DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2021

DERIVATIVE INSTRUMENTS

NOTE 7 - DERIVATIVE INSTRUMENTS

NOTE 7 - DERIVATIVE INSTRUMENTS

The Company analyzed the conversion options in its convertible notes and warrants for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that the instrument should be classified as a liability since the discounted variable-rate conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

Fair Value Assumptions Used in Accounting for Derivative Liabilities.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of June 30, 2021. The Black-Scholes model requires six basic data inputs: the exercise or strike price, expected time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model.

During the six months ended June 30, 2021 and the year ended December 31, 2020, the estimated fair values of the liabilities measured on a recurring basis are as follows:

	Six months ended	Year ended
	June 30,	December 31,
	2021	2020
Expected life in years	0.40 - 5 years	0.90 - 5 years
Stock price volatility	201% - 1,456 %	895% - 1,444 %
Discount rate	0.05% - 0.92%	0.10% - 0.39%
Expected dividends	None	None

The following table summarizes the changes in the derivative liabilities during the six months ended June 30, 2021:

Fair Value Measurements Using Significant Observable Inputs (Level 3)
Balance - December 31, 2020	$	102,361,488
Addition of new derivatives recognized as debt discounts		281,533
Addition of new derivatives recognized as loss on derivatives		356,699
Settled upon conversion of debt		(4,801,926	)
Gain on change in fair value of the derivative		(91,704,821	)
Balance - June 30, 2021	$	6,492,973

The following table summarizes the aggregate (gain) loss on derivatives during the year ended June 30, 2021 and 2020:

	Six months ended
	June 30,
	2021			2020
Addition of new derivatives recognized as loss on derivatives	$	356,699		$	-
Change in fair value of the derivative		(91,704,821	)		(682,156	)
	$	(91,348,122	)	$	(682,156	)