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Equity and Equity Incentive Plan

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

NOTE 12.

EQUITY AND EQUITY INCENTIVE PLAN

Common Stock

The Company had 224,311,059 and 161,086,228 common shares outstanding at September 30, 2019 and December 31, 2018, respectively.

In December 2018, the Company issued 20,000,000 shares of common stock to our CEO as an incentive bonus. As the shares are subject to continued employment by the CEO through January 2, 2020, the Company has treated the shares as issued but not as yet outstanding. Expense for the issuance is being recognized over the full vesting period, and accordingly, the Company recognized stock compensation expense of $10,576 as of December 31, 2018. During the three and nine months ended September 30, 2019 the Company recognized additional stock compensation expense of $47,998 and $138,781, respectively. The Total amount of expense recorded as of September 30, 2019 is $149,357.

On August 1, 2017, Mr. Mikkel Pitzner was appointed by the Company’s board of directors to serve on the Company’s board of directors, filling a vacancy on the board. Mr. Pitzner shall serve on the board of directors and shall hold office until the next election of directors by stockholders and until his successor is elected and qualified or until his earlier resignation or removal. The Company has agreed to pay Mr. Pitzner an annual fee of $6,000 and has issued Mr. Pitzner 3,333,333 shares of restricted common stock valued at $31,250 under a consulting agreement expiring in January 2019. In December 2018, Mr. Pitzner was issued 708,287 common shares in payment of accrued director fees through December 31, 2018. The shares were valued at $0.0195 per share, totaling $13,812, the fair value on the date of grant. During the three and nine months ended September 30, 2019 the Company recorded $0 and $31,250, respectively of stock compensation pursuant to this agreement. In August 2019 the agreement was cancelled.

In January 2019, the Company entered into an investment banking and corporate advisory agreement. The term of the agreement is for one year and provided for compensation of 2,700,000 common shares with a fair value of $29,700 plus related expenses. The shares were issued in February and March 2019. For the three and nine months ended September 30, 2019 the Company expenses $7,425 and $22,275, respectively in stock compensation.

In January 2019, the Company issued 1,000,000 common shares with a fair value of $12,500 to a consultant for general administrative advisory services for the period from December 1, 2018 through April 30, 2019, of which $0 and $10,000 was expensed during the three and nine months ended September 30, 2019, respectively.

In March 2019 we issued an accredited investor, a unit of the securities of the Company, with the unit consisting of 50,000,000 shares of common stock, par value $0.0001 per share and 50,000,000 eighteen month common stock purchase warrants exercisable at $0.01 per share in consideration of $500,000. The Company intends to use the proceeds from the sale for product research and development and working capital purposes. The Company did not pay any fees or commissions in connection with the sale of the unit.

In May 2019, the Company issued 1,000,000 common shares with a fair value of $16,000 to a consultant for general administrative advisory services, of which $8,000 and $10,000 was expensed during the three and nine months ended September30, 2019, respectively. In addition the Company agreed to pay the consultant $1,500 per month. If the Company acquires / merges with Mako the consultant is entitled to a $10,000 fee payable in common stock. If the Company acquires / merges with SNUBA the consultant is entitled to a $25,000 fee payable in common stock. The agreement expires on December 31, 2019.

On July 17, 2019 the Company sold 2,500,000 shares of common stock for proceeds of $25,000 ($0.01 per share).

In September 2019 the Company issued 1,250,000 shares of common stock valued at $20,375 ($0.016 per share) fair market value, pursuant to an investor relations agreement, and agreed to pay $2,500 and an additional $2,500 after 45 days for a variety of services, including investor and public relations assessment, marketing surveys, investor support, and strategic business planning. The agreement is for six months and may renew for an additional 6 months on the same terms unless either party notifies the other of non-renewal prior to the renewal date.

In August 2019 the Company issued 318,747 common shares with a fair value of $5,000 to a consultant for general administrative advisory services, of which $5,000 and $5,000 was expensed during the three and nine months ended September 30, 2019, respectively.

In September the Company issued 1,122,751 shares of common stock valued at $14,446 an average of ($0.013) per share for accrued consulting fees of $14,446.

Preferred Stock

During the second quarter of 2010, the holder of the majority of the Company’s outstanding shares of common stock approved an amendment to the Company’s Articles of Incorporation authorizing the issuance of 10,000,000 shares of preferred stock. The preferred stock as authorized has such voting powers, designations, preferences, limitations, restrictions and relative rights as may be determined by our Board of Directors of the Company from time to time in accordance with the provisions of the Florida Business Corporation Act. Before modification, the existing Articles of Incorporation did not authorize the issuance of shares of preferred stock. The Company authorized the preferred stock for the purpose of added flexibility in seeking capital and potential acquisition targets. The amendment authorizing the issuance of shares of preferred stock grants the Board authority, without further action by our stockholders, to designate and issue preferred stock in one or more series and to designate certain rights, preferences and restrictions of each series, any or all of which may be greater than the rights of the common stock. As of September 30, 2019 and December 31, 2018, the 425,000 shares of preferred stock are owned by the Company’s Chief Executive Officer. The preferred shares have 250 to 1 voting rights over the common stock, and are convertible into 31,481 shares of common stock. The preferred stock votes with the Company’s common stock, except as otherwise required under Florida law.

Equity Incentive Plan

On August 22, 2007, the Company adopted an Equity Incentive Plan (the “Plan”). The Plan expired on August 22, 2017. All 297 options issued under the Plan had expired as of March 31, 2019.

Equity Compensation Plan Information as of December 31, 2018.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted – average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a) (c)
Equity Compensation Plans Approved by Security Holders		297	$	1,350		—
Equity Compensation Plans Not Approved by Security Holders		—		—		—
Total		297	$	1,350		—

Equity Compensation Plan Information as of September 30, 2019.

Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)

Weighted – average
exercise price of
outstanding options,
warrants and rights
(b)

Number of securities
remaining available
for future issuances
under equity
compensation plans
(excluding securities
reflected in column
(a) (c)

Equity Compensation Plans Approved by Security Holders

—

Equity Compensation Plans Not Approved by Security Holders

—

Total

—

Options

Effective July 29, 2019 the Company issued options to purchase up to an aggregate of 22,838,094 shares of common stock to two service providers, including Mikkel Pitzner, a member of the Company’s board of directors, and Blake Carmichael, an employee of the Company and son of our CEO. The options were issued pursuant to a stock option grant agreement and are exercisable at $0.018 per share for a period of five years from the date of issuance, subject to vesting over a period of six months. The fair value of the options totaled $95,862 using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of 2.10%, ii) expected life of 5 years, iii) dividend yield of 0%, iv) expected volatility of 172%. In August 2019 8,304,761 options belonging to Mikkel Pitzner were cancelled. Stock option expense recognized during the three and nine months ended September 30, 2019 was $46,873.

Options

Effective July 29, 2019 the Company issued its chief executive officer options to purchase up to 20,761,904 shares of common stock. The options were issued pursuant to a Grant Agreement and are exercisable at $0.018 per share for a period of five years from the date of issuance, subject to vesting over a period of six months. The fair value of the options totaled $87,147 using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of 2.01%, ii) expected life of 5 years, iii) dividend yield of 0%, iv) expected volatility of 172%.

Stock option expense recognized during the three and nine months ended September 30, 2019 was $58,888.

A summary of the Company’s stock option as of September 30, 2019, and changes during the nine-month period then ended is presented below:

	Number of Options			Weighted Average Exercise Price
Options outstanding at December 31, 2018		-		$	-
Options granted		43,599,998			0.018
Options exercised		—			—
Options cancelled		(8,304,761	)		0.018
Options expired		-			-
Options at end of period		35,295,237		$	0.018
Options exercisable at September 30, 2019		14,533,333		$	0.018

At September 30, 2019 the intrinsic value of the options outstanding is $243,337 and options exercisable is $100,280.Changes in the Company’s non-vested options for the nine months ended September 30, 2019 are summarized as follows:

	Nine Months Ended September 30, 2019
	Number of Options			Weighted Average Exercise Price
Nonvested options at December 31, 2018		-		$	-
Granted		43,599,998			0.018
Vested		(14,533,333	)		0.018
Cancelled		(8,304,761	)		0.018
Nonvested options at September 30, 2019		20,761,904		$	0.018

	Options Outstanding						Options Exercisable
Range of Exercise Price	Number Outstanding		Remaining Average Contractual Life (In Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.0123 -$0.012		35,295,237		4.83	$	0.018		14,533,333	$	0.018
Totals		35,295,237		4.83	$	0.018		14,533,333	$	0.018

Warrants

A summary of the Company’s warrants as of September 30, 2019, and changes during the nine-month period then ended is presented below:

	Number of Warrants		Weighted Average Exercise Price
Warrants outstanding at December 31, 2018		6,783,551	$	0.0115
Warrants granted		50,000,000		0.01
Warrants exercised		—		—
Warrants cancelled		—		—
Warrants expired		—		—
Warrants at end of period		56,783,551	$	0.01
Warrants exercisable at September 30, 2019		56,783,551	$	0.01

	Warrants Outstanding						Warrants Exercisable
Range of Exercise Price	Number Outstanding		Remaining Average Contractual Life (In Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.01 -$0.0115		56,783,551		1.73	$	0.01		56,783,551	$	0.01
Totals		56,783,551		1.73	$	0.01		56,783,551	$	0.01