Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2017 | May 10, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | CEREBAIN BIOTECH CORP. | |
Entity Central Index Key | 1,453,099 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
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 | 7,760,347 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 517 | $ 20,245 |
Prepaid expenses | 402,768 | 475,699 |
Total current assets | 403,285 | 495,944 |
Total assets | 403,285 | 495,944 |
Current liabilities: | ||
Accounts payable | 908,839 | 685,045 |
Related party payables | 329,316 | 230,685 |
Accrued payroll | 65,266 | |
Payroll taxes payable | 30,037 | |
Convertible notes to stockholders, current portion | 62,500 | 62,500 |
Related party notes payable | 114,000 | 114,000 |
Total current liabilities | 1,509,958 | 1,092,230 |
Long term liabilities: | ||
Convertible notes to stockholders, net of current portion and net of debt discount of approximately $18,034 and $9,534, respectively | 2,772,578 | 2,448,478 |
Total long term liabilities | 2,772,578 | 2,448,478 |
Total liabilities | 4,282,536 | 3,540,708 |
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; 7,710,347 and 7,116,347 shares issued and outstanding at March 31, 2017 and June 30, 2016, respectively) | 7,710 | 7,116 |
Additional paid in capital | 23,080,681 | 8,466,226 |
Accumulated deficit | (26,967,642) | (11,518,106) |
Total stockholders' deficit | (3,879,251) | (3,044,764) |
Total liabilities and stockholders' deficit | $ 403,285 | $ 495,944 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
Long term liabilities: | ||
Net of debt discount Non current | $ 18,034 | $ 9,534 |
Stockholders' deficit | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized shares | 1,000,000 | 1,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, Authorized shares | 249,000,000 | 249,000,000 |
Common stock, Issued shares | 7,710,347 | 7,116,347 |
Common stock, outstanding shares | 7,710,347 | 7,116,347 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Operating Expenses | ||||
Selling, general and administrative expenses | $ 439,052 | $ 397,465 | $ 1,267,759 | $ 1,123,910 |
Research and development costs | 58,902 | 190,369 | ||
Patent Royalty Expense | 25,000 | 12,500 | 75,000 | 137,500 |
Marketing expenses | 1,630 | 14,840 | 9,782 | 50,880 |
Total operating expenses | 524,584 | 424,805 | 1,542,910 | 1,312,290 |
Net operating loss | (524,584) | (424,805) | (1,542,910) | (1,312,290) |
Other (income) expense | ||||
Accretion of debt discount | 1,944 | 43,982 | 11,500 | 81,834 |
Loss from extinguishment of debt | 13,778,649 | 48,750 | ||
Financing costs | 28,125 | |||
Interest expense | 40,226 | 26,697 | 116,476 | 97,717 |
Total other expense, net | 42,170 | 70,679 | 13,906,625 | 256,426 |
Net loss | $ (566,754) | $ (495,484) | $ (15,449,535) | $ (1,568,716) |
Loss per share: | ||||
Basic and diluted loss per share | $ (0.07) | $ (0.08) | $ (2.08) | $ (0.28) |
Basic and diluted weighted average shares outstanding | 7,605,236 | 6,378,479 | 7,421,427 | 5,614,438 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (15,449,535) | $ (1,568,716) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Accretion of debt discount | 11,500 | 81,834 |
Loss from extinguishment of debt | 13,778,649 | 48,750 |
Stock based compensation | 263,792 | 245,475 |
Amortization of stock based prepaid consulting compensation | 578,511 | 162,583 |
Amortization of deferred financing costs | 28,125 | |
Correction of an error | 100,000 | |
Changes in operating assets and liabilities: | ||
Prepaid expenses | (46,372) | 20,000 |
Accounts payable | 253,829 | 532,331 |
Related party payables | 163,898 | (43,995) |
Net cash used in operating activities | (445,728) | (393,613) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 50,000 | |
Proceeds from excercise of warrants | 31,000 | |
Proceeds from related party notes | 1,000 | |
Proceeds from convertible notes | 345,000 | 402,900 |
Repayment of notes payable to shareholders | (8,000) | |
Net cash flows provided by financing activities: | 426,000 | 395,900 |
Net change in cash and cash equivalents | (19,728) | 2,287 |
Cash and cash equivalents- beginning of period | 20,245 | 486 |
Cash and cash equivalents- end of period | 517 | 2,773 |
Cash paid during the period for: | ||
Interest | ||
Income tax | ||
Supplemental disclosure on non-cash investing and financing activities: | ||
Debt discount associated with convertible notes payable - beneficial conversion feature | 4,500 | 197,360 |
Debt discount associated with convertible notes payable - warrant feature | 15,500 | |
Stock issued for prepaid services | 288,400 | 148,500 |
Warrants issued for prepaid services | 170,808 | |
Options issued for prepaid services | 54,000 | |
Stock issued for Financing Fee | 38,750 | |
Stock issued for satisfaction of accounts payable | 100,000 | |
Conversion of convertible notes payable into stock | 12,400 | |
Stock issued for satisfaction of accounts payable | 293,112 | |
Stock issued for satisfaction of related party payables | 245,000 | |
Reclassification of debt from shareholders to convertible debt | $ 10,000 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
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 Companys business revolves around the discovery of products for the treatment of Alzheimers 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 consolidated balance sheet at June 30, 2016 has been derived from audited statements and (b) unaudited interim condensed consolidated financial statements as of March 31, 2017 and for the three-month and nine-month periods ended March 31, 2017 and 2016 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, 2016 included on Form 10-K filed with the Securities and Exchange Commission on September 27, 2016. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
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 Going Concern The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of approximately $27,000,000 and $11,500,000 at March 31, 2017 and June 30, 2016, respectively, and had a net loss of approximately $15,500,000 and $1,600,000 for the nine-month periods ended March 31, 2017 and 2016, respectively, and net cash used in operating activities of approximately $446,000 and $394,000 for the nine-month periods ended March 31, 2017 and 2016, respectively, with no revenue earned since inception. These matters raise substantial doubt about our ability to continue as a going concern. While the Company is attempting to commence operations, and generate revenues, the Companys cash position may not be significant enough to support the Companys 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 Companys 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 ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | This summary of significant accounting policies of the Company is presented to assist in understanding the Companys condensed consolidated financial statements. The condensed consolidated financial statements and notes are representations of the Companys 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 condensed consolidated financial statements. Use of Estimates The preparation of these condensed consolidated 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 condensed consolidated 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 condensed consolidated 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 condensed 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. Reclassifications Certain reclassifications have been made to prior fiscal year amounts or balances to conform to the presentation adopted in the current fiscal year, which did not have any impact to consolidated net loss or stockholders deficit amounts previously reported. Advertising Costs Advertising costs are recorded as general and administrative expenses when they are incurred. Advertising costs charged to operations were approximately $1,600 and $15,000 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $10,000 and $51,000 for the nine-month periods ended March 31, 2017 and 2016, respectively. Research and Development The Company expenses the cost of research and development as incurred. Research and development costs charged to operations were approximately $59,000 and $0 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $190,000 and $0 for the nine-month periods ended March 31, 2017 and 2016, respectively, and are included in research and development costs in the accompanying condensed 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 Companys future financial statements. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 4 - COMMITMENTS AND CONTINGENCIES | Employment Agreements Eric Clemons On June 15, 2013, the Company entered into an employment agreement with Eric Clemons. Terms of the agreement included the following: · An annual salary of One Hundred Fifty-Six Thousand Dollars ($156,000), which has been paid or settled in stock in full. · Bonus of $40,000 upon the delivery to the Company of a prototype medical device from Sonos Models Inc., which has been paid in full. · Cash bonus 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. To date, this incentive has not earned or been paid. · Option to acquire up to 100,000 shares of our common stock at an exercise price of $5.00 per share subject to a vesting schedule. Fair Market Value of these options totaled approximately $822,000, and is recognized ratably over the vesting period in selling, general and administrative expense. 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 March 31, 2017, 80,000 options to purchase the Companys common stock have vested. The Company recognized selling, general and administrative expense of approximately $41,000 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $123,000 for the nine-month periods ended March 31, 2017 and 2016, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $41,000. On October 1, 2014, the Company entered into an addendum to the employment agreement. The addendum had no accounting impact on the prior agreement. Terms of the addendum include included the following: · Extension of employment until June 15, 2017. · Annual salary of One Hundred Ninety-Five Thousand Dollars ($195,000). · Option to acquire up to 100,000 shares of our common stock under the Companys 2014 Omnibus Stock Grant and Option Plan at an exercise price of $1.20 per share subject to a vesting schedule. Fair Market Value of these options totaled approximately $112,000, and is recognized ratably over the vesting period in selling, general and administrative expense. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 262%; risk-free interest rate of 1.69%; expected term of 5 years; and 0% dividend yield. As of March 31, 2017, 60,000 options to purchase the Companys common stock have vested. The Company recognized selling, general and administrative expense of approximately $5,500 and $4,500 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $16,000 and $13,000 for the nine-month periods ended March 31, 2017 and 2016, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $32,000. On March 1, 2015, the Company entered into an addendum to the employment agreement. The addendum had no accounting impact on the prior agreements. Terms of the addendum included a cash placement bonus equal to an amount up to 10% of the aggregate purchase price paid by each purchaser of the Companys Securities and Convertible Debt, where the purchaser of said Securities and Convertible Debt has been directly introduced to the Company by Mr. Clemons. For the three-month periods ended March 31, 2017 and 2016, a cash placement bonus was earned of approximately $0 and $20,000, respectively, and for the nine-month periods ended March 31, 2017 and 2016, a cash placement bonus was earned of approximately $27,500 and $20,000, respectively, which was recognized as a reduction of the proceeds from the sale of shares of common stock and debt issuances and recorded as an expense. On September 29, 2016, the Company issued Mr. Clemons an option to acquire up to 105,000 shares of our common stock under the Companys 2014 Omnibus Stock Grant and Option Plan at an exercise price of $0.75 per share subject to a vesting schedule. Fair Market Value of these options totaled approximately $78,000, and is recognized ratably over the vesting period in selling, general and administrative expense. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 206%; risk-free interest rate of 1.13%; expected term of 6 years; and 0% dividend yield. As of March 31, 2017, 21,000 options to purchase the Companys common stock have vested. The Company recognized selling, general and administrative expense of approximately $4,000 and $0 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $27,000 and $0 for the nine-month periods ended March 31, 2017 and 2016, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $51,000. Wesley Tate On June 15, 2013, the Company entered into an employment agreement with Wesley Tate. Terms of the agreement included the following: · Annual salary of One Hundred Five Thousand Dollars ($105,000), which has been paid or settled in stock in full. · Bonus of $20,000 upon the delivery to the Company of a prototype medical device form Sonos Models, Inc., which has been paid in full. · Option to acquire up to 50,000 shares of our common stock at an exercise price of $5.00 per share subject to a vesting schedule. Fair Market Value of these options totaled approximately $411,000, and is recognized ratably over the vesting period in selling, general and administrative expense. 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 March 31, 2017, 40,000 options to purchase the Companys common stock have vested. The Company recognized selling, general and administrative expense of approximately $21,000 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $62,000 for the nine-month periods ended March 31, 2017 and 2016, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $21,000. On April 1, 2014, the Company entered into an addendum to this agreement. The addendum had no accounting impact on the prior agreement. Terms of the addendum included 25,000 of the Companys common restricted shares representing a retention bonus as an incentive for him to remain in the employment of the Company for 12 months. The Company recognized a prepaid expense of approximately $37,500, which has been fully amortized to selling, general and administrative. On October 1, 2014, the Company entered into an addendum to the employment agreement. The addendum had no accounting impact on the prior agreements. Terms of the agreement included the following: · Extension of employment until June 15, 2017. · Annual salary of One Hundred Fifty-Six Thousand Dollars ($156,000) · Option to acquire up to 50,000 shares of our common stock under the Companys 2014 Omnibus Stock Grant and Option Plan at an exercise price of $1.20 per share subject to a vesting schedule. Fair Market Value of these options totaled approximately $56,000, and is recognized ratably over the vesting period in selling, general and administrative expense. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 262%; risk-free interest rate of 1.69%; expected term of 5 years; and 0% dividend yield. As of March 31, 2017, 30,000 options to purchase the Companys common stock have vested. The Company recognized selling, general and administrative expense of approximately $2,700 and $2,300 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $8,000 and $7,000 for the nine-month periods ended March 31, 2017 and 2016, respectively. The compensation expected to be recognized in future years is approximately $16,000. On October 1, 2015, the Company entered into a new employment agreement. The new contract had no accounting impact on the prior agreements. Terms of the agreement included the following: · Extension of employment until October 2018. · Annual salary of One Hundred Fifty-Six Thousand Dollars ($156,000) · Stock grant of 150,000 of the Companys common restricted shares for services provided to the Company. The Company recognized selling, general and administrative expense of approximately $40,000 for the year ended June 2016. On September 29, 2016, the Company issued Mr. Tate an option to acquire up to 105,000 shares of our common stock under the Companys 2014 Omnibus Stock Grant and Option Plan at an exercise price of $0.75 per share subject to a vesting schedule. Fair Market Value of these options totaled approximately $78,000, and is recognized ratably over the vesting period in selling, general and administrative expense. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 206%; risk-free interest rate of 1.13%; expected term of 6 years; and 0% dividend yield. As of March 31, 2017, 21,000 options to purchase the Companys common stock have vested. The Company recognized selling, general and administrative expense of approximately $4,000 and $0 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $27,000 and $0 for the nine-month periods ended March 31, 2017 and 2016, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $51,000. Commitments In September 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. In April 2014, the Company entered into an addendum to the agreement with Sonos, which included a commitment by the Company to pay Sonos up to One Million Dollars ($1,000,000) cash, excluding stock based compensation, for research and development costs. These costs will be recognized in research and development expense as costs are incurred. To date, Sonos has been issued 325,000 restricted shares of the Companys stock, 20,000 warrants to purchase the Companys stock and the Company has paid approximately $220,000, of which $65,000 has been incurred towards the Companys monetary commitment. Consulting Agreements Between December 2013 and March 2017, the Company entered into service and consulting agreements with various vendors 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, research and development, 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 approximate aggregate 1,760,000 shares of the Companys fully vested and non-forfeitable common stock. These contracts are for twelve to thirty-six months and may be renewed or extended for any period as may be agreed by the parties. As of March 31, 2017, the Company has extended some of the contracts for additional periods. 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 to thirty-six months, the Company recorded the original approximate $2,650,000 as the value of the shares issued to prepaid expense and is amortizing the expense associated with these issuances over a twelve to thirty-six-month period. For the three-month periods ended March 31, 2017 and 2016, the Company amortized from prepaid expenses to selling, general and administrative expenses approximately $192,000 and $34,000, respectively, and approximately $472,000 and $128,000 for the nine-month periods ended March 31, 2017 and 2016. The unamortized prepaid expenses of these contracts are approximately $215,000 and included in prepaid expenses on the condensed consolidated balance sheets at March 31, 2017. In January 2016, the Company entered into a consulting agreement with an individual to provide business consulting services for a period of thirty-six months. Compensation was issuance of 75,000 shares of the Companys stock (See note 7) and fully vested and non-forfeitable options to acquire up to 300,000 shares of our common stock, at an exercise price of $0.33 per share. Fair Market Value of these options totaled approximately $83,500, and is to be recognized ratably over the service period in selling, general and administrative expense. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 210%; risk-free interest rate of 1.07%; expected term of 3 years; and 0% dividend yield. For the three-month periods ended March 31, 2017 and 2016, the Company amortized from prepaid expenses to selling, general and administrative expenses approximately $7,000 and $0, respectively, and approximately $21,000 and $0 for the nine-month periods ended March 31, 2017 and 2016, respectively. The unamortized prepaid expense of this contract is approximately $56,000 and included in prepaid expenses on the consolidated balance sheets at March 31, 2017. In October 2016, the Company entered into a consulting agreement with an individual to provide business consulting services for a period of twelve months. Compensation was issuance of 300,000 shares of the Companys stock (See note 7) and fully vested and non-forfeitable warrants to acquire up to 300,000 shares of our common stock, at an exercise price of $0.40 per share. Fair Market Value of these warrants totaled approximately $171,000, and is to be recognized ratably over the service period in selling, general and administrative expense. The warrants were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 205%; risk-free interest rate of 0.63%; expected term of 1 year(s); and 0% dividend yield. For the three-month periods ended March 31, 2017 and 2016, the Company amortized from prepaid expenses to selling, general and administrative expenses approximately $43,000 and $0, respectively, and approximately $85,000 and $0 for the nine-month periods ended March 31, 2017 and 2016, respectively. The unamortized prepaid expense of this contract is approximately $85,000 and included in prepaid expenses on the consolidated balance sheets at March 31, 2017. As of March 31, 2017, future maturities of prepaid expenses on value of shares issued for consulting are as follows: Fiscal year ended June 30, 2017 $ 170,877 2018 160,284 2019 25,235 Total $ 356,396 Legal On July 21, 2016, the Company was sued in the United States District Court for the Eastern District of Pennsylvania ( Miriam Weber Miller v. Cerebain Biotech Corp. and Eric Clemons 1) The Company could pay Ms. Miller the total gross amount of one hundred twenty thousand dollars ($120,000) as follows: a) One payment of twenty thousand dollars ($20,000) within thirty (30) days after March 29, 2017; and b) Beginning within ninety (90) days after March 29, 2017, the Company would make monthly payments of fifteen thousand dollars ($15,000) to Ms. Millers representative until such time that Ms. Miller and her representative has received the gross amount of $120,000, OR 2) The Company could pay Ms. Miller the total gross amount of one hundred thousand dollars ($100,000) as follows: a) One payment of twenty thousand dollars ($20,000) within thirty (30) days after March 29, 2017. b) One payment of eighty thousand dollars ($80,000) within sixty (60) days after March 29, 2017, OR 3) The Company could pay Ms. Miller the total gross amount of one hundred ten thousand dollars ($110,000) as follows: a) One payment of twenty thousand dollars ($20,000) within thirty (30) days after March 29, 2017. b) One payment of fifteen thousand dollars ($15,000) within sixty (60) days after March 29, 2017. c) One payment of seventy-five thousand dollars ($75,000) within ninety (90) days after March 29, 2017. Upon all payments being made pursuant to the terms set forth in the agreement, Ms. Miller has agreed to knowingly and voluntarily release and discharge the Company of and from all claims, demands, liabilities, obligations, promises, controversies, compensation, wages, bonuses, commissions, damages, rights, actions and causes of action known and unknown, at law or in equity, which Ms. Miller has or may have against the Company as of the date of execution of the settlement agreement. The Company has recognized an accrual in Accounts Payable for payment of the agreed upon settlement, but no accrual has been made for additional legal contingencies in the consolidated financial statements as of March 31, 2017. In April 2017, the Company paid Ms. Miller twenty thousand dollars ($20,000) as agreed in the settlement agreement. |
PATENT RIGHTS
PATENT RIGHTS | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
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. To date, Dr. Saini has not participated in any sales of equity. 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 the fourth (June 2014), fifth (June 2015), and sixth (June 2016) 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 accrued the minimum patent royalty expense associated with the patent rights in accounts payable 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 $1,300 and $1,700 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $5,000 and $2,000 for the nine-month periods ended March 31, 2017 and 2016, respectively. The Company recognized a patent royalty expense of approximately $25,000 for the three-month period ended March 31, 2017 compared to $12,500 for the three-month period ended March 31, 2016, and approximately $75,000 for the nine-month period ended March 31, 2017 compared to $137,500 for the nine-month period ended March 31, 2016. The accrued payable of $225,000 pertaining to the patent royalty expense at March 31, 2017 is included in related party payables. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 6 - NOTES PAYABLE | Related Party Notes Payable Short Term Notes Payable March 31, 2017 June 30, 2016 Short term notes payable (A) $ 114,000 $ 114,000 Net total $ 114,000 $ 114,000 Related Party Notes Payable (A) In 2012, the Company issued a note payable to a related party. The note was scheduled to mature on December 31, 2013 and accrued interest at seven and one-half (7.5) percent per annum. In February 2016, the noteholder provided the Company with an additional $1,000. As of March 31, 2017, the outstanding principal balance was $114,000. The Company is currently in default and is in discussions with the noteholder to restructure the terms of the notes. Convertible Notes to Stockholders Convertible Notes Payable March 31, 2017 June 30, 2016 Convertible notes payable (A) $ 133,000 $ 125,400 Convertible note payable (B) 260,000 260,000 Convertible notes payable (C) 2,460,112 2,135,112 Subtotal 2,853,112 2,520,512 Debt discount (18,034 ) (9,534 ) Net total $ 2,835,078 $ 2,510,978 Convertible Notes Payable (A) Between September 2013 and March 2017, the Company entered into various unsecured convertible promissory notes with non-affiliate stockholders for principal amounts of approximately $7,500 to $30,000, totaling approximately $157,000, offset by the conversion of convertible notes payable to shares of the Companys common stock of approximately $24,000, netting a balance of approximately $133,000. Under the terms of these notes, maturity dates range from June 2015 and November 2019, interest rates range from 7.5% to 8.0% per annum, and are convertible into shares of our common stock at rates that range from $0.20 to $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. In addition, the Company granted to certain noteholders a cashless option to purchase one (1) share of the Companys common stock, $.001 par value, at the exercise price of $0.50 to $1.25 per share, for each share the noteholders are entitled pursuant to the promissory notes. The options are fully vested and shall expire from one to three years from date of execution. For the period ended March 31, 2017, the Company is in default approximately $62,000 on various notes. As a result, these notes are included in the current portion of convertible notes payable, and the Company is in discussions with the noteholders to restructure the terms of the notes. The Company determined that some of the notes had a beneficial conversion feature totaling approximately $38,000. The Company recognized an accretion of debt discount expense of approximately $2,000 and $0 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $11,500 and $3,000 for the nine-month periods ended March 31, 2017 and 2016, respectively. The accretion of debt discount expense to be recognized in future years is approximately $18,000. During the nine-month period ended March 31, 2017, convertible notes of approximately $12,400 have been converted to 62,000 shares of the Companys common stock. During the nine-month period ended March 31, 2017, the Company issued 62,000 shares of our common stock, pursuant to warrant agreements that were exercised, in exchange for $31,000, (See Note 8). Unsecured, Amended and Consolidated Convertible Note Payable (B) December 2014 Convertible Note In December 2014, the Company entered into an unsecured convertible promissory note with a non-affiliate stockholder for a principal amount of $200,000. The note payable matures in December 2016, accrued interest at 7.5% per annum, and convertible into shares of our common stock at a conversion rates of $1.00 per share, but only if such conversion would not cause the noteholder to own more than 9.9% of our outstanding common stock, and contains piggyback registration rights. The Company determined that the note had a beneficial conversion feature of approximately $90,000. December 2015 Convertible Note In December 2015, the Company entered into an unsecured amended and consolidated convertible promissory note with a non-affiliate stockholder for a principal amount of $260,000. In exchange, the Company extinguished a $10,000 short term note payable, the $200,000 convertible note payable issued in December 2014, and received cash of $50,000. The amended and consolidated note payable matures in October 2019, accrues interest at 7.5% per annum, and convertible into shares of our common stock at a conversion rates of $0.20 per share, but only if such conversion would not cause the noteholder to own more than 9.9% of our outstanding common stock, and contains piggyback registration rights. In addition, the Company granted to the noteholder a cashless warrant to purchase one (1) share of the Companys common stock, $.001 par value, at the exercise price of $0.50 per share, for each share the noteholder is entitled pursuant to the promissory note. The options are fully vested and shall expire three years from date of execution. The Company determined the estimated relative fair value discount of the warrants was approximately $128,000 which was valued using the Black-Scholes option pricing model with the following inputs: volatility of 240%; risk-free interest rate of 1.05%; expected term of 3 years; and 0% dividend yield. The Company determined that the note had a beneficial conversion feature of approximately $141,000. In connection with the $260,000 convertible note, the Company recognized a loss from extinguishment of debt of approximately $269,000 for the year ended June 30, 2016. In connection with the $200,000 convertible note, the Company recognized a loss from extinguishment of debt of approximately $50,000 for the year ended June 30, 2016. Unsecured, Amended and Consolidated Convertible Notes Payable (C) June 2015 Convertible Note In June 2015, the Company entered into an unsecured convertible promissory note with a non-affiliate stockholder for a principal amount of approximately $1,475,000. The note matured on June 9, 2017 and accrued interest at 7.5% per annum and is convertible into shares of our common stock at a conversion rate of $1.00 per share, but only if such conversion would not cause the noteholder to own more than 9.9% of our outstanding common stock, and contains piggyback registration rights. December 2015 Convertible Note In December 2015, the Company entered into an unsecured $112,000 promissory note with a stockholder. The note matured on March 31, 2016 and accrued no interest. In addition, the Company issued to the noteholder 125,000 shares of the Companys common stock. In connection with the issuance of the 125,000 shares of stock in December 2015, the Company recorded the approximate $39,000 value of the shares issued, included in loss on extinguishment. The Company used a recent sale of stock to determine the fair market value of the transaction. February 2016 Convertible Note In February 2016, the Company entered into an unsecured amended and consolidated convertible promissory note with a non-affiliate stockholder for a principal amount of approximately $2,100,000. In exchange, the Company modified the $1,475,000 convertible note payable issued in June 2015, the $112,000 note payable issued in December 2015, accounts payable related to accrued interest of approximately $293,000, and received cash of $200,000. The amended and consolidated note payable matures February 2018, accrues interest at 5% per annum, and is convertible into shares of our common stock at a conversion rate of $0.50 per share, but only if such conversion would not cause the noteholder to own more than 9.9% of our outstanding common stock, and contains piggyback registration rights. In connection with the $2,100,000 convertible note payable, the Company determined the embedded conversion feature does not meet the criteria in ASC 470-50-40-10 or 470-20-25, and the issuance of the convertible promissory note payable is considered a modification, and not an extinguishment that would require the recognition of a gain or loss. April 2016 Convertible Note In April 2016, the Company entered into an unsecured amended and consolidated convertible promissory note with a non-affiliate stockholder for a principal amount of approximately $2,130,000. In exchange, the Company modified the $2,080,112 convertible promissory note payable issued in February 2016 and received cash of $55,000. The amended and consolidated convertible note payable matures in February 2018, accrues interest at 5% per annum, and is convertible into shares of our common stock at a conversion rate of $0.50 per share, but only if such conversion would not cause the noteholder to own more than 9.9% of our outstanding common stock, and contains piggyback registration rights. In connection with the $2,130,000 convertible note payable, the Company determined the embedded conversion feature does not meet the criteria in ASC 470-50-40-10 or 470-20-25, and the issuance of the convertible promissory note payable is considered a modification, and not an extinguishment that would require the recognition of a gain or loss. August 2016 Convertible Note In August 2016, the Company entered into an unsecured amended and consolidated convertible promissory note with a non-affiliate stockholder for a principal amount of approximately $2,285,000. In exchange, the Company extinguished the $2,135,112 convertible promissory note payable issued in April 2016 and received cash of $150,000. The amended and consolidated convertible note payable matures in August 2018, accrues interest at 5% per annum, and is convertible into shares of our common stock at a conversion rate of $0.40 per share, but only if such conversion would not cause the noteholder to own more than 9.9% of our outstanding common stock, and contains piggyback registration rights. In connection with the $2,285,000 convertible note, the Company determined the embedded conversion feature does meet the criteria in ASC 470-50-40-10 or 470-20-25, and the issuance of the convertible promissory note payable is considered an extinguishment that would require the recognition of a gain or loss. The Company recognized a loss from extinguishment of debt of approximately $3.7 million for the nine-month period ended March 31, 2017 compared to $0 for the nine-month period ended March 31, 2016. October 2016 Convertible Note In October 2016, the Company entered into an unsecured amended and consolidated convertible promissory note with a non-affiliate stockholder for a principal amount of approximately $2,310,000. In exchange, the Company modified the $2,285,000 convertible promissory note payable issued in August 2016 and received cash of $25,000. The amended and consolidated convertible note payable matures in October 2018, accrues interest at 5% per annum, and is convertible into shares of our common stock at a conversion rate of $0.40 per share, but only if such conversion would not cause the noteholder to own more than 9.9% of our outstanding common stock, and contains piggyback registration rights. In connection with the $2,310,000 convertible note payable, the Company determined the embedded conversion feature does not meet the criteria in ASC 470-50-40-10 or 470-20-25, and the issuance of the convertible promissory note payable is considered a modification, and not an extinguishment that would require the recognition of a gain or loss. November 2016 Convertible Note In November 2016, the Company entered into an unsecured amended and consolidated convertible promissory note with a non-affiliate stockholder for a principal amount of approximately $2,410,000. In exchange, the Company extinguished the $2,310,112 convertible promissory note payable issued in October 2016 and received cash of $100,000. The amended and consolidated convertible note payable matures in November 2018, accrues interest at 5% per annum, and is convertible into shares of our common stock at a conversion rate of $0.15 per share, but only if such conversion would not cause the noteholder to own more than 9.9% of our outstanding common stock, and contains piggyback registration rights. In connection with the $2,410,000 convertible note, the Company determined the embedded conversion feature does meet the criteria in ASC 470-50-40-10 or 470-20-25, and the issuance of the convertible promissory note payable is considered an extinguishment that would require the recognition of a gain or loss. The Company recognized a loss from extinguishment of debt of approximately $10.1 million for the nine-month period ended March 31, 2017 compared to $0 for the nine-month period ended March 31, 2016. January 2017 Convertible Note In January 2017, the Company entered into an unsecured amended and consolidated convertible promissory note with a non-affiliate stockholder for a principal amount of approximately $2,460,000. In exchange, the Company modified the $2,410,112 convertible promissory note payable issued in November 2016 and received cash of $50,000. The amended and consolidated convertible note payable matures in January 2019, accrues interest at 5% per annum, and is convertible into shares of our common stock at a conversion rate of $0.15 per share, but only if such conversion would not cause the noteholder to own more than 9.9% of our outstanding common stock, and contains piggyback registration rights. In connection with the $2,460,000 convertible note payable, the Company determined the embedded conversion feature does not meet the criteria in ASC 470-50-40-10 or 470-20-25, and the issuance of the convertible promissory note payable is considered a modification, and not an extinguishment that would require the recognition of a gain or loss. The Company recognized interest expense on all notes payable to stockholders of approximately $40,000 and $27,000 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $116,000 and $98,000 for the nine-month periods ended March 31, 2017 and 2016, respectively. Accrued interest on all notes payable to stockholders at March 31, 2017 and 2016 totaled approximately $219,000 and $69,000, respectively, and is included in accounts payables. As of March 31, 2017, future maturities of convertible notes payable are as follows: Fiscal years ending June 30, 2017 $ 176,500 2018 52,500 2019 2,720,112 2020 18,000 Total outstanding notes 2,967,112 Debt Discount (18,034 ) Net Convertible Notes Payable $ 2,949,078 |
STOCK TRANSACTIONS
STOCK TRANSACTIONS | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 7 - STOCK TRANSACTIONS | For the nine-month period ended March 31, 2017, the Company entered into various stock purchase agreements with a third parties between July 2016 and March of 2017, under which the Company issued 102,000 shares of its common stock, in exchange for $81,000. The aggregate value of these shares was $81,000 as the price was between $0.50 and $1.25 per share. The stock purchase agreements include piggyback registration rights. For the nine-month period ended March 31, 2017, the Company issued 62,000 shares of its common stock to an individual for conversion of notes payable. The aggregate value of these shares was approximately $12,400 as the conversion price was $0.20 per share. For the nine-month period ended March 31, 2017, the Company issued 430,000 fully vested, nonforfeitable shares of common stock to various individuals as payment for consulting services per contracts dated between April 2016 and March 2017 (See Note 4). The aggregate Fair Market Value of these shares was approximately $288,000 as the fair market value of the stock was between $0.50 and $0.75 per share. The Company used recent sales of stock to determine the fair market value of these transactions. |
OPTIONS AND WARRANTS
OPTIONS AND WARRANTS | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 8 - OPTIONS AND WARRANTS | Options For the nine-month period ended March 31, 2017, the Company had 910,000 options outstanding at a weighted average exercise price of $1.45, with 652,000 options exercisable. For the three-month periods ended March 31, 2017 and 2016, the Company recognized an expense of approximately $85,000 and $68,000, respectively, and approximately $285,000 and $240,000 for the nine-month periods ended March 31, 2017 and 2016, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $266,000. On September 29, 2016, the Company issued Eric Clemons and Wesley Tate options to acquire up to a total of 210,000 Shares of our Common Stock under the Companys 2014 Omnibus Stock Grant and Option Plan at an exercise price of $0.75 per share subject to a vesting schedule. Fair value of these options totaled approximately $156,000, and is recognized ratably over the vesting period in selling, general and administrative expense. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 206%; risk-free interest rate of 1.13%; expected term of 6 years; and 0% dividend yield. As of March 31, 2017, 42,000 options to purchase the Companys common stock have vested. The Company recognized selling, general and administrative expense of approximately $7,800 and $0 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $55,000 and $0 for the nine-month periods ended March 31, 2017 and 2016, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $101,000. Warrants For the nine-month period ended March 31, 2017, the Company had approximately 1,700,000 warrants outstanding at an average exercise price of $0.49. The Company recognized the issuance of approximately 400,000 warrants, offset by the exercise of 62,000 warrants and the expiration of 115,000 warrants which is included in the approximate 1,700,000 warrants outstanding for the nine-month period ended March 31, 2017. For the three-month period ended March 31, 2017 and 2016, the Company recognized an accretion of debt discount related to warrants expense of approximately $1,300 and $0, respectively, and approximately $2,800 and $0 for the nine-month period ended March 31, 2017 and 2016, respectively. The approximate expense expected to be recognized in future years is $13,000. In July 2016, the Company entered into a $10,000 unsecured convertible promissory note with a non-affiliate stockholder. In association with this note, the Company granted the noteholder a cashless warrant to purchase one (1) share of the Companys common stock, $.001 par value, at the exercise price of $0.50 per share, for each share the holder is entitled pursuant to the promissory note, totaling 50,000 shares. Relative fair value of the warrants totaled approximately $8,000, and is to be recognized ratably over the note period in interest expense. They were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 211%; risk-free interest rate of 0.81%; expected term of 3 years; and 0% dividend yield. In November 2016, the Company entered into a $10,000 unsecured convertible promissory note with a non-affiliate stockholder. In association with this note, the Company granted the noteholder a cashless warrant to purchase one (1) share of the Companys common stock, $0.001 par value, at the exercise price of $0.50 per share, for each share the holder is entitled pursuant to the promissory note, totaling 50,000 shares. Relative fair value of the warrants totaled approximately $7,500, and is to be recognized ratably over the note period in interest expense. They were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 199.7%; risk-free interest rate of 1.28%; expected term of 3 years; and 0% dividend yield. In October 2016, the Company entered into a consulting agreement with an individual to provide business consulting services for a period of twelve months. Compensation was the issuance of 300,000 shares of the Companys common stock (See note 4 and 7) and fully vested and non-forfeitable warrants to acquire up to 300,000 shares of our common stock, at an exercise price of $0.40 per share. Fair value of these warrants totaled approximately $171,000, and is to be recognized ratably over the service period in selling, general and administrative expense. The warrants were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 205%; risk-free interest rate of 0.63%; expected term of 1 year(s); and 0% dividend yield. For the three-month periods ended March 31, 2017 and 2016, the Company amortized from prepaid expenses to selling, general and administrative expenses approximately $43,000 and $0, respectively, and approximately $85,000 and $0 for the nine-month periods ended March 31, 2017 and 2016, respectively. The unamortized prepaid expense of this contract is approximately $85,000 and included in prepaid expenses on the consolidated balance sheets at March 31, 2017. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 9 - RELATED PARTY TRANSACTIONS | On September 29, 2016, the Company issued Eric Clemons and Wesley Tate options to acquire up to a total of 210,000 shares of our common stock under the Companys 2014 Omnibus Stock Grant and Option Plan at an exercise price of $0.75 per share subject to a vesting schedule. Fair value of these options totaled approximately $156,000, and is recognized ratably over the vesting period in selling, general and administrative expense. The options were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 206%; risk-free interest rate of 1.13%; expected term of 6 years; and 0% dividend yield. As of March 31, 2017, 42,000 options to purchase the Companys common stock have vested. The Company recognized selling, general and administrative expense of approximately $7,800 and $0 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $55,000 and $0 for the nine-month periods ended March 31, 2017 and 2016, respectively. The compensation expected to be recognized in selling, general and administrative expense in future years is approximately $101,000. On March 1, 2015, the Company entered into an addendum to the employment agreement related to Mr. Clemons. The addendum had no accounting impact on the prior agreements. Terms of the addendum included a cash placement bonus equal to an amount up to 10% of the aggregate purchase price paid by each purchaser of the Companys Securities and Convertible Debt, where the purchaser of said Securities and Convertible Debt has been directly introduced to the Company by Mr. Clemons. For the three-month periods ended March 31, 2017 and 2016, a cash placement bonus was earned of approximately $0 and $20,000, respectively, and for the nine-month periods ended March 31, 2017 and 2016, a cash placement bonus was earned of approximately $27,500 and $20,000, respectively, which was recognized as a reduction of the proceeds from the sale of shares of common stock and debt issuances and recorded as an expense. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 10 - EARNINGS PER SHARE | FASB ASC Topic 260, Earnings Per Share The total number of potential additional dilutive options and warrants outstanding was approximately 2.6 million and 2.2 million for the nine-month periods ended March 31, 2017 and 2016, respectively. In addition, the convertible notes convert at an exercise price of between $0.15 and $5.00 per share of common stock representing approximately 17.9 million shares. 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 Nine Months ended March 31, For The Three Months ended March 31, 2017 2016 2017 2016 Net loss attributable to the common stockholders $ (15,449,535 ) (1,568,716 ) $ (566,754 ) $ (495,484 ) Basic weighted average outstanding shares of common stock 7,421,427 5,614,438 7,605,236 6,378,479 Dilutive effect of options and warrants - - - - Diluted weighted average common stock and common stock equivalents 7,421,427 5,614,438 7,605,236 6,378,479 Earnings (loss) per share: Basic and diluted $ (2.08 ) (0.28 ) $ (0.07 ) $ (0.08 ) |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 11- INCOME TAXES | The provision (benefit) for income taxes for the periods ended March 31, 2017 and June 30, 2016, assumes a 34% effective tax rate for federal income taxes and 1.5% for state income taxes: March 31, 2017 June 30, 2016 Current tax provision: Federal Taxable income - federal $ 34.0 % $ 34.0 % State Taxable income - state $ 1.5 % $ 1.5 % Total current tax provision $ 35.5 % $ 35.5 % Deferred tax provision: Federal and State Total deferred tax provision $ -- $ -- The Company had deferred income tax assets as of March 31, 2017 and June 30, 2016 are as follows: March 31, 2017 June 30, 2016 Loss carryforwards $ 27,000,000 $ 11,500,000 Less valuation allowance (27,000,000 ) (11,500,000 ) Total net deferred tax assets $ -- $ -- The Company provided a valuation allowance equal to the deferred income tax assets for the periods ended March 31, 2017 and June 30, 2016 respectively, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards. At March 31, 2017, the Company had approximately $27,000,000 in Federal and State tax loss carryforwards that can be utilized in future periods to reduce taxable income, and begin to expire in 2030. Pursuant to Internal Revenue Code Section 382, the future utilization of our net operating loss carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that may have occurred previously or that could occur in the future. The Company did not identify any material uncertain tax positions on tax returns that will be filed. The Company has not filed any of its income tax returns. The fiscal years ended June 30, 2010 thru 2016 are open for examination. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 12 - SUBSEQUENT EVENTS | In April 2017, the Company entered into an unsecured $50,000 promissory note with a stockholder. The note matures on June 30, 2017 and accrues no interest. In addition, the Company issued to the noteholder 50,000 shares of the Companys common stock. In April 2017, the Company entered into an unsecured $100,000 promissory note with a stockholder. The note matures on June 30, 2017 and accrues no interest. |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Mar. 31, 2017 | |
Summary Of Significant Accounting Policies Policies | |
Use of Estimates | The preparation of these condensed consolidated 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 condensed consolidated 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 condensed consolidated 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 condensed 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. |
Reclassifications | Certain reclassifications have been made to prior fiscal year amounts or balances to conform to the presentation adopted in the current fiscal year, which did not have any impact to consolidated net loss or stockholders deficit amounts previously reported. |
Advertising Costs | Advertising costs are recorded as general and administrative expenses when they are incurred. Advertising costs charged to operations were approximately $1,600 and $15,000 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $10,000 and $51,000 for the nine-month periods ended March 31, 2017 and 2016, respectively. |
Research and Development | The Company expenses the cost of research and development as incurred. Research and development costs charged to operations were approximately $59,000 and $0 for the three-month periods ended March 31, 2017 and 2016, respectively, and approximately $190,000 and $0 for the nine-month periods ended March 31, 2017 and 2016, respectively, and are included in research and development costs in the accompanying condensed 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 Companys future financial statements. |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Commitments And Contingencies | |
Schedule of Maturity of Prepaid Expense | Fiscal year ended June 30, 2017 $ 170,877 2018 160,284 2019 25,235 Total $ 356,396 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Future maturities of convertible notes payable | Fiscal years ending June 30, 2017 $ 176,500 2018 52,500 2019 2,720,112 2020 18,000 Total outstanding notes 2,967,112 Debt Discount (18,034 ) Net Convertible Notes Payable $ 2,949,078 |
Short Term Note Payable [Member] | |
Summary of note payable | Short Term Notes Payable March 31, 2017 June 30, 2016 Short term notes payable (A) $ 114,000 $ 114,000 Net total $ 114,000 $ 114,000 |
Long Term Note Payable [Member] | |
Summary of note payable | Convertible Notes Payable March 31, 2017 June 30, 2016 Convertible notes payable (A) $ 133,000 $ 125,400 Convertible note payable (B) 260,000 260,000 Convertible notes payable (C) 2,460,112 2,135,112 Subtotal 2,853,112 2,520,512 Debt discount (18,034 ) (9,534 ) Net total $ 2,835,078 $ 2,510,978 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Loss per share: | |
Computation of basic and diluted net income per share | For The Nine Months ended March 31, For The Three Months ended March 31, 2017 2016 2017 2016 Net loss attributable to the common stockholders $ (15,449,535 ) (1,568,716 ) $ (566,754 ) $ (495,484 ) Basic weighted average outstanding shares of common stock 7,421,427 5,614,438 7,605,236 6,378,479 Dilutive effect of options and warrants - - - - Diluted weighted average common stock and common stock equivalents 7,421,427 5,614,438 7,605,236 6,378,479 Earnings (loss) per share: Basic and diluted $ (2.08 ) (0.28 ) $ (0.07 ) $ (0.08 ) |
INCOME TAXES (Table)
INCOME TAXES (Table) | 9 Months Ended |
Mar. 31, 2017 | |
Income Taxes Table | |
Summary of provision (benefit) for income taxes | March 31, 2017 June 30, 2016 Current tax provision: Federal Taxable income - federal $ 34.0 % $ 34.0 % State Taxable income - state $ 1.5 % $ 1.5 % Total current tax provision $ 35.5 % $ 35.5 % Deferred tax provision: Federal and State Total deferred tax provision $ -- $ -- |
Deferred income tax assets | March 31, 2017 June 30, 2016 Loss carryforwards $ 27,000,000 $ 11,500,000 Less valuation allowance (27,000,000 ) (11,500,000 ) Total net deferred tax assets $ -- $ -- |
ORGANIZATION AND PRINCIPAL AC23
ORGANIZATION AND PRINCIPAL ACTIVITIES (Details Narrative) | 9 Months Ended |
Mar. 31, 2017 | |
Organization And Principal Activities Details Narrative | |
State of incorporation | Nevada |
Date of incorporation | Dec. 18, 2007 |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Jun. 30, 2016 | |
Basis Of Presentation Details Narrative | |||||
Accumulated deficit | $ (26,967,642) | $ (26,967,642) | $ (11,518,106) | ||
Net loss | $ (566,754) | $ (495,484) | (15,449,535) | $ (1,568,716) | |
Net cash used in operating activities | $ (445,728) | $ (393,613) |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Summary Of Significant Accounting Policies Details Narrative | ||||
Research and development costs | $ 58,902 | $ 190,369 | ||
Advertising costs | $ 1,600 | $ 15,000 | $ 10,000 | $ 51,000 |
COMMITMENTS AND CONTINGENCIES26
COMMITMENTS AND CONTINGENCIES (Details) | Mar. 31, 2017USD ($) |
Commitments And Contingencies Details | |
2,017 | $ 170,877 |
2,018 | 160,284 |
2,019 | 25,235 |
Total | $ 356,396 |
COMMITMENTS AND CONTINGENCIES27
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Jun. 30, 2016 | |
Research and development costs | $ 58,902 | $ 190,369 | |||
Common stock warrants | 2,600,000 | 2,200,000 | |||
Accounts payable | 908,839 | $ 908,839 | $ 685,045 | ||
Prepaid expense | $ 402,768 | 402,768 | $ 475,699 | ||
Employee Agreement with Eric Clemons [Member] | |||||
Annual salary | $ 156,000 | ||||
Common stock shares option | 100,000 | ||||
Stock options to purchase vested | 80,000 | 80,000 | |||
Eexercise price | $ 5 | $ 5 | |||
Fair market value option total | $ 822,000 | ||||
Fair Value Volatility rate | 100.00% | ||||
Fair Value Risk-free interest rate | 1.04% | ||||
Fair Value Expected term | 5 years | ||||
Fair Value Dividend yield | 0.00% | ||||
Recognized selling, general and administrative expense | $ 41,000 | 41,000 | $ 123,000 | $ 123,000 | |
Compensation expected to be recognized in future cost | $ 41,000 | 41,000 | |||
Cash placement bonus | $ 40,000 | ||||
Employee Agreement with Eric Clemons [Member] | On September 29, 2016 [Member] | |||||
Common stock shares option | 105,000 | ||||
Stock options to purchase vested | 21,000 | 21,000 | |||
Eexercise price | $ 0.75 | $ 0.75 | |||
Fair market value option total | $ 78,000 | ||||
Fair Value Volatility rate | 206.00% | ||||
Fair Value Risk-free interest rate | 1.13% | ||||
Fair Value Expected term | 6 years | ||||
Fair Value Dividend yield | 0.00% | ||||
Recognized selling, general and administrative expense | $ 4,000 | 0 | $ 27,000 | 0 | |
Compensation expected to be recognized in future cost | 51,000 | 51,000 | |||
Employee Agreement with Eric Clemons [Member] | On March 1, 2015 [Member] | |||||
Cash placement bonus | $ 0 | 20,000 | $ 27,500 | 20,000 | |
Aggregate purchase price | 10.00% | ||||
Employee Agreement with Eric Clemons [Member] | Lehman Formula First [Member] | |||||
Cash placement bonus | $ 1,000,000 | ||||
Aggregate purchase price | 5.00% | ||||
Employee Agreement with Eric Clemons [Member] | Lehman Formula Second [Member] | |||||
Cash placement bonus | $ 1,000,000 | ||||
Aggregate purchase price | 4.00% | ||||
Employee Agreement with Eric Clemons [Member] | Lehman Formula Third [Member] | |||||
Cash placement bonus | $ 1,000,000 | ||||
Aggregate purchase price | 3.00% | ||||
Employee Agreement with Eric Clemons [Member] | Lehman Formula Fourth [Member] | |||||
Cash placement bonus | $ 1,000,000 | ||||
Aggregate purchase price | 2.00% | ||||
Employee Agreement with Eric Clemons [Member] | Lehman Formula Thereafter [Member] | |||||
Aggregate purchase price | 1.00% | ||||
Employee Agreement with Wesley Tate [Member] | |||||
Annual salary | $ 105,000 | ||||
Common stock shares option | 50,000 | ||||
Stock options to purchase vested | 40,000 | 40,000 | |||
Eexercise price | $ 5 | $ 5 | |||
Fair market value option total | $ 411,000 | ||||
Fair Value Volatility rate | 100.00% | ||||
Fair Value Risk-free interest rate | 1.04% | ||||
Fair Value Expected term | 5 years | ||||
Fair Value Dividend yield | 0.00% | ||||
Recognized selling, general and administrative expense | $ 21,000 | 21,000 | $ 62,000 | 62,000 | |
Compensation expected to be recognized in future cost | $ 21,000 | 21,000 | |||
Cash placement bonus | 20,000 | ||||
Omnibus Stock Grant and Option Plan [Member] | Employee Agreement with Eric Clemons [Member] | |||||
Annual salary | $ 195,000 | ||||
Common stock shares option | 100,000 | ||||
Stock options to purchase vested | 60,000 | 60,000 | |||
Eexercise price | $ 1.20 | $ 1.20 | |||
Fair market value option total | $ 112,000 | ||||
Fair Value Volatility rate | 262.00% | ||||
Fair Value Risk-free interest rate | 1.69% | ||||
Fair Value Expected term | 5 years | ||||
Fair Value Dividend yield | 0.00% | ||||
Recognized selling, general and administrative expense | $ 5,500 | 4,500 | $ 16,000 | 13,000 | |
Compensation expected to be recognized in future cost | 32,000 | $ 32,000 | |||
On April 1, 2014 [Member] | Employee Agreement with Wesley Tate [Member] | |||||
Common stock shares option | 25,000 | ||||
Fair Value Expected term | 12 months | ||||
Prepaid expense unamortized | $ 37,500 | $ 37,500 | |||
On October 1, 2014 [Member] | Employee Agreement with Wesley Tate [Member] | |||||
Annual salary | $ 156,000 | ||||
Common stock shares option | 50,000 | ||||
Stock options to purchase vested | 30,000 | 30,000 | |||
Eexercise price | $ 1.20 | $ 1.20 | |||
Fair market value option total | $ 56,000 | ||||
Fair Value Volatility rate | 262.00% | ||||
Fair Value Risk-free interest rate | 1.69% | ||||
Fair Value Expected term | 5 years | ||||
Fair Value Dividend yield | 0.00% | ||||
Recognized selling, general and administrative expense | $ 2,700 | 2,300 | $ 8,000 | 7,000 | |
Compensation expected to be recognized in future cost | $ 16,000 | 16,000 | |||
On October 1, 2015 [Member] | Employee Agreement with Wesley Tate [Member] | |||||
Annual salary | $ 156,000 | ||||
Common stock shares option | 150,000 | ||||
Recognized selling, general and administrative expense | $ 40,000 | ||||
On September 29, 2016 [Member] | Employee Agreement with Wesley Tate [Member] | |||||
Common stock shares option | 105,000 | ||||
Stock options to purchase vested | 21,000 | 21,000 | |||
Eexercise price | $ 0.75 | $ 0.75 | |||
Fair market value option total | $ 78,000 | ||||
Fair Value Volatility rate | 206.00% | ||||
Fair Value Risk-free interest rate | 1.13% | ||||
Fair Value Expected term | 6 years | ||||
Fair Value Dividend yield | 0.00% | ||||
Recognized selling, general and administrative expense | $ 4,000 | 0 | $ 27,000 | 0 | |
Compensation expected to be recognized in future cost | 51,000 | 51,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller Two [Member] | |||||
Breach of contract damages payable | 100,000 | 100,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller Two [Member] | Transaction One [Member] | |||||
Monthly payments | 20,000 | 20,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller Two [Member] | Transaction Two [Member] | |||||
Monthly payments | 80,000 | 80,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller Three [Member] | |||||
Breach of contract damages payable | 110,000 | 110,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller Three [Member] | Transaction One [Member] | |||||
Monthly payments | 20,000 | 20,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller Three [Member] | Transaction Two [Member] | |||||
Monthly payments | 15,000 | 15,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller Three [Member] | Transaction Three [Member] | |||||
Monthly payments | 75,000 | 75,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller One [Member] | |||||
Breach of contract damages payable | 120,000 | 120,000 | |||
Monthly payments | 15,000 | 15,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller [Member] | |||||
Accounts payable | 20,000 | 20,000 | |||
Breach of contract damages | 400,000 | 400,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller [Member] | Minimum [Member] | |||||
Breach of contract damages payable | 100,000 | 100,000 | |||
Legal [Member] | July 2016 [Member] | Miriam Weber Miller [Member] | Maximum [Member] | |||||
Breach of contract damages payable | 120,000 | $ 120,000 | |||
Commitments [Member] | September 2012 [Member] | |||||
Common stock shares option | 325,000 | ||||
Research and development costs | $ 1,000,000 | ||||
Common stock warrants | 20,000 | ||||
Company paid approximately amount | $ 220,000 | ||||
Incurred balance | $ 65,000 | ||||
Consulting Agreements [Member] | December 2013 and March 2017 [Member] | |||||
Common stock shares option | 1,760,000 | ||||
Recognized selling, general and administrative expense | 192,000 | 34,000 | $ 472,000 | 128,000 | |
Prepaid expense unamortized | 215,000 | 215,000 | |||
Accounts payable | 30,000 | 30,000 | |||
Prepaid expense | $ 2,650,000 | $ 2,650,000 | |||
Consulting Agreements [Member] | January 2016 [Member] | |||||
Common stock shares option | 300,000 | ||||
Eexercise price | $ 0.33 | $ 0.33 | |||
Fair market value option total | $ 83,500 | ||||
Fair Value Volatility rate | 210.00% | ||||
Fair Value Risk-free interest rate | 1.07% | ||||
Fair Value Expected term | 3 years | ||||
Fair Value Dividend yield | 0.00% | ||||
Recognized selling, general and administrative expense | $ 7,000 | 0 | $ 21,000 | 0 | |
Prepaid expense unamortized | $ 56,000 | $ 56,000 | |||
Compensation issuance shares | 75,000 | 75,000 | |||
Consulting Agreements [Member] | October 2016 [Member] | |||||
Common stock shares option | 300,000 | ||||
Eexercise price | $ 0.40 | $ 0.40 | |||
Fair market value option total | $ 171,000 | ||||
Fair Value Volatility rate | 205.00% | ||||
Fair Value Risk-free interest rate | 0.63% | ||||
Fair Value Expected term | 1 year | ||||
Fair Value Dividend yield | 0.00% | ||||
Recognized selling, general and administrative expense | $ 43,000 | $ 0 | $ 85,000 | $ 0 | |
Prepaid expense unamortized | $ 85,000 | $ 85,000 | |||
Compensation issuance shares | 300,000 | 300,000 |
PATENT RIGHTS (Details Narrativ
PATENT RIGHTS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Jun. 10, 2010 | |
Legal fees | $ 1,300 | $ 1,700 | $ 5,000 | $ 2,000 | |
Patent royalty expense | 25,000 | $ 12,500 | 75,000 | $ 137,500 | |
Accrued payable | 225,000 | 225,000 | |||
2,014 | 50,000 | 50,000 | |||
2,015 | 50,000 | 50,000 | |||
2,016 | 50,000 | 50,000 | |||
Thereafter | $ 100,000 | $ 100,000 | |||
Estimated useful life of patent | 20 years | ||||
Royalty payment percentage | 6.00% | 6.00% | |||
Dr. Saini [Member] | |||||
Patent license agreement fees | $ 50,000 | ||||
Stock issued | 825,000 | ||||
Market value on share issued | $ 6,600 | ||||
Equity participation percentage | 10.00% |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
Short Term Notes Payable | $ 114,000 | $ 114,000 |
Short term notes payable [Member] | ||
Short Term Notes Payable | $ 114,000 | $ 114,000 |
NOTES PAYABLE (Details 1)
NOTES PAYABLE (Details 1) - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
Convertible Notes Payable | $ 2,853,112 | $ 2,520,512 |
Debt discount | (18,034) | (9,534) |
Net total | 2,835,078 | 2,510,978 |
Convertible Notes Payable (A) [Member] | ||
Convertible Notes Payable | 133,000 | 125,400 |
Convertible Notes Payable (B) [Member] | ||
Convertible Notes Payable | 260,000 | 260,000 |
Convertible Note Payable Two [Member] | ||
Convertible Notes Payable | $ 2,460,112 | $ 2,135,112 |
NOTES PAYABLE (Details 2)
NOTES PAYABLE (Details 2) - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
Fiscal year ending June 30, | ||
2,017 | $ 176,500 | |
2,018 | 52,500 | |
2,019 | 2,672,112 | |
2,020 | 18,000 | |
Total outstanding notes | 2,967,112 | |
Debt discount | (18,034) | $ (9,534) |
Net Convertible Notes Payable | $ 2,949,078 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Jun. 30, 2016 | Feb. 28, 2016 | Dec. 31, 2013 | |
Convertible Notes Payable | $ 2,853,112 | $ 2,853,112 | $ 2,520,512 | |||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Convertible notes approximately | $ 12,400 | |||||||
Beneficial conversion amount | 4,500 | 197,360 | ||||||
Accretion of debt discount expense | $ 1,944 | $ 43,982 | 11,500 | 81,834 | ||||
Related Party Notes Payable [Member] | ||||||||
Accrued interest percentage | 7.50% | |||||||
Note holder provided additional amount | $ 1,000 | |||||||
Outstanding balance on related party | 114,000 | 114,000 | ||||||
Minimum [Member] | Convertible note payable [Member] | ||||||||
Unsecured promissory note | $ 7,500 | $ 7,500 | ||||||
Common stock rate, per share | $ 0.20 | $ 0.20 | ||||||
Excercise price | $ 0.50 | $ 0.50 | ||||||
Maximum [Member] | Convertible note payable [Member] | ||||||||
Unsecured promissory note | $ 30,000 | $ 30,000 | ||||||
Common stock rate, per share | $ 5 | $ 5 | ||||||
Excercise price | $ 1.25 | $ 1.25 | ||||||
November 2016 Convertible Note [Member] | ||||||||
Accrued interest percentage | 5.00% | 5.00% | ||||||
Unsecured promissory note | $ 2,410,000 | $ 2,410,000 | ||||||
Convertible Notes Payable | $ 2,310,112 | $ 2,310,112 | ||||||
Maturity date | 2018-11 | |||||||
Common stock rate, per share | $ 0.15 | $ 0.15 | ||||||
Note hoder acquire percentage | 9.90% | 9.90% | ||||||
Cash received from notes payable | $ 100,000 | $ 100,000 | ||||||
Loss from extinguishment of debt | 101,000,000 | 0 | ||||||
Accounts payable related to accrued interest | 179,000 | $ 335,000 | 179,000 | |||||
Interest expense on notes payable | $ 40,000 | 27,000 | $ 116,000 | $ 98,000 | ||||
January 2017 Convertible Note [Member] | ||||||||
Accrued interest percentage | 5.00% | 5.00% | ||||||
Unsecured promissory note | $ 2,460,000 | $ 2,460,000 | ||||||
Convertible Notes Payable | $ 2,410,112 | $ 2,410,112 | ||||||
Maturity date | 2019-01 | |||||||
Common stock rate, per share | $ 0.15 | $ 0.15 | ||||||
Note hoder acquire percentage | 9.90% | 9.90% | ||||||
Cash received from notes payable | $ 50,000 | $ 50,000 | ||||||
October 2016 Convertible Note [Member] | ||||||||
Accrued interest percentage | 5.00% | 5.00% | ||||||
Unsecured promissory note | $ 2,310,000 | $ 2,310,000 | ||||||
Convertible Notes Payable | $ 2,285,000 | $ 2,285,000 | ||||||
Maturity date | 2018-10 | |||||||
Common stock rate, per share | $ 0.40 | $ 0.40 | ||||||
Note hoder acquire percentage | 9.90% | 9.90% | ||||||
Cash received from notes payable | $ 25,000 | $ 25,000 | ||||||
August 2016 Convertible Note [Member] | ||||||||
Accrued interest percentage | 5.00% | 5.00% | ||||||
Unsecured promissory note | $ 2,285,000 | $ 2,285,000 | ||||||
Convertible Notes Payable | $ 2,135,112 | $ 2,135,112 | ||||||
Maturity date | 2018-08 | |||||||
Common stock rate, per share | $ 0.40 | $ 0.40 | ||||||
Note hoder acquire percentage | 9.90% | 9.90% | ||||||
Cash received from notes payable | $ 150,000 | $ 150,000 | ||||||
Loss from extinguishment of debt | $ 37,000,000 | $ 0 | ||||||
April 2016 Convertible Note [Member] | ||||||||
Accrued interest percentage | 5.00% | 5.00% | ||||||
Unsecured promissory note | $ 2,130,000 | $ 2,130,000 | ||||||
Convertible Notes Payable | $ 2,080,112 | $ 2,080,112 | ||||||
Maturity date | 2018-02 | |||||||
Common stock rate, per share | $ 0.50 | $ 0.50 | ||||||
Note hoder acquire percentage | 9.90% | 9.90% | ||||||
Cash received from notes payable | $ 55,000 | $ 55,000 | ||||||
February 2016 Convertible Note [Member] | ||||||||
Accrued interest percentage | 5.00% | 5.00% | ||||||
Unsecured promissory note | $ 2,100,000 | $ 2,100,000 | ||||||
Convertible Notes Payable | $ 1,475,000 | $ 1,475,000 | ||||||
Maturity date | 2018-02 | |||||||
Common stock rate, per share | $ 0.50 | $ 0.50 | ||||||
Note hoder acquire percentage | 9.90% | 9.90% | ||||||
Cash received from notes payable | $ 200,000 | $ 200,000 | ||||||
Accounts payable related to accrued interest | $ 293,000 | $ 293,000 | ||||||
December 2015 Convertible Note [Member] | ||||||||
Accrued interest percentage | 7.50% | 7.50% | ||||||
Unsecured promissory note | $ 260,000 | $ 260,000 | ||||||
Convertible Notes Payable | $ 200,000 | $ 200,000 | ||||||
Maturity date | 2019-10 | |||||||
Common stock rate, per share | $ 0.20 | $ 0.20 | ||||||
Note hoder acquire percentage | 9.90% | 9.90% | ||||||
Common stock granted in cashless option | 1 | 1 | ||||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||||
Excercise price | $ 0.50 | $ 0.50 | ||||||
Convertible notes approximately | $ 260,000 | |||||||
Beneficial conversion amount | $ 141,000 | |||||||
Short term notes payable | $ 10,000 | 10,000 | ||||||
Cash received from notes payable | 50,000 | 50,000 | ||||||
Estimated relative fair value discount | 128,000 | $ 128,000 | ||||||
Volatility rate | 240.00% | |||||||
Risk-free interest rate | 1.05% | |||||||
Expected term | 3 years | |||||||
Dividend yield | 0.00% | |||||||
Loss from extinguishment of debt | 269,000 | |||||||
December 2015 Convertible Note [Member] | Unsecured, Amended and Consolidated Convertible Notes Payable [Member] | ||||||||
Note holder provided additional amount | 125,000 | $ 125,000 | ||||||
Unsecured promissory note | $ 112,000 | $ 112,000 | ||||||
Maturity date | 2016-03 | |||||||
Loss from extinguishment of debt | $ 39,000 | |||||||
Connection of issuance of stock | 125,000 | 125,000 | ||||||
June 2015 Convertible Note [Member] | ||||||||
Accrued interest percentage | 7.50% | 7.50% | ||||||
Unsecured promissory note | $ 1,475,000 | $ 1,475,000 | ||||||
Maturity date | 2017-06 | |||||||
Common stock rate, per share | $ 1 | $ 1 | ||||||
Note hoder acquire percentage | 9.90% | 9.90% | ||||||
December 2015 Convertible Note One [Member] | ||||||||
Convertible notes approximately | 200,000 | |||||||
Loss from extinguishment of debt | $ 50,000 | |||||||
December 2014 Convertible Note [Member] | ||||||||
Accrued interest percentage | 7.50% | 7.50% | ||||||
Unsecured promissory note | $ 200,000 | $ 200,000 | ||||||
Maturity date | 2016-12 | |||||||
Common stock rate, per share | $ 1 | $ 1 | ||||||
Note hoder acquire percentage | 9.90% | 9.90% | ||||||
Beneficial conversion amount | $ 90,000 | |||||||
Convertible Notes Payable (A) [Member] | ||||||||
Convertible Notes Payable | $ 157,000 | 157,000 | ||||||
Converted amount | 24,000 | 24,000 | ||||||
Balance amount | $ 133,000 | $ 133,000 | ||||||
Note hoder acquire percentage | 9.90% | 9.90% | ||||||
Common stock granted in cashless option | 1 | 1 | ||||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||||
Beneficial conversion amount | $ 38,000 | |||||||
Accretion of debt discount expense | $ 2,000 | $ 0 | 11,500 | $ 3,000 | ||||
Accretion of debt discount expense in future | $ 18,000 | |||||||
Common stock issued to Convertible notes | 62,000 | |||||||
Common stock convertible notes amount | $ 12,400 | |||||||
Common stock issued for warrant agreement | 62,000 | |||||||
Warrant agreement exercise exchange price | $ 31,000 | |||||||
Convertible Notes Payable (A) [Member] | Minimum [Member] | ||||||||
Maturity date | 2015-06 | |||||||
Interest rate | 7.50% | |||||||
Fully vested options expire period | 1 year | |||||||
Convertible Notes Payable (A) [Member] | Maximum [Member] | ||||||||
Maturity date | 2019-11 | |||||||
Interest rate | 8.00% | |||||||
Fully vested options expire period | 3 years |
STOCK TRANSACTIONS (Details Nar
STOCK TRANSACTIONS (Details Narrative) | 9 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
Stock Purchase Agreements [Member] | |
Common stock issued for purchase agreements, shares | shares | 102,000 |
Common stock issued for purchase agreements, amount | $ | $ 81,000 |
Minimum [Member] | |
Exercise price | $ 0.15 |
Minimum [Member] | Stock Purchase Agreements [Member] | |
Exercise price | 0.50 |
Maximum [Member] | |
Exercise price | 5 |
Maximum [Member] | Stock Purchase Agreements [Member] | |
Exercise price | $ 1.25 |
Convertible Notes Payable (A) [Member] | |
Common stock issued for purchase agreements, shares | shares | 62,000 |
Common stock issued for purchase agreements, amount | $ | $ 12,400 |
Exercise price | $ 0.20 |
Individuals [Member] | |
Common stock issued for purchase agreements, shares | shares | 430,000 |
Common stock issued for purchase agreements, amount | $ | $ 288,000 |
Individuals [Member] | Minimum [Member] | |
Exercise price | $ 0.50 |
Individuals [Member] | Maximum [Member] | |
Exercise price | $ 0.75 |
OPTIONS AND WARRANTS (Details N
OPTIONS AND WARRANTS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 29, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Jun. 30, 2016 | |
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||
Accretion of debt discount expense | $ 1,944 | $ 43,982 | $ 11,500 | $ 81,834 | ||
Warrant [Member] | ||||||
Number of securities to be issued upon exercise of outstanding options, warrants and rights | 1,700,000 | 1,700,000 | ||||
Weighted-average exercise price of outstanding options, warrants and rights | $ 0.49 | $ 0.49 | ||||
Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column (a)) | 400,000 | 400,000 | ||||
Exercised | 62,000 | |||||
Expired/Forfeited | 115,000 | |||||
Recognized expense | $ 13,000 | |||||
Accretion of debt discount expense | $ 1,300 | 0 | $ 2,800 | 0 | ||
2014 Omnibus Stock Grant and Option Plan [Member] | ||||||
Fair Value Expected Volatility Rate | 206.00% | |||||
Risk-free interest rate | 1.13% | |||||
Expected term | 6 years | |||||
Dividend yield | 0.00% | |||||
Option [Member] | ||||||
Number of securities to be issued upon exercise of outstanding options, warrants and rights | 910,000 | 910,000 | ||||
Weighted-average exercise price of outstanding options, warrants and rights | $ 1.45 | $ 1.45 | ||||
Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column (a)) | 652,000 | 652,000 | ||||
Expense recognized | $ 85,000 | 68,000 | $ 285,000 | 240,000 | ||
Recognized selling, general and administrative expense | $ 266,000 | |||||
October 2016 [Member] | Consulting Agreements [Member] | ||||||
Number of securities to be issued upon exercise of outstanding options, warrants and rights | 300,000 | 300,000 | ||||
Fair Market Value of options | $ 171,000 | $ 171,000 | ||||
Prepaid expense unamortized | 128,000 | 128,000 | ||||
November 2016 [Member] | Unsecured convertible promissory note [Member] | ||||||
Fair Market Value of options | 7,500 | 7,500 | ||||
Convertible promissory note | $ 10,000 | $ 10,000 | ||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||
Promissory note | 50,000 | 50,000 | ||||
November 2016 Convertible Note [Member] | Unsecured convertible promissory note [Member] | ||||||
Fair Value Expected Volatility Rate | 199.70% | |||||
Risk-free interest rate | 1.28% | |||||
Expected term | 3 years | |||||
Dividend yield | 0.00% | |||||
Exercise price | $ 0.50 | |||||
July 2016 [Member] | Unsecured convertible promissory note [Member] | ||||||
Fair Market Value of options | $ 8,000 | $ 8,000 | ||||
Fair Value Expected Volatility Rate | 211.00% | |||||
Risk-free interest rate | 81.00% | |||||
Expected term | 3 years | |||||
Dividend yield | 0.00% | |||||
Convertible promissory note | $ 10,000 | $ 10,000 | ||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||
Exercise price | $ 0.50 | |||||
Promissory note | 50,000 | 50,000 | ||||
Eric Clemons [Member] | 2014 Omnibus Stock Grant and Option Plan [Member] | ||||||
Number of securities to be issued upon exercise of outstanding options, warrants and rights | 210,000 | |||||
Weighted-average exercise price of outstanding options, warrants and rights | $ 0.75 | |||||
Fair Market Value of options | $ 156,000 | |||||
Expected compensation | $ 101,000 | $ 101,000 | ||||
Recognized selling, general and administrative expense | 7,800 | 0 | $ 55,000 | 0 | ||
Fair Value Expected Volatility Rate | 206.00% | |||||
Risk-free interest rate | 1.13% | |||||
Expected term | 6 years | |||||
Dividend yield | 0.00% | |||||
Stock option to purchase | 42,000 | |||||
Consulting Agreements [Member] | October 2016 [Member] | ||||||
Recognized selling, general and administrative expense | 43,000 | $ 0 | $ 85,000 | $ 0 | ||
Fair Value Expected Volatility Rate | 205.00% | |||||
Risk-free interest rate | 0.63% | |||||
Expected term | 1 year | |||||
Dividend yield | 0.00% | |||||
Exercise price | $ 0.40 | |||||
Prepaid expense unamortized | $ 85,000 | $ 85,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Mr. Clemons [Member] | |||||
Cash placement bonus | $ 0 | $ 20,000 | $ 27,500 | $ 20,000 | |
Cash placement bonus percentage | 10.00% | ||||
2014 Omnibus Stock Grant and Option Plan [Member] | |||||
Fair Value Expected Volatility Rate | 206.00% | ||||
Risk-free interest rate | 1.13% | ||||
Expected term | 6 years | ||||
Dividend yield | 0.00% | ||||
2014 Omnibus Stock Grant and Option Plan [Member] | Eric Clemons [Member] | |||||
Number of securities to be issued upon exercise of outstanding options, warrants and rights | 210,000 | ||||
Weighted-average exercise price of outstanding options, warrants and rights | $ 0.75 | ||||
Fair Market Value of options | $ 156,000 | ||||
Expected compensation | 101,000 | $ 101,000 | |||
Fair Value Expected Volatility Rate | 206.00% | ||||
Risk-free interest rate | 1.13% | ||||
Expected term | 6 years | ||||
Dividend yield | 0.00% | ||||
Recognized selling, general and administrative expense | $ 7,800 | $ 0 | $ 55,000 | $ 0 | |
Stock option to purchase | 42,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Earnings Per Share Details | ||||
Net loss attributable to the common stockholders | $ (566,754) | $ (495,484) | $ (15,449,535) | $ (1,568,716) |
Basic weighted average outstanding shares of common stock | 7,605,236 | 6,378,479 | 7,421,427 | 5,614,438 |
Dilutive effect of options and warrants | ||||
Diluted weighted average common stock and common stock equivalents | 7,605,236 | 6,378,479 | 7,421,427 | 5,614,438 |
Earnings (loss) per share: | ||||
Basic and diluted | $ (0.07) | $ (0.08) | $ (2.08) | $ (0.28) |
EARNINGS PER SHARE (Details Nar
EARNINGS PER SHARE (Details Narrative) - $ / shares | 9 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Total dilutive warrants | 2,600,000 | 2,200,000 |
Common stock | 17,900,000 | |
Minimum [Member] | ||
Exercise price of convertable note | $ 0.15 | |
Maximum [Member] | ||
Exercise price of convertable note | $ 5 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Jun. 30, 2016 | |
Federal | ||
Taxable income - federal | 34.00% | 34.00% |
State | ||
Taxable income - state | 1.50% | 1.50% |
Total current tax provision | 35.50% | 35.50% |
Federal and State | ||
Total deferred tax provision |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
Income Taxes Details 1 | ||
Loss carryforwards | $ 27,000,000 | $ 11,500,000 |
Less - valuation allowance | (27,000,000) | (11,500,000) |
Total net deferred tax assets |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Jun. 30, 2016 | |
Income Taxes Details Narrative | ||
Effective tax rate for federal income taxes | 34.00% | 34.00% |
Taxable income - state | 1.50% | 1.50% |
Loss carryforwards | $ 27,000,000 | $ 11,500,000 |
Expiry year | 2,030 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | ||
Apr. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2016 | |
Common stock issued shares | 7,710,347 | 7,116,347 | |
Subsequent Event [Member] | Stockholder [Member] | |||
Unsecured promissory note | $ 50,000 | ||
Common stock issued shares | 50,000 | ||
Maturity date | Jun. 30, 2017 | ||
Subsequent Event [Member] | Stockholder One [Member] | |||
Unsecured promissory note | $ 100,000 | ||
Maturity date | Jun. 30, 2017 |