Note 9 - Derivative Liability

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Derivatives and Fair Value [Text Block]

NOTE

9

– 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, 2020

and

2019:

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

	Level 1		Level 2		Level 3		Fair Value at December 31, 2020
Liabilities		-		-		-		-
Derivative Liability		-		-	$	96,369	$	96,369

As of

December 31, 2020,

and

2019,

the Company had a

$96,369

and

$65,289

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

$25,229

and a gain of

$492,198

during the years ended

December 31, 2020

and

2019,

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

8

 – 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 the derivative liability for the year ended

December 31, 2019

of

$492,198.

An additional debt discount of

$7,567

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

124%,

discount rate

1.59%,

130,577

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

$1.00

per share.

Utilizing Level

3

Inputs, the Company recorded fair market value adjustments related to the derivative liability for the year ended

December 31, 2020

of

$25,229.

An additional debt discount of

$5,851

was recorded during the year ended

December 31, 2020

using the following assumptions: exercise price of

$1.00,

19,000

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, 2020

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

$1.00,

computed volatility

127%,

discount rate

0.13%,

148,328

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, 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
Derivative liabilities recorded		5,851
Loss on change in derivative fair value adjustment		25,229
Balance at December 31, 2020	$	96,369