|9 Months Ended|
Sep. 30, 2021
|Derivative Liability [Abstract]|
Note 6 – Derivative Liabilities
The above convertible notes contained an embedded conversion option with a conversion price that could result in issuing an undeterminable amount of future common stock to settle the host contract. Accordingly, the embedded conversion option is required to be bifurcated from the host instrument (convertible note) and treated as a liability, which is calculated at fair value, and marked to market at each reporting period.
The Company used the binomial pricing model to estimate the fair value of its embedded conversion option liabilities with the following inputs:
Schedule of Weighted Average Assumptions
A reconciliation of the beginning and ending balances for the derivative liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows at September 30, 2021 and December 31, 2020:
Summary of Changes in Fair Value
Changes in fair value of derivative liabilities are included in other income (expense) in the accompanying consolidated statements of operations.
During the three months ended September 30, 2021 and 2020, the Company recorded a change in fair of derivative liabilities of () and $212,851, respectively.
During the nine months ended September 30, 2021 and 2020, the Company recorded a change in fair of derivative liabilities of $746,896 and $405,413, respectively.
In connection with bifurcating the embedded conversion option and accounting for this instrument at fair value, the Company computed a fair value on the commitment date, and upon the initial valuation of this instrument, determined that the fair value of the liability exceeded the proceeds of the debt host instrument. As a result, the Company recorded a debt discount at the maximum amount allowed (the face amount of the debt), which required the overage to be recorded as a derivative expense.
For the three months ended September 30, 2021 and 2020, the Company recorded a derivative expense of $ and $33,239, respectively.
For the nine months ended September 30, 2021 and 2020, the Company recorded a derivative expense of $1,775,057 and $529,294, respectively.
SURGEPAYS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
The entire disclosure for deposit liabilities including data and tables. It may include a description of the entity's deposit liabilities, the aggregate amount of time deposits (including certificates of deposit) in denominations of $100,000 or more at the balance sheet date; the aggregate amount of any demand deposits that have been reclassified as loan balances, such as overdrafts, at the balance sheet date; deposits that are received on terms other than those in the normal course of business, the amount of accrued interest on deposit liabilities; securities, mortgage loans or other financial instruments that serve as collateral for deposits; for time deposits having a remaining term of more than one year, the aggregate amount of maturities for each of the five years following the balance sheet date; and the weighted average interest rate for all deposit liabilities held by the entity.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef