Derivative Liabilities

3 Months Ended

Mar. 31, 2020

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 authorized share requirement under the notes to Intelligent Partners is outside of the control of the Company. Because there is no set limit on the number of shares issuable under the notes if the notes become convertible, absent an increase in the stock price or an increase in authorized shares, there are potentially not enough authorized shares of common stock to satisfy the exercise of the Company's options, thus the Company determined that certain 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 other income (expense) for each reporting period at each balance sheet date. 

As of March 31, 2020, and December 31, 2019, the aggregate fair value of the outstanding derivative liability was approximately $635,000 and $595,000, 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 period ended March 31, 2020 and December 31, 2019:

	Period Ended
	March 31,			December 31,
	2020				2019
Volatility		238	%			207-426	%
Risk-free interest rate		0.24	%			0.24	%
Expected dividends		-				-	%
Expected term		0.5				0.75-4.70

The following schedule summarizes the valuation of financial instruments at fair value in the balance sheets as of March 31, 2020 and December 31, 2019:

	Fair Value Measurements as of
	31-Mar-20						31-Dec-19
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
None		-		-		-		-		-		-
Total assets		-		-		-		-		-		-
Liabilities
Option derivative liability		-		-		635,000		-		-		595,000
Total liabilities	$	-	$	-	$	635,000	$	-	$	-	$	595,000

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 March 31, 2020
Beginning balance	$	595,000
Change in fair value		40,000
Ending balance	$	635,000