DERIVATIVE INSTRUMENTS

12 Months Ended

Dec. 31, 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 December 31, 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 years ended December 31, 2021 and 2020, the estimated fair values of the liabilities measured on a recurring basis are as follows:

	Year ended		Year ended
	December 31,		December 31,
	2021		2020
Expected life in years	0.12 - 5 years		0.90 - 5 years
Stock price volatility	135% - 1456	%	895% - 1444	%
Discount rate	0.04% - 1.26	%	0.10% - 0.39	%
Expected dividends	None		None

The following table summarizes the changes in the derivative liabilities during the years ended December 31, 2021 and 2020:

Fair Value Measurements Using Significant Observable Inputs (Level 3)
Balance - December 31, 2019	$	143,678
Addition of new derivatives recognized as debt discounts		192,400
Addition of new derivatives recognized as loss on derivatives		1,404,247
Settled upon conversion of debt		(2,155,269	)
Gain on change in fair value of the derivative		102,776,432
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		(4,978,926	)
Gain on change in fair value of the derivative		(92,861,546	)
Balance - December 31, 2021	$	5,159,248

The aggregate (gain) loss on derivatives during the year ended December 31, 2021 and 2020 was as follows:

	Year ended
	December 31,
	2021			2020
Addition of new derivatives recognized as loss on derivatives	$	356,699		$	1,404,247
Change in fair value of the derivative		(92,861,546	)		102,776,432
	$	(92,504,847	)	$	104,180,679