x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Nevada
|
|
98-0163519
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
incorporation or organization)
|
|
Identification No.)
|
Large accelerated filer o
|
Accelerated filer o
|
|
|
Non-accelerated filer o
|
Smaller reporting company T
|
|
Page
|
PART I - FINANCIAL INFORMATION
|
|
|
|
Item 1. Financial Statements
|
|
|
|
F-1
|
|
|
|
F-2
|
|
|
|
F-3
|
|
|
|
F-4
|
|
|
|
F-5
|
|
|
|
1
|
|
4
|
|
Item 4. Controls and Procedures
|
4
|
|
|
PART II - OTHER INFORMATION
|
|
|
|
Item 1. Legal Proceedings
|
5
|
Item 1A. Risk Factors
|
5
|
5
|
|
Item 3. Defaults Upon Senior Securities
|
5
|
Item 4. Removed and Reserved
|
5
|
Item 5. Other Information
|
5
|
Item 6. Exhibits
|
5
|
6
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
December 31,
2013
|
June 30,
2013
|
||||||
|
(Unaudited)
|
|||||||
Assets
|
||||||||
Current
|
||||||||
Cash
|
$
|
41,878
|
$
|
532,308
|
||||
Prepaid expenses
|
0
|
20,232
|
||||||
Account receivable (note 13)
|
0
|
250,000
|
||||||
|
||||||||
Total Assets
|
$
|
41,878
|
$
|
802,540
|
||||
|
||||||||
Liabilities
|
||||||||
|
||||||||
Current
|
||||||||
Accounts payable and accruals (note 14)
|
$
|
1,650,692
|
$
|
2,270,727
|
||||
Promissory notes payable (note 12)
|
60,000
|
0
|
||||||
Deferred liability (note 13)
|
25,000
|
25,000
|
||||||
Convertible debentures (note 11)
|
137,030
|
174,827
|
||||||
Derivative financial liabilities (note 11)
|
300,117
|
414,102
|
||||||
Redeemable preferred stock (notes 5 and 14)
|
240,000
|
180,000
|
||||||
|
||||||||
Total Current Liabilities
|
2,412,839
|
3,064,656
|
||||||
Promissory Note Payable (note 12)
|
215,000
|
0
|
||||||
Deferred Liability (note 13)
|
212,500
|
225,000
|
||||||
Redeemable Preferred Stock (notes 5 and 14)
|
60,000
|
120,000
|
||||||
|
||||||||
Total Liabilities
|
2,900,339
|
3,409,656
|
||||||
|
||||||||
Stockholders’ Deficit (note 5)
|
||||||||
Preferred Stock and Paid-in Capital in Excess of $0.001 Par Value
|
||||||||
20,000,000 shares authorized 308,538 issued and outstanding (notes 5 and 14)
|
237,950
|
237,950
|
||||||
Common Stock and Paid-in Capital in Excess of $0.001 Par Value 150,000,000 shares authorized 81,275,997 (June 30, 2013 – 76,748,839) issued and outstanding
|
43,125,424
|
41,204,935
|
||||||
Promissory Notes Receivable
|
(29,737
|
)
|
(29,737
|
)
|
||||
Share Subscriptions
|
28,951
|
13,400
|
||||||
Accumulated Other Comprehensive Income
|
46,267
|
46,267
|
||||||
Deficit Accumulated During the Development Stage
|
(46,267,316
|
)
|
(44,079,931
|
)
|
||||
|
||||||||
Total Stockholders’ Deficit
|
(2,858,461
|
)
|
(2,607,116
|
)
|
||||
|
||||||||
Total Liabilities and Stockholders’ Deficit
|
$
|
41,878
|
$
|
802,540
|
|
Three Months Ended
December 31,
|
Six Months Ended
December 31,
|
Period from
February 12,
1996
(Inception) to
December 31,
|
|||||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
2013
|
|||||||||||||||
Revenue
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
249,308
|
||||||||||
Cost of Sales
|
0
|
0
|
0
|
0
|
216,016
|
|||||||||||||||
|
0
|
0
|
0
|
0
|
33,292
|
|||||||||||||||
Other Income
|
6,309
|
48
|
12,722
|
113
|
882,374
|
|||||||||||||||
|
||||||||||||||||||||
|
6,309
|
48
|
12,722
|
113
|
915,666
|
|||||||||||||||
|
||||||||||||||||||||
Expenses
|
||||||||||||||||||||
Consulting
|
558,693
|
402,520
|
1,450,356
|
1,226,901
|
15,079,021
|
|||||||||||||||
Legal and accounting
|
103,992
|
122,953
|
209,390
|
235,386
|
12,121,539
|
|||||||||||||||
Salaries and benefits
|
55,000
|
55,000
|
110,000
|
165,000
|
5,526,297
|
|||||||||||||||
Research and development (note 9)
|
16,432
|
5,591
|
43,628
|
83,695
|
2,339,163
|
|||||||||||||||
General and administrative
|
59,151
|
54,432
|
99,433
|
112,960
|
1,907,239
|
|||||||||||||||
Travel and entertainment
|
14,119
|
42,843
|
54,719
|
78,400
|
1,856,721
|
|||||||||||||||
Bank charges and interest, net
|
174,688
|
34,509
|
236,776
|
60,388
|
648,852
|
|||||||||||||||
Rent
|
16,514
|
18,174
|
38,402
|
37,806
|
760,400
|
|||||||||||||||
Telephone
|
3,955
|
7,714
|
7,368
|
15,698
|
567,753
|
|||||||||||||||
Advertising
|
7,746
|
500
|
12,452
|
7,500
|
382,013
|
|||||||||||||||
Fair value loss (recovery) on derivative financial liabilities (note 11)
|
(93,270
|
)
|
58,118
|
10,572
|
64,458
|
420,435
|
||||||||||||||
Net gain on settlement of convertible debenture (note 11)
|
(32,432
|
)
|
(26,189
|
)
|
(32,432
|
)
|
(26,189
|
)
|
(58,621
|
)
|
||||||||||
Loss (gain) on extinguishment of debt, net (note 14)
|
27,142
|
(228,897
|
)
|
(48,287
|
)
|
(228,897
|
)
|
(294,309
|
)
|
|||||||||||
Write-down of license and operating assets
|
0
|
0
|
0
|
0
|
1,855,619
|
|||||||||||||||
Write-off of investments
|
0
|
0
|
0
|
0
|
1,250,000
|
|||||||||||||||
Non-competition agreement
|
0
|
0
|
0
|
0
|
711,000
|
|||||||||||||||
Interest on beneficial conversion feature
|
0
|
0
|
0
|
0
|
566,455
|
|||||||||||||||
Bad debts
|
0
|
0
|
0
|
0
|
46,604
|
|||||||||||||||
Financing fees
|
0
|
0
|
0
|
0
|
129,043
|
|||||||||||||||
Settlement of lawsuit
|
0
|
0
|
0
|
0
|
45,250
|
|||||||||||||||
Amortization
|
0
|
0
|
0
|
0
|
324,386
|
|||||||||||||||
|
||||||||||||||||||||
|
911,730
|
547,268
|
2,192,377
|
1,833,106
|
46,184,860
|
|||||||||||||||
|
||||||||||||||||||||
Net Loss for Period
|
$
|
(905,421
|
)
|
$
|
(547,220
|
)
|
$
|
(2,179,655
|
)
|
$
|
(1,832,993
|
)
|
$
|
(45,269,194
|
)
|
|||||
|
||||||||||||||||||||
Basic and Diluted Loss Per Share (note 8)
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.03
|
)
|
$
|
(0.03
|
)
|
||||||||
|
||||||||||||||||||||
Weighted Average Number of Common Shares Outstanding
|
77,738,310
|
65,507,394
|
77,089,481
|
65,403,372
|
|
Shares
of Common
Stock
Issued
|
Common
Stock and
Paid-in Capital
in Excess
of Par
|
Shares of
Preferred
Stock
Issued
|
Preferred
Stock and
Paid-in Capital
in Excess
of Par
|
Promissory
Notes
Receivable
|
Share
Subscriptions
|
Accumulated
Other
Comprehensive
Income
|
Deficit
Accumulated
During the
Development
Stage
|
Total
Stockholders'
Equity (Deficit)
|
|||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Balance, June 30, 2012
|
62,368,653
|
$
|
37,655,315
|
308,538
|
$
|
308,538
|
$
|
(29,737
|
)
|
$
|
191,600
|
$
|
46,267
|
$
|
(40,314,166
|
)
|
$
|
(2,142,183
|
)
|
|||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Shares issued for
|
||||||||||||||||||||||||||||||||||||
Services
|
2,247,500
|
974,125
|
0
|
0
|
0
|
0
|
0
|
0
|
974,125
|
|||||||||||||||||||||||||||
Cash
|
11,202,304
|
2,191,360
|
0
|
0
|
0
|
(191,600
|
)
|
0
|
0
|
1,999,760
|
||||||||||||||||||||||||||
Settlement of convertible debentures
|
930,382
|
252,456
|
0
|
0
|
0
|
0
|
0
|
0
|
252,456
|
|||||||||||||||||||||||||||
Dividends on preferred stock
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
(15,460
|
)
|
(15,460
|
)
|
|||||||||||||||||||||||||
Redeemable preferred stock (note 14)
|
0
|
0
|
0
|
(70,588
|
)
|
0
|
0
|
0
|
(229,412
|
)
|
(300,000
|
)
|
||||||||||||||||||||||||
Gain on extinguishment of debt (note 14)
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
228,897
|
228,897
|
|||||||||||||||||||||||||||
Subscriptions received
|
0
|
0
|
0
|
0
|
0
|
13,400
|
0
|
0
|
13,400
|
|||||||||||||||||||||||||||
Stock-based compensation
|
0
|
131,679
|
0
|
0
|
0
|
0
|
0
|
0
|
131,679
|
|||||||||||||||||||||||||||
Net loss for year
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
(3,749,790
|
)
|
(3,749,790
|
)
|
|||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Balance, June 30, 2013
|
76,748,839
|
41,204,935
|
308,538
|
237,950
|
(29,737
|
)
|
13,400
|
46,267
|
(44,079,931
|
)
|
(2,607,116
|
)
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Shares issued for
|
||||||||||||||||||||||||||||||||||||
Services (note 5)
|
1,941,666
|
778,333
|
0
|
0
|
0
|
0
|
0
|
0
|
778,333
|
|||||||||||||||||||||||||||
Cash
|
44,000
|
13,400
|
0
|
0
|
0
|
(13,400
|
)
|
0
|
0
|
0
|
||||||||||||||||||||||||||
Settlement of convertible debentures (note 11)
|
1,449,274
|
576,967
|
0
|
0
|
0
|
0
|
0
|
0
|
576,967
|
|||||||||||||||||||||||||||
Settlement of debt (note 14)
|
1,092,218
|
421,531
|
0
|
0
|
0
|
0
|
0
|
0
|
421,531
|
|||||||||||||||||||||||||||
Dividends on preferred stock
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
(7,730
|
)
|
(7,730
|
)
|
|||||||||||||||||||||||||
Subscriptions received
|
0
|
0
|
0
|
0
|
0
|
28,951
|
0
|
0
|
28,951
|
|||||||||||||||||||||||||||
Stock-based compensation (note 5)
|
0
|
115,008
|
0
|
0
|
0
|
0
|
0
|
0
|
115,008
|
|||||||||||||||||||||||||||
Obligation to issue shares (note 12)
|
0
|
15,250
|
0
|
0
|
0
|
0
|
0
|
0
|
15,250
|
|||||||||||||||||||||||||||
Net loss for period
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
(2,179,655
|
)
|
(2,179,655
|
)
|
|||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Balance, December 31, 2013 (Unaudited)
|
81,275,997
|
$
|
43,125,424
|
308,538
|
$
|
237,950
|
$
|
(29,737
|
)
|
$
|
28,951
|
$
|
46,267
|
$
|
(46,267,316
|
)
|
$
|
(2,858,461
|
)
|
|
Six Months Ended
December 31,
|
Period from
February 12, 1996
(Inception) to
December 31,
|
||||||||||
|
2013
|
2012
|
2013
|
|||||||||
Operating Activities
|
||||||||||||
Net loss
|
$
|
(2,179,655
|
)
|
$
|
(1,832,993
|
)
|
$
|
(45,269,194
|
)
|
|||
Items not involving cash
|
||||||||||||
Write-down of investment
|
0
|
0
|
1,250,000
|
|||||||||
Proprietary, non-competition agreement
|
0
|
0
|
711,000
|
|||||||||
Amortization
|
0
|
0
|
349,941
|
|||||||||
Other income
|
(12,500
|
)
|
0
|
(670,805
|
)
|
|||||||
Consulting services
|
778,333
|
349,125
|
3,887,998
|
|||||||||
Stock-based compensation
|
115,008
|
283,876
|
8,155,969
|
|||||||||
Interest on derivative financial liability
|
219,799
|
51,522
|
387,301
|
|||||||||
Obligation to issue shares (note 12)
|
15,250
|
0
|
15,250
|
|||||||||
Fair value loss on derivative financial liabilities
|
10,572
|
64,458
|
420,435
|
|||||||||
Net gain on settlement of convertible debentures
|
(32,432
|
)
|
(26,189
|
)
|
(58,621
|
)
|
||||||
Loss (gain) on extinguishment of debt, net (note 14)
|
(48,287
|
)
|
(228,897
|
)
|
(294,309
|
)
|
||||||
Interest on beneficial conversion feature
|
0
|
0
|
566,456
|
|||||||||
Settlement of lawsuit
|
0
|
0
|
60,250
|
|||||||||
Write-down of license and operating assets
|
0
|
0
|
1,853,542
|
|||||||||
Bad debts
|
0
|
0
|
77,712
|
|||||||||
Changes in non-cash working capital (note 7)
|
357,285
|
538,368
|
3,180,181
|
|||||||||
Net Cash Used in Operating Activities
|
(776,627
|
)
|
(800,730
|
)
|
(25,376,894
|
)
|
||||||
Investing Activities
|
||||||||||||
Purchase of property, equipment and intangible assets
|
0
|
0
|
(200,935
|
)
|
||||||||
Assets acquired and liabilities assumed on purchase of subsidiary
|
0
|
0
|
(129,474
|
)
|
||||||||
Investment purchase
|
0
|
0
|
(2,000,000
|
)
|
||||||||
License agreement
|
0
|
0
|
(124,835
|
)
|
||||||||
Net Cash Used in Investing Activities
|
0
|
0
|
(2,455,244
|
)
|
||||||||
Financing Activities
|
||||||||||||
Redemption of preferred stock
|
0
|
0
|
(50,000
|
)
|
||||||||
Repayment of loan
|
0
|
0
|
(11,000
|
)
|
||||||||
Proceeds from (repayment of) promissory notes
|
30,000
|
(63,167
|
)
|
(93,696
|
)
|
|||||||
Repayments to stockholders
|
0
|
0
|
(91,283
|
)
|
||||||||
Loan payable
|
0
|
67,273
|
0
|
|||||||||
Proceeds from issuance of common stock
|
0
|
398,315
|
25,522,688
|
|||||||||
Advances from stockholders
|
0
|
0
|
1,078,284
|
|||||||||
Share issue costs
|
0
|
0
|
(629,991
|
)
|
||||||||
Subscriptions received
|
28,951
|
551,223
|
748,366
|
|||||||||
Proceeds from convertible debentures
|
285,000
|
80,000
|
1,533,000
|
|||||||||
Repayment of convertible debentures
|
(57,754
|
)
|
(120,865
|
)
|
(178,619
|
)
|
||||||
Net Cash Provided by Financing Activities
|
286,197
|
912,779
|
27,827,749
|
|||||||||
Effect of Foreign Currency Translation on Cash
|
0
|
0
|
46,267
|
|||||||||
Inflow (Outflow) of Cash
|
(490,430
|
)
|
112,049
|
41,878
|
||||||||
Cash, Beginning of Period
|
532,308
|
172,173
|
0
|
|||||||||
Cash, End of Period
|
$
|
41,878
|
$
|
284,222
|
$
|
41,878
|
1. | NATURE OF OPERATIONS |
2. | BASIS OF PRESENTATION |
3.
|
USE OF ESTIMATES
|
4.
|
GOING CONCERN
|
4. | GOING CONCERN (Continued) |
5. | STOCKHOLDERS’ DEFICIT |
(a)
|
Preferred stock
|
Within one year
|
$
|
1.50
|
||
2nd year
|
$
|
2.00
|
||
3rd year
|
$
|
2.50
|
||
4th year
|
$
|
3.00
|
||
5th year
|
$
|
3.50
|
||
6th year
|
$
|
4.00
|
||
increasing $0.50 per year thereafter.
|
(b)
|
Common stock
|
i)
|
550,000 shares measured at a fair value of $0.50 per share
|
ii)
|
250,000 shares measured at a fair value of $0.36 per share
|
iii)
|
100,000 shares measured at a fair value of $0.30 per share
|
iv)
|
500,000 shares measured at a fair value of $0.29 per share.
|
(b) | Common stock (Continued) |
(c)
|
Stock-based compensation
|
(d)
|
Stock options
|
|
Number of Options
|
Price Per
Option
|
Weighted
Average
Exercise Price
|
|||||||||
|
||||||||||||
Outstanding, June 30, 2013 and December 31, 2013
|
5,900,000
|
$
|
0.25 to $ 1.00
|
$
|
0.43
|
|||||||
Exercisable, December 31, 2013
|
5,725,000
|
$
|
0.25 to $ 1.00
|
$
|
0.43
|
5. | STOCKHOLDERS’ DEFICIT (Continued) |
(d)
|
Stock options (Continued)
|
Number of Options
|
||||||||||||
Expiry Date
|
Exercise
Price
|
December 31,
2013
|
June 30,
2013
|
|||||||||
|
||||||||||||
December 31, 2014(1)
|
$
|
1.00
|
110,000
|
110,000
|
||||||||
March 9, 2014
|
$
|
0.25
|
125,000
|
125,000
|
||||||||
June 1, 2014
|
$
|
0.85
|
100,000
|
100,000
|
||||||||
October 15, 2014
|
$
|
0.50
|
100,000
|
100,000
|
||||||||
July 31, 2014
|
$
|
1.00
|
415,000
|
415,000
|
||||||||
November 15, 2014(2)
|
$
|
1.00
|
100,000
|
100,000
|
||||||||
December 1, 2014
|
$
|
0.50
|
75,000
|
75,000
|
||||||||
December 1, 2014
|
$
|
0.85
|
100,000
|
100,000
|
||||||||
December 31, 2014(3)
|
$
|
0.25
|
1,500,000
|
1,500,000
|
||||||||
April 15, 2015
|
$
|
0.50
|
100,000
|
100,000
|
||||||||
June 1, 2015
|
$
|
0.50
|
75,000
|
75,000
|
||||||||
June 1, 2015
|
$
|
0.85
|
100,000
|
100,000
|
||||||||
October 15, 2015
|
$
|
0.50
|
100,000
|
100,000
|
||||||||
December 1, 2015
|
$
|
0.50
|
75,000
|
75,000
|
||||||||
December 1, 2015
|
$
|
0.85
|
100,000
|
100,000
|
||||||||
April 15, 2016
|
$
|
0.50
|
100,000
|
100,000
|
||||||||
June 1, 2016
|
$
|
0.50
|
75,000
|
75,000
|
||||||||
June 1, 2016
|
$
|
0.85
|
100,000
|
100,000
|
||||||||
June 30, 2016(4)
|
$
|
0.25
|
2,000,000
|
2,000,000
|
||||||||
October 15, 2016
|
$
|
0.50
|
100,000
|
100,000
|
||||||||
December 1, 2016
|
$
|
0.50
|
75,000
|
75,000
|
||||||||
December 1, 2016
|
$
|
0.85
|
100,000
|
100,000
|
||||||||
April 15, 2017
|
$
|
0.50
|
100,000
|
100,000
|
||||||||
June 1, 2017
|
$
|
0.50
|
75,000
|
75,000
|
||||||||
|
||||||||||||
Total outstanding
|
5,900,000
|
5,900,000
|
||||||||||
Total exercisable
|
5,725,000
|
5,450,000
|
(1)
|
During the six month period ended December 31, 2013, the expiry date of 110,000 options was extended from December 31, 2013 to December 31, 2014.
|
(2)
|
During the six month period ended December 31, 2013, the expiry date of 100,000 options was extended from November 15, 2013 to November 15, 2014.
|
(3)
|
During the six month period ended December 31, 2013, the expiry date of 500,000 options was extended from December 31, 2013 to December 31, 2014.
|
(4)
|
During the year ended June 30, 2013, the expiry date of 2,000,000 options was extended from December 31, 2013 to June 30, 2016.
|
5. | STOCKHOLDERS’ DEFICIT (Continued) |
(d)
|
Stock options (Continued)
|
(e)
|
Stock purchase warrants
|
|
Number of Warrants
|
Price Per
Share
|
Weighted Average Exercise Price
|
|||||||||
|
||||||||||||
Balance, June 30, 2012
|
14,060,103
|
$
|
0.67
|
|||||||||
Issued
|
19,930,899
|
$
|
0.31 to $ 0.70
|
$
|
0.59
|
|||||||
|
||||||||||||
Balance, June 30, 2013
|
33,991,002
|
$
|
0.58
|
|||||||||
Issued
|
88,000
|
$
|
0.50
|
$
|
0.50
|
|||||||
Expired
|
(4,109,192
|
)
|
$
|
0.70 to $ 1.00
|
$
|
0.72
|
||||||
|
||||||||||||
Balance, December 31, 2013
|
29,969,810
|
$
|
0.31 to $ 0.70
|
$
|
0.45
|
5. | STOCKHOLDERS’ DEFICIT (Continued) |
(e)
|
Stock purchase warrants (Continued)
|
Number of Warrants
|
||||||||||||
Expiry Date
|
Exercise Price
|
December 31,
2013
|
June 30,
2013
|
|||||||||
|
||||||||||||
December 31, 2013(1)
|
$
|
0.50
|
0
|
3,710,000
|
||||||||
December 31, 2013(2)
|
$
|
0.70
|
0
|
3,963,152
|
||||||||
December 31, 2013(3)
|
$
|
1.00
|
0
|
1,358,372
|
||||||||
December 29, 2013(4)
|
$
|
0.70
|
0
|
311,428
|
||||||||
January 3, 2014
|
$
|
0.70
|
0
|
856,692
|
||||||||
January 31, 2014(5)
|
$
|
0.70
|
817,603
|
2,360,459
|
||||||||
February 14, 2014
|
$
|
0.70
|
300,000
|
300,000
|
||||||||
February 28, 2014
|
$
|
0.70
|
21,421
|
21,421
|
||||||||
March 31, 2014(6)
|
$
|
0.57
|
0
|
1,000,000
|
||||||||
May 31, 2014(1), (3)
|
$
|
0.50
|
2,041,620
|
0
|
||||||||
July 17, 2014
|
$
|
0.31
|
300,000
|
300,000
|
||||||||
August 31, 2014(2)
|
$
|
0.60
|
2,796,666
|
2,796,666
|
||||||||
August 31, 2014
|
$
|
0.70
|
999,708
|
799,708
|
||||||||
September 30, 2014
|
$
|
0.50
|
926,604
|
926,604
|
||||||||
January 31, 2015
|
$
|
0.50
|
4,150,000
|
4,150,000
|
||||||||
February 28, 2015(2), (3)
|
$
|
0.50
|
5,160,925
|
4,936,500
|
||||||||
May 25, 2015(1), (2), (4), (5), (6)
|
$
|
0.50
|
12,167,263
|
6,000,000
|
||||||||
July 31, 2015
|
$
|
0.50
|
88,000
|
0
|
||||||||
November 29, 2016
|
$
|
0.70
|
200,000
|
200,000
|
||||||||
|
||||||||||||
Total outstanding
|
29,969,810
|
33,991,002
|
||||||||||
|
||||||||||||
Total exercisable
|
29,969,810
|
33,916,002
|
(1)
|
During the six month period ended December 31, 2013, the expiry date of 670,000 warrants was extended from December 31, 2013 to May 25, 2015 and 1,028,000 warrants was extended to May 31, 2014.
|
(2)
|
During the six month period ended December 31, 2013, the expiry date of 200,000 warrants was extended from December 31, 2013 to August 31, 2014, 71,429 warrants extended to May 25, 2015 and re-priced to $0.50 and 209,070 warrants was extended to February 28, 2015 and re-priced to $0.50.
|
(3)
|
During the six month period ended December 31, 2013, the expiry date of 1,013,620 warrants was extended from December 31, 2013 to May 31, 2014 and re-priced to $0.50 and 15,355 warrants extended to February 28, 2015 and re-priced to $0.50.
|
(4)
|
During the year ended June 30, 2013, the expiry date of 14,286 warrants was extended from December 29, 2013 to May 25, 2015 and re-priced to $0.50.
|
(5)
|
During the year ended June 30, 2013, the expiry date of 1,542,856 warrants was extended from January 31, 2014 to May 25, 2015 and re-priced to $0.50.
|
(6)
|
During the year ended June 30, 2013, the expiry date of these 1,000,000 warrants was extended from March 31, 2014 to May 25, 2015.
|
6.
|
INCOME TAXES
|
7.
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
Six Months Ended
December 31,
|
Period from
February 12,
1996
(Inception) to
December 31,
|
|||||||||||
|
2013
|
2012
|
2013
|
|||||||||
|
||||||||||||
Changes in non-cash working capital
|
||||||||||||
Prepaid expenses
|
$
|
20,231
|
$
|
(61,205
|
)
|
$
|
0
|
|||||
Accounts payable and accruals
|
87,054
|
599,573
|
140,787
|
|||||||||
Due from affiliated company
|
0
|
0
|
(46,842
|
)
|
||||||||
Notes and accounts receivable
|
250,000
|
0
|
3,204,845
|
|||||||||
Inventory
|
0
|
0
|
(116,000
|
)
|
||||||||
Deferred revenue and other
|
0
|
0
|
(2,609
|
)
|
||||||||
|
||||||||||||
|
$
|
357,285
|
$
|
538,368
|
$
|
3,180,181
|
Six Months Ended
December 31,
|
Period from
February 12,
1996
(Inception) to
December 31,
|
|||||||||||
|
2013
|
2012
|
2013
|
|||||||||
|
||||||||||||
Shares Issued for
|
||||||||||||
Redemption of preferred shares
|
$
|
0
|
$
|
0
|
$
|
415,000
|
||||||
Property and equipment
|
$
|
0
|
$
|
0
|
$
|
23,000
|
||||||
Proprietary agreement
|
$
|
0
|
$
|
0
|
$
|
711,000
|
||||||
Settlement of debt
|
$
|
421,531
|
$
|
0
|
$
|
650,273
|
||||||
Settlement of convertible debenture
|
$
|
576,967
|
$
|
121,801
|
$
|
1,073,609
|
||||||
Services (provided by officers and directors)
|
$
|
0
|
$
|
122,500
|
$
|
242,500
|
||||||
Settlement of lawsuit
|
$
|
0
|
$
|
0
|
$
|
15,000
|
||||||
Services and financing fees
|
$
|
778,333
|
$
|
226,625
|
$
|
3,180,980
|
||||||
Subscriptions received
|
$
|
28,951
|
$
|
0
|
$
|
28,951
|
||||||
Acquisition of subsidiary
|
$
|
0
|
$
|
0
|
$
|
894,200
|
||||||
Supplemental Cash Flow Information
|
||||||||||||
Interest paid
|
$
|
1,236
|
$
|
0
|
$
|
100,660
|
||||||
Income tax paid
|
$
|
0
|
$
|
0
|
$
|
0
|
||||||
Accrual of liability for mandatory redeemable preferred shares
|
$
|
0
|
$
|
0
|
$
|
300,000
|
8.
|
LOSS PER SHARE
|
|
Loss (Numerator)
|
Weighted Average Number of Shares (Denominator)
|
Basic and Diluted Loss Per Share
|
|||||||||
|
||||||||||||
Three months ended December 31, 2013
|
||||||||||||
Net loss for period
|
$
|
(905,421
|
)
|
|||||||||
Preferred stock dividends (note 5(a))
|
(3,865
|
)
|
|
|
||||||||
Loss attributable to common shareholders
|
$
|
(909,286
|
)
|
77,738,310
|
$
|
(0.01
|
)
|
|||||
|
||||||||||||
Three months ended December 31, 2012
|
||||||||||||
Net loss for period
|
$
|
(547,220
|
)
|
|||||||||
Preferred stock dividends (note 5(a))
|
(3,865
|
)
|
||||||||||
Loss attributable to common shareholders
|
$
|
(551,085
|
)
|
65,507,394
|
$
|
(0.01
|
)
|
|||||
|
||||||||||||
Six months ended December 31, 2013
|
||||||||||||
Net loss for period
|
$
|
(2,179,655
|
)
|
|||||||||
Preferred stock dividends (note 5(a))
|
(7,730
|
)
|
||||||||||
Loss attributable to common shareholders
|
$
|
(2,187,385
|
)
|
77,089,481
|
$
|
(0.03
|
)
|
|||||
|
||||||||||||
Six months ended December 31, 2012
|
||||||||||||
Net loss for period
|
$
|
(1,832,993
|
)
|
|||||||||
Preferred stock dividends (note 5(a))
|
(7,730
|
)
|
||||||||||
Loss attributable to common shareholders
|
$
|
(1,840,723
|
)
|
65,403,372
|
$
|
(0.03
|
)
|
9. | RESEARCH AND DEVELOPMENT |
10.
|
SEGMENT INFORMATION
|
11.
|
CONVERTIBLE DEBENTURES
|
(a)
|
Asher Enterprises Inc.
|
(i)
|
August 9, 2011 received $53,000 (settled);
|
(ii)
|
September 15, 2011 received $50,000 (settled);
|
(iii)
|
October 15, 2011 received $35,500 (settled);
|
(iv)
|
April 18, 2012 received $53,500 (settled);
|
(v)
|
May 23, 2012 received $78,500 (settled);
|
(vi)
|
July 5, 2012 received $30,000, net of $2,500 in legal fees (settled);
|
(vii)
|
November 20, 2012 received $50,000, net of $3,000 in legal fees (settled);
|
(viii)
|
January 4, 2013 received $25,000, net of $2,500 in legal fees (settled);
|
(ix)
|
January 31, 2013 received $35,000, net of $2,500 in legal fees (settled);
|
(x)
|
April 5, 2013 received $50,000, net of $3,000 in legal fees (settled);
|
(xi)
|
June 12, 2013 received $37,500 (settled);
|
(xii)
|
July 15, 2013 received $25,000, net of $2,500 in legal fees;
|
(xiii)
|
October 10, 2013 received $50,000, net of $3,000 in legal fees; and
|
(xiv)
|
November 20, 2013 received $60,000, net of $3,000 in legal fees.
|
·
|
Outstanding principal multiplied by 135% together with accrued interest and unpaid interest thereon if prepaid within a period of 90 days beginning on the date of issuance of the note;
|
·
|
Outstanding principal multiplied by 145% together with accrued interest and unpaid interest thereon if prepaid at any time during the period beginning 91 days from the date of issuance of the note and ending on the date that is 150 days following the date of the note; and
|
·
|
Outstanding principal multiplied by 150% together with accrued interest and unpaid interest thereon if prepaid at any time during the period beginning 151 days from the date of issuance of the note and ending on the date that is 180 days following the date of the note.
|
11.
|
CONVERTIBLE DEBENTURES (Continued)
|
(a)
|
Asher Enterprises Inc. (Continued)
|
(b)
|
JMJ Financial
|
·
|
February 27, 2013 received $100,000, net of an upfront fee of $11,111 (settled);
|
·
|
June 2, 2013 received $50,000, net of an upfront fee of $5,555; and
|
·
|
September 30, 2013 received $150,000, net of an upfront fee of $16,666.
|
11.
|
CONVERTIBLE DEBENTURES (Continued)
|
|
December 31,
2013
|
June 30,
2013
|
||||
|
||||||
Expected life (years)
|
0.91 | 0.76 | ||||
Interest rate
|
1.12% | 0.71% |
|
|||
Volatility
|
77.57% |
|
62.80% |
|
||
Dividend yield
|
N/A | N/A |
|
|||
Estimated forfeitures
|
N/A |
|
N/A |
|
11.
|
CONVERTIBLE DEBENTURES (Continued)
|
|
December 31,
2013
|
June 30,
2013
|
||||
|
||||||
Expected life (years)
|
0.39 | 0.20 | ||||
Interest rate
|
0.96% |
|
0.66% |
|
||
Volatility
|
72.14% |
|
72.76% |
|
||
Dividend yield
|
N/A |
|
N/A |
|
||
Estimated forfeitures
|
N/A |
|
N/A |
|
|
December 31,
2013
|
June 30,
2013
|
||||
|
||||||
Expected life (years)
|
0.61 | 0.62 | ||||
Interest rate
|
0.96% |
|
0.94% |
|
||
Volatility
|
68.79% |
|
70.20% |
|
||
Dividend yield
|
N/A |
|
N/A |
|
||
Estimated forfeitures
|
N/A |
|
N/A |
|
|
December 31,
2013
|
June 30,
2013
|
||||||
|
||||||||
Fair value of convertible debenture, beginning of period
|
$
|
174,827
|
$
|
93,356
|
||||
Fair value at inception of new tranches
|
21,595
|
166,922
|
||||||
Interest accrued
|
219,799
|
112,330
|
||||||
Loss on early repayment
|
15,758
|
44,489
|
||||||
Repayment on November 28, 2012 (cash)
|
(57,754
|
)
|
(120,865
|
)
|
||||
Settlement (issuance of common shares)
|
(237,195
|
)
|
(121,405
|
)
|
||||
|
||||||||
Carrying amount of convertible debenture, end of period
|
$
|
137,030
|
$
|
174,827
|
11.
|
CONVERTIBLE DEBENTURES (Continued)
|
|
December 31,
2013
|
June 30,
2013
|
||||||
|
||||||||
Fair value of derivative liability, beginning of period
|
$
|
414,102
|
$
|
84,718
|
||||
Fair value at inception of new tranches
|
263,405
|
210,576
|
||||||
Loss on fair value of derivative liability
|
10,572
|
320,537
|
||||||
Gain on early repayment
|
(48,190
|
)
|
(70,678
|
)
|
||||
Settlement (issuance of common shares)
|
(339,772
|
)
|
(131,051
|
)
|
||||
|
||||||||
Fair value of derivative liabilities, end of period
|
$
|
300,117
|
$
|
414,102
|
12.
|
PROMISSORY NOTES PAYABLE
|
(a)
|
Two promissory notes totaling $60,000, which bear interest at 12% annually. Any unpaid principal and unpaid accrued interest is due January 19, 2014 and January 24, 2014, the maturity dates. In addition, the Company must issue 25,000 shares of common stock at each maturity date to settle the promissory notes.
|
(b)
|
On October 1, 2013, the Company entered into a promissory note agreement with a consultant for $215,000, which bears interest at 6% annually. Any interest accrued on the outstanding balance is due in six months, with the first interest payment due April 1, 2014. Any unpaid principal and unpaid accrued interest is due October 1, 2015, the maturity date. Any payments made during the year shall be first applied to unpaid accrued interest, then to the reduction of principal. As at February 14, 2014, no payments have been made.
|
13.
|
DEFERRED LIABILITY
|
13.
|
DEFERRED LIABILITY (Continued)
|
·
|
$250,000 (received) to be paid to the Company within 15 business days; and
|
·
|
A second payment is due to the Company no later than one year after signing the agreement.
|
14.
|
EXTINGUISHMENT OF DEBT
|
(a)
|
On November 8, 2012, a director of the Company resigned from his position as director and CEO of the Company. An agreement was signed indicating that all amounts owing at the agreement date would be waived resulting in payables of $228,897 recognized as a gain on extinguishment of debt charged to accumulated deficit. Further, the agreement indicated that the Company would redeem 70,588 shares of preferred stock held by the director at $4.25 per share for a total of $300,000 as follows:
|
(i)
|
Monthly installments of $7,500 would be paid on the 15th of each month starting November 15, 2012 until June 15, 2013;
|
(ii)
|
Monthly installments of $10,000 would be paid on the 15th of each month starting July 15, 2013 until December 15, 2014; and
|
(iii)
|
A lump sum payment of $60,000 on January 15, 2015.
|
14.
|
EXTINGUISHMENT OF DEBT (Continued)
|
(b)
|
On June 13, 2013, the Company signed a separation agreement with a consultant resulting in a termination of consulting services effective December 31, 2012. As a result of the termination, the Company was required to issue the following:
|
(i)
|
541,666 shares of common stock pursuant to a restricted stock award agreement for options vesting prior to the agreement date. These shares were issued during the six months ended December 31, 2013 and were measured at a fair value of $0.44 per share.
|
(ii)
|
628,571 shares common stock in consideration for unpaid fees of $243,000. The modified consulting fees were recorded at the fair value of shares to be issued of $352,000 as at June 30, 2013 which were included in accounts payable and accruals. The increase in value of modified debt of $109,000 was recognized as a loss on extinguishment of liabilities in the consolidated statements of operations for the year ended June 30, 2013. During the six months ended December 31, 2013, 628,571 shares were issued to settle the above mentioned consulting fees which were re-measured at a fair value of $0.44 per share on the share issuance date. A total of $276,571 was recorded as equity with the decrease in value of extinguished debt of $75,429 recorded as a recovery of loss on extinguishment of debt in the consolidated statements of operations.
|
(c)
|
On December 30, 2013 the Company amended the terms of a promissory note to add a conversion option to settle the remaining balance of $51,040 through issuance of shares at a conversion price of $0.165. On December 30, 2013, 309,332 shares of common stock were issued to settle the above mentioned promissory note which were measured at a fair value of $0.28 per share on the share issuance date. A total of $86,613 was recorded as equity with the loss on extinguishment of $35,573 recorded in the consolidated statement of operations.
|
(d)
|
On October 16, 2013 the Company settled $55,052 in legal fees through issuance of shares of common stock. 125,000 shares of common stock were issued to settle the above mentioned payable balance which was measured at a fair value of $0.38 per share on the share issuance date. A total of $47,500 was recorded as equity with the gain on extinguishment of $7,552 recorded in the consolidated statement of operations.
|
(e)
|
On October 25, 2013 the Company settled $11,726 in consulting fees through issuance of shares of common stock. 29,315 shares of common stock were issued to settle the above mentioned payable balance which was measured at a fair value of $0.37 per share on the share issuance date. A total of $10,847 was recorded as equity with the gain on extinguishment of $879 recorded in the consolidated statement of operations.
|
15.
|
SUBSEQUENT EVENTS
|
|
Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act is filed herewith.
|
|
|
|
|
31.2
|
|
Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act is filed herewith.
|
|
|
|
32.1
|
|
Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code is filed herewith.
|
|
|
|
32.2
|
|
Certification by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code is filed herewith.
|
Integral Technologies, Inc.
|
|
||
|
|
|
|
|
By:
|
/s/ Doug Bathauer
|
|
|
Doug Bathauer, Chief Executive Officer
|
|
|
|
and Principal Executive Officer
|
|
|
|
|
|
|
|
By:
|
/s/ William A. Ince
|
|
|
William A. Ince, Chief Financial Officer and
|
|
|
|
Principal Accounting Officer
|
|
|
Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act is filed herewith.
|
|
|
|
|
|
Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act is filed herewith.
|
|
|
|
|
|
Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code is filed herewith.
|
|
|
|
|
|
Certification by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code is filed herewith.
|