Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Deficit

v3.21.1
Stockholders' Deficit
3 Months Ended
Mar. 31, 2021
Equity [Abstract]  
Stockholders' Deficit

NOTE 9 – STOCKHOLDERS’ DEFICIT

 

Common Stock

 

On November 20, 2020, the Board of Directors approved an increase in the Company’s authorized shares of Common Stock from 100,000,000 to 500,000,000 shares by Unanimous Written Consent. The Secretary of State of Nevada approved the share increase.

 

The Company has 500,000,000 shares of par value $0.001 common stock authorized and 99,897,748 and 46,756,970 shares were outstanding as of March 31, 2021 and December 31, 2020, respectively.

 

Common stock issued for cash

 

During the year Marcher 31, 2021, the Company issued 32,475,000 shares of common stock mostly under the S1 then in effect at $0.04. In total $1,014,000 in cash was received.

 

Common stock issued for cash

 

During the three months ended March 31, 2021, the Company issued 32,475,000 shares of common stock for total proceeds of $1,014,000. The shares were primarily issued under a Form S-1 registration in effect at $0.04 per share.

 

Common stock issued for services

 

During the three months ended December 31, 2021, the Company issued 5,000,000 shares of common stock to service vendors with a fair value of $449,000, and 1,000,000 shares of common stock to employees and officers of the Company with a fair value of $69,950. The fair value of the shares was determined based on the closing price of the Company’s common stock on the date shares were granted, and recorded as stock compensation in selling, general and administrative expense.

 

Restricted common stock

 

In 2019, the Company agreed to issue 8,000,000 shares of the Company’s common stock with vesting terms to Arthur Mikaelian. 1,000,000 shares vested immediately, and the balance of 7,000,000 shares vest 625,000 shares per quarter over 2.8 years. The Company accounts for the share awards using a graded vesting attribution method over the requisite service period, as if each tranche were a separate award. During the three months ended March 31, 2021 and 2020, total share-based expense recognized related to vested restricted shares totaled $160,179 and $425,768, respectively. At March 31, 2021, there was $271,232 of unvested compensation related to these awards that will be amortized over a remaining vesting period of 1.1 years.

 

The following table summarizes restricted common stock activity for the three months ended March 31, 2021:

 

    Number of shares     Fair value of shares  
Non-vested shares, December 31, 2020     3,250,000       431,411  
Granted     -       -  
Vested     (625,000 )     (160,179 )
Forfeited     -       -  
Non-vested shares, March 31, 2021     2,625,000     $ 271,232  

 

As of March 31, 2021, no shares have been issued and 5,375,000 vested shares are included in shares to be issued on the accompanying financial statements

 

Common stock issued in conversion of convertible notes payable

 

The Company issued 14,665,778 shares of common stock to holders of convertible notes valued at $396,458, which includes reclassification of put premiums associated with stock settled debt of $97,866.

 

Stock Options

 

During the three months ended March 31, 2021, the Company did not issue any options. The Company used the Black-Scholes-Merton option pricing model to estimate the fair value of the option granted. That value is accreted over the vesting period.

 

During the three months ended March 31, 2021 and 2020, the Company recognized $70,994 and $80,404, respectively, of compensation expense relating to vested stock options. As of March 31, 2021, the amount of unvested compensation related to stock options was approximately $230,000 which will be recorded as an expense in future periods as the options vest.

 

A summary of stock option activity during the three months ended March 31, 2021:

 

    Number of options     Weighted Average
Exercise Price
    Contractual
Life in Years
 
Options Outstanding as of December 31, 2020     4,130,000       0.10       6.0  
Granted     -       0.11       10.0  
Exercised     -       -       -  
Forfeited     (2,805,000 )     -       -  
Options Outstanding as of March 31, 2021     1,325000       0.11       6.5  
Options Exercisable as of March 31, 2021     975,814     $ 0.10       5.5  

 

At March 31, 2021, the options outstanding had no intrinsic value.