[X]
|
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
[ ]
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________to ________________
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NEVADA
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20-2583185
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification Number)
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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☐ Yes
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☒ No
|
|
|
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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☒ Yes
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o No
|
|
|
|
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
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☒Yes
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☐ No
|
|
|
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
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☐ Yes
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☒ No
|
|
Accelerated filer ☐
|
|
|
|
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Non-accelerated filer ☐
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Smaller reporting company ☒
|
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(Do not check if a smaller reporting company)
|
||
Emerging growth company ☐
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
|
☐ Yes
|
x No
|
|
|
|
|
PART I
|
FINANCIAL INFORMATION
|
|
PAGE
|
|
|
|
|
Item 1
|
Condensed Consolidated Financial Statements
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheets as of March 31, 2017 (unaudited) and June 30, 2016 (unaudited)
|
|
3
|
|
|
|
|
|
Condensed Consolidated Statements of Operations for the Nine Months Ended March 31, 2017 and 2016 (unaudited)
|
|
4
|
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2017 and 2016 (unaudited)
|
|
5
|
|
|
|
|
|
Condensed Consolidated Notes to Financial Statements (unaudited)
|
|
6
|
|
|
|
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Item 2
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Management's Discussion and Analysis or Plan of Operation
|
|
16
|
|
|
|
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Item 3
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Quantitative and Qualitative Disclosures About Market Risk
|
|
22
|
|
|
|
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Item 4
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Controls and Procedures
|
|
22
|
|
|
|
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PART II
|
OTHER INFORMATION
|
|
|
|
|
|
|
Item 1
|
Legal Proceedings
|
|
22
|
|
|
|
|
Item 1A
|
Risk Factors
|
|
23
|
|
|
|
|
Item 2
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
23
|
|
|
|
|
Item 3
|
Defaults Upon Senior Securities
|
|
23
|
|
|
|
|
Item 4
|
Mine Safety Disclosures
|
|
23
|
|
|
|
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Item 5
|
Other Information
|
|
23
|
|
|
|
|
Item 6
|
Exhibits
|
|
23
|
|
|
|
|
Signatures
|
|
24
|
|
||||||||
|
March 31,
|
June 30,
|
||||||
|
2017
|
2016
|
||||||
|
(unaudited)
|
(unaudited)
|
||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash
|
$
|
63
|
$
|
114
|
||||
Inventory
|
6,200
|
6,200
|
||||||
Total current assets
|
6,263
|
6,314
|
||||||
|
||||||||
Property & equipment, net of accumulated
|
||||||||
Marketable Securities
|
752,596
|
752,595
|
||||||
Total Assets
|
$
|
758,859
|
$
|
758,910
|
||||
|
||||||||
Liabilities and Stockholders' Equity
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$
|
172,924
|
$
|
171,665
|
||||
Accrued expenses
|
134,941
|
131,449
|
||||||
Convertible Notes payable, net
|
25,948
|
24,090
|
||||||
Payroll Liabilities
|
92,201
|
92,201
|
||||||
Notes payable, affiliates
|
20,687
|
20,678
|
||||||
Total current liabilities
|
446,701
|
440,083
|
||||||
|
||||||||
Non-Current liabilities
|
||||||||
Notes payable to shareholder
|
342,852
|
342,862
|
||||||
Total liabilities
|
789,553
|
782,944
|
||||||
|
||||||||
Stockholders' Equity
|
||||||||
Preferred stock, 50,000,000 authorized, $.001 par value:
|
||||||||
Series A Convertible: 5,000,000 shares designated;
|
||||||||
2,523,624 and 2,523,624 issued and outstanding
|
2,525
|
2,525
|
||||||
Series A1 Convertible: 33,000,000 issued and outstanding
|
-
|
|||||||
Common stock, $.001 par value, 1,950,000,000 shares
|
||||||||
authorized; 1,411,911,416 and 925,518,595 shares
|
||||||||
issued and outstanding, respectively
|
1,411,911
|
925,520
|
||||||
Additional paid-in capital
|
13,314,347
|
13,527,257
|
||||||
Accumulated deficit
|
(14,518,344
|
)
|
(14,479,336
|
)
|
||||
Total stockholders' equity
|
(30,694
|
)
|
(24,035
|
)
|
||||
|
||||||||
Total Liabilities and Stockholders' Equity
|
$
|
758,859
|
$
|
758,910
|
||||
|
Infrax Systems, Inc.
|
Consolidated Statements of Operations
|
(Unaudited)
|
|
For the Nine Months Ended
March 31,
|
For the Nine Months Ended
March 31,
|
||||||
|
2017
|
2016
|
||||||
|
||||||||
Revenues
|
$
|
-
|
$
|
-
|
||||
Direct costs
|
-
|
|||||||
|
-
|
|||||||
Operating expenses:
|
||||||||
Salaries and benefits
|
-
|
|||||||
Professional fees
|
1,259
|
16,825
|
||||||
General and administrative
|
51
|
30,594
|
||||||
Amortization and depreciation
|
32,601
|
349,770
|
||||||
Total operating expenses
|
33,911
|
397,189
|
||||||
|
||||||||
Other income (expense):
|
||||||||
Interest Expense
|
(5,097
|
)
|
(12,997
|
)
|
||||
Total other (expense)
|
(5,097
|
)
|
(12,997
|
)
|
||||
|
||||||||
Income (Loss) from continuing operations before income taxes and minority interest
|
(39,008
|
)
|
(410,186
|
)
|
||||
|
||||||||
Provision for income taxes
|
0
|
0
|
||||||
|
||||||||
Income (Loss) from continuing operations before minority interest
|
(39,008
|
)
|
(410,232
|
)
|
||||
|
||||||||
Income (Loss) from discontinued operations, Gain from sale of asset (net)
|
0
|
(73,048
|
)
|
|||||
|
||||||||
Net Income (loss)
|
$
|
(39,008
|
)
|
$
|
(483,234
|
)
|
||
|
||||||||
Basic net Income (loss) per share
|
||||||||
Loss from continuing operations
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
||
Loss from discontinued operations
|
(0.00
|
)
|
(0.00
|
)
|
||||
Net Income (loss) per share
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
||
|
||||||||
Weighted average shares outstanding
|
||||||||
Basic
|
1,076,710,612
|
841,518.595
|
|
For the Nine Months Ended March 31,
|
For the Nine Months Ended March 31,
|
||||||
|
2017
|
2016
|
||||||
Cash Flows from Operating Activities:
|
||||||||
Net (loss) income
|
$
|
(39,008
|
)
|
$
|
(483,234
|
)
|
||
Adjustment to reconcile Net Income to net
|
||||||||
cash provided by or (used in) operations:
|
||||||||
Depreciation and amortization
|
- |
10,865
|
||||||
Amortization of deferred revenue
|
||||||||
Amortization of debt discount
|
32,601
|
43,838
|
||||||
Gain on settlement of debt
|
-
|
|||||||
Stock based compensation
|
- |
-
|
||||||
Interest expense
|
0
|
0
|
||||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
- |
11,157
|
||||||
Inventory
|
-
|
|||||||
Related party loans
|
0
|
(98,222
|
)
|
|||||
Accounts Payable
|
1,259
|
-
|
||||||
Accrued Expenses
|
0
|
(5,627
|
)
|
|||||
Gains from sale of assets
|
0
|
521,337
|
||||||
Change in unamortized debt discount
|
0
|
-
|
||||||
Net Cash (Used) by Operating Activities
|
(51
|
)
|
(134
|
)
|
||||
|
||||||||
Cash Flows from Investing Activities:
|
||||||||
(Purchase) disposal of property and equipment
|
-
|
-
|
||||||
Net Cash (Used) Provided by Investing Activities
|
0
|
-
|
||||||
|
||||||||
Cash Flows from Financing Activities:
|
||||||||
Net proceeds from debt
|
-
|
|||||||
Payments from (to) Related Parties
|
-
|
|||||||
Change in Additional Paid in Capital
|
0
|
-
|
||||||
Net Cash (Used) Provided by Financing Activities
|
0
|
0
|
||||||
Net increase/decrease in Cash
|
(51
|
)
|
(134
|
)
|
||||
|
||||||||
Cash at beginning of period
|
114
|
274
|
||||||
|
||||||||
Cash at end of period
|
$
|
63
|
140
|
|||||
Supplemental cash flow information:
|
||||||||
Interest paid
|
-
|
-
|
||||||
|
||||||||
Taxes paid
|
-
|
-
|
·
|
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities
|
·
|
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
·
|
Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
|
|
March 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
Earnings (Loss) per share:
|
|
|
||||||
Net Loss
|
|
$
|
(39,008
|
)
|
|
$
|
(63,131
|
)
|
|
|
|
|
|
|
|
|
|
Common shares – weighted average
|
|
|
1,411,911,416
|
|
|
|
539,280,618
|
|
Earnings (loss) per share, basic
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
Property and equipment consists of the following:
|
||||||||
|
March 31,
|
June 30,
|
||||||
|
2017
|
2016
|
||||||
|
(unaudited)
|
(unaudited)
|
||||||
Office and computer equipment
|
$
|
0
|
$
|
0
|
||||
Furniture and fixtures & improvements
|
0
|
0
|
||||||
Computer software
|
0
|
0
|
||||||
|
0
|
0
|
||||||
Accumulated depreciation
|
0
|
0
|
||||||
|
$
|
0
|
$
|
0
|
|
March 31, 2017
|
June 30, 2016
|
||||||
|
||||||||
|
||||||||
Convertible note to Typenex Investments in the original amount of $52,000. Interest at 10% and principal are due on October 3, 2016. Convertible at 40% of market. Balance is net of discounts of $0 and $10,400.
|
$
|
0
|
$
|
27,009
|
||||
|
||||||||
Convertible note to KBM Worldwide in the original amount of $43,000. Interest at 8% and principal are due on September 21, 2016. Convertible at 40% of market. Balance is net of discounts of $12,897 and $24,437, respectively.
|
38,845
|
43,000
|
||||||
|
||||||||
|
38,845
|
70,009
|
||||||
|
||||||||
Less unamortized Discount
|
(12,897
|
)
|
(45,919
|
)
|
||||
|
||||||||
Long-term portion
|
$
|
25,948
|
$
|
24,090
|
||||
|
|
|
Shares
|
|
|
Conversion
Rate to
|
|
||
|
|
Outstanding
|
|
|
Common
|
|
||
Preferred Series A
|
|
|
2,400,000
|
|
|
|
375
|
|
Preferred Series A1
|
|
|
8,889
|
|
|
|
89
|
|
Preferred Series A2
|
|
|
88,889
|
|
|
|
20
|
|
Preferred Series A3
|
|
|
25,846
|
|
|
|
16
|
|
Preferred Series B1
|
|
|
830
|
|
|
|
300
|
|
Preferred Series B2
|
|
|
1,210
|
|
|
|
300
|
|
|
|
|
2,525,664
|
|
|
|
|
|
Item 2.
|
Management's Discussion and Analysis or Plan of Operation
|
Management's Discussion and Analysis or Plan of Operation
|
·
|
Principals of Consolidation -The consolidated financial statements include the accounts and operations of the Infrax Systems, Inc., and its wholly owned subsidiary Infrax Systems SA (Pty) Ltd. (collectively referred to as the "Company"). Accordingly, the assets and liabilities, and expenses of this company have been included in the accompanying consolidated financial statements, and intercompany transactions have been eliminated.
|
|
|
·
|
Revenue Recognition - The Company is principally in the business of providing solutions for a secure intelligent energy platform that incorporates our secure wireless technology. Contracts include multiple revenue components, comprised of our software licensing, hardware platforms, installation, training and maintenance. In accordance with ASC 605-25 Multiple-Element Arrangements, revenue from licensing the software will be recognized upon installation and acceptance of the software by customers. When a software sales arrangement includes rights to customer support, the portion of the license fee allocated to such support is recognized ratably over the term of the arrangement, normally one year. Revenue from professional services arrangements will be recognized in the month in which services are rendered over the term of the arrangement.
|
Revenue associated with software sales to distributors is recognized, net of discounts, when the Company has performed substantially all its obligations under the arrangement. Until such time as substantially all obligations under the arrangement are met, software sales are recognized as deferred revenue. Costs and expenses associated with deferred revenue are also deferred. When a software sales arrangements include a commitment to provide training and/or other services or materials, the Company estimates and records the expected costs of these training and/or other services and/or materials.
|
|
|
|
·
|
Long-Lived Assets - We depreciate property and equipment and amortize intangible assets, including software development costs over the respective assets' estimated useful life and periodically review the remaining useful lives of our assets to ascertain that our estimate is still valid. If we determine a useful life has materially changed, we either change the useful life or write the asset down or if we determine the asset has exhausted its useful life, we write the asset off completely.
|
|
|
·
|
Capitalized Software Development Costs - We capitalize software development costs incurred subsequent to the establishment of technological feasibility and amortize them over the estimated lives of the related products. We discontinue capitalization of software when the software product is available to be sold, leased, or otherwise marketed. Amortization of software costs begins when the developed product is available for sale to our customers. We amortize our software development costs over the estimated economic life and estimated number of units of the product to be sold.
|
|
|
·
|
Stock Based Compensation - We recognize stock-based compensation expense net of an estimated forfeiture rate and therefore only recognize compensation cost for those shares expected to vest over the service period of the award. Calculating stock-based compensation expense requires the input of subjective assumptions, including the expected term of the option grant, stock price volatility, and the pre-vesting option forfeiture rate. We estimate the expected life of options granted based on historical exercise patterns. We estimate stock price volatility based on historical implied volatility in our stock. In addition, we are required to estimate the expected volatility rate and only recognize expense for those shares expected to vest. We estimate the forfeiture rate based on historical experience of our stock-based awards that are granted, exercised or cancelled.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Item 3.
|
Defaults Upon Senior Securities.
|
Item 4.
|
Mine Safety Disclosures.
|
Item 5.
|
Other Information.
|
Item 6.
|
Exhibits
|
|
|
31.1
|
Principal Executive Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
31.2
|
Principal Financial & Accounting Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
32.1
|
Principal Executive Officer's Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase
|
|
Infrax Systems, Inc.
|
|
(Registrant)
|
|
|
|
|
Date: May 22, 2017
|
By: /s/ John Verghese
|
|
John Verghese
|
|
Principal Executive Officer
|
|
|
Date: May 22, 2017
|
By: /s/ Sam Talari
|
|
Sam Talari
|
|
Principal Financial & Accounting Officer
|
Date: May 22, 2017
|
FutureLand Corp.
|
|
|
|
|
|
By:
|
/s/ John Verghese
|
|
|
John Verghese
President, Chief Executive Officer
|
|
|
|
Date: May 22, 2017
|
Infrax Systems, Inc.
|
|
|
|
|
|
By:
|
/s/ Sam Talari
|
|
|
Sam Talari
Chief Financial Officer
|
|
|
|
Date: May 22, 2017
|
Infrax Systems, Inc.
|
|
|
|
|
|
By:
|
/s/ John Verghese
|
|
|
John Verghese
President, Chief Executive Officer
|
|
|
|
Date: May 22, 2017
|
||
|
|
|
|
By:
|
/s/ Sam Talari
|
|
|
Sam Talari
Chief Financial Officer
|
|
|
|
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 19, 2017 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | INFRAX SYSTEMS, INC. | |
Entity Central Index Key | 0001380277 | |
Trading Symbol | ifxy | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,411,911,416 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2017 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2017 |
Jun. 30, 2016 |
---|---|---|
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,950,000,000 | 1,950,000,000 |
Common stock, shares issued | 1,411,911,416 | 925,518,595 |
Common stock, shares outstanding | 1,411,911,416 | 925,518,595 |
Series A Convertible Preferred Stock | ||
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares designated | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 2,523,624 | 2,523,624 |
Preferred stock, shares outstanding | 2,523,624 | 2,523,624 |
Series Aone Preferred Stock Member | ||
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 33,000,000 | 33,000,000 |
Preferred stock, shares outstanding | 33,000,000 | 33,000,000 |
Consolidated Statements of Operations (Unaudited) - USD ($) |
9 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Income Statement [Abstract] | ||
Revenues | $ 0 | $ 0 |
Direct costs | 0 | 0 |
Operating expenses: | ||
Salaries and benefits | 0 | 0 |
Professional fees | 1,259 | 16,825 |
General and administrative | 51 | 30,594 |
Amortization and depreciation | 32,601 | 349,770 |
Total operating expenses | 33,911 | 397,189 |
Other income (expense): | ||
Interest expenses | (5,097) | (12,997) |
Total other (expense) | (5,097) | (12,997) |
Income (Loss) from continuing operations before income taxes and minority interest | (39,008) | (410,186) |
Provision for income taxes | 0 | 0 |
Income (Loss) from continuing operations before minority interest | (39,008) | (410,232) |
Income (Loss) from discontinued operations, Gain from sale of asset (net) | 0 | (73,048) |
Net Income (loss) | $ (39,008) | $ (483,234) |
Earnings (loss) per share: | ||
Loss from continuing operations | $ (0.00) | $ (0.00) |
Loss from discontinued operations | (0.00) | (0.00) |
Net Income (loss) per share | $ (0.00) | $ (0.00) |
Weighted average shares outstanding | ||
Basic | 1,076,710,612 | 841,518.60 |
Consolidated Statements of Cash Flows (Unaudited) - USD ($) |
9 Months Ended | |
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Mar. 31, 2017 |
Mar. 31, 2016 |
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Cash Flows from Operating Activities: | ||
Net (loss) income | $ (39,008) | $ (483,234) |
Adjustment to reconcile Net Income to net cash provided by or (used in)operations: | ||
Depreciation and amortization | 0 | 10,865 |
Amortization of deferred revenue | 0 | 0 |
Amortization of debt discount | 32,601 | 43,838 |
Gain on settlement of debt | 0 | 0 |
Stock based compensation | 0 | 0 |
Interest expense | 0 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable | 0 | 11,157 |
Inventory | 0 | 0 |
Related party loans | 0 | (98,222) |
Accounts payable | 1,259 | 0 |
Accrued expenses | 0 | (5,627) |
Gains from sale of assets | 0 | 521,337 |
Change in unamortized debt discount | 0 | 0 |
Net Cash (Used) by Operating Activities | (51) | (134) |
Cash Flows from Investing Activities: | ||
(Purchase) disposal of property and equipment | 0 | 0 |
Net Cash (Used) Provided by Investing Activities | 0 | 0 |
Cash Flows from Financing Activities: | ||
Net proceeds from debt | 0 | 0 |
Payments from (to) Related Parties | 0 | 0 |
Change in Additional Paid in Capital | 0 | 0 |
Net Cash (Used) Provided by Financing Activities | 0 | 0 |
Net increase/decrease in Cash | (51) | (134) |
Cash at beginning of period | 114 | 274 |
Cash at end of period | 63 | 140 |
Supplemental cash flow information: | ||
Interest paid | 0 | 0 |
Taxes paid | $ 0 | $ 0 |
History of the Company and Nature of the Business |
9 Months Ended |
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Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
History of the Company and Nature of the Business | Note 1. History of the Company and Nature of the Business
History of the Company
Nature of Business
Since its inception, the Company had been dedicated to selling and/or licensing a fiber optic management software system under the name OptiCon Network Manager, originally developed, and acquired from Corning Cable System, Inc. through a related company, FutureTech Capital, LLC. In October 2009, the Company began developing smart grid energy related products. As of June 29, 2010, the Company acquired the assets and management of Trimax Wireless Systems, Inc. ("Trimax"), in exchange for equity and a note payable. In April 2011, the Company acquired controlling interest in Lockwood Technology Corporation ("Lockwood"), a provider of advanced asset management solutions. In June of 2016, the Company sold its interest in Lockwood Technology Corporation and has accountied for its assets, liabilities and results of operations as a discontinued operation for all periods presented.
While we continue to support the OptiCon Network Management platform, the Company has shifted its focus and energies towards the "Smart Grid" energy sector. The Company believes our secure integrated platform will hasten the deployment of all Smart Grid technology for resource constrained small and mid-sized utilities. Infrax's advantage comes from our products ability to enable the creation of a secure platform scalable to deliver a broad set of intelligent Smart Grid initiatives across millions of endpoints for Utilities. |
Summary of Significant Accounting Policies |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated balance sheet as of March 31, 2017, the consolidated statements of operations and statements of cash flows for the nine months then ended, and the statement of stockholders' equity have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures, normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading.
In the opinion of management, all adjustments necessary to present fairly the financial position at March 31, 2017, and the results of operations and changes in cash flows for the six months then ended have been made. These financial statements should be read in conjunction with our unaudited financial statements and notes thereto included in our annual report for the year ended June 30, 2016 on Form 10-K filed with the SEC on October 13, 2016.
Certain reclassifications have been made to the Statement of Operations for disclosure purposes and comparability.
Use of Estimates The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States of America. These principals require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts and operations of Infrax Systems, Inc., and its wholly owned subsidiary, Infrax Systems SA (Pty) Ltd, an inactive foreign subsidiary.
Variable Interest Entities
The Company considers the consolidation of entities to which the usual condition (ownership of a majority voting interest) of consolidation does not apply, focusing on controlling financial interests that may be achieved through arrangements that do not involve voting interest. If an enterprise holds a majority of the variable interests of an entity, it would be considered the primary beneficiary. The primary beneficiary is generally required to consolidate assets, liabilities and non-controlling interests at fair value (or at historical cost if the entity is a related party) and subsequently account for the variable interest as if it were consolidated based on a majority voting interest. The Company has evaluated all related parties, contracts, agreements and arrangements in which it may hold a variable interest. The Company has determined it is not the primary beneficiary in any of these entities, arrangements or participates in any of the activities.
Financial Instruments
The Company's balance sheets include the following financial instruments: cash, accounts receivable, inventory, accounts payable, accrued expenses, deferred revenue, and notes payable and notes payable to stockholder. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. The carrying values of the note payable to stockholder approximates fair value based on borrowing rates currently available to the Company for instruments with similar terms and remaining maturities.
In September 2006, the Financial Accounting Standards Board (FASB) introduced a framework for measuring fair value and expanded required disclosure about fair value measurements of assets and liabilities. The Company adopted the standard for those financial assets and liabilities as of the beginning of the 2008 fiscal year and the impact of adoption was not significant. FASB Accounting Standards Codification (ASC) 820 "Fair Value Measurements and Disclosures" (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Three levels of the fair value hierarchy are described below:
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2017. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, accrued compensation and accrued expenses. The fair value of the Company's notes payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.
The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company's financial statements.
As of March 31, 2017, the fair values of the Company's financial instruments approximate their historical carrying amount.
The majority of cash is maintained with major financial institutions in the United States. Deposits with these banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk. The Company considers all highly liquid investments purchased with an original maturity of Three months or less to be cash equivalents.
Accounts Receivable and Credit
Accounts receivable consist of amounts due for the delivery of sales to customers. Prepayments on account are recorded as customer deferred revenue. Additionally, the Company invoices projects when signed agreement or statements of work are received. Amounts are recorded at the anticipated collectible amount and recorded as deferred revenue until such time that the work is performed. Contract revenue is recognized as the contract is completed, based on defined milestones (see policy on revenue recognition). An allowance for doubtful accounts is considered to be established for any amounts that may not be recoverable, which is based on an analysis of the Company's customer credit worthiness, and current economic trends. Based on management's review of accounts receivable, no allowance for doubtful accounts was considered necessary. Receivables are determined to be past due, based on payment terms of original invoices. The Company does not typically charge interest on past due receivables.
Inventories
Inventories are stated at the lower of cost or market, which approximates actual cost. Cost is determined using the first-in, first-out method. Inventory is comprised of component parts and accessories available for sale. Parts are generally purchased for projects, as minimal inventory is held to supply customers.
Property & Equipment
Property and equipment are recorded at historical cost or acquisition value. Depreciation is computed on the straight-line method over estimated useful lives of the respective assets, ranging from five to nine years. The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or the unamortized balance is warranted. Based upon the Company's most recent analysis, management believes that no impairment of property and equipment exists at March 31, 2017.
Intangible Property
On June 29, 2010 the Company acquired the assets of Trimax Wireless Systems, Inc., including licenses and trademarks. The purchase price was allocated first to the identifiable assets received, allocating the remaining costs to the intellectual property. The valuation considered future cash flows of the operating intangible assets acquired. The valuation of the intellectual property was limited to the acquisition price (valuation of stock consideration and note payable), less the fair market value of identifiable assets. The shares issued in exchange for the acquired property were valued at the fair market value of the equivalent common stock as of the date of closing. The fair market value of consideration issued (stock and note payable) to the sellers was an aggregate amount of $6,511,364. The value assigned to the carrying value of the acquired intellectual property was $6,329,342. Intellectual property has an estimated useful life of 59 months (remaining life of patents).
Capitalized Software Development Costs
The Company capitalizes software development costs, under which certain software development costs incurred subsequent to the establishment of technological feasibility have been capitalized and are being amortized over the estimated lives of the related products. Capitalization of computer software costs is discontinued when the computer software product is available to be sold, leased, or otherwise marketed.
Impairment of Long-Lived Assets
Periodically, the Company assesses the recoverability of the Company's intangible assets, consisting of the Trimax acquired intellectual property, OptiCon Network Manager software and its trademark, intangibles and goodwill and record an impairment loss to the extent that the carrying amounts of the assets exceed its fair value. Based upon management's most recent analysis, the Company believes that no impairment of the Company's tangible or intangible assets exist at March 31, 2017 and June 30, 2016.
Discontinued Operations
In accordance with ASC 205-20, Presentation of Financial Statements-Discontinued Operations ("ASC 205-20"), we reported the results of Lockwood Technology Corporation as discontinued operations. The application of ASC 205-20 is discussed in the notes to the financial statements.
Revenue Recognition
The Company is principally in the business of providing solutions for a secure intelligent energy platform that incorporates our secure wireless technology. Contracts include multiple revenue components, comprised of our software licensing, hardware platforms, installation, training and maintenance. In accordance with ASC 605-25 Multiple-Element Arrangements, revenue from licensing the software will be recognized upon installation and acceptance of the software by customers. When a software sales arrangement includes rights to customer support, the portion of the license fee allocated to such support is recognized ratably over the term of the arrangement, normally one year. Revenue from professional services arrangements will be recognized in the month in which services are rendered over the term of the arrangement and collection is probable.
Stock Based Compensation
The Company issues restricted stock to consultants for various services. Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expenses and a corresponding increase to additional paid-in-capital related to stock issued for services. Stock compensation for the periods presented were issued to consultants for past services provided, accordingly, all shares issued are fully vested, and there is no unrecognized compensation associated with these transactions.
Shipping Costs
The Company includes shipping costs and freight-in costs in cost of goods sold.
Advertising Costs
The costs of advertising are expensed as incurred. Advertising expenses are included in the Company's operating expenses. Advertising expense was $0 and $0 for the six month periods ending March 31, 2017 and 2016, respectively.
Income Taxes
The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.
Earnings (Loss) Per Share
Basic EPS is calculated by dividing the loss available to common shareholders by the weighted average number of common shares outstanding during each period. Diluted EPS is similarly calculated, except that the denominator includes common shares that may be issued subject to existing rights with dilutive potential, except when their inclusion would be anti-dilutive.
Based on an estimated current value of the Company's stock being equal to or less than the exercise price of the warrants, none of the shares assumed issued upon conversion of the warrants, nor any of the stock assumed issued under the Company's 2004 Non statutory Stock Option Plan, are included in the computation of fully diluted loss per share, since their inclusion would be anti-dilutive. Convertible preferred shares have been included in the dilutive computation, as if they would have been converted at the end of the period.
* Potentially issuable preferred shares, if converted to common, were considered but not included in the calculation of diluted earnings per share for the period ended March 31, 2017 and 2016, respectively, because their inclusion would be anti-dilutive.
Recently Issued Accounting Pronouncements
We have reviewed accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration. Those standards have been addressed in the notes to the unaudited financial statement and in our Annual Report, filed on Form 10-K for the period ended June 30, 2016. |
Going Concern |
9 Months Ended |
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Mar. 31, 2017 | |
Going Concern [Abstract] | |
Going Concern | Note 3. Going Concern
As of March 31, 2017, the Company has a working capital deficit and has incurred a loss from operations and recurring losses since its inception resulting in a significant accumulated deficit. As of March 31, 2017, the Company had negative working capital of approximately $51 and approximately $63 in cash with which to satisfy any future cash requirements. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company currently has no revenue, although management's plans do anticipate revenue in the future. Accordingly, the Company depends upon capital to be derived from future financing activities such as loans from its officers and directors, subsequent offerings of its common stock or debt financing in order to operate and grow the business. There can be no assurance that the Company will be successful in raising such capital. The key factors that are not within the Company's control and that may have a direct bearing on operating results include, but are not limited to, acceptance of the Company's business plan, the ability to raise capital in the future, to continue receiving funding from its officers, directors and shareholders, the ability to expand its customer base, and the ability to hire key employees to grow the business. There may be other risks and circumstances that management may be unable to predict. |
Accounts Receivable |
9 Months Ended |
---|---|
Mar. 31, 2017 | |
Receivables [Abstract] | |
Accounts Receivable | Note 4. Accounts Receivable
Accounts receivable reflect the amounts that have billed at their anticipated collectible amount. The Company receives contract acceptances on submitted quotes. Due to the advanced planning required, contract modifications occur, therefore, management invoices contracts upon signing, however, may reserve against invoicing until final scope of project negotiations or good faith deposits are made. |
Property and Equipment |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Note 5. Property and Equipment
For the six months ended March 31, 2017 and 2016, the total depreciation expense charged to continuing operations was $0, and $0 respectively. |
Discontinued Operations |
9 Months Ended |
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Mar. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Note 6. Discontinued Operations
In June of 2016, the Company sold its 70% controlling interest in Lockwood Technology Corporation to Sam Talari, the Company's Chairman in exchange for approximately $735,000 of accrued compensation and related party debt payable to Mr. Talari. As a result of the decision to sell this subsidiary, the Company has identified the assets and liabilities of Lockwood as pertaining to discontinued operations at March 31, 2017 and 2016 and has segregated its operating results and presented them separately as a discontinued operation for all periods presented. |
Notes payable |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable | Note 7. Notes payable
Notes payable consist of the following as of March 31, 2017;
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Related Parties Disclosures |
9 Months Ended |
---|---|
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Parties Disclosures | Note 8. Related Parties Disclosures
Employment Agreements
The Company currently does not have any employment agreements in place.
Line of Credit, Master Agreement
On September 1, 2005, Mr. Sam Talari, one of the Company's directors, agreed to make advances to the Company as an interim unsecured loan for operational capital up to a maximum of $350,000, evidenced by a non-interest bearing master promissory note, based on amounts advanced from time to time, payable annually. Mr. Talari has pledged additional funding for operating capital, up to $500,000, under the same terms as the original Master Note. Mr. Talari, from time to time, has converted advances and accrued interest in exchange for equity shares. Mr. Talari continued making advances to the Company on the loan, of which $342,852 and $342,862 remains outstanding at March 31, 2017 and June 30, 2016, respectively. |
Accounts Payable |
9 Months Ended |
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Mar. 31, 2017 | |
Payables and Accruals [Abstract] | |
Accounts Payable | Note 9. Accounts Payable
The Company relies on advances from the majority shareholder and other key members. Advances are normally in the form of a loan. Payments are made on behalf of the Company by these individuals and are treated as trade payables. These amounts are considered liquid and if payment is not made, may be formally converted in the form of a note. The Company currently has an aggregate of $172,924 and $171,665 due to two individuals as of March 31, 2017 and June 30. 2016. |
Income Taxes |
9 Months Ended |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10. Income Taxes
There is no current or deferred income tax expense or benefit allocated to continuing operations for the period ended September 30, 2016 and June 30, 2016. The Company has not recognized an income tax benefit for its operating losses generated through September 30, 2016 based on uncertainties concerning the Company's ability to generate taxable income in future periods. The tax benefit is offset by a valuation allowance established against deferred tax assets arising from operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not.
For income tax purposes the Company has available a net operating loss carry-forward of approximately $14,518,344 from inception to March 31, 2017, which will expire, unless used to offset future federal taxable income beginning in 2024. The tax years ending June 30, 2010 through March 31, 2017 are open for inspection by both Federal and State Agencies. |
Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | Note11. Equity
Preferred stock
The Company has issued convertible preferred shares. Shares are convertible into the Company's common stock, at the option of the holder, at the prescribed conversion rate. Conversions are as follows:
The Company has 50,000,000 shares of preferred stock authorized at $.001 par value.
Common stock
The Company has 1,950,000,000 shares of common stock authorized at $.001 par value. |
Commitments and Contingencies |
9 Months Ended |
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Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12. Commitments and Contingencies
Lease/Rental Agreements
Rent expense for the six months ended March 31, 2017 and 2016 for continuing operations amounted to $0 and $0 respectively.
Legal Matters
From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company's consolidated financial position or results of operations as of March 31, 2017. |
Subsequent Events |
9 Months Ended |
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Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13. Subsequent Events
N/A |
Summary of Significant Accounting Policies (Policies) |
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation
The consolidated balance sheet as of March 31, 2017, the consolidated statements of operations and statements of cash flows for the nine months then ended, and the statement of stockholders' equity have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures, normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading.
In the opinion of management, all adjustments necessary to present fairly the financial position at March 31, 2017, and the results of operations and changes in cash flows for the six months then ended have been made. These financial statements should be read in conjunction with our unaudited financial statements and notes thereto included in our annual report for the year ended June 30, 2016 on Form 10-K filed with the SEC on October 13, 2016.
Certain reclassifications have been made to the Statement of Operations for disclosure purposes and comparability. |
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Use of Estimates | Use of Estimates
The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States of America. These principals require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates. |
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Principles of Consolidation | Principles of Consolidation
The consolidated financial statements include the accounts and operations of Infrax Systems, Inc., and its wholly owned subsidiary, Infrax Systems SA (Pty) Ltd, an inactive foreign subsidiary. |
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Variable Interest Entities | Variable Interest Entities
The Company considers the consolidation of entities to which the usual condition (ownership of a majority voting interest) of consolidation does not apply, focusing on controlling financial interests that may be achieved through arrangements that do not involve voting interest. If an enterprise holds a majority of the variable interests of an entity, it would be considered the primary beneficiary. The primary beneficiary is generally required to consolidate assets, liabilities and non-controlling interests at fair value (or at historical cost if the entity is a related party) and subsequently account for the variable interest as if it were consolidated based on a majority voting interest. The Company has evaluated all related parties, contracts, agreements and arrangements in which it may hold a variable interest. The Company has determined it is not the primary beneficiary in any of these entities, arrangements or participates in any of the activities. |
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Financial Instruments | Financial Instruments
The Company's balance sheets include the following financial instruments: cash, accounts receivable, inventory, accounts payable, accrued expenses, deferred revenue, and notes payable and notes payable to stockholder. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. The carrying values of the note payable to stockholder approximates fair value based on borrowing rates currently available to the Company for instruments with similar terms and remaining maturities.
In September 2006, the Financial Accounting Standards Board (FASB) introduced a framework for measuring fair value and expanded required disclosure about fair value measurements of assets and liabilities. The Company adopted the standard for those financial assets and liabilities as of the beginning of the 2008 fiscal year and the impact of adoption was not significant. FASB Accounting Standards Codification (ASC) 820 "Fair Value Measurements and Disclosures" (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Three levels of the fair value hierarchy are described below:
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2017. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, accrued compensation and accrued expenses. The fair value of the Company's notes payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.
The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company's financial statements.
As of March 31, 2017, the fair values of the Company's financial instruments approximate their historical carrying amount. |
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Cash and Cash Equivalents | Cash and Cash Equivalents
The majority of cash is maintained with major financial institutions in the United States. Deposits with these banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk. The Company considers all highly liquid investments purchased with an original maturity of Three months or less to be cash equivalents. |
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Accounts Receivable and Credit | Accounts Receivable and Credit
Accounts receivable consist of amounts due for the delivery of sales to customers. Prepayments on account are recorded as customer deferred revenue. Additionally, the Company invoices projects when signed agreement or statements of work are received. Amounts are recorded at the anticipated collectible amount and recorded as deferred revenue until such time that the work is performed. Contract revenue is recognized as the contract is completed, based on defined milestones (see policy on revenue recognition). An allowance for doubtful accounts is considered to be established for any amounts that may not be recoverable, which is based on an analysis of the Company's customer credit worthiness, and current economic trends. Based on management's review of accounts receivable, no allowance for doubtful accounts was considered necessary. Receivables are determined to be past due, based on payment terms of original invoices. The Company does not typically charge interest on past due receivables. |
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Inventories | Inventories
Inventories are stated at the lower of cost or market, which approximates actual cost. Cost is determined using the first-in, first-out method. Inventory is comprised of component parts and accessories available for sale. Parts are generally purchased for projects, as minimal inventory is held to supply customers. |
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Property & Equipment | Property & Equipment
Property and equipment are recorded at historical cost or acquisition value. Depreciation is computed on the straight-line method over estimated useful lives of the respective assets, ranging from five to nine years. The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or the unamortized balance is warranted. Based upon the Company's most recent analysis, management believes that no impairment of property and equipment exists at March 31, 2017. |
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Intangible Property | Intangible Property
On June 29, 2010 the Company acquired the assets of Trimax Wireless Systems, Inc., including licenses and trademarks. The purchase price was allocated first to the identifiable assets received, allocating the remaining costs to the intellectual property. The valuation considered future cash flows of the operating intangible assets acquired. The valuation of the intellectual property was limited to the acquisition price (valuation of stock consideration and note payable), less the fair market value of identifiable assets. The shares issued in exchange for the acquired property were valued at the fair market value of the equivalent common stock as of the date of closing. The fair market value of consideration issued (stock and note payable) to the sellers was an aggregate amount of $6,511,364. The value assigned to the carrying value of the acquired intellectual property was $6,329,342. Intellectual property has an estimated useful life of 59 months (remaining life of patents). |
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Capitalized Software Development Costs | Capitalized Software Development Costs
The Company capitalizes software development costs, under which certain software development costs incurred subsequent to the establishment of technological feasibility have been capitalized and are being amortized over the estimated lives of the related products. Capitalization of computer software costs is discontinued when the computer software product is available to be sold, leased, or otherwise marketed.
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Impairment of Long-Lived Assets | Impairment of Long-Lived Assets
Periodically, the Company assesses the recoverability of the Company's intangible assets, consisting of the Trimax acquired intellectual property, OptiCon Network Manager software and its trademark, intangibles and goodwill and record an impairment loss to the extent that the carrying amounts of the assets exceed its fair value. Based upon management's most recent analysis, the Company believes that no impairment of the Company's tangible or intangible assets exist at March 31, 2017 and June 30, 2016. |
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Discontinued Operations | Discontinued Operations
In accordance with ASC 205-20, Presentation of Financial Statements-Discontinued Operations ("ASC 205-20"), we reported the results of Lockwood Technology Corporation as discontinued operations. The application of ASC 205-20 is discussed in the notes to the financial statements. |
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Revenue Recognition | Revenue Recognition
The Company is principally in the business of providing solutions for a secure intelligent energy platform that incorporates our secure wireless technology. Contracts include multiple revenue components, comprised of our software licensing, hardware platforms, installation, training and maintenance. In accordance with ASC 605-25 Multiple-Element Arrangements, revenue from licensing the software will be recognized upon installation and acceptance of the software by customers. When a software sales arrangement includes rights to customer support, the portion of the license fee allocated to such support is recognized ratably over the term of the arrangement, normally one year. Revenue from professional services arrangements will be recognized in the month in which services are rendered over the term of the arrangement and collection is probable.
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Stock based compensation | Stock Based Compensation
The Company issues restricted stock to consultants for various services. Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expenses and a corresponding increase to additional paid-in-capital related to stock issued for services. Stock compensation for the periods presented were issued to consultants for past services provided, accordingly, all shares issued are fully vested, and there is no unrecognized compensation associated with these transactions. |
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Shipping Costs | Shipping Costs
The Company includes shipping costs and freight-in costs in cost of goods sold. |
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Advertising Costs | Advertising Costs
The costs of advertising are expensed as incurred. Advertising expenses are included in the Company's operating expenses. Advertising expense was $0 and $0 for the six month periods ending March 31, 2017 and 2016, respectively. |
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Income Taxes | Income Taxes
The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized. |
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Earnings (Loss) Per Share | Earnings (Loss) Per Share
Basic EPS is calculated by dividing the loss available to common shareholders by the weighted average number of common shares outstanding during each period. Diluted EPS is similarly calculated, except that the denominator includes common shares that may be issued subject to existing rights with dilutive potential, except when their inclusion would be anti-dilutive.
Based on an estimated current value of the Company's stock being equal to or less than the exercise price of the warrants, none of the shares assumed issued upon conversion of the warrants, nor any of the stock assumed issued under the Company's 2004 Non statutory Stock Option Plan, are included in the computation of fully diluted loss per share, since their inclusion would be anti-dilutive. Convertible preferred shares have been included in the dilutive computation, as if they would have been converted at the end of the period.
* Potentially issuable preferred shares, if converted to common, were considered but not included in the calculation of diluted earnings per share for the period ended March 31, 2017 and 2016, respectively, because their inclusion would be anti-dilutive. |
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Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements
We have reviewed accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration. Those standards have been addressed in the notes to the unaudited financial statement and in our Annual Report, filed on Form 10-K for the period ended June 30, 2016. |
Summary of Significant Accounting Policies (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share | Convertible preferred shares have been included in the dilutive computation, as if they would have been converted at the end of the period.
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Property and Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property and equipment |
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Notes payable (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notes payable | Notes payable consist of the following as of March 31, 2017;
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Equity (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of convertible preferred shares |
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Summary of Significant Accounting Policies (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Earnings (Loss) per share: | ||
Net Loss | $ (39,008) | $ (483,234) |
Common shares - weighted average | 1,411,911,416 | 539,280,618 |
Earnings (loss) per share, basic | $ (0.00) | $ (0.00) |
Summary of Significant Accounting Policies (Detail Textuals) - USD ($) |
1 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
May 31, 2011 |
Jun. 29, 2010 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Jun. 30, 2016 |
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Accounting Policies [Line Items] | |||||
Depreciation methods | Straight-line method | ||||
Estimated useful lives | five to nine years | ||||
Impairment of intangible assets | $ 0 | $ 0 | |||
Advertising expense | 0 | $ 4,706 | |||
Intellectual property | |||||
Accounting Policies [Line Items] | |||||
Value of shares issued to acquire interest | $ 6,511,364 | ||||
Intangible assets, gross | $ 6,329,342 | $ 6,329,342 | $ 6,329,342 | ||
Intangible assets, estimated useful life | 59 months | ||||
Lockwood Technologies [Member] | Warrant [Member] | |||||
Accounting Policies [Line Items] | |||||
Warrants, valuation method | Option price model |
Going Concern (Detail Textuals) |
Mar. 31, 2017
USD ($)
|
---|---|
Going Concern [Abstract] | |
Working capital deficit | $ 51 |
Cash on hand | $ 63 |
Property and Equipment - Property and equipment (Details) - USD ($) |
Mar. 31, 2017 |
Jun. 30, 2016 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 0 | $ 0 |
Accumulated depreciation | 0 | 0 |
Office and Computer Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 0 | 0 |
Furniture and fixtures & improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 0 | 0 |
Computer Software | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 0 | $ 0 |
Property and Equipment (Detail Textuals) - USD ($) |
9 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Property, Plant and Equipment [Abstract] | ||
Total depreciation expense | $ 0 | $ 0 |
Discontinued Operations (Details Textuals) - Sam Talari Member |
1 Months Ended |
---|---|
Jun. 30, 2015
USD ($)
| |
Accrued compensation and related party debt payable | $ 735,000 |
Controlling interest | 0.7 |
Notes payable (Details) - USD ($) |
Mar. 31, 2017 |
Jun. 30, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Total | $ 38,845 | $ 70,009 |
Less current portion | (12,897) | (45,919) |
Long-term portion | 25,948 | 24,090 |
Convertible Redeemable Note [Member] | Typenex Investments [Member] | ||
Debt Instrument [Line Items] | ||
Total | 0 | 27,009 |
Convertible Redeemable Note [Member] | Kbm Worldwide [Member] | ||
Debt Instrument [Line Items] | ||
Total | $ 38,845 | $ 43,000 |
Note Payable (Details) (Parentheticals) - Convertible Redeemable Note [Member] |
9 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017
USD ($)
|
Jun. 30, 2016
USD ($)
|
|
Typenex Investments [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 52,000 | $ 52,000 |
Interest rate | 10.00% | 10.00% |
Principle due date | Oct. 03, 2016 | Oct. 03, 2016 |
Conversion percentage of market | 0.40 | 0.40 |
Convertible note balance net of discounts | $ 0 | $ 10,400 |
Kbm Worldwide [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 43,000 | $ 43,000 |
Interest rate | 8.00% | 8.00% |
Principle due date | Sep. 21, 2016 | Sep. 21, 2016 |
Conversion percentage of market | 0.40 | 0.40 |
Convertible note balance net of discounts | $ 12,897 | $ 24,437 |
Related Parties Disclosures (Detail Textuals) - Sam Talari Member - USD ($) |
Mar. 31, 2017 |
Jun. 30, 2016 |
Sep. 01, 2005 |
---|---|---|---|
Related Party Transaction [Line Items] | |||
Debt instrument, face amount | $ 350,000 | ||
Additional funding for operating capital | $ 500,000 | ||
Outstanding balance on line of credit | $ 342,852 | $ 342,862 |
Accounts Payable (Details Textuals) - USD ($) |
Mar. 31, 2017 |
Jun. 30, 2016 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accounts Payable to related parties | $ 172,924 | $ 171,665 |
Income Taxes (Detail Textuals) |
Mar. 31, 2017
USD ($)
|
---|---|
Income Tax Disclosure [Abstract] | |
Operating loss carry-forwards | $ 14,518,344 |
Equity (Details) |
9 Months Ended |
---|---|
Mar. 31, 2017
shares
| |
Equity [Line Items] | |
Shares Outstanding | 2,525,664 |
Series A Convertible Preferred Stock | |
Equity [Line Items] | |
Shares Outstanding | 2,400,000 |
Conversion Rate to Common | 375 |
Series A1Convertible Preferred Stock Member | |
Equity [Line Items] | |
Shares Outstanding | 8,889 |
Conversion Rate to Common | 89 |
Series A2 Preferred Stock [Member] | |
Equity [Line Items] | |
Shares Outstanding | 88,889 |
Conversion Rate to Common | 20 |
Series A3Convertible Preferred Stock Member | |
Equity [Line Items] | |
Shares Outstanding | 25,846 |
Conversion Rate to Common | 16 |
Series B1 Preferred Stock [Member] | |
Equity [Line Items] | |
Shares Outstanding | 830 |
Conversion Rate to Common | 300 |
Series B 2 Preferred Stock [Member] | |
Equity [Line Items] | |
Shares Outstanding | 1,210 |
Conversion Rate to Common | 300 |
Equity (Details Textuals) - $ / shares |
Mar. 31, 2017 |
Jun. 30, 2016 |
---|---|---|
Equity [Abstract] | ||
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,950,000,000 | 1,950,000,000 |
Commitments and Contingencies (Detail Textuals) |
9 Months Ended | ||
---|---|---|---|
Jun. 01, 2012
USD ($)
|
Mar. 31, 2017
USD ($)
ft²
|
Mar. 31, 2016
USD ($)
|
|
Commitments and Contingencies Disclosure [Abstract] | |||
Lease term | 5 years | 5 years | |
Rent expense | $ | $ 4,729 | $ 0 | $ 0 |
Area under lease | ft² | 4,100 |
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