Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements

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Fair Value Measurements
12 Months Ended
Jun. 30, 2017
Fair Value Disclosures [Abstract]  
Fair Value Measurements
6. Fair Value Measurements

As defined in FASB ASC Topic 820, fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Topic requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The statement requires fair value measurements be classified and disclosed in one of the following categories:

 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

 

Level 2: Pricing inputs other than quoted market prices included in Level 1 that are based on observable market data and are directly or indirectly observable for substantially the full term of the asset or liability. These include quoted market prices for similar assets or liabilities, quoted market prices for identical or similar assets in markets that are not active, adjusted quoted market prices, inputs from observable data such as interest rate and yield curves, volatilities or default rates observable at commonly quoted intervals or inputs derived from observable market data by correlation or other means.

 

Level 3: Pricing inputs that are unobservable or less observable from objective sources. Unobservable inputs should only be used to the extent observable inputs are not available. These inputs maintain the concept of an exit price from the perspective of a market participant and should reflect assumptions of other market participants. An entity should consider all market participant assumptions that are available without unreasonable cost and effort. These are given the lowest priority and are generally used in internally developed methodologies to generate management’s best estimate of the fair value when no observable market data is available.

 

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

 

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

Certain assets and liabilities are reported at fair value on a recurring or non-recurring basis in the Company’s consolidated balance sheets. The following methods and assumptions were used to estimate the fair values:

 

Cash, Prepaid expenses, Accounts payable, Accrued liabilities

 

The carrying amounts approximate fair value because of the short-term nature or maturity of the instruments.

 

Derivative liabilities

 

The Company’s determination of fair value of its derivative instruments incorporates various factors required under FASB Topic ASC 815. See Note 6 for the fair value calculations. The fair values of the Company’s derivatives are valued using less observable data from objective sources as inputs into internal valuation models. Therefore, the Company considers the fair value of its derivatives to be Level 3 hierarchy.

 

The following table sets forth the fair value hierarchy within our financial assets and liabilities by level that they were accounted for at fair value on a recurring basis as of June 30, 2017 and June 30, 2016:

 

    Fair Value Measurement at June 30, 2017  
      Level 1       Level 2       Level 3  
Liabilities:                        
Warrant derivative liabilities   $     $     $  
Total   $     $     $  

 

    Fair Value Measurement at June 30, 2016  
      Level 1       Level 2       Level 3  
Liabilities:                        
Warrant derivative liabilities   $     $     $  
Total   $     $     $  

 

The following table sets forth the changes in the fair value of derivative liabilities for the period from June 30, 2015 through year ended June 30, 2017:

 

Balance, June 30, 2015   $ 11,700  
Change in fair value of derivative liabilities     (11,700 )
Balance, June 30, 2016      
Change in fair value of derivative liabilities      
Balance, June 30, 2017   $