Derivative Liabilities

3 Months Ended

Sep. 30, 2014

Derivative Liabilities [Abstract]

DERIVATIVE LIABILITIES

6.     DERIVATIVE LIABILITIES

The convertible notes issued and described in Note 5 do not have fixed settlement provisions because their conversion prices are not fixed. The conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations. At June 30, 2014, the outstanding fair value of the derivative liabilities amounted to $8,667,274.

During the three months ended September 30, 2014, approximately $30,000 convertible notes were converted. As a result of the conversion of these notes, the Company recorded a gain of $514,656 due to the extinguishment of the corresponding derivative liability. Furthermore, during the three months ended September 30, 2014, the Company recognized a net gain of $2,853,054 to account for the change in fair value of the derivative liabilities. At September 30, 2014, the fair value of the derivative liability was $5,914,220.

For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative are as follows:

Risk free interest rate	0.03% - 0.13%
Stock volatility factor	133.84% - 318.08%
Weighted average expected option life	3  months - 1 year
Expected dividend yield	None