CONVERTIBLE NOTES PAYABLE - AFFILIATES	6 Months Ended
Dec. 31, 2021
Convertible Notes Payable - Affiliates
CONVERTIBLE NOTES PAYABLE - AFFILIATES	6. CONVERTIBLE NOTES PAYABLE - AFFILIATES: 2020 Convertible Obligations The 2020 Convertible Obligations, which accrue interest at either 4% per annum or 4% compounded quarterly and effective January 1, 2020 are due and payable on July 1, 2024. The 2020 Convertible Obligations (including accrued interest, plus all future deferred compensation added subsequently), are convertible, at the sole election of the holder, into Units consisting of one share of the Company’s common stock and one half to one warrant to purchase a share of the Company’s common stock, at a price of $0.50 per Unit until July 1, 2024. The warrant contained in the Unit was originally exercisable at $1.00 per unit but was modified to $0.75 during the year ended June 30, 2020 and is exercisable until a date three years after the date of the conversion. During the year ended June 30, 2021, the Company approved the increase of warrants by one-third to be received by the noteholder if a conversion takes place. The original conversion price of $0.50 per Unit approximated the fair value of the Units at the date of the agreements; therefore, no beneficial conversion feature exists. Management evaluated the terms and conditions of the embedded conversion features based on the guidance of ASC 815-15 “Embedded Derivatives” to determine if there was an embedded derivative requiring bifurcation. An embedded derivative instrument (such as a conversion option embedded in the deferred compensation) must be bifurcated from its host instruments and accounted for separately as a derivative instrument only if the “risks and rewards” of the embedded derivative instrument are not “clearly and closely related” to the risks and rewards of the host instrument in which it is embedded. Management concluded that the embedded conversion feature of the deferred compensation was not required to be bifurcated because the conversion feature is clearly and closely related to the host instrument, and because of the Company’s limited trading volume that indicates the feature is not readily convertible to cash in accordance with ASC 815-10, “Derivatives and Hedging”. As of December 31, 2021, the 2020 Convertible Obligation balances, including accrued interest, owed Bassani (and his donees), Smith and Edward Schafer (“Schafer”), the Company’s Vice Chairman, were $2,550,104, $1,302,049 and $490,197, respectively. As of December 31, 2020, the 2020 Convertible Obligation balances, including accrued interest, owed Bassani, Smith and Schafer were $2,455,656, $1,163,862 and $472,041, respectively. During the six months ended December 31, 2021, Smith elected to add $90,000 of his salary to his 2020 Convertible Obligations. The Company recorded interest expense of $40,864 and $65,468 for the three months ended December 31, 2021 and 2020, respectively. The Company recorded interest expense of $81,424 and $96,428 for the six months ended December 31, 2021 and 2020, respectively. September 2015 Convertible Notes During the year ended June 30, 2016, the Company entered into September 2015 Convertible Notes with Bassani, Schafer and a Shareholder which replaced previously issued promissory notes. The September 2015 Convertible Notes bear interest at 4% per annum, have maturity dates of July 1, 2024, and may be converted at the sole election of the noteholders into restricted common shares of the Company at a conversion price of $0.60 per share. As the conversion price of $0.60 approximated the fair value of the common shares at the date of the September 2015 Convertible Notes, no beneficial conversion feature exists. The balances of the September 2015 Convertible Notes as of December 31, 2021, including accrued interest owed Bassani, Schafer and Shareholder, are $274,521, $20,517 and $438,198, respectively. The balances of the September 2015 Convertible Notes as of December 31, 2020, including accrued interest, were $168,498, $19,862 and $423,081, respectively. During the six months ended December 31, 2021, Bassani elected to transfer $100,000 from deferred compensation to his 2015 convertible note. The Company recorded interest expense of $5,698 and $5,365 for the three months ended December 31, 2021 and 2020, respectively. The Company recorded interest expense of $11,064 and $10,731 for both the six months ended December 31, 2021 and 2020, respectively.

CONVERTIBLE NOTES PAYABLE - AFFILIATES

6 Months Ended

Dec. 31, 2021

Convertible Notes Payable - Affiliates

6. CONVERTIBLE NOTES PAYABLE - AFFILIATES:

2020 Convertible Obligations

The 2020 Convertible Obligations, which accrue interest at either 4% per annum or 4% compounded quarterly and effective January 1, 2020 are due and payable on July 1, 2024. The 2020 Convertible Obligations (including accrued interest, plus all future deferred compensation added subsequently), are convertible, at the sole election of the holder, into Units consisting of one share of the Company’s common stock and one half to one warrant to purchase a share of the Company’s common stock, at a price of $0.50 per Unit until July 1, 2024. The warrant contained in the Unit was originally exercisable at $1.00 per unit but was modified to $0.75 during the year ended June 30, 2020 and is exercisable until a date three years after the date of the conversion. During the year ended June 30, 2021, the Company approved the increase of warrants by one-third to be received by the noteholder if a conversion takes place. The original conversion price of $0.50 per Unit approximated the fair value of the Units at the date of the agreements; therefore, no beneficial conversion feature exists. Management evaluated the terms and conditions of the embedded conversion features based on the guidance of ASC 815-15 “Embedded Derivatives” to determine if there was an embedded derivative requiring bifurcation. An embedded derivative instrument (such as a conversion option embedded in the deferred compensation) must be bifurcated from its host instruments and accounted for separately as a derivative instrument only if the “risks and rewards” of the embedded derivative instrument are not “clearly and closely related” to the risks and rewards of the host instrument in which it is embedded. Management concluded that the embedded conversion feature of the deferred compensation was not required to be bifurcated because the conversion feature is clearly and closely related to the host instrument, and because of the Company’s limited trading volume that indicates the feature is not readily convertible to cash in accordance with ASC 815-10, “Derivatives and Hedging”.

As of December 31, 2021, the 2020 Convertible Obligation balances, including accrued interest, owed Bassani (and his donees), Smith and Edward Schafer (“Schafer”), the Company’s Vice Chairman, were $2,550,104, $1,302,049 and $490,197, respectively. As of December 31, 2020, the 2020 Convertible Obligation balances, including accrued interest, owed Bassani, Smith and Schafer were $2,455,656, $1,163,862 and $472,041, respectively.

During the six months ended December 31, 2021, Smith elected to add $90,000 of his salary to his 2020 Convertible Obligations.

The Company recorded interest expense of $40,864 and $65,468 for the three months ended December 31, 2021 and 2020, respectively. The Company recorded interest expense of $81,424 and $96,428 for the six months ended December 31, 2021 and 2020, respectively.

September 2015 Convertible Notes

During the year ended June 30, 2016, the Company entered into September 2015 Convertible Notes with Bassani, Schafer and a Shareholder which replaced previously issued promissory notes. The September 2015 Convertible Notes bear interest at 4% per annum, have maturity dates of July 1, 2024, and may be converted at the sole election of the noteholders into restricted common shares of the Company at a conversion price of $0.60 per share. As the conversion price of $0.60 approximated the fair value of the common shares at the date of the September 2015 Convertible Notes, no beneficial conversion feature exists.

The balances of the September 2015 Convertible Notes as of December 31, 2021, including accrued interest owed Bassani, Schafer and Shareholder, are $274,521, $20,517 and $438,198, respectively. The balances of the September 2015 Convertible Notes as of December 31, 2020, including accrued interest, were $168,498, $19,862 and $423,081, respectively.

During the six months ended December 31, 2021, Bassani elected to transfer $100,000 from deferred compensation to his 2015 convertible note.

The Company recorded interest expense of $5,698 and $5,365 for the three months ended December 31, 2021 and 2020, respectively. The Company recorded interest expense of $11,064 and $10,731 for both the six months ended December 31, 2021 and 2020, respectively.