FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2023

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

2. FAIR VALUE MEASUREMENTS

Certain assets and liabilities that are measured at fair value on a recurring basis at December 31, 2023 and 2022 are measured in accordance with FASB ASC Topic 820-10-05, Fair Value Measurements. FASB ASC Topic 820-10-05 defines fair value, establishes a framework for measuring fair value and expands the disclosure requirements regarding fair value measurements for financial assets and liabilities as well as for non-financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis in the consolidated financial statements.

The statement requires fair value measurement be classified and disclosed in one of the following three categories:

Level 1:	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities;
Level 2:	Quoted prices in markets that are not active or inputs which are observable either directly or indirectly for substantially the full term of the asset or liability; and
Level 3:	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

The following table summarizes our financial instruments measured at fair value at December 31, 2023 and December 31, 2022:

	Fair Value Measurements at December 31, 2023
Liabilities:	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	661,257	$	-	$	661,257	$	-
Convertible notes at fair value	$	1,867,421	$	-	$	-	$	1,867,421

	Fair Value Measurements at December 31, 2022
Liabilities:	Total		Level 1		Level 2		Level 3
Warrant liability	$	6,072	$	-	$	-	$	6,072
Derivative liabilities	$	623,507	$	-	$	623,507	$	-
Convertible notes at fair value	$	1,729,183	$	-	$	-	$	1,729,183

The following table shows the changes in fair value measurements for the warrant liability using significant unobservable inputs (Level 3) during the years ended December 31, 2023 and 2022:

Description	2023			2022
Beginning balance	$	6,072		$	710,585
Purchases, issuances, and settlements		-			324,379
Total gain included in earnings (1)		(6,072	)		(1,028,892	)
Ending balance	$	-		$	6,072

(1) The gain related to the revaluation of our warrant liability is included in “Change in fair value of convertible notes and derivatives” in the accompanying consolidated statements of operations.

We valued our warrants using a Dilution-Adjusted Black-Scholes Model. Assumptions used include (1) 4.76% to 4.85% risk-free rate, (2) warrant life is the remaining contractual life of the warrants, (3) expected volatility of 580% to 620% (4) zero expected dividends (5) exercise price set forth in the agreements (6) common stock price of the underlying share on the valuation date, and (7) number of shares to be issued if the instrument is converted.

We valued derivative liabilities using the number of potential convertible shares for warrants in equity and convertible notes with a fixed conversion price that are recorded at amortized cost times the closing stock price of our restricted common stock at December 31, 2023 and 2022, respectively. These derivative liabilities are recorded due to the fact that the number of shares of common stock issuable could exceed the Company’s authorized share limit and the equity environment is tainted, and therefore all convertible debt and options and warrants should be accounted for as liabilities.

The following table summarizes assumptions and the significant terms of the convertible notes for which the entire hybrid instrument is recorded at fair value at December 31, 2023 and 2022:

						Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period
Debenture	Face Amount		Interest Rate	Default Interest Rate	Discount Rate	Anti-Dilution Adjusted Price	% of stock price for look-back period		Look-back Period
2023	$	663,529	8%-10%	19%-24%	N/A	$0.00005-$0.0006		50%-60%	3 to 25 Days
2022	$	681,446	8%-10%	19%-24%	N/A	$0.00005-$0.0006		50%-60%	3 to 25 Days

Using the stated assumptions summarized in the table above, we calculated the inception date and reporting period fair values of each note issued. The following table shows the changes in fair value measurements for the convertible notes at fair value using significant unobservable inputs (Level 3) during the years ended December 31, 2023 and 2022:

Description	2023			2022
Beginning balance	$	1,729,183		$	2,855,709
Loss (gain) from change in fair value (1)		146,155			(1,015,526	)
Repayments in cash		(5,417	)		(75,000	)
Conversion to common stock		(2,500	)		(36,000	)
Ending balance	$	1,867,421		$	1,729,183

(1) The losses (gains) related to the valuation of the convertible notes are included in “Change in fair value of convertible notes and derivatives” in the accompanying consolidated statements of operations.