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Derivative Liabilities
 12 Months Ended
Dec. 31, 2020
Derivative Liability [Abstract]  
Derivative Liabilities
11 DERIVATIVE LIABILITIES

 

As discussed above in Note 10, during the year ended December 31, 2020, the Company executed convertible notes with lenders and received gross proceeds of $2,182,000. The Company identified certain features embedded in the notes requiring the Company to classify the features as derivative liabilities. The conversion price of the notes is subject to adjustment for issuances of the Company’s Common Stock or any equity linked instruments or securities convertible into the Company’s Common Stock at a purchase price of less than the prevailing conversion price or exercise price. Such adjustment shall result in the conversion price and exercise price being reduced to such lower purchase price.

 

The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2020:

 

   

Fair Value

Measurement
Using Level 3
Inputs

  
    Total  
Balance, December 31, 2019   $ 190,846  
Change in fair value of derivative liabilities     (577,936 )
Derivative liabilities recorded on issuance of convertible notes     2,024,191  
Write-off of derivative liabilities upon settlement of debt     (279,573 )
Balance, December 31, 2020   $ 1,357,528  

 

During the year ended December 31, 2020, the fair value of the derivative feature was calculated using the following weighted average assumptions:

 

   

December 31,

2020

  
Risk-free interest rate     0.08 – 1.51 %
Expected life of grants     0.75 year  
Expected volatility of underlying stock     96 - 132 %
Dividends     0 %

 

As of December 31, 2020 and 2019, the derivative liability was $1,357,528 and $190,846, respectively. In addition, for the year ended December 31, 2020, the Company recorded $577,936 as a gain on the change in fair value of the derivative on the consolidated statement of operations. The Company determined that upon measuring the fair value of the derivative features, the total amount recorded as a debt discount exceed the face value of the notes issued and the Company therefore recorded derivative expense of $566,789 on the consolidated income statements.