DERIVATIVE LIABILITY

12 Months Ended

Dec. 31, 2023

DERIVATIVE LIABILITY

DERIVATIVE LIABILITY

NOTE 8 - DERIVATIVE LIABILITY

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the convertible notes 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. The Company accounts for warrants as a derivative liability due to there being no explicit limit to the number of shares to be delivered upon settlement of all conversion options.

The Company determined its derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of December 31, 2023 and 2022. The Black-Scholes 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 table below shows the Black-Scholes option-pricing model inputs used by the Company to value the derivative liability for convertible notes at each measurement date:

	Year Ended
	December 31,			December 31,
	2023			2022
Expected term	0.55 years			0.37 - 0.82 years
Expected average volatility	202% - 393		%	223% - 349		%
Expected dividend yield		-			-
Risk-free interest rate	4.01% - 5.43		%	2.07% - 4.73		%

The following table summarizes the derivative liabilities included in the balance sheets at December 31, 2023 and 2022:

Balance - December 31, 2021	$	4,892,985
Addition of new derivative liabilities upon issuance of convertible notes as debt discount		19,719
Reduction of derivative liabilities from exercise of warrants		(116,485	)
Addition of new derivative liabilities upon issuance of warrants as debt discount		43,801
Addition of new derivatives liabilities recognized as day one loss on convertible notes and warrants		125,714
Gain on change in fair value of the derivative		(2,330,867	)
Balance - December 31, 2022	$	2,634,867
Addition of new derivative liabilities upon issuance of convertible notes as debt discount		29,111
Reduction of derivative liabilities from exercise of warrants		(64,683	)
Addition of new derivative liabilities upon issuance of warrants as debt discount		59,000
Addition of new derivatives liabilities recognized as day one loss on convertible notes and warrants		101,123
Gain on change in fair value of the derivative		(920,612	)
Balance - December 31, 2023	$	1,838,806

The following table summarizes the loss (gain) on derivative liability included in the statements of operations for the year ended December 31, 2023 and 2022, respectively.

	Year Ended
	December 31,			December 31,
	2023			2022
Day one loss due to derivative liabilities on convertible notes and warrants	$	101,123		$	125,714
Gain on change in fair value of derivative liabilities on convertible notes and warrants	$	(920,612	)	$	(2,330,867	)
Loss (Gain) on change in fair value of derivative liabilities	$	(819,489	)	$	(2,205,153	)