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Derivative Liability
6 Months Ended
Jun. 30, 2025
Derivative Liability  
Derivative Liability

Note 8 – Derivative Liability

 

Fair Value Assumptions Used in Accounting for Derivative Liabilities

 

ASC 815 requires us to assess the fair market value of derivative liabilities at the end of each reporting period and recognize any change in the fair market value as other income or expense.

 

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Binomial Lattice model to calculate the fair value as of June 30, 2025 and December 31, 2024.

 

For the six months ended June 30, 2025 and the year ended December 31, 2024, the estimated fair values of the liabilities measured on a recurring basis, used the following significant assumptions: 

 

 

 

June 30,

 

 

December 31

 

 

 

2025

 

 

2024

 

Expected term

 

0.13 - 1 year

 

 

0.29 years

 

Risk-free interest rate

 

4.02 - 4.30

 

 

4.15%

Stock price at valuation date

 

$

  0.89 - 1.95

 

 

0.73

 

Expected average volatility

 

60.5 - 146.5

 

 

95.41%

Expected dividend yield

 

 

-

 

 

 

-

 

 

The following table summarizes the changes in the derivative liabilities during the six months ended June 30, 2025:

 

Fair Value Measurements Using Significant Observable Inputs (Level 3)

 

 

 

 

 

Balance - December 31, 2024

 

$1,055,233

 

Addition of new derivatives recognized as debt discounts

 

 

1,027,000

 

Settled on issuance of common stock

 

 

(2,127,000)

Loss on change in fair value of the derivative

 

 

3,777,767

 

Balance - June 30, 2025

 

$3,733,000