Stockholders' Deficit | NOTE 8: STOCKHOLDERS’ DEFICIT Common Stock The Company has 2,000,000,000 shares of common stock authorized, with a par value of $0.001, and as of December 31, 2018 and 2017, the Company has 1,307,565,888 and 65,695,213 shares issued and outstanding, respectively. Preferred Stock As of December 31, 2018 and 2017, the Company has 20,000,000 shares of Preferred stock authorized with a par value of $0.001. The Company’s Board of Directors is authorized to provide for the issuance of shares of preferred stock in one or more series, fix or alter the designations, preferences, rights, qualifications, limitations or restrictions of the shares of each series, including the dividend rights, dividend rates, conversion rights, voting rights, term of redemption including sinking fund provisions, redemption price or prices, liquidation preferences and the number of shares constituting any series or designations of such series without further vote or action by the shareholders. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of management without further action by the shareholders and may adversely affect the voting and other rights of the holders of common stock. The issuance of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of common stock, including the loss of voting control to others. The following is a summary of the rights and preferences of the Series A Convertible Preferred, which summary is not meant to be a complete description of those terms. On October 8, 2018 the Company created out of the shares of Preferred Stock, par value $0.001 per share, of the Company, as authorized in Article IV of the Company’s Certificate of Incorporation, a series of Preferred Stock of the Company, to be named “Series B Convertible Preferred Stock,” consisting of Five Million (5,000,000) shares. Series A Convertible Preferred Stock In June 2015, the Series A Certificate of Designation was filed with the Delaware Secretary of State to designate 2.5 million shares of our preferred stock as Series A Convertible Preferred. Effective March 31, 2016, the Company amended the Certificate of Designations, Preferences and Rights of Series A Convertible Preferred of the Registrant, increasing the maximum number of shares of Series A Convertible Preferred from 2,500,000 shares to 5,000,000 shares. The following summarizes the current rights and preferences of the Series A Convertible Preferred: Liquidation Preference Dividends Conversion Series A Conversion Shares In the event the Company completes an equity or equity-based public offering, registered with the SEC, resulting in gross proceeds to the Company totaling at least $5.0 million, all issued and outstanding shares of Series A Convertible Preferred at that time will automatically convert into Series A Conversion Shares. Redemption Voting Rights Liquidation Liquidation Certain Price and Share Adjustments a) Stock Dividends and Stock Splits b) Merger or Reorganization Series B Convertible Preferred Stock In October 2018, the Series B Certificate of Designation was filed with the Delaware Secretary of State to designate 5.0 million shares of our preferred stock as Series B Convertible Preferred. The following summarizes the current rights and preferences of the Series B Convertible Preferred: Liquidation Preference Dividends Conversion Series B Conversion Shares Redemption Voting Rights Liquidation Liquidation Certain Price and Share Adjustments a) Stock Dividends and Stock Splits b) Merger or Reorganization Common Stock Issuances Common Stock Issued for Services During 2018, the Company issued 10,000 shares of common stock for services valued at $449. During 2017, the Company issued 2,302,194 shares of common stock for services valued at $254,438. Common Stock Issued for the Exercise of Options and Warrants During 2018, the Company did not issue any shares of common stock for the exercise of options and warrants. During 2017, the Company did not issue any shares of common stock for the exercise of options and warrants. Common Stock and Preferred Stock Issued for Settlement and Conversion of Debt During 2018, the Company issued 1,028,230,303 shares of common stock and 2,995,755 shares of Series B Convertible Preferred in conjunction with the settlement of $3,545,378 worth of convertible debt (both related and non-related) and $506,245 worth of accrued interest (both related and non-related). As part of these conversions, the Company recognized offsets of $4,823,363 for derivative liabilities and recognized a gain on extinguishment of debt of $1,694,005. During 2017, the Company issued 3,040,239 shares of common stock in conjunction with the settlement of $322,381 worth of convertible debt and $36,479 worth of accrued interest. The shares were valued at $334,048 and $159,299 worth of debt discount was written off, with $21,282 recognized as a loss on the settlement of debt and $113,205 recorded to Additional Paid in Capital upon conversion. Common Stock Issued for Conversion of Preferred Stock During 2018, the Company issued 12,259,810 shares of common stock valued at $4,678,380 in exchange for 1,225,981 shares of Series A Convertible Preferred. During 2017, the Company issued 18,692,500 shares of common stock valued at $4,305,962 in exchange for 1,809,250 shares of Series A Convertible Preferred. Common Stock Issued for Cash During 2018, the Company issued 136,628,000 shares of common stock for cash in the amount of $683,140. Preferred Stock Issuances Preferred Stock Issued for Cash During 2018, the Company issued no shares of Series A Convertible Preferred for cash. During 2018, the Company issued 110,000 shares of Series B Convertible Preferred for cash in the amount of $55,000. During 2017, the Company issued no shares of Series A Convertible Preferred for cash. Preferred Stock Issued for Exercise of Warrants During 2018, the Company issued no shares of Series A Convertible Preferred for the exercise of warrants. During 2018, the Company issued no shares of Series B Convertible Preferred for the exercise of warrants. During 2017, the Company issued no shares of Series A Convertible Preferred for the exercise of warrants. Preferred Stock Issued for Warrants Surrendered During 2018, the Company issued no shares of Series A Convertible Preferred for the surrender of warrants. During 2018, the Company issued no shares of Series B Convertible Preferred for the surrender of warrants. During 2017, the Company issued no shares of Series A Convertible Preferred for the surrender of warrants. Preferred Stock Issued for Services During 2018, the Company issued no shares of its Series A Convertible Preferred for services. During 2018, the Company issued no shares of its Series B Convertible Preferred for services. During 2017, the Company issued no shares of its Series A Convertible Preferred for services. Preferred Stock Issued for Loan Fees During 2018, the Company issued no shares of Series A Convertible Preferred for loan fees. During 2018, the Company issued no shares of Series B Convertible Preferred for loan fees. During 2017, the Company issued 843,699 shares of Series A Convertible Preferred, valued at $1,212,503, for loan fees, and recorded $1,212,503 as debt discount. During 2017, the Company issued 627,302 shares of Series A Convertible Preferred, valued at $1,488,650, to current note holders for the due date extension on the conversion date of the related notes from December 15, 2017 to May 9, 2018. Preferred Stock Issued for Debt Extinguishment For 2018 activity, see above for the Preferred Series A Convertible Preferred and Series B Convertible Preferred that were issued along with the common stock to convert debt and accrued interest. During 2017, the Company issued no shares of Series A Convertible Preferred in exchange for debt extinguishment. Common and Preferred Stock Issued for Accounts Payable and Accrued Liabilities During 2018, no shares of Series A Convertible Preferred were issued for accounts payable and accrued liabilities. During 2018, 62,262,562 shares of common stock and 200,000 shares of Series B Convertible Preferred were issued to officers and consultants for accrued compensation as well as to settle accounts payable and shareholder advances made during the year. The value of these shares were $1,665,285. The Company recognized a loss on extinguishment on these issuances of $1,256,972. During 2017, the Company issued 183,279 shares of Series A Convertible Preferred to the CEO and CFO, in exchange for $115,587 of accrued payroll, $67,692 of accounts payable and wages valued at $365,989. Additionally, the Company issued 3,096,483 shares of Common Stock and 160,000 shares of Series A Convertible Preferred to third parties and former employees to extinguish $205,283 worth of accounts payable and $272,164 of accrued payroll, which resulted in the Company recording a loss on extinguishment of debt of $294,530. The Company recorded a gain on debt extinguishment of $35,217 as a result of offsetting certain payables that were written off after statutes of limitations had passed on payment. Common Stock Options The following schedule summarizes the changes in the Company’s stock options: Weighted Weighted Options Outstanding Average Average Number Exercise Remaining Aggregate Exercise Of Price Contractual Intrinsic Price Shares Per Share Life Value Per Share Balance at December 31, 2016 2,402,500 $ 0.50-15.00 3.91 years $ - $ 0.81 Options granted - $ - - $ - Options exercised - $ - - $ - Options expired (1,180,000 ) $ 0.12-.0.15 - $ - Balance at December 31, 2017 1,222,500 $ 0.50-15.00 2.91 years $ - $ 1.08 Options granted 89,321,669 $ 0.014 - $ - Options exercised - $ - - $ - Options expired - $ - - $ - Balance at December 31, 2018 90,544,169 $ 0.014-15.00 6.75 years $ - $ 0.03 Exercisable at December 31, 2018 90,544,669 $ 0.014-15.00 6.75 years $ - $ 0.03 During the years ending December 31, 2018 and 2017, the Company recognized $1,164,885 and $103,865, respectively, worth of stock based compensation related to the vesting of it stock options. Common Stock Warrants The following schedule summarizes the changes in the Company’s common stock warrants: Weighted Weighted Warrants Outstanding Average Average Number Exercise Remaining Aggregate Exercise Of Price Contractual Intrinsic Price Shares Per Share Life Value Per Share Balance at December 31, 2016 3,579,505 $ 0.1-10.00 1.90 years $ 2,052,699 $ 4.45 Warrants granted - $ - - $ Warrants exercised - $ - - $ Warrants expired/cancelled (3,275,305 ) $ 4.62 - $ Balance at December 31, 2017 304,200 $ 1.19 1.19 years $ 749 $ 2.63 Warrants granted 184,349,305 $ 0.01 - $ Warrants exercised - $ - - $ Warrants expired/cancelled (233,733 ) $ 0.40 - $ Balance at December 31, 2018 184,419,772 $ 0.01 1.77 years $ - $ 0.01 Exercisable at December 31, 2018 184,419,772 $ 0.01 1.77 years $ - $ 0.01 For the year ended December 31, 2018, the Company granted 19,331,281 warrants to settle accrued payroll, 63,404,024 warrants to settle other payables, 21,800,000 warrants to settle accounts payable, 6,000,000 warrants issued for consulting services and 73,814,000 warrants in the issuance of shares issued for cash. The Company did not grant any warrants in the year ended December 31, 2017. Restricted Stock Units The following schedule summarizes the changes in the Company’s restricted stock units: Weighted Number Average Of Grant Date Shares Fair Value Balance at December 31, 2016 - $ - RSU’s granted 12,560,000 $ 0.07 RSU’s vested (6,820,000 ) $ - RSU’s forfeited - $ - Balance at December 31, 2017 5,740,000 $ 0.07 RSU’s granted - $ 0.07 RSU’s vested (2,480,000 ) $ - RSU’s forfeited (1,160,000 ) $ - Balance at December 31, 2018 2,100,000 $ 0.07 During the years ended December 31, 2018 and 2017, the Company recognized $113,189 and $575,011 worth of expense related to the vesting of its RSU’s, respectively. As of December 31, 2018, the Company had $155,400 worth of expense yet to be recognized for RSU’s not yet vested. |