Derivative Liabilities

6 Months Ended

Dec. 31, 2015

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, 2015 and June 30, 2015, the derivative liability was $382,000 and $304,000, respectively. The Company recorded $420,000 gain and $100,000 gain from changes in derivative liability during the three months ended December 31, 2015 and 2014, respectively.

The Black-Scholes model with the following assumption inputs:

	December 31, 2015
Annual dividend yield		—
Expected life (years)		0.74
Risk-free interest rate		0.47	%
Expected volatility		470	%