Shareholders' equity

12 Months Ended

Dec. 31, 2019

Shareholders Equity

Shareholders' equity

Note 7- Stockholders’ Equity

Convertible preferred stock rights

Preferred Stock (’Series A’) shall be convertible into Common Stock any time at the holder’s sole discretion. Currently, no Series A Preferred stock is issued or outstanding. The Company intends to file a Certificate of Amendment of Certificate of Designation with the State of Nevada to amend the Series A Preferred Socks class of shares

Preferred Stock (“Series B”) shall be convertible into ten common shares at any time and holders are entitled to 20 common share votes per such preferred share.

Preferred Stock Series A Convertible

The Company has authorized 30,000,000 shares of Series A Preferred Stock, $.001 par value, and 20,000,000 shares of Series B Preferred Stock, $.001 par value.

As of December 31, 2019, the Company has issued and outstanding 26,038,572 shares of Series B Preferred Stock to the two officers per the terms of their employee contracts.

Common Stock

The Company has authorized 300,000,000 shares of common stock, $.001 par value. As of December 31, 2019 and 2018, there were 35,902,602 shares of common stock issued and outstanding, respectively.

Paid in Capital

Beginning in November 2010 and through July 2011, Gold X Change, Inc. (“GXC”) invested approximately $132,000 in the aggregate in the Company’s convertible notes. In July 2011, a dispute arose between the Company and GXC as to the number of shares issuable upon conversion of the convertible notes.  In order to resolve this dispute, the Company and GXC agreed to issue a total of 24 million shares of the Company’s common stock in the name of GXC; provided that GXC deposit such shares into an escrow account with an escrow agent.  Under the terms of the escrow agreement, these shares would only be released to GXC if GXC invested an additional $1 million into the Company within one year, which ended on September 30, 2012.  During the one year period, GXC only invested $880,162.  As a result of GXC’s failure to invest the full $1 million within the one year time period as required by the escrow agreement, GXC was in default under the escrow agreement and the 24 million shares were cancelled. The $880,162 paid by GXC to the Company was deemed to be the cost of the 4,003,860 shares of the Company’s common stock that was originally issued to GXC. The Company adjusted the note payable balance and reclassified the note balance to additional paid in capital to include such in the original transaction in which 4,003,860 shares of common stock were issued. Currently, GXC holds 1,189,300 shares of common stock after the President distributed 2,814,560 shares to different people and entities. The President disclaims beneficial ownership of such securities except to the extent of his pecuniary interest in such securities, if any.

Designation of Series A Convertible Preferred Stock

On August 29, 2018, the Company filed a certificate of designation (the “Series A Certificate of Designation”) with the Nevada Secretary of State to set forth the terms of the Series A Convertible Preferred Stock. Pursuant to the Series A Certificate of Designation, the Company designated 20,000,000 shares of its preferred stock as Series A Convertible Preferred Stock. Following is a summary of the material terms of the Series A Convertible Preferred Stock:

● Dividends. Holders of shares of Series A Convertible Preferred Stock are not entitled to dividends.

● Liquidation. Upon any dissolution or winding up of the Company, whether voluntary or involuntary (a “Liquidation”), holders of Series A Convertible Preferred Stock shall be entitled to receive out of the assets of the Company, before any distribution of assets is made to holders of any other class of capital stock of the Company, an amount equal to $100 per share (the “Series A Liquidation Preference”). If upon any Liquidation the amounts payable with respect to the Series A Convertible Preferred Stock and any other shares of stock of the Company ranking as to any such distribution on parity with the Series A Convertible Preferred Stock are not paid in full, the holders of Series A Convertible Preferred Stock and of such other shares shall share ratably in any such distribution in proportion to the full respective preferential amounts to which they are entitled. After the payment of the Series A Liquidation Preference shall have been made in full to the holders of the Series A Convertible Preferred Stock, the remaining assets of the Company legally available for distribution to its stockholders shall be distributed among the holders of any junior capital stock that has a liquidation preference senior to holders of common stock, and after such holders have received in full their liquidation preference, the remaining amounts shall be distributed among the holders of the Series A Convertible Preferred Stock and the common stock, collectively, as one class.

● Voting. On any matter presented to stockholders for their action or consideration, each holder of Series A Convertible Preferred Stock shall be entitled to cast the number of votes equal to the number of shares of common stock into which the shares of Series A Convertible Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions of the Series A Certificate of Designation, the holders shall vote together with the holders of shares of common stock as a single class. However, so long as at least 50% of the shares of Series A Convertible Preferred Stock originally issued remains outstanding, the Company may not, without the affirmative vote or the written consent of the holders of at least 51% of the then outstanding shares of Series A Convertible Preferred Stock, voting separately as a class, (i) create, authorize or issue any equity security, or any security convertible into or exercisable for any equity security, unless such security is junior to the Series A Convertible Preferred Stock, in terms of dividend and liquidation preference; or (ii) increase the total number of authorized shares of Series A Convertible Preferred Stock.

● Conversion. Each holder of shares of Series A Convertible Preferred Stock may, at holder’s option and at any time, convert any or all such shares into shares of common stock. The number of shares of common stock into which each share of Series A Convertible Preferred Stock may be converted (the “Conversion Rate”) shall be determined according to the terms of a stock purchase agreement between the Company and the holder. In addition, each share of Series A Convertible Preferred Stock shall automatically convert into shares of common stock, at the then applicable Conversion Rate, upon the earlier of (i) the closing of a public offering of equity or equity equivalent securities resulting in minimum gross proceeds to the Company of $20 million and (ii) upon the Company’s common stock trading at or above $6.00 per share for 20 out of 30 consecutive trading days; provided that prior to the event specified by (ii) above, the Company shall have (y) an effective registration statement on file with the SEC registering the resale of the common stock issuable upon conversion of the Series A Convertible Preferred Stock and (ii) obtained the approval for listing the common stock on any national securities exchange. The Conversion Rate is subject to customary adjustments as described in the Series A Certificate of Designation.

● Redemption. The Series A Convertible Preferred Stock is not redeemable.

The Company entered in a stock purchase agreement with the holder of the Series A Convertible Preferred Stock, FOGT, LLC, pursuant which the parties agreed on the conversion rate of 400 shares of common stock for each share of Series A Convertible Preferred Stock. As of December 31, 2019, the purchase agreement, subject to the terms of a settlement in a dispute with FOGT, LLC has been cancelled along with 10,350 shares of Series A Convertible Preferred Stock previously issued.

Designation of Series B Convertible Preferred Stock

On August 29, 2018, the Company filed a certificate of designation (the “Series B Certificate of Designation”) with the Nevada Secretary of State to set forth the terms of the Series B Convertible Preferred Stock. Pursuant to the Series B Certificate of Designation, the Company designated 30,000,000 shares of its preferred stock as Series B Convertible Preferred Stock. Following is a summary of the material terms of the Series B Convertible Preferred Stock:

● Dividends. Holders of shares of Series B Convertible Preferred Stock are not entitled to dividends.

● Liquidation. Upon any Liquidation, holders of Series B Convertible Preferred Stock shall be entitled to receive out of the assets of the Company, before any distribution of assets is made to holders of any other class of capital stock of the Company, an amount equal to $100 per share (the “Series B Liquidation Preference”). If upon any Liquidation the amounts payable with respect to the Series B Convertible Preferred Stock and any other shares of stock of the Company ranking as to any such distribution on parity with the Series B Convertible Preferred Stock are not paid in full, the holders of Series B Convertible Preferred Stock and of such other shares shall share ratably in any such distribution in proportion to the full respective preferential amounts to which they are entitled. After the payment of the Series B Liquidation Preference shall have been made in full to the holders of the Series B Convertible Preferred Stock, the remaining assets of the Company legally available for distribution to its stockholders shall be distributed among the holders of any junior capital stock that has a liquidation preference senior to holders of common stock, and after such holders have received in full their liquidation preference, the remaining amounts shall be distributed among the holders of the Series B Convertible Preferred Stock and the common stock, collectively, as one class.

● Voting. On any matter presented to stockholders for their action or consideration, each holder of Series A Convertible Preferred Stock shall be entitled to cast 20 votes per share. Except as provided by law or by the other provisions of the Series B Certificate of Designation, the holders shall vote together with the holders of shares of common stock as a single class. However, so long as at least 50% of the shares of Series B Convertible Preferred Stock originally issued remains outstanding, the Company may not, without the affirmative vote or the written consent of the holders of at least 51% of the then outstanding shares of Series B Convertible Preferred Stock, voting separately as a class, (i) create, authorize or issue any equity security, or any security convertible into or exercisable for any equity security, unless such security is junior to the Series B Convertible Preferred Stock, in terms of dividend and liquidation preference; or (ii) increase the total number of authorized shares of Series B Convertible Preferred Stock.

● Conversion. Each holder of shares of Series B Convertible Preferred Stock may, at holder’s option and at any time, convert any or all such shares into shares of common stock. The number of shares of common stock into which each share of Series B Convertible Preferred Stock may be converted is ten shares of common stock for each share of Series B Convertible Preferred Stock.

● Redemption. The Series B Convertible Preferred Stock is not redeemable.

As of December 31, 2019, the Company has issued to Dr. Milici, CEO and Tannya Irizarry, CAO, CFO a total of 26,038,572 shares of Series B Preferred Stock pursuant to the terms of their employee agreements.