Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 17 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximate their respective fair values due to the short-term nature of such instruments.

The Company measures certain financial instruments at fair value on a recurring basis, including certain convertible notes payable and related party loans which were extinguished and reissued and are therefore subject to fair value measurement, as well as derivative financial instruments arising from conversion features embedded in convertible promissory notes for which the conversion rate is not fixed. All financial instruments carried at fair value fall within Level 3 of the fair value hierarchy as their value is based on unobservable inputs. The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made.

The following table summarizes the conclusions reached regarding fair value measurements as of December 31, 2019 and 2018:

	As of December 31, 2019
							Total
	Level 1		Level 2		Level 3		Fair Value
Convertible notes payable	$	—	$	—	$	723,482	$	723,482
Notes payable to related party		—		—		193,007		193,007
Derivative financial instruments		—		—		991,288		991,288
Total	$	—	$	—	$	1,907,777	$	1,907,777

	As of December 31, 2018
							Total
	Level 1		Level 2		Level 3		Fair Value
Convertible notes payable	$	—	$	—	$	780,315	$	780,315
Notes payable to related party		—		—		203,971		203,971
Derivative financial instruments		—		—		800,440		800,440
Total	$	—	$	—	$	1,784,726	$	1,784,726

The changes in Level 3 financial instruments that are measured at fair value on a recurring basis during the years ended December 31, 2019 and 2018 were as follows:

	Years Ended December 31,
	2019			2018
Convertible notes payable	$	(97,410	)	$	(125,760	)
Notes payable to related party		(24,098	)		(15,029	)
Derivative financial instruments		671,822			(106,141	)
Total	$	550,314		$	(246,930	)