Derivative Liability

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Derivative Liability

Note 8 - Derivative Liability

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 September 30, 2018 and December 31, 2017:

	September 30,			December 31,
	2018			2017
Stock price	$	0.95		$	1.12
Risk free rate		2.59	%		1.76	%
Volatility		165	%		175	%
Conversion/ Exercise price	$	0.51		$	0.60
Dividend rate		0	%		0	%

The following table represents the Company’s derivative liability activity for the nine months ended September 30, 2018:

Derivative liability balance, December 31, 2017	$	95,164
Issuance of derivative liability during the period		337,669
Fair value of beneficial conversion feature of debt repaid		(113,287	)
Change in derivative liability during the period		2,458,506
Derivative liability balance, September 30, 2018	$	2,778,052