Annual report pursuant to Section 13 and 15(d)

Significant Accounting Policies (Policies)

v3.10.0.1
Significant Accounting Policies (Policies)
12 Months Ended
Jun. 30, 2017
Accounting Policies [Abstract]  
Consolidation, Policy [Policy Text Block]
Principles of consolidation
 
These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Integral Operating, LLC (“Operating”), Integral Vision Systems, Inc. ("IVSI"), Antek Wireless Inc. ("Antek"), Electriplast Corp. (formerly Plastenna, Inc.) (“Electriplast”), and Integral Technologies Asia, Inc. (“Asia”), which are currently inactive. All intercompany balances and transactions have been eliminated.
Earnings Per Share, Policy [Policy Text Block]
Basic and
d
iluted
n
et
l
oss
p
er
s
hare
 
Basic net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the year. Diluted net loss per common share is computed by dividing the net loss by the weighted-average number of common shares and dilutive common share equivalents outstanding during the period. Because the Company has reported a net loss for all years presented, diluted net loss per common share is the same as basic net loss per common share for those years.
Stockholders' Equity, Policy [Policy Text Block]
Stock issued in exchange for services
 
The valuation of common stock issued in exchange for services to non-employees is valued at an estimated fair market value of the Company’s stock price based upon trading, sales and other issuances of the Company's common stock. Stock-based compensation expense related to awards to non-employees is recognized based on the then-current fair value at each measurement date over the associated service period of the award, which is generally the vesting term, using the accelerated attribution method. The fair value of non-employee stock options is estimated using the Black-Scholes valuation model with assumptions generally consistent with those used for employee stock options, with the exception of the expected term, which is the remaining contractual life at each measurement date. Restricted shares are issued or become issuable when they vested and are measured at their grant date and recorded evenly over the vesting period.
Revenue Recognition, Policy [Policy Text Block]
Revenue recognition
 
The Company has
not
generated significant revenue since inception. Although the Company has begun to receive revenue from the sale of material for commercial applications, the Company is devoting substantially all its efforts to developing the business.
 
As discussed in Note
13,
the Company signed a
ten
-year license agreement with Hanwha Advanced Materials Co., Ltd., (“Hanwa”), of South Korea. For license agreements that the Company enters into, revenue is recognized when all
four
of the following criteria are met: (i) a contract is executed, (ii) the contract price is fixed and determinable, (iii) delivery of the service or products has occurred, and (iv) collectability of the contract amounts is reasonably assured.
 
The Company’s license agreements can provide for upfront license fees, maintenance payments, and/or substantive milestone payments. In accordance with revenue recognition guidance, the Company identifies all of the deliverables at the inception of the agreement. License fees which are nonrefundable fees will be evaluated for standalone value to the licensor and
may
be recognized upon delivery pursuant to terms of the agreement. Upfront nonrefundable fees associated with license and development agreements where the Company has continuing involvement that does
not
meet the requirement of a separate deliverable are recorded as deferred revenue and recognized over the estimated service period. The Company
may
also enter into agreements to provide engineering services. The Company recognizes revenue from engineering services as the service has been performed and amounts are reasonably assured of collection.
Foreign Currency Transactions and Translations Policy [Policy Text Block]
Foreign currency translation
 
The Company’s functional and reporting currency is the US dollar. Transactions and balances for the Company’s operations that are
not
in US dollars are translated into US dollars at the exchange rates in effect at the balance sheet dates for monetary assets and liabilities, and at historical exchange rates for non-monetary assets and liabilities. Revenues and expenses are translated at the rate of exchange on the date of the transaction, except for amortization and depreciation, which are translated on the same basis as the related assets. Resulting translation gains or losses are included in the consolidated statements of operations. The foreign currency impact on the consolidated financial statements is immaterial.
Advertising Costs, Policy [Policy Text Block]
Advertising
 
Advertising costs are charged to operations when incurred. Advertising expense was
$2,031
and
$39,357
for the years ended
June 30, 2017
and
2016,
respectively.
Research and Development Expense, Policy [Policy Text Block]
Research and development
 
The Company expenses all research and development expenditures as incurred.
Use of Estimates, Policy [Policy Text Block]
Use of estimates
 
The preparation of financial statements in conformity with US GAAP requires 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. Significant areas requiring the use of management estimates include valuation allowance for deferred income tax assets, the determination of the assumptions used in calculating the fair value of stock-based compensation and the determination of the assumptions used in calculating the fair value of derivative financial liabilities and the warrant liability. Actual results could differ from those estimates and could impact future results of operations and cash flows.
Derivatives, Embedded Derivatives [Policy Text Block]
F
inancial instruments
 
We have issued financial instruments that contain embedded conversion features that qualify as derivatives and are therefore accounted for as liabilities. The derivative liabilities are initially recorded at fair value, with gains and losses arising from changes in fair value recognized in the consolidated statements of operations at each period end while such instruments are outstanding. The derivative liabilities relating to the convertible debt is valued using the Black-Scholes Model where appropriate. The fair value of the warrants issued with reset provisions were measured using the Monte Carlo method.
Fair Value Measurement, Policy [Policy Text Block]
Fair value measurements
 
Assets and liabilities recorded at fair value in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. For certain of the Company’s financial instruments including cash and accounts payable, the carrying values approximate fair value due to their short-term nature.
 
ASC
820
Fair Value Measurements and Disclosures
specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with ASC
820,
these inputs are summarized in the
three
broad levels listed below:
 
 
Level
1
– Quoted prices in active markets for identical securities;
 
Level
2
– Other significant observable inputs that are observable through corroboration with market data (including quoted prices in active markets for similar securities); and
 
Level
3
– Significant unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability.
 
The fair value measurement of the derivative liability and warrants with reset provisions are classified as a Level
3
measurement as further discussed under Fair Value Measurements.
Income Tax, Policy [Policy Text Block]
Income
taxes
 
The Company uses the asset and liability approach in its method of accounting for income taxes that requires the recognition of deferred tax liabilities and assets for expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. A valuation allowance against deferred tax assets is recorded if, based upon weighted available evidence, it is more likely than
not
that some or all of the deferred tax assets will
not
be realized.
 
The impact of an uncertain tax position that is more likely than
not
of being sustained upon audit by the relevant taxing authority is recognized at the largest amount that is more likely than
not
to be sustained.
No
portion of an uncertain tax position will be recognized if the position has less than a
50%
likelihood of being sustained.
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]
Stock-based compensation
 
The Company accounts for stock-based compensation expense associated with stock options and other forms of equity compensation by estimating the fair value of share-based payment awards on the date of grant using the market price of common stock or the Black-Scholes option pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations. The Company uses the straight-line single-option method to recognize the value of stock-based compensation expense for all share-based payment awards. Stock-based compensation expense recognized in the consolidated statements of operations is reduced for estimated forfeitures, as it is based on awards ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Property, Plant and Equipment, Policy [Policy Text Block]
Property and Equipment
 
Property and equipment are recorded at cost and depreciated over the estimated useful lives using the straight-line method of depreciation. Amortization of the leasehold improvements is computed using the straight-line method over the lesser of the estimated useful lives of the underlying assets and the term of the related lease.
New Accounting Pronouncements, Policy [Policy Text Block]
Recent Accounting Pronouncement
s
 
In
May 2014,
the FASB issued amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The requirements are effective for annual reporting periods beginning after
December 15, 2017.
Early adoption is
not
permitted. The Company is evaluating the impact of the amended revenue recognition guidance on our financial statements.
 
In
August 2014,
the FASB issued ASU
2014
-
15,
Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern (“ASU
2014
-
15”
).  ASU
2014
-
15
provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements.  The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within
one
year of the date the financial statements are issued.  An entity must provide certain disclosure if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.”  ASU
2014
-
15
applies to all entities and is effective for annual period ending after
December 15, 2016,
and interim periods thereafter, with early adoption permitted.  The adoption of this standard is
not
expected to have a material impact on the Company’s financial position, results of operations or cash flows.
 
In
March 2016,
the FASB issued ASU
2016
-
09,
Compensation – Stock Compensation:  Improvements to Employee Share-Based P
ay
ment Accounting,
which relates to the accounting for employee share-based payments.  This standard addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows.  This standard will be effective for fiscal years beginning after
December 15, 2016,
including interim periods within those fiscal years.  The Company is currently evaluating the impact the adoption of this ASU will have on our financial statements.
 
In
February 2016,
the FASB issued ASU
2016
-
02,
Leases, amending the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The guidance will be effective in the
first
quarter of
2019
and allows for early adoption. The new standard requires a modified retrospective transition approach for all leases existing at the date of initial application, with an option to use certain transition relief. ASU
2016
-
02
provides for transition relief, which includes
not
electing to (i) reassess whether any expired or existing contract is a lease or contains a lease, (ii) reassess the lease classification of any expired or existing leases and (iii) expense any capitalized initial direct costs for any existing leases. The Company will continue to assess the impact of the new standard.