STOCKHOLDERS' EQUITY | NOTE 9 - STOCKHOLDERS' EQUITY On January 4, 2021, pursuant to the authorization and approval previously provided by the stockholders, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada to increase its authorized shares of common stock, $ 0.001 1,000,000,000 10,000,000 0.001 Common Stock Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock do not have cumulative voting rights. Holders of common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the Board of Directors in its discretion from funds legally available, therefore. In the event of liquidation, dissolution, or winding up of the Company, the holders of common stock are entitled to share pro rata in all assets remaining after payment in full of all liabilities. All of the outstanding shares of common stock are fully paid and non-assessable. Holders of common stock have no preemptive rights to purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock. On January 28, 2021, the noteholder of Note C converted the principal balance of $ 40,000 6,510 4,650,978 On February 1, 2021, the noteholder of Note F converted the principal balance of $ 66,833 5,177 7,200,000 On February 4, 2021, the noteholder of Note A converted the principal balance of $ 50,000 5,000,000 On February 24, 2021, the Company entered into a Common Stock Purchase Agreement with an investor pursuant to which the investor agreed to purchase up to $ 5,000,000 0.015 8,000,000 8,400,000 8,900,000 10,200,000 120,000 126,000 133,500 153,000 On April 1, 2021, the Company’s Chief Technology Officer resigned from his employment with the Company. In settlement of the Company’s total obligations with the officer upon separation, the Company issued 843,288 252,986 On April 15, 2021, the noteholder of Note A converted the principal balance of $ 75,000 7,500,000 On May 20, 2021, the Company issued to a consultant for services rendered, pursuant to a consulting agreement, 500,000 7,800 On May 20, 2021, the Company issued to a consultant for services, pursuant to a consulting agreement, 50,000 900 On June 15, 2021, the Company issued 1,500,000 450,000 On July 28, 2021, the noteholder of Note A converted the principal balance of $ 80,000 8,000,000 As a result of all common stock issuances, the Company recorded 215,854,396 145,110,130 Stock Incentive Plans On December 14, 2017, the Board of Directors of the Company approved the 2017 Stock Incentive Plan (the “ 2017 Plan 4,500,000 On March 11, 2019, the Board of Directors of the Company approved the 2019 Stock Incentive Plan (the “ Plan 5,000,000 Shares earned and issued related to the consulting agreements are issued under the 2017 Stock Incentive Plan and the 2019 Stock Incentive Plan (Note 4). Vesting of the shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the agreement) or the listing of the Company’s common stock on a senior exchange. A summary of the status of the Company’s non-vested shares as of September 30, 2021 and 2020, and changes during the nine months period then ended, is presented below: Summary of non-vested shares Non-vested Shares of Common Stock Weighted Average Fair Value Balance at December 31, 2019 6,000,000 $ 0.30 Awarded – – Vested (1,600,000 ) $ 0.30 Forfeited – – Balance at September 30, 2020 4,400,000 $ 0.30 Balance at December 31, 2020 3,600,000 $ 0.30 Awarded – – Vested (3,600,000 ) $ 0.30 Forfeited – – Balance at September 30, 2021 – $ 0.30 Preferred Stock Series A Supervoting Convertible Preferred Stock On July 2, 2020, the Board of Directors of the Company authorized the issuance of 15,600 0.001 Dividends: Liquidation and Redemption Rights: Conversion: Rank: Voting Rights: A. If at least one share of Series A Super Voting Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series A Super Voting Preferred Stock at any given time, regardless of their number, shall have voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting. B. Each individual share of Series A Super Voting Preferred Stock shall have the voting rights equal to: twenty times the sum of: {all shares of Common stock issued and outstanding at the time of voting + all shares of Series A and any newly designated Preferred stock issued and outstanding at the time of voting} Divided by: the number of shares of Series A Super Voting Preferred Stock issued and outstanding at the time of voting With respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series A Super Voting Preferred Stock shall vote together with the holders of Common Stock without regard to class, except as to those matters on which separate class voting is required by applicable law or the Articles of Incorporation or Bylaws. The Company did not issue any Series A Supervoting Convertible Preferred Stock during the nine months ended September 30, 2021. The Company had 25,845 shares of Series A Supervoting Convertible Preferred Stock issued and outstanding at September 30, 2021 and December 31, 2020, respectively. Series B Convertible Preferred Stock Equity Financing On November 16, 2020, the Board of Directors of the Company authorized the issuance of up to 600 0.001 1,200 Dividends: Dividend End Date Voting Rights: Liquidation: Liquidation Conversion: Redemption: · 115% of the stated value if the redemption takes place within 90 days of issuance; · 120% of the stated value if the redemption takes place after 90 days and within 120 days of issuance · 125% of the stated value if the redemption takes place after 120 days and within 180 days of issuance; and · each share of Preferred Stock is redeemed one year from the day of issuance On November 19, 2020, pursuant to the terms of a Securities Purchase Agreement dated November 16, 2020 (the “ SPA GHS COD The Company’s ability to conduct additional closings under the SPA is subject to certain conditions, including the following: · The Company’s continued compliance with all covenants and agreements under the SPA and the COD, with no uncured defaults under the Company’s agreements with GHS; · The continued quotation of the Company’s common stock on the over-the-counter market or another trading market or exchange; · The average daily dollar trading volume for the Company’s common stock for the 30 trading days preceding each additional closing must be at least $10,000 per day; and · The closing market price for the Company’s common stock must be at least $0.01 for each of the 30 trading days preceding each additional closing. No additional closings may take place after the two-year anniversary of the SPA, or once the entire $600,000 amount has been funded. If the average daily dollar trading volume for the Company’s common stock for the 30 trading days preceding a particular additional closing is at least $50,000 per day, the Company may, at its option, increase the amount of that additional closing to 75 shares of Series B Convertible Preferred Stock ($75,000). The Series B Convertible Preferred Stock is classified as temporary equity, as it is convertible upon issuance at an amount equal to the lowest traded price for the Company’s common stock for the fifteen trading days immediately preceding the date of conversion. Based on the requirements of ASC 815, Derivatives and Hedging On November 19, 2020 (the date of receipt of cash proceeds of $45,000 issuance), the Company valued the conversion feature of the derivative and recorded an initial derivative liability of $ 103,267 58,267 39,000 84,000 7,755 79,211 2,541 7,539 On November 19, 2020, at December 31, 2020, March 31, 2021, June 30, 2021, and September 30, 2021, the Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $ 0.0051 0.0141 0.0083 0.0184 0 200.59 440.99 0.07 0.39 0.63 1.38 On December 16, 2020, pursuant to the terms of the SPA, GHS purchased an additional 85 shares of Series B Convertible Preferred Stock for gross proceeds of $ 85,000 On December 16, 2020 (the date of receipt of cash proceeds of $85,000 issuance), the Company valued the conversion feature of the derivative and recorded an initial derivative liability of $ 106,241 1,700 On December 16, 2020, December 31, 2020, March 31, 2021, June 30, 2021 and September 30, 2021, the Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $ 0.0060 0.0141 0.0063 0.0184 0 200.59 437.59 0.07 0.39 0.96 1.50 As a result of receipt of cash proceeds relating to Series B Convertible Preferred Stock, the Company recorded derivative liability of $ 143,224 315,782 18,357 1,653 Warrants A summary of the status of the Company’s warrants as of September 30, 2021 and December 31, 2020, and changes during the three months then ended, is presented below: Summary of warrant activity Shares Under Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding at December 31, 2019 1,627,532 $ 0.21 4.5 Issued 43,082,532 0.01 4.4 Exercised – – Expired/Forfeited (41,666,667 ) – Outstanding at September 30, 2020 3,043,397 $ 0.012292 4.0 Outstanding at December 31, 2020 – – Issued 2,868,397 $ 0.00084 3.4 Exercised – – Expired/Forfeited – – Outstanding at September 30, 2021 2,868,397 $ 0.00084 2.7 |