Based on the terms of the conversion feature, the Company could be required to issue an infinite number of shares of common stock. As such, the Company has determined the conversion feature to be a derivative liability under relevant accounting guidance. The Company estimated the fair value of the conversion feature using the Binomial Lattice Model on the date of issuance, on the date of each conversion notice, and remeasures the fair value at each reporting period. During the nine months ended September 30, 2020, the Company issued 253,000 shares of series A preferred stock for proceeds of $229,570. Related to these issuances, the Company recorded derivative liabilities of $476,435 and discounts to the preferred stock of $213,534, which is being amortized to deemed dividends over the redemption period. Also related to these issuances the Company recorded deemed dividends of $262,888.
During 2019, holders converted 42,000 shares of Series A Preferred stock into 2,977,226 shares of common stock at the Variable Conversion Price as defined above, resulting in a loss on extinguishment of $23,000.
During the nine months ended September 30, 2020, the holder of the series A preferred stock converted 207,900 shares of series A preferred stock and accrued dividends into 244,512,485 shares of common stock. Related to these conversions during the nine months ended September 30, 2020, the Company recorded a reduction of the associated derivative liability for the conversion features of $286,782 and a reduction of the preferred stock discount of $163,326 and $87,897 of deemed dividend.
