Derivative Liabilities

6 Months Ended

Dec. 31, 2016

Derivative Liabilities

Derivative Liabilities

7. 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, 2016 and June 30, 2016, the derivative liability was $813,000 and $701,000, respectively. The Company recorded $355,000 loss and $420,000 gain from changes in derivative liability during the three months ended December 31, 2016 and 2015, respectively. The Black-Scholes model with the following assumption inputs:

	December 31, 2016
Annual dividend yield		—
Expected life (years)		0.75
Risk-free interest rate		0.64	%
Expected volatility		258	%

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