DERIVATIVE LIABILITY

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE LIABILITY

7 DERIVATIVE LIABILITY

The Company received subscription advances of $135,400 from investors during the period June 18, 2019 to August 5, 2019. The Company had insufficient authorized shares to issue the investors the 2,521,615 shares of common stock, this gave rise to a derivative financial liability of $60,804 which was valued using a Black-Scholes valuation model. The value of the derivative liability is assessed every quarter.

Certain of the short-term convertible notes disclosed in note 6 above and note 11 below, have variable priced conversion rights with no fixed floor price and will re-price dependent on the share price performance over varying periods of time, due to the variable priced conversion rights, all convertible notes and any warrants attached thereto, issued subsequent to the variable priced conversion notes are valued and give rise to a derivative financial liability, which was initially valued at inception of the convertible notes using a Black-Scholes valuation model.

The value of the derivative financial liabilities above was re-assessed at September 30, 2019 and 2018 and a total of $123,598 and $1,169,205 for the three months ended September 30, 2019 and 2018 respectively and $986,011 and 3,441,118 for the nine months ended September 30, 2019 and 2018, respectively, was credited to the consolidated statement of operations and comprehensive loss. The value of the derivative liability will be re-assessed at each financial reporting period, with any movement thereon recorded in the statement of operations in the period in which it is incurred.

The following assumptions were used in the Black-Scholes valuation model:

	Nine months ended September 30, 2019
Conversion price	$	0.03 to 2.00
Risk free interest rate		1.75 to 2.59	%
Expected life of derivative liability		1 to 16 months
Expected volatility of underlying stock		148.4 to 174.49	%
Expected dividend rate		0	%

The movement in derivative liability is as follows:

	September 30, 2019			December 31, 2018
Opening balance	$	1,833,672		$	3,277,621
Derivative financial liability arising from convertible notes		630,115			2,685,844
Fair value adjustment to derivative liability		(986,011	)		(4,129,793	)
	$	1,477,776		$	1,833,672