Stockholders' Equity (Deficit) | Note 7 - Stockholders’ Equity (Deficit) Shares Authorized The authorized capital of the Company consists of 300,000,000 shares of common stock, par value $0.001 per share and 20,000,000 shares of preferred stock, par value $0.001 per share. On March 19, 2018, the Board of Directors of the Company approved and amended its Articles of Incorporation to include two series of preferred stock authorized, Series A and Series B Preferred Stock. Preferred stock On March 19, 2018, the Company designated 520,000 shares of Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) Each share of Series A Preferred Stock is convertible into shares of the Company’s common stock with a stated value of $10 per share and conversion price of $0.10 per share of common stock, subject to adjustment in the event of stock split, stock dividends, and recapitalization or otherwise. The holders of the Series A Preferred Stock shall not possess any voting rights. The Series A Preferred Stock does not contain any redemption provision. The Series C Preferred Stock are entitled to receive in cash out of assets of the Company before any amounts shall be paid to the holders of any of shares of Junior stock, an amount equal to the stated value plus any accrued and unpaid dividends thereon and any other fees due and owing. On March 19, 2018, the Company designated 500,000 shares of Series B Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”) Each share of Series B Preferred Stock is convertible into shares of the Company’s common stock with a stated value of $10 per share and conversion price of $0.10 per share of common stock, subject to adjustment in the event of stock split, stock dividends, and recapitalization or otherwise. The Series B Preferred Stock votes with the common stock on a fully as converted basis. The Series B Preferred Stock does not contain any redemption provision. The Series C Preferred Stock are entitled to receive in cash out of assets of the Company before any amounts shall be paid to the holders of any of shares of Junior stock, an amount equal to the stated value plus any accrued and unpaid dividends thereon and any other fees due and owing. Share Exchange Agreement On March 26, 2018, Gratitude Health, Inc. f/ka Vapir Enterprises, Inc., a corporation organized under the laws of Nevada (the “Acquiror” or the “Company”), Hamid Emarlou, the principal shareholder of the Acquiror (the “Acquiror Principal Shareholder”), Gratitude Health, Inc., a corporation organized under the laws of Florida (the “Acquiree” or “Gratitude Subsidiary”), and each of the Persons who are shareholders of the Acquiree (collectively, the “Acquiree Shareholders,” and individually an “Acquiree Shareholder”) entered into a Share Exchange Agreement pursuant to which the Acquiree Shareholders (who are the holders of all the issued and outstanding shares of common stock of the Acquiree (the “Acquiree Interests”)) have agreed to transfer to the Acquiror, and the Acquiror has agreed to acquire from the Acquiree Shareholders, all of the Acquiree Interests, in exchange for the issuance of 520,000 shares of Series A Preferred Stock and 500,000 shares of Series B Preferred Stock, to the Acquiree Shareholders (the “Acquiror Shares”), which Acquiror Shares shall, upon conversion into 102,000,000 shares of common stock of the Acquiror, constitute approximately 85.84% on a fully diluted basis of the issued and outstanding shares of Acquiror common stock immediately after the closing of the transactions on the terms and conditions as set forth in the Exchange Agreement and the closing of the Spin Off Agreement as described below. Effective March 26, 2018, the Company acquired all the issued and outstanding shares of the Acquiree pursuant to the Exchange Agreement and the Acquiree became the Company’s wholly-owned subsidiary. As a result of the Exchange Agreement, for financial statement reporting purposes, the business combination between the Company and Acquiree has been treated as a reverse acquisition and recapitalization with the Acquiree deemed the accounting acquirer and the Company deemed the accounting acquiree under the acquisition method of accounting in accordance with FASB Accounting Standards Codification (“ASC”) Section 805-10-55. At the time of the Share Exchange Agreement, both the Company and Acquiror have their own separate operating segments. Accordingly, the assets and liabilities and the historical operations that are reflected in the consolidated financial statements after the Exchange Agreement are those of the Acquiree and are recorded at the historical cost basis of the Acquiree. The acquisition process utilizes the capital structure of the Company and the assets and liabilities of the Acquiree which are recorded at historical cost. The results of operations of the Company are consolidated with results of operations of the Acquiree starting on the date of the Exchange Agreement. The Merger has constituted a change of control or change in control, the majority of the Board of Directors changed with the consummation of the Merger. The Company issued to Acquiree shares of preferred stock which represented approximately 86% of the combined company on a fully converted basis after the closing of the Exchange Agreement and the Spin off Agreement as described below. On the Closing Date, Acquiror Principal Shareholder entered into a Spin Off Agreement with Acquiror for the sale of the existing wholly owned Vapir, Inc. subsidiary of the Company in exchange for Acquiror Principal Shareholder’s 36,309,768 shares of Common Stock. The Spin Off Agreement closed on April 14, 2018. As such, the Company recognized the disposition of the Vapir business on the date of merger. In March 2018, in connection with the Exchange Agreement, the Company issued 20,000 Series A Preferred stock for purchase price of $2,000. In March 2018, in connection with the Exchange Agreement, the Company issued 490,000 Series A Preferred Stock for a purchase price of (i) $3,000 cash, (ii) the satisfaction of the convertible notes including any accrued interest for a total principal amount of $240,000 and the cancellation of all the stock warrants granted to the note holder pursuant to the Surrender and Exchange Agreement, (see Note 5) (iii) $260,000 additional funding in cash after the closing of an Exchange Agreement which is recorded as subscription receivable and (iv) the surrender and cancellation of a certain note and warrants owed by the Company prior to the merger pursuant to the Surrender and Exchange Agreement dated in March 2018 for a principal amount of $70,000 and accrued interest of $59,807. Such surrender of notes and warrants were done in connection with the Exchange Agreement which closed on March 26, 2018. The subscription receivable of $260,000 was collected in April 2018. In March 2018, in connection with the Exchange Agreement, the Company issued 10,000 Series A Preferred Stock in exchanged for the surrender and cancellation of a certain note for a principal amount of $102,500 and accrued interest of $16,350 and warrants issued and owed by the Company prior to the merger pursuant to the Surrender and Exchange Agreement dated in March 2018 for a principal amount of $70,000 and accrued interest of $59,807. Such surrender of notes and warrants were done in connection with the Exchange Agreement which closed on March 26, 2018. In connection with the Exchange Agreement, the Company issued 500,000 shares of Series A Preferred Stock to the founders who are the CEO and COO of the Company. Common Stock In connection with the Exchange Agreement, the Company is deemed to have issued 53,141,833 shares of common stock which represents the outstanding common shares of the Company prior to the closing of the Merger. In connection with the Spin Off Agreement which closed on April 14, 2018, the Company cancelled the 36,309,768 shares. In April 2018, the Company granted an aggregate of 2,600,000 shares of the Company’s common stock to various consultants and service providers for services rendered. The Company valued these common shares at the fair value of $234,000 or $0.09 per common share based on the closing trading price on the date of grant. The Company recorded stock-based compensation of $234,000 during the six months ended June 30, 2018. In connection with these transactions, there were 2,600,000 shares of common stock to be issued as of June 30, 2018. Common Stock Warrants A summary of the Company’s outstanding stock warrants as of June 30, 2018 and changes during the period presented below: Number of Weighted Average Weighted Balance at December 31, 2017 12,000,000 $ 0.02 4.85 Granted 12,000,000 0.02 5.00 Cancelled (24,000,000 ) 0.10 4.70 Balance at June 30, 2018 - $ - - Warrants exercisable at June 30, 2018 - $ - - Weighted average fair value of warrants granted during the six months ended June 30, 2018 $ 0.001 In March 2018 in connection with the merger, the Company entered into Surrender and Exchange Agreements with note holders whereby the note holders agreed to surrender the 12% convertible notes including accrued interest for a total principal amount of $240,000 and the cancellation of all the stock warrants granted to the note holders. Such surrender of notes and warrants was done in connection with the Exchange Agreement which closed on March 26, 2018 (see Note 5). Common Stock Options Stock option activity for the six months ended June 30, 2018 is summarized as follows: Number of Options Weighted Average Exercise Weighted Average Remaining Contractual Life Aggregate Intrinsic Balance at December 31, 2017 - - - - Recapitalization on March 26, 2018 1,940,000 0.10 2.80 - Balance at June 30, 2018 1,940,000 0.10 2.79 - Options exercisable at June 30, 2018 1,940,000 $ 0.10 2.54 $ - As of June 30, 2018, all outstanding options are fully vested and there were $0 unrecognized compensation expense in connection with unvested stock options. |