Quarterly report pursuant to Section 13 or 15(d)

Equity Transactions

v3.19.3
Equity Transactions
9 Months Ended
Sep. 30, 2019
Equity [Abstract]  
Equity Transactions

NOTE 5 – EQUITY TRANSACTIONS

 

Common Stock:

 

Nine Months Ended September 30, 2018

 

During the three months ended March 31, 2018, the Company issued 500,000 shares of restricted common stock to the father of an executive officer of the Company for cash of $50,000.

 

During the three months ended March 31, 2018, the Company issued an aggregate of 4,200,000 shares of restricted common stock to third parties for cash of $555,000.

 

During the three months ended March 31, 2018, the Company issued an aggregate of 1,250,000 shares of restricted common stock to employees with a total fair value of $625,000 for services rendered. The shares issued are non-refundable and deemed earned upon issuance. As a result, the Company expensed the entire $625,000 upon issuance. The shares issued were valued at the date earned under the respective agreement based upon closing market price of the Company’s common stock.

  

During the three months ended March 31, 2018, the Company issued an aggregate of 4,441,942 shares of restricted common stock to consultants with a total fair value of $1,712,000. The shares issued are non-refundable and deemed earned upon issuance. As a result, the Company expensed the entire $1,712,000 upon issuance. The shares issued were valued at the date earned under the respective agreements based upon closing market price of the Company’s common stock.

 

During the three months ended June 30, 2018, the Company issued an aggregate of 2,000,000 shares of restricted common stock to third parties for cash of $300,000.

 

During the three months ended June 30, 2018, the Company issued an aggregate of 1,145,840 shares of restricted common stock to consultants with a total fair value of $401,000. The shares issued are non-refundable and deemed earned upon issuance. As a result, the Company expensed the entire $401,000 upon issuance. The shares issued were valued at the date earned under the respective agreements based upon closing market price of the Company’s common stock.

 

During the three months ended June 30, 2018, the Company cancelled an aggregate of 625,000 shares of restricted common stock on termination of a third-party service agreement with a total fair value on the date of termination of $207,000. The Company recorded a gain on cancellation of $113,000 for the portion of shares (375,000) issued during 2017 and reversed expenses of $94,000 for the portion of shares (250,000) issued during 2018. The shares issued were valued at the termination date of the agreement based upon closing market price of the Company’s common stock.

 

During the three months ended September 30, 2018, the Company issued an aggregate of 1,020,999 shares of restricted common stock to consultants with a total fair value of $237,000. The shares issued are non-refundable and deemed earned upon issuance. As a result, the Company expensed the entire $237,000 upon issuance. The shares issued were valued at the date earned under the respective agreements based upon closing market price of the Company’s common stock.

 

During the three months ended September 30, 2018, the Company cancelled an aggregate of 17,500 shares of restricted common stock due to the violation of certain gating provisions of a third-party service agreement. The total fair value on the date of termination was $5,000 based upon the closing market price of the Company’s common stock. The Company recorded a gain on cancellation of $5,000.

 

During the three months ended September 30, 2018, pursuant to a July 12, 2018 court approved settlement agreement, the Company issued 3,500,000 common shares and 3,500,000 warrants. The combined fair value of the shares and warrants was $1,983,000. The shares issued were valued at the July 12, 2018 court approval date based upon closing market price of the Company’s common stock. The warrants were valued using the Black-Scholes Option Pricing Model. The combined fair value was fully recognized on the issuance date as a $1,983,000 reduction to the litigation settlement liability.

 

Nine Months Ended September 30, 2019

 

During the three months ended March 31, 2019, the Company issued an aggregate of 1,250,000 shares of restricted common stock to employees with a total fair value of $131,000 for services rendered. The shares issued are non-refundable and deemed earned upon issuance. As a result, the Company expensed the entire $131,000 upon issuance. The shares issued were valued at the date earned under the respective agreement based upon closing market price of the Company’s common stock.

 

During the three months ended June 30, 2019, the Company issued an aggregate of 500,000 shares of common stock in conversion of notes payable with a total fair value of $50,000. As a result, the Company reduced the balance due on the notes by $50,000 upon issuance.

 

Options:

 

The following table summarizes common stock options activity:

 

        Weighted
        Average
        Exercise
    Options   Price
  December 31, 2018       12,449,900     $ 1.64  
  Granted       —         —    
  Exercised       —         —    
  Forfeited       —         —    
  Outstanding, September 30, 2019       12,449,900     $ 1.64  
  Exercisable, September 30, 2019       12,449,900     $ 1.64  

 

The weighted average exercise prices, remaining lives for options granted, and exercisable as of September 30, 2019 were as follows:

                     
    Outstanding Options       Exercisable Options
Options           Weighted       Weighted
Exercise Price       Life   Average Exercise       Average Exercise
Per Share   Shares   (Years)   Price   Shares   Price
$0.50   8,000,000   0.92   $0.50   8,000,000   $0.50
$1.00   1,449,900   0.07 – 2.36   $1.00   1,449,900   $1.00
$5.00   3,000,000   0.25   $5.00   3,000,000   $5.00
    12,449,900       $1.64   12,449,900   $1.64

 

At September 30, 2019, the Company’s closing stock price was $0.06 per share. As all outstanding options had an exercise price greater than $0.06 per share, there was no intrinsic value of the options outstanding at September 30, 2019.

 

Warrants:

 

The following table summarizes common stock warrants activity:

 

        Weighted
        Average
        Exercise
    Warrants   Price
  Outstanding, December 31, 2018       9,000,000     $ 0.46  
  Granted       —         —    
  Exercised       —         —    
  Forfeited       —         —    
  Outstanding, September 30, 2019       9,000,000     $ 0.46  
  Exercisable, September 30, 2019       9,000,000     $ 0.46  

 

 

The weighted average exercise prices, remaining lives for warrants granted, and exercisable as of September 30, 2019, were as follows:

 

    Outstanding and Exercisable Warrants
Warrants        
Exercise Price       Life
Per Share   Shares   (Years)
$0.01   600,000   1.25
$0.15   1,200,000   1.28
$0.25   1,000,000   3.78
$0.375   200,000   1.56
$0.40   1,200,000   1.28
$0.50   3,000,000   0.08 – 3.78
$0.625   100,000   1.56
$0.75   1,250,000   1.66 – 3.78
$1.00   250,000   1.66
$2.00   200,000   3.64
    9,000,000    

 

At September 30, 2019, the Company’s closing stock price was $0.06 per share. The Company had 600,000 warrants outstanding with exercise prices less than $0.06 with an intrinsic value of $30,000 at September 30, 2019.

 

Shares Reserved:

 

At September 30, 2019, the Company has reserved 30,000,000 shares of common stock in connection with 2 convertible notes with detachable warrants and 3,500,000 shares of common stock in connection with the court approved settlement agreement for a total of 33,500,000 reserved shares of common stock.