| NOTE 4 - DERIVATIVE INSTRUMENTS | During
the nine month period ended June 30, 2015 the Company changed the conversion features on a convertible instrument that require
liability classification under ASC 815. These instruments are measured at fair value at the end of each reporting period. (See
Note 5) As
defined in FASB ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of
similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including
assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable,
market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those
inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement)
and the lowest priority to unobservable inputs (level 3 measurement). The
three levels of the fair value hierarchy are as follows:
Level
1 Quoted
prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those
in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on
an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities
and listed equities.
Level
2 Pricing
inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable
as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies.
These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for
commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as
well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout
the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions
are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity
swaps, interest rate swaps, options and collars.
Level
3 Pricing
inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with
internally developed methodologies that result in managements best estimate of fair value. The
following table sets forth by level within the fair value hierarchy the Companys financial assets and liabilities that
were accounted for at fair value as September 30, 2014 and June 30, 2015:
Recurring Fair Value
Measures Level
1 Level
2 Level
3 Total
LIABILITIES:
Derivative
liabilities as of September 30, 2014 -- -- $ -- $ --
Derivative
liabilities as of June 30, 2015 -- -- $ 106,105 $ 106,105 The
below table represents the change in the fair value of the derivative liabilities during the nine months ended June 30, 2015:
Fair value of
derivatives, September 30, 2014 $ --
Derivative at
time of initial measurement 40,223
Change in fair
value of derivative liability 65,882
Fair value of
derivatives, June 30, 2015 $ 106,105 |
