition, in connection with the restatement, this Amendment reflects the revisions to Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of Part I. Otherwise, the Originally Filed Form 10-Q is restated herein in its entirety and no other information in the Originally Form Filed 10-Q is amended hereby. Disclosures and forward-looking information in this Amendment continue to speak as of the date of the Originally Filed Form 10-Q, and do not reflect events occurring after the filing of the Originally Filed Form 10-Q. Accordingly, this Amendment should be read in conjunction with our other filings made with the SEC after the filing of the Originally Filed Form 10-Q, including any amendments to those filings.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">A description of the restatement is presented in Note 14, under the caption Restatement of Prior Period Financial Statements.</font></p> | |
Current Fiscal Year End Date | --06-30 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 143,095,128 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2018 | |
Entity Emerging Growth Company | false | |
Entity Small Business | true |
Consolidated Statements of Operations - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
REVENUES | ||||
AfterMaster Revenues | $ 132,291 | $ 266,621 | $ 371,910 | $ 369,844 |
Product Revenues | 308,905 | 0 | 529,748 | 0 |
Total Revenues | 441,196 | 266,621 | 901,658 | 369,844 |
COSTS AND EXPENSES | ||||
Cost of Revenues (Exclusive of Depreciation and Amortization) | 365,407 | 243,628 | 876,747 | 563,403 |
Depreciation and Amortization Expense | 41,800 | 46,322 | 125,307 | 131,876 |
Research and Development | 8,793 | 45,972 | 10,987 | 138,987 |
Advertising and Promotion Expense | 28,939 | 24,865 | 47,604 | 42,509 |
Legal and Professional Expense | 28,915 | 61,360 | 66,105 | 116,430 |
Non-Cash Consulting Expense | 75,914 | 427,499 | 167,949 | 1,959,408 |
General and Administrative Expenses | 588,816 | 653,160 | 2,193,848 | 2,281,202 |
Total Costs and Expenses | 1,138,584 | 1,502,806 | 3,488,547 | 5,233,815 |
Loss from Operations | (697,388) | (1,236,185) | (2,586,889) | (4,863,971) |
Other Income (Expense) | ||||
Interest Expense | (734,221) | (401,829) | (2,199,709) | (1,149,424) |
Derivative Expense | (1,328,142) | (197,200) | (1,668,421) | (197,200) |
Change in Fair Value of Derivative | 169,584 | (434,125) | 1,278,948 | (434,699) |
Gain Available for Sale Securities | 240,000 | 0 | 240,000 | 0 |
Gain Loss on Extinguishment of Debt | 4,681,469 | 0 | 4,771,511 | 9,236 |
Total Other Income (Expense) | 3,028,690 | (1,033,154) | 2,422,329 | (1,772,087) |
Income (Loss) Before Income Taxes | 2,331,302 | (2,269,339) | (164,560) | (6,636,058) |
Income Tax Expense | 0 | 0 | 0 | 0 |
NET INCOME (LOSS) | 2,331,302 | (2,269,339) | (164,560) | (6,636,058) |
Preferred Stock Accretion and Dividends | (56,367) | (41,999) | (169,101) | (129,855) |
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ 2,274,935 | $ (2,311,338) | $ (333,661) | $ (6,765,913) |
Basic Income(Loss) Per Share of Common Stock | $ .02 | $ (0.02) | $ 0.00 | $ (0.06) |
Weighted Average Number of Shares Outstanding | 130,950,689 | 109,468,240 | 124,785,081 | 106,238,848 |
Diluted Income (Loss) Per Share of Common Stock | $ .01 | $ (0.02) | $ 0.00 | $ (0.06) |
Diluted -Weighted Average Number of Shares Outstanding | 182,810,706 | 109,468,240 | 124,785,081 | 106,238,848 |
Other Comprehensive Income, net of tax | ||||
NET INCOME/(LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ 2,274,935 | $ (2,311,338) | $ (333,661) | $ (6,765,913) |
Unrealized gain(loss) on AFS Securities | 64,800 | 15,000 | 0 | (600) |
COMPREHENSIVE INCOME/(LOSS) | $ 2,339,735 | $ (2,296,338) | $ (333,661) | $ (6,766,513) |
1. CONDENSED FINANCIAL STATEMENTS |
9 Months Ended |
---|---|
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
1. CONDENSED FINANCIAL STATEMENTS | The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2018, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's June 30, 2017 audited financial statements. The results of operations for the periods ended March 31, 2018 and 2017 are not necessarily indicative of the operating results for the full years.
|
2. GOING CONCERN |
9 Months Ended |
---|---|
Mar. 31, 2018 | |
Text Block [Abstract] | |
2. GOING CONCERN |
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an accumulated deficit of $72,468,111, negative working capital of $6,834,972, and currently has revenues which are insufficient to cover its operating costs, which raises substantial doubt about its ability to continue as a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern.
The future of the Company as an operating business will depend on its ability to (1) obtain sufficient capital contributions and/or financing as may be required to sustain its operations and (2) to achieve adequate revenues from its ProMaster and AfterMaster businesses. Management's plan to address these issues includes, (a) continued exercise of tight cost controls to conserve cash, (b) obtaining additional financing, (c) more widely commercializing the AfterMaster and ProMaster products, and (d) identifying and executing on additional revenue generating opportunities.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations. |
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended |
---|---|
Mar. 31, 2018 | |
Notes to Financial Statements | |
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates are made in relation to the allowance for doubtful accounts and the fair value of certain financial instruments.
Principles of Consolidation The consolidated financial statements include the accounts of AfterMaster, Inc. and its subsidiaries. All significant inter-Company accounts and transactions have been eliminated.
Investments Our available for securities are considered Level 1. Realized gains and losses on these securities are included in “Other income (expense) – net” in the consolidated statements of operations using the specific identification method. Unrealized gains and losses, on available-for-sale securities are recorded in accumulated other comprehensive income (accumulated OCI). Unrealized losses that are considered other than temporary are recorded in other income (expense) – net, with the corresponding reduction to the carrying basis of the investment.
Our short-term investments are recorded at amortized cost, and the respective carrying amounts approximate fair values. Our available for securities maturing within one year are recorded in “Other current assets,” on the balance sheets.
Accounts Receivables Accounts receivables are stated at amounts management expects to collect. An allowance for doubtful accounts is provided for uncollectible receivables based upon management's evaluation of outstanding accounts receivable at each reporting period considering historical experience and customer credit quality and delinquency status. Delinquency status is determined by contractual terms. Bad debts are written off against the allowance when identified.
Fair Value Instruments Cash is the Company’s only financial asset or liability required to be recognized at fair value and is measured using quoted prices for active markets for identical assets (Level 1 fair value hierarchy). The carrying amounts reported in the balance sheets for notes receivable and accounts payable and accrued expenses approximate their fair market value based on the short-term maturity of these instruments.
Market prices are not available for the Company’s loans due to related parties or its other notes payable, nor are market prices of similar loans available. The Company determined that the fair value of the notes payable based on its amortized cost basis due to the short-term nature and current borrowing terms available to the Company for these instruments.
Derivative Liabilities The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares.
Using this sequencing policy, the Company used this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to July 5, 2016 until the note was converted on the same day were derivative liabilities. The Company again used this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to August 19, 2016 until the note was converted on August 22, 2016 were derivative liabilities.
The Company entered into multiple amendments to a note payable to extend the maturity date (the Amendments). The Company agreed to additional $30,000 extension fees which were converted at a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. This creates a situation where the Company no longer has shares enough available to “cover” all potential equity issuance obligations during the period of issuance until conversion.
On February 3, 2017, the company entered into a note payable with an unrelated party at a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. Accordingly, all convertible instruments issued after February 3, 2017 are considered derivatives according to the Company’s sequencing policy.
The Company values these convertible notes payable using the multinomial lattice method that values the derivative liability within the notes based on a probability weighted discounted cash flow model. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.
Income Taxes There is no income tax provision for the three and nine months ended March 31, 2018 and 2017 due to net operating losses for which there is no benefit currently available.
At March 31, 2018, the Company had deferred tax assets associated with state and federal net operating losses. The Company has recorded a corresponding full valuation allowance as it is more likely than not that some portion of all of the deferred tax assets will not be realized.
Revenue Recognition The Company applies the provisions of FASB ASC 605, Revenue Recognition in Financial Statements, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue related to goods and services provided when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured.
The Company's revenues are generated from AfterMaster products and services, AfterMaster Pro, sessions revenue, and remastering. Revenues related to AfterMaster Pro sells through consumer retail distribution channels and through our website. For sales through consumer retail distribution channels, revenue recognition occurs when title and risk of loss have transferred to the customer which usually occurs upon shipment to the customers. We established allowances for expected product returns and these allowances are recorded as a direct reduction to revenue. Return allowances are based on our historical experience. Revenues related to sessions and remastering are recognized when the event occurred.
Cost of Revenues The Company’s cost of revenues includes employee costs, product costs, and other nominal amounts. Costs associated with products are recognized at the time of the sale and when the inventory is shipped. Costs incurred to provide services are recognized as cost of sales as incurred. Depreciation is not included within cost of revenues.
Loss Per Share Basic loss per Common Share is computed by dividing losses attributable to Common shareholders by the weighted-average number of shares of Common Stock outstanding during the period. The losses attributable to Common shareholders was increased for accrued and deemed dividends on Preferred Stock during the nine months ended March 31, 2018 and 2017 of $169,101 and $129,855, respectively.
Diluted earnings per Common Share is computed by dividing net loss attributable to Common shareholders by the weighted-average number of Shares of Common Stock outstanding during the period increased to include the number of additional Shares of Common Stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding convertible Preferred Stock, stock options, warrants, and convertible debt. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s Common Stock can result in a greater dilutive effect from potentially dilutive securities.
For the nine months ended March 31, 2018 and 2017, all of the Company’s potentially dilutive securities (warrants, options, convertible preferred stock, and convertible debt) were excluded from the computation of diluted earnings per share as they were anti-dilutive. The total number of potentially dilutive Common Shares that were excluded were 90,531,890 and 30,383,665 at March 31, 2018 and 2017, respectively.
Recent Accounting Pronouncements Management has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements.
|
4. SECURITIES AVAILABLE-FOR-SALE |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities Available-for-sale | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4. SECURITIES AVAILABLE-FOR-SALE | On November 10, 2014, the Company received 600,000 shares of b Booth stock as part of an Asset License agreement with b Booth. On February 22, 2018, the Company sold the 600,000 shares to the CEO of b Booth in exchange for $270,000, which included $250,000 in cash and $20,000 in commissions fees. The Company realized a gain on sale of the available for sale securities of $240,000 (Sales price of $270,000 less the gross realized loss of $30,000)The following table presents the amortized cost, gross unrealized gains, gross unrealized losses, and fair market value of available-for-sale equity securities, nearly all of which are attributable to the Company's investment in b Booth stock, as follows:
|
5. NOTES PAYABLE |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5. NOTES PAYABLE |
Convertible Notes Payable In accounting for its convertible notes payable where derivative accounting does not apply, proceeds from the sale of a convertible debt instrument with Common Stock purchase warrants are allocated to the two elements based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance. The portions of the proceeds allocated to the warrants are accounted for as paid-in capital with an offset to debt discount. The remainder of the proceeds are allocated to the debt instrument portion of the transaction as prescribed by ASC 470-25-20. The Company then calculates the effective conversion price of the note based on the relative fair value allocated to the debt instrument to determine the fair value of any beneficial conversion feature (“BCF”) associated with the convertible note in accordance with ASC 470-20-30. The BCF is recorded to additional paid-in capital with an offset to debt discount. Both the debt discount related to the issuance of warrants and related to a BCF is amortized over the life of the note.
Convertible Notes Payable – Related Parties Convertible notes payable due to related parties consisted of the following as of March 31, 2018 and June 30, 2017, respectively:
As part of a settlement agreement dated March 30, 2018, the agreed to extinguish $3,925,000 in convertible notes with related parties and accrued interest of $240,041, $575,000 in related party notes payable and accrued interest of $43,007 for a total payment of $200,000. As part of the arrangement the note holder agreed to cancel 14,837,251 shares of common stock and 531,250 warrants.
On December 30, 2017, the Company issued a note to a related party for $25,000 that matures on December 30, 2018. The note bears 0% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. The Company valued a BCF related to the note valued at $3,750.
On January 4, 2018, the Company issued a note to a related party for $15,000 that matures on January 4, 2019. The note bears 0% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. The Company valued a BCF related to the note valued at $2,700.
On January 11, 2018, the Company issued a note to a related party for $10,000 that matures on January 11, 2019. The note bears 0% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. The Company valued a BCF related to the note valued at $1,000.
On February 14, 2018, the Company issued a note to a related party for $24,500 that matures on February 14, 2019. The note bears 0% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share.
Convertible Notes Payable - Non-Related Parties Convertible notes payable due to non-related parties consisted of the following as of March 31, 2018 and June 30, 2017, respectively:
On November 20, 2015, the Company issued a convertible note to an unrelated company for $600,000 that matures on May 20, 2016. The company paid $200,000 in principle balance leaving a remain balance of $430,000 including the extension fees and is not convertible unless the borrower defaults under the amendment agreement dated January 1, 2017. The note bears 0% interest and had an original issue discount (OID) of $100,000. This note is not convertible unless there is a default event. Per the terms of the note there are no derivatives until it becomes convertible on the original note, however the $30,000 extensions are to be considered derivatives. The Lender released a clarification of amendments to convertible promissory notes that explained the $30,000 extension fees are the only portion that is to be considered as convertible and converts within 2 days of issuance. The intent of the amendment agreements were to insure the original note dated November 20, 2015 in the amount of $600,000. Because the terms do not dictate a maximum numbers of convertible shares, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability Under ASC 815-40. The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares. During the extension and conversion day period no additional convertible instruments were issued, therefore on the extension was considered in the derivative calculation. The Company extended the maturity date seven times since February 27, 2017 for a total of $210,000, of which, the Company paid $135,000 in the nine months ended March 31, 2018. The Company latest and fourteenth extension with consideration of $30,000 was on December 18, 2017 to extending the maturity date to January 31, 2018. The Company evaluated the amendments under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. On February 2, 2018, the note converted the principal of $30,000 for 680,118 shares of common stock. On February 23, 2018, the note converted the principal of $30,000 for 1,083,698 shares of common stock.
On February 15, 2016, the Company issued a convertible note to an unrelated individual for $25,000 that matures on February 15, 2017. The note was amended subsequently in September 28, 2017 to extend the maturity date to October 15, 2017. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt.
On September 15, 2016, the Company issued a convertible note to an unrelated individual for $1,000,000 that matures on June 30, 2017. The note was amended subsequently on June 30, 2017 to extend the maturity date to June 30, 2018. The Company evaluated amendment under ASC 47050, "Debt Modification and Extinguishment", and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt.
On February 23, 2017, the Company issued a convertible note to an unrelated company for $149,000 that matures on November 23, 2017. The note bears 10% interest per annum and is convertible into shares of the Company’s common stock at lesser of 40% of the average three lowest closing bids 20 days prior to the conversion date. Additionally, the note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, that this percentage discount (variable) exercise price indicates is an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value. The Company extended the possibility to convert date by issuing 60,000 warrants valued at $7,813 on September 8, 2017 to November 2, 2017. The Company extended the possibility to convert date by issuing 60,000 warrants valued at $7,813 on September 8, 2017 to November 2, 2017. The Company extended the possibility to convert date by paying $10,000 of principal and $1,400 of accrued interest on October 23, 2017 to November 24, 2017 and extend the maturity date to February 21, 2018. The Company extended the possibility to convert date by paying $10,000 of principal and $4,000 of accrued interest on November 29, 2017 to December 22, 2017. The warrants are considered derivative liabilities under ASC 815-40 under the Company’s sequencing policy and were valued using the multinomial lattice model. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt.
On February 23, 2017, the Company issued a convertible note to an unrelated company for $224,000 that matures on November 23, 2017. The note bears 10% interest per annum and is convertible into shares of the Company’s common stock at lesser of 40% of the average three lowest closing bids 20 days prior to the conversion date. Additionally, the note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value. The Company extended the possibility to convert date by issuing 90,000 warrants valued at $11,720 on September 8, 2017 to November 2, 2017. The Company extended the possibility to convert date by paying $10,000 of principal and $2,100 of accrued interest on October 23, 2017 to November 24, 2017 and extend the maturity date to February 21, 2018. The Company extended the possibility to convert date by paying $20,000 of principal and $6,000 of accrued interest on November 29, 2017 to December 22, 2017. The warrants are considered derivative liabilities under ASC 815-40 under the Company’s sequencing policy and were valued using the multinomial lattice model. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. On March 12, 2018, the note converted the principal of $7,337 and $4,278 in accrued interest into for 575,000 shares of common stock.
On August 26, 2016, the Company issued a convertible note to an unrelated individual for $50,000 that matures on August 26, 2017. The note bears interest rate of 10% per annum and is convertible into shares of the Company’s Common stock at $0.40 per share. The note was amended on June 30, 2017 to extend the maturity date to October 1, 2017. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. The note was amended again on September 28, 2017 to extend the maturity date to January 1, 2018. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension resulted in significant and consequential changes to the economic substance of the debt and thus resulted in a extinguishment of the debt. The Company recorded a debt discount of $30,000 as a result of the extinguishment.
On March 7, 2016, the Company issued a convertible note to an unrelated individual for $100,000 that matures on March 7, 2017. The note bears interest rate of 10% per annum and is convertible into shares of the Company’s Common stock at $0.40 per share. The Company valued a BCF related to the note valued at $24,269 and debt discount related to the 10,000 shares of common stock issued with the note at a relative fair value of $4,569. The note was amended again on September 28, 2017 to extend the maturity date to January 15, 2018, as additional consideration the Company issued 25,000 shares of common stock valued at $3,998. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt.
On July 26, 2016, the Company issued a convertible note to an unrelated individual for $50,000 that matures on September 26, 2016. The note bears interest rate of 0% per annum and is convertible into shares of the Company’s Common stock at $0.40 per share, as part of the note the company issued warrants to purchase 35,000 shares of 144 restricted common stock at an exercise price $0.30 for a two-year period. The note was amended on September 28, 2017 to extend the maturity date to January 15, 2018, as additional consideration the Company issued 15,000 shares of common stock valued at $2,399. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt.
On May 12, 2017, the Company issued a convertible note to an unrelated company for $265,000 that matures on February 17, 2018. The note bears 10% interest per annum and is convertible into shares of the Company’s common stock at the lesser of $.31 and 60% of the lowest closing bids 25 days prior to the conversion date. Additionally, the note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates that these shares, if issued, are not indexed to the Company’s own stock and, therefore, is an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value. On February 22, 2018, the note converted interest of $9,200 and $250 in conversion fees for 450,000 shares of common stock. On March 6, 2018, the note converted principal of $11,138, $13,812 in interest, and $250 in conversion fees for 1,200,000 shares of common stock.
On June 13, 2017, the Company issued a convertible note to an unrelated company for $55,000 that matures on January 13, 2018. The note bears 10% interest per annum and is convertible into shares of the Company’s common stock at 57.5% of the lowest closing bids 30 days prior to the conversion date. Additionally, the note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates that these shares, if issued, are not indexed to the Company’s own stock and, therefore, is an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value. The note was amended on December 13, 2017, to extend the maturity date to January 15, 2018 and again on January 18, 2018, to extend the maturity date to February 15, 2018.As consideration for the extensions two extension fees of $10,000 each had been added to the outstanding principal. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did result in significant and consequential changes to the economic substance of the debt and thus resulted in an extinguishment of the debt and the company recorded a loss on extinguishment of debt of $20,000. On March 5, 2018, the note converted the principal of $15,000 for 745,342 shares of common stock. On March 21, 2018, the note converted the principal of $15,000 for 745,342 shares of common stock.
In conjunction with the note, the Company issued to the holder 55,000 warrants to purchase Common Shares. The value of the debt discount recorded was $41,150 and the debt discount related to the attached relative fair value of warrants was $8,850, for a total debt discount of $50,000, and a derivative expense of $9,432.
On July 31, 2017, the Company issued a convertible note to an unrelated company for $78,000, which included $75,000 in proceeds and $3,000 in legal fees, that matures on April 10, 2018. The note bears 12% interest per annum and is convertible into shares of the Company’s common stock at 61% of the lowest two trading prices during the fifteen (15) trading day period ending to the date of conversion. The note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value. On February 1, 2018, the note converted the principal of $12,000 for 238,284 shares of common stock. On February 1, 2018, the note converted the principal of $12,000 for 238,284 shares of common stock. On February 15, 2018, the note converted the principal of $20,000 for 529,101 shares of common stock. On February 22, 2018, the note converted the principal of $20,000 for 655,738 shares of common stock. On March 2, 2018, the note converted the principal of $20,000 for 809,717 shares of common stock.
On August 2, 2017, the Company issued a convertible note to an unrelated party for $50,000 that matures on August 24, 2017. The note bears 0% interest per annum, in lieu of interest the Company issued 12,000 shares of common stock on August 4, 2017. The note is convertible into shares of the Company’s common stock at $0.10 per share. The Company valued a BCF related to the note valued at $31,287 and debt discount related to the 12,000 shares of common stock issued with the note at a relative fair value of $1,837. The note was amended on September 15, 2017, to extend the maturity date to October 15, 2017. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. On September 15, 2017, the note converted the principal of $34,000 for 340,000 shares of common stock. On November 17, 2017, the company transferred the remaining balance to a new note, see below.
On August 2, 2017, the Company issued a convertible note to an unrelated company for $60,500, which includes proceeds of $55,000, and $5,500 in OID, that matures on August 2, 2018. The note bears 12% interest per annum and is convertible into shares of the Company’s common stock at 61% of the lowest two trading prices during the fifteen (15) trading day period ending to the date of conversion. The note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value.
On August 4, 2017, the Company issued a convertible note to an unrelated party for $10,000 that matures on August 4, 2018. The note bears 0% interest per annum, in lieu of interest the Company issued 3,500 shares of common stock on August 7, 2017. The note is convertible into shares of the Company’s common stock at $0.10 per share. The Company valued a BCF related to the note valued at $7,056 and debt discount related to the 3,500 shares of common stock issued with the note at a relative fair value of $546.
On August 15, 2017, the Company issued a convertible note to an unrelated company for $82,250, which included $75,000 in proceeds and $7,250 in legal and other fees, that matures on April 18, 2018. The note bears 12% interest per annum and is convertible into shares of the Company’s common stock at 60% the lowest trading price during the previous twenty (2) days to the date of conversion. The note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value. On February 21, 2018, the note converted the principal of $15,000 for 714,285 shares of common stock. On March 21, 2018, the note converted the principal of $20,000 for 833,333 shares of common stock.
On August 16, 2017, the Company issued a convertible note to an unrelated company for $53,000, which included $50,000 in proceeds and $3,000 in legal fees, that matures on June 16, 2018. The note bears 12% interest per annum and is convertible into shares of the Company’s common stock at 61% of the lowest two trading prices during the fifteen (15) trading day period ending to the date of conversion. The note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value.
On September 8, 2017, the Company issued a convertible note to an unrelated company for $65,000, which included $58,500 in proceeds and $6,500 in OID, that matures on March 8, 2018. The note bears 12% interest per annum and is convertible into shares of the Company’s common stock at 55% of either the lowest sales price for common stock on principal market during the twenty-five consecutive trading days including the immediately preceding the conversion date. The note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value.
On September 11, 2017, the Company issued a convertible note to an unrelated party for $10,000 that matures on September 11, 2018. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. Due to sequencing on February 2, 2017, the Company determined under ASC 815, the Company has determined that the note is to be treated as an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value.
On September 27, 2017, the Company issued a convertible note to an unrelated party for $5,000 that matures on March 31, 2018. The note bears 0% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. The Company valued a BCF related to the note valued at $2,995.
On September 28, 2017, the Company issued a convertible note to an unrelated party for $50,000 that matures on November 28, 2017. The note bears 0% interest per annum, in lieu of interest the Company issued 25,000 shares of common stock. The note is convertible into shares of the Company’s common stock at $0.10 per share. The Company valued a BCF related to the note valued at $33,397 and debt discount related to the 25,000 shares of common stock issued with the note at a relative fair value of $3,702. On November 17, 2017, the company transferred the remaining balance to a new note, see below.
On October 16, 2017, the Company issued a convertible note to an unrelated company for $110,000 that matures on July 16, 2018. The note bears 10% interest per annum and is convertible into shares of the Company’s common stock at 57.5% of the lowest closing bid 30 days prior to the conversion date. Additionally, the note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates that these shares, if issued, are not indexed to the Company’s own stock and, therefore, is an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value.
The Company extended the possibility to convert date by issuing 60,000 warrants valued at $7,813 on September 8, 2017 to November 2, 2017. The warrants are considered derivative liabilities under ASC 815-40 under the Company’s sequencing policy and were valued using the multinomial lattice model. The Company extended the possibility to convert date by paying $164,469 in principal on October 23, 2017 to February 21, 2018. The warrants are considered derivative liabilities under ASC 815-40 under the Company’s sequencing policy and were valued using the multinomial lattice model. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt.
On October 29, 2017, the Company issued a convertible note to an unrelated party for $100,000 that matures October 29, 2018. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. As additional consideration the Company is to issue shares of common stock as initial interest payment in kind calculated by dividing the principal by $0133333 per share totaling 750,002 shares of common stock. The Company valued a BCF related to the note valued at $20,000 and debt discount related to the 750,002 shares of common stock issued with the note at a relative fair value of $47,368.
On November 13, 2017, the Company issued a convertible note to an unrelated party for $115,000 that matures on August 13, 2018. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at 57.5% of the lowest closing bids 30 days prior to the conversion per share. Due to sequencing on February 2, 2017, the Company determined under ASC 815, the Company has determined that the note is to be treated as an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value. As additional consideration the Company also issued 150,000 warrants valued at $12,570. The warrants are considered derivative liabilities under ASC 815-40 under the Company’s sequencing policy and were valued using the multinomial lattice model.
On November 13, 2017, the Company issued a convertible note to an unrelated party for $50,000 that matures January 10, 2018. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. The Company valued a BCF related to the note valued at $18,500.
The note was amended on October 30, 2017, to extend the conversion rights from 180 days to 225 days, in consideration of the extension the Company paid $25,000 and issued 150,000 valued at $6,691. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did result in significant and consequential changes to the economic substance of the debt and thus resulted in an extinguishment of the debt.
On November 17, 2017, the Company issued a convertible note to an unrelated party for $66,000 that matures November 17, 2018 in exchange for two existing notes for $16,000 issued on August 2, 2017 and $50,000 on September 28, 2017. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. As additional consideration the Company is to issue shares of common stock as initial interest payment in kind calculated by dividing the principal by $0133333 per share totaling 495,001. The Company valued a BCF related to the note valued at $13,266 and debt discount related to the 495,001shares of common stock issued with the note at a relative fair value of $31,277.
On November 21, 2017, the Company issued a convertible note to an unrelated party for $100,000 that matures on November 21, 2018. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at 57.5% of the lowest closing bids 20 days prior to the conversion per share. Due to sequencing on February 2, 2017, the Company determined under ASC 815, the Company has determined that the note is to be treated as an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value.
On November 24, 2017, the Company issued a convertible note to an unrelated party for $5,000 that matures November 24, 2018. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. As additional consideration the Company is to issue shares of common stock as initial interest payment in kind calculated by dividing the principal by $0133333 per share totaling 37,500. The Company valued a BCF related to the note valued at $2,200 and debt discount related to the 37,500shares of common stock issued with the note at a relative fair value of $2,596.
On November 28, 2017, the Company issued a convertible note to an unrelated party for $53,000 that matures on July 16, 2018. The note bears 12% interest per annum. The note is convertible into shares of the Company’s common stock at 61% of the lowest closing bids 15 days prior to the conversion per share. Due to sequencing on February 2, 2017, the Company determined under ASC 815, the Company has determined that the note is to be treated as an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value.
On December 18, 2017, the Company issued a convertible note to an unrelated party for $100,000 that matures December 18, 2018. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. As additional consideration the Company is to issue shares of common stock as initial interest payment in kind calculated by dividing the principal by $0133333 per share totaling 750,002. The Company valued a BCF related to the note valued at $100 and debt discount related to the 750,002 shares of common stock issued with the note at a relative fair value of $42,882.
On December 21, 2017, the Company issued a convertible note to an unrelated party for $20,000 that matures December 21, 2018. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. As additional consideration the Company is to issue shares of common stock as initial interest payment in kind calculated by dividing the principal by $0133333 per share totaling 150,000 The Company valued a BCF related to the note valued at $1,020 and debt discount related to the 150,000 shares of common stock issued with the note at a relative fair value of $8,816.
On December 31, 2017, the Company issued a convertible note to an unrelated party for $75,000 that matures December 31, 2018. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. As additional consideration the Company is to issue shares of common stock as initial interest payment in kind calculated by dividing the principal by $0133333 per share totaling 150,000. The Company valued a BCF related to the note valued at $11,250 and debt discount related to the 150,000 shares of common stock issued with the note at a relative fair value of $34,732.
On December 31, 2017, the Company issued a convertible note to an unrelated party for $20,000 that matures December 31, 2018. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. As additional consideration the Company is to issue shares of common stock as initial interest payment in kind calculated by dividing the principal by $0133333 per share totaling 562,501. The Company valued a BCF related to the note valued at $3,000 and debt discount related to the 562,501 shares of common stock issued with the note at a relative fair value of $9,262.
On January 8, 2018, the Company issued a convertible note to an unrelated company for $53,000, which included $50,000 in proceeds and $3,000 in legal fees, that matures on November 10, 2018. The note bears 12% interest per annum and is convertible into shares of the Company’s common stock at 61% of the lowest two trading prices during the fifteen (15) trading day period ending to the date of conversion. The note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value.
On January 10, 2018, the Company issued a convertible note to an unrelated party for $115,000 that matures on October 10, 2018. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at the lesser of $.12 and 57.5% of the lowest trading price during the prior 30 days. Due to sequencing on February 2, 2017, the Company determined under ASC 815, the Company has determined that the note is to be treated as an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value. As additional consideration the Company also issued 150,000 warrants valued at $11,056 The warrants are considered derivative liabilities under ASC 815-40 under the Company’s sequencing policy and were valued using the multinomial lattice model.
On February 8, 2018, the Company issued a convertible note to an unrelated party for $20,000 that matures February 8, 2019. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. The Company valued a debt discount related to the 150,004 shares of common stock issued with the note at a relative fair value of $7,581.
On February 21, 2018, the Company issued a convertible note to an unrelated party for $6,000 that matures April 1, 2018. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share.
On March 2, 2018, the Company issued a convertible note to an unrelated party for $10,000 that matures March 2, 2019. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. The Company valued a debt discount related to the 75,002 shares of common stock issued with the note at a relative fair value of $3,377.
On March 5, 2018, the Company issued a convertible note to an unrelated party for $15,000 that matures March 5, 2019. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. The Company valued a debt discount related to the 112,503 shares of common stock issued with the note at a relative fair value of $4,091.
On March 12, 2018, the Company issued a convertible note to an unrelated party for $100,000 that matures March 12, 2019. The note bears 10% interest per annum. The note is convertible into shares of the Company’s common stock at $0.10 per share. The Company valued a debt discount related to the 750,019 shares of common stock issued with the note at a relative fair value of $31,055.
On March 29, 2018, the Company issued a convertible note to an unrelated party for $225,000 that matures March 29, 2019. The note bears 10% interest per annum. The Company valued a debt discount related to the 2,000,000 shares of common stock issued with the note at a relative fair value of $78,261.
Notes Payable – Related Parties Notes payable due to related parties consisted of the following as of March 31, 2018 and June 30, 2017, respectively:
Notes Payable – Non-Related Parties Notes payable due to non-related parties consisted of the following as of March 31, 2018 and June 30, 2017, respectively:
On August 25, 2017, the Company issued a note to an unrelated party for $52,000 as part of an Accounts Receivable Financing Agreement, which included $50,000 in proceeds and an OID of $2,000, that matures on October 25, 2017. The note bears 0% interest per annum. As additional consideration the Company also issued 50,000 warrants valued at $6,625. The warrants are considered derivative liabilities under ASC 815-40 under the Company’s sequencing policy and were valued using the multinomial lattice model.
On August 31, 2017, the Company issued a note to an unrelated party for $52,000 as part of an Accounts Receivable Financing Agreement, which included $50,000 in proceeds and an OID of $2,000, that matures on October 31, 2017. The note bears 0% interest per annum. As additional consideration the Company also issued 50,000 warrants valued at $6,773. The warrants are considered derivative liabilities under ASC 815-40 under the Company’s sequencing policy and were valued using the multinomial lattice model.
On September 19, 2017, the Company issued a note to an unrelated party for $81,000 which included $74,504 in proceeds, $6,000 in OID, and $496 in other fees, that matures on March 19, 2018. The note bears 8% interest per month. As additional consideration the Company is to issue 75,000 shares of common stock within 10 days. The note was amended subsequently on March 19,2018, to extend the maturity date to September 19, 2018. The Company evaluated amendment under ASC 47050, "Debt Modification and Extinguishment", and concluded that the extension did result in significant and consequential changes to the economic substance of the debt and thus resulted in an and the company recorded a loss on extinguishment of debt of $0.
On October 31, 2017, the Company issued a secured promissory note to an unrelated party for $255,000, that matures on February 28, 2018. The note bears 2.5% interest per month. The note is to be paid back the greater of $1,000 per day and $75 per unit sold commencing 31 days after closing, the greater of $1,500 per day and $75 per unit sold commencing 61 days after closing, the greater of $2,000 per day and $75 per unit sold commencing 91 days after closing.
On March 2, 2018, the Company issued a note to an unrelated party for $50,000 that matures March 2, 2019. The note bears 10% interest per annum.
|
6. CONVERTIBLE PREFERRED STOCK |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6. CONVERTIBLE PREFERRED STOCK | The Company has authorized 10,000,000 shares of $0.001 par value per share Preferred Stock, of which the following were issued outstanding:
The Company's Series A Convertible Preferred Stock ("Series A Preferred") is convertible into Common Stock at the rate of 0.025 share of Common stock for each share of the Series A Preferred. Dividends of $0.50 per share annually from date of issue, are payable from retained earnings, but have not been declared or paid.
The Company’s Series A-1 Senior Convertible Redeemable Preferred Stock (“Series A-1 Preferred”) is convertible at the rate of 2 shares of Common Stock per share of Series A-1 Preferred. The dividend rate of the Series A-1 Senior Convertible Redeemable Preferred Stock is 6% per share per annum in cash, or commencing on June 30, 2009 in shares of the Company’s Common Stock (at the option of the Company).
Due to the fact that the Series A-1 Preferred has certain features of debt and is redeemable, the Company analyzed the Series A-1 Preferred in accordance with ASC 480 and ASC 815 to determine if classification within permanent equity was appropriate. Based on the fact that the redeemable nature of the stock and all cash payments are at the option of the Company, it is assumed that payments will be made in shares of the Company’s Common Stock and therefore, the instruments are afforded permanent equity treatment.
The Company's Series B Convertible 8% Preferred Stock ("Series B Preferred") is convertible at the rate of 0.067 share of Common Stock for each share of Series B Preferred. Dividends from date of issue are payable on June 30 from retained earnings at the rate of 8% per annum but have not been declared or paid.
The Company's Series C Convertible Preferred Stock ("Series C Preferred") is convertible at a rate of 0.007 share of Common Stock per share of Series C Preferred. Holders are entitled to dividends only to the extent of the holders of the Company’s Common Stock receive dividends.
The Company's Series D Convertible Preferred Stock ("Series D Preferred") is convertible at a rate of 0.034 share of Common Stock per share of Series D Preferred. Holders are entitled to a proportionate share of any dividends paid as though they were holders of the number of shares of Common Stock of the Company into which their shares of are convertible as of the record date fixed for the determination of the holders of Common Stock of the Company entitled to receive such distribution.
The Company's Series E Convertible Preferred Stock ("Series E Preferred") is convertible at a rate of 0.034 share of Common Stock per share of Series E Preferred. Holders are entitled to a proportionate share of any dividends paid as though they were holders of the number of shares of Common Stock of the Company into which their shares of are convertible as of the record date fixed for the determination of the holders of Common Stock of the Company entitled to receive such distribution.
The Company's Series P Convertible Preferred Stock ("Series P Preferred") is convertible at a rate of 0.007 share of Common Stock for each share of Series P Preferred. Holders are entitled to dividends only to the extent of the holders of the Company’s Common Stock receive dividends.
In the event of a liquidation, dissolution or winding up of the affairs of the Company, holders of Series A Preferred Stock, Series P Convertible Preferred Stock, Series C Convertible Preferred Stock have no liquidation preference over holders of the Company’s Common Stock. Holders of Second Series B Preferred Stock have a liquidation preference over holders of the Company’s Common Stock and the Company’s Series A Preferred Stock. Holders of Series D Preferred Stock are entitled to receive, before any distribution is made with respect to the Company’s Common Stock, a preferential payment at a rate per each whole share of Series D Preferred Stock equal to $1.00. Holders of Series E Preferred Stock are entitled to receive, after the preferential payment in full to holders of outstanding shares of Series D Preferred Stock but before any distribution is made with respect to the Company’s Common Stock, a preferential payment at a rate per each whole share of Series E Preferred Stock equal to $1.00. Holders of Series A-1 Preferred Stock are superior in rank to the Company’s Common Stock and to all other series of Preferred Stock heretofore designated with respect to dividends and liquidation.
The activity surrounding the issuances of the Preferred Stock is as follows:
During the three and nine months ended March 31, 2018 the Company did not issue shares of Series A-1 Preferred.
During the fiscal year ended June 30, 2017 the Company issued 550,000 shares of Series A-1 Preferred Stock for $550,000 in cash and paid $196,853 in cash offering costs. The Company had one conversion of 150,000 shares of Series A-1 Preferred Stock for 300,000 shares of Common Stock, and issued 15,682 shares of Common Stock of payment of $7,481 in accrued dividends.
During the three and nine months ended March 31, 2018 and 2017, the outstanding Preferred Stock accumulated $169,101 and $129,855 in dividends on outstanding Preferred Stock. The cumulative dividends in arrears as of March 31, 2018 were approximately $1,078,039.
|
7. COMMON STOCK |
9 Months Ended |
---|---|
Mar. 31, 2018 | |
Text Block [Abstract] | |
7. COMMON STOCK | The Company has authorized 250,000,000 shares of $0.001 par value per share Common Stock, of which 132,147,996 and 118,486,728 were issued outstanding as of March 31, 2018 and June 30, 2017, respectively. The activity surrounding the issuances of the Common Stock is as follows:
For the nine months Ended March 31, 2018
The Company issued 8,566,666 shares of Common Stock for $413,751 in cash as part of a private placement, net of $4,750 of issuance costs, respectively.
The Company issued 9,599,958 shares of Common Stock for the conversion of notes and accrued interest valued at $277,265.
The Company issued 6,098,101 shares of Common Stock as incentive with convertible notes valued at $317,261.
The Company issued 415,000 shares of Common Stock for the prepaid consulting services and rent valued at $49,290.
The Company issued 115,000 shares of Common Stock for the extension of two convertible notes valued at $16,897.
As share-based compensation to employees and non-employees, the Company issued 2,423,632 shares of common stock valued at $252,128, based on the market price of the stock on the date of issuance.
As interest expense on outstanding notes payable, the Company issued 1,280,162 shares of common stock valued at $217,628 based on the market price on the date of issuance.
As part of a debt extinguishment, the note holder agreed to cancel 14,837,251 shares of common stock.
For the Nine Months Ended March 31, 2017
The Company issued 1,463,334 shares of Common Stock for cash valued at $359,000 which includes a $80,000 subscription payable.
The Company issued 994,684 shares of Common Stock for the conversion of notes and accrued interest valued at $220,164.
The Company also issued 650,000 shares of Common Stock as incentive to notes valued at $127,600. The Beneficial Conversion was valued at $30,519.
The Company also issued 100,000 shares of Common Stock for the conversion of 50,000 shares of Series A-1 Preferred Stock and issued 5,162 shares of Common Stock of payment of $2,581 in accrued dividends.
The Company issued 2,667,876 shares of Common Stock as payment for services and rent valued at $847,616.
The Company issued 3,020,750 shares of Common Stock for the conversion warrants valued at $906,224.
The Company issued 12,500 shares of Common Stock for the extension of two convertible notes valued at $3,749.
As share-based compensation to employees and non-employees, the Company issued 880,366 shares of common stock valued at $328,128, based on the market price of the stock on the date of issuance. As interest expense on outstanding notes payable, the Company issued 1,603,135, shares of common stock valued at $569,020 based on the market price on the date of issuance.
|
8. STOCK PURCHASE OPTIONS AND WARRANTS |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8. STOCK PURCHASE OPTIONS AND WARRANTS | The Board of Directors on June 10, 2009 approved the 2009 Long-Term Stock Incentive Plan. The purpose of the 2009 Long-term Stock Incentive Plan is to advance the interests of the Company by encouraging and enabling acquisition of a financial interest in the Company by employees and other key individuals. The 2009 Long-Term Stock Incentive Plan is intended to aid the Company in attracting and retaining key employees, to stimulate the efforts of such individuals and to strengthen their desire to remain with the Company. A maximum of 1,500,000 shares of the Company's Common Stock is reserved for issuance under stock options to be issued under the 2009 Long-Term Stock Incentive Plan. The Plan permits the grant of incentive stock options, nonstatutory stock options and restricted stock awards. The 2009 Long-Term Stock Incentive Plan is administered by the Board of Directors or, at its direction, a Compensation Committee comprised of officers of the Company.
Stock Purchase Options
During the nine months ended March 31, 2018, the Company did not issue any stock purchase options.
During the fiscal year ended June 30, 2017, the Company issued 500,000 stock purchase options.
The following table summarizes the changes in options outstanding of the Company during the nine months ended March 31, 2018.
Stock Purchase Warrants
During the three and nine months ended March 31, 2018, the Company issued warrants to purchase a total of 2,175,000, consisting of 75,000 warrants as part of a private placement valued at $6,019, 100,000 warrants as part of two AR financing agreements executed on August 2017 valued at $13,398, 150,000 warrants as part additional consideration of a promissory note on November 2017 valued at $12,560 and an additional 150,000 warrants to modify the note later in November 2017 valued at $12,570, 150,000 warrants as part additional consideration of a promissory note on January 2018 valued at $11,056, 1,000,000 warrants were for facilitating the sales of bBooth stock on February 2018 valued at 63,041, and 550,000 warrants in conjunction with extension of three promissory notes valued at $54,491. The warrants are considered derivative liabilities under ASC 815-40 under the Company’s sequencing policy and were valued using the multinomial lattice model.
The following table presents the assumptions used to estimate the fair values of the stock warrants and options granted:
The following table summarizes the changes in warrants outstanding issued to employees and non-employees of the Company during the three and nine months ended March 31, 2018.
|
9. FINANCIAL INSTRUMENTS |
9 Months Ended |
---|---|
Mar. 31, 2018 | |
Financial Instruments | |
9. FINANCIAL INSTRUMENTS |
The
Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting.
Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s
balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated
fair value in results of operations during the period of change. The Company has estimated the fair value of these embedded derivatives
for convertible debentures and associated warrants using a multinomial lattice model as of March 31, 2018 and June 30, 2017. The
fair values of the derivative instruments are measured each quarter, which resulted in a gain (loss) on derivatives of $160,175,
and $927,997, and derivative expense of $1,268,098 and $1,613,231 during the three and nine months ended March 31, 2018, respectively.
As of March 31, 2018, and June 30, 2017, the fair market value of the derivatives aggregated $3,407,690 and $2,145,065, respectively,
using the following assumptions: estimated 5-0 year term, estimated volatility of 303.62 -104.82%, and a discount rate of 2.48-0.96%. |
10. FAIR VALUE MEASUREMENTS |
9 Months Ended | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | ||||||||||||||||||||||||||
Fair Value Measurements | ||||||||||||||||||||||||||
10. FAIR VALUE MEASUREMENTS | For asset and liabilities measured at fair value, the Company uses the following hierarchy of inputs:
Liabilities measured at fair value on a recurring basis at March 31, 2018, are summarized as follows:
|
11. COMMITMENTS AND CONTINGENCIES |
9 Months Ended | |||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||
11. COMMITMENTS AND CONTINGENCIES | Legal Proceedings
The Company may become involved in certain legal proceedings and claims which arise in the normal course of business. The Company is not a party to any litigation. To the best of the knowledge of our management, there are no material litigation matters pending or threatened against us.
Lease Agreements
We lease offices in Hollywood, California (located at 6671 Sunset Blvd., Suite 1520, 1518 and 1550, Hollywood, California, 90028) for corporate, research, engineering and mastering services. The lease expires on December 31, 2017. The total lease expense for the facility is approximately $17,220 per month, and the total remaining obligations under these leases at March 31, 2018, were approximately $0.
We lease a warehouse space located at 8260 E Gelding Drive, Suite 102, Scottsdale, Arizona, 85260. The lease expires on February 28, 2019. The total lease expense for the facility is approximately $1,888 per month, and the total remaining obligations under this leases at March 31, 2018, were approximately $20,768.
We lease corporate offices located at 7825 E Gelding Drive, Suite 101, Scottsdale, Arizona, 85260. The lease expires on April 30, 2021. The total lease expense for the facility is approximately $7,224 per month, and the total remaining obligations under this leases at March 31, 2018, were approximately $267,288.
We lease corporate offices located at 7825 E Gelding Drive, Suite 103, Scottsdale, Arizona, 85260. The lease expires on April 30, 2021. The total lease expense for the facility is approximately $3,000 per month, and the total remaining obligations under this leases at March 31, 2018, were approximately $108,000.
Below is a table summarizing the annual operating lease obligations over the next 5 years:
Other
The Company has not declared dividends on Series A or B Convertible Preferred Stock or its Series A-1 Convertible Preferred Stock. The cumulative dividends in arrears through March 31, 2018 were approximately $1,078,039.
As of the date of this filing, the Company has not filed its tax return for the fiscal year ended 2015, 2016, and 2017.
|
12. SUBSEQUENT EVENTS |
9 Months Ended |
---|---|
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
12. SUBSEQUENT EVENTS | In accordance with ASC 855, Company’s management reviewed all material events through the date of this filing and determined that there were the following material subsequent events to report:
On May 4, 2018, the Company issued a convertible note to an unrelated company for $150,086, which includes proceeds of $127,500 and $22,500 in OID, that matures on May 4, 2019. The note bears 10% interest per annum and is convertible into shares of the Company’s common stock at 61% of the lowest two trading prices during the fifteen (15) trading day period ending to the date of conversion. The note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value.
On April 10, 2018, the Company issued a convertible note to an unrelated company for $150,000, which includes proceeds of $122,386, $10,000 transaction fee, and $17,700 in OID, that matures on February 10, 2019. The note bears 10% interest per annum and is convertible into shares of the Company’s common stock at the lesser of $0.05 and 57.5% of the lowest closing bids 20 days prior to the conversion date. Additionally, the note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates that these shares, if issued, are not indexed to the Company’s own stock and, therefore, is an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value.
On November 20, 2015, the Company issued a convertible note to an unrelated company for $600,000 that matures on May 20, 2016. The company paid $200,000 in principle balance leaving a remain balance of $430,000 including the extension fees and is not convertible unless the borrower defaults under the amendment agreement dated January 1, 2017. The note bears 0% interest and had an original issue discount (OID) of $100,000. This note is not convertible unless there is a default event. Per the terms of the note there are no derivatives until it becomes convertible on the original note, however the $30,000 extensions are to be considered derivatives. The Lender released a clarification of amendments to convertible promissory notes that explained the $30,000 extension fees are the only portion that is to be considered as convertible and converts within 2 days of issuance. The intent of the amendment agreements were to insure the original note dated November 20, 2015 in the amount of $600,000. Because the terms do not dictate a maximum numbers of convertible shares, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability Under ASC 815-40. The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares. During the extension and conversion day period no additional convertible instruments were issued, therefore on the extension was considered in the derivative calculation. The Company extended the maturity date seven times since February 27, 2017 for a total of $210,000, of which, the Company paid $135,000 in the nine months ended March 31, 2018. The Company latest and fourteenth extension with consideration of $30,000 was on December 18, 2017 to extending the maturity date to January 31, 2018. The Company evaluated the amendments under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. On February 2, 2018, the note converted the principal of $30,000 for 680,118 shares of common stock. On February 23, 2018, the note converted the principal of $30,000 for 1,083,698 shares of common stock. On April 18, 2018, the note was assigned to a new note holder under the same terms. On April 23, 2018, the new note holder converted $100,000 of principal for 2,480,466 shares of common stock. On May 1, 2018, the new note holder converted $123,198 of principal for 3,000,000 shares of common stock.
On October 16, 2017, the Company issued a convertible note to an unrelated company for $110,000 that matures on July 16, 2018. The note bears 10% interest per annum and is convertible into shares of the Company’s common stock at 57.5% of the lowest closing bid 30 days prior to the conversion date. Additionally, the note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates that these shares, if issued, are not indexed to the Company’s own stock and, therefore, is an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value. On April 13, 2018, the company paid $145,000 to pay of the entire debt.
On February 23, 2017, the Company issued a convertible note to an unrelated company for $149,000 that matures on November 23, 2017. The note bears 10% interest per annum and is convertible into shares of the Company’s common stock at lesser of 40% of the average three lowest closing bids 20 days prior to the conversion date. Additionally, the note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, that this percentage discount (variable) exercise price indicates is an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value. The Company extended the possibility to convert date by issuing 60,000 warrants valued at $7,813 on September 8, 2017 to November 2, 2017. The Company extended the possibility to convert date by issuing 60,000 warrants valued at $7,813 on September 8, 2017 to November 2, 2017. The Company extended the possibility to convert date by paying $10,000 of principal and $1,400 of accrued interest on October 23, 2017 to November 24, 2017 and extend the maturity date to February 21, 2018. . The Company extended the possibility to convert date by paying $10,000 of principal and $4,000 of accrued interest on November 29, 2017 to December 22, 2017. The warrants are considered derivative liabilities under ASC 815-40 under the Company’s sequencing policy and were valued using the multinomial lattice model. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. The note was amended on May 1, 2018, effective March 31, 2018, to extend the maturity date to June 15, 2018. As consideration for the extension the Company paid extension fees totaling $2,000.
On February 23, 2017, the Company issued a convertible note to an unrelated company for $224,000 that matures on November 23, 2017. The note bears 10% interest per annum and is convertible into shares of the Company’s common stock at lesser of 40% of the average three lowest closing bids 20 days prior to the conversion date. Additionally, the note contains a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. The Company determined under ASC 815, the Company has determined that this percentage discount (variable) exercise price indicates an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value. The Company extended the possibility to convert date by issuing 90,000 warrants valued at $11,720 on September 8, 2017 to November 2, 2017. The Company extended the possibility to convert date by paying $10,000 of principal and $2,100 of accrued interest on October 23, 2017 to November 24, 2017 and extend the maturity date to February 21, 2018. The Company extended the possibility to convert date by paying $20,000 of principal and $6,000 of accrued interest on November 29, 2017 to December 22, 2017. The warrants are considered derivative liabilities under ASC 815-40 under the Company’s sequencing policy and were valued using the multinomial lattice model. The Company evaluated amendment under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. On March 12, 2018, the note converted the principal of $7,337and $4,278 in accrued interest into for 575,000 shares of common stock. The note was amended on May 1, 2018, effective March 31, 2018, to extend the maturity date to June 15, 2018. As consideration for the extension the Company paid extension fees totaling $3,000.
On November 28, 2017, the Company issued a convertible note to an unrelated party for $53,000 that matures on July 16, 2018. The note bears 12% interest per annum. The note is convertible into shares of the Company’s common stock at 61% of the lowest closing bids 15 days prior to the conversion per share. Due to sequencing on February 2, 2017, the Company determined under ASC 815, the Company has determined that the note is to be treated as an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to its estimated fair value. On May 4, 2018, the Lender assigned principal of $53,000 and $2,614 to an unrelated party.
Subsequent to March 31, 2018, the Company issued 5,466,666 shares of Common Stock for $165,000 in cash as part of a private placement.
|
13. RESTATEMENT OF INTERIM CONDENSED FINANCIAL STATEMENTS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restatement Of Interim Condensed Financial Statements Abstract | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTATEMENT OF INTERIM CONDENSED FINANCIAL STATEMENTS | During the September 30, 2017 quarter, the Company sold $400,000 of its product to its manufacturer for $400,000 and recorded it as gross revenue. The transaction eliminated $400,000 in short term debt. During the course of the audit it was determined that the transaction should have been classified as net sales. Accordingly, the Company should not have (i) recognized gross revenue of $400,000 for the sale related to 4,000 units to the Company’s manufacturer, (ii) recognized the cost of sales related to 4,000 units of Company products sold to that manufacturer in the amount of $400,000.
The Company also determined that it erroneously overstated the derivative liability as of September 30, 2017 and it should be reduced by $485,031.
During the December 31, 2017 quarter, the Company sold $90,000 of its product to its manufacturer for $120,000 and recorded it as gross revenue. The transaction eliminated $90,000 in short term debt. During the course of the audit it was determined that the transaction should have been classified as net sales. Accordingly, the Company should not have (i) recognized gross revenue of $120,000 for the sale related to the 1,000 units to the Company’s manufacturer and should have only recognized $30,000 in net revenue, (ii) recognized the cost of sales of $90,000 related to 1,000 units of Company product sold to that manufacturer, or (iii) decreased derivative liabilities by $356,396 by including in the derivative liability calculation convertible debt that did not include elements that would trigger derivative treatment.
During the March 31, 2018 quarter, the Company is (i) recording changes made in the September 30, 2017 and the December 31, 2017 quarters, and (ii) increasing derivative liabilities by $365,803 due to the Company using the incorrect discounted conversion rate to arrive at the conversion price and number of shares that could be issued and using an incorrect maturity date to estimate the useful life on several notes used in the derivative liability calculation.
We restated the three and nine months ended March 31, 2018 because we concluded the corrections were material to the interim condensed financial statements
The effects of these corrections on the interim consolidated financial statements were:
|
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended |
---|---|
Mar. 31, 2018 | |
Notes to Financial Statements | |
Use of Estimates | The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates are made in relation to the allowance for doubtful accounts and the fair value of certain financial instruments. |
Principles of Consolidation | The consolidated financial statements include the accounts of AfterMaster, Inc. and its subsidiaries. All significant inter-Company accounts and transactions have been eliminated.
|
Investments | Our available for securities are considered Level 1. Realized gains and losses on these securities are included in “Other income (expense) – net” in the consolidated statements of operations using the specific identification method. Unrealized gains and losses, on available-for-sale securities are recorded in accumulated other comprehensive income (accumulated OCI). Unrealized losses that are considered other than temporary are recorded in other income (expense) – net, with the corresponding reduction to the carrying basis of the investment.
Our short-term investments are recorded at amortized cost, and the respective carrying amounts approximate fair values. Our available for securities maturing within one year are recorded in “Other current assets,” on the balance sheets.
|
Accounts Receivables | Accounts receivables are stated at amounts management expects to collect. An allowance for doubtful accounts is provided for uncollectible receivables based upon management's evaluation of outstanding accounts receivable at each reporting period considering historical experience and customer credit quality and delinquency status. Delinquency status is determined by contractual terms. Bad debts are written off against the allowance when identified.
|
Fair Value Instruments | Cash is the Company’s only financial asset or liability required to be recognized at fair value and is measured using quoted prices for active markets for identical assets (Level 1 fair value hierarchy). The carrying amounts reported in the balance sheets for notes receivable and accounts payable and accrued expenses approximate their fair market value based on the short-term maturity of these instruments.
Market prices are not available for the Company’s loans due to related parties or its other notes payable, nor are market prices of similar loans available. The Company determined that the fair value of the notes payable based on its amortized cost basis due to the short-term nature and current borrowing terms available to the Company for these instruments.
|
Derivative Liabilities | The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares.
Using this sequencing policy, the Company used this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to July 5, 2016 until the note was converted on the same day were derivative liabilities. The Company again used this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to August 19, 2016 until the note was converted on August 22, 2016 were derivative liabilities.
The Company entered into multiple amendments to a note payable to extend the maturity date (the Amendments). The Company agreed to additional $30,000 extension fees which were converted at a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. This creates a situation where the Company no longer has shares enough available to “cover” all potential equity issuance obligations during the period of issuance until conversion.
On February 3, 2017, the company entered into a note payable with an unrelated party at a percentage discount (variable) exercise price which causes the number to be converted into a number of common shares that “approach infinity”, as the underlying stock price could approach zero. Accordingly, all convertible instruments issued after February 3, 2017 are considered derivatives according to the Company’s sequencing policy.
The Company values these convertible notes payable using the multinomial lattice method that values the derivative liability within the notes based on a probability weighted discounted cash flow model. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.
|
Income Taxes | There is no income tax provision for the three and nine months ended March 31, 2018 and 2017 due to net operating losses for which there is no benefit currently available.
At March 31, 2018, the Company had deferred tax assets associated with state and federal net operating losses. The Company has recorded a corresponding full valuation allowance as it is more likely than not that some portion of all of the deferred tax assets will not be realized.
|
Revenue Recognition | The Company applies the provisions of FASB ASC 605, Revenue Recognition in Financial Statements, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue related to goods and services provided when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured.
The Company's revenues are generated from AfterMaster products and services, AfterMaster Pro, sessions revenue, and remastering. Revenues related to AfterMaster Pro sells through consumer retail distribution channels and through our website. For sales through consumer retail distribution channels, revenue recognition occurs when title and risk of loss have transferred to the customer which usually occurs upon shipment to the customers. We established allowances for expected product returns and these allowances are recorded as a direct reduction to revenue. Return allowances are based on our historical experience. Revenues related to sessions and remastering are recognized when the event occurred.
|
Cost of Revenues | The Company’s cost of revenues includes employee costs, product costs, and other nominal amounts. Costs associated with products are recognized at the time of the sale and when the inventory is shipped. Costs incurred to provide services are recognized as cost of sales as incurred. Depreciation is not included within cost of revenues.
|
Loss Per Share | Basic loss per Common Share is computed by dividing losses attributable to Common shareholders by the weighted-average number of shares of Common Stock outstanding during the period. The losses attributable to Common shareholders was increased for accrued and deemed dividends on Preferred Stock during the nine months ended March 31, 2018 and 2017 of $169,101 and $129,855, respectively.
Diluted earnings per Common Share is computed by dividing net loss attributable to Common shareholders by the weighted-average number of Shares of Common Stock outstanding during the period increased to include the number of additional Shares of Common Stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding convertible Preferred Stock, stock options, warrants, and convertible debt. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s Common Stock can result in a greater dilutive effect from potentially dilutive securities.
For the nine months ended March 31, 2018 and 2017, all of the Company’s potentially dilutive securities (warrants, options, convertible preferred stock, and convertible debt) were excluded from the computation of diluted earnings per share as they were anti-dilutive. The total number of potentially dilutive Common Shares that were excluded were 90,531,890 and 30,383,665 at March 31, 2018 and 2017, respectively.
|
Recent Accounting Pronouncements | Management has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements. |
4. SECURITIES AVAILABLE-FOR-SALE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities Available-for-sale | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities available-for-sale |
|
5. NOTES PAYABLE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Convertible Notes Payable-Related Parties |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Convertible Notes Payable-Non-Related Parties |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Non-Convertible Notes Payable-Related Parties |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Non-Convertible Notes Payable-Non-Related Parties |
|
6. CONVERTIBLE PREFERRED STOCK (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Preferred Stock Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Preferred Stock |
|
8. STOCK PURCHASE OPTIONS AND WARRANTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of options activity |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assumptions Used to Estimate Fair Value |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Warrants |
|
10. FAIR VALUE MEASUREMENTS (Tables) |
9 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | ||||||||||||||||
Fair Value Measurements Tables | ||||||||||||||||
Schedule or fair value measurements |
|
11. COMMITMENTS AND CONTINGENCIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||
Annual operating lease obligations |
|
13. RESTATEMENT OF INTERIM CONDENSED FINANCIAL STATEMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for conversion of note, value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of corrections |
|
2. GOING CONCERN (Details Narrative) - USD ($) |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Going Concern | ||
Accumulated deficit | $ (72,468,111) | $ (72,303,551) |
Working capital | $ (6,834,972) |
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Summary Of Significant Accounting Policies Details Narrative | ||||
Preferred Stock Accretion and Dividends | $ (56,367) | $ (41,999) | $ (169,101) | $ (129,855) |
Potentially dilutive common shares excluded | 90,410,737 | 30,383,665 |
4. SECURITIES AVAILABLE-FOR-SALE (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2018 |
Jun. 30, 2017 |
|
Securities Available-for-sale | ||
Amortized cost | $ 123,600 | $ 63,600 |
Gross unrealized gains | 0 | 60,000 |
Gross unrealized losses | (93,600) | 0 |
Gross realized gains | 0 | 0 |
Gross realized losses | (30,000) | 0 |
Fair value | $ 0 | $ 123,600 |
5. NOTES PAYABLE (Details) - USD ($) |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Total convertible notes payable - related parties | $ 108,827 | $ 3,951,182 |
Less current portion | 108,827 | 3,951,182 |
Convertible related party notes payable, net of current portion | 0 | 0 |
Convertible Notes Payable One [Member] | ||
Total convertible notes payable - related parties | 0 | 3,925,000 |
Convertible Notes Payable Two [Member] | ||
Total convertible notes payable - related parties | 30,000 | 26,182 |
Convertible Notes Payable Three [Member] | ||
Total convertible notes payable - related parties | 10,000 | 0 |
Convertible Notes Payable Four [Member] | ||
Total convertible notes payable - related parties | 22,175 | 0 |
Convertible Notes Payable Five [Member] | ||
Total convertible notes payable - related parties | 9,216 | 0 |
Convertible Notes Payable Six [Member] | ||
Total convertible notes payable - related parties | 12,936 | 0 |
Convertible Notes Payable Seven [Member] | ||
Total convertible notes payable - related parties | $ 24,500 | $ 0 |
5. NOTES PAYABLE (Details 2) - USD ($) |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Notes payable - related parties | $ 75,500 | $ 610,000 |
Less current portion | 75,500 | 610,000 |
Notes payable - related parties, long term | 0 | 0 |
Convertible Notes Payable One [Member] | ||
Notes payable - related parties | 0 | 585,000 |
Convertible Notes Payable Two [Member] | ||
Notes payable - related parties | 5,000 | 5,000 |
Convertible Notes Payable Three [Member] | ||
Notes payable - related parties | 20,000 | 20,000 |
Convertible Notes Payable Four [Member] | ||
Notes payable - related parties | 18,000 | 0 |
Convertible Notes Payable Five [Member] | ||
Notes payable - related parties | 15,000 | 0 |
Convertible Notes Payable Six [Member] | ||
Notes payable - related parties | 25,000 | 0 |
Convertible Notes Payable Seven [Member] | ||
Notes payable - related parties | 0 | 0 |
Convertible Notes Payable Eight [Member] | ||
Notes payable - related parties | 7,500 | 0 |
Convertible Notes Payable Nine [Member] | ||
Notes payable - related parties | $ 10,000 | $ 0 |
5. NOTES PAYABLE (Details 3) - USD ($) |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Note payable - non-related parties | $ 371,111 | $ 40,488 |
Less current portion | 371,111 | 40,488 |
Notes payable - non-related parties, long-term | 0 | 0 |
Convertible Notes Payable One [Member] | ||
Note payable - non-related parties | 0 | 40,488 |
Convertible Notes Payable Two [Member] | ||
Note payable - non-related parties | 52,000 | 0 |
Convertible Notes Payable Three [Member] | ||
Note payable - non-related parties | 46,537 | 0 |
Convertible Notes Payable Four [Member] | ||
Note payable - non-related parties | 81,000 | 0 |
Convertible Notes Payable Five [Member] | ||
Note payable - non-related parties | 0 | 0 |
Convertible Notes Payable Six [Member] | ||
Note payable - non-related parties | 50,000 | 0 |
Convertible Notes Payable Seven [Member] | ||
Note payable - non-related parties | $ 141,574 | $ 0 |
6. CONVERTIBLE PREFERRED STOCK (Details Narrative) - USD ($) |
9 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Equity [Abstract] | ||
Dividends on preferred stock | $ 169,101 | $ 129,855 |
Dividends in arrears | $ 1,078,039 |
8. STOCK PURCHASE OPTIONS AND WARRANTS (Details 1) |
9 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2018 |
Jun. 30, 2017 |
|
Stock Purchase Options And Warrants Details 1 | ||
Expected volatility, minimum | 105.00% | 92.00% |
Expected volatility, maximum | 304.00% | 126.00% |
Expected dividends | 0.00% | 0.00% |
Expected term, minimum | 0 years | 0 years |
Expected term, maximum | 5 years | 5 years |
Risk-free interest rate, minimum | 0.96% | 0.74% |
Risk-free interest rate, maximum | 2.48% | 1.89% |
8. STOCK PURCHASE OPTIONS AND WARRANTS (Details Narrative) - shares |
9 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2018 |
Jun. 30, 2017 |
|
Notes to Financial Statements | ||
Stock purchase options issued | 0 | 500,000 |
9. FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2018 |
Jun. 30, 2017 |
|
Gain (loss) from derivative instruments | $ 160,176 | $ 927,997 | |
Derivative expense | 1,268,098 | 1,613,231 | |
Fair market value of the derivatives | $ 3,407,691 | $ 3,407,691 | $ 2,145,065 |
10. FAIR VALUE MEASUREMENTS (Details) - USD ($) |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Fair value of derivatives | $ 3,041,887 | $ 2,145,065 |
Securities available-for-sale | 0 | $ 123,600 |
Level 1 [Member] | ||
Fair value of derivatives | 0 | |
Securities available-for-sale | 0 | |
Level 2 [Member] | ||
Fair value of derivatives | 0 | |
Securities available-for-sale | 0 | |
Level 3 [Member] | ||
Fair value of derivatives | 3,041,887 | |
Securities available-for-sale | $ 0 |
11. COMMITMENTS AND CONTINGENCIES (Details) |
Mar. 31, 2018
USD ($)
|
---|---|
Commitments And Contingencies Details | |
2018 | $ 36,336 |
2019 | 137,792 |
2020 | 122,688 |
2021 | 99,746 |
2022 | 0 |
Total | $ 396,562 |
13. RESTATEMENT OF INTERIM CONDENSED FINANCIAL STATEMENTS (Details 2) - USD ($) |
3 Months Ended | 6 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Net Loss | $ 2,331,302 | $ (2,269,339) | $ (164,560) | $ (164,560) | $ (6,636,058) |
Amortization of debt discount and issuance costs | 1,338,202 | 1,338,202 | 170,168 | ||
Derivative Expense | $ 1,328,142 | $ 197,200 | 1,668,421 | 1,668,421 | 197,200 |
(Gain)/Loss remeasurement of derivative | (1,278,948) | 1,278,948 | (434,699) | ||
Beneficial conversion feature | 188,521 | 188,521 | 30,519 | ||
Derivative Liability | 907,001 | 907,001 | $ 0 | ||
As Reported | |||||
Net Loss | (642,696) | (642,696) | |||
Amortization of debt discount and issuance costs | 1,457,536 | ||||
Derivative Expense | 1,676,273 | 1,613,231 | |||
(Gain)/Loss remeasurement of derivative | (927,998) | ||||
Beneficial conversion feature | 181,521 | ||||
Derivative Liability | 917,001 | ||||
Correction | |||||
Net Loss | 478,136 | 478,136 | |||
Amortization of debt discount and issuance costs | (119,334) | ||||
Derivative Expense | (7,852) | $ 55,190 | |||
(Gain)/Loss remeasurement of derivative | (350,950) | ||||
Beneficial conversion feature | 7,000 | ||||
Derivative Liability | $ (10,000) |
$J<=*!;L3@#/+DPGQ@X3+";)A1A#P6< !B*
M ,>/>\(Q\,T!,)\?. FP&P44$0\%G 5X2AA@]ZP3R,^]T!B*@>, NWE $?50
MP(& IR0"=D^[X^4>9"@$C@/LY@%%GI@F G_%+LK7%,!10* H
M\$0U\306DSH+MVG 0+P!L+&?Z*;MLGWP#R:/>:6"K="F@VOZK(,0FALZ]&0V
MYF1:[WY2\(.VP]2,9=M_MA,MZJZWCOH&?_4?4$L#!!0 ( ",4DTO%9[G
MDP( $<* 9 >&PO=V]R:W-H965T ;:GCZ4 3B'*@3'0C(26B82IP*P''[XCL
MDI1@DQRM31VHY^[ :H_4* G !6 L9$BKKX1$1&.H8$E 8TWJU4 )5K)W4MP\
M:4?=DP!2BI$\@_QU1LDGNCM"![M.G"VB/),9("8;)\6=DW9 B1F^@G&;6KZ"
M'!CWM#?""@I(>04%8%Q!DPZNH.RB%+=1V@YT;DKV*8H;%=KP!,7] NE1^I%D
MNZ"X7V#M1U"\&JM$]?J&?C\J5V/@U9CV!0&$VHF^Y^7[H>22"+PD4IL>@% X)GID;M M_@36"KS9]*9\#UX
M5)%J<>/,-8G[%/%)YB>+%*79D8O>;8QTE-^46J9.3DYR AS)!(TS72)3"0/(