During the years ended December 31, 2019 and 2018, the Company had outstanding convertible debentures with variable exercise prices based on market rates (see Note 7). During the year ended December 31, 2019, the Company also issued series A preferred stock with variable exercise prices based on market rates (see Note 10). The Company records the fair value of the conversion features with variable exercise prices based on future market rates in accordance with ASC 815. The fair value of the derivative liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statements of operations. The Company uses either the Black-Scholes Option Pricing Model or a multi-nominal lattice model to fair value the derivative liabilities. The following inputs and assumptions were used to value the conversion features outstanding during the years ended December 31, 2019 and 2018, assuming no expected dividends:

 

		2019				2018
Expected volatility			219% - 264	%			334% - 398	%
Risk free interest rate			1.55% - 2.34	%			1.49% - 1.73	%
Expected life (in years)			0.8 – 1.5				0.0 – 0.4

The following table presents the Company’s embedded conversion features of its convertible debt and preferred stock measured at fair value on a recurring basis as of December 31, 2019 and 2018.

 

		Level 3 Carrying Value as of December 31, 2019				Level 3 Carrying Value as of December 31, 2018
Derivative liabilities:
Embedded conversion feature – convertible debt		$	87,571			$	-
Embedded conversion feature – preferred stock			4,751				-
		$	92,322			$	-

The following table provides a reconciliation of the beginning and ending balances for the Company’s derivative liabilities measured at fair value using Level 3 inputs:

 

		For The Year Ended December 31, 2019				For The Year Ended December 31, 2018
Embedded Conversion Features – Debt Instruments
Balances, as of the beginning of the year		$	-			$	227,163
Derivative liabilities recorded upon issuance of debt instruments			483,331				6,698
Extinguishment due to conversion of debt instruments			(3,055	)			(176,820	)
Net changes in fair value included in net loss			(392,705	)			(57,041	)
Ending balance		$	87,571			$	-
Embedded Conversion Features – Preferred Stock
Balances, as of the beginning of the year		$	-			$	-
Derivative liabilities recorded upon issuance of preferred stock			207,067				-
Extinguishment due to conversion of preferred stock			(22,067	)			-
Net changes in fair value included in net loss			(180,249	)			-
Ending balance		$	4,751			$	-
Total ending balance		$	92,322			$	-