DERIVATIVE LIABILITIES

9 Months Ended

Sep. 30, 2022

DERIVATIVE LIABILITIES.

DERIVATIVE LIABILITIES

NOTE 10 – DERIVATIVE LIABILITIES

The Company determined that certain warrants to purchase common stock do not satisfy the criteria for classification as equity instruments due to the existence of certain net cash and non-fixed settlement provisions that are not within the sole control of the Company. Conversion and exercise prices may be lowered if the Company issues securities at lower prices in the future. Such warrants are measured at fair value at each reporting date, and the changes in fair value are included in determining net income (loss) for the period. The Company used a Monte Carlo Simulation model to determine the fair value of the derivative liabilities at September 30, 2022 and December 31, 2021.

	September 30, 2022
Common stock issuable upon exercise of warrants		3,715,075
Market value of common stock on measurement date	$	0.62
Exercise price	$	1.10
Risk free interest rate (1)		4.07	%
Expected life in years		4.25 years
Expected volatility (2)		92	%
Expected dividend yields (3)		—	%

	December 31, 2021
Common stock issuable upon exercise of warrants		2,043,291
Market value of common stock on measurement date	$	1.38
Exercise price	$	2.00
Risk free interest rate (1)		1.25	%
Expected life in years		5 years
Expected volatility (2)		79	%
Expected dividend yields (3)		—	%

(1) The risk-free interest rate was determined by management using the applicable Treasury Bill as of the measurement date.

(2) The Company does not expect to pay a dividend in the foreseeable future.