Stockholders' Deficit | NOTE 8: STOCKHOLDERS’ DEFICIT Common Stock The Company has 950,000,000 shares of common stock authorized, with a par value of $0.001, and as of December 31, 2019 and December 31, 2018, the Company has 184,845,821 and 163,445,736 shares issued and outstanding, respectively. On March 28, 2019, the Company’s board of directors approved a reverse 1-for-8 stock split, and a decrease in the authorized shares from 2,000,000,000 to 950,000,000. The reverse stock split went effective by FINRA on June 28, 2019. Preferred Stock As of December 31, 2019 and 2018, 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. 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. On March 27, 2019 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 C Convertible Preferred Stock,” consisting of Five Million (5,000,000) shares. Series A Convertible Preferred Stock (“Series A Convertible Preferred”) 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 (“Series B Convertible Preferred”) 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 Series C Convertible Preferred Stock (“Series C Convertible Preferred”) In March 2019, the Series C Certificate of Designation was filed with the Delaware Secretary of State to designate 5.0 million shares of our preferred stock as Series C Convertible Preferred. The following summarizes the current rights and preferences of the Series C Convertible Preferred: Liquidation Preference Dividends Conversion Series C Conversion Shares The Series C Convertible Preferred will only be convertible at any time after the date that the Company shall have amended its Certificate of Incorporation to increase the number of shares of common stock authorized for issuance thereunder or effect a reverse stock split of the outstanding shares of common stock by a sufficient amount to permit the conversion of all Series C Convertible Preferred into shares of common stock (“ Authorized Share Approval Initial Convertibility Date Conversion Rights Redemption Voting Rights Liquidation Liquidation Certain Price and Share Adjustments a) Stock Dividends and Stock Splits b) Merger or Reorganization Common and Preferred Stock Issuances - 2019 In January 2019, the Company received $100,000 in gross proceeds resulting from the issuance to accredited investors of 1,250,000 shares of common stock, 100,000 shares of Series B Convertible Preferred and warrants to purchase 1,250,000 shares of common stock. The Company issued 18,390,225 shares of common stock in consideration for the conversion of 1,471,218 shares of Series B Convertible Preferred. The Company issued 821,292 shares of Series C Convertible Preferred in exchange for 821,292 shares of Series B Convertible Preferred. The Company issued 1,062,500 shares of common stock in a settlement of accounts payable valued at $43,900. This includes 500,000 shares to the Company’s former CEO in settlement of that litigation (see Note 9). The Company issued 312,500 shares of common stock for services rendered in connection with the raising of debt instruments valued at $12,500. The Company issued 385.000 shares of common stock in conversion of vested restricted stock units. Common and Preferred Stock Issuances - 2018 During 2018, the Company issued 1,250 shares of common stock for services valued at $449. During 2018, the Company issued 128,528,788 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 2018, the Company issued 1,532,476 shares of common stock valued at $4,678,380 in exchange for 1,225,981 shares of Series A Convertible Preferred. During 2018, the Company issued 17,078,500 shares of common stock for cash in the amount of $683,140. During 2018, the Company issued 110,000 shares of Series B Convertible Preferred for cash in the amount of $55,000. During 2018, 7,782,820 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. Common Stock Options The Company recognizes in the financial statements compensation related to all stock-based awards, including stock options and warrants, based on their estimated grant-date fair value. The Company has estimated expected forfeitures and is recognizing compensation expense only for those awards expected to vest. All compensation is recognized by the time the award vests. 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, 2017 152,813 $ 4.00-120.00 3.91 years $ - $ 1.08 Options granted 11,165,208 $ 0.11 - $ - Options exercised - $ - - $ - Options expired - $ - - $ - Balance at December 31, 2018 11,318,021 $ 0.11-120.00 - $ - $ 0.24 Options granted 23,252,809 $ 0.025 4-0.04 - $ - Options exercised - $ - - $ - Options expired (46,250 ) $ - - $ - Balance at December 31, 2019 34,524,580 $ 0.024-120.00 6.49 years $ 277,973 $ 0.08 Exercisable at December 31, 2019 34,428,955 $ 0.024-120.00 6.48 years $ 276,729 $ 0.08 In June 2019, the Company issued 382,500 stock options to consultants that vest through June 30, 2020. The grant date of these options was June 17, 2019, the date of board approval. On June 21, 2019, 46,250 stock options expired that were issued June 21, 2016. There was $6,529 expensed in 2019 and $2,176 remaining to be expensed through June 30, 2020 for these options. The Company has granted 21,000,000 stock options under the Company’s 2015 Omnibus Securities and Incentive Plan to Dr. Korenko. The granting of the stock options occurs 10 days after the approval of the Company’s recent 1 for 8 reverse stock split that occurred on June 28, 2018. The vesting of the options are as follows: (i) 50% vested in equal amounts at the end of each of the two successive calendar quarters (25% for each of the quarters September 30, 2019, and December 31, 2019); (ii) 25% upon the Company filing a patent (completed on July 1, 2019); and (iii) 25% upon the first commercial sale of IsoPet ® In September 2019, the Company granted 1,000,000 stock options in a settlement agreement for past due legal fees. The options have a ten-year life and vest immediately. These options were valued at $33,829 which offset accounts payable. The Company recognized a gain of $34,106 on this transaction which is included in the net (gain) loss on debt extinguishment in the statement of operations for the year ended December 31, 2019. In September 2019, the Company granted 500,000 stock options to a consultant for services rendered. The options have a ten-year life and vest immediately. These options were valued at $16,915. In December 2019, the Company granted 370,309 stock options to consultants for accounts payable. The options have a ten-year life and vest immediately. These options were valued at $14,812. During the years ending December 31, 2019 and 2018, the Company recognized $608,588 and $1,164,885, 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, 2017 38,026 $ 0.14 1.19 years $ 749 $ 0.32 Warrants granted 23,043,663 $ - - $ Warrants exercised - $ - - $ Warrants expired/cancelled (29,217 ) $ - - $ Balance at December 31, 2018 23,052,472 $ 0.08-80.00 1.77 years $ - $ 0.08 Warrants granted 8,234,375 $ 0.04-0.08 - $ Warrants exercised - $ - - $ Warrants expired/cancelled , $ - - $ Balance at December 31, 2019 31,286,847 $ 0.04-80.00 0.97 years $ - $ 0.10 Exercisable at December 31, 2019 31,286,847 $ 0.04-80.00 0.97 years $ - $ 0.10 For the year ended December 31, 2018, the Company granted 2,416,410 warrants to settle accrued payroll, 7,925,503 warrants to settle other payables, 2,725,000 warrants to settle accounts payable, 750,000 warrants issued for consulting services and 9,226,750 warrants in the issuance of shares issued for cash. For the year ended December 31, 2019, the Company granted 1,250,000 warrants in the issuance of common and preferred shares issued for cash to accredited investors, 5,650,000 warrants in the issuance of promissory notes (recorded as a debt discount valued at $151,048), 750,000 warrants for the extension of promissory notes, recorded as interest expense valued at $25,656, 500,000 warrants for settlement of accounts payable valued at $18,500 (see Note 9) and 84,375 warrants issued for consulting services valued at $3,792. 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, 2017 717,500 $ 0.59 RSU’s granted - $ - RSU’s vested (310,000 ) $ - RSU’s forfeited (145,000 ) $ - Balance at December 31, 2018 262,500 $ 0.59 RSU’s granted - $ - RSU’s vested - $ - RSU’s forfeited - $ - Balance at December 31, 2019 262,500 $ 0.59 During the years ended December 31, 2019 and 2018, the Company recognized $0 and $113,189 worth of expense related to the vesting of its RSU’s, respectively. As of December 31, 2019, the Company had $155,400 worth of expense yet to be recognized for RSU’s not yet vested. |