Convertible Promissory Note Derivative Liabilities

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Convertible Promissory Note Derivative Liabilities

NOTE 7 - CONVERTIBLE PROMISSORY NOTE DERIVATIVE LIABILITIES

The Senior Convertible Notes with Power Up Lending Group Ltd. with an issue dates of February 3, 2020 and April 14, 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, April 14, 2020 and June 30, 2020 using the binomial model.

The inputs into the binomial models are as follows:

	December 31, 2019			February 3. 2020			April 14, 2020			June 30, 2020
Closing share price	$	0.20		$	0.115		$	0.0559		$	0.0139
Conversion price	$	0.0683		$	0.0587		$	0.0338		$	0.0091
Risk free rate		1.60	%		1.60	%		2.40	%		0.16	%
Expected volatility		294	%		434	%		330	%		283% - 286%
Dividend yield		0	%		0	%		0	%		0	%
Expected life		0.67 years			1.49 years			1.50 years			1.08 – 1.29 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 and April 14, 2020 was $309,401, of which $165,000 was recorded as a debt discount and the remainder of $144,401 was recorded as initial derivative expense. During the six months ended June 30, 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 (increase) in the fair value of the conversion option derivative liability of $182,618 and $(106,993), respectively is recorded as a gain in the consolidated statements of operations for the six months ended June 30, 2020 and 2019, respectively. The fair value of the convertible promissory note derivative liabilities is $240,103 and $266,989 at June 30, 2020 and December 31, 2019, respectively.