Quantumsphere 10-Q 21 Feb 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2016	Feb. 17, 2017
Document And Entity Information
Entity Registrant Name	QUANTUMSPHERE, INC.
Entity Central Index Key	1,387,135
Document Type	10-Q
Document Period End Date	Dec. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		150,685,000
Trading Symbol	QSIM
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,017

Condensed Balance Sheets

Condensed Balance Sheets - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Current Assets
Cash	$ 0	$ 180,805
Prepaid expenses and other current assets	72,667	43,114
Total current assets	72,667	223,919
Property and equipment, net	809,098	985,231
Patents, net	91,323	95,451
Other assets	24,578	24,578
Total assets	997,666	1,329,179
Current Liabilities
Accounts payable and accrued expenses	2,531,839	1,758,158
Notes payable, net of discount	420,682	686,525
Notes payable, related party	40,000	108,762
Convertible notes payable, net of discount	1,880,277	909,878
Convertible notes payable, related party, net of discount	356,869	105,074
Derivative liabilities	146,045	7,387
Total current liabilities	5,375,712	3,575,784
Total Liabilities	5,375,712	3,575,784
Stockholders' Deficit
Undesignated preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued or outstanding
Common stock, $0.001 par value, 500,000,000 shares authorized, 23,200,085 and 22,728,437 shares issued and outstanding as of December 31, 2016 and June 30, 2016, respectively	23,200	22,728
Additional paid-in capital	44,360,296	44,209,388
Accumulated deficit	(48,761,542)	(46,478,721)
Total stockholders' deficit	(4,378,046)	(2,246,605)
Total liabilities and stockholders' deficit	$ 997,666	$ 1,329,179

Condensed Balance Sheets (Paren

Condensed Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2016	Jun. 30, 2016
Statement of Financial Position [Abstract]
Undesignated preferred stock, par value	$ 0.001	$ 0.001
Undesignated preferred stock, shares authorized	10,000,000	10,000,000
Undesignated preferred stock, shares issued
Undesignated preferred stock, shares outstanding
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	23,200,085	22,728,437
Common stock, shares outstanding	23,200,085	22,728,437

Condensed Statements of Operati

Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Income Statement [Abstract]
Net Sales	$ 1,970	$ 21,115	$ 29,269	$ 30,172
Cost of Sales	203	3,869	2,711	4,945
Gross Profit	1,767	17,246	26,558	25,227
Operating Expenses
Research and development	187,193	264,106	386,392	572,184
Selling, marketing and advertising	737	11,430	2,203	16,824
General and administrative	272,510	1,545,568	724,419	2,592,033
Total operating expenses	460,440	1,821,104	1,113,014	3,181,041
Loss from Operations	(458,673)	(1,803,858)	(1,086,456)	(3,155,814)
Other Income (Expense)
Interest expense, net	(290,662)	(155,561)	(384,720)	(220,814)
Interest expense – amortization of note discounts	(563,411)	(156,480)	(1,093,346)	(303,246)
Gain from change in fair value of derivative liabilities	298,893	46,661	252,116	656,061
Gain from disposal of assets	2,000		30,385
Gain from debt extinguishment		161,667		161,667
Total other income (expense), net	(553,180)	(103,713)	(1,195,565)	293,668
Loss Before Provision for Income Taxes	(1,011,853)	(1,907,571)	(2,282,021)	(2,862,146)
Provision for Income Taxes			800	800
Net Loss	$ (1,011,853)	$ (1,907,571)	$ (2,282,821)	$ (2,862,946)
Basic and Diluted Loss Per Common Share	$ (0.04)	$ (0.08)	$ (0.10)	$ (0.13)
Basic and Diluted Weighted-Average Common Shares Outstanding	22,963,393	22,573,206	22,901,383	22,482,219

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (2,282,821)	$ (2,862,946)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	180,390	194,188
Stock based compensation expense	28,780	386,231
Gain from change in fair value of derivative liabilities	(252,116)	(656,061)
Gain from debt extinguishment		(161,667)
Increase in interest expense due to notes payable default	168,438
Stock issued for services	110,500	977,679
Gain on disposal of fixed assets	(30,385)
Debt discount amortization	1,093,346	303,246
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(29,552)	(63,811)
Accounts payable and accrued expenses	773,681	748,698
Net cash used in operating activities	(239,739)	(1,134,443)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for development of patents	(130)	(5,767)
Purchase of property and equipment		(14,126)
Cash received from disposal of equipment	30,385
Net cash provided by (used in) investing activities	30,255	(19,893)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuances of convertible notes payable		625,000
Proceeds from issuance of notes payable	65,000	460,000
Principal payments of notes payable	(36,321)	(307,099)
Common stock buy back		(19,400)
Net cash provided by financing activities	28,679	758,501
NET DECREASE IN CASH	(180,805)	(395,835)
CASH - beginning of period	180,805	398,570
CASH - end of period	0	2,735
ADDITIONAL CASH FLOW INFORMATION
Interest paid	11,920	130,092
Income taxes paid	800	800
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Issuance of common stock in connection with services rendered	111,000	1,265,000
Issuance of common stock for the conversion of convertible notes payable	8,066
Issuance of warrants to purchase common stock with relative fair value in connection with issuance of notes payable		400,000
Issuance of warrants to purchase common stock with relative fair value connection with services rendered		60,000
Beneficial conversion feature of convertible notes payable		351,000
Converted principal amount		710,000
Conversion of accrued interest to convertible notes payable		$ 72,000

Condensed Statements of Cash F6

Condensed Statements of Cash Flows (Parenthetical) - shares	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Statement of Cash Flows [Abstract]
Issuance of common stock shares in connection with services rendered	261,000	383,333
Issuance of common stock for the conversion of convertible notes payable	210,791
Issuance of warrants to purchase of common stock shares connection with notes payable		606,155
Issuance of warrants to purchase of common stock shares connection with services rendered		54,167

Organization and Business

Organization and Business	6 Months Ended
	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Business	1. ORGANIZATION AND BUSINESS QuantumSphere, Inc. (the “Company” or “QuantumSphere”) was organized under the laws of the State of Nevada on December 1, 2005. The Company has developed a process to manufacture metallic nanopowders with end-use applications focused on the chemical sector. The Company’s products are used on a stand-alone basis to improve efficiencies in the commercial production of ammonia. The Company’s major activities to date have included capital formation, research and development, and marketing of its metallic nanopowder products.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Dec. 31, 2016
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) applicable to interim reports of companies filing as a smaller reporting company. These financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016 filed with the SEC on October 13, 2016. In the opinion of management, the accompanying condensed financial statements include all adjustments necessary in order to make the financial statements not misleading. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year or any other future period. Certain notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Company’s Annual Report on Form 10-K have been omitted. The accompanying condensed balance sheet at June 30, 2016 has been derived from the audited balance sheet at June 30, 2016 contained in such Form 10-K. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred recurring losses from operations from inception and, at December 31, 2016, has $0 cash on hand and a working capital deficit of $5,303,045. As of December 31, 2016, the Company had an accumulated deficit of approximately $48.8 million. In addition, at December 31, 2016 the Company is in default on certain of its debt obligations as described in Note 3 below. As of the date of this filing, the Company had approximately $800 on hand. The Company’s activities will necessitate significant uses of working capital during and beyond fiscal 2017. Additionally, the Company’s capital requirements will depend on many factors, including the success of its continued research and development efforts and the status of competitive products. The Company plans to continue financing its operations with cash received from financing activities. The Company engaged U.S. Capital Partners and Avalon Securities for a proposed issuance of up to $5.0 million of 8% Series A convertible preferred stock. The Company completed the due diligence phase and both firms presented the offering to potential accredited investors. At this time, potential accredited investors have indicated that they will await the issuance of a purchase order for the Company’s nano iron from an ammonia plant before considering investing in the Company’s 8% Series A convertible preferred stock. On February 2, 2017, the Company issued a convertible note for $68,000 (see Subsequent Events). The Company currently has sufficient cash for operations through February 2017. The Company will pursue the issuance of notes payable to provide cash for operations through either March 2017 or April 2017. Such cash will allow the Company to continue to pursue additional equity financing based on the receipt of a purchase order from an ammonia plant and/or additional debt financing alternatives. In addition, although a formal plan has not been adopted to do so, the Company is exploring possible opportunities to sell its assets pursuant to an asset purchase agreement. In this regard, the Company has had preliminary discussions with multiple parties that have expressed an interest in acquiring the Company’s assets. There can be no assurances that a purchase order will be received or that such additional financing will be obtained or that assets will be sold and the financial statements do not include any adjustments to reflect the outcome of this uncertainty. Should the Company not be able to obtain a purchase order, not be able to obtain additional equity or debt financing, or not be able to sell assets, then the Company would have no alternative but to file bankruptcy. Use of Estimates The accompanying financial statements are prepared in conformity with GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. The use of estimates may also affect the reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management include among others, fair value of derivative liabilities, realization of capitalized assets, valuation of equity instruments, and deferred income tax asset valuation allowances. Actual results could differ from those estimates. Revenue Recognition The Company recognizes revenue when all four of the following criteria are met: (i) persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured. The Company does not grant customers the right to return the products after such products have been accepted. Amounts billed for shipping and handling are recorded as a component of net sales and the cost incurred for freight is included as a component of operating expenses in the statements of operations. Cash and Cash Equivalents The Company considers demand deposits, U.S. treasury securities and highly-liquid debt investments purchased with original maturities of three months or less to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2016 and June 30, 2016. The Company maintains its cash in major banks. From time to time, the Company’s cash balances exceed the Federal Deposit Insurance Corporation limit. The Company has not experienced and does not anticipate any losses relating to these amounts. Inventory Inventory consists primarily of manufactured nano materials and is comprised of raw materials, labor and manufacturing overhead. Inventory is stated at the lower of cost, determined on a first-in, first-out basis, or market. An inventory reserve is created when potentially slow-moving or obsolete inventories are identified in order to reflect the appropriate inventory value. While the Company’s inventory is not perishable and does not degrade with time, the Company recorded a reserve as its inventory was over one year old and there is no certainty that the inventory will be sold. At December 31, 2016 and June 30, 2016, inventory with cost values of $65,668 and $65,668, respectively, were fully reserved. Property and Equipment Property and equipment is stated at cost, less accumulated depreciation. Repairs and maintenance of equipment are charged to expense as incurred. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Gains or losses on dispositions of property and equipment are included in the results of operations when realized. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, ranging from three to seven years. Leasehold improvements are amortized over the shorter of terms of the leases or their estimated useful lives. Patents Costs incurred in applying for patents relating to the Company’s process for production of nanopowders have been capitalized. Patents are amortized to reflect the pattern of economic benefits consumed, on a straight-line basis, over the estimated periods benefited. As of December 31, 2016, ten patents have been issued and two patent applications are pending approval. Amortization relating to issued patents was not significant during the periods presented. Additional significant costs may be required for the continued development of end-use applications for the Company’s technology. Patents costs are reviewed periodically as to if any patents are no longer being pursued and associated costs should be written off. Impairment of Long-Lived Assets Long-lived assets and intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates potential impairment by comparing the carrying amount of the assets with the estimated undiscounted future cash flows associated with them. Should the review indicate that an asset is not recoverable, the Company’s carrying value of the asset would be reduced by the estimated shortfall to fair value. Fair Value of Financial Instruments and Certain Other Assets and Liabilities GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: ● Level 1: Observable inputs such as quoted prices in active markets; ● Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and ● Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses, and debt. The carrying amounts of such assets and liabilities approximate their respective fair values because of the short-term nature of these items. The carrying amounts of the Company’s debt agreements approximate their fair values as interest approximates current market rates for similar instruments. Derivative liabilities recorded in connection with convertible debt agreements are reported at estimated fair value with changes in fair value reported in results of operations. Other than derivative liabilities referenced above, the Company did not have any assets or liabilities that are measured at fair value on a recurring or nonrecurring basis during the six months ended December 31, 2016 and the year ended June 30, 2016. The following details the fair value measurement within the fair value hierarchy of the Company’s financial assets and liabilities at December 31, 2016. Fair Value Measurement Total Fair Value Level 1 Level 2 Level 3 Derivative liabilities $ 146,045 $ - $ - $ 146,045 The following details the fair value measurement within the fair value hierarchy of the Company’s financial assets and liabilities at June 30, 2016. Fair Value Measurement Total Fair Value Level 1 Level 2 Level 3 Derivative liabilities $ 7,387 $ - $ - $ 7,387 There were no transfers among Level 1, Level 2 and Level 3 during the six months ended December 31, 2016 and the year ended June 30, 2016. The fair values of derivative liabilities were estimated using the Black-Scholes-Merton pricing model and the following assumptions for the six months ended December 31, 2016 and the year ended June 30, 2016: December 31, 2016 June 30, 2016 Risk free interest rate 0.4% - 1.1 % 0.5% - 1.0 % Expected term 0.25 - 5 years 1 - 5 years Expected volatility 80.5% - 217.7 % 86.8% - 131.7 % Dividend yield - - The change in fair value of the derivative liabilities during the six months ended December 31, 2016 is summarized as follows: Fair value at June 30, 2016 7,387 Change in fair value, net 138,658 Fair value at December 31, 2016 $ 146,045 Derivative Liabilities A derivative is an instrument whose value is “derived“ from an underlying instrument or index such as a future, forward, swap, option contract, or other financial instrument with similar characteristics, including certain derivative instruments embedded in other contracts and for hedging activities. As a matter of policy, we do not invest in separable financial derivatives or engage in hedging transactions. However, we have entered into certain financing transactions that involve financial equity instruments containing certain features that have resulted in the instruments being deemed derivatives. We may engage in other similar complex financing transactions in the future, but not with the intention to enter into derivative instruments. Derivatives are measured at fair value using the Black-Scholes-Merton model and marked to market through earnings. However, such new and/or complex instruments may have immature or limited markets. As a result, the pricing models used for valuation of derivatives often incorporate significant estimates and assumptions. Changes in these subjective assumptions can materially affect the estimate of the fair value of derivative liabilities and, consequently, the related amount recognized as loss due to change in fair value of derivative liabilities on the consolidated statement of operations. Furthermore, depending on the terms of a derivative, the valuation of derivatives may be removed from the financial statements upon exercise or conversion of the underlying instrument into some other security. The classification of a derivative instrument is reassessed at each balance sheet date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified. Research and Development Costs Research and development costs are expensed as incurred. Costs incurred for research and development for new or improved processes to produce nanocatalysts as well as end use applications for the nanocatalysts are expensed until the production process or applications have been determined to be commercially viable. Costs incurred after the production process is viable and a working model of the equipment has been completed will be capitalized as long-lived assets. Income Taxes Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period, if any, and the change during the period in deferred tax assets and liabilities. The Company has determined that a full valuation allowance against the Company’s net deferred tax assets is appropriate. Loss Per Share The Company calculates basic loss per share by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if such additional common shares had been issued and were dilutive. Potential common shares, consisting of options and warrants, totaling 14,886,642 and 13,008,048, have been excluded from the computations of diluted net loss per share because the effect would have been anti-dilutive for the three and six months ended December 31, 2016 and 2015, respectively. Stock-Based Compensation The Company measures all employee stock-based compensation awards using the Black-Scholes-Merton valuation model and allocates the related expense over the requisite service period. The expected volatility is based on the historical volatility of the Company’s stock as determined by its private placement offerings and recent market activity. The expected life of the award is based on the simplified method. The Company accounts for nonemployee stock-based transactions using the fair value of the consideration received (i.e. the value of the goods or services) or the fair value of the equity instruments issued, whichever is more reliably measurable. Risks and Uncertainties The Company faces risks and uncertainties relating to its ability to successfully implement and fulfill its strategy. Among other things, these risks include the ability to obtain revenues; manage operations; competition; attract, retain and motivate qualified personnel; maintain and develop new strategic relationships; and the ability to anticipate and adapt to the changing nanotechnology market and any changes in government regulations. Therefore, the Company may be subject to the risks of delays in consummating contracts with customers and suppliers, raising sufficient capital to achieve its objectives and other uncertainties, including financial, operational, technological, regulatory and other risks associated with an emerging business, including the potential risks of business failure. Technology and manufacturing companies with whom the Company is expected to compete, in general, are well capitalized. The Company is competing against entities with the financial and intellectual resources and expressed intent of performing rapid technological innovation. The Company’s resources are limited and must be allocated to focused objectives in order to succeed. Subsequent Events The Company has evaluated events subsequent to December 31, 2016 through the date that the accompanying condensed financial statements were filed with the Securities and Exchange Commission for transactions and other events which may require adjustment or disclosure in such financial statements. The Company did not have any material transactions or other events other than those discussed in Note 8 Subsequent Events below. Recent Accounting Pronouncements The FASB issued ASU 2016-2, Leases In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40).“ This ASU provides guidance to determine when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. ASU 2014-15 will be effective for all entities in the first annual period ending after December 15, 2016. Earlier adoption is permitted. ASU 2014-15 will be effective for the Company for the year ending June 30, 2017. The Company does not believe that this pronouncement will have a significant impact on its financial statements. In May 2014, the FASB issued ASU 2014-09, as amended by ASU 2015-14, “Revenue from Contracts with Customers (Topic 606),“ which is the new comprehensive revenue recognition standard that will supersede all existing revenue recognition guidance under U.S. GAAP. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In July 2015, the FASB issued ASU 2015-14 to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is currently evaluating the impact of adopting this guidance.

Notes Payable

Notes Payable	6 Months Ended
	Dec. 31, 2016
Debt Disclosure [Abstract]
Notes Payable	3. NOTES PAYABLE Novus On June 19, 2014, the Company signed a loan and security agreement with Novus Capital Group that provides a loan in the amount of $500,000. The loan accrues at an annual rate of 15.5%, has a term of thirty-six months, and monthly payments are $17,455. The agreement includes a warrant to purchase 20,000 shares of common stock at an exercise price of $2.00 per share. The vested warrants were valued at approximately $11,000, using the Black Scholes Merton option pricing model, and recorded as a discount to the note payable. On June 5, 2015, the Company signed a loan and security agreement with Novus Capital Group that provides a loan in the amount of $127,500. The loan accrues interest at an annual rate of 15.5%, has a term of thirty-six months, and monthly payments are $4,451, beginning July 10, 2015. The agreement includes a warrant to purchase 2,555 shares of common stock at an exercise price of $2.00 per share that expires June 30, 2020. The vested warrants were valued at approximately $2,000, using the Black Scholes Merton option pricing model, and recorded as a discount to the note payable. The two loans with Novus Capital Group are secured by substantially all of the Company’s assets. The Company is currently in default on payment of the two Novus Notes. Bridge Notes On July 28, 2015, the Company issued a promissory note for $60,000. The note was due October 12, 2015 and interest was set at $20,000. On December 7, 2015, the note and interest were paid in full. In September 2015, the Company issued promissory notes totaling $350,000. The promissory notes bear interest at the rate of 10% per thirty (30) day period and are due six months from the date of issuance. In connection with the promissory notes, the Company also issued warrants exercisable at $3.00 per share and for a period of five (5) years. The number of warrants to be issued ranges between 120% - 160% of the face value of the promissory note depending on repayment date. The warrants were valued at approximately $87,000 using the Black-Scholes-Merton option pricing model, and recorded as a discount to the notes payable. In December 2015, $150,000 in principal and related accrued interest were paid in cash. In December 2015, $200,000 in principal and $45,000 of related accrued interest were converted to Series O-2 of the Company’s convertible notes payable. The Company accounted for the conversion as a debt extinguishment and recorded a net loss of approximately $69,000 in the quarter ended December 31, 2015. In total, 140,000 warrants were issued and remain outstanding as of December 31, 2016. On November 9, 2015 and February 25, 2016, the Company issued promissory notes totaling $100,000. The notes were due December 9, 2015 and March 25, 2016, respectively and bear interest at 10% per each 30 day period. The agreement included a warrant to purchase shares of common stock at 110% of the face value of the notes if the note is repaid within 30 days, and an additional 10% of the face value of the note for each month the note remains unpaid. The exercise price is $3.00 per share and the warrant expires November 9, 2020. The warrants were valued at approximately $15,000 using the Black-Scholes-Merton option pricing model, and recorded as a discount to the note payable. As of December 31, 2016, the notes remain unpaid. The Company is currently in default on payment of these notes. On April 29, 2016, the Company issued a promissory note for $100,000. The note was due May 29, 2016 and interest was set at $25,000. On June 10, 2016, the principal was paid. As of December 31, 2016, the interest remains accrued. On September 16, 2016, the Company issued a promissory note for $25,000 to a related party. The note is due March 16, 2017 and interest is 10% per annum. On October 12, 2016, the Company issued a promissory note for $25,000. The note was due November 12, 2016 and interest is 10% per annum. The Company is currently in default on payment of the note. On November 17, 2016, the Company issued a promissory note for $15,000 to a related party. The note is due May 17, 2017 and interest is 10% per annum. As of December 31, 2016, notes payable net of discount balance of $460,682 consisted of $463,094 principal and $2,412 unamortized debt discount.

Convertible Notes Payable

Convertible Notes Payable	6 Months Ended
	Dec. 31, 2016
Debt Disclosure [Abstract]
Convertible Notes Payable	4. CONVERTIBLE NOTES PAYABLE Series O-1 Notes In May 2015, the Company issued convertible promissory notes (“Series O-1 Notes“) totaling $510,000. The Series O-1 Notes bear interest at the rate of 10% per annum. The Series O-1 Notes will mature upon the earlier of (i) one year from the date of the issuance of the notes, or (ii) closing of an equity financing of Four Million Dollars or more (“Qualifying Equity Offering“). The Series O-1 Notes were convertible and had certain price protection features based on the closing of a Qualifying Equity Offering in the future. Additionally, the Company issued detachable warrants equal to 50% of the face value of the Series O-1 Notes based on the closing of a Qualifying Equity Offering in the future. As a Qualifying Equity Offering has not yet occurred, the total number of warrants to be issued was not yet fixed. Due to the price protection features of the convertible notes as well as the variable number of warrants that can be issued in connection with these notes, both the embedded conversion feature and the warrants were considered to be derivative liabilities. As such, the Company allocated the entire face amount of the notes as a debt discount and amortized the discount using the effective interest method. In December 2015, all $510,000 in principal and approximately $27,000 in accrued interest of the Series O-1 Notes were converted to the Company’s Series O-2 Notes. All Series O-1 Notes and the initial warrants were surrendered as part of the conversion. Series O-2 Notes In October and November 2015, the Company issued convertible promissory notes (“Series O-2 Notes“) totaling $625,000. In December 2015, the Company and note holders converted $245,000 principal and accrued interest of September 2015 bridge notes and $537,058 principal and accrued interest of May 2015 Series O-1 notes into Series O-2 notes. The notes bear interest at the rate of 10% per annum, with a default rate of 18% per annum. The Series O-2 Notes will mature upon the earlier of (i) one year from the date of the issuance of the notes, or (ii) closing of an equity financing of Four Million Dollars or more (Qualifying Equity Financing“). All outstanding principal and accrued interest under the Series O-2 Notes will be automatically converted into shares of common stock at the closing of a Qualifying Equity Offering based upon a conversion price equal to $1.60 per share. Alternatively, the outstanding principal and accrued interest may be voluntarily converted at the sole discretion of the Lender, at any time prior to the close of the Qualifying Equity Offering, in whole or in part, at a conversion price per share equal to $1.60 per share. In connection with the Series O-2 Notes, the Company also issued approximately 469,000 warrants exercisable at $3.00 per share, exercisable for a period of five (5) years. Both the Series O-2 Notes and warrants also had certain price protection features based on the closing of a Qualifying Equity Offering in the future. Due to the price protection features of the convertible notes as well as the variable number of warrants that can be issued in connection with these notes, both the embedded conversion feature and the warrants were considered to be derivative liabilities. As such, the Company allocated $727,841 as a debt discount and is amortizing the discount using the effective interest method over the term of the Series O-2 notes. All Series O-2 Notes were outstanding as of December 31, 2016. The Company is currently in default on payment of these notes. Promissory Notes On January 15, 2016, the Company issued a promissory note for $75,000. The note was due July 15, 2016 and interest was 10% per annum. On June 8, 2016, the note was converted into a promissory note at the amount of $86,250 that bore interest at 5% per annum. The new note is due October 8, 2016. Warrant agreement and security agreement are the same as the June 8, 2016 promissory notes listed below. On June 8, 2016, the Company issued promissory notes for cash totaling $500,000. The principal amount due on the notes was $587,500. The notes are due October 8, 2016 and bear interest at 5% per annum. The agreements include warrants to purchase shares of common stock at 150% of the face value of the notes with an exercise price equal to the price per share of the Company’s next equity round of financing. In the event of default, the note holders may convert the notes and accrued interest into shares of common stock at a price equal to 60% of the volume weighted average price of the common stock during the 30 day consecutive trading day period immediately preceding the trading day that the Company receives a notice of conversion. If the closing bid price of the common stock is less than the above conversion price on the date following the conversion date on which the note holder actually receives common shares, then the conversion price shall be deemed to have been retroactively adjusted, as of the conversion date, to a price equal to 75% multiplied by the closing bid price of the common stock on the date the common stock is received, and the Company shall issue additional shares based upon the difference between common stock initially issued and the shares due based upon the revised number due. The warrants were valued at approximately $254,000 using the Black-Scholes-Merton option pricing model, and recorded as a discount to the note payable, along with the original issue discount. Because the number of warrants was fixed, such instruments were not considered derivative liabilities. The notes are secured by all of the stock, options, and warrants of the Company owned by Kevin Maloney and Gregory Hrncir. The Company is currently in default on payment of the promissory notes. The amount of principal and accrued interest increased by 25% under Rights and Remedies Upon an Event of Default in the promissory notes agreements. As of December 31, 2016, $8,066 in promissory notes have been converted to 210,791 shares of common stock. All remaining such notes and accrued interest were outstanding as of December 31, 2016. Due to the notes becoming in default in October 2016, thus triggering the conversion feature, and the price protection feature of the conversion feature, the embedded conversion features were considered to be derivative liabilities. As such, the Company recorded a derivative liability and additional debt discount of $390,774, based on the estimated fair value of the derivative liability on the debt default date. See Note 8 Subsequent Events regarding additional conversions to common stock.

Stockholders' Equity

Stockholders' Equity	6 Months Ended
	Dec. 31, 2016
Equity [Abstract]
Stockholders' Equity	5. STOCKHOLDERS’ EQUITY Common Stock In early April 2014, the Company executed a 10,000 for 1 reverse split. As a result of the reverse split, the Company cancelled and repurchased fractional shares comprising approximately 585,000 shares of common stock for $2.00 per share. Shortly after the reverse split, the Company executed a 1 for 10,000 forward split. As of December 31, 2016, the Company had approximately $220,000 of accrued liabilities associated with the share cancellation. Convertible Preferred Stock The Company has authorized the issuance of 10,000,000 shares of convertible preferred stock with a $0.001 par value. As of December 31, 2016, no convertible preferred stock was outstanding. Stock Options In 2004, the Company adopted the 2004 Stock Option and Incentive Plan (the “2004 Plan“) for directors, employees, consultants and other persons acting on behalf of the Company. Options granted under the 2004 Plan vest on the date of grant, over a fixed period of time, or upon the occurrence of certain events and are exercisable for up to ten years. As of 2016, the total shares authorized for issuance, were 7,500,000 shares of common stock. As of December 31, 2016, there were 1,620,523 shares of common stock available for grant under the 2004 Plan. No stock options were granted for the six months ended December 31, 2016. 280,000 stock options were granted to board members for the six months ended December 31, 2015. During the six months ended December 31, 2016 and 2015, the company recognized stock based compensation expense of $28,780 and $386,231, respectively, and as of December 31, 2016 there was unrecognized stock based compensation expense totaling $140,217, that is expected to be recognized over the following twelve months.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Dec. 31, 2016
Related Party Transactions [Abstract]
Related Party Transactions	6. RELATED PARTY TRANSACTIONS From July 2015 through December 2016, Kevin Maloney, CEO of the Company, has provided short-term loans or paid expenses on behalf of the Company totaling $139,046. As of December 31, 2016, $101,126 has been repaid. The loans/expense payments are similar to a revolving line of credit. Payment in full is to be made upon a financing of $1 million or more and interest is 10% per month (interest rate is the same as the September 2015 and February 2016 promissory notes with third parties). As of December 31, 2016, accrued interest was $65,152.

Concentrations

Concentrations	6 Months Ended
	Dec. 31, 2016
Risks and Uncertainties [Abstract]
Concentrations	7. CONCENTRATIONS For the three months ended December 31, 2016, 71% of net sales were to South Korea, 17% of net sales were to Japan, and 12% of net sales were to the United States. For the three months ended December 31, 2015, 82% of net sales were to China and 11% of net sales were to the United States. For the three months ended December 31, 2016, 100% of net sales were to three customers. For the three months ended December 31, 2015, 82% of net sales were to one customer. For the six months ended December 31, 2016, 79% of net sales were to the United States and 20% of net sales were to South Korea. For the six months ended December 31, 2015, 61% of net sales were to China and 22% of net sales were to the United States. For the six months ended December 31, 2016, 82% of net sales were to four customers. For the six months ended December 31, 2015, 70% of net sales were to two customers.

Subsequent Events

Subsequent Events	6 Months Ended
	Dec. 31, 2016
Subsequent Events [Abstract]
Subsequent Events	8. SUBSEQUENT EVENTS On January 18, 2017, the Company issued a promissory note for $8,000 to a related party. The note is due July 18, 2017 and interest is 10% per annum. On January 20, 2017, the Company issued a promissory note for $3,000 to a related party. The note is due July 20, 2017 and interest is 10% per annum. On February 2, 2017, the Company issued a promissory note for $68,000. The note is due November 5, 2017 and interest is 12% per annum. The default interest rate on the February 2017 Note is twenty-two percent (22%) per annum. All interest shall accrue and be payable at maturity in the form of cash unless the Investor options to convert the accrued interest into common stock. The February 2017 Note is convertible into common stock at any time beginning one hundred eighty (180) days following the date of the note and ending on the later of (i) the maturity date and (ii) the date of payment of the default amount. The conversion price will be sixty percent (60%) of the market price, defined as the average of the lowest three (3) trading prices for the common stock on the OTCQB during the fifteen (15) trading day period ending on the latest complete trading day prior to the conversion date. From January 1, 2017 through February 17, 2017, $599,620 in June 8, 2016 promissory notes and related interest that were in default have been converted into 127,484,915 shares of common stock. The Company anticipates that additional outstanding debt will be converted into common shares from available authorized common stock.

Summary of Significant Accoun15

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Dec. 31, 2016
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) applicable to interim reports of companies filing as a smaller reporting company. These financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016 filed with the SEC on October 13, 2016. In the opinion of management, the accompanying condensed financial statements include all adjustments necessary in order to make the financial statements not misleading. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year or any other future period. Certain notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Company’s Annual Report on Form 10-K have been omitted. The accompanying condensed balance sheet at June 30, 2016 has been derived from the audited balance sheet at June 30, 2016 contained in such Form 10-K.
Going Concern	Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred recurring losses from operations from inception and, at December 31, 2016, has $0 cash on hand and a working capital deficit of $5,303,045. As of December 31, 2016, the Company had an accumulated deficit of approximately $48.8 million. In addition, at December 31, 2016 the Company is in default on certain of its debt obligations as described in Note 3 below. As of the date of this filing, the Company had approximately $800 on hand. The Company’s activities will necessitate significant uses of working capital during and beyond fiscal 2017. Additionally, the Company’s capital requirements will depend on many factors, including the success of its continued research and development efforts and the status of competitive products. The Company plans to continue financing its operations with cash received from financing activities. The Company engaged U.S. Capital Partners and Avalon Securities for a proposed issuance of up to $5.0 million of 8% Series A convertible preferred stock. The Company completed the due diligence phase and both firms presented the offering to potential accredited investors. At this time, potential accredited investors have indicated that they will await the issuance of a purchase order for the Company’s nano iron from an ammonia plant before considering investing in the Company’s 8% Series A convertible preferred stock. On February 2, 2017, the Company issued a convertible note for $68,000 (see Subsequent Events). The Company currently has sufficient cash for operations through February 2017. The Company will pursue the issuance of notes payable to provide cash for operations through either March 2017 or April 2017. Such cash will allow the Company to continue to pursue additional equity financing based on the receipt of a purchase order from an ammonia plant and/or additional debt financing alternatives. In addition, although a formal plan has not been adopted to do so, the Company is exploring possible opportunities to sell its assets pursuant to an asset purchase agreement. In this regard, the Company has had preliminary discussions with multiple parties that have expressed an interest in acquiring the Company’s assets. There can be no assurances that a purchase order will be received or that such additional financing will be obtained or that assets will be sold and the financial statements do not include any adjustments to reflect the outcome of this uncertainty. Should the Company not be able to obtain a purchase order, not be able to obtain additional equity or debt financing, or not be able to sell assets, then the Company would have no alternative but to file bankruptcy.
Use of Estimates	Use of Estimates The accompanying financial statements are prepared in conformity with GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. The use of estimates may also affect the reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management include among others, fair value of derivative liabilities, realization of capitalized assets, valuation of equity instruments, and deferred income tax asset valuation allowances. Actual results could differ from those estimates.
Revenue Recognition	Revenue Recognition The Company recognizes revenue when all four of the following criteria are met: (i) persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured. The Company does not grant customers the right to return the products after such products have been accepted. Amounts billed for shipping and handling are recorded as a component of net sales and the cost incurred for freight is included as a component of operating expenses in the statements of operations.
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers demand deposits, U.S. treasury securities and highly-liquid debt investments purchased with original maturities of three months or less to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2016 and June 30, 2016. The Company maintains its cash in major banks. From time to time, the Company’s cash balances exceed the Federal Deposit Insurance Corporation limit. The Company has not experienced and does not anticipate any losses relating to these amounts.
Inventory	Inventory Inventory consists primarily of manufactured nano materials and is comprised of raw materials, labor and manufacturing overhead. Inventory is stated at the lower of cost, determined on a first-in, first-out basis, or market. An inventory reserve is created when potentially slow-moving or obsolete inventories are identified in order to reflect the appropriate inventory value. While the Company’s inventory is not perishable and does not degrade with time, the Company recorded a reserve as its inventory was over one year old and there is no certainty that the inventory will be sold. At December 31, 2016 and June 30, 2016, inventory with cost values of $65,668 and $65,668, respectively, were fully reserved.
Property and Equipment	Property and Equipment Property and equipment is stated at cost, less accumulated depreciation. Repairs and maintenance of equipment are charged to expense as incurred. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Gains or losses on dispositions of property and equipment are included in the results of operations when realized. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, ranging from three to seven years. Leasehold improvements are amortized over the shorter of terms of the leases or their estimated useful lives.
Patents	Patents Costs incurred in applying for patents relating to the Company’s process for production of nanopowders have been capitalized. Patents are amortized to reflect the pattern of economic benefits consumed, on a straight-line basis, over the estimated periods benefited. As of December 31, 2016, ten patents have been issued and two patent applications are pending approval. Amortization relating to issued patents was not significant during the periods presented. Additional significant costs may be required for the continued development of end-use applications for the Company’s technology. Patents costs are reviewed periodically as to if any patents are no longer being pursued and associated costs should be written off.
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets Long-lived assets and intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates potential impairment by comparing the carrying amount of the assets with the estimated undiscounted future cash flows associated with them. Should the review indicate that an asset is not recoverable, the Company’s carrying value of the asset would be reduced by the estimated shortfall to fair value.
Fair Value of Financial Instruments and Certain Other Assets and Liabilities	Fair Value of Financial Instruments and Certain Other Assets and Liabilities GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: ● Level 1: Observable inputs such as quoted prices in active markets; ● Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and ● Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses, and debt. The carrying amounts of such assets and liabilities approximate their respective fair values because of the short-term nature of these items. The carrying amounts of the Company’s debt agreements approximate their fair values as interest approximates current market rates for similar instruments. Derivative liabilities recorded in connection with convertible debt agreements are reported at estimated fair value with changes in fair value reported in results of operations. Other than derivative liabilities referenced above, the Company did not have any assets or liabilities that are measured at fair value on a recurring or nonrecurring basis during the six months ended December 31, 2016 and the year ended June 30, 2016. The following details the fair value measurement within the fair value hierarchy of the Company’s financial assets and liabilities at December 31, 2016. Fair Value Measurement Total Fair Value Level 1 Level 2 Level 3 Derivative liabilities $ 146,045 $ - $ - $ 146,045 The following details the fair value measurement within the fair value hierarchy of the Company’s financial assets and liabilities at June 30, 2016. Fair Value Measurement Total Fair Value Level 1 Level 2 Level 3 Derivative liabilities $ 7,387 $ - $ - $ 7,387 There were no transfers among Level 1, Level 2 and Level 3 during the six months ended December 31, 2016 and the year ended June 30, 2016. The fair values of derivative liabilities were estimated using the Black-Scholes-Merton pricing model and the following assumptions for the six months ended December 31, 2016 and the year ended June 30, 2016: December 31, 2016 June 30, 2016 Risk free interest rate 0.4% - 1.1 % 0.5% - 1.0 % Expected term 0.25 - 5 years 1 - 5 years Expected volatility 80.5% - 217.7 % 86.8% - 131.7 % Dividend yield - - The change in fair value of the derivative liabilities during the six months ended December 31, 2016 is summarized as follows: Fair value at June 30, 2016 7,387 Change in fair value, net 138,658 Fair value at December 31, 2016 $ 146,045
Derivative Liabilities	Derivative Liabilities A derivative is an instrument whose value is “derived“ from an underlying instrument or index such as a future, forward, swap, option contract, or other financial instrument with similar characteristics, including certain derivative instruments embedded in other contracts and for hedging activities. As a matter of policy, we do not invest in separable financial derivatives or engage in hedging transactions. However, we have entered into certain financing transactions that involve financial equity instruments containing certain features that have resulted in the instruments being deemed derivatives. We may engage in other similar complex financing transactions in the future, but not with the intention to enter into derivative instruments. Derivatives are measured at fair value using the Black-Scholes-Merton model and marked to market through earnings. However, such new and/or complex instruments may have immature or limited markets. As a result, the pricing models used for valuation of derivatives often incorporate significant estimates and assumptions. Changes in these subjective assumptions can materially affect the estimate of the fair value of derivative liabilities and, consequently, the related amount recognized as loss due to change in fair value of derivative liabilities on the consolidated statement of operations. Furthermore, depending on the terms of a derivative, the valuation of derivatives may be removed from the financial statements upon exercise or conversion of the underlying instrument into some other security. The classification of a derivative instrument is reassessed at each balance sheet date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified.
Research and Development Costs	Research and Development Costs Research and development costs are expensed as incurred. Costs incurred for research and development for new or improved processes to produce nanocatalysts as well as end use applications for the nanocatalysts are expensed until the production process or applications have been determined to be commercially viable. Costs incurred after the production process is viable and a working model of the equipment has been completed will be capitalized as long-lived assets.
Income Taxes	Income Taxes Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period, if any, and the change during the period in deferred tax assets and liabilities. The Company has determined that a full valuation allowance against the Company’s net deferred tax assets is appropriate.
Loss Per Share	Loss Per Share The Company calculates basic loss per share by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if such additional common shares had been issued and were dilutive. Potential common shares, consisting of options and warrants, totaling 14,886,642 and 13,008,048, have been excluded from the computations of diluted net loss per share because the effect would have been anti-dilutive for the three and six months ended December 31, 2016 and 2015, respectively.
Stock-Based Compensation	Stock-Based Compensation The Company measures all employee stock-based compensation awards using the Black-Scholes-Merton valuation model and allocates the related expense over the requisite service period. The expected volatility is based on the historical volatility of the Company’s stock as determined by its private placement offerings and recent market activity. The expected life of the award is based on the simplified method. The Company accounts for nonemployee stock-based transactions using the fair value of the consideration received (i.e. the value of the goods or services) or the fair value of the equity instruments issued, whichever is more reliably measurable.
Risks and Uncertainties	Risks and Uncertainties The Company faces risks and uncertainties relating to its ability to successfully implement and fulfill its strategy. Among other things, these risks include the ability to obtain revenues; manage operations; competition; attract, retain and motivate qualified personnel; maintain and develop new strategic relationships; and the ability to anticipate and adapt to the changing nanotechnology market and any changes in government regulations. Therefore, the Company may be subject to the risks of delays in consummating contracts with customers and suppliers, raising sufficient capital to achieve its objectives and other uncertainties, including financial, operational, technological, regulatory and other risks associated with an emerging business, including the potential risks of business failure. Technology and manufacturing companies with whom the Company is expected to compete, in general, are well capitalized. The Company is competing against entities with the financial and intellectual resources and expressed intent of performing rapid technological innovation. The Company’s resources are limited and must be allocated to focused objectives in order to succeed.
Subsequent Events	Subsequent Events The Company has evaluated events subsequent to December 31, 2016 through the date that the accompanying condensed financial statements were filed with the Securities and Exchange Commission for transactions and other events which may require adjustment or disclosure in such financial statements. The Company did not have any material transactions or other events other than those discussed in Note 8 Subsequent Events below.
Recent Accounting Pronouncements	Recent Accounting Pronouncements The FASB issued ASU 2016-2, Leases In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40).“ This ASU provides guidance to determine when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. ASU 2014-15 will be effective for all entities in the first annual period ending after December 15, 2016. Earlier adoption is permitted. ASU 2014-15 will be effective for the Company for the year ending June 30, 2017. The Company does not believe that this pronouncement will have a significant impact on its financial statements. In May 2014, the FASB issued ASU 2014-09, as amended by ASU 2015-14, “Revenue from Contracts with Customers (Topic 606),“ which is the new comprehensive revenue recognition standard that will supersede all existing revenue recognition guidance under U.S. GAAP. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In July 2015, the FASB issued ASU 2015-14 to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is currently evaluating the impact of adopting this guidance.

Summary of Significant Accoun16

Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Dec. 31, 2016
Accounting Policies [Abstract]
Fair Value Assets Measured on Recurring Basis	The following details the fair value measurement within the fair value hierarchy of the Company’s financial assets and liabilities at December 31, 2016. Fair Value Measurement Total Fair Value Level 1 Level 2 Level 3 Derivative liabilities $ 146,045 $ - $ - $ 146,045 The following details the fair value measurement within the fair value hierarchy of the Company’s financial assets and liabilities at June 30, 2016. Fair Value Measurement Total Fair Value Level 1 Level 2 Level 3 Derivative liabilities $ 7,387 $ - $ - $ 7,387
Schedule of Derivative Liabilities at Fair Value	The fair values of derivative liabilities were estimated using the Black-Scholes-Merton pricing model and the following assumptions for the six months ended December 31, 2016 and the year ended June 30, 2016: December 31, 2016 June 30, 2016 Risk free interest rate 0.4% - 1.1 % 0.5% - 1.0 % Expected term 0.25 - 5 years 1 - 5 years Expected volatility 80.5% - 217.7 % 86.8% - 131.7 % Dividend yield - -
Schedule of Changes in Fair Value Derivative Liabilities	The change in fair value of the derivative liabilities during the six months ended December 31, 2016 is summarized as follows: Fair value at June 30, 2016 7,387 Change in fair value, net 138,658 Fair value at December 31, 2016 $ 146,045

Summary of Significant Accoun17

Summary of Significant Accounting Policies (Details Narrative)	6 Months Ended
	Dec. 31, 2016USD ($)Patentsshares	Dec. 31, 2015USD ($)shares	Jun. 30, 2016USD ($)	Jun. 30, 2015USD ($)
Cash on hand	$ 0	$ 2,735	$ 180,805	$ 398,570
Working capital deficit	5,303,045
Accumulated deficit	(48,761,542)		(46,478,721)
Cash balance	800
Inventory, net	$ 65,668		$ 65,668
Number of assets issued | Patents	10
Number of assets pending for approval | Patents	2
Potential common shares, consisting of options and warrants | shares	14,886,642	13,008,048
Minimum [Member]
Estimated useful lives	3 years
Maximum [Member]
Estimated useful lives	7 years
February 2, 2017 [Member]
Debt instrument face amount	$ 68,000
Series A Convertible Preferred Stock [Member]
Proceeds from issuance of preferred stock	$ 5,000,000
Preferred stock percentage	8.00%

Summary of Significant Accoun18

Summary of Significant Accounting Policies - Fair Value Assets Measured on Recurring Basis (Details) - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Derivative liabilities	$ 146,045	$ 7,387
Level 1 [Member]
Derivative liabilities
Level 2 [Member]
Derivative liabilities
Level 3 [Member]
Derivative liabilities	$ 146,045	$ 7,387

Summary of Significant Accoun19

Summary of Significant Accounting Policies - Schedule of Derivative Liabilities at Fair Value (Details) - Derivative Liabilities [Member]	6 Months Ended	12 Months Ended
	Dec. 31, 2016	Jun. 30, 2016
Dividend yield
Minimum [Member]
Risk free interest rate	0.40%	0.50%
Expected term	3 months	1 year
Expected volatility	80.50%	86.80%
Maximum [Member]
Risk free interest rate	1.10%	1.00%
Expected term	5 years	5 years
Expected volatility	217.70%	131.70%

Summary of Significant Accoun20

Summary of Significant Accounting Policies - Schedule of Changes in Fair Value Derivative Liabilities (Details)	6 Months Ended
	Dec. 31, 2016USD ($)
Accounting Policies [Abstract]
Fair value, beginning	$ 7,387
Change in fair value, net	138,658
Fair value, ending	$ 146,045

Notes Payable (Details Narrativ

Notes Payable (Details Narrative) - USD ($)

Nov. 17, 2016

Oct. 12, 2016

Jun. 08, 2016

Apr. 29, 2016

Feb. 25, 2016

Jan. 15, 2016

Nov. 09, 2015

Jul. 28, 2015

Jun. 05, 2015

Jun. 19, 2014

Sep. 16, 2016

Dec. 31, 2015

Sep. 30, 2015

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2016

Dec. 31, 2015

Conversion of debt extinguishment amount

$ 161,667

$ 161,667

Promissory Notes [Member]

Loan face amount

$ 25,000

$ 100,000

$ 75,000

$ 60,000

$ 200,000

$ 350,000

463,094

200,000

463,094

200,000

Annual loan interest rate

10.00%

5.00%

10.00%

10.00%

Loan term

30 days

Loan monthly payment amount

$ 20,000

Warrants exercise price per share

$ 3

Loan discount note payable

2,412

$ 2,412

Debt maturity date

Nov. 12, 2016

Oct. 8, 2016

May 29, 2016

Jul. 15, 2016

Oct. 12, 2015

Warrants exercisable period

5 years

Fair value of warrants

$ 87,000

Repayment of debt

150,000

Related accrued interest

$ 25,000

$ 45,000

45,000

$ 45,000

Conversion of debt extinguishment amount

$ 69,000

Issuance of warrants to debt

140,000

Notes payable not of discount balance

$ 460,682

$ 460,682

Promissory Notes [Member] | Related Party [Member]

Loan face amount

$ 15,000

$ 25,000

Annual loan interest rate

10.00%

10.00%

Debt maturity date

May 17, 2017

Mar. 16, 2017

Promissory Notes [Member] | November 9, 2015 And February 25, 2016 [Member]

Loan face amount

$ 100,000

Annual loan interest rate

10.00%

Warrants exercise price per share

$ 3

Warrant expiration date

Nov. 9, 2020

Debt maturity date

Mar. 25, 2016

Dec. 9, 2015

Fair value of warrants

$ 15,000

Warrants description

The agreement includes a warrant to purchase shares of common stock at 110% of the face value of the note if the note is repaid within 30 days, and an additional 10% of the face value of the note for each month the note remains unpaid

Promissory Notes [Member] | Minimum [Member]

Percentage of face value of promissory note

120.00%

Promissory Notes [Member] | Maximum [Member]

Percentage of face value of promissory note

160.00%

Loan and Security Agreement [Member] | Novus Capital Group [Member]

Loan face amount

$ 127,500

Annual loan interest rate

15.50%

Loan term

36 months

Loan monthly payment amount

$ 4,451

Warrant to purchase of common stock

2,555

Warrants exercise price per share

$ 2

Loan discount note payable

$ 2,000

Warrant expiration date

Jun. 30, 2020

Loan and Security Agreement [Member] | Novus Capital Group [Member] | Initial Loan [Member]

Loan face amount

$ 500,000

Annual loan interest rate

15.50%

Loan term

36 months

Loan monthly payment amount

$ 17,455

Warrant to purchase of common stock

20,000

Warrants exercise price per share

$ 2

Loan discount note payable

$ 11,000

Convertible Notes Payable (Deta

Convertible Notes Payable (Details Narrative) - USD ($)	Dec. 31, 2016	Oct. 12, 2016	Jun. 08, 2016	Apr. 29, 2016	Jan. 15, 2016	Jul. 28, 2015	Oct. 31, 2016	Sep. 30, 2015	May 31, 2015	Nov. 30, 2015	Dec. 31, 2016	Dec. 31, 2015
Debt conversion converted amount												$ 710,000
Beneficial conversion feature of convertible notes payable							$ 390,774					351,000
Series O-1 Notes [Member]
Convertible promissory notes									$ 510,000
Convertible promissory notes bear interest rate									10.00%
Description of conversion price of debt									The Series O-1 Notes will mature upon the earlier of (i) one year from the date of the issuance of the notes, or (ii) closing of an equity financing of Four Million Dollars or more (“Qualifying Equity Offering”).
Principal debt amount												510,000
Accrued interest												27,000
Series O-1 Notes [Member] | Warrant [Member]
Description of conversion price of debt									The Company issued Detachable Warrants equal to 50% of the face value of the Series O-1 Notes based on the closing of a Qualifying Equity Offering in the future.
Percentage of warrants issued equal to convertible promissory notes									50.00%
Series O-2 Notes [Member]
Convertible promissory notes										$ 625,000
Convertible promissory notes bear interest rate										10.00%
Accrued interest	$ 537,058									$ 245,000	537,058
Convertible promissory notes default interest rate										18.00%
Debt conversion price per share										$ 1.60
Number of warrant issued during period										469,000
Warrants exercisable per share price										$ 3
Warrants exercisable period										5 years
Debt discount										$ 727,841
Promissory Notes [Member]
Convertible promissory notes	8,066										8,066
Convertible promissory notes bear interest rate		10.00%	5.00%		10.00%			10.00%
Principal debt amount	463,094	$ 25,000		$ 100,000	$ 75,000	$ 60,000		$ 350,000			463,094	200,000
Accrued interest				$ 25,000								$ 45,000
Warrants exercisable per share price								$ 3
Warrants exercisable period								5 years
Debt discount	$ 2,412										$ 2,412
Debt maturity date		Nov. 12, 2016	Oct. 8, 2016	May 29, 2016	Jul. 15, 2016	Oct. 12, 2015
Debt conversion converted amount			$ 86,250
Debt instrument converted into shares	210,791
Promissory Notes [Member] | Warrant Agreement and Security Agreement [Member]
Principal debt amount			587,500
Proceeds from issuance of debt			$ 500,000
Warrant to purchase shares of common stock, percentage			150.00%
Debt instrument percentage of stock price			60.00%
Percentage of principal and accrued interest increased			25.00%
Promissory Notes [Member] | Warrant Agreement and Security Agreement [Member] | Warrant [Member]
Percentage of warrants issued equal to convertible promissory notes			75.00%
Debt discount			$ 254,000

Stockholders' Equity (Details N

Stockholders' Equity (Details Narrative) - USD ($)	Apr. 30, 2014	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Description of reverse stock split	10,000 for 1 reverse split
Number of shares cancelled and repurchased	585,000
Common stock per share	$ 2
Description of stock split	Shortly after the reverse split, the Company executed a 1 for 10,000 forward split.
Accrued liabilities		$ 220,000
Convertible preferred stock, shares authorized		10,000,000		10,000,000
Convertible preferred stock, par value		$ 0.001		$ 0.001
Convertible preferred stock, shares issued
Convertible preferred stock, shares outstanding
Unrecognized stock based compensation		$ 28,780	$ 386,231
Board Members [Member]
Stock options			280,000
Stock Options [Member]
Stock options
Stock based compensation expense		$ 28,780	$ 386,231
Unrecognized stock based compensation		$ 140,217
2004 Stock Option and Incentive Plan [Member]
Number of shares authorized for issuance		7,500,000
Number of shares available for grant		1,620,523

Related Party Transactions (Det

Related Party Transactions (Details Narrative)	6 Months Ended
	Dec. 31, 2016USD ($)
Promissory Notes [Member] | September 2015 [Member]
Debt instrument, interest rate during period percent	10.00%
Promissory Notes [Member] | February 2016 [Member]
Debt instrument, interest rate during period percent	10.00%
Minimum [Member]
Payment in full is to be made upon a financing	$ 1,000,000
Debt instrument, interest rate during period percent	10.00%
Kevin Maloney [Member]
Short-term loan	$ 139,046
Repayment of related party debt	101,126
Accrued interest	$ 65,152

Concentrations (Details Narrati

Concentrations (Details Narrative)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Three Customers [Member]
Concentrations risk	100.00%
One Customers [Member]
Concentrations risk		82.00%
Four Customers [Member]
Concentrations risk			82.00%
Two Customers [Member]
Concentrations risk				70.00%
South Korea [Member]
Concentrations risk	71.00%		20.00%
Japan [Member]
Concentrations risk	17.00%
United States [Member]
Concentrations risk	12.00%	11.00%	79.00%	22.00%
China [Member]
Concentrations risk		82.00%		61.00%

Subsequent Events (Details Narr

Subsequent Events (Details Narrative) - USD ($)

Feb. 17, 2017

Feb. 02, 2017

Jan. 20, 2017

Jan. 18, 2017

Dec. 31, 2016

Nov. 17, 2016

Oct. 12, 2016

Jun. 08, 2016

Apr. 29, 2016

Jan. 15, 2016

Jul. 28, 2015

Sep. 16, 2016

Dec. 31, 2015

Sep. 30, 2015

Promissory Notes [Member]

Debt instrument face amount

$ 463,094

$ 25,000

$ 100,000

$ 75,000

$ 60,000

$ 200,000

$ 350,000

Debt instrument maturity date

Nov. 12, 2016

Oct. 8, 2016

May 29, 2016

Jul. 15, 2016

Oct. 12, 2015

Debt instrument interest rate

10.00%

5.00%

10.00%

10.00%

Promissory notes

$ 8,066

Debt instrument converted into shares

210,791

Promissory Notes [Member] | Related Party [Member]

Debt instrument face amount

$ 15,000

$ 25,000

Debt instrument maturity date

May 17, 2017

Mar. 16, 2017

Debt instrument interest rate

10.00%

10.00%

Subsequent Event [Member]

Promissory notes

$ 599,620

Debt instrument converted into shares

127,484,915

Subsequent Event [Member] | February 2017 [Member]

Debt instrument interest rate

22.00%

Debt instrument description

The February 2017 Note is convertible into common stock at any time beginning one hundred eighty (180) days following the date of the note and ending on the later of (i) the maturity date and (ii) the date of payment of the default amount. The conversion price will be sixty percent (60%) of the market price, defined as the average of the lowest three (3) trading prices for the common stock on the OTCQB during the fifteen (15) trading day period ending on the latest complete trading day prior to the conversion date.

Debt conversion price, percentage

60.00%

Subsequent Event [Member] | Promissory Notes [Member]

Debt instrument face amount

$ 68,000

Debt instrument maturity date

Nov. 5, 2017

Debt instrument interest rate

12.00%

Subsequent Event [Member] | Promissory Notes [Member] | Related Party [Member]

Debt instrument face amount

$ 3,000

$ 8,000

Debt instrument maturity date

Jul. 20, 2017

Jul. 18, 2017

Debt instrument interest rate

10.00%

10.00%