Convertible Promissory Note Derivative Liability

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Convertible Promissory Note Derivative Liability

NOTE 7 - CONVERTIBLE PROMISSORY NOTE DERIVATIVE LIABILITY

The Senior Convertible Note with Firstfire Global Opportunities Fund, LLC with an issue date of March 1, 2019 was accounted for under ASC 815.  The variable conversion price is not considered predominantly based on a fixed monetary amount settleable with a variable number of shares due to the volatility and trading volume of the Company’s common stock. The Company’s convertible promissory note derivative liabilities have been measured at fair value at March 1, 2019, June 30, 2019 and December 31, 2019 using the binomial model.

The inputs into the binomial models are as follows:

	March 1, 2019			December 31, 2019
Closing share price	$	0.07		$	0.20
Conversion price	$	0.0364		$	0.0683
Risk free rate		2.55	%		1.60	%
Expected volatility		403	%		294	%
Dividend yield		0	%		0	%
Expected life		1.51 years			0.67 years

The fair value of the convertible promissory note derivative liability was $380,919, of which $175,000 was recorded as a debt discount and the remainder of $205,919 was recorded as initial derivative expense, and $266,989 at March 1, 2019 and December 31, 2019, respectively. During the year ended December 31, 2019, the convertible promissory note derivative liability was reduced by $140,444 for settlement of derivative liabilities due to conversion of the Note into common stock by the Holder. The increase in the fair value of the conversion option derivative liability of $26,514 is recorded as a loss in the consolidated statements of operations for the year ended December 31, 2019.