Derivative Liabilities

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Liabilities

NOTE 6: DERIVATIVE LIABILITIES

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Binomial pricing model to calculate the fair value as of December 31, 2019. The Binomial model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note and warrant is estimated using the Binomial valuation model.

For the years ended December 31, 2019 and, 2018, the estimated fair values of the liabilities measured on a recurring basis are as follows:

	Year Ended		Year Ended
	December 31, 2019		December 31, 2018
Expected term	0.25 - 5.00 years		0.54 - 5.00 years
Expected average volatility	160%- 305	%	164%- 355	%
Expected dividend yield	-		-
Risk-free interest rate	1.55% - 2.50	%	2.51% - 2.86	%

The following table summarizes the changes in the derivative liabilities during the years ended December 31, 2019 and 2018:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Derivative liability as of December 31, 2017	$	295,800
Addition of new derivatives recognized as debt discounts		1,276,667
Addition of new derivatives recognized as day-one loss		716,948
Derivative liabilities settled upon conversion of convertible note		(2,480,000	)
Reclassification from APIC to derivative due to tainted instruments		83,334
Change in derivative liabilities recognized as loss on derivative		12,554,360
Derivative liability as of December 31, 2018	$	12,447,109
Addition of new derivatives recognized as debt discounts		606,000
Addition of new derivatives recognized as day-one loss		1,544,785
Derivative liabilities settled upon conversion of convertible note		(3,130,000	)
Reclassification from APIC to derivative due to tainted instruments		167,544
Reclassification to APIC from derivative due to not tainted instruments		(250,878	)
Change in derivative liabilities recognized as loss on derivative		(8,783,283	)
Derivative liability as of December 31, 2019	$	2,601,277

The aggregate gain (loss) on derivatives during the year ended December 31, 2019 and 2018 was $7,238,498 and ($13,271,308), respectively.