Stockholders' Equity (Deficit) | NOTE 8 – STOCKHOLDERS’ EQUITY (DEFICIT) Preferred Stock The Company has 20,000,000 authorized shares of preferred stock, $0.001 par value per share. Series A Preferred Stock On December 19, 2017, the Company amended its articles of incorporation by filing a certificate of designation with the Secretary of State of Florida therein designating a class of preferred stock as Series A Preferred Stock, $0.001 par value per share, consisting of 3 million (3,000,000) shares. Each holder of shares of Series A Preferred Stock shall be entitled to the number of votes equal to the number of votes held by the number of shares of common stock into which such share of Series A Preferred Stock could be converted, and except as otherwise required by applicable law, shall have the voting rights and power equal to the voting rights and powers of the common stock. The holders of the Series A Preferred Stock shall vote together with the holders of the common stock of the Company as a single class and as single voting group upon all matters required to be submitted to a class or series vote pursuant to the protective provisions of the Certificate of Designation or under applicable law. In the event of liquidation, dissolution or winding up of the Corporation, either voluntarily or involuntarily, the holders of Series A Preferred Stock shall be entitled to receive, prior and in preference to any common stock holders, distribution of any surplus funds equal to the greater of (i) the sum of $1.67 per share or (ii) such amount per share as would have been payable had all shares been converted to common stock. The holder of Series A Preferred Stock may elect at any time to convert such shares into common stock of the Company. Each share of Series A Preferred Stock is convertible into shares of common stock at a conversion Rate of 2:1 (the “Series A Conversion Rate”). The Series A Conversion Rate shall be adjusted for stock splits, stock combinations, stock dividends or similar recapitalizations. The shares of Series A Preferred Stock shall automatically convert into shares of common stock on February 12, 2021 (the one-year anniversary of the initial filing by the Company of a Form 10 filed with the Securities and Exchange Commission). The holders of the Series A Preferred Stock shall be entitled to participate with the holders of the common stock in any dividends paid or set aside for payment (other than dividends payable solely in shares of common stock) so that the holders of the Series A Preferred Stock shall receive with respect to each share of Series A Preferred Stock an amount equal to (x) the dividend payable with respect to each share of common stock multiplied by (y) the number of share of common stock into which such share of Series A Preferred Stock is convertible as of the record date for such dividend. Any such dividend shall be paid with respect to all then outstanding shares of common stock and Series A Preferred Stock on a pari passu basis and on as-converted basis. No dividends shall be paid on the common stock or the Series B Preferred Stock unless an equivalent dividend is paid with respect to the Series A Preferred Stock. In addition to any other rights and restrictions provided by applicable law, without first obtaining the affirmative vote or written consent of the holders of a majority of the then-outstanding shares of Series A Preferred Stock, the Company shall not amend or repeal any provision of, add any provision to, the Company’s Articles of Incorporation or the Series A Preferred Stock Certificate of Designation if such action would adversely alter or change the preferences, rights, privileges or power of, or restrictions provided for the benefit of, the Series A Preferred Stock. Unless otherwise prohibited by applicable law, the Board of Directors of the Company shall have the authority to repeal any provision of, or add any provision to, the Company’s Articles of Incorporation or Series A Preferred Stock Certificate of Designation if such action would not adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series A Preferred Stock. As of June 30, 2020, and 2019, there were 3,000,000 shares of Series A Preferred Stock issued and outstanding. Series B Preferred Stock On December 19, 2017, the Company amended the articles of incorporation by filing a certificate of designation with the Secretary of State of Florida therein designating a class of preferred stock as Series B Preferred Stock, $0.001 par value per share, consisting of 4.44 million (4,440,000) shares (the “Series B Preferred Stock Certificate of Designation). Each holder of shares of Series B Preferred Stock shall be entitled to the number of votes equal to the number of votes held by the number of shares of common stock into which such share of Series B Preferred Stock could be converted, and except as otherwise required by applicable law, shall have the voting rights and power equal to the voting rights and powers of the common stock. The holders of the Series B Preferred Stock shall vote together with the holders of the common stock of the Company as a single class and as single voting group upon all matters required to be submitted to a class or series vote pursuant to the protective provisions of the Series B Preferred Stock Certificate of Designation or under applicable law. In the event of liquidation, dissolution or winding up of the Corporation, either voluntarily or involuntarily, the holders of Series A Preferred Stock shall be entitled to receive, prior and in preference to any common stock holders, distribution of any surplus funds equal to the greater of : the sum of $0.83 per share or such amount per share as would have been payable had all shares been converted to common stock. The holder of Series B Preferred Stock may elect at any time to convert such sharers into common stock of the Company. Each share of Series B Preferred Stock is convertible into shares of common stock at a conversion rate of 1:1 (the “Series B Conversion Rate”). The Series B Conversion Rate shall be adjusted for stock splits, stock combinations, stock dividends or similar recapitalizations. The shares of Series B Preferred Stock shall automatically convert into shares of common stock on February 12, 2021 (the one-year anniversary of the initial filing by the Company of a Form 10 filed with the Securities and Exchange Commission). The holders of the Series B Preferred Stock shall be entitled to participate with the holders of the common stock in any dividends paid or set aside for payment (other than dividends payable solely in shares of common stock) so that the holders of the Series B Preferred Stock shall receive with respect to each share of Series B Preferred Stock an amount equal to (x) the dividend payable with respect to each share of common stock multiplied by (y) the number of share of common stock into which such share of Series B Preferred Stock is convertible as of the record date for such dividend. Any such dividend shall be paid with respect to all then outstanding shares of common stock and Series B Preferred Stock on a pari passu basis and on as-converted basis. No dividends shall be paid on the common stock or the Series B Preferred Stock unless an equivalent dividend is paid with respect to the Series B Preferred Stock. In addition to any other rights and restrictions provided by applicable law, without first obtaining the affirmative vote or written consent of the holders of a majority of the then-outstanding shares of Series B Preferred Stock, the Company shall not amend or repeal any provision of, add any provision to, the Company’s Articles of Incorporation or the Series B Preferred Stock Certificate of Designation if such action would adversely alter or change the preferences, rights, privileges or power of, or restrictions provided for the benefit of, the Series B Preferred Stock. Unless otherwise prohibited by applicable law, the Board of Directors of the Company shall have the authority to repeal any provision of, or add any provision to, the Company’s Articles of Incorporation or Series B Preferred Stock Certificate of Designation if such action would not adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series B Preferred Stock. As of June 30, 2020 and 2019, there were 4,440,000 shares of Series B Preferred Stock issued and outstanding. Common Stock The Company has 300,000,000 authorized shares of common stock, $0.001 par value per share. As of June 30, 2020, and December 31, 2019, there were 17,483,283 shares of common stock outstanding. Common Stock Issuance During the six months ended June 30, 2019, the Company sold 2,280,000 units, consisting of one share of common stock and one warrant to purchase a share of common stock (the “Units”). The Company sold 2,280,000 units at $0.25 to accredited investors. The Company received net proceeds of $550,000, net of $20,000 of issuance costs. The warrant has a three- year exercise term at a price per share of common stock of $0.50. The Company did not issue any shares of common stock during the six months ended June 30, 2020. Common Stock to be issued As of June 30, 2020 and 2019, there were 651,281 and 4,504,431, respectively, shares of common stock to be issued. As of June 30, 2020, 621,281 of the shares are to be issued under the IAR Agreements (see above), and 30,000 shares of common stock are to be issued to two initial shareholders of VI. During the period ended June 30, 2019, 891,551 shares of common stock were to be issued pursuant to a Stock Issuance and Release Agreement (“SRI Agreement”) executed by the Company to stockholders who purchased shares in 2018 at $1.85 per share for no consideration. The Company recorded a deemed dividend to stockholders of $160,479 for the shares to be issued under the SRI Agreements, at $0.18 per share, based upon the estimated underlying value of the common stock of $0.18 per share based upon recent Units sold by the Company. As of June 30, 2019, the remaining common stock to be issued consists of 3,612,880 shares to be issued to MGH pursuant to the License Agreement (see Notes 5, 6 and 7). Stock Options The following table summarizes activities related to stock options of the Company for the six months ended June 30, 2020: Number of Options Weighted-Average Exercise Price per Share Weighted-Average Remaining Life (Years) Outstanding at December 31, 2019 2,450,000 $ 0.57 8.20 Outstanding at June 30, 2020 2,450,000 $ 0.57 7.71 Exercisable at June 30,2020 2,116,667 $ 0.62 7.52 The Company did not grant any options to purchase shares of common stock during the three and six months ended June 30, 2020. The Company recorded stock compensation expense of $5,408 and $10,816 during the three and six months ended June 30, 2020, respectively. The Company did not record any stock-based compensation expense during the three and six months ended June 30, 2019, respectively. As of June 30, 2020, 333,333 options to purchase shares of common stock remain unvested and $43,261 of stock compensation expense remains unrecognized and will be expensed over a weighted average period of 2.50 years. Warrants The following table summarizes activities related to warrants of the Company for the six months ended June 30, 2020: Number of Warrants Weighted-Average Exercise Price per Share Weighted-Average Remaining Life (Years) Outstanding and exercisable at December 31, 2019 4,146,725 $ 0.53 2.50 Outstanding and exercisable at June 30, 2020 4,146,725 $ 0.53 2.01 The Company did not issue any warrants during the six- month period ended June 30,2020. |