Stockholders' Deficit | NOTE 8: STOCKHOLDERSā 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, 2020 and December 31, 2019, the Company has 292,278,591 and 184,845,821 shares issued and outstanding, respectively. On March 28, 2019, the Companyās 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, 2020 and 2019, the Company has 20,000,000 shares of Preferred stock authorized with a par value of $0.001. The Companyās 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 Companyās Certificate of Incorporation, a series of Preferred Stock of the Company, to be named āSeries B Convertible Preferred Stock,ā 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 Companyās Certificate of Incorporation, a series of Preferred Stock of the Company, to be named āSeries C Convertible Preferred Stock,ā consisting of Five Million (5,000,000) shares. Series A Convertible Preferred Stock (āSeries A Convertible Preferredā) 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 (āSeries B Convertible Preferredā) 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 (āSeries C Convertible Preferredā) 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 (ā 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 - 2020 The Company in January 2020 paid $50,000 to redeem 100,000 shares of Series B Convertible Preferred Stock. The redemption price was agreed to by the investor. In January 2020, the Company converted 435,990 shares of Series C Convertible Preferred stock into 5,449,875 shares of common stock. In March through June 2020, the Company entered into agreements to issue 18,440,000 shares of common stock conditioned upon the qualification of the offer and sale of such shares under Regulation A+ for $497,880. Additionally, the Company agreed to issue 9,220,000 warrants with a term of two years and an exercise price of $.045 for a purchase price of $8,143. These shares were issued in June 2020 and July 2020 following the qualification of the Regulation A+. In March through June 2020, certain holders of convertible promissory notes entered into agreements to exchange certain notes totaling $651,044, including $525,000 in principal amount, $27,536 in accrued interest and an exchange premium as provided for in the note agreements of $98,508 into 21,770,668 shares of common stock effective upon the qualification of the offer and sale of such shares under Regulation A+. In connection with the holderās agreement to enter into the exchange, the Company issued 2,200,000 warrants with a two-year term and an exercise price of $0.045 per share and amend 4,400,000 previously issued warrants to provide for a $.045 exercise price and an expiration date of March 31, 2022. These shares were issued on June 10, 2020 following the qualification of the Regulation A+. During the three months ended September 30, 2020, the Company issued 1,851,852 shares of common stock to settle $50,000 in promissory notes. Between November 30 and December 2, 2020, the Company issued 42,177,778 shares of common stock along with 19,200,000 warrants under the Regulation A+ for cash proceeds of $1,138,800 for the common stock and the warrants were purchased for $19,200. On November 30, 2020, the Company issued 933,750 shares of common stock in exchange for 1,867,500 warrants in accordance with a convertible promissory note. On December 2, 2020, holders of Series A Preferred stock redeemed 381,635 shares of Series A Preferred stock for $13,650. The Company canceled these certificates simultaneous to the redemption. On December 3, 2020, a Series B Preferred holder converted 276,592 Series B shares into 3,457,400 common shares, and on December 29, 2020 this Series B Preferred holder converted 300,000 Series B shares into 3,750,000 common shares. On December 10, 2020, the Chief Executive Officer exercised 2,500,000 stock options into common shares valued at $60,000. Between December 14, 2020 and December 28, 2020, the Company issued 4,759,435 shares of common stock in the cashless exercise of 6,860,000 warrants. 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 Companyās 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 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 Companyās 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, 2018 11,318,021 $ 0.11-120.00 3.91 years $ - $ 0.24 Options granted 23,252,809 $ 0.024-0.04 - $ - 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 Options granted - $ - - $ - Options exercised (2,500,000 ) $ - - $ - Options expired (3,139,119 ) $ - - $ - Balance at December 31, 2020 28,885,461 $ 0.024-120.00 5.57 years $ 1,661,429 $ 0.05 Exercisable at December 31, 2020 28,789,836 $ 0.024-120.00 5.56 years $ 1,653,636 $ 0.05 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 Companyās 2015 Omnibus Securities and Incentive Plan to Dr. Korenko. The granting of the stock options occurs 10 days after the approval of the Companyās 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 Ā® 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. On December 10, 2020, the Chief Executive Officer exercised 2,500,000 stock options into common shares valued at $60,000. During the years ending December 31, 2020 and 2019, the Company recognized $2,176 and $608,588, 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 Companyās 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, 2018 23,052,472 $ 0.08-80.00 1.77 years $ - $ 0.08 Warrants granted 8,234,375 $ - - $ Warrants exercised - $ - - $ Warrants expired/cancelled - $ - - $ Balance at December 31, 2019 31,286,847 $ 0.08-80.00 0.97 years $ - $ 0.10 Warrants granted 31,870,000 $ 0.045-0.06 - $ Warrants exercised/exchanged (8,727,500 ) $ - - $ Warrants expired/cancelled (22,364,972 ) $ - - $ Balance at December 31, 2020 32,064,375 $ 0.04-80.00 1.65 years $ 1,614,567 $ 0.06 Exercisable at December 31, 2020 32,064,375 $ 0.04-80.00 1.65 years $ 1,614,567 $ 0.06 Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each option/warrant is estimated using the Black-Scholes valuation model. The following assumptions were used for the years ended December 31, 2020 and 2019: Year Ended Year Ended December 31, December 31, Expected term 2 - 5 years 2 - 5 years Expected volatility 109 - 147 % 144 - 295 % Expected dividend yield - - Risk-free interest rate 0.20 - 0.58 % 0.58 ā 0.81 % 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. The Company issued a convertible note in the amount of $100,000 to an accredited investor. The note bears interest at 8% per annum and matures March 31, 2020. The Company granted 1,250,000 warrants with an exercise price of $0.06 per share and a term of two years with this note and amended 1,312,500 previously issued warrants held by the investor to provide for a $.06 exercise price and an expiration date of March 31, 2022. This issuance resulted in a debt discount of $28,482. In March through June 2020, the Company entered into agreements to issue 18,440,000 shares of common stock conditioned upon the qualification of the offer and sale of such shares under Regulation A+ for $497,880. Additionally, the Company agreed to issue 9,220,000 warrants with a term of two years and an exercise price of $.045 for a purchase price of $8,143. These shares were issued in June 2020 and July 2020 following the qualification of the Regulation A+. In March through June 2020, certain holders of convertible promissory notes entered into agreements to exchange certain notes totaling $651,044, including $525,000 in principal amount, $27,536 in accrued interest and an exchange premium as provided for in the note agreements of $98,508 into 21,770,668 shares of common stock effective upon the qualification of the offer and sale of such shares under Regulation A+. In connection with the holderās agreement to enter into the exchange, the Company issued 2,200,000 warrants with a two-year term and an exercise price of $0.045 per share and amend 4,400,000 previously issued warrants to provide for a $.045 exercise price and an expiration date of March 31, 2022. These shares were issued on June 10, 2020 following the qualification of the Regulation A+. The issuance of the warrants resulted in $77,883 in additional warrant expense. Between November 30, 2020 and December 2, 2020 the Company sold 19,200,000 warrants for $19,200. These warrants have a two-year term and have an exercise price of $0.06 per share. On November 30, 2020, the Company exchanged 1,867,500 warrants into 933,750 shares of common stock, and between December 14, 2020 and December 28, 2020, there were cashless exercises of 6,860,000 warrants into 4,759,435 shares of common stock. In the Companyās quarter ended December 31, 2020, 22,364,972 warrants expired. Restricted Stock Units The following schedule summarizes the changes in the Companyās restricted stock units: Weighted Number Average Of Grant Date Shares Fair Value Balance at December 31, 2018 262,500 $ 0.59 RSUās granted - $ - RSUās vested - $ - RSUās forfeited - $ - Balance at December 31, 2019 262,500 $ 0.59 RSUās granted - $ - RSUās vested - $ - RSUās forfeited - $ - Balance at December 31, 2020 262,500 $ 0.59 During the years ended December 31, 2020 and 2019, the Company recognized $0 and $0 worth of expense related to the vesting of its RSUās, respectively. As of December 31, 2020, the Company had $155,400 worth of expense yet to be recognized for RSUās not yet vested. |