Annual report pursuant to Section 13 and 15(d)

8% CONVERTIBLE NOTES (Tables)

v3.5.0.2
8% CONVERTIBLE NOTES (Tables)
12 Months Ended
Sep. 30, 2016
Debt Disclosure [Abstract]  
Schedule of Derivative Liabilities at Fair Value
As a result of the conversion of notes we recorded other income of $142,964 for the year ended September 30, 2016 and due to the change in the estimated fair value of the derivative liability we recorded other income of $192,128 for the year ended September 30, 2016. As a result of a change in the estimated fair value of the derivative liability we recorded other expense of $67,395 and a gain on the conversion of notes of $87,291 for the year ended September 30, 2015.
 
Fair Value Measurements Using Significant Unobservable
Inputs
(Level 3)
 
 
 
Convertible
Debt Derivative Liability
 
 
 
2016
 
2015
 
Beginning balance at September 30,
 
$
335,092
 
$
-
 
 
 
 
 
 
 
 
 
Issuance
 
 
-
 
 
354,988
 
 
 
 
 
 
 
 
 
Conversion of notes
 
 
(142,964)
 
 
(87,291)
 
 
 
 
 
 
 
 
 
Adjustments to estimated fair value
 
 
(192,128)
 
 
67,395
 
 
 
 
 
 
 
 
 
Ending balance at September 30,
 
$
-
 
$
355,092
 
Schedule of Assumptions Used
The derivative liability was valued as of September 30, 2015, October 29, 2015 (weighted average conversion date) and December 31, 2015 using Monte Carlo Simulations with the following assumptions:
 
 
 
September 30,
 
 
October 29,
 
 
December 31,
 
 
 
2015
 
 
2015
 
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stated interest rate
 
 
8.0
%
 
 
8.0
%
 
 
8.0
%
Exercise price per share
 
$
0.20
 
 
$
0.20
 
 
$
0.20
 
Expected volatility
 
 
80.0
%
 
 
85.0
%
 
 
110.0
%
Risk-free interest rate
 
 
0.07
%
 
 
0.14
%
 
 
0.16
%
Credit adjusted discount rate
 
 
22.0
%
 
 
22.0
%
 
 
25.0
%
Remaining expected term of underlying securities (years)
 
 
0.46
 
 
 
0.38
 
 
 
0.21