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Derivative Liabilities

3 Months Ended

Mar. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Liabilities

Note 8. Derivative Liabilities

As discussed in Note 7, Convertible Notes, the Company has $168,000 of principal outstanding in CN Notes 2 that contain 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 Company fair values the variable conversion provisions each reporting period. The fair value gets reported as a derivative liability in the accompanying consolidated balance sheets and the change in value is recorded as a gain or loss in the accompanying consolidated statements of operations.

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

		31-Mar-21				31-Dec-20
Expected life			0.67				0.92
Volatility (based on comparable company)			116.81	%			120.38	%
Risk Free interest rate			.05	%			.1	%
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, 2020 to March 31, 2021:

December 31, 2020		$	41,475
Net gain from change in value			(16,787	)
For the period ended March 31, 2021		$	24,688

The following table presents the Company’s fair value hierarchy for applicable assets and liabilities measured at fair value as of December 31, 2020 and March 31, 2021:

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

		Level 1				Level 2				Level 3				Total
Derivative Liability March 31, 2021		$	-				-				24,688			$	24,688

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- References

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- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-URI http://asc.fasb.org/topic&trid=2229140

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 50
-Paragraph 5
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008

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