Convertible Promissory Note Derivative Liability

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Convertible Promissory Note Derivative Liabilities

NOTE 7 - CONVERTIBLE PROMISSORY NOTE DERIVATIVE LIABILITIES

The Senior Convertible Notes with Firstfire Global Opportunities Fund, LLC and Power Up Lending Group Ltd. with an issue dates of March 1, 2019 and February 3, 2020, respectively, are 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 December 31, 2019, February 3, 2020 and March 31, 2020 using the binomial model.

The inputs into the binomial models are as follows:

	December 31, 2019			February 3, 2020			March 31, 2020
Closing share price	$	0.20		$	0.115		$	0.081
Conversion price	$	0.0683		$	0.0587		$	0.0319
Risk free rate		1.60	%		1.60	%		2.40	%
Expected volatility		294	%		434	%		312	%
Dividend yield		0	%		0	%		0	%
Expected life		0.67 years			1.49 years			1.33 years

The fair value of the convertible promissory note derivative liability related to the Note issued to Power Up Lending Group Ltd. on February 3, 2020 was $200,554, of which $100,000 was recorded as a debt discount and the remainder of $100,554 was recorded as initial derivative expense. During the three months ended March 31, 2020, the convertible promissory note derivative liability was reduced by $153,668 for settlement of derivative liabilities due to conversion of the Note into common stock by the Holder. The decrease in the fair value of the conversion option derivative liability of $62,280 and $4,385, respectively is recorded as a gain in the consolidated statements of operations for the three months ended March 31, 2020 and 2019, respectively. The fair value of the convertible promissory note derivative liabilities is $251,595 and $266,989 at March 31, 2020 and December 31, 2019, respectively.