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Derivative Liabilities
 12 Months Ended
Jun. 30, 2014
Derivative Liabilities  
Derivative Liabilities

5. Derivative Liabilities

 

During the fiscal year ended June 30, 2013, the Company issued a total of $525,000 14% convertible notesto twelve accredited investors. In connection with the issuance, each note holder received a two-year warrant to purchase up to a total of 131,250 shares of common stock at $0.01 per share and a two-year warrant to purchase up to a total of 78,750 shares of common stock at $0.50 per share. The Company recognized the conversion feature, the $0.01 warrant to purchase common stock and $0.50 warrant to purchase common stock were derivative liabilities. The derivative liabilities were valued using the weighted-average Black-Scholes-Merton option pricing model using the assumptions detailed below. 

 

As of June 30, 2014, the derivative liabilities were valued using the weighted-average Black-Scholes-Merton option pricing model using the assumptions detailed below. The results of year-end valuation were summarized as follows:

 

Grant Date   Derivative Liabilities   Dividend Yield   Expected Volatility   Risk Free Rate   Expected Term   Fair Value as of June 30, 2014
8/17/2012   Conversion Feature   0%   147%   0.19%             2.01         12,000
    $0.01 Warrant   0%   147%   0.19%             0.13           2,000
                         
8/24/2012   Conversion Feature   0%   147%   0.18%             2.01         12,000
    $0.01 Warrant   0%   147%   0.18%             0.15           2,000
                         
9/9/2012   Conversion Feature   0%   130%   0.17%             2.01         18,000
    $0.01 Warrant   0%   130%   0.17%             0.19           6,000
                         
9/13/2012   Conversion Feature   0%   130%   0.16%             2.01         22,000
    $0.01 Warrant   0%   130%   0.16%             0.20           4,000
                         
9/18/2012   Conversion Feature   0%   128%   0.18%             0.67           6,000
    $0.01 Warrant   0%   128%   0.18%             0.22           2,000
                         
9/18/2012   Conversion Feature   0%   128%   0.18%             0.67           6,000
    $0.01 Warrant   0%   128%   0.18%             0.22           2,000
    $0.50 Warrant   0%   128%   0.18%             0.22              225
                         
9/18/2012   Conversion Feature   0%   128%   0.18%             0.67           6,000
    $0.01 Warrant   0%   128%   0.18%             0.22           2,000
    $0.50 Warrant   0%   128%   0.18%             0.22              225
                         
9/27/2012   Conversion Feature   0%   122%   0.16%             0.67           5,000
    $0.01 Warrant   0%   122%   0.16%             0.24           3,000
    $0.50 Warrant   0%   122%   0.16%             0.24              750
                         
10/5/2012   Conversion Feature   0%   122%   0.17%             2.01           4,000
    $0.01 Warrant   0%   122%   0.17%             0.27           1,000
                         
10/25/2012   Conversion Feature   0%   99%   0.18%             2.01           8,000
    $0.01 Warrant   0%   99%   0.18%             0.32           4,000
                         
7/31/2012   Conversion Feature   0%   66%   0.17%             0.84           2,000
    $0.01 Warrant   0%   66%   0.14%             0.34           5,000
    $0.50 Warrant   0%   66%   0.14%             0.34           1,537
                         
10/31/2012   Conversion Feature   0%   99%   0.14%             2.01           8,000
    $0.01 Warrant   0%   66%   0.17%             0.08           5,000
                         
11/27/2012   Conversion Feature   0%   96%   0.17%             0.41         12,000
    $0.01 Warrant   0%   96%   0.17%             0.41           7,000
                         
12/21/2012   Conversion Feature   0%   83%   0.17%             2.01         28,000
    $0.01 Warrant   0%   83%   0.17%             0.48         18,000
                         
8/23/2016   $0.50 Warrant   0%   99%   0.00%             2.15         13,500
                    Total Fair Value   228,237

 

As of June 30, 2013,the derivative liabilities were valued using the weighted-average Black-Scholes-Merton option pricing model using the assumptions detailed below. The results of year--end valuation were summarized as follows:

 

Grant Date   Derivative Liabilities   Dividend Yield    Expected Volatility    Risk Free Rate   Expected Term   Fair Value as of  June 30, 2013
8/17/2012   Conversion Feature   0%   88%   0.15%           0.88   $            12,500
    $0.01 Warrant   0%   232%   0.15%           1.13                 2,313
    $0.50 Warrant   0%   232%   0.15%           1.13                 1,088
8/24/2012   Conversion Feature   0%   65%   0.15%           0.65                 7,000
    $0.01 Warrant   0%   251%   0.15%           1.15                 2,313
    $0.50 Warrant   0%   251%   0.15%           1.15                 1,125
9/9/2012   Conversion Feature   0%   94%   0.15%           0.94               20,000
    $0.01 Warrant   0%   248%   0.15%           1.19                 3,700
    $0.50 Warrant   0%   248%   0.15%           1.19                 1,800
9/13/2012   Conversion Feature   0%   71%   0.15%           0.71               16,000
    $0.01 Warrant   0%   232%   0.15%           1.13                 4,625
    $0.50 Warrant   0%   232%   0.15%           1.13                 2,175
9/18/2012   Conversion Feature   0%   97%   0.15%           0.97               13,000
    $0.01 Warrant   0%   245%   0.15%           1.22                 2,313
    $0.50 Warrant   0%   245%   0.15%           1.22                 1,125
9/18/2012   Conversion Feature   0%   97%   0.15%           0.97               13,000
    $0.01 Warrant   0%   245%   0.15%           1.22                 2,313
    $0.50 Warrant   0%   245%   0.15%           1.22                 1,125
9/18/2012   Conversion Feature   0%   97%   0.15%           0.97               13,000
    $0.01 Warrant   0%   245%   0.15%           1.22                 2,313
    $0.50 Warrant   0%   245%   0.15%           1.22                 1,125
9/27/2012   Conversion Feature   0%   121%   0.15%           1.21               15,000
    $0.01 Warrant   0%   244%   0.15%           1.24                 2,313
    $0.50 Warrant   0%   244%   0.15%           1.24                 1,125
10/5/2012   Conversion Feature   0%   85%   0.15%           0.85                 4,600
    $0.01 Warrant   0%   243%   0.15%           1.27                    925
    $0.50 Warrant   0%   243%   0.15%           1.27                    465
10/25/2012   Conversion Feature   0%   90%   0.15%           0.90               12,500
    $0.01 Warrant   0%   245%   0.15%           1.32                 2,313
    $0.50 Warrant   0%   245%   0.15%           1.32                 1,163
10/31/2012   Conversion Feature   0%   84%   0.15%           0.84               11,500
    $0.01 Warrant   0%   244%   0.15%           1.34                 2,313
    $0.50 Warrant   0%   244%   0.15%           1.34                 1,163
11/27/2012   Conversion Feature   0%   91%   0.15%           0.91               50,000
    $0.01 Warrant   0%   240%   0.15%           1.41                 9,250
    $0.50 Warrant   0%   240%   0.15%           1.41                 4,650
12/21/2012   Conversion Feature   0%   98%   0.15%           0.98               52,000
    $0.01 Warrant   0%   237%   0.15%           1.48                 9,250
    $0.50 Warrant   0%   237%   0.15%           1.48                 4,650
1/31/2013   Conversion Feature   0%   108%   0.15%           1.08               14,000
    $0.01 Warrant   0%   224%   0.15%           1.08                 2,313
    $0.50 Warrant   0%   224%   0.15%           1.08                 1,013
                    Total fair value   $326,452