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Derivative Liabilities

12 Months Ended

Dec. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Liabilities

NOTE 11 – DERIVATIVE LIABILITIES

At December 31, 2018 and December 31, 2017, the Company had warrants that contain net cash settlement provisions or do not have fixed settlement provisions because their conversion and exercise prices may be lowered if the Company issues securities at lower prices in the future. The Company concluded that the warrants should be accounted for as derivative liabilities. In determining the fair value of the derivative liabilities, the Company used the Black-Scholes option pricing model at December 31, 2018 and 2017:

		December 31, 2018
Common stock issuable upon exercise of warrants			1,129,121
Market value of common stock on measurement date		$	1.20
Exercise price		$	1.68
Risk free interest rate (1)			2.46 – 2.63	%
Expected life in years			1.3 – 3.3 years
Expected volatility (2)			74% – 124	%
Expected dividend yields (3)			0	%

		December 31, 2017
Common stock issuable upon exercise of warrants			1,020,717
Market value of common stock on measurement date		$	5.79
Exercise price		$	$7.70 to $7.00
Risk free interest rate (1)			1.89	%
Expected life in years			2 years
Expected volatility (2)			70.69	%
Expected dividend yields (3)			0	%

	(1)	The risk-free interest rate was determined by management using the applicable Treasury Bill as of the measurement date.
	(2)	The historical trading volatility was determined by calculating the volatility of the Company’s peers’ common stock.
	(3)	The Company does not expect to pay a dividend in the foreseeable future.

The following table shows the change in the Company’s derivative liabilities rollforward for the years ended December 31, 2018 and 2017:

		Amount
Balance, December 31, 2016			-
Initial valuation of derivative liabilities of warrants			2,718,554
Change in fair value of derivative liabilities			(861,302	)
Balance, December 31, 2017		$	1,857,252
Initial valuation of derivative liabilities upon issuance of warrants			149,321
Cancellation of warrants			(1,253,140	)
Change in fair value of derivative liabilities			(426,981	)
Balance, December 31, 2018			326,452

The change in fair value of derivative liabilities includes losses from exercise price modifications.

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- References

No definition available.

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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

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