The accompanying notes are integral part of the consolidated financial statements.
Integral Technologies, Inc
.
Consolidated Statements of Cash Flows
|
|
2016
|
|
|
2015
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(4,639,698
|
)
|
|
$
|
(4,432,617
|
)
|
Items not involving cash
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
4,581
|
|
|
|
3,254
|
|
Accrued interest
|
|
|
5,500
|
|
|
|
|
|
Settlement of debt
|
|
|
6,220
|
|
|
|
599,250
|
|
Deferred revenues
|
|
|
(50,000
|
)
|
|
|
(50,000
|
)
|
Obligation to issue shares for consulting services
|
|
|
55,710
|
|
|
|
45,720
|
|
Stock-based compensation
|
|
|
179,584
|
|
|
|
184,622
|
|
Interest on convertible debentures
|
|
|
511,623
|
|
|
|
142,790
|
|
Fair value loss (gain) on derivative financial liabilities
|
|
|
815,491
|
|
|
|
(49,724
|
)
|
Fair value gain on warrant liability
|
|
|
(37,500
|
)
|
|
|
|
|
(Gain) loss on extinguishment of convertible debentures
|
|
|
(149,194
|
)
|
|
|
6,577
|
|
Net loss on extinguishment of liabilities
|
|
|
-
|
|
|
|
139,400
|
|
Changes in working capital
|
|
|
782,437
|
|
|
|
(168,579
|
)
|
|
|
|
(2,515,246
|
)
|
|
|
(3,579,307
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Deposit
|
|
|
-
|
|
|
|
(2,500
|
)
|
Purchase of property, equipment and intangible assets
|
|
|
(13,756
|
)
|
|
|
(40,947
|
)
|
|
|
|
(13,756
|
)
|
|
|
(43,447
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from loans
|
|
|
130,000
|
|
|
|
-
|
|
Repayment of loans
|
|
|
(221,034
|
)
|
|
|
(58,370
|
)
|
Repayment of promissory notes
|
|
|
-
|
|
|
|
(24,500
|
)
|
Proceeds from issuance of common stock
|
|
|
28,000
|
|
|
|
2,747,380
|
|
Proceeds from warrants exercised
|
|
|
889,771
|
|
|
|
685,989
|
|
Subscriptions received
|
|
|
-
|
|
|
|
107,500
|
|
Proceeds from convertible debentures
|
|
|
1,863,950
|
|
|
|
245,000
|
|
Repayment of convertible debentures
|
|
|
(231,642
|
)
|
|
|
(162,715
|
)
|
|
|
|
2,459,045
|
|
|
|
3,540,284
|
|
Decrease in cash
|
|
|
(69,957
|
)
|
|
|
(82,470
|
)
|
Cash, beginning of year
|
|
|
117,307
|
|
|
|
199,777
|
|
Cash, end of year
|
|
$
|
47,350
|
|
|
$
|
117,307
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
31,355
|
|
|
$
|
14,529
|
|
The accompanying notes are integral part of the consolidated financial statements.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 1 -
NATURE OF OPERATIONS
Integral Technologies, Inc. (the “Company” or “Integral”) was incorporated under the laws of the state of Nevada on February 12, 1996 and has recently relocated its head office to Evansville, Indiana, USA. The Company is in the business of researching, developing and commercializing new electrically-conductive resin-based materials called ElectriPlast.
The Company will be devoting all of its resources to the research, development and commercialization of its ElectriPlast technology.
NOTE 2 -
SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are presented in United States dollars.
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”) and its 76.625%-owned subsidiary, Emergent Technologies Corp. ("ETC"), which is currently inactive. ETC's non-controlling interest balance is immaterial to the financial statements. All intercompany balances and transactions have been eliminated.
Basic and diluted net loss per share
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.
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
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.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 2 -
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue recognition (continued)
As discussed in Note 14, 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 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
Advertising costs are charged to operations when incurred. Advertising expense was $39,357 and $97,119 for the years ended June 30, 2016 and 2015, respectively.
Research and development
The Company expenses all research and development expenditures as incurred.
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.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 2 -
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial 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 a binomial lattice model and the Black-Scholes Model where appropriate. The fair value of the warrants issued with reset provisions are measured using the Monte Carlo method.
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 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.
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.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 2 -
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
Reclassifications:
For comparability certain 2015 amounts have been reclassified to conform to classifications adopted in 2016. These reclassifications did not have an impact on stockholders’ deficit or net loss on the 2015 consolidated financial statements.
Recent Accounting Pronouncements
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. We are 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 Pment 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 April 2015, the FASB issued Update No. 2015-03—
Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.
To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. 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.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 3 -
GOING CONCERN
These consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the ordinary course of business. The Company’s operations have resulted in a net loss of $4,639,698 for the fiscal year ended June 30, 2016 (2015 - $4,432,617), and an accumulated deficit of $57,622,282 (2015 - $52,982,584) and a working capital deficiency of $1,967,917 as at June 30, 2016 (2015 - $488,067). The Company does not have sufficient revenue-producing activities to fund its expenditure requirements to continue to advance researching, developing and commercializing its conductive plastics technology, ElectriPlast. Subsequent to year end, the Company raised $554,155 pursuant to private placements and $80,000 pursuant to a short-term loan agreement (note 17). The Company estimates that, without further funding, it will deplete its cash resources within three months. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
These consolidated financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate because management believes that the actions already taken or planned will mitigate the adverse conditions and events that raise doubts about the validity of the going concern assumption used in preparing these consolidated financial statements. Management intends to raise additional capital through stock and debt issuances to finance operations. If none of these events occur, there is a risk that the business will fail.
NOTE 4 -
PROPERTY AND EQUIPMENT
As of June 30, 2016 and 2015, property and equipment consisted of the following:
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
Equipment
|
|
$
|
118,680
|
|
|
$
|
104,924
|
|
Furniture and fixtures
|
|
|
96,279
|
|
|
|
96,279
|
|
Leasehold improvements
|
|
|
64,565
|
|
|
|
64,565
|
|
|
|
|
279,524
|
|
|
|
265,768
|
|
Less: accumulated depreciation
|
|
|
(204,835
|
)
|
|
|
(200,254
|
)
|
Property and equipment, net
|
|
$
|
74,689
|
|
|
$
|
65,514
|
|
Depreciation expense for the fiscal years ended June 30, 2016 and 2015 was $4,581 and $3,254, respectively.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 5 -
STOCKHOLDERS’ DEFICIT
Common stock
During the year ended June 30, 2016, the Company completed the following private placement:
|
(i)
|
Completed a private placement amounting to $28,000 for the issuance of 56,000 shares of common stock at $0.50 per share.
|
During the year ended June 30, 2016, the Company issued shares of common stock to settle the following debt:
|
(i)
|
Pursuant to a promissory note agreement, the Company issued 13,000 shares of common stock measured at a fair value of $0.48 per share resulting in a total value of $6,220 which was recorded in common stock and paid in capital in excess of par.
|
|
(ii)
|
The Company issued 15,463,881 shares of common stock to settle $2,059,738 of convertible debentures and derivative liabilities (note 9).
|
During the year ended June 30, 2015, the Company completed the following private placements:
|
(i)
|
Completed a private placement amounting to $108,620 for the issuance of 638,940 units. Each unit consisted of one common share at $0.17 per share and one share purchase warrant at $0.001 per warrant to purchase 638,940
common
shares on or before February 16, 2016 at an exercise price of $0.30 per share.
|
|
(ii)
|
Completed a private placement amounting to $305,478 for the issuance of 1,796,927 units. Each unit consisted of one common share at $0.17 per share and one share purchase warrant issued at $0.001 per warrant to purchase 1,796,927 common shares on or before February 16, 2016 at an exercise price of $0.30 per share.
|
|
(iii)
|
Completed a private placement amounting to
$160,622 for the issuance of 642,087 shares consisting of common stock at $0.25 per share.
|
|
(iv)
|
Completed a private placement amounting to $247,875 for the issuance of 701,447 shares consisting of common stock at $0.35 per share.
|
|
(v)
|
Completed a private placement amounting to $263,720 for the issuance of 694,377 shares consisting of common stock at $0.38 per share.
|
|
(vi)
|
Completed a private placement amounting to $25,000 for the issuance of 100,000 shares consisting of common stock at $0.25 per share.
|
|
(vii)
|
Completed a private placement amounting to $48,500 for the issuance of 127,631 shares consisting of common stock at $0.38 per share.
|
|
(viii)
|
Completed a private placement amounting to $35,000 for the issuance of 100,000 shares consisting of common stock at $0.35 per share.
|
|
(ix)
|
Completed a private placement amounting to $239,000 for the issuance of 796,667 shares consisting of common stock at $0.30 per share.
|
|
(x)
|
Completed a private placement amounting to $1,002,190 for the issuance of 3,340,633 shares consisting of common stock at $0.30 per share.
|
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 5 -
STOCKHOLDERS’ DEFICIT (CONTINUED)
Common stock (continued)
|
(xi)
|
Completed a private placement amounting to $70,000 for the issuance of 230,000 shares consisting of common stock at $0.30 per share.
|
|
(xii)
|
Completed a private placement amounting to $400,000 for the issuance of 800,000 common shares issued at $0.50 per share.
|
The Company determined that warrants issued did not contain any provisions that would preclude equity treatment.
During the year ended June 30, 2015, the Company issued shares of common stock pursuant to consulting agreements as follows:
|
(i)
|
50,000 shares measured at a fair value of $0.31 per share resulting in a total value of $15,250 which was previously recorded as selling, general, and administrative expenses during the year ended June 30, 2014.
|
|
(ii)
|
850,000 shares measured at a fair value of $0.33 per share resulting in a total value of $280,500 which was recorded as selling, general, and administrative expenses.
|
|
(iii)
|
150,000 shares measured at a fair value of $0.48 per share resulting in a total value of $72,250 which was recorded as selling, general, and administrative expenses.
|
|
(iv)
|
15,000 shares measured at a fair value of $0.45 per share resulting in a total value of $6,750 which was recorded as selling, general, and administrative expenses.
|
|
(v)
|
50,000 shares measured at a fair value of $0.68 per share resulting in a total value of $33,750 which was recorded as selling, general, and administrative expenses.
|
|
(vi)
|
400,000 shares measured at a fair value of $0.52 per share resulting in a total value of $206,000 which was recorded as selling, general, and administrative expenses.
|
During the fiscal year ended
June 30, 2016
,
the Company issued 337,500 (2015 - 675,000) shares of common stock pursuant to agreements with employees
. The shares issued were measured at a weighted average fair value of $0.38 per share (2015 - $0.38).
Preferred stock
As of June 30, 2016 and 2015 there are no outstanding preferred shares of stock.
Stock-based compensation
During the fiscal year ended June 30, 2016, the Company recorded stock-based compensation expense with respect to vesting stock options, restricted stock and warrants and modified stock options of $179,584 (2015- $184,622) included in selling, general, and administrative expenses.
Stock-based compensation not yet recognized at June 30, 2016 relating to non-vested stock options was $196,576 (June 30, 2015 - $376,159), which will be recognized over a period of 1 years (2015 – 2 years).
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 5 -
STOCKHOLDERS’ DEFICIT (CONTINUED)
Stock options and restricted shares
The Company is reviewing several alternatives to replace its 2001, 2003, and 2009 Stock Option Plans with a new omnibus stock option plan (the “New Plan”). In certain cases, we have made contractual commitments to provide shares or stock option grants in anticipation of putting in place the New Plan. The New Plan will allow us to attract and retain key employees or service providers as we continue to develop our business. We will obtain the necessary approvals based on the attributes of the plan. We anticipate that this New Plan will be implemented prior to June 30, 2017.
In January 2001, the Company adopted the Integral Technologies, Inc. 2001 Stock Plan (the "2001 Plan"), a non-qualified stock option plan under which the Company may issue up to 2,500,000 stock options and bonuses of common stock of the Company to provide incentives to officers, directors, key employees and other persons who contribute to the success of the Company. This plan was amended during December 2001 to increase the number of common stock options that may be granted from 2,500,000 to 3,500,000 stock options. As of June 30, 2016, there were no (June 30, 2015 - nil) common stock options available under this plan.
In April 2003, the Company adopted the Integral Technologies, Inc. 2003 Stock Plan (the "2003 Plan"), a non-qualified stock option plan under which the Company may issue up to 1,500,000 stock options. As of June 30, 2016, there were no (June 30, 2015 - nil) common stock options available under this plan.
During the fiscal year ended June 30, 2010, the Company adopted the Integral Technologies, Inc. 2009 Stock Plan (the "2009 Plan"), a non-qualified stock option plan under which the Company may issue up to 4,000,000 common stock options. As of June 30, 2016, there were no (June 30, 2015 - nil) common stock options available under this plan.
Stock option activity
The following summarizes information about the Company’s options outstanding:
|
|
Number of
Options
|
|
|
Price Per
Option
|
|
|
Weighted
Average
Exercise
Price
|
|
Outstanding, June 30, 2015
|
|
|
3,500,000
|
|
|
$
|
0.25 to $ 0.85
|
|
|
$
|
0.34
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Expired
|
|
|
(2,350,000
|
)
|
|
$
|
0.25 to $ 0.85
|
|
|
$
|
0.32
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Outstanding, June 30, 2016
|
|
|
1,150,000
|
|
|
$
|
0.25 to $ 0.85
|
|
|
$
|
0.37
|
|
Exercisable, June 30, 2016
|
|
|
1,100,000
|
|
|
$
|
0.25 to $ 0.85
|
|
|
$
|
0.38
|
|
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 5 -
STOCKHOLDERS’ DEFICIT (CONTINUED)
Stock option activity (continued)
A summary of the status of non-vested options as of June 30, 2016 is as follows;
|
|
Number of Options
|
|
|
Weighted Average
Grant Date Fair
Value
|
|
|
|
|
|
|
|
|
Non-vested at June 30, 2015
|
|
|
100,000
|
|
|
$
|
0.25
|
|
Options granted
|
|
|
-
|
|
|
|
-
|
|
Options forfeited
|
|
|
-
|
|
|
|
-
|
|
Options vested
|
|
|
(50,000
|
)
|
|
|
0.25
|
|
Non-vested at June 30, 2016
|
|
|
50,000
|
|
|
$
|
0.25
|
|
The weighted average remaining contractual lives for options outstanding and exercisable at June 30, 2016 are 1.13 years and 0.93 years (June 30, 2015 - 1.34 and 1.20 years), respectively.
The following summarizes the options outstanding and exercisable:
|
|
|
|
|
Number of Options
|
|
Expiry Date
|
|
Exercise Price
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
December 1, 2015
|
|
$
|
0.50
|
|
|
|
-
|
|
|
|
150,000
|
|
December 1, 2015
|
|
$
|
0.85
|
|
|
|
-
|
|
|
|
100,000
|
|
June 1, 2016
|
|
$
|
0.50
|
|
|
|
-
|
|
|
|
75,000
|
|
June 1, 2016
|
|
$
|
0.85
|
|
|
|
-
|
|
|
|
100,000
|
|
June 30, 2016
|
|
$
|
0.25
|
|
|
|
-
|
|
|
|
2,000,000
|
|
December 1, 2016
|
|
$
|
0.85
|
|
|
|
100,000
|
|
|
|
100,000
|
|
December 1, 2016
|
|
$
|
0.50
|
|
|
|
75,000
|
|
|
|
75,000
|
|
February 19, 2017
|
|
$
|
0.31
|
|
|
|
750,000
|
|
|
|
750,000
|
|
June 1, 2017
|
|
$
|
0.50
|
|
|
|
75,000
|
|
|
|
75,000
|
|
January 13, 2019
|
|
$
|
0.25
|
|
|
|
50,000
|
|
|
|
50,000
|
|
January 13, 2020
|
|
$
|
0.25
|
|
|
|
50,000
|
|
|
|
50,000
|
|
January 13, 2021
|
|
$
|
0.25
|
|
|
|
50,000
|
|
|
|
50,000
|
|
Total outstanding
|
|
|
|
|
|
|
1,150,000
|
|
|
|
3,500,000
|
|
Total exercisable
|
|
|
|
|
|
|
1,100,000
|
|
|
|
3,400,000
|
|
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 5 -
STOCKHOLDERS’ DEFICIT (CONTINUED)
Stock option activity (continued)
The aggregate intrinsic value of options outstanding and exercisable as of June 30, 2016 was $nil and $nil (June 30, 2015 - $1,128,000 and $1,089,000), respectively. The aggregate intrinsic values exclude options having a negative aggregate intrinsic value due to awards with exercise prices greater than market value. The intrinsic value is the difference between the market value of the shares and the exercise price of the award.
During the year ended June 30, 2014, the Company entered into employment agreements, whereby the employees would be granted restricted shares. The holder of a restricted share award is generally entitled at all times on and after the date of the agreement to exercise the rights of a shareholder of the Company, including the right to vote and the right to receive dividends on the shares. These shareholders do not have the ability to sell, transfer or otherwise encumber the restricted shares awards until they fully vest. The restricted shares granted vest over three or four-year periods and the grant date fair value of the awards is recognized as expense over the vesting period. During the year ended June 30, 2016, total compensation expense of $179,584 (June 30, 2015 - $184,622) was recognized as stock-based compensation and included in selling, general and administration expense.
During the year ended June 30, 2016, the Company issued 377,500 shares (2015 - 675,000) and is obligated to issue an additional 600,000 shares pursuant to the employment agreements.
A summary of the status of non-vested restricted shares as of June 30, 2016 is as follows:
|
|
Number of
Restricted Stock
Awards
|
|
|
Weighted Average
Grant Date Fair
Value
|
|
|
|
|
|
|
|
|
Non-vested at June 30, 2015
|
|
|
875,000
|
|
|
$
|
0.35
|
|
Awards granted
|
|
|
-
|
|
|
|
-
|
|
Awards forfeited
|
|
|
-
|
|
|
|
-
|
|
Awards vested
|
|
|
(537,500
|
)
|
|
$
|
0.33
|
|
Non-vested at June 30, 2016
|
|
|
337,500
|
|
|
$
|
0.38
|
|
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 5 -
STOCKHOLDERS’ DEFICIT, CONTINUED
Stock purchase warrants
The following summarizes information about the Company’s stock purchase warrants outstanding:
|
|
Number of
Warrants
|
|
|
Price Per Share
|
|
|
Weighted Average
Exercise Price
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2015
|
|
|
25,554,938
|
|
|
$
|
0.25 - $0.60
|
|
|
$
|
0.33
|
|
Issued
|
|
|
1,250,000
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
Expired
|
|
|
(11,033,060
|
)
|
|
$
|
0.25 - $0.60
|
|
|
$
|
0.33
|
|
Exercised
|
|
|
(3,265,569
|
)
|
|
$
|
0.30 - $0.50
|
|
|
$
|
0.31
|
|
Balance, June 30, 2016
|
|
|
12,506,309
|
|
|
$
|
0.08 - $0.50
|
|
|
$
|
0.32
|
|
|
|
|
|
|
Number of Warrants
|
|
Expiry Date
|
|
Exercise Price
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
January 31, 2015
|
|
$
|
0.50
|
|
|
|
-
|
|
|
|
150,000
|
|
February 28, 2015
|
|
$
|
0.50
|
|
|
|
-
|
|
|
|
200,000
|
|
June 30, 2015
|
|
$
|
0.30
|
|
|
|
-
|
|
|
|
125,000
|
|
July 31, 2015
|
|
$
|
0.50
|
|
|
|
-
|
|
|
|
88,000
|
|
September 13, 2015
|
|
$
|
0.60
|
|
|
|
-
|
|
|
|
44,757
|
|
October 1, 2015
|
|
$
|
0.30
|
|
|
|
-
|
|
|
|
13,191,405
|
|
October 1, 2015
|
|
$
|
0.50
|
|
|
|
-
|
|
|
|
450,000
|
|
December 1, 2015
|
|
$
|
0.30
|
|
|
|
-
|
|
|
|
936,405
|
|
December 1, 2015
|
|
$
|
0.50
|
|
|
|
-
|
|
|
|
1,000,000
|
|
December 31, 2015
|
|
$
|
0.30
|
|
|
|
-
|
|
|
|
157,000
|
|
January 1, 2016
|
|
$
|
0.30
|
|
|
|
-
|
|
|
|
249,235
|
|
February 16, 2016
|
|
$
|
0.25
|
|
|
|
-
|
|
|
|
302,117
|
|
February 16, 2016
|
|
$
|
0.30
|
|
|
|
-
|
|
|
|
1,737,804
|
|
November 25, 2016
|
|
$
|
0.30
|
|
|
|
8,501,786
|
|
|
|
4,168,692
|
|
November 25, 2016
|
|
$
|
0.50
|
|
|
|
2,754,523
|
|
|
|
2,754,523
|
|
May 5, 2020
|
|
$
|
0.08
|
|
|
|
1,250,000
|
|
|
|
-
|
|
Total outstanding and exercisable
|
|
|
|
|
|
|
12,506,309
|
|
|
|
25,554,938
|
|
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 5 -
STOCKHOLDERS’ DEFICIT (CONTINUED)
Stock purchase warrants (continued)
The following summarizes changes to share purchase warrants outstanding during the year ended June 30, 2016:
|
·
|
955,646 investor warrants expiring October 1, 2015 and exercisable at $0.30 were extended to November 25, 2016;
|
|
·
|
588,236 investor warrants expiring December 1, 2015 and exercisable at $0.30 were extended to November 25, 2016;
|
|
·
|
157,000 investor warrants expiring December 31, 2015 and exercisable at $0.30 were extended to November 25, 2016;
|
|
·
|
466,629 investor warrants expiring February 16, 2016 and exercisable at $0.30 were extended to November 25, 2016;
|
The modifications of warrants resulted in no additional expense.
Share obligations
Pursuant to a consulting agreement with the CFO dated August 19, 2013, the Company is obligated to pay $5,000 to $12,500 per month based on the number of hours worked and to issue 6,000 shares of common stock per month beginning September 1, 2013.
As of June 30, 2016, no shares have been issued. As such, a total of 204,000 shares of common stock are issuable. The obligation to issue shares of common stock was measured at a weighted average fair value of $0.43 per share on the date each series of shares became issuable. During the year ended June 30, 2016, $26,460 (2015 - $23,340) was recorded as an obligation to issue shares
. As of June 30, 2016, a total balance of $86,940 remains as an obligation to issue the shares within equity, as this obligation can only be satisfied in shares of common stock.
During the year ended June 30, 2016, the Company received conversion notices to issue 950,000 shares of common stock to settle $280,282 of convertible debentures and derivative liabilities (note 9) recorded as an obligation to issue shares within equity. These shares were issued in April 2016.
Pursuant to a director’s agreement dated July 1, 2015, the Company is obligated to issue 250,000 shares of common stock. As at June 30, 2016, these shares have not been issued and as such, the grant date fair value of $29,250 has been recognized in obligation to issue shares within equity.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 5 -
STOCKHOLDERS’ DEFICIT (CONTINUED)
Subscriptions
During the year ended June 30, 2016, 331,667 shares were issued pursuant to warrants exercised for proceeds received during the year ended June 30, 2015 of $107,500.
NOTE 6 -
RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Fair value
The loan payable balance approximates fair value due its short-term nature.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company’s financial asset that is exposed to credit risk consists of cash, which is placed with US and Canadian financial institutions.
Concentration of credit risk exists with respect to the Company’s cash, as certain amounts are held at US and Canadian financial institutions. The Company's cash are as follows at June 30, 2016 and 2015:
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
|
|
|
|
|
|
Cash (US institution)
|
|
$
|
46,698
|
|
|
$
|
116,655
|
|
Cash (CDN institution)
|
|
|
652
|
|
|
|
652
|
|
|
|
$
|
47,350
|
|
|
$
|
117,307
|
|
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 6 -
RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (CONTINUED)
Credit risk (continued)
All U.S. institution amounts are covered by FDIC insurance as of June 30, 2016. Additionally, all CDN institution amounts are covered by CDIC insurance. Management deems any related risk to be minimal.
Interest rate risk
The Company is not exposed to significant interest rate risk due to the short-term maturity of its monetary current assets and current liabilities.
Currency risk
The Company translates the results of non-US transactions into US dollars using rates of exchange on the date of the transaction. The exchange rate varies from time to time. This risk is considered nominal as the Company does not incur significant transactions in currencies other than US dollars.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they become due. The Company’s approach to managing liquidity risk is to provide reasonable assurance that it will have sufficient funds to meet liabilities when due. The Company manages its liquidity risk by forecasting cash flows required for operations and anticipated investing and financing activities.
The Company requires significant additional funding to meet its administrative overhead costs and maintain its research and development program in fiscal year 2016.
Financing transactions may include the issuance of equity securities, obtaining additional credit facilities, licensing proprietary technology or other financing mechanisms. However, the trading price of the Company’s common stock and the recent year’s slowdown in the United States economy has made it more difficult to obtain equity financing.
NOTE 7 - INCOME TAXES
The provision for income taxes consists of the following at June 30:
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Current Expense
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred Expense/(Benefit)
|
|
|
(746,000
|
)
|
|
|
(482,000
|
)
|
Inc/(Dec) in valuation allowance
|
|
|
746,000
|
|
|
|
482,000
|
|
Total provision for income tax
|
|
$
|
-
|
|
|
$
|
-
|
|
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 7 - INCOME TAXES (CONTINUED)
The total provision differs from the amount computed by applying federal statutory rates to loss before income taxes due to the following at June 30:
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Provision for income tax at the statutory rate of 34%
|
|
$
|
(1,578,000
|
)
|
|
$
|
(1,507,000
|
)
|
|
|
|
|
|
|
|
|
|
Increase(Decrease) in taxes due to
|
|
|
|
|
|
|
|
|
Change in valuation allowance
|
|
|
746,000
|
|
|
|
482,000
|
|
Disallowed expense
|
|
|
419,000
|
|
|
|
(14,000
|
)
|
Federal Tax Return True Ups
|
|
|
64,000
|
|
|
|
(30,000
|
)
|
Expired & Cancelled Stock Op
|
|
|
349,000
|
|
|
|
729,000
|
|
Expired Net Operating Loss
|
|
|
-
|
|
|
|
340,000
|
|
Total provision for income tax
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company has used a federal statutory rate of 34%. The Company has no material state tax liabilities, so no provision for state income tax is needed.
Deferred tax assets and liabilities reflect the tax effects of the temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. The Company has net deferred income tax assets which have been reduced to zero through a valuation allowance because of uncertainties relating to utilization of future tax benefits. The increase/(decrease) in the valuation allowance for the years ended June 30, 2016 and June 30, 2015 are respectively $746,000 and $482,000.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 7 - INCOME TAXES (CONTINUED)
The components of the net deferred income tax assets, calculated at an effective rate of 34%, are as follows at June 30:
|
|
2016
|
|
|
2015
|
|
Deferred income tax assets
|
|
|
|
|
|
|
Current deferred tax assets
|
|
|
|
|
|
|
Accrued Liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
Valuation allowance
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total current deferred tax assets
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Noncurrent deferred tax assets
|
|
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
|
14,450,000
|
|
|
|
13,339,000
|
|
Nonqualified stock options
|
|
|
41,000
|
|
|
|
390,0000
|
|
Deferred Revenue
|
|
|
127,000
|
|
|
|
143,000
|
|
Capital loss carryforwards
|
|
|
-
|
|
|
|
-
|
|
Unrealized Loss on Stock Compensation
|
|
|
-
|
|
|
|
-
|
|
Legal dispute reserve
|
|
|
-
|
|
|
|
-
|
|
Basis difference of fixed assets
|
|
|
-
|
|
|
|
-
|
|
Valuation allowance
|
|
|
(14,605,000
|
)
|
|
|
(13,859,000
|
)
|
|
|
|
|
|
|
|
|
|
Total noncurrent deferred tax assets
|
|
|
13,000
|
|
|
|
13,000
|
|
|
|
|
|
|
|
|
|
|
Noncurrent deferred tax liabilities
|
|
|
|
|
|
|
|
|
Basis difference of fixed assets
|
|
|
13,000
|
|
|
|
13,000
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent deferred tax liabilities
|
|
|
13,000
|
|
|
|
13,000
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset/(liability)
|
|
$
|
-
|
|
|
$
|
-
|
|
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 7 - INCOME TAXES (CONTINUED)
For tax purposes, the Company has unused net operating losses available for carryforwards to future tax years. At June 30, 2016, the amounts and expiration dates of the Company's net operating loss carryforwards are as follows:
Year Ended
|
|
Expires
|
|
Amount
|
|
|
|
|
|
|
|
June 30, 1999
|
|
June 30, 2019
|
|
|
1,264,000
|
|
June 30, 2000
|
|
June 30, 2020
|
|
|
946,000
|
|
June 30, 2001
|
|
June 30, 2021
|
|
|
1,975,000
|
|
June 30, 2002
|
|
June 30, 2022
|
|
|
2,506,000
|
|
June 30, 2003
|
|
June 30, 2023
|
|
|
1,364,000
|
|
June 30, 2004
|
|
June 30, 2024
|
|
|
2,159,000
|
|
June 30, 2005
|
|
June 30, 2025
|
|
|
2,208,000
|
|
June 30, 2006
|
|
June 30, 2026
|
|
|
2,373,000
|
|
June 30, 2007
|
|
June 30, 2027
|
|
|
1,177,000
|
|
June 30, 2008
|
|
June 30, 2028
|
|
|
1,676,000
|
|
June 30, 2009
|
|
June 30, 2029
|
|
|
1,439,000
|
|
June 30, 2010
|
|
June 30, 2030
|
|
|
1,699,000
|
|
June 30, 2011
|
|
June 30, 2031
|
|
|
3,130,000
|
|
June 30, 2012
|
|
June 30, 2032
|
|
|
3,057,000
|
|
June 30, 2013
|
|
June 30, 2033
|
|
|
3,536,000
|
|
June 30, 2014
|
|
June 30, 2034
|
|
|
4,635,000
|
|
June 30, 2015
|
|
June 30, 2035
|
|
|
3,897,000
|
|
June 30, 2016
|
|
June 30, 2036
|
|
|
3,458,000
|
|
Total
|
|
|
|
$
|
42,499,000
|
|
Current federal tax laws include substantial restrictions on the utilization of net operating losses and tax credits in the event of an ownership change of a corporation. Accordingly, the Company's ability to utilize net operating loss and tax credit carryforwards may be limited as a result of such ownership changes. Such a limitation could result in the expiration of carryforwards before they are utilized.
In July 2006, the FASB released the Final Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (formerly FIN 48, now ASC 740-10). ASC 740-10 prescribes the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. ASC 740-10 also requires additional disclosure of the beginning and ending unrecognized tax benefits and details regarding the uncertainties that may cause the unrecognized benefits to increase or decrease within a twelve-month period.
We adopted the provisions of ASC 740-10 on July 1, 2007. There was no impact on our consolidated financial position, results of operations and cash flows as a result of adoption. We have an unrecognized tax benefit of $336,000 as of June 30, 2016, including no accrued amounts for interest and penalties. In addition, the Company has not completed an analysis under IRC section 382 to determine if there have been any direct and/or indirect ownership changes that would limit the use of net operating loss in future years.
Our policy will be to recognize interest and penalties related to income taxes as a component of income tax expense. We are subject to income tax examinations for U.S. incomes taxes from the year ended June 30, 1999 forward. We do not anticipate that total unrecognized tax benefits will significantly change prior to June 30, 2017.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 8 -
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
Changes in working capital
|
|
|
|
|
|
|
Prepaid expenses
|
|
$
|
65,433
|
|
|
$
|
49,995
|
|
Accounts payable and accruals
|
|
|
769,378
|
|
|
|
(218,574
|
)
|
Related party payable
|
|
|
(30,480
|
)
|
|
|
|
|
Accounts receivable
|
|
|
(21,894
|
)
|
|
|
-
|
|
|
|
$
|
782,437
|
|
|
$
|
(168,579
|
)
|
|
|
|
|
|
|
|
|
|
Shares issued for:
|
|
|
|
|
|
|
|
|
Subscriptions received in prior year
|
|
$
|
107,500
|
|
|
$
|
158,625
|
|
Settlement of debt
|
|
|
6,220
|
|
|
|
529,400
|
|
Settlement of convertible debenture
|
|
|
2,059,738
|
|
|
|
-
|
|
Services and financing fees
|
|
|
-
|
|
|
|
614,500
|
|
NOTE 9 -
RELATED PARTY TRANSACTIONS
As of June 30, 2016, $30,000 (June 30, 2015 - $60,480) was owed to the Company's executives for outstanding managements fees, consulting fees and business related reimbursements, and are without interest or stated terms of repayment.
NOTE 10 -
SEGMENT INFORMATION
The Company operates primarily in one business segment, the development of electronically-conductive resin-based materials, with operations located in the US.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 11 -
CONVERTIBLE DEBENTURES
During the year ended June 30, 2016, the Company had the following convertible debenture agreements, summarized as follows:
|
(a)
|
Vis Vires Group, Inc.:
|
|
·
|
On July 23, 2015, a total of $165,000 (extinguished) was received, net of $4,000 in legal fees. The convertible debt was due April 27, 2016;
|
|
·
|
On August 20, 2015, a total of $100,000 (extinguished) was received, net of $4,000 in legal fees. The convertible debt was due May 25, 2016;
|
|
·
|
On November 17, 2015, a total of $100,000 (extinguished) was received, net of $4,000 in legal fees. The convertible debt was due August 19, 2016; and
|
|
·
|
On January 28, 2016, a total of $75,000 (extinguished) was received, net of $3,500 in legal fees. The convertible debt was due November 1, 2016.
|
|
·
|
On March 25, 2016, a total of $125,000 (settled) was received, net of $3,500 in legal fees. The convertible debt was due December 29, 2016
|
The convertible debentures accrue interest of 8% per annum and can be converted into common stock at the option of the holder at any time after 180 days following the date of issuance. The debenture has a conversion price equal to 63% of the market price. Market price is defined as the average of the lowest three trading prices for the Company’s common stock during the ten-day trading period ending one trading day prior to the date of conversion notice with a limitation of 4.99% of the issued and outstanding common stock at the time of conversion. Any amount of principal that is not paid when due bears interest at a rate of 22% per annum.
The convertible debentures may be repaid by the Company as follows:
|
·
|
Outstanding principal multiplied by 107% together with accrued interest and unpaid interest thereon if prepaid within a period of 30 days beginning on the date of issuance of the note;
|
|
·
|
Outstanding principal multiplied by 113% together with accrued interest and unpaid interest thereon if prepaid at any time during the period beginning 31 days from the date of issuance of the note and ending on the date that is 60 days following the date of the note;
|
|
·
|
Outstanding principal multiplied by 118% together with accrued interest and unpaid interest thereon if prepaid at any time during the period beginning 61 days from the date of issuance of the note and ending on the date that is 90 days following the date of the note.
|
|
·
|
Outstanding principal multiplied by 123% 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 120 days following the date of the note.
|
|
·
|
Outstanding principal multiplied by 128% together with accrued interest and unpaid interest thereon if prepaid at any time during the period beginning 121 days from the date of issuance of the note and ending on the date that is 150 days following the date of the note.
|
|
·
|
Outstanding principal multiplied by 130% 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.
|
After the expiration of the 180 days following the date of issuance of the debentures, the Company will have no right of prepayment.
On September 23, 2015, the first two convertible debentures with Vis Vires Group, Inc. were transferred to River North Equity LLC with identical terms with the exception of the maturity date of the note (note 9(b)). The transfer of debt was accounted for as an extinguishment of debt with a gain on extinguishment of $1,927 recognized in the consolidated statement of operations
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 11 -
CONVERTIBLE DEBENTURES (CONTINUED)
|
(a)
|
Vis Vires Group, Inc. (continued):
|
On March 21, 2016, the second two convertible debentures with Vis Vires Group, Inc. were transferred to Vista Capital Investments, LLC with identical terms with the exception of the maturity date of the note and a lower interest rate (note 9(c)). The transfer of debt was accounted for as an extinguishment of debt with a gain on extinguishment of $67,148 recognized in the consolidated statement of operations during the year ended June 30, 2016.
The embedded conversion feature of the convertible debentures were treated as derivative liabilities measured at fair value on inception and at each reporting date with the debt component being allocated the residual value of the debt and amortized using the effective interest method to its maturity value. Debt issuance costs have been recorded as a reduction to the debt.
During the year ended June 30, 2016, the total net proceeds allocated to the derivative liability components were $261,974 with the residual net proceeds of $30,026 allocated to the debt components at inception.
|
(b)
|
River North Equity LLC
|
|
·
|
On September 23, 2015, a replacement note of $273,000 (extinguished during the three months ended March 31, 2016) was received in exchange with the two convertible notes with Vis Vires Group, Inc. (described above). The new convertible debt is due September 21, 2016. The terms of this convertible debt are identical to the terms with Vis Vires Group, Inc. (above);
|
|
·
|
On September 24, 2015, a total of $98,950 (extinguished during the three months ended March 31, 2016) was received, net of $5,000 in legal fees and $61,050 in Other Issue Discount (“OID”). The convertible debt is due December 31, 2016;
|
The convertible debenture accrues interest of 8% per annum and can be converted into common stock at the option of the holder at any time after 180 days following the date of issuance. The debenture has a conversion price equal to 63% of the market price. Market price is defined as the average of the lowest trading price for the Company’s common stock during the ten-day trading period ending one trading day prior to the date of conversion notice with a limitation of 9.99% of the issued and outstanding common stock at the time of conversion. Any amount of principal that is not paid when due bears interest at a rate of 18% per annum.
The convertible debenture may be repaid by the Company as follows:
|
·
|
Outstanding principal multiplied by 105% together with accrued interest and unpaid interest thereon if prepaid within a period of 30 days beginning on the date of the Note
|
|
·
|
Outstanding principal multiplied by 110% together with accrued interest and unpaid interest thereon if prepaid at any time during the period beginning 31 days from the date of the Note and ending on the date which is 60 days following the date of the Note
|
|
·
|
Outstanding principal multiplied by 118% together with accrued interest and unpaid interest thereon if prepaid at any time during the period beginning 61 days from the date of the Note and ending on the date which is 90 days following the date of the Note
|
|
·
|
Outstanding principal multiplied by 123% together with accrued interest and unpaid interest thereon if prepaid at any time during the period beginning 91 days from the date of the Note and ending on the date which is 120 days following the date of the Note
|
|
·
|
Outstanding principal multiplied by 130% together with accrued interest and unpaid interest thereon if prepaid at any time during the period beginning 121 days from the date of the Note and ending on the date which is 180 days following the date of the Note
|
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 11 -
CONVERTIBLE DEBENTURES (CONTINUED)
|
(b)
|
River North Equity LLC (continued)
|
After the expiration of the 180 days following the date of issuance of the debenture, the Company will have no right of prepayment.
The two outstanding convertible debt notes with River North LLC (described above) were exchanged for new convertible debentures as follows:
|
(i)
|
On February 4, 2016, a portion of the $273,000 convertible debenture was transferred to an independent lender. A new note totalling $127,786 was issued representing the original principle of $104,000, accrued interest of $3,100 and an additional $20,686 as consideration for the amending the terms of the convertible debt.
|
The maturity date of the new convertible debt is February 1, 2018 and is stated without interest.
As of the effective date of the convertible debt note, the lender may convert all or part of the unpaid principal and accrued interest into common stock at its sole discretion. All balances outstanding have a variable conversion price equal to 63% of the market price. The market price is defined as the lowest five trading prices in the 25 days prior to the conversion date. The lender is limited in its sale of the Company’s common shares to the greater of 15% of the total number of common shares traded in that same week, or $10,000 in dollar volume per week and a limitation of 4.99% of the issued and outstanding common stock at the time of conversion unless the market capitalization of the Company falls below $2,500,000, then the limit will increase to 9.99%.
|
(ii)
|
On February 5, 2016, the remaining convertible debentures were transferred to SBI Investments, LLC and an independent lender. The replacement notes were issued with identical terms as described above with the exception of the maturity dates of the notes being extending to February 5, 2017:
|
The replacement notes with SBI Investment total $273,575, representing transferred principle of $222,667, accrued interest of $6,375 and an additional $44,533 as consideration for amending the terms of the convertible debt.
The replacement notes with the independent lender total $136,787, representing transferred principle of $111,333, accrued interest of $3,187 and an additional $22,267 as consideration for amending the terms of the convertible debt.
The transfer of their debts were accounted for as an extinguishment of debt with a gain on extinguishment of $75,149 recognized in the consolidated statement of operations during the year ended June 30, 2016.
The embedded conversion features of the convertible debentures were treated as derivative liabilities measured at fair value on inception and at each reporting date with the debt component being allocated the residual value of the debt and amortized using the effective interest method to its maturity value. Debt issuance costs have been recorded as a reduction to the debt.
During the year ended June 30, 2016, the net proceeds of the replacement notes allocated to derivative liability components were $508,587 with the residual net proceeds of $29,561 allocated to the debt components at inception.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 11 -
CONVERTIBLE DEBENTURES (CONTINUED)
|
(c)
|
Vista Capital Investments, LLC
|
|
·
|
On March 21, 2016, a new note with a principle of $126,000 (inclusive of $8,507 in interest and a premium of $13,493) was received in exchange for the $104,000 convertible note with Vis Vires Group, Inc. (note 9(a)). The new convertible debt is due January 1, 2017; and
|
|
·
|
On March 21, 2016, a new note with a principle of $89,250 (inclusive of $5,858 in interest and a premium of $4,892) was received in exchange for the $78,500 convertible note with Vis Vires Group, Inc. (note 9(a)). The new convertible debt is due January 1, 2017;
|
During the year ended June 30, 2016, the two notes with Vista Capital were settled with 2,833,333 common shares of the Company.
The convertible debentures include an up-front interest charge of 5% due at maturity and can be converted into common stock at the option of the holder at any time after date of issuance. The debenture has a conversion price equal to 63% of the market price. Market price is defined as the lowest trading price for the Company’s common stock during the twenty five-day trading period ending one trading day prior to the date of conversion notice with a limitation of 4.99% of the issued and outstanding common stock at the time of conversion unless the market capitalization of the Company falls below $2,500,000, then the limit will increase to 9.99%.
The convertible debentures may be repaid by the Company as follows:
|
·
|
Outstanding principal multiplied by 145% together with accrued interest and unpaid interest thereon if prepaid within a period of 150 days beginning on the date of issuance of the note;
|
After the expiration of the 150 days following the date of issuance of the debentures, the Company will have no right of prepayment.
The embedded conversion feature of the convertible debentures were treated as derivative liabilities measured at fair value on inception and at each reporting date with the debt components being allocated the residual value of the debt and amortized using the effective interest method to its maturity value. Debt issuance costs have been recorded as a reduction to the debt.
During the year ended June 30, 2016, the total net proceeds allocated to the derivative liability components were $215,250 with the residual net proceeds of $0 allocated to the debt components at inception.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 11 -
CONVERTIBLE DEBENTURES (CONTINUED)
During the year ended June 30, 2016, the Company entered into two convertible debt notes with JMJ Financial.
First convertible note:
The total amount that may be borrowed with JMJ Financial is $650,000, which includes an upfront OID fee of 8%.
On signing the agreement, the first advance of $300,000 was received by the Company from the lender. At the sole discretion of the lender, additional consideration may be advanced to the Company; however, the Company has the right to reject any of those payments within 24 hours of receipt of payment. Each advance received by the Company is due two years from delivery of payment.
|
·
|
On September 30, 2015, received $300,000, net of an upfront fee of $26,087;
|
No interest will be applied to the principal balance for the first 90 days after cash advance. After the first 90 days, an interest charge of 8% will be immediately applied to the principal.
On delivery of consideration, the lender may convert all or part of the unpaid principal and up-front fee into common stock at its sole discretion. All balances outstanding have a variable conversion price equal to 75% of the market price. The market price is defined as the lowest two trading prices in the 20 days prior to the conversion date. The lender is limited to holding no more than 4.99% of the issued and outstanding common stock at the time of conversion. After the expiration of 90 days following the delivery date of any consideration, the Company will have no right of prepayment.
The embedded conversion feature of the convertible debenture was treated as a derivative liability measured at fair value on inception and at each reporting date with the debt component being allocated the residual value of the debt and amortized using the effective interest method to its maturity value. Debt issuance costs have been recorded as a reduction to the debt.
During the year ended June 30, 2016, the net proceeds allocated to the derivative liability component was $234,087 with the residual net proceeds of $65,913 allocated to the debt component at inception.
Second convertible note:
On May 5, 2016, the Company entered into a second convertible debt agreement with JMJ Financial. A total of $900,000 was received, net of an upfront OID 10% fee of $100,000. The convertible debenture is due May 5, 2017.
No interest will be applied to the principal balance for the first 90 days after cash advance. After the first 90 days, a one-time interest charge of 12% will be immediately applied to the principal.
On delivery of consideration, the lender may convert all or part of the unpaid principal and up-front fee into common stock at its sole discretion. All balances outstanding have a variable conversion price equal to 65% of the market price. The market price is defined as the lowest two trading prices in the 25 days prior to the conversion date. The lender is limited to holding no more than 4.99% of the issued and outstanding common stock at the time of conversion. After the expiration of 120 days following the delivery date of any consideration, the Company will have no right of prepayment without written consent of the lender.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 11 -
CONVERTIBLE DEBENTURES (CONTINUED)
|
(d)
|
JMJ Financial (continued)
|
Second convertible note (continued)
The convertible debenture may be repaid by the Company as follows:
|
·
|
Outstanding principal multiplied by 120% together with accrued interest and unpaid interest thereon if prepaid within a period of 90 days beginning on the date of the Note
|
|
·
|
Outstanding principal multiplied by 140% together with accrued interest and unpaid interest thereon if prepaid at any time during the period beginning 91 days from the date of the Note and ending on the date which is 180 days following the date of the Note
|
Pursuant to the terms of the financing, the Company is required to use a portion of the proceeds to settle all outstanding convertible debentures with other lenders.
In addition to the convertible debt, the Company issued 1,250,000 share purchase warrants with an expiry date of May 5, 2020. The exercise price of the warrants will be the lessor of $0.20 per share, the lowest trade price in the 10 days prior to exercise or the adjusted price as described below.
The adjusted warrant price is described as follows:
|
·
|
At any time while the warrants are outstanding, any subsequent sale of shares of common stock, or any agreement whereby the holder may acquire common stock at an effective exercise price per share less than the warrant exercise price in effect, the exercise price of these warrants will automatically adjust to this new lower exercise price.
|
|
·
|
On June 7, 2016, 5,250,000 common shares were issued to settle $416,325 of the convertible debt with at a conversion price of $0.0793. This conversion price is now the new exercise price of the warrant.
|
These warrants are cashless and the number of shares received will be equivalent to the gain between the market price of shares at the time of exercise and the exercise price of warrant.
The price reset feature of the warrants have been accounted for as a derivative liability with fair value measured at inception and at each reporting date. Further, the embedded conversion feature of the convertible debenture was treated as a derivative liability measured at fair value on inception and at each reporting date. The proceeds of the loan were first allocated to the derivative warrant liability with the residual value then allocated to embedded conversion feature of the convertible debt and then allocated to the debt component. The debt is amortized over its life using the effective interest method. Debt issuance costs have been recorded as a reduction to the debt.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 11 -
CONVERTIBLE DEBENTURES (CONTINUED)
During the year ended June 30, 2016, $815,837 of the face value of debentures were extinguished by issuing 15,463,881 shares of common stock of the Company. As a result, $2,059,738 representing the fair value of the derivative liabilities and the amortized cost of convertible debentures settled was included as additional paid in capital. $231,642 of the face value of debentures were extinguished with cash.
As of June 30, 2016, the total amortized value of the outstanding convertible debentures were $664,621 (June 30, 2015 - $94,107), the total fair value of the outstanding derivative liabilities were $142,797 (June 30, 2015 - $87,821) and the fair value of the warrant liability was $87,500 (June 30, 2015 - $nil).
During the year ended June 30, 2016, a fair value loss on the derivative liability of $815,491 (2015 - $1,092) was recognized. As of June 30, 2016, $115,079 of the fair value loss relates to the conversion features associated with the outstanding debentures with the remaining $700,412 related to the conversion features associated with the debentures that were settled and extinguished.
As of June 30, 2016, 1,374,041 (June 30, 2015 - 343,177) common shares of the Company would be required to settle the remaining tranches of convertible debt at a weighted average conversion price of $0.11 (June 30, 2015 - $0.26) per common share.
As of June 30, 2016, the face value of convertible debentures is $1,189,649 (June 30, 2015 - $133,976), which includes accrued interest of $146,087 (June 30, 2015 - $4,976).
During the year ended June 30, 2016, debt discount amortization of $511,623 (2015 - $103,956) was recorded as interest expense.
The fair value of the derivative financial liability is calculated using a binomial lattice valuation method at inception and the balance sheet date. The fair value of the warrant liability is calculated using the Monte Carlo Model at inception and the balance sheet date.
The following assumptions were used in determining the fair value of the derivative liabilities at inception during the year ended:
|
|
June 30, 2016
|
|
Share price
|
|
|
0.16 – 0.50
|
|
Conversion price
|
|
|
0.11 – 0.37
|
|
Expected life (years)
|
|
|
0.78 – 2.00
|
|
Interest rate
|
|
|
0.42 - 0.63
|
%
|
Volatility
|
|
|
76.39 – 101.5
|
%
|
Dividend yield
|
|
|
N/A
|
|
Estimated forfeitures
|
|
|
N/A
|
|
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 11 -
CONVERTIBLE DEBENTURES (CONTINUED)
The following assumptions were used in determining the fair value of the derivative financial liabilities as of:
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
Share price
|
|
|
0.16
|
|
|
|
0.64
|
|
Conversion price
|
|
|
0.11
|
|
|
|
0.39
|
|
Expected life (years)
|
|
|
0.850 – 1.25
|
|
|
|
0.27
|
|
Interest rate
|
|
|
0.45 - 0.50
|
%
|
|
|
0.58
|
%
|
Volatility
|
|
|
91.50 – 122.29
|
%
|
|
|
65.73
|
%
|
Dividend yield
|
|
|
N/A
|
|
|
|
N/A
|
|
Estimated forfeitures
|
|
|
N/A
|
|
|
|
N/A
|
|
The following assumptions were used in determining the fair value of the derivative warrant liability as of:
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
Share price
|
|
|
0.16
|
|
|
|
N/A
|
|
Conversion price
|
|
$
|
0.0915
|
|
|
|
N/A
|
|
Expected life (years)
|
|
|
1.85
|
|
|
|
N/A
|
|
Interest rate
|
|
|
0.58
|
%
|
|
|
N/A
|
|
Volatility
|
|
|
92
|
%
|
|
|
N/A
|
|
Dividend yield
|
|
|
N/A
|
|
|
|
N/A
|
|
Estimated forfeitures
|
|
|
N/A
|
|
|
|
N/A
|
|
NOTE 12 –
LOAN PAYABLE
During the year ended June 30, 2016, the Company entered into the following loan agreements, summarized as follows:
|
(a)
|
On Jan 1, 2016, the Company entered into a new financing arrangement to cover directors’ and officers’ liability insurance for the period December 31, 2015 to December 31, 2016. The amount financed was $73,176, which bears interest at 3.189% annually. Monthly payments of $8,131 are required to settle amounts owing. The balance outstanding as of June 30, 2016 was $32,522 (June 30, 2015 - $32,335).
|
As of June 30, 2016, $45,609 (June 30, 2015 – $45,351), representing the unamortized portion of prepaid insurance, is included in prepaid expenses on the consolidated balance sheet.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 12 –
LOANS PAYABLE (CONTINUED)
|
(b)
|
On January 1, 2016, the Company entered into a short term loan agreement with an original maturity date of July 1, 2016, for $110,000. A one-time interest charge of 5% or $5,500 is due as of July 1, 2016. The loan was entered into to settle marketing fees payable. As of June 30, 2016, the loan balance on the consolidated balance sheet is $115,500.
|
On July 2, 2016 the maturity date of the loan was revised to include the following loan repayment dates:
|
(i)
|
$5,500 on July 5, 2016 (paid)
|
|
(ii)
|
$25,000 on July 18, 2016 (paid)
|
|
(iii)
|
$25,000 on July 29, 2016 (paid)
|
|
(iv)
|
$25,000 on August 8, 2016 (partially repaid); and
|
|
(v)
|
$35,000 on August 22, 2016
|
In the event of a default on the loan, the unpaid principal amount together with the interest shall immediately increase by 130% and the lender will have the right to convert the outstanding balance into shares of the Company’s common stock.
The outstanding balance will have a variable conversion price equal to 65% of the market price. The market price is defined as the lowest trading price in the 15 days prior to the conversion date. The lender is limited to 4.99% of the issued and outstanding common stock at the time of conversion unless the market capitalization of the Company falls below $2,500,000, then the limit will increase to 9.99%.
On September 9, 2016, the lender agreed to waive its right to conversion of the loan until January 31, 2017. As such, the Company expects to settle the debt with cash, no consideration for the default conversion feature has been accounted for.
|
(c)
|
On March 8, 2016, the Company entered into a short term loan agreement with a maturity date of May 8, 2016, for $120,000 net of legal fees of $6,000. A one-time OID fee of $20,00 was applied to the balance at inception of the loan. On May 9, 2016 the loan was settled with a cash payment of $146,000.
|
|
(d)
|
On March 30, 2016, the Company entered into a short term loan agreement with a maturity date of April 4, 2016, for $10,000. A one-time interest charge of $500 was applied to the balance at inception of the loan. On April 4, 2016, the principle and interest were repaid in cash.
|
NOTE 13 –
EXTINGUISHMENT OF DEBT
During the year ended June 30, 2015, the following debts were extinguished:
|
(a)
|
Accounts payable of $25,000 with a consultant was settled by issuing 54,347 shares of common stock measured at a fair value of $0.46 per share on the date of the agreement.
|
|
(b)
|
Legal fees included in accounts payable for a total of $200,000 were settled by a cash payment of $100,000 and a deposit in advance of services of $50,000 included in prepaid expenses. As a result, a gain on extinguishment of $100,000 was recognized in net loss on extinguishment of liabilities within the consolidated statement of operations.
|
There were no such extinguishments during the year ended June 30, 2016.
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 14 -
DEFERRED REVENUE
On June 21, 2013, the Company signed a ten year license agreement with
Hanwha Advanced Materials Co., Ltd
, of South Korea. The agreement grants Hanwha exclusive rights to sell, distribute and manufacture Integral's patented line of conductive plastics, ElectriPlast, in South Korea, as well as non-exclusive sales and distribution rights to ElectriPlast for Japan, Taiwan and the China markets.
The agreement called for license fees as follows:
|
·
|
$250,000 (received) to be paid to the Company within 15 business days; and
|
|
·
|
$250,000 (received) payment to be paid to the Company no later than one year after signing the agreement.
|
The payments have been recorded as deferred revenue, which will be recognized as license fee revenue in the consolidated statements of operations over the life of the ten year contract. During the year ended June 30, 2016, $50,000 (June 30, 2014 - $29,167) has been recognized as revenue.
As of June 30, 2016 and June 30, 2015, the remaining deferred revenue was as follows:
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
50,000
|
|
|
$
|
50,000
|
|
Non-current
|
|
|
320,833
|
|
|
|
370,833
|
|
|
|
$
|
370,833
|
|
|
$
|
420,833
|
|
NOTE 15 -
LEASE AGREEMENTS
During the fiscal years June 30, 2016 and 2015, rent expense was $76,542 and $48,212, respectively. Effective July 1, 2013 the Company entered into a lease agreement whereby the Company is the lessee of office space. The agreement expires on June 30, 2018, and monthly payments are $2,500. Future minimum lease payments are as follows:
2017
|
|
|
30,000
|
|
2018
|
|
|
30,000
|
|
|
|
$
|
60,000
|
|
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 16 -
COMMITMENTS
During the fiscal year ended June 30, 2016, the following commitments were outstanding:
|
(a)
|
An employment agreement with an employee, dated November 1, 2013, engaging the individual to provide certain business development services to the Company in Korea. The term of the agreement is for three years and the Company is to pay the employee an annual salary of $150,000. The Company agreed to issue 810,000 shares of the Company’s common stock vesting 25% on the grant date and each anniversary thereafter. As at June 30, 2016, 607,500 shares have vested and 202,500 (2015 – 405,000) were issued during the year.
|
|
(b)
|
An employment agreement with an employee, dated November 1, 2013, engaging the individual to provide certain consulting services to the Company in Korea. The term of the agreement is for three years and the Company is to pay the employee an annual salary of $100,000. The Company agreed to issue 540,000 shares of the Company’s common stock vesting 25% on the grant date and each anniversary thereafter. As at June 30, 2016, 405,000 shares have vested and 135,000 (2015 – 270,000) were issued during the year.
|
|
(c)
|
An employment agreement with an employee, dated January 13, 2014, engaging the individual to provide certain technical expertise to the Company in the USA. The term of the agreement is for three years and the Company is to pay the employee an annual salary of $200,000. The Company agreed to issue 500,000 shares of the Company’s common stock vesting 33% on the grant date and each anniversary thereafter. As at June 30, 2016, 500,000 shares have vested and are obligated to be issued.
|
|
(d)
|
An employment agreement with an employee, dated January 1, 2014, engaging the individual to provide the expertise as that of the Chief Technical Officer. The term of the agreement is for three years and the Company is to pay the employee an annual salary of $170,000 The Company agreed to issue 100,000 shares of the Company’s common stock vesting 33% on the grant date and each anniversary thereafter. As at June 30, 2016, 100,000 shares have vested and are obligated to be issued.
|
For each of the shares granted under the employee agreements above, fair value is measured at the grant date and recorded evenly over each of the vesting periods. During the year ended June 30, 2016, fair value of $179,583 was recorded to the consolidated statement of operations within selling, general and administrative.
|
(e)
|
Pursuant to a consulting agreement dated August 19, 2014, the Company is obligated to pay $5,000 to $12,500 per month based on the number of hours worked and to issue 6,000 shares of common stock per month beginning September 1, 2014.
|
Integral Technologies, Inc
.
Notes to the Consolidated Financial Statements
NOTE 17 -
SUBSEQUENT EVENTS
Subsequent to the year ended June 30, 2016, the following events occurred:
|
(a)
|
On July 27, 2016, the Company completed a private placement amounting to $226,355 for the issuance of 1,968,304 units. Each unit consisted of one common share at $0.115 per share and one quarter share purchase warrant at $0.001 per warrant to purchase 492,076
common
shares on or before April 30, 2017 at an exercise price of $0.30 per warrant.
|
|
(b)
|
On August 22, 2016, the Company completed a private placement amounting to $94,000 for the issuance of 817,391 units. Each unit consisted of one common share at $0.115 per share and one quarter share purchase warrant at $0.001 per warrant to purchase 204,348
common
shares on or before May 31, 2017 at an exercise price of $0.30 per warrant.
|
|
(c)
|
On September 2, 2016, the Company entered into a promissory note agreement and received a
total of $80,000, net of $8,000 in fees. The $88,000 plus a one-time interest charge of 10% is due December 2, 2016. In addition, the Company is to issue 100,000 common shares within 14 days of the start of the note. In the event of default (non-payment), the balance of the promissory note will increase by 140%.
|
|
(d)
|
On September 21, 2016, the Company issued 1,035,864 shares to settle the remaining balance of $69,649, the first convertible debt note with JMJ Financial (note 11(d)).
|
|
(e)
|
On November 29, 2016, increased its authorized common shares to 250,000,000 from 150,000,000.
|
|
(f)
|
During December, 2016, the Company completed private placements amounting to $210,000 for the issuance of 3,000,000 units.
Each unit consisted of one common share at $0.07 per share and one quarter share purchase warrant at $0.001 per warrant to purchase 750,000
common
shares on or before October 1, 2017 at an exercise price of $0.20 per warrant.
|
|
(g)
|
During January 2017, the Company completed a private placement amounting to $23,800 for the issuance of 340,000 units.
Each unit consisted of one common share at $0.07 per share and one quarter share purchase warrant at $0.001 per warrant to purchase 85,000
common
shares on or before October 1, 2017 at an exercise price of $0.20 per warrant.
|