Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v3.20.1
Stockholders' Equity
12 Months Ended
Dec. 31, 2019
Equity [Abstract]  
STOCKHOLDERS' EQUITY
10. STOCKHOLDERS' EQUITY

 

Series A Preferred Stock

 

The Company has designated 150,000 shares of its preferred stock as Series A Preferred Stock. Each share of Series A Preferred Stock has a stated value of $10. The Series A Preferred Stock is convertible into shares of the Company's common stock by dividing the stated value by a conversion price of $0.10 per share. The Series A Preferred Stock shall have voting rights on an as converted basis (subject to limitations) and liquidation preference for each share of Series A Preferred Stock at an amount equal to the stated value per share. As of December 31, 2019 and 2018, the Company has 82,500 shares of Series A Preferred Stock outstanding.

 

On August 14, 2017, the Company entered into Securities Purchase Agreements with two accredited investors. In connection with these agreements, the Company issued 45,000 shares of Series A Preferred Stock and warrants to acquire 9,000,000 shares of common stock. The shares of Series A Preferred Stock are convertible, at any time at the option of the holder, into an aggregate of 4,500,000 shares of the Company's common stock. The Warrants shall be exercisable for a period of five years at an exercise price of $0.15 per share.  

 

The Company recognized the value attributable to the conversion feature of the issued warrants of $650,421 as a charge against additional paid in capital up to $450,000 with the excess of $200,421 charged to change in fair value of warrant liability during the year ended December 31, 2017. The Company valued the warrants using the Binomial Lattice pricing model as described in Note 7.

 

On October 24, 2017, the Company entered into Securities Purchase Agreements with an accredited investor. In connection with the agreement, the Company issued 10,000 shares of Series A Preferred Stock and warrants to acquire 2,000,000 shares of common stock. The shares of Series A Preferred Stock are convertible, at any time at the option of the holder, into an aggregate of 1,000,000 shares of the Company's common stock. The Warrants shall be exercisable for a period of five years at an exercise price of $0.15 per share.

 

During 2017, the Company recognized the value attributable to the conversion feature of the issued warrants of $93,312 as a charge against additional paid in capital. The Company valued the warrants using the Binomial Lattice pricing model as described in Note 7.

 

On February 2, 2018, the Company entered into Securities Purchase Agreements with four accredited investors. In connection with these agreements, the Company issued 27,500 shares of Series A Preferred Stock and warrants to acquire 5,500,000 shares of common stock in consideration of $275,000. The shares of Series A Preferred Stock are convertible, at any time at the option of the holder, into an aggregate of 2,750,000 shares of the Company's common stock. The Warrants shall be exercisable for a period of five years at an exercise price of $0.15 per share.

 

During 2018, the Company recognized the value attributable to the conversion feature of the issued warrants of $226,833 as a charge against additional paid in capital. The Company valued the warrants using the Binomial Lattice pricing model as described in Note 7.

 

Common Stock

 

On February 16, 2018, the Company's Board of Directors approved the issuance of 3,666,666 shares of the Company's common stock to two consultants for services rendered amounting to $330,000.

 

During 2018, 29 investors converted their Convertible Debenture totaling $1,225,000 plus accrued interest of $52,066, into 17,027,544 shares of the Company's common stock.

 

On January 10, 2019, the Company issued 1,000,000 shares of its common stock in exchange for consulting services amounting to $22,900 pursuant to a consulting agreement entered into and approved by the Board of Directors on November 23, 2018.

 

Common Stock Warrants

 

The Company accounts for warrants as either equity instruments or liabilities depending on the specific terms of the warrant agreement. As of December 31, 2019, the Company had 38,458,320 warrants outstanding which are all classified as equity instruments and are fully exercisable.

  

The following tables summarize the Company's common stock warrants activity for the years ended December 31, 2019 and 2018:

 

    Warrants     Weighted
Average
Exercise
Price
    Aggregate
Intrinsic
Value
 
Outstanding as of December 31, 2018     38,999,990     $ 0.17     $  
Granted                  
Exercised                  
Forfeited/Canceled     (541,670 )     0.94        
Outstanding as of December 31, 2019     38,458,320     $ 0.16     $  

 

    Warrants     Weighted
Average
Exercise
Price
    Aggregate
Intrinsic
Value
 
Outstanding as of December 31, 2017     41,029,669     $ 0.23     $  
Granted     5,875,000       0.15        
Exercised                  
Forfeited/Canceled     (7,904,679 )     0.43        
Outstanding as of December 31, 2018     38,999,990     $ 0.17     $  

  

The aggregate intrinsic value represents the pretax intrinsic value, based on the warrants with an exercise price less than the Company's stock price of $0.011 as of December 31, 2019, which would have been received by the warrant holders had those warrant holders exercised their warrants as of that date.