Subsequent Events

12 Months Ended

Dec. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

15. SUBSEQUENT EVENTS

Between January 1, 2020 and June 10, 2020 the Company issued an aggregate of 330,636 shares of common stock to an employee for services performed in December 2019 and the first five (5) months of 2020. See note 13.

On January 2, 2020 the vesting conditions for the December 2018 issuance of 20,000,000 shares of common stock to Robert M. Carmichael as an incentive bonus were satisfied and the shares were then considered outstanding. See notes 7 and 13.

On January 6, 2020, the Company sold an aggregate of 2,647,065 shares of its common stock to Grace Kelly Hyatt, the minor daughter of Mr. Hyatt. The Company received proceeds of $45,000 for this transaction. Mr. Hyatt, a member of the Company’s Board of Directors, has voting and dispositive control over the shares held by Grace Kelly Hyatt.

Mr. Pitzner resigned from the Board of Directors on January 6, 2020.

Jeffrey Guzy was appointed to the Board of Directors on January 9, 2020, filling the vacancy created by Mr. Pitzner’s resignation.

On January 9, 2020 the Company entered into a Director Agreement with Mr. Guzy pursuant to which it agreed to pay him a monthly Board fee of $1,000 and issue him a three year immediately exercisable stock option to purchase up to 2,000,000 shares of the Company’s common stock exercisable at $0.0229 per share.

On January 11, 2020 the Company entered into a Consulting Agreement with BizLaunch Advisors, LLC to provide the Company with outside CFO advisory and related services. As compensation the Company agreed to pay the consultant a monthly retainer of $2,000 and issued it a three-year option to purchase 2,000,000 shares of common stock at an exercise price of $0.0229 per share. In May 2020 the Company terminated the agreement but the option remains outstanding.

On February 23, 2020, Mr. Hyatt exercised a portion of an outstanding Hyatt Warrant representing 12,500,000 shares of common stock. The Company received proceeds of $125,000 upon such exercise.

In March 2020 the Company announced that that its BLU3 subsidiary had submitted a technical proposal in response to the U.S. Department of Defense DIY Hack-A-Vent Innovation Challenge and other similar initiatives seeking innovative ways to rapidly produce ventilators during this time of critical demand due to COVID-19. The original challenger indicated that the top three submissions would be selected by a panel of experts and may be offered an opportunity to produce a functioning prototype. BLU3’s proposal included utilization of an existing BLU3 technology, Nemo, at the core of the ventilator solution, which the team has named BLU3 Vent. BLU3 Vent is the product of converting the Company’s existing, software driven, inspiration sensitive, battery powered, tankless diving system to perform the behaviors of mechanical ventilation. Management of the Company believes the BLU3 Vent is unique in its ability to rapidly be converted into a device that meets all of the Hack-a-Vent requirements.

In late March, 2020, the Company was notified that the BLU3 Vent design submission was selected as number five out of 172 entries in the Hack-a-Vent challenge following Northrup Grumman, Coridea, Navsea, and L3 Harris Corp.

On April 14, 2020, the Company received a purchase order from a third-party to mature the design into a functional ventilator prototype. BLU3 Vent emerged as the first in the Hack-a-Vent challenge to pass through preliminary testing at Uniformed Services University to confirm feasibility to treat an ARDS inflicted patient. BLU3 Vent has been submitted initial documents for a review with the FDA at the direction and with the support of the Wright Brothers Institute (WBI) under an additional purchase order issued May 12, 2020. The project is currently on standby as the urgent demand for emergency use ventilators has declined. The team is working with WBI to be prepared in case a major demand for ventilators returns.

On April 2, 2020 Mr. Hyatt exercised an additional portion of an outstanding Hyatt Warrant representing 10,000,000 shares of common stock. The Company received proceeds of $100,000 upon such exercise.

On April 10, 2020 the Company sold an aggregate of 20,000,000 shares of its common stock at a purchase price $0.025 per share to accredited investors, including Mr. Hyatt, in a private transaction, resulting in proceeds to the Company of $500,000.

On April 14, 2020 the Company entered into a Non-Qualified Stock Option Agreement with Robert M. Carmichael (the “Carmichael Option Agreement”). Under the terms of the Carmichael Option Agreement, as additional compensation the Company granted Mr. Carmichael an option (the “Carmichael Option”) to purchase up to an aggregate of 125,000,000 shares of the Company’s common stock at an exercise price of $.045 per share, of which the right to purchase 75,000,000 shares of common stock is subject to vesting upon the achievement of the net revenue milestones set forth below (the “Net Revenue Portion of the Option”) and the right to purchase 50,000,000 shares of common stock is subject to vesting upon official notice of the listing of the Company’s common stock on The Nasdaq Stock Market, the NYSE American LLC or similar stock exchange. The Net Revenue Portion of the Option shall vest as follows:

● the right to purchase 25,000,000 shares of the Company’s common stock shall vest at such time as the Company reports cumulative consolidated net revenues, including revenues from related parties and revenues recognized by the Company arising out of any subsequent acquisitions, mergers, or other business combinations following the closing date of such transaction (the collectively, “Net Revenues”), in excess of $3,500,000 in the aggregate over four consecutive fiscal quarters commencing May 1, 2020 and ending on April 30, 2023 (the “Net Revenue Period”);

● the right to purchase an additional 25,000,000 shares of common stock shall vest at such time as the Company reports cumulative Net Revenues in excess of $7,000,000 in the aggregate over four consecutive fiscal quarters during the Net Revenue Period; and

● the right to purchase an additional 25,000,000 shares of common stock shall vest at such time as the Company reports cumulative Net Revenues in excess of $10,500,000 in the aggregate over four consecutive quarters during the Net Revenue Period.

The Carmichael Option Agreement provides that the Carmichael Option is exercisable by Mr. Carmichael on a cashless basis. The Carmichael Option is not transferrable by Mr. Carmichael, and he must remain an employee of the Company as an additional term of vesting. Once a portion of the Carmichael Option vests, it is exercisable by Mr. Carmichael for 90 days. Any portion of the Carmichael Option which does not vest during the Net Revenue Period lapses and Mr. Carmichael has no further rights thereto.

On April 9, 2020 the Company entered into an Investor Relations Consulting Agreement with HIR Holdings, LLC pursuant to which the Company engaged the firm to provide investor relations services. The term of the agreement is for a minimum guaranteed period of six months, and thereafter is cancellable by either party upon 30 days notice to the other party. As compensation the Company issued the consultant 3,000,000 shares of its common stock, valued at $105,000, and is responsible for reimbursement of certain pre-approved expenses.

On April 9, 2020 the Company also entered into a Corporate Communication Consulting Agreement with Impact IR Inc. pursuant to which the Company also engaged this firm to provide investor relations services. The term of the agreement is six months. As compensation the Company issued the consultant 2,000,000 shares of its common stock valued at $70,000.

On April 28, 2020 the Company awarded two employees 1,333,333 shares of its common stock valued at $64,000 as additional compensation for their services to the Company.

On May 12, 2020 the Company received the proceeds from an unsecured $159,600 loan (the “PPP Loan”) through South Atlantic Bank under the Paycheck Protection Program (the “PPP”) pursuant to the Coronavirus Aid, Relief and Economic Security Act (the “CARES” Act) which is administered by the United States Small Business Administration. In accordance with the requirements of the CARES Act, the Company will use proceeds from the PPP Loan primarily for payroll costs. The PPP Loan is scheduled to mature on April 9, 2022 (the “Maturity Date”) and has a 1% interest rate. Commencing on November 9, 2020 and continuing on the same day of each following month, the Company must pay principal and interest payments of $8,983.41 until the Maturity Date, at which time the remaining principal and accrued interest is due in full. The promissory note evidencing the PPP Loan contains customary events of default relating to, among other things, payment defaults and provisions of the promissory note.

On May 21, 2020 the Board of Directors of the Company agreed to provide incentive compensation to six individuals who are either its employees or independent contractors for additional time spent by these Individual on BLU3-VENT project. Of the aggregate of approximately $214,648 of incentive compensation, $53,668 was paid in cash and the balance of $160,980 was paid through the issuance of an aggregate of 3,658,633 shares of the Company’s common stock valued at $0.044 per share. Robert M. Carmichael received a total of $31,904 of incentive compensation which was paid through the issuance of 725,087 shares of the Company’s common stock and Blake Carmichael received a total of $37,369 of incentive compensation which was paid through the issuance of 849,305 shares of the Company’s common stock.

On May 29, 2020 the Company entered into a Note Extension and Amendment Agreement with the holder of a $50,000 principal amount 6% secured convertible promissory note due December 31, 2019 pursuant to which the due date of the note was extended to December 31, 2020.

On June 8, 2020 the Company entered into a Note Extension and Amendment Agreement with the holder of a second $50,000 principal amount 6% secured convertible promissory note due December 31, 2019 pursuant to which the due date of the note was extended to December 31, 2020

During early 2020 an offer of settlement for $50,000 was made by the Company to the Estate of Ernesto Rodriguez (Case No. CACE-15-03238 and CACE -16-0000242). The settlement was accepted and the Circuit Court in and for Broward County, Florida entered an Order on May 13, 2020 which approved the settlement. The Final Order of Dismissal was entered on behalf of the Company and Trebor on May 19, 2020. The $50,000 settlement amount is payable in installments through May 19, 2022.