Derivative Liabilities

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE LIABILITIES

NOTE 4 – DERIVATIVE LIABILITIES

Because there is not a fixed conversion price, remaining compliant with the reserve requirement under the notes held by Intelligent Partners as transferee of United Wireless, is outside of the control of the Company. As a result of this, the Company has a potential inability to have sufficient available authorized common shares to settle certain outstanding instruments beginning with the date that the reserve requirement went into effect on January 22, 2016. There is no limit on the number of shares issuable under the note, and absent an increase in the stock price or an increase in authorized shares, there are potentially not enough authorized shares to satisfy the exercise of the options, thus the Company determined the options qualify as derivative liabilities under ASC Topic 815. On January 22, 2016, the Company reclassified all non-employee warrants and options as derivative liabilities and revalued them at their fair values at each balance sheet date. Any change in fair value was recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date.

As of December 31, 2019, and December 31, 2018, the aggregate fair value of the outstanding derivative liability was approximately $595,000 and $540,000, respectively.  

The Company estimated the fair value of the derivative liability using the Black-Scholes option pricing model using the following key assumptions during the years ended December 31, 2019 and 2018:

	Year Ended
	December 31,
	2019			2018
Volatility		207-426	%		388-426	%
Risk-free interest rate		0.24	%		0.64	%
Expected dividends		-			-	%
Expected term		0.75-4.70			1.75-4.70

The following schedule summarizes the valuation of financial instruments that are remeasured on a recurring basis at fair value in the balance sheets as of December 31, 2019 and 2018:

	Fair Value Measurements as of
	December  31, 2019						December 31, 2018
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
None		-		-		-		-		-		-
Total assets		—		—		—		—		—		—
Liabilities
Conversion option derivative liability		—		—		595,000		—		—		540,000
Total liabilities	$	—	$	—	$	595,000	$	—	$	—	$	540,000

The following table sets forth a reconciliation of changes in the fair value of derivative liabilities classified as Level 3 in the fair value hierarchy:

	Significant Unobservable Inputs (Level 3) as of December 31, 2019
Balance - December 31, 2017	$	90,000
Change in fair value		450,000
Balance – December 31, 2018		540,000
Change in fair value		55,000
Balance - December 31, 2019	$	595,000