CONVERTIBLE NOTES PAYABLE - AFFILIATES:	9 Months Ended
Mar. 31, 2023
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 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”. Effective February 1, 2023, a large portion of the 2020 Convertible Obligations were adjusted as set forth below. As of March 31, 2023, the remaining unadjusted portion of the 2020 Convertible Obligation balances, including accrued interest, owed Bassani Family Trusts (and his donees), Smith and Edward Schafer (“Schafer”), a director of the Company, were $358,151, $36,072 and 0 nil, respectively. As of March 31, 2022, the 2020 Convertible Obligation balances, including accrued interest, owed Bassani Family Trusts, Smith and Schafer were $2,573,716, $1,315,069 and $494,736, respectively. During the nine months ended March 31, 2023 (on dates prior to the adjustment on February 1, 2023), Smith elected to add $90,000 of his salary and $23,943 in accounts payable for reimbursable expenses to his 2020 Convertible Obligations. During the nine months ended March 31, 2023 (on dates prior to the adjustment on February 1, 2023), Smith elected to convert $30,000 in principal of the 2020 Convertible Obligation to 60,000 units (60,000 common shares and 60,000 warrants), and $20,000 of accrued interest of the 2020 Convertible Obligation to 40,000 units (40,000 common shares and 40,000 warrants). The warrants are exercisable for three years from conversion date. The Company recorded interest expense of $16,208 and $6,366 for the three months ended March 31, 2023 and 2022, respectively. The Company recorded interest expense of $98,948 and $17,430 for the nine months ended March 31, 2023 and 2022, respectively. The Company capitalized $51,238 and nil 0 related to the Initial Project for the three months ended March 31, 2023 and 2022, respectively. The Company capitalized $117,342 and nil 0 related to the Initial Project for the nine months ended March 31, 2023 and 2022, respectively. Effective February 1, 2023, three (3) directors/officers of the Company agreed to adjust the provisions of long-term convertible obligations (including most of the 2020 Convertible Obligations and September 2015 Convertible Notes) owed to them by the Company in a manner which reduces the indebtedness of the Company by 80% (approximately $3.47 million, in aggregate) while equitably maintaining existing conversion rights. Mark A. Smith (the Company’s President) (“Smith”), Dominic Bassani (the Company’s Chief Operating Officer) (“Bassani”) and Ed Schafer (Director) (“Schafer”), adjusted/reduced the principal owed to them by $1,109,649, $1,939,670 and $424,873, respectively. Subsequent to the adjustment, the adjusted portion of the 2020 Convertible Obligations were renamed Adjusted 2020 Convertible Obligations (see below). 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 March 31, 2023, including accrued interest owed Bassani, Schafer and Shareholder, are $157,682, nil 0 and $457,094, respectively. The balances of the September 2015 Convertible Notes as of March 31, 2022, including accrued interest, were $276,944, $20,681 and $441,977, respectively. The Company recorded interest expense of $5,507 and $5,366 for the three months ended March 31, 2023 and 2022, respectively. The Company recorded interest expense of $18,239 and $17,430 for the nine months ended March 31, 2023 and 2022, respectively. Effective February 1, 2023, three (3) directors/officers of the Company agreed to adjust the provisions of long term convertible obligations (including the September 2015 Convertible Notes owned by Bassani and Schafer) owed to them by the Company in a manner which reduces the indebtedness of the Company by 80% (approximately $3.47 million, in aggregate) while equitably maintaining existing conversion rights. Mark A. Smith (the Company’s President), Dominic Bassani (the Company’s Chief Operating Officer)(and a family Trust) and Ed Schafer (Director), adjusted/reduced the principal owed to them by $1,109,649, $1,939,670 and $424,873, respectively. Adjusted 2020 Convertible Obligations and Adjusted September 2015 Convertible Notes Effective February 1, 2023, three (3) directors/officers of the Company agreed to adjust the provisions of long term convertible obligations (including most of the 2020 Convertible Obligations and September 2015 Convertible Notes) owed to them by the Company in a manner which reduces the indebtedness of the Company by 80% (approximately $3.47 million, in aggregate) while equitably maintaining existing conversion rights. Mark A. Smith (the Company’s President)(“Smith”), Dominic Bassani (the Company’s Chief Operating Officer)(“Bassani”) and Ed Schafer (Director)(“Schafer”), adjusted/reduced the principal owed to them by $1,109,649, $1,939,670 and $424,873, respectively. Subsequent to the adjustment, the adjusted portion of the 2020 Convertible Obligations were renamed Adjusted 2020 Convertible Obligations and Adjusted September 2015 Convertible Notes. The Adjusted 2020 Convertible Obligations of Smith, Bassani and Schafer are convertible into Units at prices of $.0946, $0953, and $.0953, respectively, and the Adjusted September 2015 Convertible Notes may be converted at the sole election of the noteholders into restricted common shares of the Company at a conversion price of $0.115 per share. The Adjusted 2020 Convertible Obligations and Adjusted September 2015 Convertible Notes do not accrue any interest until their maturity date (July 1, 2024). Effective February 1, 2023 the Company owed Smith, Bassani (and trust) and Schafer $262,154, $434,016 and $96,364 of Adjusted 2020 Convertible Obligations and Bassani and Schafer $24,230 and $4,012 of Adjusted September 2015 Convertible Notes. Effective March 8, 2023, Smith converted $70,000 of his Adjusted 2020 Convertible Obligation into 739,958 Units (each Unit consisting one share and one warrant). Effective March 31, 2023, Smith converted $29,888.64 of his Adjusted Convertible Obligation into 315,948 Units (each Unit consisting one share of common stock and one warrant). Smith donated to charitable organizations and/or gifted to family members and others a large portion of these securities (450,000 common shares and 705,000 warrants, in aggregate) while retaining direct ownership of 255,906 common shares and 79,958 warrants and indirect ownership of 350,000 common shares and 270,948 warrants (owned by his wife). The warrants are exercisable for three years from conversion date. As of March 31, 2023, the Adjusted 2020 Convertible Obligation balances, including accrued interest, owed Bassani (and his donees), Smith and Edward Schafer were $436,988, $164,060 and $97,024, respectively. As of March 31, 2023 the Adjusted September 2015 Convertible Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were $24,396 and $4,039, respectively.

CONVERTIBLE NOTES PAYABLE - AFFILIATES:

9 Months Ended

Mar. 31, 2023

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 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”. Effective February 1, 2023, a large portion of the 2020 Convertible Obligations were adjusted as set forth below.

As of March 31, 2023, the remaining unadjusted portion of the 2020 Convertible Obligation balances, including accrued interest, owed Bassani Family Trusts (and his donees), Smith and Edward Schafer (“Schafer”), a director of the Company, were $358,151, $36,072 and 0 nil, respectively. As of March 31, 2022, the 2020 Convertible Obligation balances, including accrued interest, owed Bassani Family Trusts, Smith and Schafer were $2,573,716, $1,315,069 and $494,736, respectively.

During the nine months ended March 31, 2023 (on dates prior to the adjustment on February 1, 2023), Smith elected to add $90,000 of his salary and $23,943 in accounts payable for reimbursable expenses to his 2020 Convertible Obligations.

During the nine months ended March 31, 2023 (on dates prior to the adjustment on February 1, 2023), Smith elected to convert $30,000 in principal of the 2020 Convertible Obligation to 60,000 units (60,000 common shares and 60,000 warrants), and $20,000 of accrued interest of the 2020 Convertible Obligation to 40,000 units (40,000 common shares and 40,000 warrants). The warrants are exercisable for three years from conversion date.

The Company recorded interest expense of $16,208 and $6,366 for the three months ended March 31, 2023 and 2022, respectively. The Company recorded interest expense of $98,948 and $17,430 for the nine months ended March 31, 2023 and 2022, respectively. The Company capitalized $51,238 and nil 0 related to the Initial Project for the three months ended March 31, 2023 and 2022, respectively. The Company capitalized $117,342 and nil 0 related to the Initial Project for the nine months ended March 31, 2023 and 2022, respectively.

Effective February 1, 2023, three (3) directors/officers of the Company agreed to adjust the provisions of long-term convertible obligations (including most of the 2020 Convertible Obligations and September 2015 Convertible Notes) owed to them by the Company in a manner which reduces the indebtedness of the Company by 80% (approximately $3.47 million, in aggregate) while equitably maintaining existing conversion rights. Mark A. Smith (the Company’s President) (“Smith”), Dominic Bassani (the Company’s Chief Operating Officer) (“Bassani”) and Ed Schafer (Director) (“Schafer”), adjusted/reduced the principal owed to them by $1,109,649, $1,939,670 and $424,873, respectively. Subsequent to the adjustment, the adjusted portion of the 2020 Convertible Obligations were renamed Adjusted 2020 Convertible Obligations (see below).

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 March 31, 2023, including accrued interest owed Bassani, Schafer and Shareholder, are $157,682, nil 0 and $457,094, respectively. The balances of the September 2015 Convertible Notes as of March 31, 2022, including accrued interest, were $276,944, $20,681 and $441,977, respectively.

The Company recorded interest expense of $5,507 and $5,366 for the three months ended March 31, 2023 and 2022, respectively. The Company recorded interest expense of $18,239 and $17,430 for the nine months ended March 31, 2023 and 2022, respectively.

Effective February 1, 2023, three (3) directors/officers of the Company agreed to adjust the provisions of long term convertible obligations (including the September 2015 Convertible Notes owned by Bassani and Schafer) owed to them by the Company in a manner which reduces the indebtedness of the Company by 80% (approximately $3.47 million, in aggregate) while equitably maintaining existing conversion rights. Mark A. Smith (the Company’s President), Dominic Bassani (the Company’s Chief Operating Officer)(and a family Trust) and Ed Schafer (Director), adjusted/reduced the principal owed to them by $1,109,649, $1,939,670 and $424,873, respectively.

Adjusted 2020 Convertible Obligations and Adjusted September 2015 Convertible Notes

Effective February 1, 2023, three (3) directors/officers of the Company agreed to adjust the provisions of long term convertible obligations (including most of the 2020 Convertible Obligations and September 2015 Convertible Notes) owed to them by the Company in a manner which reduces the indebtedness of the Company by 80% (approximately $3.47 million, in aggregate) while equitably maintaining existing conversion rights. Mark A. Smith (the Company’s President)(“Smith”), Dominic Bassani (the Company’s Chief Operating Officer)(“Bassani”) and Ed Schafer (Director)(“Schafer”), adjusted/reduced the principal owed to them by $1,109,649, $1,939,670 and $424,873, respectively. Subsequent to the adjustment, the adjusted portion of the 2020 Convertible Obligations were renamed Adjusted 2020 Convertible Obligations and Adjusted September 2015 Convertible Notes. The Adjusted 2020 Convertible Obligations of Smith, Bassani and Schafer are convertible into Units at prices of $.0946, $0953, and $.0953, respectively, and the Adjusted September 2015 Convertible Notes may be converted at the sole election of the noteholders into restricted common shares of the Company at a conversion price of $0.115 per share. The Adjusted 2020 Convertible Obligations and Adjusted September 2015 Convertible Notes do not accrue any interest until their maturity date (July 1, 2024). Effective February 1, 2023 the Company owed Smith, Bassani (and trust) and Schafer $262,154, $434,016 and $96,364 of Adjusted 2020 Convertible Obligations and Bassani and Schafer $24,230 and $4,012 of Adjusted September 2015 Convertible Notes.

Effective March 8, 2023, Smith converted $70,000 of his Adjusted 2020 Convertible Obligation into 739,958 Units (each Unit consisting one share and one warrant). Effective March 31, 2023, Smith converted $29,888.64 of his Adjusted Convertible Obligation into 315,948 Units (each Unit consisting one share of common stock and one warrant). Smith donated to charitable organizations and/or gifted to family members and others a large portion of these securities (450,000 common shares and 705,000 warrants, in aggregate) while retaining direct ownership of 255,906 common shares and 79,958 warrants and indirect ownership of 350,000 common shares and 270,948 warrants (owned by his wife). The warrants are exercisable for three years from conversion date.

As of March 31, 2023, the Adjusted 2020 Convertible Obligation balances, including accrued interest, owed Bassani (and his donees), Smith and Edward Schafer were $436,988, $164,060 and $97,024, respectively.

As of March 31, 2023 the Adjusted September 2015 Convertible Notes balances, including accrued interest, owed Bassani Family Trusts and Schafer were $24,396 and $4,039, respectively.