General form of registration statement for all companies including face-amount certificate companies

DERIVATIVE LIABILITY AND FAIR VALUE MEASUREMENTS

v3.19.2
DERIVATIVE LIABILITY AND FAIR VALUE MEASUREMENTS
 6 Months Ended
Feb. 28, 2019
Derivative Liability And Fair Value Measurements [Abstract]  
DERIVATIVE LIABILITY AND FAIR VALUE MEASUREMENTS

NOTE 7 – DERIVATIVE LIABILITY AND FAIR VALUE MEASUREMENTS

 

The Company recognized a derivative liability related to the purchase price protection clause associated with equity offerings for Series D offering (Note 5). Additional units would be issued to the unit holder if the Company should issue common stock or the equivalent at a share price less than $0.75 per share. In accordance with ASC 815-10- Derivatives and Hedging we measured the derivative liability using a Monte Carlo pricing model. Accordingly, at the end of each quarterly reporting date, the derivative fair market value is re-measured and adjusted to current market value.

 

Changes in the fair value of the warrant liability were as follows:

 

Fair value – August 31, 2018

 

 $ -

 

 

 

 

 

 

Reclass of warrant derivative liability from equity

 

 

 (918,050 )

Change in fair value for the period of warrant derivative liability

 

 

 333,130

 

Fair value – February 28, 2019

 

 

 584,920

 

 

The Monte Carlo pricing model was used to estimate the fair value of the derivative liability and reflected the following assumptions:

 

 

 

February 28,

2019

 

 

August 31,

2018

 

Assumptions for Pricing Model:

 

 

 

 

 

 

Expected term in years

 

0.25 – 0.33

 

 

 

 —

 

Volatility

 

 

 146 %

 

 

 —

 

Risk-free interest rate

 

2.45% - 2.52

%

 

 

 —

 

Expected annual dividends

 

 

 0 %

 

 

 —