Derivative Liabilities

3 Months Ended

Sep. 30, 2016

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 September 30, 2016 and June 30, 2016, the derivative liability was $458,000 and $701,000, respectively. The Company recorded $243,000 gain and $498,000 loss from changes in derivative liability during the three months ended September 30, 2016 and 2015, respectively. The Black-Scholes model with the following assumption inputs:

	September 30, 2016
Annual dividend yield		—
Expected life (years)		0.45
Risk-free interest rate		0.18	%
Expected volatility		398	%

	June 30, 2016
Annual dividend yield		—
Expected life (years)		0.01
Risk-free interest rate		0.21	%
Expected volatility		449	%