Note 10 - Derivative Liability

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Disclosure of Credit Derivatives [Table Text Block]

NOTE

10

– DERIVATIVE LIABILITY

As discussed in Note

1,

on a recurring basis, we measure certain financial assets and liabilities based upon the fair value hierarchy. The following table presents information about the Company's derivative liabilities measured at fair value on a recurring basis as of

December 31, 2019

and

2018:

	Level 1		Level 2		Level 3		Fair Value at December 31, 2018
Liabilities		-		-		-		-
Derivative Liability		-		-	$	549,919	$	549,919

	Level 1		Level 2		Level 3		Fair Value at December 31, 2019
Liabilities		-		-		-		-
Derivative Liability		-		-	$	65,289	$	65,289

As of

December 31, 2019,

and

2018,

the Company had a

$65,289

and

$549,919

derivative liability balance on the consolidated balance sheets, respectively and recorded a gain from derivative liability fair value adjustment of

$492,198

and a loss of

$156,394

during the years ended

December 31, 2019

and

2018,

respectively. The Company assessed its outstanding convertible credit line payable as summarized in Note

9

 – Convertible Credit Line Payable- Related Party and determined certain convertible credit lines payable with variable conversion features contain embedded derivatives and are therefore accounted for at fair value under ASC

920,

Fair Value Measurements and Disclosures and ASC

825,

Financial Instruments.

Utilizing Level

3

inputs, the Company recorded fair market value adjustments related to convertible notes payable for the year ended

December 31, 2018

of

$156,394.

The derivative liabilities were initially measured at

$105,271.

An additional debt discount of

$49,580

was recorded during the year ended

December 31, 2018,

using the following assumptions: exercise price of

$1.50,

33,053

common share equivalents, and a weighted average fair value of the common stock of

$5.20

per share. The fair market value adjustments as of

December 31, 2018

were calculated utilizing the Black-Scholes option pricing model using the following assumptions: exercise price of

$1.50,

computed volatility of

162%,

discount rate of

2.48%,

93,630

common share equivalents, and a fair value of the common stock of

$6.50

per share.

Utilizing Level

3

inputs, the Company recorded fair market value adjustments related to convertible notes payable for the year ended

December 31, 2019

of

$492,198.

An additional debt discount of

$7,568

was recorded during the year ended

December 31, 2019

using the following assumptions: exercise price of

$1.50,

13,000

common share equivalents, and a fair value of the common stock of

$1.00

per share. The fair market value adjustments as of

December 31, 2019

were calculated utilizing the Black-Scholes option pricing model using the following assumptions: exercise price of

$1.50,

computed volatility of

124%,

discount rate of

1.59%,

130,578

common share equivalents, and a fair value of the common stock of

$1.00

per share.

A summary of the activity of the derivative liability is shown below:

Balance at December 31, 2017	$	238,674
Derivative liabilities recorded		49,580
Day one loss		105,271
Loss on change in derivative fair value adjustment		156,394
Balance at December 31, 2018	$	549,919
Derivative liabilities recorded		7,568
Gain on change in derivative fair value adjustment		(492,198	)
Balance at December 31, 2019	$	65,289