Derivative Liability

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Derivative Liability

Note 8 - Derivative Liability

The certain of the convertible notes payable discussed in Note 7 have a conversion price that can be adjusted based on the Company’s stock price which results in the conversion feature being recorded as a derivative liability.

The fair value of the derivative liability is recorded and shown separately under current liabilities. Changes in the fair value of the derivative liability is recorded in the statement of operations under other income (expense).

The Company uses a weighted average Black-Scholes-Merton option pricing model with the following assumptions to measure the fair value of derivative liability at December 31, 2017:

Stock price	$1.12
Risk free rate	1.76%
Volatility	175%
Conversion/ Exercise price	$0.60
Dividend rate	0%
Term (years)	0.5 years

The following table represents the Company’s derivative liability activity for the three months ended March 31, 2018:

Derivative liability balance, December 31, 2017	$	95,164
Fair value of beneficial conversion feature of debt repaid		(113,287	)
Change in derivative liability during the period		18,123
Derivative liability balance, December 31, 2017	$	—

During the three months ended March 31, 2018, the convertible note with the embedded conversion feature was repaid; therefore, there is no derivative liability outstanding at March 31, 2018.