WARRANT DERIVATIVE LIABILITY

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

NOTE 11.   WARRANT DERIVATIVE LIABILITY

On May 31, 2019 we received gross proceeds of $3 million by issuing three million shares of our common stock and three million warrants (“2019 Warrants”) to purchase shares of our common stock (together “2019 Units”) in a registered direct offering for $1.00 per 2019 Unit (combined the “2019 Capital Raise”).  The 2019 Warrants, issued with the 2019 Capital Raise, are accounted for as a derivative liability.  The 2019 Warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash based on the Black-Scholes value, upon certain fundamental transactions, as defined in the 2019 Warrant agreement, that are considered outside of the control of management, such as a change of control.

The following are the key assumptions that were used to determine the fair value of the 2019 Warrants:

		May 31,		December 31,
		2019		2019
Number of shares underlying the warrants		3,000,000		3,000,000
Fair market value of stock	$	0.95	$	0.63
Exercise price	$	1.30	$	0.45
Volatility		133%		124%
Risk-free interest rate		1.93%		1.69%
Warrant life (years)		5.00		4.41

The following table sets forth a summary of the changes in the fair value of the warrant derivative liability, our Level 3 financial liabilities that are measured at fair value on a recurring basis:

		December 31,
		2019		2019
Beginning balance	$	–	$	–
Recognition of warrant derivative liability on May 31, 2019		2,416,422		–
Change in fair value of warrants derivative liability		(816,986)		–
Ending balance	$	1,599,436	$	–