On November 12, 2018, the Company issued a $36,000 convertible note to Crown Partners, LLC. The note bears an original discount of $3,500, matures in 12 months from the origination date and bears interest at 5% per annum. The note is convertible at any time, in part or whole, at $0.50 per share until the 180^th date of the note at which time it is convertible at 55% of the market price which is defined as the lowest trading price 25 days prior to conversion. The Company used the Black Scholes model to estimate the fair value of the derivative liability as of the date of issuance and as of September 30, 2019, using the following key inputs: market price of the Company’s common stock $0.0727 per share, volatility of 269.66% and discount rate of 2.00%. The fair value of the derivative liability was determined to $6,509 as of September 30, 2020 and $57,452 as of September 30, 2019.

On May 15, 2019, the Company issued a $100,000 convertible note to Auctus Funding, LLC. The note bears an original discount of $3,500, matures February 17, 2020 and bears interest at 5% per annum. The note is convertible at any time, at 5% of the market price which is defined as the lowest trading price 25 days prior to conversion. The Company used the Black Scholes model to estimate the fair value of the derivative liability as of the date of issuance and as of September 30, 2019, using the following key inputs: market price of the Company’s common stock $0.0727 per share, volatility of 269.66% and discount rate of 2.00%. The fair value of the derivative liability was determined to $9,463 as of September 30, 2020 and $200,926 as of September 30, 2019.

On May 16, 2019, the Company issued a $125,000 convertible note to Firstfire Global Opportunity Fund, LLC. The note bears an original discount of $12,500, matures in 12 months from the origination date and bears interest at 7% per annum. The note is convertible at any time, in part or whole, at $0.25 per share or 60% of the market price which is defined as the lowest trading price 20 days prior to conversion. The Company used the Black Scholes model to estimate the fair value of the derivative liability as of the date of issuance and as of September 30, 2019, using the following key inputs: market price of the Company’s common stock $0.0727 per share, volatility of 269.66% and discount rate of 2.00%. The fair value of the derivative liability was determined to $78,302 as of September 30, 2020 and $176,631 as of September 30, 2019.

The Company used the Black Scholes model to estimate the fair value of the notes for the year ended September 30, 2020, using the following key inputs: market price of the Company’s common stock $0.0028 per share, volatility of 351.00% and discount rate of 1.80%.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued expenses and shareholder loans. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

Financial assets and liabilities recorded at fair value in our condensed consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:

Level 1 — Quoted market prices in active markets for identical assets or liabilities at the measurement date.

Level 2 — quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.

Level 3 — Inputs reflecting management’s best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of September 30, 2020 and September 30, 2019:

	Level 1		Level 2		Level 3		Total
As of September 30, 2019:
Assets
None	$	-	$	-	$	-	$	-
Liabilities
Derivative liability	$	-	$	-	$	434,999	$	434,999

As of September 30, 2020:
Assets
None	$	-	$	-	$	-	$	-
Liabilities
Derivative liability	$	-	$	-	$	94,275	$	94,275

The following table summarizes the change in the fair value of the derivative liability during the year ended September 30, 2020 and 2019.:

Fair value as of September 30, 2018	$	--
Additions		462,119
Debt discount charged to derivatives		106,300
Financing costs charged to derivatives		15,965
Change in fair value		(117,457	)
Fair value as of September 30, 2019		434,999
Loss on debt at conversion		(43,969	)
Transfer out upon conversion of debt		(1,677,300	)
Change in fair value		1,380,545
Fair value as of September 30, 2020	$	94,275

Fluctuations in the Company’s stock price are a primary driver for the changes in the derivative valuations during each reporting period. As the stock price increases for each of the related derivative instruments, the value to the holder of the instrument generally increases, therefore increasing the liability on the Company’s balance sheet. Additionally, stock price volatility is one of the significant unobservable inputs used in the fair value measurement of each of the Company’s derivative instruments. The simulated fair value of these liabilities is sensitive to changes in the Company’s expected volatility. Increases in expected volatility would generally result in higher fair value measurement. A 10% change in pricing inputs and changes in volatilities and correlation factors would not result in a material change in our Level 3 fair value.