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Derivative Liabilities

12 Months Ended

Dec. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Note 8. Derivative Liabilities

As discussed in Note 7, Convertible Notes, the Company issued Series CN Note acceleration offer convertible notes payable that provide variable conversion provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock, therefore the number of shares of common stock issuable upon conversion of the promissory note is indeterminate.

The fair values of the Company’s derivative liabilities are estimated at the issuance date and are revalued at each subsequent report date. The derivative liability was revalued at December 31, 2019 with a value of $211,028, which resulted in a gain of $1,114,625 for the year then ended.

As discussed in Note 7, there was a portion of the CN1 and CN2 notes that was not modified. The Company continued to revalue the derivative liability for each reporting period in 2020. At December 31, 2020, there was no value as the Company settled the derivative liability through repayment of the outstanding principal upon maturity. On March 20, 2020, the Company determined the fair value of the derivative liability related to CN1 and CN2 notes that were converted and extended. The derivative liability values of $23,100 (CN converted) and $3,440 (CN extended) were used to determine the debt extinguishment gain or loss.

The fair value of the derivative liability for CN notes that were converted and CN notes that were extended was calculated using the Black-Scholes model using the following assumptions:

	March 20, 2020
Expected life (in years)		0.71
Volatility		84.82	%
Risk Free interest rate		0.5	%
Dividend yield (on common stock)		-

As the variable conversion provisions were not modified for $168,000 of CN2 notes that were extended to November 2021, the Company valued the derivative liability as of March 20, 2020. As of March 20, 2020, the initial value of the derivative liability was $13,527.

The fair value of the derivative liability for CN2 notes that were extended was calculated using the Black-Scholes model using the following assumptions:

	March 20, 2020
Expected life (in years)		1.71
Volatility		88.02	%
Risk Free interest rate		0.37	%
Dividend yield (on common stock)		-

The fair value of the derivative liabilities for CN Convertible Note 2 of 2 was calculated using the Black-Scholes model using the following assumptions.

	December 31, 2020			December 31, 2019
Expected life		0.92			0.93
Volatility		120.38	%		104.89	%
Risk Free interest rate		.1	%		1.58	%
Dividend yield (on common stock)		-			-

Reconciliation of the derivative liability measured at fair value on a recurring basis with the use of significant unobservable inputs (level 3) from December 31, 2018 to December 31, 2019:

December 31, 2018	$	1,325,653
Loss from change in value		(1,114,625	)
For the period ended December 31, 2019	$	211,028

Reconciliation of the derivative liabilities measured at fair value on a recurring basis with the use of significant unobservable inputs (level 3) from December 31, 2019 to December 31, 2020:

	December 31, 2019
	$	211,028
Extinguishment change in derivative from conversion		(23,100	)
Extinguishment change in derivative from extension		(3,440	)
Initial derivative value – March 20, 2020		13,527
Net gain from change in value		(156,540	)
For the period ended December 31, 2020	$	41,475

The following table presents the Company’s fair value hierarchy for applicable assets and liabilities measured at fair value as of December 31, 2019 and December 31, 2020:

	Level 1		Level 2		Level 3		Total
Derivative Liability December 31, 2019	$	-		-		211,028	$	211,028

		Level 1				Level 2				Level 3				Total
Derivative Liability December 31, 2020		$	-				-				41,475			$	41,475