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CONVERTIBLE LOANS - RELATED PARTY
3 Months Ended
Sep. 30, 2018
Convertible Loans Related Party [Abstract]  
CONVERTIBLE LOANS - RELATED PARTY

6. CONVERTIBLE LOANS – RELATED PARTY

 

At September 30, 2018 and June 30, 2018, convertible loan – related party consisted of the following:

 

 

 

September 30,

 

 

June 30,

 

 

 

2018

 

 

2018

 

Convertible notes - related party -Issued in fiscal year 2018

 

 

8,333

 

 

 

8,333

 

Total convertible notes payable

 

 

8,333

 

 

 

8,333

 

 

 

 

 

 

 

 

 

 

Accrued interest -related party

 

 

1,155

 

 

 

644

 

Less: Unamortized debt discount - related party

 

 

-

 

 

 

-

 

Total convertible notes

 

 

9,488

 

 

 

8,977

 

 

 

 

 

 

 

 

 

 

Less: current portion of convertible notes - related party

 

 

9,488

 

 

 

8,977

 

Long-term convertible notes

 

$ -

 

 

$ -

 

 

During the three months ended September 30, 2018 and 2017, the Company recognized amortization of discount, included in interest expense, of $0 and $0, respectively.

  

Promissory Notes - Issued in fiscal year 2018

 

During the year ended June 30, 2018, the Company issued a total of $8,333 note with the following terms:

 

 

·

Terms of 6 months.

 

·

Annual interest rates of 8%.

 

·

Convertible at the option of the holders at issuance.

 

·

Conversion prices are typically based on the discounted (45% discount) average closing prices of the Company’s shares during 20 days prior to conversion.

 

The Company received cash of $8,333.

 

The Company determined that the conversion feature met the definition of a liability in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and therefore bifurcated the embedded conversion option once the note becomes convertible and accounted for it as a derivative liability. The fair value of the conversion feature was recorded as a debt discount and amortized to interest expense over the term of the note.

 

The Company valued the conversion feature using the Black Scholes valuation model. The fair value of the derivative liability for all the notes that became convertible, including the notes issued in prior years, during the year ended June 30, 2018 amounted to $9,371. $8,333 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $1,038 was recognized as a “day 1” derivative loss.