| Stockholders' Equity | Note 10- Stockholders’ Equity Common Stock During the years ended December 31, 2018, the
Company had the following transactions in its common stock:
● issued 66,000,000 shares in connection with the conversion of 66,000 shares of Series D Preferred Stock;
● issued 2,000,000 shares in connection with the conversion of 2,000,000 shares of Series G Preferred Stock;
● issued 250,000 shares to a consultant for professional services rendered valued at $123,725. The value of the common stock was determined based on the closing stock price of the Company’s common stock on the dates that the shares earned based on the agreement;
● issued 1,800,000 shares to employees and board members as part of their agreements with the Company. The value of the common stock of $4,404,500 was determined based on the closing stock price of the Company’s common stock on the date of the respective agreements;
● issued 3,000,000 to a consultant for services related to assisting the Company with the acquisition of the RWJ assets. The 3,000,000 shares were earned when the operations of the RWJ assets produced revenue in excess of $10,000,000. The value of the common stock of $4,590,000 was determined based on the closing stock price of the Company’s common stock on the date of the shares were earned.
● issued aggregate of 1,250,000 shares to a consultant for services rendered valued at $2,715,000. The services, which include business development, analysis, and interaction with professionals, were principally related to assisting the Company with the acquisition of the ECS and Electronic Check assets (see Note 3). The value of the common stock was determined based on the closing stock price of the Company’s common stock on the closing date of acquisition of ECS and Electronic Check;
● issued 500,000 shares for the acquisition of the ECS assets valued at $1,010,000. The value of the common stock was determined based on the closing stock price of the Company’s common stock on the acquisition date;
● issued 250,000 shares for the acquisition of the Electronic Check valued at $695,000. The value of the common stock was determined based on the closing stock price of the Company’s common stock on the acquisition date;
● issued 10,000,000 shares in connection with its equity interest in Mobiquity valued at $9,980,000 (See Note 6). The value of the common stock was determined based on the closing stock price of the Company’s common stock on the closing date of the Mobiquity transaction;
● issued an additional 10,000,000 shares to Mobiquity valued at $3,90,000 for payment of the exercise price for 20,000,000 warrants previously granted to the Company. (See Note 6). The value of the common stock was determined based on the closing stock price of the Company’s common stock on the date of issuance;
● issued 1,000,000 shares to a consultant for services rendered valued at $998,000. The services, which include business development, analysis, and interaction with professionals, were principally related to assisting the Company with the acquisition of its equity interest in Mobiquity. The value of the common stock was determined based on the closing stock price of the Company’s common stock on the closing date of Mobiquity transaction;
● issued 12,500,000 shares to Guardian LLC in connection the termination of its 50% interest in the profits of certain of the Company’s products (See Note 11). The shares were valued at $11,750,000 which was determined based on the closing stock price of the Company’s common stock at the date of the agreement;
● issued 324,528 shares to Bellridge for the conversion of $275,000 in convertible notes and $17,075 in accrued interest;
● issued 9,499,274 shares to an investor for the conversion of $2,000,000 in convertible notes and $6,521 in accrued interest;
● issued 318,583 shares to Bellridge pursuant to the limited price protection. The shares were valued at $213,451 which was charged to financing cost was determined based on the closing stock price of the Company’s common stock on the date of issuance;
● issued 2,000,000 shares to a consultant for services rendered in connection with the issuance of the Company’s common stock as payment of the exercise price for the Mobiquity warrants valued at $780,000. The value of the common stock was determined based on the closing stock price of the Company’s common stock on the date of issuance;
● issued 2,000,000 shares to a consultant for services rendered in connection with the issuance of the Company’s common stock as payment of the exercise price for the Mobiquity warrants valued at $780,000.
● issued 2,000,000 shares to Eagle Equities LLC as a result of the Company issuing shares of common stock for less than $0.30 pursuant to an agreement with Eagle Equities. (see below). The shares were valued at $670,000 which was charged to financing cost was determined based on the closing stock price of the Company’s common stock on the date the Company issued shares for less than $0.30;
● a consultant for services rendered valued at $30,000. The value of the common stock was determined based on the closing stock price of the Company’s common stock on the date of issuance;
● issued 1,272,726 shares of common stock to an investor for cash proceeds of $1,500,000 (See discussion below); and
● canceled 50,000 shares pursuant to the settlement of a legal matter. During the year ended December 31, 2017, the
Company had the following transactions in its common stock:
● issued 7,571,334 shares to the PTPI note holder upon the conversion of convertible note and accrued interest of $56,990;
● issued 865,366 shares to convertible note holders upon the conversion of convertible note of $100,000;
● issued an aggregate of 2,025,000 shares to two consultants for services rendered valued at $766,500. The services, which include business development, analysis, and interaction with professionals, were principally related to assisting the Company with the acquisition of the RWJ assets (see Note 3). The value of the common stock was determined based on the closing stock price of the Company’s common stock on the date of grant;
● issued 5,000,000 shares for the acquisition of the RWJ assets valued at $1,850,000. The value of the common stock was determined based on the closing stock price of the Company’s common stock on the acquisition date; and
● issued 1,333,334 shares of common stock to an investor for cash proceeds of $1,000,000 (See discussion below). Eagle Equities, LLC On December 29, 2017, the Company entered into
a Securities Purchase Agreement with Eagle Equities, LLC (“Eagle”) pursuant to which Eagle agreed to purchase up to
2,000,000 shares of the Company’s common stock for a purchase price of $1,500,000 or $0.75 per share. The closing occurred
on December 29, 2017 with respect to the funding of $1,000,000 resulting in the issuance of 1,333,334 shares of common stock (the
“First Closing Shares”). Eagle agreed to potentially purchase an additional 666,666 shares of common stock (the “Second
Closing Shares”) on or before March 31, 2018 for a purchase price of $500,000 subject to various closing conditions. On March
21, 2018, Eagle purchased an additional 666,666 shares of common stock for a purchase price of $500,000. The Company placed an aggregate of 2,000,000
shares of common stock (the “Escrow Shares”) in escrow to be utilized for the purpose of limited price protection.
If, beginning on the seventh month anniversary of the issuance of the First Closing Shares and Second Closing Shares, Eagle has
sold any of the First Closing Shares or the Second Closing Shares at a sales price of less than $0.72 per share, then that number
of Escrow Shares shall be released from escrow to Eagle as a limited make whole which shall be determined by using the following
formula: ($0.72 – Closing Price) / Closing Price) * number
of shares sold at a price less than $0.72. Closing Price is price on the first day of
each monthly anniversary beginning on the first day of the 7th month (and continuing monthly until the earlier of January 31, 2019
or until all shares are sold). The Company shall deposit an additional 2,000,000
shares of common stock into escrow which shares shall only be released to Eagle, if, prior to January 31, 2019 (while Eagle continues
to hold shares), the Company issues shares at an issue price of less than $0.30 per share. The Company also issued Eagle a Common Stock
Purchase Warrant to acquire 666,666 shares of common stock exercisable for three years at an exercise price of $2.00 per share
(the “Eagle Warrant”). Unless otherwise agreed in writing by both the Company and Eagle, at no time will Eagle exercise
any amount of the Eagle Warrant to purchase common stock that would result in Eagle owning more than 9.9% of the common stock outstanding
of the Company. The Eagle Warrant contains standard anti-dilution protections. On May 4, 2018, the Company entered into a
Securities Purchase Agreement with Eagle pursuant to which Eagle agreed to purchase up to 1,212,120 shares of the Company’s
common stock for an aggregate purchase price of $2,000,000 or $1.65 per share. The closing occurred on May 4, 2018 with respect
to the funding of $500,000 resulting in the issuance of 303,030 shares of common stock and on May 25, 2018 with respect to the
funding of $500,000 resulting in the issuance of an additional 303,030 shares of common stock. Additional closings of $500,000
for 303,030 shares are scheduled to close on June 15, 2018 and July 5, 2018 each. The additional closings on June 15, 2018 and
July 5, 2018 have not occurred. The Company agreed to place 303,030 shares
of common stock each tranche (the “Escrow Shares”) in escrow to be utilized for the purpose of limited price protection.
If, beginning on the seventh month anniversary of the closing of each tranche, Eagle has sold any of its shares of common stock
at a sales price of less than $1.65 per share, then that number of Escrow Shares shall be released from escrow to Eagle as a limited
make whole which shall be determined by using the following formula: ($1.65 – Closing Price) / Closing
Price) * number of shares sold at a price less than $1.65. Closing Price is price on the first day of
each monthly anniversary beginning on the first day of the 7th month (and continuing monthly until the earlier of June 4, 2019
or until all shares are sold. Series B Preferred Shares On November 1, 2011, the Company and certain
creditors entered into a Settlement Agreement (the “Settlement Agreement”) whereby without admitting any wrongdoing
on either part, the parties settled all previous agreements and resolved any existing disputes. Under the terms of the Settlement
Agreement, the Company agreed to issue the creditors 45,000 shares of Series B Preferred Stock of the Company on a pro-rata basis.
Following the issuance and delivery of the shares of Series B Preferred Stock to said creditors, as well as surrendering the undelivered
shares, the Settlement Agreement resulted in the settlement of all debts, liabilities and obligations between the parties. The Series B Preferred Stock has a stated value
of $100 per share and is convertible into the Company’s common stock at a conversion price of $0.30 per share representing
3,000 posts split (15,000,000 pre-split) common shares. Furthermore, the Series B Preferred Stock votes on an as converted basis
and carries standard anti-dilution rights. These rights were subsequently removed, except in cases of stock dividends or splits. As of December 31, 2018 and 2017, there were
45,000 Series B Preferred Shares outstanding. Series C Preferred Shares On April 29, 2011, GV Global Communications,
Inc. (“GV”) provided funding to the Company in the aggregate principal amount of $111,000 (the “Loan”). On
September 25, 2012, the Company and GV entered into a Conversion Agreement pursuant to which the Company agreed to convert the
Loan into 10,000 shares of Series C Preferred Stock of the Company, which was approved by the Board of Directors. Each share of Series C Preferred Stock is convertible,
at the option of GV, into such number of shares of common stock of the Company as determined by dividing the Stated Value (as defined
below) by the Conversion Price (as defined below). The Conversion Price for each share is equal to a 50% discount to
the average of the lowest three lowest closing bid prices of the Company’s common stock during the 10-day trading period
prior to the conversion with a minimum conversion price of $0.002. The stated value is $11.00 per share (the “Stated
Value”). The Series C Preferred Stock has no liquidation preference, does not pay dividends and the holder of
Series C Preferred Stock shall be entitled to one vote for each share of common stock that the Series C Preferred Stock shall be
convertible into. GV has contractually agreed to restrict its ability to convert the Series C Preferred Stock and receive
shares of the Company’s common stock such that the number of shares of the Company’s common stock held by it and its
affiliates after such conversion does not exceed 4.9% of the then issued and outstanding shares of the Company’s common stock. During the fiscal year ended December 31, 2014,
GV Global Communications, Inc. converted 7,770 of its Series C Preferred Stock into 12,010 post-split (64,551,667 common shares
pre-split). During the third quarter of 2014, the Company received 4,204 post-split (21,021,900 pre-split) common shares to adjust
the shares issued to reflect the amount that both they and the Company believed that they were owed. At December 31, 2016, and
at December 31, 2015, GV owns 700 Series C Preferred Shares. The issuance of the Series C Preferred Stock
was made in reliance upon exemptions from registration pursuant to Section 4(a)(2) under the Securities Act of 1933 and Rule 506
promulgated under Regulation D thereunder. GV is an accredited investor as defined in Rule 501 of Regulation D promulgated
under the Securities Act of 1933. As of December 31, 2018 and 2017, there were
700 Series C Preferred Shares outstanding. Series D Preferred Shares Per the terms of the Exclusive License Agreement
and in consideration of the licensing agreement signed between the Company and Hermes Roll LLC, the Company issued 100,000 shares
of Series D Preferred Stock of the Company (the “Preferred Shares”). The preferred stock has a value of $ 1,000 based
upon the cost of the license; due to the holder of license is the related party of the Company. The Preferred Shares have no liquidation
rights. The Holder of the Preferred Shares will be entitled to vote on all matters submitted to shareholders of the Company on
an as-converted basis. The Preferred Shares have a conversion price of $0.01 (the “Conversion Price”) and a stated
value of $10.00 per share (the “Stated Value”). Each Preferred Share is convertible, at the option of the Holder, into
such number of shares of common stock of the Company as determined by dividing the Stated Value by the Conversion Price. On January 23, 2018, Reko Holdings, LLC converted
66,000 shares of its Series D Preferred Stock into 66,000,000 restricted common shares. As of December 31, 2018 and 2017, there are
0 and 66,000 shares of Series D Preferred Shares outstanding, respectively. Series G Preferred Shares On December 29, 2017, Guardian LLC converted
all of the principal and interest of the Note, into 2,000,000 shares of Series G Preferred Stock. The Series G Preferred Stock
is entitled to vote on an as-converted basis, automatically converts to common stock upon any liquidation, dissolution or winding
up and the Company may not declare a dividend until the Series G Preferred Stock has received a dividend. Each share of Series
G Preferred Stock is convertible into one shares of common stock of the Company and contain standard anti-dilution rights. On August 30, 2018, Guardian LLC converted
the 2,000,000 shares of Series G Preferred Stock into 2,000,000 shares of common stock. As of December 31, 2018 and December 31, 2017,
there are 0 and 2,000,000 shares of Series G Preferred Shares outstanding, respectively. Warrants The following is a summary of warrant
activity.
Weighted
Weighted Average
Average Remaining Aggregate
Warrants Exercise Contractual Intrinsic
Outstanding Price Life Value
Outstanding, December 31, 2016 93,750 $ $ —
Granted 22,666,666 0.54
Forfeited —
Exercised —
Outstanding, December 31, 2017 22,760,416 $ 0.55 4.67 $ 13,640,000
Granted 19,250,000 0.69
Forfeited (93,750 ) 2.25
Exercised —
Outstanding, December 31, 2018 41,916,666 $ 0.61 3.48 $ —
Exercisable, December 31, 2018 41,416,666 $ 0.61 3.47 $ — The exercise price for warrant outstanding
and exercisable at December 31, 2018:
Outstanding Exercisable
Number of Exercise Number of Exercise
Warrants Price Warrants Price
28,000,000 $ 0.50 28,000,000 $ 0.50
4,500,000 0.75 4,500,000 0.75
3,000,000 1.00 3,000,000 1.00
3,000,000 1.85 3,000,000 1.85
666,666 2.00 666,666 2.00
1,000,000 2.35 1,000,000 2.35
750,000 2.50 750,000 2.50
500,000 2.70 500,000 2.70
500,000 2.80 — 2.80
41,916,666 41,416,666 During the years ended December 31, 2018, the
Company issued:
● 1,000,000 warrants in connection with two convertible notes payable;
● 500,000 warrants as consideration for the acquisition of the ECS assets (see Note 3) valued at $992,958;
● 250,000 warrants as consideration for the acquisition of the Electronic Check assets (see Note 3) valued at $682,919;
● 2,250,000 warrants to shares to employees and board members as part of their agreements with the Company valued at $5,443,039;
● 1,750,000 warrants to a consultant for services rendered. The services, which include business development, analysis, and interaction with professionals, were principally related to assisting the Company with the acquisition of the ECS and Electronic Check assets (see Note 3) valued at $3,661,791;
● 13,500,000 warrants in connection with a convertible note issued to investor; and
● canceled 93,750 warrants pursuant to the settlement of a legal matter. The fair value of the warrants listed above
was determined using the Black-Scholes option pricing model with the following assumptions:
2018 2017
Risk-free interest rate 2.65 % 1.73 %
Expected life of the options 5 years 5 years
Expected volatility 210 % 250 %
Expected dividend yield 0 % 0 % |
