Derivative Liability

12 Months Ended

Dec. 31, 2023

Derivative Liability [Abstract]

DERIVATIVE LIABILITY

14 DERIVATIVE LIABILITY

The convertible notes and warrants issued by the Company to Cavalry, Mercer and RRH as described herein 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 and certain notes and warrants have fundamental transaction clauses which might result in cash settlement, due to these factors, all convertible notes and any warrants attached thereto 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.

On December 30, 2022, the Company entered into the December 2022 Note Amendment transaction (“the Note Amendment”) as fully described under note 12 above. Included in the derivative liability is: (i) the Original Warrants which were exchanged for non-convertible promissory notes, (ii) the Cavalry and Mercer convertible notes which were subject to the Note Amendment and (ii) the Cavalry and Mercer Extension Warrants as well as certain other warrants due to Cavalry and Mercer and certain other warrant holders. The Note Amendment triggered a repricing of certain of these warrants.

The derivative liability on the Cavalry and Mercer convertible notes and the warrants affected by the note amendment were marked-to-market immediately prior to the Note Amendment resulting in a market to market movement on the original warrants, the convertible notes and the extension warrants and certain other warrants, which were subject to a full rachet provision, of $474,614. In addition, the Note and warrant Amendment gave rise to an additional derivative liability charge of $2,317,051 which was recorded as an expense in the loss on convertible notes charge in the statement of operations.

On May 10, 2023 and June 13, 2023, the Company entered into convertible note agreements with 1800 Diagonal which 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, which gave rise to a derivative financial liability, which was initially valued at inception of the convertible notes at $360,491 but limited to the cash value of the convertible notes of $150,000, using a Black-Scholes valuation model. These convertible notes were subsequently settled on August 3, 2023, resulting in the elimination of the derivative liability related to these notes.

 
Between September 12, 2023 and December 20, 2023, the Company entered into a convertible note agreement with RRH which 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, which gave rise to a derivative financial liability, which was initially valued at inception of the convertible notes at $416,317 but limited to the cash value of the convertible notes of $235,000, using a Black-Scholes valuation model.

The net movement on the derivative liability for the year ended December 31, 2023 was a net mark-to-market credit of $1,501,446 determined by using a Black-Scholes valuation model.

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

	Year ended December 31, 2023			Year ended December 31, 2022
Conversion price	$	0.104 to $0.345		$	0.345 to $4.50
Risk free interest rate		3.60 to 5.55	%		0.79 to 4.73	%
Expected life of derivative liability		3.5 to 47 months			1.5 to 59 months
Expected volatility of underlying stock		158.72 to 217.01	%		120.49 to 258.3	%
Expected dividend rate		0	%		0	%

The movement in derivative liability is as follows:

	December 31, 2023			December 31, 2022
Opening balance	$	2,550,642		$	407,161
Derivative financial liability arising from convertible note and warrants		385,000			238,182
Derivative financial liability arising on note amendment included in loss on convertible notes		-			2,317,051
Fair value adjustment to derivative liability		(1,501,446	)		(411,752	)
	$	1,434,196		$	2,550,642