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6. Derivative Liability | 12 Months Ended
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Sep. 30, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Liability | The February 2014 Convertible Note of $335,245 discussed in Note 7 has a reset provision and a dilutive issuance clause that gave rise to a derivative liability. The reset provision provides for the conversion price to be adjusted downward in the event that the Company issues any securities at a price per share lower than the then-current conversion price; provided, however, that in no event shall the conversion price per share be less than $1.00. The fair value of the derivative liability is recorded and shown separately under current liabilities. Changes in the fair value of the derivative liability are recorded in the consolidated statement of income under other income (expense). The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. The range of significant assumptions which the Company used to measure the fair value of derivative liabilities at September 30, 2014 is as follows:
| Inception | September 30, 2014
Stock price | $7.14 | $2.98
Risk free rate | .11% | .13%
Volatility | 142% | 94%
Exercise prices | $8.12 | $2.93
Term (years) | 1.00 | .42
The following table represents the Company’s derivative liability activity for both the embedded conversion features for the year ended September 30, 2014:
| Amount
Derivative liability balance, September 30, 2013 | $ | –
Issuance of derivative liability during the year ended September 30, 2014 |  | 139,852
Change in derivative liability during the year ended September 30, 2014 |  | (56,272)
Derivative liability balance, September 30, 2014 | $ | 83,580

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- Definition The entire disclosure for derivatives and fair value of assets and liabilities. + References No definition available. + Details
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