Stockholders' Deficiency | NOTE 4: STOCKHOLDERS’ DEFICIENCY The Company has designated ten million (10,000,000) shares of its preferred stock, par value $0.001 as Class A Preferred Super Majority Voting Stock (“Class A”). The Class A shares have the right to vote upon matters submitted to the holders of common stock, par value $0.0001 of the Company. Class A shares have a vote equal to the number of shares of common stock of the Company which would give the holders of the Class A shares a vote equal to sixty percent (60%) of the common stock. This vote shall be exercised pro-rata by the holders of the Class A. The Company shall have the right to redeem, in its sole and absolute discretion, at any time one (1) year after the date of issuance of such Class A shares, all or any portion of the shares of Class A at a price of one cent ($0.01) per share. On October 4, 2018, the Company issued a total of 7,000,000 Class A shares to its CEO and President (formerly COO) as stock-based compensation for services rendered. The Company has not currently authorized a Class B designation of Preferred Stock. The Company has designated ten million (10,000,000) shares of its preferred stock, par value $0.001 as Class C Convertible Preferred Non-Voting Stock (“Class C”). Each share of Class C shall be convertible into one (1) shares of common stock. The holders of Class C shall be entitled to receive the same dividend as the holders of the common stock and such dividend shall be paid pro rata per share on a fully converted basis. The holders of Class C shall have piggyback registration rights. The Company shall have the right to redeem, in its sole and absolute discretion, at any time after five (5) years, all or any portion of the shares of Class C at a price of five dollars ($5.00) per share. The Class C shares shall be considered to have a junior liquidation preference to Class A shares and a senior dividend preference to Class A shares. On October 4, 2018, the Company issued a total of 7,000,000 Class C shares to its CEO and President (formerly COO) as stock-based compensation for services rendered. Subsequently, in April 2019, the Company filed an amended and restated certificate of designation, which restricts the CEO and President from converting the 7,000,000 shares into common stock for 36 months from the issuance date. As of December 31, 2020, the Company was authorized to issue 150,000,000 shares of common stock. All common stock shares have full dividend and voting rights. However, it is not anticipated that the Company will be declaring dividends in the foreseeable future. Financing Activities On January 20, 2020, the Company purchased data center equipment components for 32,000 shares of common stock and capitalized $6,083 based on the estimated value of surrounding equity transactions. In January 2020, the Company issued 627,862 equity units at $0.25 to two individuals in exchange for conversion of $100,000 of convertible notes and $6,966 of accrued interest and an additional $50,000 of cash. Each equity unit consists of one three-year warrant to purchase two shares of the Company’s common stock for $0.50 each, and one share of the Company’s common stock. The Company may call the warrants in the event its common stock trades for $1.00 or more per share for ten out of fifteen consecutive trading days. In connection with these transactions, the Company assigned $119,665 of value to the common stock and $37,301 to the warrants using the Black-Scholes model with the following inputs: Risk-free interest rate 1.44%-1.51 % Expected life of warrants 3 years Annualized volatility 60 % Dividend rate 0 % The following table sets forth the Company’s warrant activity through December 31, 2020: Warrants Shares Term Exercise Remaining Balance, December 31, 2019 - - Warrants issued with equity units 627,862 1,255,724 3 years $ 0.50 Balance, December 31, 2020 627,862 1,255,724 Stock-Based Compensation On February 18, 2020, the Company issued 50,000 shares of common stock to an advisor and recorded $9,500 of stock-based compensation expense. On May 6, 2020, the Company agreed to issue 60,000 shares of common stock to a consultant for services rendered, resulting in stock-based compensation expense of $11,400. On June 19, 2020, the Board of Directors approved the issuance of 750,000 fully vested common shares to its board members and officers as compensation for services rendered, consisting of 250,000 shares to Delray Wannemacher, CEO and Director, 250,000 shares to Daniel Wong, President and Director, and 250,000 shares to Austin Bosarge, Director. In connection with this issuance, the Board further approved the issuance of 375,000 common shares on July 1, 2021 and 375,000 common shares on July 1, 2022. Each of these future issuances will result in the issuance of 125,000 common shares to each director and officer. The Company recorded stock-based compensation expense of $142,500 upon approving issuance of the first 750,000 shares. On July 7, 2020, the Company issued a total of 1,000,000 common shares, consisting of 500,000 to Delray Wannemacher, CEO and Director, and 500,000 to Daniel Wong, President and Director, as compensation for services rendered, resulting in stock compensation expense of $190,000. On September 15, 2020, the Company granted 50,000 common shares to a consultant in exchange for services rendered, resulting in $9,500 of stock compensation expense. Under the advisory agreement, the Company will issue an additional 50,000 common shares to the advisor over the next two years. On September 16, 2020, the Company granted 100,000 common shares to an advisor in exchange for services rendered, resulting in $19,000 of stock compensation expense. Under the advisory agreement, the Company will issue an additional 100,000 common shares to the advisor over the next two years. During 2020, the Company issued a total of 1,150,000 common shares and 1,910,000 common shares to management, board members and consultants for services rendered, resulting in stock-based compensation expense of $381,900 for the year ended December 31, 2020. Outstanding Shares As of December 31, 2020, the Company had 8,321,079 common shares outstanding. As of December 31, 2020, 7,000,000 shares of Class A Preferred Stock and 7,000,000 shares of Class C Preferred Stock were issued and outstanding. |