Cerebain Biotech (CBBT) 10-Q 17 Feb 15 2015 Q2 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
	Dec. 31, 2014	Feb. 17, 2015
Document And Entity Information
Entity Registrant Name	CEREBAIN BIOTECH CORP.
Entity Central Index Key	1453099
Document Type	10-Q
Document Period End Date	31-Dec-14
Amendment Flag	FALSE
Current Fiscal Year End Date	-24
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		4,447,448
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015

CONDENSED_CONSOLIDATED_BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Dec. 31, 2014	Jun. 30, 2014
Current assets:
Cash and cash equivalents	$15,641	$1,688
Prepaid expenses	402,669	694,292
Total current assets	418,310	695,980
Long-term assets:
Patent rights	133,900	133,900
Total assets	552,210	829,880
Current liabilities:
Accounts payable	219,752	133,200
Related party payables	347,471	288,009
Related party notes payable	113,000	144,153
Total current liabilities	680,223	565,362
Long term liabilities:
Convertible note to stockholders, net of debt discount of $228,013 and $444,127, respectively	1,499,487	1,058,373
Total liabilities	2,179,710	1,623,735
Stockholders' deficit
Preferred stock ($0.001 par value: 1,000,000 shares authorized; none issued and outstanding)
Common stock ($0.001 par value: 249,000,000 shares authorized; 4,447,448 and 4,176,323 shares issued and outstanding at December 31 and June 30, 2014, respectively)	4,447	4,176
Additional paid in capital	5,832,732	5,356,697
Accumulated deficit	-7,464,679	-6,154,728
Total stockholders' deficit	-1,627,500	-793,855
Total liabilities and stockholders' deficit	$552,210	$829,880

CONDENSED_CONSOLIDATED_BALANCE1

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 2014	Jun. 30, 2014
Long term liabilities:
Net of debt discount	$228,013	$444,127
Stockholders' deficit
Preferred stock, par value	$0.00	$0.00
Preferred stock, authorized shares	1,000,000	1,000,000
Preferred stock, issued shares
Preferred stock, outstanding shares
Common stock, par value	$0.00	$0.00
Common stock, Authorized shares	249,000,000	249,000,000
Common stock, Issued shares	4,447,448	4,176,323
Common stock, outstanding shares	4,447,448	4,176,323

UNAUDITED_CONDENSED_CONSOLIDAT

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Operating Expenses
Selling, general and administrative expenses	$428,426	$564,700	$772,643	$1,046,099
Research and development costs	121,875	88,960	243,750	177,160
Marketing expenses	39,351	33,768	100,237	87,109
Total operating expenses	589,652	687,428	1,116,630	1,310,368
Other (income) expense
Accretion of debt discount	37,329	123,648	96,186	206,736
Interest expense	49,540	43,709	97,135	63,328
Total other (income) expense	86,869	167,357	193,321	270,064
Net operating loss	-676,521	-854,785	-1,309,951	-1,580,432
Loss before income taxes	-676,521	-854,785	-1,309,951	-1,580,432
Income taxes
Net loss	($676,521)	($854,785)	($1,309,951)	($1,580,432)
Loss per share:
Basic and diluted loss per share	($0.15)	($0.25)	($0.30)	($0.47)
Basic and diluted weighted average shares outstanding	4,396,405	3,381,641	4,310,542	3,337,212

UNAUDITED_CONDENSED_CONSOLIDAT1

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Cash flows from operating activities:
Net loss	($1,309,951)	($1,580,432)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of debt discount	96,186	206,736
Warrants issued for research and development		65,660
Stock compensation related to stock options	156,750	123,250
Amortization of prepaid stock based consulting compensation	509,654	691,000
Changes in operating assets and liabilities:
Prepaid expenses	-12,281	-28,467
Accounts payable	86,552	-10,396
Related party payables	101,743	83,487
Accrued payroll and taxes		-12,880
Net cash used in operating activities	-371,347	-462,042
Cash flows from financing activities:
Proceeds from issuance of common stock	135,300
Notes payable to related parties		1,600
Repayment of notes payable to related parties		-26,068
Repayment of notes payable to stockholders		-5,720
Notes payable to stockholders	250,000	596,220
Net cash flows provided by financing activities:	385,300	566,032
Net change in cash and cash equivalents	13,953	103,990
Cash and cash equivalents- beginning of period	1,688	8
Cash and cash equivalents- end of period	15,641	103,998
Supplemental disclosure of non cash activities:
Interest
Income tax
Supplemental disclosure on non-cash investing and financing activities:
Beneficial conversion feature on convertible note	119,928	769,706
Stock issued for prepaid services	122,300	1,474,500
Options issued for prepaid services	83,450
Stock issued for satisfaction of accounts payable		7,500
Stock issued for satisfaction of related party payables	40,000
Conversion convertible notes payable and interest into stock	25,781
Conversion of related party notes payable and interest into stock	$32,653	$219,700

ORGANIZATION_AND_PRINCIPAL_ACT

ORGANIZATION AND PRINCIPAL ACTIVITIES	6 Months Ended
	Dec. 31, 2014
Organization And Principal Activities
Note 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES	Description of Business
	Cerebain Biotech Corp. (Formerly Discount Dental Materials, Inc.) (“Cerebain Biotech”), was incorporated on December 18, 2007 under the laws of Nevada. The Company is a smaller reporting biomedical company and through its wholly owned subsidiary, Cerebain Operating, Inc. (Formerly Cerebain Biotech Corp.), the Company’s business revolves around the discovery of products for the treatment of Alzheimer’s disease utilizing Omentum. The Company plans to produce products that will include both a medical device solution as well as a synthetic drug solution.
	Cerebain Operating, Inc. was incorporated on February 22, 2010, in the State of Nevada.
	The accompanying (a) condensed balance sheet at June 30, 2014 has been derived from audited statements and (b) unaudited interim condensed financial statement as of December 31, 2014 and for the three and six months ended December 31, 2014 and 2013 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company's audited financial statements and notes thereto for the year ended June 30, 2014 included on Form 10-K filed with the Securities and Exchange Commission on August 11, 2014.

BASIS_OF_PRESENTATION

BASIS OF PRESENTATION	6 Months Ended
	Dec. 31, 2014
Basis Of Presentation
Note 2 - BASIS OF PRESENTATION	The Company operates in one segment in accordance with accounting guidance Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting. Our Principal Executive Officer has been identified as the chief operating decision maker as defined by FASB ASC Topic 280.
	Reverse Stock Split
	On April 15, 2014, the Company filed a Certificate of Amendment to our Certificate of Incorporation to implement a one-for-ten reverse split of our common stock (the “Reverse Stock Split”). The ratio for the Reverse Stock Split was determined by our Board of Directors subject to the approval of the Company’s stockholders. The Company received approval from its stockholders on April 15, 2014 and the Company’s common stock began trading on a post-split basis on June 19, 2014.
	As a result of the Reverse Stock Split, each ten shares of the Company’s issued and outstanding common stock were automatically combined and converted into one issued and outstanding share of common stock. The Reverse Stock Split affected all issued and outstanding shares of the Company’s common stock, as well as common stock underlying stock options, stock appreciation rights, restricted stock, restricted stock units, warrants and convertible debentures outstanding immediately prior to the effectiveness of the Reverse Stock Split. The Reverse Stock Split reduced the number of shares of the Company’s common stock outstanding from approximately 41 million to 4.1 million at the time of the Reverse Stock Split. The Reverse Stock Split did not alter the par value of common stock, which remained $0.001 per share, or modify any voting rights or other terms of the Company’s common stock. Unless otherwise indicated, all information set forth herein gives effect to such Reverse Stock Split.
	Going Concern
	The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $7,464,679 and $6,154,728 at December 31 and June 30, 2014, respectively, and had a net loss of $1,309,951 and $1,580,432 for the six months ended December 31, 2014 and 2013, respectively, and net cash used in operating activities of $371,347 and $462,042 for the six months ended December 31, 2014 and 2013, respectively, with no revenue earned since inception. These matters, among others, raise substantial doubt about our ability to continue as a going concern.
	While the Company is in the process of developing its medical device solution and its synthetic drug solution for the treatment of dementia, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.
	The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

SUMMARY_OF_SIGNIFICANT_ACCOUNT

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Dec. 31, 2014
Summary Of Significant Accounting Policies
Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.
	Use of Estimates
	The preparation of these financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the reported periods. Actual results may differ from those estimates and such differences may be material to the financial statements. The more significant estimates and assumptions by management include among others: useful lives and residual values of long-lived assets, the valuation of equity instruments and the valuation of warrants and options. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.
	Principles of Consolidation
	The accompanying consolidated financial statements include the accounts of Cerebain Biotech Corp. and its wholly-owned subsidiary, Cerebain Operating, Inc. (collectively referred to as the “Company”). There are no material intercompany transactions.
	Revenue Recognition
	The Company expects to recognize revenues in accordance with the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104 “Revenue Recognition”.
	Under SAB 104, four conditions must be met before revenue can be recognized: (i) there is persuasive evidence that an arrangement exists, (ii) delivery has occurred or service has been rendered, (iii) the price is fixed or determinable, and (iv) collection is reasonably assured.
	Cash and Cash Equivalents
	For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of six months or less to be cash equivalents. Accounts held at U.S. financial institutions are insured by the FDIC up to $250,000. Cash balances could exceed insured amounts at any given time, however, the Company has not experienced any such losses.
	Advertising Costs
	Advertising costs are recorded as general and administrative expenses when they are incurred. Advertising costs charged to operations were approximately $100,000 and $87,000 for the six months ended and $39,000 and $34,000 for the three months ended December 31, 2014 and 2013, respectively, and are included in marketing costs in the accompanying consolidated statements of operations.
	Research and Development
	The Company expenses the cost of research and development as incurred. Research and development costs charged to operations were approximately $244,000 and $177,000 for the six months ended and $122,000 and $89,000 for the three months ended December 31, 2014 and 2013, respectively, and are included in research and development costs in the accompanying consolidated statements of operations.
	Concentrations, Risks, and Uncertainties
	The Company is a startup company subject to the substantial business risks and uncertainties inherent to such an entity, including the potential risk of business failure.
	Recent Accounting Pronouncements
	The Company has evaluated new accounting pronouncements that have been issued and are not yet effective for the Company and determined that there are no such pronouncements expected to have an impact on the Company’s future financial statements.

COMMITMENTS_AND_CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Dec. 31, 2014
Commitments And Contingencies
Note 4 - COMMITMENTS AND CONTINGENCIES	Employment Agreements
	On June 15, 2013, we entered into an employment agreement with Eric Clemons. Under the terms of the agreement, Mr. Clemons shall be paid an annual salary of One Hundred Fifty-Six Thousand Dollars ($156,000), shall be entitled to a bonus of $40,000 upon delivery to the company of a prototype medical device from Sonos Models Inc., and should he be responsible for the Company consolidating with or merge into another corporation or convey all or substantially all of its assets to another corporation, will receive a cash bonus calculated using a Lehman formula of 5% for the first $1,000,000, 4% for the second $1,000,000, 3% for the third $1,000,000, 2% for the fourth $1,000,000, and 1% thereafter. In addition, we also will issue Mr. Clemons an option to acquire up to 100,000 Shares of our Common Stock, fully paid and non-assessable at an exercise price of $5.00 per share subject to a vesting schedule. On August 30, 2013, we entered into an addendum to this agreement in which Mr. Clemons will be entitled to a stock award of 25,000 shares of our common restricted stock if, within 24 months, there is a reorganization of the company. On October 1, 2014, the Company entered into an addendum to the employment agreement with Eric Clemons. Under the terms of the addendum, the agreement has been extended one year until June 15, 2017. Mr. Clemons shall be paid an annual salary of One Hundred Ninety Five Thousand Dollars ($195,000) and the Company issued Mr. Clemons an option to acquire up to 100,000 Shares of our Common Stock under the Company’s 2014 Omnibus Stock Grant and Option Plan, fully paid and non-assessable at an exercise price of $1.20 per share subject to a vesting schedule. Mr. Clemons has agreed to defer the aforementioned annual salary and accept a consulting fee for the same amount.
	On June 15, 2013, we entered into an employment agreement with Wesley Tate. Under the terms of the agreement, Mr. Tate shall be paid an annual salary of One Hundred Five Thousand Dollars ($105,000) and shall be entitled to a bonus of $20,000 upon delivery to the company of a prototype medical device form Sonos Models, Inc. In addition, we also will issue Mr. Tate an option to acquire up to 50,000 Shares of our Common Stock, fully paid and non-assessable at an exercise price of $5.00 per share subject to a vesting schedule. On August 30, 2013, we entered into an addendum to this agreement in which Mr. Tate will be entitled to a stock award of 25,000 shares of our common restricted stock if, within 24 months, there is a reorganization of the company. On April 1, 2014, we entered into an addendum to this agreement in which Mr. Tate was issued stock in the amount of 25,000 of the company’s common restricted shares representing a retention bonus as an incentive for him to remain in the employment of the Company. The Company recorded the $37,500 value of the shares issued as a prepaid expense and will amortize the expense associated with this issuance over a twelve month period. For the period ended December 31, 2014, the company has recognized an expense of approximately $28,000 associated with this issuance. On October 1, 2014, the Company entered into an addendum to the employment agreement with Wesley Tate. Under the terms of the addendum, the agreement has been extended one year until June 15, 2017. Mr. Tate shall be paid an annual salary of One Hundred Fifty Six Thousand Dollars ($156,000) and the Company issued Mr. Tate an option to acquire up to 50,000 Shares of our Common Stock under the Company’s 2014 Omnibus Stock Grant and Option Plan, fully paid and non-assessable at an exercise price of $1.20 per share subject to a vesting schedule. Mr. Tate has agreed to defer the aforementioned annual salary and accept a consulting fee for the same amount.
	Contracts
	On September 24, 2012, the Company entered into an agreement with Sonos Models, Inc. (“Sonos”) to build up to three medical device prototypes to be used for testing. The agreement calls for a total cash payment of up to $400,000 and the issuance of warrants to purchase up to 65,000 shares of the Company’s common stock, with the cash payments and warrants to be issued in stages once certain developmental thresholds are achieved. Any warrants issued under this agreement will be immediately exercisable, will be eligible for cashless exercise at the option of the holder and will have a term of three years from the date of the issuance and an exercise price based on the fair market value of the stock on the date of completion of the phase (See Note 8). On April 1, 2014, the Company entered into an addendum to the agreement with Sonos. The modifications made to the agreement state that Sonos shall receive 325,000 restricted shares of the Company’s common stock for Services provided to the Company. The warrants that were to be issued for Phase 4 will not be issued and will not be due. In addition, the Company committed to pay Sonos up to One Million Dollars ($1,000,000) for Research and Development costs. The Company recorded the $487,500 value of the shares issued as a prepaid expense and is amortizing the expense associated with these issuances over a twelve-month period. For the six and three month periods ended December 31, 2014, the Company has recognized an expense of approximately $244,000 and $122,000, respectively, associated with this agreement. The unamortized portion of this contract is approximately $122,000 and included in prepaid expenses on the balance sheet.
	Consulting Agreements
	The Company has consulting agreements with various individuals to provide assistance to the Company in several areas including the marketing of its biomedical products upon the availability of the device, capital markets and marketing strategies, advertising services and assistance in the introduction of the Company to medical device testing organization and to facilitate access to doctors in numerous countries, including Poland, Uzbekistan and China. They were compensated an aggregate 491,000 shares of the Company’s common stock. These contracts are for twelve months beginning between December 2013 and December 2014 and may be renewed or extended for any period as may be agreed by the parties. As of December 31, 2014 the Company has extended some of the contracts for an additional year. Any of the parties may terminate their respective agreement by providing thirty (30) days written notice of such termination. The Company has recognized $30,000 in accounts payable which is in arrears with one contractual obligation and is in discussions with the consultant to renegotiate the terms of the contract. As these contracts are for a period of up to twelve months, the Company recorded the $1,733,500 value of the shares issued as a prepaid expense and is amortizing the expense associated with these issuances over a twelve month period. For the six and three month periods ended December 31, 2014 and 2013, the Company recognized an expense of approximately $206,000 and $625,000 and $97,000 and $328,000, respectively, associated with these agreements. The unamortized portions of these contracts are approximately $116,000 and included in prepaid expenses on the balance sheet at December 31, 2014.
	The Company has entered into service agreements with various individuals. They were compensated an aggregate 75,000 shares of the Company’s common stock. These agreements are for twelve and twenty four months beginning between December 2013 and April 2014. As these agreements are for a period of twelve and twenty four months, the Company recorded the $172,500 value of the shares issued as a prepaid expense and is amortizing the expense associated with these issuances over a twelve and twenty four month period. For the six and three month periods ended December 31, 2014 and 2013, the Company recognized an expense of approximately $52,000 and $0 and $26,000 and $0, respectively, associated with these agreements. The unamortized portions of these agreements are approximately $71,000 and included in prepaid expenses on the balance sheet at December 31, 2014.
	The Company has entered into consulting agreements with two individuals to provide business consulting services. For compensation of these services, they were issued an option to acquire up to 100,000 Shares of our Common Stock, fully paid and non-assessable at an exercise price of $1.30 per share. These agreements are for twelve months beginning December 2014 (See Note 8).
	As of December 31, 2014, future maturities of prepaid expenses on value of shares issued for consulting are as follows:
	Fiscal year ending June 30,
	2015	$	246,508
	2016	$	62,883
	Total	$	309,391
	Legal
	The Company is not involved in any legal matters arising in the normal course of business. While incapable of estimation, in the opinion of the management, the individual regulatory and legal matters in which it might involve in the future are not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

PATENT_RIGHTS

PATENT RIGHTS	6 Months Ended
	Dec. 31, 2014
Patent Rights
Note 5 - PATENT RIGHTS	On June 10, 2010, the Company entered into a Patent License Agreement under which the Company acquired the exclusive rights to certain intellectual property related to using Omentum for treating dementia conditions. Under the agreement the Company has paid rights fees of $50,000 to Dr. Saini, and the Company issued Dr. Saini 825,000 shares of our common stock, valued at $6,600 (based on the fair market value on the date of grant) restricted in accordance with Rule 144. In addition, Dr. Saini will have the option to participate in the sale of equity by the Company in the future, up to ten percent (10%) of the money raised, in exchange for the applicable number of his shares.
	In addition, the Patent License agreement provides for a royalty payment of six (6) percent of the value of the net sales, as defined, generated from the sale of licensed products. The agreement also provides for yearly minimum royalty payments of $50,000 for each of the fourth, fifth, and sixth anniversary of the date of the agreement, and a yearly minimum royalty payment of $100,000 for each year thereafter during the term of the agreement. The Company has recognized costs associated with the patent rights for $50,000 in accounts payable for the patent rights and is currently in arrears and in discussions to renegotiate the terms of the agreement. The term of the agreement shall continue until the patent in the intellectual property expires, unless terminated sooner under the provisions of the agreement, as defined.
	The patent will have an estimated useful life of 20 years based on the term of the patent. Amortization of the patent will begin when the patent is issued by the United States Patent and Trademark Office and put in use.
	Legal fees pertaining to the patent are recorded as general and administrative expenses when they are incurred. Legal fees charged to operations were approximately $11,000 and $6,000 for the six months ended December 31, 2014 and 2013, respectively and $11,000 and $6,000 for the three months ended December 31, 2014, and 2013, respectively.
	The accrued payable of $50,000 pertaining to the rights fees at June 30, 2014 is included in related party payables.

NOTES_PAYABLE_TO_STOCKHOLDERS

NOTES PAYABLE TO STOCKHOLDERS	6 Months Ended
	Dec. 31, 2014
Notes Payable To Stockholders
Note 6 - NOTES PAYABLE TO STOCKHOLDERS	Short Term Note Payable
	On June 30, 2013, the Company converted $84,915 of related party payables owed under consulting agreements, into related party notes payable. The notes matured on December 31, 2013 and accrued interest at two (2.0) percent per annum at maturity. On June 16, 2014, the Company converted $30,694 of related party notes payable to common stock. On September 30, 2014, the company converted $31,153 of related party notes payable to common stock. As of September 30, 2014, the outstanding balance of this note is $0.
	On January 18, 2013, the Company converted $356,700 of related party payables owed under consulting agreements, into related party notes payable. The notes were scheduled to mature on December 31, 2013 and accrued interest at seven and one-half (7.5) percent per annum at maturity. However, on December 30, 2013, the Company converted $219,700 of related party notes payable to equity. As of December 31, 2014, the outstanding balance of the related party notes payable is $113,000. The Company is currently in default and is in discussions with the noteholder to restructure the terms of the note.
	Long Term Note Payable
	Convertible Note Payable
	The Company has entered into various unsecured convertible promissory notes with non-affiliate stockholders totaling $1,727,500. Of this amount, $1,502,500 of notes was outstanding at June 30, 2014, and the remainder was issued during the six month period ended December 31, 2014. The principal amounts of these notes are between $10,000 and $1,450,000. Under the terms of these notes, they mature between June 2015 and December 2016, accrue interest at between 7.5% and 8.0% per annum, and are convertible into shares of our common stock at a conversion rates of between $1.00 and $5.00 per share, but only if such conversion would not cause the Noteholders to own more than 9.9% of our outstanding common stock, and contains piggyback registration rights. The Company used a recent sale of stock to determine the fair market value of these transactions. The issuances were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and the investors were sophisticated and familiar with our operations at the time of the issuance of the shares. In December 2014, the company converted $25,000 of convertible notes payable and issued 12,891 shares of restricted stock (See Note 7). In addition, the Company issued to a holder 50,000 shares of the company’s common stock (See Note 4).
	To properly account for certain Convertible Promissory Notes, the Company performed a detailed analysis to obtain a thorough understanding of the transactions, including understanding the terms of each instrument issued, and any related derivatives entered into. The Company first reviewed ASC Topic 815, to identify whether any equity-linked features in the Notes are freestanding or embedded. The Company determined that there were no free standing features. The Notes were then analyzed in accordance with Topic 815 to determine if the Note should be accounted for at fair value and remeasured at fair value in income. The Company determined that the Notes did not meet the requirements of Topic 815 and therefore accounted for the Notes as conventional debt. The Company then reviewed ASC Topic 470-20, and determined that some of Notes met the criteria of a conventional convertible note and that the Note had a beneficial conversion feature, which was recorded as a debt discount against the face amount of the Note, indicated above.
	Accrued interest on all notes payable to stockholders and other related parties at December 31, 2014 totaled approximately $200,000 and is included in related party payables.
	As of December 31, 2014, future maturities of notes payable are as follows:
	Fiscal year ending June 30,
	2015	$	47,500
	2016	$	1,680,000
	Total	$	1,727,500

STOCK_TRANSACTIONS

STOCK TRANSACTIONS	6 Months Ended
	Dec. 31, 2014
Stock Transactions
Note 7 - STOCK TRANSACTIONS	For the six month period ended December 31, 2014, the Company entered into various stock purchase agreements with third parties between July and September of 2014, under which we issued 89,799 shares of our common stock, restricted in accordance with Rule 144, in exchange for $135,300. The stock purchase agreements include piggyback registration rights. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and the investor was sophisticated and familiar with our operations at the time of the issuance of the shares.
	In December 2014, we issued 12,891 shares of our common stock to an individual for conversion of a convertible note payable and related interest payable. The aggregate Fair Market Value of these shares was $25,781 as the conversion price was $2.00 per share. This issuance was completed in accordance with Section 4(2) of the Securities Act in an offering without any public offering or distribution. These shares are restricted securities and include an appropriate restrictive legend.
	In September 2014, we issued 48,435 shares of our common stock to an individual as payment for related party notes and accounts payable. The aggregate Fair Market Value of these shares was $72,653 as the agreed price was $1.50 per share. This issuance was completed in accordance with Section 4(2) of the Securities Act in an offering without any public offering or distribution. These shares are restricted securities and include an appropriate restrictive legend.
	For the six month period ended December 31, 2014, the Company issued 120,000 shares of common stock to various individuals as payment for consulting services per contracts dated between July and December 2104. The aggregate Fair Market Value of these shares was approximately $122,000 as the fair market value of the stock was between $0.90 and $1.09 per share. The Company used a recent sale of stock to determine the fair market value of these transactions. These issuances were completed in accordance with Section 4(2) of the Securities Act in an offering without any public offering or distribution. These shares are restricted securities and include an appropriate restrictive legend.
	On November 26, 2014, the Company issued a Private Placement Memorandum (“PPM”). The PPM authorizes the sale of up to 4,000,000 units, with each Unit consisting of one share of our common stock and a Warrant to purchase one share of our common stock, at a price of $1.25 per Unit. Each Unit includes a non-cashless Warrant to purchase one (1) share of the Company’s common stock, $.001 par value, at the exercise price of $2.50 per share. The Offering will terminate on or before February 26, 105 unless extended one or more times by us to a date not later than March 26, 2015. As of December 31, 2014, the Company has received no subscriptions.

OPTIONS_AND_WARRANTS

OPTIONS AND WARRANTS	6 Months Ended
	Dec. 31, 2014
Options And Warrants
Note 8 - OPTIONS AND WARRANTS	Options
	In December 2014, the Company entered into consulting agreements with two individuals (See Note 4). The agreements call for an issuance of options to purchase up to a total of 100,000 shares of the Company’s common stock at an exercise price of $1.30 per share. Fair Market Value of these options totaled approximately $83,500. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 100%; risk-free interest rate of 0.49%; expected term of 2 years; and 0% dividend yield. As of December 31, 2014, 100,000 options to purchase the Company’s common stock have vested. For the six and three month periods ended December 31, 2014 and 2013, the Company recognized an expense of approximately $6,954 and $0, respectively. The expense expected to be recognized is approximately $76,496.
	In October 2014, the Company entered into employee agreements addendums with two individuals (See Note 4). The agreements call for an issuance of options to purchase up to a total of 150,000 shares of the Company’s common stock at an exercise price of $1.20 per share, subject to a vesting schedule. Fair Market Value of these options totaled approximately $134,000. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 100%; risk-free interest rate of 1.69%; expected term of 5 years; and 0% dividend yield. As of December 31, 2014, 30,000 options to purchase the Company’s common stock have vested. For the six and three month periods ended December 31, 2014 and 2013, the Company recognized an expense of approximately $33,500 and $0, respectively. The compensation expected to be recognized in future years is approximately $100,500.
	In June 2013, the Company entered into employee agreements with two individuals (See Note 4). The agreements call for an issuance of options to purchase up to a total of 150,000 shares of the Company’s common stock at an exercise price of $5.00 per share, subject to a vesting schedule. Fair Market Value of these options totaled approximately $1.2 million. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 100%; risk-free interest rate of 1.04%; expected term of 5 years; and 0% dividend yield. As of December 31, 2014, 60,000 options to purchase the Company’s common stock have vested. For the six and three month periods ended December 31, 2014 and 2013, the Company recognized an expense of approximately $123,000 and $123,000 and $62,000 and $62,000, respectively. The compensation expected to be recognized in future years is approximately $616,000.
	The following represents a summary of the Options outstanding at December 31, 2014 and changes during the periods then ended:
		Options			Options Average Exercise Price
	Outstanding June 30, 2013	$	150,000		$	5
	Granted		-			-
	Exercised		-			-
	Expired/Forfeited		-			-
	Outstanding, June 30, 2014	$	150,000		$	5
	Granted		250,000			1.24
	Exercised		-			-
	Expired/Forfeited		-			-
	Outstanding, December 31, 2014	$	400,000		$	2.65
	Exercisable at December 31, 2014	$	190,000		$	2.45
	Expected to be vested	$	400,000		$	2.65
	Compensation to be recognized	$	793,246		$	-
	Forfeiture Rate	$	-		$	-
	Warrants
	On December 11, 2013, the Company issued Sonos warrants to purchase 20,000 shares of the Company’s common stock, valued at $65,660 (based on the fair market value of the date of grant). The Company recognized an expense of $49,200 as research and development during the three months ended September 30, 2013 related to 10,000 of these warrants to be issued for completion of phases 1b and 2 during that period. The fair value was determined using Black-Scholes option pricing model with a volatility of 100%, a risk free interest rate of 1.04% and 0% dividend yield. The Company has recognized no research and development costs related to issued warrants during the six months ended December 31, 2014. The warrants are immediately exercisable, cashless at the option of the holder, and have a term of three years and an exercise price of $2.00 per share.
	The following represents a summary of the Warrants outstanding at December 31, 2014 and changes during the periods then ended:
		Warrants			Weighted Average Exercise Price
	Outstanding, June 30, 2013		6,250		$	3.2
	Granted		20,000			2
	Exercised		-			-
	Expired/Forfeited		(1,250	)		8
	Outstanding, June 30, 2014		25,000		$	2
	Granted		-			-
	Exercised		-			-
	Expired/Forfeited		-			-
	Outstanding, December 31, 2014		25,000			2
	Exercisable at December 31, 2014		25,000		$	2

RELATED_PARTY_TRANSACTIONS

RELATED PARTY TRANSACTIONS	6 Months Ended
	Dec. 31, 2014
Related Party Transactions
Note 9 - RELATED PARTY TRANSACTIONS	Other than as set forth below, and as disclosed in Notes 4, 6, 7, and 8, the Company has not entered into or been a participant in any transaction in which a related person had or will have a direct or indirect material interest.

EARNINGS_PER_SHARE

EARNINGS PER SHARE	6 Months Ended
	Dec. 31, 2014
Loss per share:
Note 10 - EARNINGS PER SHARE	FASB ASC Topic 260, Earnings Per Share, requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share (EPS) computations.
	The total number of potential additional dilutive options and warrants outstanding was 425,000 and 175,000 for the six and three months ended December 31, 2014 and 2013, respectively. In addition, the convertible notes convert at an exercise price of between $1.00 and $5.00 per share of common stock. The options, warrants and shares underlying the convertible note were considered for the dilutive calculation but in periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.
	The following table sets forth the computation of basic and diluted net income per share:
		For The Six Months ended						For The Three Months ended
		December 31,						December 31,
		2014			2013			2014			2013
	Net loss attributable to the common stockholders	$	(1,309,951	)	$	(1,580,432	)	$	(676,521	)	$	(854,785	)
	Basic weighted average outstanding shares of common stock		4,310,542			3,337,212			4,396,405			3,381,641
	Dilutive effect of options and warrants		-			-			-			-
	Diluted weighted average common stock and common stock equivalents		4,310,542			3,337,212			4,396,405			3,381,641
	Earnings (loss) per share:
	Basic and diluted	$	(0.30	)	$	(0.47	)	$	(0.15	)	$	(0.25	)

SUBSEQUENT_EVENTS

SUBSEQUENT EVENTS	6 Months Ended
	Dec. 31, 2014
Subsequent Events
Note 11 - SUBSEQUENT EVENTS	There have been no events which are required to be reported under this Note.

SUMMARY_OF_SIGNIFICANT_ACCOUNT1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Dec. 31, 2014
Summary Of Significant Accounting Policies Policies
Use of Estimates	The preparation of these financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the reported periods. Actual results may differ from those estimates and such differences may be material to the financial statements. The more significant estimates and assumptions by management include among others: useful lives and residual values of long-lived assets, the valuation of equity instruments and the valuation of warrants and options. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.
Principles of Consolidation	The accompanying consolidated financial statements include the accounts of Cerebain Biotech Corp. and its wholly-owned subsidiary, Cerebain Operating, Inc. (collectively referred to as the “Company”). There are no material intercompany transactions.
Revenue Recognition	The Company expects to recognize revenues in accordance with the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104 “Revenue Recognition”.
	Under SAB 104, four conditions must be met before revenue can be recognized: (i) there is persuasive evidence that an arrangement exists, (ii) delivery has occurred or service has been rendered, (iii) the price is fixed or determinable, and (iv) collection is reasonably assured.
Cash and Cash Equivalents	For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of six months or less to be cash equivalents. Accounts held at U.S. financial institutions are insured by the FDIC up to $250,000. Cash balances could exceed insured amounts at any given time, however, the Company has not experienced any such losses.
Advertising Costs	Advertising costs are recorded as general and administrative expenses when they are incurred. Advertising costs charged to operations were approximately $100,000 and $87,000 for the six months ended and $39,000 and $34,000 for the three months ended December 31, 2014 and 2013, respectively, and are included in marketing costs in the accompanying consolidated statements of operations.
Research and Development	The Company expenses the cost of research and development as incurred. Research and development costs charged to operations were approximately $244,000 and $177,000 for the six months ended and $122,000 and $89,000 for the three months ended December 31, 2014 and 2013, respectively, and are included in research and development costs in the accompanying consolidated statements of operations.
Concentrations, Risks, and Uncertainties	The Company is a startup company subject to the substantial business risks and uncertainties inherent to such an entity, including the potential risk of business failure.
Recent Accounting Pronouncements	The Company has evaluated new accounting pronouncements that have been issued and are not yet effective for the Company and determined that there are no such pronouncements expected to have an impact on the Company’s future financial statements.

COMMITMENTS_AND_CONTINGENCIES_

COMMITMENTS AND CONTINGENCIES (Tables)	6 Months Ended
	Dec. 31, 2014
Commitments And Contingencies
Schedule of Maturity of Prepaid Expense	As of December 31, 2014, future maturities of prepaid expenses on value of shares issued for consulting are as follows:
	Fiscal year ending June 30,
	2015	$	246,508
	2016	$	62,883
	Total	$	309,391

NOTES_PAYABLE_TO_STOCKHOLDERS_

NOTES PAYABLE TO STOCKHOLDERS (Tables)	6 Months Ended
	Dec. 31, 2014
Notes Payable To Stockholders Tables
Future maturities of notes payable	As of December 31, 2014, future maturities of notes payable are as follows:
	Fiscal year ending June 30,
	2015	$	47,500
	2016	$	1,680,000
	Total	$	1,727,500

OPTIONS_AND_WARRANTS_Tables

OPTIONS AND WARRANTS (Tables)	6 Months Ended					3 Months Ended
	Dec. 31, 2014					Sep. 30, 2014
Summary of the options outstanding	The following represents a summary of the Options outstanding at December 31, 2014 and changes during the periods then ended:
		Options		Options Average Exercise Price
	Outstanding June 30, 2013	$	150,000	$	5
	Granted		-		-
	Exercised		-		-
	Expired/Forfeited		-		-
	Outstanding, June 30, 2014	$	150,000	$	5
	Granted		250,000		1.24
	Exercised		-		-
	Expired/Forfeited		-		-
	Outstanding, December 31, 2014	$	400,000	$	2.65
	Exercisable at December 31, 2014	$	190,000	$	2.45
	Expected to be vested	$	400,000	$	2.65
	Compensation to be recognized	$	793,246	$	-
	Forfeiture Rate	$	-	$	-
Warrant [Member]
Summary of the options outstanding						The following represents a summary of the Warrants outstanding at December 31, 2014 and changes during the periods then ended:
							Warrants			Weighted Average Exercise Price
						Outstanding, June 30, 2013		6,250		$	3.2
						Granted		20,000			2
						Exercised		-			-
						Expired/Forfeited		(1,250	)		8
						Outstanding, June 30, 2014		25,000		$	2
						Granted		-			-
						Exercised		-			-
						Expired/Forfeited		-			-
						Outstanding, December 31, 2014		25,000			2
						Exercisable at December 31, 2014		25,000		$	2

EARNINGS_PER_SHARE_Tables

EARNINGS PER SHARE (Tables)	6 Months Ended
	Dec. 31, 2014
Loss per share:
Computation of basic and diluted net income per share	The following table sets forth the computation of basic and diluted net income per share:
		For The Six Months ended						For The Three Months ended
		December 31,						December 31,
		2014			2013			2014			2013
	Net loss attributable to the common stockholders	$	(1,309,951	)	$	(1,580,432	)	$	(676,521	)	$	(854,785	)
	Basic weighted average outstanding shares of common stock		4,310,542			3,337,212			4,396,405			3,381,641
	Dilutive effect of options and warrants		-			-			-			-
	Diluted weighted average common stock and common stock equivalents		4,310,542			3,337,212			4,396,405			3,381,641
	Earnings (loss) per share:
	Basic and diluted	$	(0.30	)	$	(0.47	)	$	(0.15	)	$	(0.25	)

BASIS_OF_PRESENTATION_Details_

BASIS OF PRESENTATION (Details Narrative) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Jun. 30, 2014
Basis Of Presentation Details Narrative
Accumulated deficit	($7,464,679)		($7,464,679)		($6,154,728)
Net loss	-676,521	-854,785	-1,309,951	-1,580,432
Net cash used in operating activities			($371,347)	($462,042)

SUMMARY_OF_SIGNIFICANT_ACCOUNT2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Summary Of Significant Accounting Policies Details Narrative
Advertising costs	$39,000	$34,000	$100,000	$87,000
Research and development costs	$121,875	$88,960	$243,750	$177,160

COMMITMENTS_AND_CONTINGENCIES_1

COMMITMENTS AND CONTINGENCIES (Details) (USD $)	Jun. 30, 2014
Commitments And Contingencies Details
2015	$246,508
2016	62,883
Total	$309,391

COMMITMENTS_AND_CONTINGENCIES_2

COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Prepaid expense unamortized	$122,000		$122,000
Recognized expenses	122,000		244,000
Employment Contracts [Member]
Recognized expenses	28,000
Consulting agreements [Member]
Prepaid expense unamortized	116,000		116,000
Recognized expenses	625,000	328,000	206,000	97,000
Service agreements [Member]
Prepaid expense unamortized	71,000		71,000
Recognized expenses	$0	$0	$52,000	$26,000

PATENT_RIGHTS_Details_Narrativ

PATENT RIGHTS (Details Narrative) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Jun. 30, 2014
Patent Rights Details Narrative
Paid legal fees	$11,000	$6,000	$11,000	$6,000
Accrued payable					$50,000

NOTES_PAYABLE_TO_STOCKHOLDERS_1

NOTES PAYABLE TO STOCKHOLDERS (Details) (USD $)	Dec. 31, 2014
Fiscal year ending June 30,
2015	$47,500
2016	1,680,000
Total	$1,727,500

NOTES_PAYABLE_TO_STOCKHOLDERS_2

NOTES PAYABLE TO STOCKHOLDERS (Details Narrative) (USD $)	Dec. 31, 2014	Jun. 30, 2014
Notes Payable To Stockholders Details Narrative
Related party notes payable	$113,000	$144,153
Accured intrest convertible note payables	$200,000

STOCK_TRANSACTIONS_Details_Nar

STOCK TRANSACTIONS (Details Narrative)	6 Months Ended
	Dec. 31, 2014
Stock Transactions Details Narrative
Common stock issued	120,000

OPTIONS_AND_WARRANTS_Details

OPTIONS AND WARRANTS (Details) (USD $)	6 Months Ended	12 Months Ended	3 Months Ended
	Dec. 31, 2014	Jun. 30, 2014	Sep. 30, 2014
Options and Warrants
Outstanding, beginning of year	150,000	150,000	150,000
Granted	250,000
Exercised
Expired/Forfeited
Outstanding, ending balance	400,000	150,000
Exercisable, ending balance	190,000
Expected to be vested	400,000
Compensation to be recognized	793,246
Forfeiture Rate
Options Average Exercise Price
Outstanding, beginning of year	$5	$5	$5
Granted	$1.24
Exercised
Expired/Forfeited
Outstanding, ending price	$2.65	$5
Exercisable, ending balance	$2.45
Expected to be vested	$2.65
Forfeiture Rate
Warrant [Member]
Options and Warrants
Outstanding, beginning of year	25,000	6,250	25,000
Granted		20,000
Exercised
Expired/Forfeited		-1,250
Outstanding, ending balance		25,000	25,000
Exercisable, ending balance			25,000
Options Average Exercise Price
Outstanding, beginning of year	$2	$3.20	$2
Granted		$2
Exercised
Expired/Forfeited		$8
Outstanding, ending price		$2	$2
Exercisable, ending balance			$2

OPTIONS_AND_WARRANTS_Details_N

OPTIONS AND WARRANTS (Details Narrative) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Employee Agreements [Member]
Common stock vested options	30,000		30,000
Recognized expense	$33,500	$0	$33,500	$0
Compensation expected to be recognized in future years	100,500		100,500
Employee Agreements One [Member]
Common stock vested options	60,000		60,000
Recognized expense	62,000	62,000	123,000	123,000
Compensation expected to be recognized in future years	616,000		616,000
Consulting agreements [Member]
Common stock vested options	100,000		100,000
Recognized expense	6,954	0	6,954	0
Compensation expected to be recognized in future years	$76,496		$76,496

EARNINGS_PER_SHARE_Details

EARNINGS PER SHARE (Details) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Earnings Per Share Details
Net loss attributable to the common stockholders	($676,521)	($854,785)	($1,309,951)	($1,580,432)
Basic weighted average outstanding shares of common stock	4,396,405	3,381,641	4,310,542	3,337,212
Dilutive effect of options and warrants
Diluted weighted average common stock and common stock equivalents	4,396,405	3,381,641	4,310,542	3,337,212
Earnings (loss) per share:
Basic and diluted	($0.15)	($0.25)	($0.30)	($0.47)

EARNINGS_PER_SHARE_Details_Nar

EARNINGS PER SHARE (Details Narrative) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Total dilutive warrants	175,000	175,000	425,000	425,000
Maximum [Member]
Exercise price	5		5
Minimum [Member]
Exercise price	1		1