Derivative Liability

3 Months Ended

Mar. 31, 2024

Derivative Liability

Derivative Liability

Note 12 - Derivative Liability

Certain of the convertible notes payable discussed in Note 10 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 FV of the derivative liability is recorded and shown separately under current liabilities. Changes in the FV of the derivative liability is recorded in the statement of operations under other income (expense).

The Company uses a weighted average Black-Scholes option pricing model with the following assumptions to measure the FV of derivative liability at March 31, 2024 and December 31, 2023:

	March 31,			December 31,
	2024			2023
Stock price	$	0.0001		$	0.0002
Risk free rate		5.38 – 5.46	%		5.26 – 5.60	%
Volatility		375 – 538	%		427 – 502	%
Conversion/ Exercise price	$	0.000085		$	0.000075 – 0.000085
Dividend rate		0	%		0	%

The following table represents the Company’s derivative liability activity for the period ended March 31, 2024:

Derivative liability balance, December 31, 2023	$	14,116,062
Issuance of derivative liability during the period		—
Fair value of beneficial conversion feature of debt converted		(694,919	)
Change in derivative liability during the period		(7,271,013	)
Derivative liability balance, March 31, 2024	$	6,150,130

The significant decrease in the fair value of derivative liability was mainly due to the decrease in the stock prices from $0.0002 to $0.0001 from Q4 2023 to Q1 2024, as well as the conversions during the three months ended March 31, 2024, and the decrease in remaining convertible principal balances lower the derivative liabilities.