WARRANT LIABILITY

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

WARRANT LIABILITY

NOTE 9 - WARRANT LIABILITY

The Company analyzed the warrants issued in connection with the Series C Convertible Preferred Stock (see Note 10) for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that the instruments should be classified as a liability due to reset provisions and variability in exercise price resulting in there being no fixed value or explicit limit to the number of shares to be delivered upon exercise. ASC 815 requires us to assess the fair market value of the 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 warrant liabilities to be a Level 3 fair value measurement during the year based on management’s estimate of the expected future cash flows required to settle the liabilities and used the Black Scholes pricing model to calculate the fair value as of September 30, 2023. The Black Scholes model requires nine basic data inputs: the exercise or strike price, 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 warrant is estimated using the Black-Scholes valuation model.

For the period ended September 30, 2023, the estimated fair values of the warrant liabilities measured on a recurring basis are as follows:

	Nine Months Ended
	September 30,
	2023
Expected term		1.71 - 2.50 years
Expected average volatility		177 - 220	%
Expected dividend yield		8.33	%
Risk-free interest rate		1.50 – 5.46	%

The following table summarizes the changes in the warrant liabilities during the period ended September 30, 2023, and December 31, 2022:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Addition of new warrants	$	721,275
Additional day-one loss		(28,043	)
Change in fair value of warrant liability		(494,753	)
Warrant liability as of December 31, 2022	$	198,479
Addition of new warrants	$	-
Additional day-one loss		-
Change in fair value of warrant liability		(114,984	)
Warrant liability as of September 30, 2023	$	83,495