FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

The application of fair value measurements may be on a recurring or nonrecurring basis depending on the accounting principles applicable to the specific asset or liability or whether management has elected to carry the item at its estimated fair value. FASB ASC 820-10-35 specifies a hierarchy of valuation techniques based on whether the inputs to those techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:

- Level 1: Observable inputs such as quoted prices in active markets;

- Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

- Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when estimating fair value.

The Company assesses its recurring fair value measurements as defined by FASB ASC 810. Liabilities measured at estimated fair value on a recurring basis include derivative liabilities. Transfers between fair value classifications occur when there are changes in pricing observability levels. Transfers of financial liabilities among the levels occur at the beginning of the reporting period. There were no transfers between Level 1, Level 2 and/or Level 3 during the nine months ended September 30, 2018. The Company had no Level 1 or 2 fair value measurements at September 30, 2018 or December 31, 2017.

The following table presents the estimated fair value of financial liabilities measured at estimated fair value on a recurring basis included in the Company’s financial statements as of September 30, 2018 and December 31, 2017:

			Level 1		Level 2		Level 3
	Total carrying value		Quoted market prices in active markets		Internal Models with significant observable market parameters		Internal models with significant unobservable market parameters
Derivative liabilities – September 30, 2018	$	2,621,097	$	-	$	-	$	2,621,097
Derivative liabilities – December 31, 2017	$	8,337	$	-	$	-	$	8,337

The following table presents the changes in recurring fair value measurements included in net loss for the nine months ended September 30, 2018 and 2017:

	Recurring Fair Value Measurements
	Changes in Fair Value Included in Net Income
	Other Income		Other Expense		Total
Derivative liabilities – September 30, 2018	$	7,141,543	$	-	$	7,141,543
Derivative liabilities – September 30, 2017	$	2,272,697	$	-	$	2,272,697

The table below sets forth a summary of changes in the fair value of our Level 3 financial liabilities for the nine months ended September 30, 2018:

	December 31, 2017		Recorded New Derivative Liabilities		Reclassification of Derivative Liabilities to Additional Paid in Capital		Change in Estimated Fair Value Recognized in Results of Operations			September 30, 2018
Derivative liabilities	$	8,337	$	9,754,303	$	-	$	(7,141,543	)	$	2,621,097

The table below sets forth a summary of changes in the fair value of our Level 3 financial liabilities for the nine months ended September 30, 2017: 

	December 31, 2016		Recorded New Derivative Liabilities		Reclassification of Derivative Liabilities to Additional Paid in Capital			Change in Estimated Fair Value Recognized in Results of Operations			September 30, 2017
Derivative liabilities	$	5,792,572	$	2,627,931	$	(6,080,278	)	$	(2,272,697	)	$	67,528