Derivative Liabilities

6 Months Ended

Dec. 31, 2017

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, 2017 and June 30, 2017, the derivative liability was $5,039,998 and $1,134,000, respectively. The Company recorded $5,064,955 loss and $243,000 gain from changes in derivative liability during the six months ended December 31, 2017 and 2016, respectively. The Black- Scholes model with the following assumption inputs:

	December 31, 2017
Annual dividend yield		—
Expected life (years)		0.01 – 1 year
Risk-free interest rate		1.29% – 1.76%
Expected volatility		103% - 206%

	June 30, 2017
Annual dividend yield		—
Expected life (years)		0.01
Risk-free interest rate		0.21	%
Expected volatility		449	%

Fair value of the derivative is summarized as below:

Beginning Balance, September 30, 2017	1,479,052
Additions	—
Mark to Market	4,924,302
Reclassification to APIC due to conversions	(1,363,356	)
Balance, December 31, 2017	5,039,978