Quarterly report pursuant to Section 13 or 15(d)

Derivative Financial Instruments and Fair Value Measurements

Derivative Financial Instruments and Fair Value Measurements

6 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments and Fair Value Measurements

NOTE 10 - DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Derivative Financial Instruments:

The Company had $216,400 of convertible debt, that contain embedded conversion options and is treated as derivative instruments outstanding at December 31, 2019.

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 December 31, 2019, the last trading day of the quarter ended December 31, 2019, was $0.38. Volatility, expected remaining term and risk free interest rates used to estimate the fair value of derivative liabilities at December 31, 2019 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 six months ended December 31, 2019)			December 31, 2019
Volatility		227.82	%		227.82	%
Expected Remaining Term (in years)		1			00.39 – 0.91
Risk Free Interest Rate		1.59	%		1.48% – 1.59	%
Expected dividend yield		None			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 December 31, 2019:

	Balance at December 31, 2019		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	$	924,744	$	—	$	—	$	924,744
Total	$	924,744	$	—	$	—	$	924,744

The following is a roll forward for the six months ended December 31, 2019 of the fair value liability of price adjustable derivative instruments:

	Fair Value of
	Liability for
	Derivative
	Instruments
Balance at June 30, 2019	$	698,264
Initial fair value of embedded conversion option derivative liability recorded as debt discount		115,000
Initial fair value of embedded conversion option derivative liability recorded as expense		93,125
Reductions due to conversions		(44,588	)
Change in fair value included in statements of operations		62,943
Balance at December 31, 2019	$	924,744