|6 Months Ended|
Jun. 30, 2022
|Derivative Instruments and Hedging Activities Disclosure [Abstract]|
8. DERIVATIVE LIABILITY
In prior years, the Company granted certain warrants that included a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. As a result, the fundamental transaction clause of these warrants is accounted for as a derivative liability in accordance with ASC 815 and are being re-measured every reporting period with the change in value reported in the Company’s condensed consolidated statements of operations.
The derivative liabilities were valued using a Binomial pricing model with the following assumptions:
SCHEDULE OF DERIVATIVE LIABILITY USING BINOMIAL PRICING MODEL ASSUMPTIONS
The expected life of the warrants was based on the remaining contractual term of the instruments. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected dividend yield was based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future. The risk-free interest rate was based on rates established by the Federal Reserve Bank.
During the six months ended June 30, 2022, the Company recorded a gain of $ to account for the changes in the fair value of these derivative liabilities during the period.
During the six months ended June 30, 2021, the Company recorded expense of $1,945 to account for the changes in the fair value of these derivative liabilities during the period. In addition, shares of the Series A warrants that were accounted for as a derivative liability were exercised. As result, the Company computed the fair value of the corresponding derivative liability one last time which amounted to $2,300 and the extinguishment was accounted for as part of equity.
The details of derivative liability transactions for the six months ended June 30, 2022 and 2021 are as follows:
SCHEDULE OF DERIVATIVE LIABILITY TRANSACTIONS
The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef