Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Dec. 31, 2013 | Feb. 06, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Puramed Bioscience Inc. | ' |
Entity Central Index Key | '0001409565 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Dec-13 | ' |
Amendment Flag | 'false | ' |
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 Common Stock, Shares Outstanding | ' | 316,273,077 |
Document Fiscal Period Focus | 'Q2 | ' |
Document Fiscal Year Focus | '2014 | ' |
Balance_Sheets
Balance Sheets (USD $) | Dec. 31, 2013 | Jun. 30, 2013 |
Current Assets | ' | ' |
Cash | $0 | $41,180 |
Accounts Receivable | 0 | 25,119 |
Inventory | 29,317 | 203,906 |
Prepaid Expenses | 20,349 | 56,039 |
Total Current Assets | 49,666 | 326,244 |
Property and Equipment | ' | ' |
Computer Software | 2,483 | 2,483 |
Computer Hardware | 5,570 | 5,338 |
Equipment | 2,136 | 2,136 |
Accumulated Depreciation | -6,233 | -5,090 |
Net Property and Equipment | 3,956 | 4,867 |
Other Assets | ' | ' |
PuraMed Bioscience Products, net of accumulated amortization of $322,420 and $298,418, respectively | 13,612 | 37,614 |
Trademarks, net of amortization of $3,592 and $2,754, respectively | 14,511 | 13,383 |
Patents, net of amortization of $5,856 and $2,928, respectively | 89,363 | 89,511 |
Deferred Financing Fees | 11,183 | 4,727 |
Total Other Assets | 128,669 | 145,235 |
Total Assets | 182,291 | 476,346 |
Current Liabilities | ' | ' |
Accounts Payable | 957,403 | 627,427 |
Accrued Wages - Officers | 553,570 | 435,326 |
Accrued Expenses | 199,253 | 120,040 |
Short-term Term Note | 525,000 | 525,000 |
Short-term Convertible Note, net of discount | 528,886 | 454,025 |
Convertible bond payable, net of discount | 598,733 | 598,733 |
Derivative Liability - Warrants | 1,363 | 10,178 |
Derivative Liability - Convertible Debt | 882,341 | 400,270 |
Total Current Liabilities | 4,246,549 | 3,170,999 |
Conditionally Redeemable Stock | 75,000 | 75,000 |
Stockholders' Deficit | ' | ' |
Common Stock, $.001 par value, 1,000,000,000 shares authorized, 142,857,622 shares and 51,110,297 shares issued and outstanding, respectively | 142,858 | 51,110 |
Additional paid in capital | 5,680,179 | 5,528,469 |
Accumulated deficit | -9,962,295 | -8,349,232 |
Total Stockholders' Deficit | -4,139,258 | -2,769,653 |
Total Liabilities and Stockholders' Deficit | $182,291 | $476,346 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 | Jun. 30, 2013 |
ASSETS | ' | ' |
PuraMed Bioscience Products, accumulated amortization | $322,420 | $298,418 |
Trademarks, accumulated amortization | 3,592 | 2,754 |
Patents, accumulated amortization | $5,856 | $2,928 |
Stockholders' Deficit | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized shares | 1,000,000,000 | 1,000,000,000 |
Common stock, issued shares | 142,857,622 | 51,110,297 |
Common stock, outstanding shares | 142,857,622 | 51,110,297 |
Statements_of_Operations
Statements of Operations (USD $) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |
Statements Of Operations | ' | ' | ' | ' |
Net Revenues | $0 | $0 | $0 | $27,534 |
Cost of Sales | 386,013 | 15,024 | 412,616 | 28,067 |
Gross Loss | -386,013 | -15,024 | -412,616 | -533 |
Operating Expenses | ' | ' | ' | ' |
Selling, General and Administrative Expenses | 54,427 | 50,557 | 97,653 | 106,108 |
Amortization and Depreciation Expense | 14,472 | 12,975 | 28,912 | 25,951 |
Professional fees | 51,875 | 110,165 | 159,805 | 270,494 |
Marketing and advertising expense | 56,857 | 68,827 | 79,847 | 316,338 |
Research and development | 0 | 56 | 0 | 14,656 |
Salaries | 6,996 | 7,040 | 14,432 | 14,300 |
Officer's salaries | 60,923 | 90,462 | 121,846 | 167,820 |
Total Operating Expenses | 245,550 | 340,082 | 502,495 | 915,667 |
Loss from Operations | -631,563 | -355,106 | -915,111 | -916,200 |
Other Income/(Expense) | ' | ' | ' | ' |
Interest expense | -170,174 | -146,316 | -296,173 | -295,649 |
Gain (Loss) on Derivative Liability | -108,608 | 182,062 | -401,779 | 111,825 |
Other Income/(Expense) | -278,782 | 35,746 | -697,952 | -183,824 |
Net loss | ($910,345) | ($319,360) | ($1,613,063) | ($1,100,024) |
Loss on Common Share - Basic and Diluted | ($0.01) | ($0.01) | ($0.02) | ($0.04) |
Weighted Average number of common shares outstanding basic and diluted | 75,623,864 | 27,552,057 | 65,306,934 | 26,219,462 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 6 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Cash Flows from operating activities | ' | ' |
Net Loss | ($1,613,063) | ($1,100,024) |
Changes in non cash working capital items: | ' | ' |
Depreciation | 1,143 | 1,143 |
Amortization | 27,769 | 24,810 |
Amortization of deferred financing fees | 10,410 | 0 |
Accretion on discount on convertible bond | 0 | 50,490 |
Accretion on discount on convertible notes | 181,649 | 227,913 |
Day-one loss on derivative liability | 95,394 | 145,716 |
Loss (gain) on derivative liability | 306,385 | -257,541 |
Changes in Operating assets and liabilities: | ' | ' |
Accounts receivable | 25,119 | 3,370 |
Inventory | 174,589 | -33,706 |
Prepaid expenses | 35,690 | -102,601 |
Accounts payable | 329,976 | 84,106 |
Accrued wages - Officers | 118,244 | 118,720 |
Accrued expenses | 79,213 | 130,189 |
Net cash used for operating activities | -227,482 | -707,415 |
Cash Flows from investing activities | ' | ' |
Patent acquisition costs | 0 | -5,490 |
Property and equipment acquisition costs | -232 | 0 |
Trademark acquisition costs | -1,966 | 0 |
Net cash used for investing activities | -2,198 | -5,490 |
Cash flows from financing activities | ' | ' |
Proceeds from notes | 188,500 | 655,000 |
Proceeds from sale of stock and warrants, net of issuance costs | 0 | 61,350 |
Net cash provided by financing activities | 188,500 | 716,350 |
Net increase in cash | -41,180 | 3,445 |
Cash at Beginning of Period | 41,180 | 562 |
Cash at End of Period | 0 | 4,007 |
Supplemental disclosures of noncash investing and financing activities and other cash flow information: | ' | ' |
Short-term debt and accrued interest converted to common stock | 121,417 | 162,240 |
Retirement of derivative liability - convertible debt | 121,523 | 213,214 |
Issuance of derivative liability - convertible debt | 288,394 | 205,000 |
Issuance of common stock for debt discount | 0 | 115,000 |
Interest paid with cash | $14,263 | $50,717 |
A_Basis_of_Presentation
A. Basis of Presentation | 6 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
NOTE A- Basis of Presentation | ' |
The condensed balance sheets as of December 31, 2013, the condensed statements of operations for the three and six month periods ended December 31, 2013 and 2012 and the condensed statements of cash flows for the six month periods ended December 31, 2013 and 2012 have been prepared by PuraMed BioScience, Inc. (the "Company") without audit. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of December 31, 2013 and the results of operations and cash flows for the three and six month periods ended December 31, 2013 and 2012 presented herein have been made. | |
Certain information and footnote disclosures normally included in financial statements prepared in accordance with the United States generally accepted accounting principles have been condensed or omitted. These financial statements should be read in conjunction with the Company's financial statements and notes thereto for the fiscal year ended June 30, 2013 included in the Annual Report on Form 10-K of the Company filed with the SEC on October 15, 2013. |
B_Going_Concern
B. Going Concern | 6 Months Ended |
Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
NOTE B- Going Concern | ' |
As of December 31, 2013, the Company had negative working capital and minimal funds needed to accomplish its planned business strategy or support its projected expenses. The Company plans to obtain the needed working capital primarily through debt issuances and sales of its common stock, which there is no assurance it will be able to accomplish. If the Company cannot obtain substantial working capital through debt issuances, common stock sales or other sources (if any), it will be forced to curtail its planned business operations. If the Company is unable to obtain additional financing, its ability to continue as a going concern is doubtful. |
C_Accounting_Policies
C. Accounting Policies | 6 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||||||||||
NOTE C - Accounting Policies | ' | ||||||||||||||||
Loss per common share – Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding. Diluted loss per common share assumes the exercise of stock options and warrants using the treasury stock method, if dilutive. Potentially dilutive shares were not included in the calculation of diluted shares, as their effect would have been antidilutive. | |||||||||||||||||
Product Amortization – PuraMed® BioScience products consist primarily of the cost of trade secrets, formulas, scientific and manufacturing know-how, trade names, marketing material and other intellectual property and are amortized on a straight-line basis over an estimated useful life of seven years. | |||||||||||||||||
Trademark Amortization – PuraMed® BioScience trademarks consist of the legal costs associated with registering our LipiGesic® and PuraMed® BioScience trademarks. As these trademarks have been approved, they are being amortized on a straight-line basis over an estimated useful life of ten years. | |||||||||||||||||
Fair Value Measurements | |||||||||||||||||
Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: | |||||||||||||||||
Level 1 Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. | |||||||||||||||||
Level 2 Other inputs that are observable directly or indirectly, such as quoted prices for similar assets and liabilities or market corroborated inputs. | |||||||||||||||||
Level 3 Unobservable inputs that are used when little or no market data is available, which require the Company to develop its own assumptions about how market participants would value the assets or liabilities. | |||||||||||||||||
Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosure each quarter. Assets and liabilities measured at fair value on a recurring basis as of December 31, 2013 and June 30, 2013 are summarized as follows: | |||||||||||||||||
Fair Value as of December 31, 2013 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liabilities | |||||||||||||||||
Derivative Liability - Warrants | $ | - | $ | - | $ | 1,363 | $ | 1,363 | |||||||||
Derivative Liability – Convertible Debt | - | - | 882,341 | 882,341 | |||||||||||||
Total | $ | - | $ | - | $ | 883,704 | $ | 883,704 | |||||||||
Fair Value as of June 30, 2013 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liabilities | |||||||||||||||||
Derivative Liability - Warrants | $ | - | $ | - | $ | 10,178 | $ | 10,178 | |||||||||
Derivative Liability – Convertible Debt | - | - | 400,270 | 400,270 | |||||||||||||
Total | $ | - | $ | - | $ | 410,448 | $ | 410,448 | |||||||||
The following table presents the fair value reconciliation of Level 3 liabilities measured at fair value on a recurring basis during the six months ended December 31, 2013: | |||||||||||||||||
Fair Value Measurements Using Significant | |||||||||||||||||
Unobservable Inputs (Level 3) | |||||||||||||||||
Derivative | |||||||||||||||||
Derivative | Liability - | ||||||||||||||||
Liability - | Convertible | ||||||||||||||||
Warrants | Debt | Total | |||||||||||||||
Beginning balance, July 1, 2013 | $ | 10,178 | $ | 400,270 | $ | 410,448 | |||||||||||
Issuance | - | 193,000 | 193,000 | ||||||||||||||
Retirements | - | (121,523 | ) | (121,523 | ) | ||||||||||||
Gain (loss) on derivative liability | (8,815 | ) | 410,594 | 401,779 | |||||||||||||
Ending balance, December 31, 2013 | $ | 1,363 | $ | 882,341 | $ | 883,704 | |||||||||||
A binomial option-pricing model was used to value the derivative liability with the following inputs: | |||||||||||||||||
● | Stock Price – The Stock Price was based on the closing price of the Company’s common stock on the valuation date. The valuation date can either be the date of issuance of the convertible debt note or the last day of a reporting period (the Valuation Date). Stock prices on the Valuation Dates ranged from $0.002 to $0.02. | ||||||||||||||||
● | Variable Conversion Price – The variable conversion price was based on 50% to 60% of the average of the three lowest stock bid prices out of the last 10 trading days prior to the Valuation Date. | ||||||||||||||||
● | Time to Maturity – The time to maturity was determined based on the length of time between the Valuation Date and the maturity of the debt. | ||||||||||||||||
● | Risk Free Rate – The risk free rate was based on the US treasury note rate as of the Valuation Dates with term commensurate with the remaining term of the debt. The risk free rate used was .09%. | ||||||||||||||||
● | Volatility – The volatility was based on the historical volatility of the Company, using a time period to calculate volatility commensurate with the Time to Maturity. | ||||||||||||||||
Recently Enacted Accounting Standards | |||||||||||||||||
In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards (ASC) Update No. 2013-11 – Income Taxes. In April 2013, FASB issued ASC Update No. 2013-07 – Presentation of Financial Statements. In February 2013, FASB issued ASC 2013-04, Liabilities. In January 2013, FASB issued ASC Update No. 2013-01 – Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. In October 2012, FASB issued ASC Update No. 2012-04 – Technical Corrections and Improvements. In August 2012, FASB issued ASC Update No. 2012-03 – Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22. In July 2012, FASB issued Update No. 2012-02 – Intangibles – Goodwill and Other (Topic 350), testing Indefinite-Lived Intangible Assets for Impairment. | |||||||||||||||||
The Company has considered these and other recent accounting pronouncements of which the Company is aware, and the Company believes their adoption has not had, and will not have, any material impact on our financial position or results of operations. |
D_Inventory
D. Inventory | 6 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
NOTE D - Inventory | ' | ||||||||
Inventory consists of raw materials and finished goods. Raw materials are the components, including boxes, inserts, liquid medicine and packaging materials that have not been combined into the final product, ready for sale. Finished goods are the final product, available for sale. The raw materials inventory will be assembled and placed in finished goods inventory when that amount is significantly reduced. Due to the lack of degradation of the material, no adjustment for obsolescence is necessary. Inventory consisted of the following as of December 31, 2013 and June 30, 2013: | |||||||||
31-Dec-13 | 30-Jun-13 | ||||||||
Raw Materials | $ | 29,317 | $ | 29,345 | |||||
Finished Goods | 166,416 | 174,561 | |||||||
Reserve for inventory obsolescence | (166,416 | ) | - | ||||||
Total Inventory | $ | 29,317 | $ | 203,906 |
E_Notes_Payable_Transactions
E. Notes Payable Transactions | 6 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
NOTE E- Notes Payable Transactions | ' |
The Company has issued various 8% secured convertible notes (the Convertible Notes). The Company has bifurcated the convertible debt agreements according to the guidance provided by ASC 815-15-25. The principal and accrued interest for these notes is payable nine to twelve months after issuance, or such earlier date as defined in the agreement. The notes are convertible by the holder at any time after the issue date and by the Company at any time after issue with conversion periods as defined in the agreement. The notes are convertible into shares of the Company’s common stock at a price of 50% to 60% of the average of the three lowest closing bid prices of the stock during the defined trading day period ending one day prior to the date of conversion. The holders are not entitled to convert any portion of the Convertible Notes to the extent that the shares to be issued in connection therewith would cause the holder’s beneficial ownership of the Company’s common stock to exceed 4.99% of the outstanding shares of the Company’s common stock. Because of the operation of the floating conversion price and the holder’s ability to convert as described above, the Company is unable to determine at any time that number of shares into which the Convertible Notes are convertible. As of December 31, 2013, the balance of the Convertible Notes was $705,835, net of discount of $176,949. | |
The Convertible Notes contain customary representations and warranties, customary affirmative and negative covenants, customary anti-dilution provisions, and customary events of default that accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the Convertible Notes. A default on the Convertible Notes could lead to certain penalties, including an obligation to (a) pay all of the following, plus an additional 50% of (i) default interest, (ii) other monetary penalties, and (iii) the outstanding balance on the Convertible Notes. | |
The holders are entitled to have all shares issued upon conversion listed upon each national securities exchange or other automated quotation system, if any, upon which shares of the Company’s common stock are then listed. | |
The Company is required to carry the embedded derivatives on its balance sheet at fair value and account for any unrealized change in fair value as a component in its results of operations. The Company valued the embedded derivatives using a binomial option-pricing model. | |
The Company entered into a convertible note in the amount of $500,000 with an individual who is now a Director of the Company on November 13, 2009. The note expired on November 12, 2012, and a new note in the amount of $598,733 was entered into on January 31, 2013, with an interest rate of 8% and the right to pay off the note in whole or in part at any time. The new note is the balance of the former note plus expenses of $98,233, paid by the Board Member on behalf of the Company. | |
During 2013, the Company entered into a material definitive agreement with TCA Global Credit Master Fund, LP, a Cayman Islands limited partnership (TCA), with a promissory note in the amount of $350,000. Interest is due and payable each month at a rate of 12%. The note has a cross default clause and has a continuing, first priority security until such time as the note is repaid. This note is convertible only upon default. No derivative has been recorded because the value is nominal. As further consideration for TCA entering into and structuring the promissory note, the Company paid TCA a fee of $115,000, with consideration of 479,167 shares of common shares of the Company, which was recorded as a debt discount, and amortized over the initial term of the debt of one year. | |
In June 2013, TCA restructured its debt agreement with the Company, which constituted a troubled debt restructuring, with the term of the debt extended through January 1, 2014 . Subsequent to December 31, 2013 the Company has been in negotiations with the Lender to further restructure the debt agreement. Presently final terms of the loan restructure have not been completed. The principal balance of the note was increased to $368,757 (which included $14,000 of interest due to TCA) as a result of this debt restructuring. This balance is included with short-term convertible notes. Losses incurred as a result of this restructuring totaled $94,132, which consisted of the payment of $75,000 of common stock to TCA, the write-off of a remaining debt discount of $14,375 and an increase in the balance due to TCA of $4,757. The common stock issued to TCA is redeemable by the Company if TCA does not realize net proceeds of at least $75,000 from the shares within a twelve month period following receipt of the shares; accordingly, it has been classified outside of permanent equity as of December 31, 2013 and June 30, 2013. | |
In April 2013, two notes were signed with Robert Libauer for a total of $525,000, which are due on April 1, 2014, with 8% interest compounded annually. These notes are secured by a second position in all the Company’s assets. | |
During the three months ended December 31, 2013, the Company has issued various secured convertible notes totaling $96,000 with four different organizations (Asher, JMJ, Tonaquint, Brighton Capital). The interest rates on these convertible notes vary from 8% to 22%. | |
F_Stockholders_Deficit
F. Stockholders' Deficit | 6 Months Ended |
Dec. 31, 2013 | |
Equity [Abstract] | ' |
NOTE F- Stockholders' Deficit | ' |
During the six months ended December 31, 2013, the Company issued a total of 69,119,989 common shares in payment of principal and interest due on convertible notes totaling $126,820. The shares were valued at $0.0007 to $0.028 per share. | |
During the six months ended December 31, 2013, 22,627,336 common shares were issued in connection with the cashless exercise of warrants. |
G_Subsequent_Events
G. Subsequent Events | 6 Months Ended |
Dec. 31, 2013 | |
Subsequent Events [Abstract] | ' |
NOTE G- Subsequent Events | ' |
Subsequent to December 31, 2013, the Company issued convertible notes payable totaling $ 105,500, due with interest ranging from 8% to 10% with maturity dates ranging from being due on demand to February 3, 2015. | |
Subsequent to December 31, 2013, the Company issued a total of 86,791,345 common shares in payment of principal and interest due on convertible notes totaling $76,470 ($71,910 Principal and $4,560 Interest). The shares were valued at $0.00073 to $0.001. | |
Subsequent to December 31, 2013, 71,867,403 common shares were issued in connection with the cashless exercise of warrants. | |
Subsequent to December 31, 2013, the Company issued a total of 31,400,000 common shares in payment of principal and interest due on a convertible note totaling $23,700. The shares were valued at $0.000720 to $0.000780. |
C_Accounting_Policies_Policies
C. Accounting Policies (Policies) | 6 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||||||||||
Loss per common share | ' | ||||||||||||||||
Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding. Diluted loss per common share assumes the exercise of stock options and warrants using the treasury stock method, if dilutive. Potentially dilutive shares were not included in the calculation of diluted shares, as their effect would have been antidilutive. | |||||||||||||||||
Product Amortization | ' | ||||||||||||||||
PuraMed® BioScience products consist primarily of the cost of trade secrets, formulas, scientific and manufacturing know-how, trade names, marketing material and other intellectual property and are amortized on a straight-line basis over an estimated useful life of seven years. | |||||||||||||||||
Trademark Amortization | ' | ||||||||||||||||
PuraMed® BioScience trademarks consist of the legal costs associated with registering our LipiGesic® and PuraMed® BioScience trademarks. As these trademarks have been approved, they are being amortized on a straight-line basis over an estimated useful life of ten years. | |||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: | |||||||||||||||||
Level 1 Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. | |||||||||||||||||
Level 2 Other inputs that are observable directly or indirectly, such as quoted prices for similar assets and liabilities or market corroborated inputs. | |||||||||||||||||
Level 3 Unobservable inputs that are used when little or no market data is available, which require the Company to develop its own assumptions about how market participants would value the assets or liabilities. | |||||||||||||||||
Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosure each quarter. Assets and liabilities measured at fair value on a recurring basis as of December 31, 2013 and June 30, 2013 are summarized as follows: | |||||||||||||||||
Fair Value as of December 31, 2013 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liabilities | |||||||||||||||||
Derivative Liability - Warrants | $ | - | $ | - | $ | 1,363 | $ | 1,363 | |||||||||
Derivative Liability – Convertible Debt | - | - | 882,341 | 882,341 | |||||||||||||
Total | $ | - | $ | - | $ | 883,704 | $ | 883,704 | |||||||||
Fair Value as of June 30, 2013 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liabilities | |||||||||||||||||
Derivative Liability - Warrants | $ | - | $ | - | $ | 10,178 | $ | 10,178 | |||||||||
Derivative Liability – Convertible Debt | - | - | 400,270 | 400,270 | |||||||||||||
Total | $ | - | $ | - | $ | 410,448 | $ | 410,448 | |||||||||
The following table presents the fair value reconciliation of Level 3 liabilities measured at fair value on a recurring basis during the six months ended December 31, 2013: | |||||||||||||||||
Fair Value Measurements Using Significant | |||||||||||||||||
Unobservable Inputs (Level 3) | |||||||||||||||||
Derivative | |||||||||||||||||
Derivative | Liability - | ||||||||||||||||
Liability - | Convertible | ||||||||||||||||
Warrants | Debt | Total | |||||||||||||||
Beginning balance, July 1, 2013 | $ | 10,178 | $ | 400,270 | $ | 410,448 | |||||||||||
Issuance | - | 193,000 | 193,000 | ||||||||||||||
Retirements | - | (121,523 | ) | (121,523 | ) | ||||||||||||
Gain (loss) on derivative liability | (8,815 | ) | 410,594 | 401,779 | |||||||||||||
Ending balance, December 31, 2013 | $ | 1,363 | $ | 882,341 | $ | 883,704 | |||||||||||
A binomial option-pricing model was used to value the derivative liability with the following inputs: | |||||||||||||||||
● | Stock Price – The Stock Price was based on the closing price of the Company’s common stock on the valuation date. The valuation date can either be the date of issuance of the convertible debt note or the last day of a reporting period (the Valuation Date). Stock prices on the Valuation Dates ranged from $0.002 to $0.02. | ||||||||||||||||
● | Variable Conversion Price – The variable conversion price was based on 50% to 60% of the average of the three lowest stock bid prices out of the last 10 trading days prior to the Valuation Date. | ||||||||||||||||
● | Time to Maturity – The time to maturity was determined based on the length of time between the Valuation Date and the maturity of the debt. | ||||||||||||||||
● | Risk Free Rate – The risk free rate was based on the US treasury note rate as of the Valuation Dates with term commensurate with the remaining term of the debt. The risk free rate used was .09%. | ||||||||||||||||
● | Volatility – The volatility was based on the historical volatility of the Company, using a time period to calculate volatility commensurate with the Time to Maturity. | ||||||||||||||||
Recently Enacted Accounting Standards | ' | ||||||||||||||||
In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards (ASC) Update No. 2013-11 – Income Taxes. In April 2013, FASB issued ASC Update No. 2013-07 – Presentation of Financial Statements. In February 2013, FASB issued ASC 2013-04, Liabilities. In January 2013, FASB issued ASC Update No. 2013-01 – Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. In October 2012, FASB issued ASC Update No. 2012-04 – Technical Corrections and Improvements. In August 2012, FASB issued ASC Update No. 2012-03 – Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22. In July 2012, FASB issued Update No. 2012-02 – Intangibles – Goodwill and Other (Topic 350), testing Indefinite-Lived Intangible Assets for Impairment. | |||||||||||||||||
The Company has considered these and other recent accounting pronouncements of which the Company is aware, and the Company believes their adoption has not had, and will not have, any material impact on our financial position or results of operations. |
C_Accounting_Policies_Tables
C. Accounting Policies (Tables) | 6 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis | ' | ||||||||||||||||
Fair Value as of December 31, 2013 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liabilities | |||||||||||||||||
Derivative Liability - Warrants | $ | - | $ | - | $ | 1,363 | $ | 1,363 | |||||||||
Derivative Liability – Convertible Debt | - | - | 882,341 | 882,341 | |||||||||||||
Total | $ | - | $ | - | $ | 883,704 | $ | 883,704 | |||||||||
Fair Value as of June 30, 2013 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liabilities | |||||||||||||||||
Derivative Liability - Warrants | $ | - | $ | - | $ | 10,178 | $ | 10,178 | |||||||||
Derivative Liability – Convertible Debt | - | - | 400,270 | 400,270 | |||||||||||||
Total | $ | - | $ | - | $ | 410,448 | $ | 410,448 | |||||||||
Fair value reconciliation of Level 3 liabilities | ' | ||||||||||||||||
Fair Value Measurements Using Significant | |||||||||||||||||
Unobservable Inputs (Level 3) | |||||||||||||||||
Derivative | |||||||||||||||||
Derivative | Liability - | ||||||||||||||||
Liability - | Convertible | ||||||||||||||||
Warrants | Debt | Total | |||||||||||||||
Beginning balance, July 1, 2013 | $ | 10,178 | $ | 400,270 | $ | 410,448 | |||||||||||
Issuance | - | 193,000 | 193,000 | ||||||||||||||
Retirements | - | (121,523 | ) | (121,523 | ) | ||||||||||||
Gain (loss) on derivative liability | (8,815 | ) | 410,594 | 401,779 | |||||||||||||
Ending balance, December 31, 2013 | $ | 1,363 | $ | 882,341 | $ | 883,704 |
D_INVENTORY_Tables
D. INVENTORY (Tables) | 6 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventory | ' | ||||||||
31-Dec-13 | 30-Jun-13 | ||||||||
Raw Materials | $ | 29,317 | $ | 29,345 | |||||
Finished Goods | 166,416 | 174,561 | |||||||
Reserve for inventory obsolescence | (166,416 | ) | - | ||||||
Total Inventory | $ | 29,317 | $ | 203,906 |
C_Accounting_Policies_Details
C. Accounting Policies (Details) (USD $) | Dec. 31, 2013 | Jun. 30, 2013 |
Liabilities | ' | ' |
Derivative Liability-Warrants | $1,363 | $10,178 |
Derivative Liability - Convertible Debt | 882,341 | 400,270 |
Total | 883,704 | 410,448 |
Level 1 | ' | ' |
Liabilities | ' | ' |
Derivative Liability-Warrants | 0 | 0 |
Derivative Liability - Convertible Debt | 0 | 0 |
Total | 0 | 0 |
Level 2 | ' | ' |
Liabilities | ' | ' |
Derivative Liability-Warrants | 0 | 0 |
Derivative Liability - Convertible Debt | 0 | 0 |
Total | 0 | 0 |
Level 3 | ' | ' |
Liabilities | ' | ' |
Derivative Liability-Warrants | 1,363 | 10,178 |
Derivative Liability - Convertible Debt | 882,341 | 400,270 |
Total | $883,704 | $410,448 |
C_Accounting_Policies_Details_
C. Accounting Policies (Details 1) (USD $) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |
Beginning balance, July 1, 2013 | ' | ' | $410,448 | ' |
Issuance | ' | ' | 193,000 | ' |
Retirements | ' | ' | -121,523 | ' |
Gain (loss) on derivative liability | 108,608 | -182,062 | 401,779 | -111,825 |
Ending balance, December 31, 2013 | 883,704 | ' | 883,704 | ' |
Derivative Liability - Warrants | ' | ' | ' | ' |
Beginning balance, July 1, 2013 | ' | ' | 10,178 | ' |
Issuance | ' | ' | 0 | ' |
Retirements | ' | ' | 0 | ' |
Gain (loss) on derivative liability | ' | ' | -8,815 | ' |
Ending balance, December 31, 2013 | 1,363 | ' | 1,363 | ' |
Derivative Liability - Convertible Debt | ' | ' | ' | ' |
Beginning balance, July 1, 2013 | ' | ' | 400,270 | ' |
Issuance | ' | ' | 193,000 | ' |
Retirements | ' | ' | -121,523 | ' |
Gain (loss) on derivative liability | ' | ' | 410,594 | ' |
Ending balance, December 31, 2013 | $882,341 | ' | $882,341 | ' |
D_INVENTORY_Details
D. INVENTORY (Details) (USD $) | Dec. 31, 2013 | Jun. 30, 2013 |
C.InventoryDetailsAbstract | ' | ' |
Raw Materials | $29,317 | $29,345 |
Finished Goods | 166,416 | 174,561 |
Reserve for inventory obsolescence | -166,416 | 0 |
Total Inventory | $29,317 | $203,906 |
E_Notes_Payable_Transactions_D
E. Notes Payable Transactions (Details Narrative) (USD $) | Dec. 31, 2013 |
Notes to Financial Statements | ' |
Convertible note payable amount | $705,835 |