Annual report pursuant to Section 13 and 15(d)

Stockholders' Deficit

v3.20.1
Stockholders' Deficit
12 Months Ended
Dec. 31, 2019
Stockholders Deficit  
Stockholders' Deficit

NOTE 7 – STOCKHOLDERS’ DEFICIT

 

 Preferred stock

 

The Company is authorized to issue 10,000,000 shares of $0.001 par value preferred stock as of December 31, 2019 and December 31, 2018. As of December 31, 2019, and 2018, the Company has designated and issued 10,000,000 shares of Class A Preferred Stock.

 

Each share of Class A Preferred Stock is entitled to 100 votes on all matters submitted to a vote to the stockholders of the Company, does not have conversion, dividend or distribution upon liquidation rights.

 

Common stock

 

The Company is authorized to issue 5,000,000,000 shares of $0.001 par value common stock as of December 31, 2019 and 2018. As of December 31, 2019, and 2018, the Company had 77,958,081 and 42,687,301, respectively, common shares issued and outstanding.

 

In 2019, the Company issued an aggregate of 141,669 shares of its common stock in settled amounts previously accrued with an estimated fair value of $193,800

 

In 2019, the Company issued an aggregate of 18,510,381 shares of its common stock for services rendered with an estimated fair value of $3,293,688.

 

In 2019, the Company issued an aggregate of 9,251,217 shares of its common stock in settlement of convertible notes payable and accrued interest with an estimated fair value of $5,424,736.

 

In 2019, the Company issued an aggregate of 1,000,000 shares of its common stock in issuance of warrants and BCF with convertible debt with an estimated fair value of $856,717.

 

In 2019, the Company issued an aggregate of 1,220,856 shares of its common stock in conversion of related party notes payable with an estimated fair value of $1,531,938.

 

In 2019, the Company issued an aggregate of 1,653,175 common shares of its common stock in exchange for exercise of warrants on a cashless basis.

 

In 2019, the Company sold shares 222,221 shares of its common stock with an estimated value of $90,000.

 

In 2019, the Company issued an aggregate of 2,082,398 common shares in settlement of a legal cases with an estimated fair value of $541,424.

 

In 2019, the Company issued an aggregate of 2,222,047 common shares in settlement of a for investments in joint ventures with an estimated fair value of $1,219,040.

 

During the year ended December 31, 2018, the Company issued an aggregate of 31,000,794 shares of its common stock for services rendered with an estimated fair value of $718,099.

 

During the year ended December 31, 2018, the Company sold an aggregate of 18,693,636 shares of its common stock for net proceeds of $152,000.

 

During the year ended December 31, 2018, the Company issued an aggregate of 80,428,246 shares of its common stock in settlement of $804,279 related party notes payable and accrued interest.

 

During the year ended December 31, 2018, the Company issued 147,927,794 shares of its common stock in part settlement of $5,466,333 convertible notes payable, accrued interest and penalties.

 

During the year ended December 31, 2018, the Company issued 57,676,810 shares of its common stock in settlement of a legal case at a cost of $1,701,466.

 

During the year ended December 31, 2018, the company issued 122,046,796 shares of its common stock in exchange for exercise of warrants on a cashless basis.

 

During the year ended December 31, 2018, the company received proceeds from common stock subscriptions for $90,000.

 

Options

 

Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Binomial Option Pricing Model with a volatility figure derived from using the Company’s historical stock prices. Management determined this assumption to be a more accurate indicator of value. The Company accounts for the expected life of options based on the contractual life of options for non-employees. For employees, the Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla" options, as defined in the accounting standards codification.

 

The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options. 

 

In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. In estimating the Company’s forfeiture rate, the Company analyzed its historical forfeiture rate, the remaining lives of unvested options, and the number of vested options as a percentage of total options outstanding. If the Company’s actual forfeiture rate is materially different from its estimate, or if the Company reevaluates the forfeiture rate in the future, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.

 

The following table summarizes the stock option activity for the years ended December 31, 2019 and 2018:

 

    Shares    

Weighted-Average

Exercise Price

   

Weighted Average

Remaining

Contractual Term

   

Aggregate

Intrinsic Value

Outstanding at December 31, 2017     16,666,667     $ 0.30       7.76   $ 15,400,000
Granted     -                      
Forfeitures or expirations     -                      
Outstanding at December 31, 2018     16,666,667     $ 0.30       6.76   $   15,296,667
Granted     -                        
Forfeitures or expirations     (16,666,667)       0.30                 
Outstanding at December 31, 2019     0(1)     $ -       -       -
Exercisable at December 31, 2019     0(1)     $ -       -     $ -

 

(1) On February 27, 2019, Donald Steinberg and Charles Larsen cancelled previously issued options to purchase an aggregate of 16,666,667 shares at an average exercise price of $0.30 per share, representing 100% of all previously issued option.

   

The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s stock price of $0 and $1.22 as of December 31, 2019 and 2018, respectively, which would have been received by the option holders had those option holders exercised their options as of that date.

  

The following table presents information related to stock options at December 31, 2019(1):

 

Options Outstanding(1)     Options Exercisable  

      Exercise

     Price

   

Number of

Options

   

Weighted Average

Remaining Life

In Years

   

Exercisable

Number of

Options

 
$ -       -     -       -  

 

The stock-based compensation expense related to option grants was $0 and $450,000 during the years ended December 31, 2019 and 2018, respectively.

 

(1) On February 27, 2019, Donald Steinberg and Charles Larsen cancelled previously issued options to purchase an aggregate of 16,666,667 shares at an average exercise price of $0.30 per share, representing 100% of all previously issued options.

  

Warrants

 

The following table summarizes the stock warrant activity for the two years ended December 31, 2019:

 

    Shares    

Weighted-Average

Exercise Price

   

Weighted Average

Remaining

Contractual Term

   

Aggregate

Intrinsic Value

 
Outstanding at December 31, 2017     186,550     $ 2.40           $ 1,873,492  
Granted     1,827,564       2.34                
Forfeitures or expirations     (166,667 )   $ 1.50-                
Outstanding at December 31, 2018     1,847,447                          
Granted     2,370,298       1.98                  
Exercised     (192,521 )     1.78                  
Forfeitures or expirations     (14,113)       1.80                  
Outstanding at December 31, 2019     4,011,111     $ 2.15       3.60     $ -  
Exercisable at December 31, 2019     4,011,111     $ 2.15       3.60     $ -  

 

The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on warrants with an exercise price less than the Company’s stock price of $0.07 and $1.22 as of December 31, 2019 and 2018, respectively, which would have been received by the warrant holders had those option holders exercised their warrants as of that date.

 

The following table presents information related to warrants at December 31, 2019:

 

Warrants Outstanding     Warrants Exercisable  

      Exercise

     Price

   

Number of

Warrants

   

Weighted Average

Remaining Life

In Years

   

Exercisable

Number of

Warrants

 
$ 0.01 - $1.00       484,187     2.70       484,187  
$ 1.01 - $2.00       27,778     2.50       27,778  
$ 2.01 - $3.00       3,499,146     3.74       3,499,146  

 

In connection with the issuance of convertible notes payable, the Company issued an aggregate of 2,370,298 warrants to purchase the Company’s common stock from $0.26 to $2.40, vesting immediately and expiring 5 years from the date of issuance. (See Note 7)