10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

Amendment No. 1 

(Mark One) 

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

For the quarterly period ended: March 31, 2017

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

For the transition period from N/A to N/A

Commission file number: 000-23446

 SUGARMADE, INC.

(Exact name of registrant as specified in its charter)
Delaware	94-3008888
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
167 N. Sunset Avenue, City of Industry, CA	91744
(Address of principal executive offices)	(Zip Code)
(888) 982-1628
(Registrant’s telephone number, including areacode)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
(Do not check if a smaller reporting company)		Emerging growth company	☐

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

At May 22, 2017, there were 213,492,343 shares outstanding of the issuer’s common stock, the only class of common equity.

EXPLANATORY NOTE

The sole purpose of this Amendment No. 1 to the registrant’s Quarterly Report on Form 10-Q which was filed with the Securities and Exchange Commission on May 22, 2017 for the quarter ended March 31, 2017 (the “Form 10-Q”), is to file Exhibits 101 to the Form 10-Q in accordance with Rule 405 of Regulation S–T.

Except for the matters described above, this Amendment No. 1 on Form 10-Q/A does not modify or update disclosures in, or exhibits to, the Form 10-Q. This Form 10-Q/A speaks as of the original filing date and does not reflect events that may have occurred subsequent to the original filing date.

ITEM 6 – EXHIBITS

Exhibit No.		Description
31.1	(1)	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	(1)	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	(1)	Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	(1)	Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	(1)	XBRL Instance Document
101.SCH*	(1)	XBRL Taxonomy Extension Schema
101.CAL*	(1)	XBRL Taxonomy Extension Calculation Linkbase
101.DEF*	(1)	XBRL Taxonomy Extension Definition Linkbase
101.LAB*	(1)	XBRL Taxonomy Extension Label Linkbase
101.PRE*	(1)	XBRL Taxonomy Extension Presentation Linkbase

 _____________________________________________________

(1) Filed as an exhibit to this Report.

-2-

SIGNATURES

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

	Sugarmade, Inc., a Delaware corporation
May 23, 2017	By:	/s/ Jimmy Chan
		Jimmy Chan CEO, CFO, and Director

 

-3-

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jimmy Chan, certify that:

1. I have reviewed this Amendment No. 1 to Quarterly Report on Form 10-Q/A of Sugarmade, Inc. (this “Quarterly Report”);

2. Based on my knowledge, this Quarterly 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 Quarterly Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly 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 Quarterly 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 Quarterly 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 Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and

(d) Disclosed in this Quarterly 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 that 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.

/s/ JIMMY CHAN

Jimmy Chan

Chief Executive Officer

(Principal Executive Officer)

Dated: May 23, 2017

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jimmy Chan, certify that:

1. I have reviewed this Amendment No. 1 to Quarterly Report on Form 10-Q/A of Sugarmade, Inc. (this “Quarterly Report”);

2. Based on my knowledge, this Quarterly 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 Quarterly Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly 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 Quarterly 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 Quarterly 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 Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and

(d) Disclosed in this Quarterly 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 that 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.

/s/ JIMMY CHAN

Jimmy Chan

Chief Financial Officer

(Principal Financial and Accounting Officer)

Dated: May 23, 2017

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Sugarmade, Inc. (the “Company) on Form 10-Q/A for the quarterly period ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

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

/s/ JIMMY CHAN

Jimmy Chan

Chief Executive Officer

(Principal Executive Officer)

Dated: May 23, 2017

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Sugarmade, Inc. (the “Company) on Form 10-Q/A for the quarterly period ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

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

/s/ JIMMY CHAN

Jimmy Chan

Chief Financial Officer

(Principal Financial and Accounting Officer)

Dated: May 23, 2017

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Document and Entity Information - USD ($)	9 Months Ended
	Mar. 31, 2017	May 22, 2017
Document And Entity Information
Entity Registrant Name	Sugarmade, Inc.
Entity Central Index Key	0000919175
Document Type	10-Q/A
Document Period End Date	Mar. 31, 2017
Amendment Flag	true
Current Fiscal Year End Date	--06-30
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float		$ 0
Entity Common Stock, Shares Outstanding		213,492,343
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2017
Amendment Description	The sole purpose of this Amendment No. 1 to the registrant?s Quarterly Report on Form 10-Q which was filed with the Securities and Exchange Commission on May 23, 2017 for the quarter ended March 31, 2017 (the ?Form 10-Q?), is to file Exhibits 101 to the Form 10-Q in accordance with Rule 405 of Regulation S T.

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Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2017	Jun. 30, 2016
Current assets:
Cash	$ 76,884	$ 911
Accounts receivable, net	132,177	117,866
Inventory, net	623,144	468,262
Loan receivables	20,000	20,000
Other current assets	221,703	84,505
Total current assets	1,073,908	691,544
Equipment, net	71,562	78,453
Other assets	27,081	23,281
Total assets	1,172,551	793,278
Current liabilities:
Bank overdraft		28,377
Note payable due to bank	25,982	25,982
Accounts payable and accrued liabilities	1,093,197	1,481,961
Accounts payable - related party	18,086
Customer deposits	291,778	248,299
Unearned revenue	66,756	93,522
Other payable	235,381	296,259
Accrued interest	175,291	272,708
Accrued compensation and personnel related payables	11,403	11,403
Notes payable due to shareholder	75,666	85,666
Loans payable	405,818	427,580
Loans payable - related party	103,530
Convertible notes payable, net	1,414,523	394,167
Stock to be issued	1,060,020
Derivative liabilities	2,150,000	701,000
Total liabilities	7,127,431	4,066,923
Stockholders' deficiency:
Preferred stock ($0.001 par value, 10,000,000 shares authorized, none issued and outstanding)
Common stock ($0.001 par value, 300,000,000 shares authorized 203,227,491 and 178,685,388 shares outstanding & issued at December 31, 2016 and June 30, 2016, respectively	205,825	178,686
Additional paid-in capital	22,057,252	17,151,379
Shares to be issued, preferred stock	2,000,000	2,000,000
Shares to be issued, common stock	491,346	1,246,000
Accumulated deficit	(30,709,303)	(23,849,712)
Total stockholders' deficiency	(5,954,880)	(3,273,647)
Totoal liabilities and stockholder's deficiency	$ 1,172,551	$ 793,278

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2017	Jun. 30, 2016
Condensed Consolidated Balance Sheets Parenthetical
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	214,826,834	178,685,388
Common stock, shares outstanding	214,826,834	178,685,388

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Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Consolidated Statements Of Operations
Revenues, net	$ 903,950	$ 826,867	$ 2,759,595	$ 3,144,207
Cost of goods sold:
Materials and freight costs	614,414	504,522	1,839,874	2,055,584
Total cost of goods sold	614,414	504,522	1,839,874	2,055,584
Gross profit	289,536	322,345	919,721	1,088,623
Operating expenses:
Selling, general and administrative expenses	693,623	426,834	2,295,458	1,632,183
Total operating expenses	693,623	426,834	2,295,458	1,632,183
Loss from operations	(404,087)	(104,489)	(1,375,737)	(543,560)
Non-operating income (expense):
Other income			243
Interest expense	(72,471)	(164)	(169,022)	(18,789)
Change in fair value of derivative liabilities	(1,337,000)	83,000	(1,449,000)	5,000
Commission		415		2,900
Loss on extinguishment of debt	(884,561)		(1,209,314)	(55,498)
Other expense		(10,589)		13,686
Total non-operating income (expense)	(2,294,032)	72,661	(2,827,093)	(52,701)
Net loss	$ (2,698,119)	$ (31,828)	$ (4,202,830)	$ (596,260)
Basic and diluted net loss per share	$ .00	$ .00	$ .00	$ .00
Basic and diluted weighted average common shares outstanding used in computing net loss per share	13,751,366	178,631,716	9,929,119	170,913,497

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Consolidated Statements of Cash Flows Statement - USD ($)	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net loss	$ (4,202,830)	$ (596,260)
Adjustments to reconcile net loss to cash flows from operating activities:
Loss on extinguishment of liability	1,209,314	55,498
Stock compensation expense	658,000
Depreciation and amortization	30,942
Change in fair value of derivative liability	1,449,000	(5,000)
Decrease in current assets
Accounts receivable	(14,309)	(206,326)
Inventory	(154,883)	36,806
Other assets	(83,519)	(89,523)
Increase in current liabilities:
Bank overdraft	(28,377)	9,263
Accounts payable and accrued liabilities	(53,086)	(101,725)
Customer deposits	43,480	(3,709)
Unearned revenue	(26,766)
Accrued interest and other payables	(130,869)	56,997
Net cash used in operating activities	(1,303,903)	(843,979)
Cash flows from investing activities:
Acquisition of fixed assets	(24,052)
Loan receivables		(3,500)
Payment for acquisition of property and equipment		(4,177)
Net cash provided by (used in) investing activities	(24,052)	(7,677)
Cash flows from financing activities:
Proceeds from shares to be issued	225,000	230,000
Proceeds from convertible notes	1,264,523	173,880
Repayment of notes payable due to related parties	(10,000)	(105,500)
Repayment of loans	(776,505)
Proceeds from loans	700,910
Proceeds from EB-Five investment		500,000
Net cash provided by (used in) financing activities	1,403,928	798,380
Net increase (decrease) in cash	75,973	(53,276)
Cash, beginning of period	911	58,260
Cash, end of period	76,884	4,984
Cash paid during the period for:
Interest
Income taxes	$ 13,395

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Nature of Business

9 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business

1. Nature of Business

Sugarmade, Inc. (hereinafter referred to as “we”, “us” or “the/our Company”) is a publicly traded product and brand marketing company investing in products and brands with disruptive potential. We are incorporated in the state of Delaware. Our previous legal name was Diversified Opportunities, Inc.  Our Company, Sugarmade, Inc. operates through our subsidiary, S W C Group, Inc. - CA (dba CarryOutSupplies.com) (“CarryOutSupplies”).

We are headquartered in City of Industry, California, a suburb of Los Angeles, with two (2) additional warehouse locations in Southern California. As of date of this filing, we employ 25 full and part-time workers and contractors.

As of the end of the reporting period, March 31, 2017, we were involved in several businesses including 1) the manufacturer and marketing of packaging for transport of products for the emerging legal cannabis industry, 2) manufacturer and supply of products to the quick service restaurant sub-sector of the restaurant industry 3) distribution of paper products derived from non-wood sources, and 4) as a marketer of a new seasoning food product.

The Company has also launched several packaging products serving the developing legal market for cannabis. CannaShroud is a new cannabis transport packaging system specifically designed to allow for discrete and protected transportation of cannabis. DabBox, a cannabis concentrate packaging product with a unique PTFE containment system. We are also in the process of developing active packaging for the cannabis industry and is in the advanced development stages for several other cannabis storage/transport and packaging products to serve this growing market sector.

Our main business operation, CarryOutSupplies.com is a producer and wholesaler of custom printed and generic supplies servicing more than 3,000 quick service restaurants. Our products include double poly paper cups for cold beverage; disposable, clear, plastic cold cups, paper coffee cups, yogurt cups, ice cream cups, cup lids, cup sleeves, food containers, soup containers, plastic spoons and many other similar products for this market sector. CarryOutSupplies.com was founded in 2009 when the founders gained first-hand experience within the restaurant industry of the difficulty for restaurant owners to acquire custom printed supplies at a reasonable cost. Many quick service restaurants wish to acquire custom printed products, such as those embossed with logos, but the minimum order size for such customization had been cost prohibitive. With that in mind, carryoutsupplies.com was founded to provide products to this underserved section of the market. Since that time, the Company has become a key supplier to many popular U.S. franchises, particularly in the frozen dessert segments. The Company estimates it holds approximately 40% market share of generic and printed products within the take out frozen yogurt and ice cream industries. We also hold a product supply and licensing agreement of FreeHand® ThumbTray™ for the western part of the United States.

During September of 2016, the Company completed negotiations for and signed a license agreement with HUY FONG FOODS, INC. (“HFFI”), the maker of Sriracha Hot Chili Sauce. Under the terms of the agreement, the Company was granted license to use the licensed marks of HFFI on and for products the Company is currently in process of designing and testing. Based on this agreement and a separate license agreement signed in 2015 with Seasoning Stixs International, LLC, the Company’s plan was to introduce a new culinary seasoning product named Sriracha Seasoning Stixs. Sriracha Seasoning Stixs are encapsulated Huy Fong Sriracha Sauce and other seasonings in the form of a stick, which are inserted into meat, fish and poultry prior to cooking. Sriracha Seasoning Stixs are a hard solid at room temperature, but as heat is applied the sticks begin to liquefy allowing the meat fibers to act like a sponge absorbing the seasonings and flavors that had previously been encapsulated in the stick.

The Company is on target to complete its California manufacturing facility, which will produce Sriracha Seasoning Stix. The facility and an additional contract manufacturing site located on the East coast will provide the Company with initial manufacturing capability of thousands of bottles of Sriracha Seasoning Stix on a weekly basis and thousands into millions more per month.

We are also a distributor of paper made from 100% reclaimed sugarcane fiber, enhanced with bamboo. Sugarcane fiber, called bagasse, is a discarded byproduct of sugarcane production. Our primary focus for this business unit as of filing of this report is the organization and administration of fundraisers and paper drives for schools, non-profits and other institutions.

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Summary of Significant Accounting Policies

9 Months Ended

Mar. 31, 2017

Summary Of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

These interim condensed consolidated financial statements should be read in conjunction with our Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016, which contains our audited consolidated financial statements and notes thereto, together with the Management’s Discussion and Analysis of Financial Condition and Results of Operation, for the period ended June 30, 2016, as filed on or about November 1, 2016 and as amended on November 15, 2016 (the “Annual Report”). The interim results for the period ended March 31, 2017 are not necessarily indicative of the results for the full fiscal year.

Principles of consolidation

The condensed consolidated unaudited financial statements include the accounts of our Company and its wholly-owned subsidiaries, Sugarmade-CA and SWC. All significant intercompany transactions and balances have been eliminated in consolidation.

Going concern

The Company's continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, in which it has not been successful, and/or obtaining additional financing from its shareholders or other sources, as may be required.

Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

Management is endeavoring to increase revenue-generating operations. While priority is on generating cash from operations through the sale of the Company’s products, management is also seeking to raise additional working capital through various financing sources, including the sale of the Company’s equity and/or debt securities, which may not be available on commercially reasonable terms to our Company, or which may not be available at all. If such financing is not available on satisfactory terms, we may be unable to continue our business as desired and our operating results will be adversely affected. In addition, any financing arrangement may have potentially adverse effects on us and/or our stockholders. Debt financing (if available and undertaken) will increase expenses, must be repaid regardless of operating results and may involve restrictions limiting our operating flexibility. If we issue equity securities to raise additional funds, the percentage ownership of our existing stockholders will be reduced and the new equity securities may have rights, preferences or privileges senior to those of the current holders of our common stock.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

Revenue recognition

We recognize revenue in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) No. 605, Revenue Recognition. Revenue is recognized when an arrangement and a determinable fee occur, and when collection is considered to be probable and products are delivered or title has been transferred. This generally occurs upon shipment of the merchandise, which is when legal transfer of title occurs. In the event that final acceptance of our product by the customer is uncertain, revenue is deferred until all acceptance criteria have been met. We currently have a consignment arrangement with two of our customers. We record revenue on consignment goods when the consigned goods are sold by the consignee and all other above mentioned revenue recognition criteria have been satisfied. Cash deposits received in connection with the sales of our products prior to their being delivered or acceptance if applicable is recorded as deferred revenue.

Cash

Cash and cash equivalents consist of amounts held as bank deposits and highly liquid debt instruments purchased with an original maturity of three months or less.

From time to time, we may maintain bank balances in interest bearing accounts in excess of the $250,000 currently insured by the Federal Deposit Insurance Corporation for interest bearing accounts (there is currently no insurance limit for deposits in noninterest bearing accounts). We have not experienced any losses with respect to cash. Management believes our Company is not exposed to any significant credit risk with respect to its cash.

Accounts receivable

Accounts receivable are carried at their estimated collectible amounts, net of any estimated allowances for doubtful accounts. We grant unsecured credit to our customer’s deemed credit worthy. Ongoing credit evaluations are performed and potential credit losses estimated by management are charged to operations on a regular basis. At the time, any particular account receivable is deemed uncollectible, the balance is charged to the allowance for doubtful accounts. The Company had accounts receivable net allowances of $132,177 as of March 31, 2017 and of $117,866 as of June 30, 2016.

Inventory

Inventory consists of finished goods paper and paper-based products such as paper cups and food containers ready for sale and is stated at the lower of cost or market. We value our inventory using the weighted average costing method. Our Company's policy is to include as a part of inventory any freight incurred to ship the product from our contract manufacturers to our warehouses. Outbound freights costs related to shipping costs to our customers are considered period costs and reflected in selling, general and administrative expenses. We regularly review inventory and consider forecasts of future demand, market conditions and product obsolescence.

If the estimated realizable value of our inventory is less than cost, we make provisions in order to reduce its carrying value to its estimated market value. On a consolidated basis, as of March 31, 2017 and June 30, 2016, the balance for the inventory totaled $623,144 and $468,262, respectively. No amounts were recognized as an obsolescence reserve at March 31, 2017 and June 30, 2016.

Income taxes

We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their perspective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded, when necessary, to reduce deferred tax assets to the amount expected to be realized.

As a result of the implementation of certain provisions of ASC 740, Income Taxes (“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax position, as defined, ASC 740 seeks to reduce the diversity in practice associated with certain aspect of the recognition and measurement related to accounting for income taxes. We adopted the provisions of ASC 740 as of October 2, 2008, and have analyzed filing positions in each of the federal and state jurisdictions where we are required to file income tax returns, as well as open tax years in these jurisdictions. We have identified the U.S. federal and California as our “major” tax jurisdictions and generally, we remain subject to Internal Revenue Service examination of our 2013 U.S. federal income tax returns. However, we have certain tax attribute carryforwards, which will remain subject to review and adjustment by the relevant tax authorities until the statute of limitations closes with respect to the year in which such attributes are utilized.

We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. In addition, we did not record a cumulative effect adjustment related to the adoption of ASC 740. Our policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes. We have no interest or penalties as of March 31, 2017.

Stock based compensation

Stock based compensation cost to employees is measured at the date of grant, based on the calculated fair value of the stock-based award, and will be recognized as expense over the employee’s requisite service period (generally the vesting period of the award). We estimate the fair value of employee stock options granted using the Black-Scholes-Merton Option Pricing Model. Key assumptions used to estimate the fair value of stock options will include the exercise price of the award, the fair value of our common stock on the date of grant, the expected option term, the risk free interest rate at the date of grant, the expected volatility and the expected annual dividend yield on our common stock. We use our company’s own data among other information to estimate the expected price volatility and the expected forfeiture rate. Share-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable.

Loss per share

We calculate basic earnings per share (“EPS”) by dividing our net loss by the weighted average number of common shares outstanding for the period, without considering common stock equivalents. Diluted EPS is computed by dividing net income or net loss by the weighted average number of common shares outstanding for the period and the weighted average number of dilutive common stock equivalents, such as options and warrants. Options and warrants are only included in the calculation of diluted EPS when their effect is dilutive; 9,929,119 and 13,751,366 diluted shares were excluded in calculating diluted loss per share for the nine and three months ended March 31, 2017 due to the fact that issuance of the shares is anti-dilutive as a result of the Company’s net loss.

Fair value of financial instruments

ASC Topic 820 defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

Level 1 - observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - include other inputs that are directly or indirectly observable in the marketplace.

Level 3 - unobservable inputs which are supported by little or no market activity.

The Company used Level 2 inputs for its valuation methodology for the derivative liabilities in determining the fair value using the Black-Scholes option-pricing model with the following assumption inputs:

	March 31, 2017
Annual dividend yield		—
Expected life (years)		0.46
Risk-free interest rate		0.90	%
Expected volatility		146	%

	Carrying Value		Fair Value Measurements at
	As of		March 31, 2017
	March 31,		Using Fair Value Hierarchy
	2017		Level 1		Level 2		Level 3
Liabilities
Derivative liabilities	$	2,150,000	$	—	$	2,150,000	$	—
Total	$	2,150,000	$	—	$	2,150,000	$	—

	June 30, 2016
Annual dividend yield		—
Expected life (years)		0.99
Risk-free interest rate		0.27	%
Expected volatility		377	%

	Carrying Value		Fair Value Measurements at
	As of		June 30, 2016
	June 30,		Using Fair Value Hierarchy
	2016		Level 1		Level 2		Level 3
Liabilities
Derivative liabilities	$	701,000	$	—	$	701,000	$	—
Total	$	701,000	$	—	$	701,000	$	—

Derivative instruments

The fair value of derivative instruments is recorded and shown separately under current liabilities. Changes in the fair value of derivatives liability are recorded in the consolidated statement of operations under non-operating income (expense).

Our Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option-pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. Refer to Note 6 for details.

Segment Reporting

FASB ASC Topic 280, “Segment Reporting”, requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the Company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

FASB ASC Topic 280 has no effect on the Company’s financial statements as substantially all of its operations are conducted in one industry segment – paper and paper-based products such as paper cups, cup lids, food containers, etc.

New accounting pronouncements not yet adopted

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-08, Revenue from Contracts with customers. The standard addresses the implementation guidance on principal versus agent considerations in the new revenue recognition standard. The ASU clarifies how an entity should identify the unit of accounting (i.e. the specified good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The ASU is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2017, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. The standard specifies how prepaid stored- value product liabilities should be derecognized, thereby eliminating the current and potential future diversity in practice. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases. The standard requires a lessee to recognize a liability to make lease payments and a right-of-use asset representing a right to use the underlying asset for the lease term on the balance sheet. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. The standard amends the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organization will now be required to classify all deferred tax assets and liabilities as noncurrent. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, with early adoption permitted. The Company early adopted this standard during the fourth quarter of fiscal 2016, utilizing retrospective applications as permitted. As such, prior period amounts have been retrospectively adjusted to conform to the current presentation.

In September 2015, the FASB issued ASU 2015-06, Simplifying the Accounting for Measurement-period Adjustments. Under this standard, an acquirer in a business combination must recognize measurement-period adjustments during the period in which the acquirer determines the amounts, including the effect on earnings of any amounts the acquirer would have recorded in previous periods if the accounting had been completed at the acquisition date, as opposed to retrospectively. This guidance is effective for fiscal years beginning after December 15, 2015 with early adoption permitted. The Company early adopted this standard during the fourth quarter of fiscal 2016.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. This standard, changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This standard is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. We do not anticipate that adoption of this standard will have a material impact to our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. This standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for interim and annual reporting periods beginning after December 15, 2015, with early application permitted. This standard will be applied retrospectively, and we do not expect the adoption of this standard to materially impact our consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ASU 2014-09, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). Early adoption is not permitted. In August 2015, the FASB issued ASU No. 2015-04, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendment in this ASU defers the effective date of ASU No. 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

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Concentration

9 Months Ended

Mar. 31, 2017

Risks and Uncertainties [Abstract]

Concentration

3. Concentration

Customers

For the three and nine months ended March 31, 2017, our Company earned net revenues of $903,950 and $2,759,595 respectively. The vast majority of these revenues for the three (3) month / three (3) and nine (9) month period ending March 31, 2017 were derived from three (3) customers of the Company. These three (3) customers accounted for 28% of revenue for the three months ended March 31, 2017. One customer accounted for 13% for the nine (9) months ending March 31, 2017.

For the three and nine months ended March 31, 2016, our Company earned net revenues of $826,867 and $3,144,207, respectively. The vast majority of these revenues for the periods were derived from a large number of customers, with no customers accounted for over 10% of the Company’s total revenues in either period.

Suppliers

For the three (3) months ended March 31, 2017, we purchased products for sale by CarryOutSupplies from several contract manufacturers located in Asia and the U.S. A substantial portion of the Company’s inventory is purchased from three (3) suppliers. The three (3) suppliers accounted as follows: One supplier accounted for 57% and the remaining two (2) account for 36% the Company’s total inventory purchase for the three (3) months ended March 31, 2017 respectively.

For the nine (9) months ended March 31, 2017, we purchased products for sale by CarryOutSupplies from several contract manufactures located in Asia and the U.S. A substantial portion of the Company’s inventory is purchased from three (3) suppliers. The three (3) suppliers accounted as follows: One supplier accounted for 73% and the remaining two (2) account for 23% of the Company’s total inventory purchase for the nine (9) months ended March 31, 2017.

For the three and nine months end March 31, 2016, we purchased products for sale by CarryOutSupplies from several contract manufacturers located in Asia and U.S. A substantial portion of the Company’s inventory is purchased from one supplier that functions as an independent foreign procurement agent. Two suppliers accounted for 10% and 76% of the Company’s total inventory purchase for the three and nine months ending March 31, 2016 respectively. There were no purchases of tree free paper products during this period.

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Litigation

9 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Litigation

4. Litigation

From time to time and in the course of business, we may become involved in various legal proceedings seeking monetary damages and other relief. The amount of the ultimate liability, if any, from such claims cannot be determined. As of March 31, 2017, there were no legal claims pending or threatened against the Company; the opinion of our management would be likely to have a material adverse effect on our financial position, results of operations or cash flows. However, as of the date of this filing, we were involved in the following legal proceedings.

On February 4, 2014, the Company filed suit in Contra Costa County, California, alleging breach of fiduciary duty, conspiracy to commit breach of fiduciary duty, fraud, conspiracy to commit fraud, conversion, breach of contract, and interference with contractual relations against, Diversified Products Group Inc. (DPG), Stephen Pinto, Lewis Cohen and Heidi Estiva, who were former sales agents for the Company. Stephen Pinto is the Company’s former Chairman of the board of directors. The Company plans to actively pursue this case. During November of 2014, the Company received notice that a cross complaint had been filed against the Company. The complaint alleges the parties were induced to make a series of investments in the Company by the material misrepresentations and omissions made by the Company. The Company believes the allegations are without merit. The Company plans to vigorously defend against such claims. No changes have occurred as of the filing date of this report. As of March 31, 2017, this matter is still pending.

On May 24, 2014, the Labor Commissioner, State of California issued an Order, Decision or Award of the Labor Commissioner against the Company in the amount of $56,365. On October 28, 2014, the Company entered into a settlement agreement, which was effective October 28, 2014, to resolve a judgment against the Company via the issuance of 502,533 restricted shares and a $30,000 cash payment. As of March 31, 2017, this matter is pending.

On December 11, 2013, the Company was served with a complaint from two Convertible Note Holders and investors in the Company, Lovitt & Hannan, Inc. Salary Deferral Plan FBO J. Thomas Hannan, Attorney at Law 401K Plan and Trust, and Kevin M. Kearney. The Company’s former CEO, Scott Lantz, was also named in the suit. The complaint alleges Hannan was induced to make a series of investments in the Company by the material misrepresentations and omissions made by the Company. We believe the Hannan case is now in the middle of depositions and it appears a trial is scheduled, tentatively, in the second quarter of 2017. We believe the claims in that case are still primarily of two categories, the first being repayment of the promissory notes and a series of allegations about improper investment solicitations and other misrepresentations.

On February 21, 2017, the Company signed a settlement agreement with the plaintiffs. Under the terms of the settlement agreement, the Company agreed to pay the plaintiffs’ $227,000 to settle all claims against the Company, which includes the payoff of the two notes outstanding within one (1) week. The parties had estimated the value of the notes at approximately $80,000. The Company has agreed to pay the plaintiff $97,000 within one hundred and twenty (120) days of the agreement with the remaining balance of $50,000 due within one hundred and eighty (180) days of the agreement. Upon receipt of all payments, plaintiffs shall surrender for cancellation 230,000 of the Company’s shares within ten (10) days. The parties agreed that all claims against the Company shall be satisfied through such payments and that the matter shall therefore be fully resolved. As of March 31, 2017, third-parties have purchased two (2) notes of approximately $80,000, hence reducing the Company’s exposure by $80,000.

There can be no assurances the ultimate liability relative to these law suits will not exceed what is outlined above.

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Convertible Notes

9 Months Ended

Mar. 31, 2017

Convertible Notes

Convertible Notes

5. Convertible Notes

As of March 31, 2017 and June 30, 2016 the balance owing on convertible notes with term as describe below was $1,414,523 and $394,167 respectively. The convertible promissory notes must be repaid by our Company within six months from the date of issuance; accrue interest at the average rate from 8% - 12%; and are subject to conversion at the election of the investors at such time as our Company has raised a minimum of $500,000 in a subsequent equity financing. The conversion price will be the lower of 45% of the per share purchase price paid for by the new investors in the subsequent financing, or $0.50 per share. Unless these promissory notes are converted or repaid earlier, our Company must pay the note-holders the amount of the then accrued interest on the three, six, and nine month anniversaries of the issue date. As of March 31, 2017, three (3) convertible promissory notes in the amount of $100,000 with accrued interest of $61,339, were converted to 12,738,334 restricted common shares as follows:

Principal amount of $25,000, interest in the amount of $15,295;

Principal amount of $50,000, interest in the amount of $30,819; and

Principal amount of $25,000, interest in the amount of S15,225.

Convertible notes issued during the nine months ended March 31, 2017:

On January 17, 2017, the Company entered into a convertible promissory note with an accredited investor for $25,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares.

On January 17, 2017, the Company entered into a convertible promissory note with an accredited investor for $20,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares.

On January 20, 2017, the Company entered into a convertible promissory note with an accredited investor for $80,000. The note has a term of seven (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares.

On January 24, 2017, the Company entered into a convertible promissory note with an accredited investor for $43,000. The note has a term of twelve (12) months with an interest of 8% and is convertible to common shares at a 45% discount to the then current market price of our shares.

On February 8, 2017, the Company entered into a convertible promissory note with an accredited investor for $50,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares.

On February 9, 2017, the Company entered into a convertible promissory note with an accredited investor for $50,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares.

On February 15, 2017, the Company entered into a convertible promissory note with an accredited investor for $63,000. The note has a term of nine (9) months with an interest rate of 8% and is convertible to common shares at 40% discount to the then current market price of our shares.

On February 16, 2017, the Company entered into a convertible promissory note with an accredited investor for $30,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares.

On February 24, 2017, the Company entered into a convertible promissory note with an accredited investor for $66,023. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares.

On February 28, 2017, the Company entered into a convertible promissory note with an accredited investor for $75,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount.

On March 1, 2017, the Company entered into a convertible promissory note with an accredited investor for $100,000. The note has a term of nine (9) months with an interest rate of 10% and is convertible to common shares at a 45% discount to the then current market price of our shares.

On March 23, 2017, the Company entered into a convertible promissory note with an accredited investor for $70,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares.

On March 31, 2017, the Company entered into a convertible promissory note with an accredited investor for $200,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares.

On October 18, 2016, the Company entered into a convertible promissory note with an accredited investor for $84,750. The note has a term of twelve (12) months with an interest rate of 10% and is convertible to common shares at a 50% discount.

On November 4, 2016, the Company entered into a convertible promissory note with an accredited investor for $84,750. The note has a term of nine (9) months with an interest rate of 10% and is convertible to common shares at a 50% discount.

On November 16, 2016, the Company entered into a convertible promissory note with an accredited investor for $110,000. The note has a term of nine (9) months with an interest rate of 10% and is convertible to common shares at a 45% discount.

On December 19, 2016, the Company entered into a convertible promissory note with an accredited investor for $20,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount.

On December 20, 2016, the Company entered into a convertible promissory note with an accredited investor for $38,000. The note has a term of nine (9) months with an interest rate of 10% and is convertible to common shares at a 45% discount.

On December 23, 2016, the Company entered into a convertible promissory note with an accredited investor for $55,000. The note has a term of nine (9) months with an interest rate of 8% and is convertible to common shares at a 42% discount.

During the nine months ended March 31,2017, the Company received cash proceeds of $1,264,523 from issuance of convertible notes.

As of March 31, 2017, the Company’s convertible notes consisted of following:

		As of March 31, 2017
Note Type and Investor	Due Date		Balance	Discount		Carrying Value
Convertible Note	7/1/2016		25,000	—		25,000
Convertible Note	7/1/2016		25,000	—		25,000
Convertible Note	7/1/2016		100,000	—		100,000
Convertible Note	10/18/2017		84,750	—		84,750
Convertible Note	8/4/2017		84,750	—		84,750
Convertible Note	8/16/2017		110,000	—		110,000
Convertible Note	9/20/2017		38,000	—		38,000
Convertible Note	7/17/2017		20,000	—		20,000
Convertible Note	9/30/2017		55,000	—		55,000
Convertible Note	7/17/2017		25,000	—		25,000
Convertible Note	7/17/2017		20,000	—		20,000
Convertible Note	1/24/2018		43,000	—		43,000
Convertible Note	8/8/2017		50,000	—		50,000
Convertible Note	7/20/2017		80,000	—		80,000
Convertible Note	8/24/2017		66,023	—		66,023
Convertible Note	8/9/2017		50,000	—		50,000
Convertible Note	8/31/2017		75,000	—		75,000
Convertible Note	12/1/2017		100,000	—		100,000
Convertible Note	9/23/2017		70,000	—		70,000
Convertible Note	11/20/2017		63,000	—		63,000
Convertible Note	8/16/2017		30,000	—		30,000
Convertible Note	9/30/2017		200,000	—		200,000
Total Convertible Promissory Notes		$	1,414,523		$	1,414,523

As of June 30, 2016, the Company’s convertible notes consisted of following:

		As of June 30, 2016
Note Type and Investor	Due Date	Balance		Discount		Carrying Value
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		40,000		—		40,000
Convertible Note	7/1/2016		50,000		—		50,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		100,000		—		100,000
Convertible Note	7/1/2016		20,834		—		20,834
Convertible Note	7/1/2016		8,333		—		8,333
Total Convertible Promissory Notes		$	394,167			$	394,167

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Debt settlements

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Debt settlements

6. Debt settlements

On December 31, 2016, the Company issued 1,486,101 common shares in exchange for the cancellation of $51,996 in vendor debt. The fair value of the 1,486,101 common shares was $89,166, which resulted in a loss on settlement of debt of $37,170.

On January 1, 2017, the Company agreed to issue 300,000 common shares and paid $15,000 cash in exchange for past legal services in the amount of $62,149.

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Derivative Liabilities

9 Months Ended

Mar. 31, 2017

Derivative Liabilities

Derivative Liabilities

7. Derivative liabilities

The derivative liability is derived from the conversion features in note 5 and stock warrant in note 8. All were valued using the weighted-average Black-Scholes- Merton option pricing model using the assumptions detailed below. As of March 31, 2017 and June 30, 2016, the derivative liability was $2,150,000 and $701,000, respectively. For the three months ended March 31, 2017 and 2016, the Company recorded a $1,337,000 loss and $83,000 gain from changes in derivative liability, respectively. For the nine months ended March 31, 2017 and 2016, the Company recorded a $1,449,000 loss and $5,000 gain from changes in derivative liability, respectively. The Black-Scholes model with the following assumption inputs:

	March 31, 2017
Annual dividend yield		—
Expected life (years)		0.46
Risk-free interest rate		0.90	%
Expected volatility		146	%

	June 30, 2016
Annual dividend yield		—
Expected life (years)		0.01
Risk-free interest rate		0.21	%
Expected volatility		449	%

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Stock warrants

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Stock warrants

8. Stock warrants

In connection with the issuance of the promissory notes, the investors in the aggregate received two-year warrants to purchase up to a total of 50,000 shares of common stock at an exercise price of $0.50 per share, and two-year warrants purchasing up to a total of 81,250 shares of common stock at an exercise price of $0.01 per share. For purposes of accounting for the detachable warrants issued in connection with the convertible notes, the fair value of the warrants was estimated using the Black-Scholes-Merton option pricing formula. The value of all warrants granted at the date of issuance totaled $508,413 and was recorded as a discount to the notes payable. The amount will be amortized over the nine (9) month term of the respective convertible note as additional interest expense.

On various dates during June 2014 and December 2014 the Company and holders of certain convertible notes agreed to cancel warrants to purchase common shares in the Company and to extend the due dates on the Notes to July 1, 2016. $0.50 warrants and “Bonus Warrants” priced at $0.01, as defined in the original Convertible Note Purchase Agreements we cancelled pertaining to the Note and warrants acquired on the following dates for the following Convertible Notes and amounts. During the nine months ended March 31, 2017, all the warrants were expired. There were no warrants outstanding at March 31, 2017. 

	Number of  Shares		Weighted Average  Exercise Price
Outstanding at June 30, 2014		180,000	$	0.20
Granted		—		—
Exercised		—		—
Forfeited September 30, 2014		38,750		0.09
Forfeited December 31, 2014		10,000		0.04
Outstanding at June 30, 2015		131,250		0.20
Outstanding at June 30, 2016		131,250		0.20
Expired		131,250		0.20
Outstanding at December 31, 2016		—	$	—
Outstanding at March 31, 2017		—		—

Following is a summary of the status of warrants outstanding at June 30, 2016:

Date Issued		Exercise Price		Number of Shares		Expiration Date
	8/17/12	$	0.01		6,250		7/1/2016
	8/20/12	$	0.01		6,250		7/1/2016
	9/10/12	$	0.01		10,000		7/1/2016
	9/13/12	$	0.01		12,500		7/1/2016
	9/18/12	$	0.01		6,250		7/1/2016
	10/5/12	$	0.01		2,500		7/1/2016
	10/25/12	$	0.01		6,250		7/1/2016
	1/31/13	$	0.01		6,250		7/1/2016
	10/22/12	$	0.01		25,000		7/1/2016
	8/24/12	$	0.50		50,000		8/24/16
	Total warrants as of June 30, 2016				131,250

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Note payable

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Note payable

9. Note payable

Note payable due to bank

During October 2011, we entered into a revolving demand note (line of credit) arrangement with HSBC Bank USA, with a revolving borrowing limit of $150,000. The line of credit bears a variable interest rate of one quarter percent (0.25%) above the prime rate (3.25% as of September 30, 2013). In the event the deposit account is not established or minimum balance maintained, HSBC can charge a higher rate of interest of up to 4.0% above prime rate. As of March 31, 2017, the loan principal balance was $25,982.

Notes payable due to related parties

On January 23, 2013, the Company entered into a promissory note with its former employee of the Company who owns less than 5% of the Company’s stock. The original principal amount was $40,000 and the note bore no interest. The note was payable upon demand. As of March 31, 2017, this note had a balance of $18,000.

On December 31, 2013, the Company entered into a promissory note with Kalvin Kwong (an employee of the Company, who owns less than 5% of the Company’s stock). The principal amount was $20,000 and the interest rate on the note was 10%. The note had a term of six (6) months. However, this note was now payable upon demand per the oral agreement with the lender. As of March 31, 2017, this note had a balance of $20,000.

On January 14, 2015, the Company entered into a promissory note with Richard Ko (an employee of the Company, who owns less than 5% of the Company’s stock). The principle amount was $30,000 and the note bore no interest. The note had a term of one (1) year and was due on January 14, 2016, and became payable upon demand after January 14, 2016. As of March 31, 2017, this note had a balance of $25,000.

On January 13, 2014, the Company entered into a promissory note with an employee (an employee of the Company, who owns less than 5% of the Company’s stock). The principal amount was $25,000 and the note bore no interest. The note had a term of twenty-four (24) months and was due on January 13, 2016, and became payable upon demand after January 13, 2016. As of March 31, 2017, this note had a balance of $12,666.

As of March 31, 2017, the Company has an outstanding balance of notes payable due to related parties of $75,666. During the nine months ended March 31, 2017, the Company repaid $10,000 cash for notes payable due to related parties.

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Shares issued for services

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Shares issued for services

10. Shares issued for services

Effective February 1, 2017, the Company entered into an agreement with PDCG, LLC (“PDCG”) to provide strategic marketing consulting services for a period from February 1, 2017 to April 30, 2017. PDCG has agreed to accept in lieu of cash, total of 750,000 of the Company’s common shares with title of these shares to be transferred to PDCG at effective date. As of March 31, 2017, these shares had yet to be issued and are being recorded as a liability for stock to be issued for $52,500.

10a. Shares issued by assignment

On September 27, 2012, the Company received monies under a subscription agreement and a convertible note (the “Note”) for the principal amount of $25,000. On January 30, 2017, the holder of the Note assigned the Note to Paladin Advisors, LLC (“Paladin”) for the principal amount, plus accrued interest. On January 30, 2017, Paladin submitted a notice of conversion, to which Paladin converted $40,225 based on the following: principal amount of $25,000, accrued interest of $15,225, for a total of $40,225 at the conversion rate of $0.005 per share. On March 30, 2017, the Company agreed to issue 8,045,000 of common shares to Paladin under the terms of the Note and notice of conversion.

On October 25, 2012, the Company received a loan in the form of a convertible note (the “Note”) for the principal amount of $25,000. On February 8, 2016, the holder of the Note executed an assignment of the Note to Blueprint Media, LLC (“BPM”) due to a debt in which the holder of the Note owed BPM. On December 31, 2016, BPM by and though its managing director executed a notice of conversion of the Note as follows: principal amount of $25,000, accrued interest of $12,483, for a total of $37,483 at the conversion rate of $0.035 per share. On March 30, 2017, the Company agreed to issue 1,070,943 of common shares to BPM under the terms of the Note and notice of conversion.

10b. Shares issued by conversion

On December 31, 2016, the holder of a convertible note (the “Note”) executed a conversion of its Note dated September 12, 2012. The terms and conditions under the Note allowed the holder to convert its Note for said total common shares issued. Upon conversion, the principal amount of the Note was $40,000, interest of $20,669, for a total of $60,669, at the conversion rate of $0.035 per share. On March 30, 2017, the Company agreed to issue 1,733,400 common shares to the holder of the Note under the terms of the Note and notice of conversion.

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Common shares issued for equity financing

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Common shares issued for equity financing

11. Common shares issued for equity financing

On October 11, 2016, the Company sold 2,000,000 shares of restricted common stock to an accredited investors for $100,000 pursuant to an exemption from registration relying on Section 4(a)(2) and Rule 506b of Regulation D, under the Securities Act of 1933, as amended (the “Securities Act”).

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Common shares reserved for future issuances

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Common shares reserved for future issuances

12. Common shares reserved for future issuances

The following table summarizes shares of our common stock reserved for future issuance at March 31, 2017:

Common shares to be issued under conversion feature	32,178,898
Common shares to be issued under $0.01 warrants	—
Common shares to be issued under $0.50 warrants	—
Total common shares reserved for future issuance	32,178,898

The following table summarizes shares of our common stock reserved for future issuance at June 30, 2016:

Common shares to be issued under conversion feature	11,702,118
Common shares to be issued under $0.01 warrants	81,250
Common shares to be issued under $0.50 warrants	50,000
Total common shares reserved for future issuance	11,833,368

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Related Party Transactions

9 Months Ended

Mar. 31, 2017

Related Party Transactions

Related Party Transactions

13. Related party transactions

From time to time, the Company would receive short-term loans from LMK Capital, LLC (“LMK”) for its working capital needs. The loan payable as of June 30, 2016 was $264,449. As of March 31, 2017, the Company’s outstanding balance to LMK is $53,689.

On December 1, 2016, the Company received a loan from an employee for $12,500 with an interest charge of $12,500. This amount was recorded as interest owed to the loan payable amount and is to be amortized on a monthly basis over the life of the loan. The loan is due on December 1, 2017. As of March 31, 2017, the balance is $9,375.

On July 7, 2016, the Company received a loan from an employee. The amount of the loan bore no interest and amortized on a monthly basis over the life of the loan. As of March 31, 2017, the balance of the loan is $39,207.

On November 21, 2016, the Company received a loan from an employee. The amount of the loan bore no interest and amortized on a monthly basis over the life of the loan. As of March 31, 2017, the balance of the loan is $1,260.

As of March 31, 2017, the Company has outstanding loan balance of $103,530 from Shareholders and directors of the Company.

13a Miscellaneous – related party transactions

On September 7, 2016, our CEO and Chairman, Jimmy Chan, was awarded five (5) million shares of restricted common stock in the Company in lieu of salary, equivalent to $150,000. On September 7, 2016, Director Waylon Huang, was awarded three (3) million shares of restricted common stock in the Company in lieu of salary, equivalent to $90,000. Mr. Huang is also the general manager of the CarryOutSupplies.com.

On September 7, 2016, Richard Ko, was awarded three (3) million shares of restricted common stock in the Company in lieu of salary, equivalent to $90,000 annually for services provided to the Company.

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Loans payable

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Loans payable

14. Loans payable

On January 25, 2017, the Company entered into an agreement with a lending company for $100,000 for its working capital needs. As of March 31, 2017, the Company has an outstanding balance of $63,348.

On December 22, 2016, CarryOutSupplies entered an agreement with a lending company for its working capital needs. The loan was payable on the 22nd day from the entering date of the agreement. The principal amount of the loan was $75,000 and the repayment amount was $109,425 including interest with daily payment of $899. At March 31, 2017, the outstanding balance under the loan was $33,728.

Reported as of December 31, 2016, the Company had an outstanding balance of $5,053 between two (2) vendors. As of March 31, 2017, the Company now has an outstanding loan balance of $1,599 from one (1) vendor of the Company.

On September 21, 2016, the Company received a loan from Greater Asia Technology for $100,000, with prepaid interest of $40,000 and is due on September 30, 2017. As of March 31, 2017, this note had a balance of $100,000.

On July 11, 2016, the Company received a loan from Greater Asia Technology for $150,000. There were loan fees of $8,000 associated with origination of the loan, which bears 40% annual interest and is due on January 15, 2017. As of March 31, 2017, this note had a balance of $58,300.

On October 28, 2016, the Company received a loan from Autumn Group, LLC for $100,000. It was predetermined interest on the loan would be $100,000. This amount was recorded as a discount to the loan payable amount and is to be amortized on a monthly basis over the life of the loan. The loan is due on September 26, 2017. The loan bears 100% annual interest and is due on November 1, 2017. As of March 31, 2017, this note had a balance of $100,000.

On July 1, 2016, the Company entered into a repayment agreement with its employee for $20,280 at no interest. As of March 31, 2017, the Company has an outstanding balance of $20,280. Repayment on this loan will be repaid at a later date with no interest being accrued.

On January 6, 2015, the Company entered into repayment agreement with its former employee for a loan of $9,500 at no interest. As of March 31, 2017, the Company has an outstanding balance of $4,076.

On July 2, 2015, the Company entered into a repayment agreement for $22,583 at no interest. As of March 31, 2017, the Company has an outstanding balance of $17,583.

On July 1, 2012, CarryOutSupplies entered an equipment loan agreement with a bank with maturity on June 1, 2017. The monthly payment is $255. At March 31, 2017, the outstanding balance under this loan was $980.

On March 5, 2013, the Company entered an equipment loan agreement with Toyota financial services with maturity date of April 4, 2018. As of March 31, 2017 the balance under this loan is $5,924.

During the nine months ended March 31, 2017, the Company received cash proceeds of $700,910 from loans, and repaid $776,505 cash for loans payable.

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Shares to be issued

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Shares to be issued

15. Shares to be issued

Preferred Shares

As of March 31, 2017, the Company was obligated to issue 30,501,339 shares of Series B Convertible Preferred Stock for three EB-5 investments with the total amount of $1,500,000. The Company received $2,000,000 proceeds during the fiscal year ended June 30, 2016 with fair value of $2,000,000. On April 1, 2015, the Company completed a series of transactions and amended its Articles of Incorporation creating a series of preferred stock of 10,000,000 shares, which shall be designated Series B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”). Series B will not be eligible for dividends. Five years from the date of issue (the “Conversion Date”), assuming the Series B investor is approved for l-526 under the U.S Government’s EB-5 Investment Program, each Preferred Share will automatically convert into that number of Common Shares having a “fair market value” of the Initial Investment plus a five (5) percent annualized return on Initial Investment. Fair market value will be determined by averaging the closing sale price of a Common Share for the 40 trading days immediately preceding the date of conversion on the U.S. stock exchange on which Common Shares are publicly traded. The offering was made pursuant to SEC Rule 506 and Section 4(2) of the Securities Act, which provides exemption from registration for transactions, which are not public offerings. The funds received were used for general working capital purposes and to accelerate order deliveries to customers.

Common Shares

During the nine months ended March 31, 2017, the Company issued 22,055,556 common shares, which were obligated to be issued at June 30, 2016, with a fair value in the amount of $1,230,000.

As of March 31, 2017, the Company was obligated to issue 500,000 shares for $25,000 proceeds received through two separate private placements with 250,000 shares each.

As of March 31, 2017, the Company was obligated to issue 2,000,000 restricted common shares for equity financing of $100,000, the fair market value of the 2,000,000 shares was $100,000.

As of March 31, 2017, the Company was obligated to issue 1,485,586 restricted common shares for the settlement of outstanding accounts payable in the amount of $51,996. The fair value of the 1,486,101 common shares was $89,166, which resulted in a loss on settlement of debt of $37,170.

On December 1, 2016, the Company modified its agreement with Bao Coc International Paper and BAO COC INTERNATIONAL PAPER AND PLASTIC COMPANY LIMITED ("Bao Cao"), of the Socialist Republic of Vietnam. Under the terms of the revised agreement, the Company shall purchase products manufactured by the current contract manufacturers and distribute such products to various quick service restaurant and institutions in the United States. Revenues from such products shall belong to Sugarmade. The price of these products will be determined from time to time in mutual agreement between the Parties. Sugarmade shall be responsible for compensating the contract manufacturer and collection of monies from the end customer with all revenues belonging to the Company. The company is obligated to issue 5,000,000 restricted common shares, the fair market value of the 5,000,000 shares was $400,000. As of March 31, 2017, these shares had yet to be issued and were recorded as a liability for stock to be issued – common shares.

As of March 31, 2017, the company was obligated to issue 3,000,000 restricted common shares for consulting services, with a fair market value of $240,000.

As of March 31, 2017, the Company was obligated to issue 1,923,077 restricted common shares for equity financing of $100,000, the fair market value of the 1,923,077 shares was $100,000.

As of March 31, 2017, the Company was obligated to issue 1,350,166 restricted common shares for convertible debt conversion in the amount of $40,505 principle. On the date of conversion, the market value of the shares issued was $0.12 per share. The fair value of the shares was $162,020.

As of March 31, 2017, the Company was obligated to issue 2,000,000 restricted common shares under an assignment of a note to convert into on shares in the amount of $40,314. The market value of the shares issued was $0.12 per share. The fair market value of the 2,000,000 shares was $240,000.

As of March 31, 2017, the Company was obligated to issue 300,000 restricted common shares for past services. The market value of the shares issued was $0.06 per share. The fair market value of the 300,000 shares was $18,000.

As of March 31, 2017, the Company was obligated to issue 1,343,167 restricted common shares on a debt settlement to convert into shares in the amount of $40,295. The market value of the shares issued was $0.12 per share. The fair market value of the 1,343,167 shares was $161,180.

For the nine month period ending March 31, 2017 and 2016, the Company received $225,000 and $230,000 respectively in proceeds from shares to be issued.

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Cancellation of Common Shares

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Cancellation of Common Shares

16. Cancellation of Common Shares

On March 15, 2017, 2,000,000 common shares were surrendered to the Company for cancellation as a result of a litigation matter in which the Company and former CEO, Scott Lantz were named defendants. As part of the agreement with Mr. Lantz, the surrendered shares were used to fund and retain defense counsel on Mr. Lantz behalf. 7,003,000 common shares were also surrendered for cancellation by its previous management and consultant due to non-fulfillment of its contractual duties.

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Commitments and Contingencies

9 Months Ended

Mar. 31, 2017

Commitments And Contingencies

Commitments and Contingencies

17. Commitments and contingencies

On April 1, 2015, the Company entered into a lease for general office and warehouse in City of Industry, California with a lease term of one year. The monthly rent was $11,884. The Company renewed the lease to March 31, 2016, effective April 1, 2016 to March 31, 2017, increasing the rent from $11,884 to $13,238. On March 6, 2017, the Company executed a Fifth Amendment to the Lease, in which the Monthly rent increased from $13,238 to $15,043 effective from April 1, 2017 to March 31, 2018. As of March 31, 2017, the Monthly rent is $15,043.

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Subsequent Event

9 Months Ended

Mar. 31, 2017

Subsequent Event

Subsequent Event

18. Subsequent events

On April 1, 2017, the Company entered into a distribution and intellectual property assignment agreement with Wagner Bartosch, Inc. (“Wagner”) for use of their Divider™ used in frozen desserts and other related uses. In lieu of cash payment under the agreement, the Company will issue common shares of the Company valued at $75,000.

On April 28, 2017, the Company signed a Marketing Service Agreement, in which it plans to “kick-start” marketing its new product Sriracha Seasoning Stixs to the public using videos and other social media circuits. In lieu of cash payment for professional services, the Company will issue common shares equivalent to $32,250.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Mar. 31, 2017

Summary Of Significant Accounting Policies Policies

Basis of presentation

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

These interim condensed consolidated financial statements should be read in conjunction with our Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016, which contains our audited consolidated financial statements and notes thereto, together with the Management’s Discussion and Analysis of Financial Condition and Results of Operation, for the period ended June 30, 2016, as filed on or about November 1, 2016 and as amended on November 15, 2016 (the “Annual Report”). The interim results for the period ended March 31, 2017 are not necessarily indicative of the results for the full fiscal year.

Principles of consolidation

Principles of consolidation

The condensed consolidated unaudited financial statements include the accounts of our Company and its wholly-owned subsidiaries, Sugarmade-CA and SWC. All significant intercompany transactions and balances have been eliminated in consolidation.

Going concern

Going concern

The Company's continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, in which it has not been successful, and/or obtaining additional financing from its shareholders or other sources, as may be required.

Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

Management is endeavoring to increase revenue-generating operations. While priority is on generating cash from operations through the sale of the Company’s products, management is also seeking to raise additional working capital through various financing sources, including the sale of the Company’s equity and/or debt securities, which may not be available on commercially reasonable terms to our Company, or which may not be available at all. If such financing is not available on satisfactory terms, we may be unable to continue our business as desired and our operating results will be adversely affected. In addition, any financing arrangement may have potentially adverse effects on us and/or our stockholders. Debt financing (if available and undertaken) will increase expenses, must be repaid regardless of operating results and may involve restrictions limiting our operating flexibility. If we issue equity securities to raise additional funds, the percentage ownership of our existing stockholders will be reduced and the new equity securities may have rights, preferences or privileges senior to those of the current holders of our common stock.

Use of estimates

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

Revenue recognition

Revenue recognition

We recognize revenue in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) No. 605, Revenue Recognition. Revenue is recognized when an arrangement and a determinable fee occur, and when collection is considered to be probable and products are delivered or title has been transferred. This generally occurs upon shipment of the merchandise, which is when legal transfer of title occurs. In the event that final acceptance of our product by the customer is uncertain, revenue is deferred until all acceptance criteria have been met. We currently have a consignment arrangement with two of our customers. We record revenue on consignment goods when the consigned goods are sold by the consignee and all other above mentioned revenue recognition criteria have been satisfied. Cash deposits received in connection with the sales of our products prior to their being delivered or acceptance if applicable is recorded as deferred revenue.

Cash

Cash

Cash and cash equivalents consist of amounts held as bank deposits and highly liquid debt instruments purchased with an original maturity of three months or less.

From time to time, we may maintain bank balances in interest bearing accounts in excess of the $250,000 currently insured by the Federal Deposit Insurance Corporation for interest bearing accounts (there is currently no insurance limit for deposits in noninterest bearing accounts). We have not experienced any losses with respect to cash. Management believes our Company is not exposed to any significant credit risk with respect to its cash.

Accounts receivable

Accounts receivable

Accounts receivable are carried at their estimated collectible amounts, net of any estimated allowances for doubtful accounts. We grant unsecured credit to our customer’s deemed credit worthy. Ongoing credit evaluations are performed and potential credit losses estimated by management are charged to operations on a regular basis. At the time, any particular account receivable is deemed uncollectible, the balance is charged to the allowance for doubtful accounts. The Company had accounts receivable net allowances of $132,177 as of March 31, 2017 and of $117,866 as of June 30, 2016.

Inventory

Inventory

Inventory consists of finished goods paper and paper-based products such as paper cups and food containers ready for sale and is stated at the lower of cost or market. We value our inventory using the weighted average costing method. Our Company's policy is to include as a part of inventory any freight incurred to ship the product from our contract manufacturers to our warehouses. Outbound freights costs related to shipping costs to our customers are considered period costs and reflected in selling, general and administrative expenses. We regularly review inventory and consider forecasts of future demand, market conditions and product obsolescence.

If the estimated realizable value of our inventory is less than cost, we make provisions in order to reduce its carrying value to its estimated market value. On a consolidated basis, as of March 31, 2017 and June 30, 2016, the balance for the inventory totaled $623,144 and $468,262, respectively. No amounts were recognized as an obsolescence reserve at March 31, 2017 and June 30, 2016.

Income taxes

Income taxes

We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their perspective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded, when necessary, to reduce deferred tax assets to the amount expected to be realized.

As a result of the implementation of certain provisions of ASC 740, Income Taxes (“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax position, as defined, ASC 740 seeks to reduce the diversity in practice associated with certain aspect of the recognition and measurement related to accounting for income taxes. We adopted the provisions of ASC 740 as of October 2, 2008, and have analyzed filing positions in each of the federal and state jurisdictions where we are required to file income tax returns, as well as open tax years in these jurisdictions. We have identified the U.S. federal and California as our “major” tax jurisdictions and generally, we remain subject to Internal Revenue Service examination of our 2013 U.S. federal income tax returns. However, we have certain tax attribute carryforwards, which will remain subject to review and adjustment by the relevant tax authorities until the statute of limitations closes with respect to the year in which such attributes are utilized.

We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. In addition, we did not record a cumulative effect adjustment related to the adoption of ASC 740. Our policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes. We have no interest or penalties as of March 31, 2017.

Stock based compensation

Stock based compensation

Stock based compensation cost to employees is measured at the date of grant, based on the calculated fair value of the stock-based award, and will be recognized as expense over the employee’s requisite service period (generally the vesting period of the award). We estimate the fair value of employee stock options granted using the Black-Scholes-Merton Option Pricing Model. Key assumptions used to estimate the fair value of stock options will include the exercise price of the award, the fair value of our common stock on the date of grant, the expected option term, the risk free interest rate at the date of grant, the expected volatility and the expected annual dividend yield on our common stock. We use our company’s own data among other information to estimate the expected price volatility and the expected forfeiture rate. Share-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable.

Loss per share

Loss per share

We calculate basic earnings per share (“EPS”) by dividing our net loss by the weighted average number of common shares outstanding for the period, without considering common stock equivalents. Diluted EPS is computed by dividing net income or net loss by the weighted average number of common shares outstanding for the period and the weighted average number of dilutive common stock equivalents, such as options and warrants. Options and warrants are only included in the calculation of diluted EPS when their effect is dilutive; 9,929,119 and 13,751,366 diluted shares were excluded in calculating diluted loss per share for the nine and three months ended March 31, 2017 due to the fact that issuance of the shares is anti-dilutive as a result of the Company’s net loss.

Fair Value of Financial Instruments

Fair value of financial instruments

ASC Topic 820 defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

Level 1 - observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - include other inputs that are directly or indirectly observable in the marketplace.

Level 3 - unobservable inputs which are supported by little or no market activity.

The Company used Level 2 inputs for its valuation methodology for the derivative liabilities in determining the fair value using the Black-Scholes option-pricing model with the following assumption inputs:

	March 31, 2017
Annual dividend yield		—
Expected life (years)		0.46
Risk-free interest rate		0.90	%
Expected volatility		146	%

	Carrying Value		Fair Value Measurements at
	As of		March 31, 2017
	March 31,		Using Fair Value Hierarchy
	2017		Level 1		Level 2		Level 3
Liabilities
Derivative liabilities	$	2,150,000	$	—	$	2,150,000	$	—
Total	$	2,150,000	$	—	$	2,150,000	$	—

	June 30, 2016
Annual dividend yield		—
Expected life (years)		0.99
Risk-free interest rate		0.27	%
Expected volatility		377	%

	Carrying Value		Fair Value Measurements at
	As of		June 30, 2016
	June 30,		Using Fair Value Hierarchy
	2016		Level 1		Level 2		Level 3
Liabilities
Derivative liabilities	$	701,000	$	—	$	701,000	$	—
Total	$	701,000	$	—	$	701,000	$	—

Derivative Instruments

Derivative instruments

The fair value of derivative instruments is recorded and shown separately under current liabilities. Changes in the fair value of derivatives liability are recorded in the consolidated statement of operations under non-operating income (expense).

Our Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option-pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. Refer to Note 6 for details.

Segment Reporting

Segment Reporting

FASB ASC Topic 280, “Segment Reporting”, requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the Company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

FASB ASC Topic 280 has no effect on the Company’s financial statements as substantially all of its operations are conducted in one industry segment – paper and paper-based products such as paper cups, cup lids, food containers, etc.

New Accounting Pronouncements Not Yet Adopted

New accounting pronouncements not yet adopted

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-08, Revenue from Contracts with customers. The standard addresses the implementation guidance on principal versus agent considerations in the new revenue recognition standard. The ASU clarifies how an entity should identify the unit of accounting (i.e. the specified good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The ASU is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2017, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. The standard specifies how prepaid stored- value product liabilities should be derecognized, thereby eliminating the current and potential future diversity in practice. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases. The standard requires a lessee to recognize a liability to make lease payments and a right-of-use asset representing a right to use the underlying asset for the lease term on the balance sheet. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. The standard amends the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organization will now be required to classify all deferred tax assets and liabilities as noncurrent. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, with early adoption permitted. The Company early adopted this standard during the fourth quarter of fiscal 2016, utilizing retrospective applications as permitted. As such, prior period amounts have been retrospectively adjusted to conform to the current presentation.

In September 2015, the FASB issued ASU 2015-06, Simplifying the Accounting for Measurement-period Adjustments. Under this standard, an acquirer in a business combination must recognize measurement-period adjustments during the period in which the acquirer determines the amounts, including the effect on earnings of any amounts the acquirer would have recorded in previous periods if the accounting had been completed at the acquisition date, as opposed to retrospectively. This guidance is effective for fiscal years beginning after December 15, 2015 with early adoption permitted. The Company early adopted this standard during the fourth quarter of fiscal 2016.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. This standard, changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This standard is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. We do not anticipate that adoption of this standard will have a material impact to our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. This standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for interim and annual reporting periods beginning after December 15, 2015, with early application permitted. This standard will be applied retrospectively, and we do not expect the adoption of this standard to materially impact our consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ASU 2014-09, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). Early adoption is not permitted. In August 2015, the FASB issued ASU No. 2015-04, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendment in this ASU defers the effective date of ASU No. 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Mar. 31, 2017

Summary Of Significant Accounting Policies Tables

Schedule of fair value of derivative liabilities

The Company used Level 2 inputs for its valuation methodology for the derivative liabilities in determining the fair value using the Black-Scholes option-pricing model with the following assumption inputs:

	March 31, 2017
Annual dividend yield		—
Expected life (years)		0.46
Risk-free interest rate		0.90	%
Expected volatility		146	%

	Carrying Value		Fair Value Measurements at
	As of		March 31, 2017
	March 31,		Using Fair Value Hierarchy
	2017		Level 1		Level 2		Level 3
Liabilities
Derivative liabilities	$	2,150,000	$	—	$	2,150,000	$	—
Total	$	2,150,000	$	—	$	2,150,000	$	—

	June 30, 2016
Annual dividend yield		—
Expected life (years)		0.99
Risk-free interest rate		0.27	%
Expected volatility		377	%

	Carrying Value		Fair Value Measurements at
	As of		June 30, 2016
	June 30,		Using Fair Value Hierarchy
	2016		Level 1		Level 2		Level 3
Liabilities
Derivative liabilities	$	701,000	$	—	$	701,000	$	—
Total	$	701,000	$	—	$	701,000	$	—

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Convertible Notes (Tables)

9 Months Ended

Mar. 31, 2017

Convertible Notes Tables

Schedule of Promissory Notes

As of March 31, 2017, the Company’s convertible notes consisted of following:

		As of March 31, 2017
Note Type and Investor	Due Date		Balance	Discount		Carrying Value
Convertible Note	7/1/2016		25,000	—		25,000
Convertible Note	7/1/2016		25,000	—		25,000
Convertible Note	7/1/2016		100,000	—		100,000
Convertible Note	10/18/2017		84,750	—		84,750
Convertible Note	8/4/2017		84,750	—		84,750
Convertible Note	8/16/2017		110,000	—		110,000
Convertible Note	9/20/2017		38,000	—		38,000
Convertible Note	7/17/2017		20,000	—		20,000
Convertible Note	9/30/2017		55,000	—		55,000
Convertible Note	7/17/2017		25,000	—		25,000
Convertible Note	7/17/2017		20,000	—		20,000
Convertible Note	1/24/2018		43,000	—		43,000
Convertible Note	8/8/2017		50,000	—		50,000
Convertible Note	7/20/2017		80,000	—		80,000
Convertible Note	8/24/2017		66,023	—		66,023
Convertible Note	8/9/2017		50,000	—		50,000
Convertible Note	8/31/2017		75,000	—		75,000
Convertible Note	12/1/2017		100,000	—		100,000
Convertible Note	9/23/2017		70,000	—		70,000
Convertible Note	11/20/2017		63,000	—		63,000
Convertible Note	8/16/2017		30,000	—		30,000
Convertible Note	9/30/2017		200,000	—		200,000
Total Convertible Promissory Notes		$	1,414,523		$	1,414,523

As of June 30, 2016, the Company’s convertible notes consisted of following:

		As of June 30, 2016
Note Type and Investor	Due Date	Balance		Discount		Carrying Value
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		40,000		—		40,000
Convertible Note	7/1/2016		50,000		—		50,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		100,000		—		100,000
Convertible Note	7/1/2016		20,834		—		20,834
Convertible Note	7/1/2016		8,333		—		8,333
Total Convertible Promissory Notes		$	394,167			$	394,167

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Stock warrants (Tables)

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Schedule of Convertible Stock Warrants

	Number of  Shares		Weighted Average  Exercise Price
Outstanding at June 30, 2014		180,000	$	0.20
Granted		—		—
Exercised		—		—
Forfeited September 30, 2014		38,750		0.09
Forfeited December 31, 2014		10,000		0.04
Outstanding at June 30, 2015		131,250		0.20
Outstanding at June 30, 2016		131,250		0.20
Expired		131,250		0.20
Outstanding at December 31, 2016		—	$	—
Outstanding at March 31, 2017		—		—

Schedule of Warrants Outstanding

Following is a summary of the status of warrants outstanding at June 30, 2016:

Date Issued		Exercise Price		Number of Shares		Expiration Date
	8/17/12	$	0.01		6,250		7/1/2016
	8/20/12	$	0.01		6,250		7/1/2016
	9/10/12	$	0.01		10,000		7/1/2016
	9/13/12	$	0.01		12,500		7/1/2016
	9/18/12	$	0.01		6,250		7/1/2016
	10/5/12	$	0.01		2,500		7/1/2016
	10/25/12	$	0.01		6,250		7/1/2016
	1/31/13	$	0.01		6,250		7/1/2016
	10/22/12	$	0.01		25,000		7/1/2016
	8/24/12	$	0.50		50,000		8/24/16
	Total warrants as of June 30, 2016				131,250

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Common shares reserved for future issuances (Tables)

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Schedule of Common Shares Reserved for Furture Issuance

The following table summarizes shares of our common stock reserved for future issuance at March 31, 2017:

Common shares to be issued under conversion feature	32,178,898
Common shares to be issued under $0.01 warrants	—
Common shares to be issued under $0.50 warrants	—
Total common shares reserved for future issuance	32,178,898

The following table summarizes shares of our common stock reserved for future issuance at June 30, 2016:

Common shares to be issued under conversion feature	11,702,118
Common shares to be issued under $0.01 warrants	81,250
Common shares to be issued under $0.50 warrants	50,000
Total common shares reserved for future issuance	11,833,368

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Summary of Significant Accounting Policies (Details)	9 Months Ended	12 Months Ended
	Mar. 31, 2017	Jun. 30, 2016
Summary Of Significant Accounting Policies Details
Annual dividend yield
Expected life (years)	5 months 16 days	11 months 26 days
Risk-free interest rate	0.90%	0.27%
Expected volatility	146.00%	377.00%

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Summary of Significant Accounting Policies (Details 2) - USD ($)	Mar. 31, 2017	Jun. 30, 2016
Derivative Liabilities	$ 2,150,000	$ 701,000
Liabilities [Member]
Derivative Liabilities	2,150,000	701,000
Liabilities [Member] | Fair Value, Inputs, Level 3 [Member]
Derivative Liabilities
Liabilities [Member] | Fair Value, Inputs, Level 1 [Member]
Derivative Liabilities
Liabilities [Member] | Fair Value, Inputs, Level 2 [Member]
Derivative Liabilities	$ 2,150,000	$ 701,000

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Summary of Significant Accounting Policies (Details Narrative)	9 Months Ended
	Mar. 31, 2017 USD ($)
Summary Of Significant Accounting Policies Details Narrative
Cash issued to Federal Deposit Insurance Corporation	$ 250,000

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Concentration (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Risks and Uncertainties [Abstract]
Net Revenue	$ 903,950	$ 826,867	$ 2,759,595	$ 3,144,207

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Litigation (Details Narrative) - USD ($)	Feb. 21, 2017	Oct. 28, 2014	May 24, 2014
Commitments and Contingencies Disclosure [Abstract]
Litigation Settlement, Amount	$ 227,000		$ 56,365
Restricted Shares Issued		502,533
Litigation Cash Paid		$ 30,000

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Convertible Notes (Details Narrative) - USD ($)	9 Months Ended	12 Months Ended
	Mar. 31, 2017	Jun. 30, 2016
Convertible Notes Payable	$ 25,982	$ 25,982
ConvertibleNotesPayableOneMember
Convertible Notes Payable	$ 25,000	$ 25,000
Convertible Notes Due Date	Jul. 01, 2016	Jul. 01, 2016
ConvertibleNotesPayableTwoMember
Convertible Notes Payable	$ 25,000	$ 40,000
Convertible Notes Due Date	Jul. 01, 2016	Jul. 01, 2016
ConvertibleNotesPayableThreeMember
Convertible Notes Payable	$ 100,000	$ 50,000
Convertible Notes Due Date	Jul. 01, 2016	Jul. 01, 2016
ConvertibleNotesPayableFourMember
Convertible Notes Payable	$ 84,750	$ 25,000
Convertible Notes Due Date	Oct. 18, 2017	Jul. 01, 2016
ConvertibleNotesPayableFiveMember
Convertible Notes Payable	$ 84,750	$ 25,000
Convertible Notes Due Date	Aug. 04, 2017	Jul. 01, 2016
ConvertibleNotesPayableSixMember
Convertible Notes Payable	$ 110,000	$ 25,000
Convertible Notes Due Date	Aug. 16, 2017	Jul. 01, 2016
ConvertibleNotesPayableSevenMember
Convertible Notes Payable	$ 38,000	$ 25,000
Convertible Notes Due Date	Sep. 20, 2017	Jul. 01, 2016
ConvertibleNotesPayableEightMember
Convertible Notes Payable	$ 20,000	$ 25,000
Convertible Notes Due Date	Jul. 17, 2017	Jul. 01, 2016
ConvertibleNotesPayableNineMember
Convertible Notes Payable	$ 55,000	$ 25,000
Convertible Notes Due Date	Sep. 30, 2017	Jul. 01, 2016
ConvertibleNotesPayableTenMember
Convertible Notes Payable	$ 25,000	$ 100,000
Convertible Notes Due Date	Jul. 17, 2017	Jul. 01, 2016
ConvertibleNotesPayableElevenMember
Convertible Notes Payable	$ 20,000	$ 20,834
Convertible Notes Due Date	Jul. 17, 2017	Jul. 01, 2016
ConvertibleNotesPayableTwelveMember
Convertible Notes Payable	$ 43,000	$ 8,333
Convertible Notes Due Date	Jan. 24, 2018	Jul. 01, 2016
ConvertibleNotesPayableThirteenMember
Convertible Notes Payable	$ 50,000
Convertible Notes Due Date	Aug. 08, 2017
ConvertibleNotesPayableTwentyOneMember
Convertible Notes Payable	$ 30,000
Convertible Notes Due Date	Aug. 16, 2017
ConvertibleNotesPayableTwentyMember
Convertible Notes Payable	$ 63,000
Convertible Notes Due Date	Nov. 20, 2017
ConvertibleNotesPayableNineteenMember
Convertible Notes Payable	$ 70,000
Convertible Notes Due Date	Sep. 23, 2017
ConvertibleNotesPayableEighteenMember
Convertible Notes Payable	$ 100,000
Convertible Notes Due Date	Dec. 01, 2017
ConvertibleNotesPayableTwentyTwoMember
Convertible Notes Payable	$ 200,000
Convertible Notes Due Date	Sep. 30, 2017
ConvertibleNotesPayableSeventeenMember
Convertible Notes Payable	$ 75,000
Convertible Notes Due Date	Aug. 31, 2017
ConvertibleNotesPayableSixteenMember
Convertible Notes Payable	$ 50,000
Convertible Notes Due Date	Aug. 09, 2017
ConvertibleNotesPayableFifteenMember
Convertible Notes Payable	$ 66,023
Convertible Notes Due Date	Aug. 24, 2017
ConvertibleNotesPayableFourteenMember
Convertible Notes Payable	$ 80,000
Convertible Notes Due Date	Jul. 20, 2017
Convertible Notes [Member]
Convertible Notes Payable	$ 1,414,523	$ 394,167
Minimum [Member]
Accured Interest Rate	8.00%
Maximum [Member]
Accured Interest Rate	12.00%

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Stock warrants (Details) - $ / shares	3 Months Ended	6 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2014	Dec. 31, 2016	Mar. 31, 2017	Mar. 31, 2015	Jun. 30, 2016
Stock Warrant [Member]
Number of Shares
Outstanding	180,000	131,250	131,250	180,000
Granted
Exercised		131,250	131,250
Forfeited	38,750			10,000
Outstanding					131,250
Weighted Average Exercise Price
Outstanding	$ 0.20	$ 0.20	$ 0.20	$ 0.20
Granted
Exercised		0.20	0.20
Forfeited	$ .09			$ .04
Outstanding					$ 0.20
8/17/2012
Number of Shares
Outstanding		6,250	6,250
Outstanding					6,250
Weighted Average Exercise Price
Exercised					$ 0.01
8/20/2012
Number of Shares
Outstanding		6,250	6,250
Outstanding					6,250
Weighted Average Exercise Price
Exercised					$ 0.01
9/10/2012
Number of Shares
Outstanding		10,000	10,000
Outstanding					10,000
Weighted Average Exercise Price
Exercised					$ 0.01
9/13/2012
Number of Shares
Outstanding		12,500	12,500
Outstanding					12,500
Weighted Average Exercise Price
Exercised					$ 0.01
9/18/2012
Number of Shares
Outstanding		6,250	6,250
Outstanding					6,250
Weighted Average Exercise Price
Exercised					$ 0.01
10/5/2012
Number of Shares
Outstanding		2,500	2,500
Outstanding					2,500
Weighted Average Exercise Price
Exercised					$ 0.01
10/25/2012
Number of Shares
Outstanding		6,250	6,250
Outstanding					6,250
Weighted Average Exercise Price
Exercised					$ 0.01
1/31/2013
Number of Shares
Outstanding		6,250	6,250
Outstanding					6,250
Weighted Average Exercise Price
Exercised					$ 0.01
10/22/2012
Number of Shares
Outstanding		25,000	25,000
Outstanding					25,000
Weighted Average Exercise Price
Exercised					$ 0.01
8/24/2012
Number of Shares
Outstanding		50,000	50,000
Outstanding					50,000
Weighted Average Exercise Price
Exercised					$ 0.5

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Stock warrants (Details 2) - $ / shares	6 Months Ended	9 Months Ended	12 Months Ended
	Dec. 31, 2016	Mar. 31, 2017	Jun. 30, 2016	Jun. 30, 2014
Stock Warrant [Member]
Exercise Price	$ 0.20	$ 0.20
Number of Shares Outstanding			131,250	180,000
8/20/2012
Exercise Price			$ 0.01
Number of Shares Outstanding			6,250
Expiration Date			Jul. 01, 2016
9/10/2012
Exercise Price			$ 0.01
Number of Shares Outstanding			10,000
Expiration Date			Jul. 01, 2016
9/13/2012
Exercise Price			$ 0.01
Number of Shares Outstanding			12,500
Expiration Date			Jul. 01, 2016
9/18/2012
Exercise Price			$ 0.01
Number of Shares Outstanding			6,250
Expiration Date			Jul. 01, 2016
8/17/2012
Exercise Price			$ 0.01
Number of Shares Outstanding			6,250
Expiration Date			Jul. 01, 2016
10/25/2012
Exercise Price			$ 0.01
Number of Shares Outstanding			6,250
Expiration Date			Jul. 01, 2016
1/31/2013
Exercise Price			$ 0.01
Number of Shares Outstanding			6,250
Expiration Date			Jul. 01, 2016
10/22/2012
Exercise Price			$ 0.01
Number of Shares Outstanding			25,000
Expiration Date			Jul. 01, 2016
8/24/2012
Exercise Price			$ 0.5
Number of Shares Outstanding			50,000
Expiration Date			Aug. 24, 2016
10/5/2012
Exercise Price			$ 0.01
Number of Shares Outstanding			2,500
Expiration Date			Jul. 01, 2016

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Common shares issued for equity financing (Details Narrative)	Oct. 11, 2016 USD ($) shares
Notes to Financial Statements
Restricted Common Shares Issued | shares	2,000,000
Equity Financing | $	$ 100,000

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Common shares reserved for future issuances (Details) - USD ($)	Mar. 31, 2017	Jun. 30, 2016
Notes to Financial Statements
Common shares to be issued under conversion feature	$ 32,178,898	$ 11,702,118
Common shares to be issued under $0.01 warrants		81,250
Common shares to be issued under $0.50 warrants		50,000
Total common shares reserved for future issuance	$ 32,178,898	$ 11,833,368

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Commitments and Contingencies (Details Narrative) - USD ($)	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Commitments And Contingencies Details Narrative
Monthly Rent	$ 15,043	$ 13,328	$ 11,884