XML 24 R13.htm IDEA: XBRL DOCUMENT
v3.19.1

Convertible Notes Payable | 9 Months Ended
--- | ---
Mar. 31, 2019
Debt Disclosure [Abstract] |
Convertible Notes Payable | Note 6. Convertible Notes Payable May 2010 Note As of March 31, 2019, the Company had a convertible note outstanding with a balance of $12,762, including accrued interest of $2,762. This note payable bears interest at 8% per annum and the holder did not elect to convert to Common Stock at the time of an equity transaction in 2017. As of March 31, 2019, this outstanding convertible note is due on demand, but the holder has not requested payment. Fiscal 2018 Notes On February 26, 2018, the Company issued a convertible promissory note for gross proceeds of $500,000 to a member of the Company’s board of directors. The note provided for interest at 15% per annum and matured one year from issuance. This convertible promissory note contained an embedded derivative for the acceleration of the maturity date if the note was paid prior to maturity, whereby a $25,000 penalty plus all unpaid interest to be accrued through the maturity date was due. The initial measurement of this embedded derivative liability of $100,000 was reflected as a debt discount that was accreted to interest expense using the effective interest method. This embedded derivative was eliminated upon conversion of the convertible promissory note as discussed below. During the quarter ended March 31, 2018, the Company issued two additional convertible promissory notes for gross proceeds of $700,000, including an additional note for $500,000 to the same member of the board of directors. These additional notes provided for interest at a rate of 12% per annum and matured one year from issuance. These notes included a default interest rate provision, in which the stated interest rate increased to 15% during an event of default. Beginning on July 1, 2018, the interest rate increased to 15% since a default existed due to the failure to make quarterly interest payments. These notes were modified on April 3, 2018 whereby the notes and accrued interest automatically convert to the class of securities issued in an equity financing for at least $15 million (a “Qualified Financing ”) at a 20% discount to the terms set forth in such Qualified Financing. On April 3, 2018 and April 11, 2018, the Company issued promissory notes and warrants for gross proceeds of $4.1 million, before deduction of cash issuance costs of approximately $239,000. The notes provided for interest at 12% per annum, with a 15% default interest rate provision, and a maturity date of January 31, 2019. The Series AA financing discussed in Note 7 met the definition of a Qualified Financing whereby all of the Fiscal 2018 Notes automatically converted for an aggregate principal balance of $5,340,000 plus accrued interest of $800,117 as of January 30, 2019, into an aggregate of 767,519 shares of Series AA Preferred Stock. Pursuant to the terms of the notes, the conversion price was $8.00 per share of Series AA Preferred Stock, which was a 20% discount to the terms set forth in the Series AA financing. The conversion of the Fiscal 2018 Notes at a 20% discount resulted in a BCF as discussed below. As of January 30, 2019, the aggregate principal and accrued interest of $6,140,117 converted to Series AA Preferred Stock, as follows:
|  | Interest |  |  |  |  |  | Accrued |  |  | Converted to |  |  | Ending |
Issuance/ Amendment Date |  | Rate |  |  | Principal |  |  | Interest |  |  | Series AA |  |  | Balance |
February 26, 2018 |  |  | 15 | % (1) |  | $ | 500,000 |  |  | $ | 94,932 |  |  | $ | (594,932 | ) |  | $ | - |
April 3, 2018 |  |  | 15 | % (1) |  |  | 4,040,000 |  |  |  | 589,064 |  |  |  | (4,629,064 | ) |  |  | - |
April 3, 2018 |  |  | 15 | % (1) |  |  | 700,000 |  |  |  | 102,066 |  |  |  | (802,066 | ) |  |  | - |
April 11, 2018 |  |  | 15 | % (1) |  |  | 100,000 |  |  |  | 14,055 |  |  |  | (114,055 | ) |  |  | - |
Total |  |  |  |  |  | $ | 5,340,000 |  |  | $ | 800,117 |  |  | $ | (6,140,117 | ) |  | $ | - |
(1) Represents the interest rate that was in effect for the nine months ended March 31, 2019. Beneficial Conversion Feature As discussed above, each of the Fiscal 2018 Notes discussed above contained a mandatory conversion feature that was triggered if the Company completed a Qualified Financing whereby the notes would automatically convert into the securities issued in the financing at a 20% discount. This feature that enabled conversion at a 20% discount was a contingent BCF that was not calculated and recorded until the financing that triggered conversion was completed. Since the closing of the Series AA Financing resulted in the conversion of the Fiscal 2018 Notes, the contingent BCF was measured and recognized on January 30, 2019. The fair value of the Company’s Common Stock was $0.24 per share on the conversion date for the Fiscal 2018 Notes compared to the effective conversion price of $ 0.176 per share (due to the 20 % discount to the Series AA Financing terms which provide for a conversion price of $ 0.22 per share). Accordingly, the Company recognized a BCF of $2,233,000 as additional interest expense related to the Fiscal 2018 Notes for the three and nine months ended March 31, 2019.

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration