Derivative Liabilities

3 Months Ended

Mar. 31, 2017

Derivative Liabilities [Abstract]

DERIVATIVE LIABILITIES

NOTE 12 – DERIVATIVE LIABILITIES

Certain of the Company’s convertible preferred stock and warrants have reset provisions to the exercise price if the Company issues equity or other derivatives at a price less than the exercise price set forth in such warrants. This ratchet provision results in a derivative liability in the Company’s financial statements.

The Company’s derivative liabilities increased to $371,421 at March 31, 2017 from $131,043 at December 31, 2016. The loss recognized during the three months ended March 31, 2017 was $240,378 as compared to a gain of $102,776 for the three months ended March 31, 2016.

The assumptions used to value the derivative liabilities in the lattice model for the quarter ended March 31, 2017 included the closing stock price of $.0130 per share, and the projected volatility based on a historical value used of 279% and assuming the probability for an event of default occurring 0% of the time and increasing by 0.0% per month.

The following tabular presentation reflects the components of derivative financial instruments on the Company’s balance sheet at March 31, 2017 and December 31, 2016:

Components of derivative financial instruments
	3/31/2017		12/31/2016
Embedded conversion features for convertible debt or preferred shares	$	371,421	$	131,043
Total	$	371,421	$	131,043
Beginning balance	$	131,043	$	742,833
Change in derivative liability valuation		240,378		(567,139	)
Change in derivative liability - settlements		-		(85,877	)
Change in derivative liability - warrant issuance		-		41,226
Total	$	371,421	$	131,043