Derivative Liabilities

6 Months Ended

Dec. 31, 2014

Derivative Liabilities

Derivative Liabilities

6. Derivative liabilities

The derivative liability is derived from the conversion features in note 5 and stock warrant in note 7. All were valued using the weighted-average Black-Scholes-Merton option pricing model using the assumptions detailed below. As of December 31, 2014 and June 30, 2014, the derivative liability was $258,000 and $228,237, respectively. The Company recorded $100,000 gain and $61,000 gain from changes in derivative liability during the three months ended December 31, 2014 and 2013, respectively; and recorded $36,737 loss and $154,452 gain for the six months ended December 31, 2014, and 2013, respectively. The Black-Scholes model with the following assumption inputs:

	December 31, 2014
Annual dividend yield		—
Expected life (years)		1.47
Risk-free interest rate		0.65	%
Expected volatility		407	%