Quarterly report pursuant to Section 13 or 15(d)

Derivative Financial Instruments and Fair Value Measurements

Derivative Financial Instruments and Fair Value Measurements

9 Months Ended

Mar. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments and Fair Value Measurements

NOTE 11 - DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Derivative Financial Instruments:

The Company applies the provisions of ASC 815-40, Contracts in Entity’s Own Equity, under which convertible instruments and warrants that contain terms and provisions which cause the embedded conversion options to be accounted for as derivative liabilities. As a result, warrants and embedded conversion options in convertible debt are recorded as a liability and are revalued at fair value at each reporting date. If the fair value of the warrants exceeds the face value of the related debt, the excess is recorded as derivative expense in operations on the issuance date. The Company had $80,000 (1 note) and $126,500 (3 notes) of convertible debt, which have embedded conversion options bifurcated and is treated as derivative instruments outstanding at March 31, 2021 and June 30, 2020, respectively.

The Company calculates the estimated fair values of the liabilities for derivative instruments using the Binomial Trees Method. The closing price of the Company’s common stock at March 31, 2021, the last trading day of the period ended March 31, 2021, was $0.26. The Volatility, expected remaining term and risk-free interest rates used to estimate the fair value of derivative liabilities at March 31, 2021 are indicated in the table that follows. The expected term is equal to the remaining term of the warrants or convertible instruments and the risk-free rate is based upon rates for treasury securities with the same term.

Convertible Debt

	Initial Valuations (on new derivative instruments entered into during the three months ended March 31, 2021)		March 31, 2021
Volatility		N/A		231.37	%
Expected Remaining Term (in years)		N/A		0.01
Risk Free Interest Rate		N/A		0.01	%
Expected dividend yield		N/A		None

Fair Value Measurements:

The Company measures and reports at fair value the liability for derivative instruments. The fair value liabilities for price adjustable warrants and embedded conversion options have been recorded as determined utilizing the Binomial Trees model. The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2021 and June 30, 2020:

	Balance at March 31, 2021		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
			(Level 1)		(Level 2)		(Level 3)
Embedded conversion option liabilities	$	53,189	$	—	$	—	$	53,189
Total	$	53,189	$	—	$	—	$	53,189

	Balance at June 30, 2020		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
			(Level 1)		(Level 2)		(Level 3)
Embedded conversion option liabilities	$	177,009	$	—	$	—	$	177,009
Total	$	177,009	$	—	$	—	$	177,009

The following is a roll forward for the nine months ended March 31, 2021 of the fair value liability of price adjustable derivative instruments:

	Fair Value of
	Liability for
	Derivative
	Instruments
Balance at June 30, 2020	$	177,009
Initial fair value of embedded conversion option derivative liability recorded as debt discount		-
Initial fair value of embedded conversion option derivative liability recorded as expense		-
Gain on debt extinguishment		(130,976	)
Change in fair value included in statements of operations		7,156
Balance at March 31, 2021	$	53,189