STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 5 – STOCKHOLDERS’ EQUITY

Common Stock

The Company was authorized to issue 750,000,000 shares of common stock, respectively, with a par value of $0.001 per share (“Common Stock”). As of June 30, 2019 and December 31, 2018, the Company had 41,673,655 shares of its Common Stock issued and outstanding.

Series A Preferred Stock

The board of directors of the Company (the “Board”) has designated 3,437,500 shares of Series A Convertible Preferred Stock, with a par value $0.001 per share (“Series A Preferred Stock”). As of June 30, 2019 and December 31, 2018, the Company had 1,270,250 shares of its Series A Preferred Stock issued and outstanding.

The Series A Preferred Stock is entitled to vote as a single class with the holders of the Company’s Common Stock and preferred stock, with each share of Series A Preferred Stock having the right to 20 votes.

Upon the liquidation, sale or merger of the Company, each share of Series A Preferred Stock is entitled to receive an amount equal to the greater of (A) a liquidation preference equal to two and a half (2.5) times the Series A Preferred Stock original issue price, or $12,767,500 in aggregate, subject to certain customary adjustments, or (B) the amount such share of Series A Preferred Stock would receive if it participated pari passu with the holders of Common Stock on an as-converted basis. The liquidation preference is calculated by taking the product of the issued and outstanding shares of Series A Preferred Stock times $10.00. Series A Preferred Stock is junior to Series B Convertible Preferred Stock par value $0.001 per share (“Series B Preferred Stock”) and the Series C Convertible Preferred Stock, par value $0.001 per share (“Series C Preferred Stock”), as it pertains to liquidation preferences.

Each share of Series A Preferred Stock is convertible into 20 shares of Common Stock, subject to adjustment and at the option of the holder of the Series A Preferred Stock.

For so long as any shares of Series A Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the Series A Preferred Stock is required to approve any amendment to the Company’s certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special rights of the Series A Preferred Stock or any amendment to the Company’s certificate of incorporation to create any shares of capital stock that rank senior to the Series A Preferred Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series A Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series A Preferred Stock is required to effect or validate any merger, sale of substantially all of the assets of the Company or other fundamental transaction, unless such transaction, when consummated, will provide the holders of Series A Preferred Stock with an amount per share equal to two and a half (2.5) times the Series A Preferred Stock original issue price, or $12,702,500, in aggregate for all issued and outstanding Series A Preferred Stock.

Series B Preferred Stock

The Board has designated 11,000,000 shares of Series B Convertible Preferred Stock, with a par value $0.001 per share (“Series B Preferred Stock”). As of June 30, 2019 and December 31, 2018, the Company had 5,307,212 of its Series B Preferred Stock issued and outstanding.

The Series B Preferred Stock is entitled to vote as a single class with the holders of the Company’s Common Stock and preferred stock, with each share of Series B Preferred Stock having the right to 20 votes.

As of June 30, 2019 and December 31, 2018, upon the liquidation, sale or merger of the Company, each share of Series B Preferred Stock is entitled to receive an amount equal to the greater of (A) a liquidation preference equal to the Series B Preferred Stock original issue price, or $15,921,636 in aggregate, subject to certain customary adjustments, or (B) the amount such share of Series B Preferred Stock would receive if it participated pari passu with the holders of Common Stock and preferred stock on an as-converted basis. The liquidation preference is calculated by taking the product of the issued and outstanding shares of Series B Preferred Stock times $3.00. Series B Preferred Stock is senior to Series A Preferred Stock, and junior to the Series C Preferred Stock, as it pertains to liquidation preferences.

Each share of Series B Preferred Stock is convertible into 20 shares of Common Stock, subject to adjustment and at the option of the holder of the Series B Preferred Stock.

For so long as any shares of Series B Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the Series B Preferred Stock is required to approve (A) any amendment to the Company’s certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special rights of the Series B Preferred Stock or (B) any amendment to the Company’s certificate of incorporation to create any shares of capital stock that rank senior to the Series B Preferred Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series B Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series B Preferred Stock is required to effect or validate any merger, sale of substantially all of the assets of the Company or other fundamental transaction, unless such transaction, when consummated, will provide the holders of Series B Preferred Stock with an amount per share equal the Series B Preferred Stock original issue price, or $15,921,636, in aggregate for all issued and outstanding Series B Preferred Stock.

Series C Preferred Stock

The Board has designated 4,000,000 shares of Series C Convertible Preferred Stock, with a par value $0.001 per share (“Series C Preferred Stock”). As of June 30, 2019 and December 31, 2018, the Company had 1,254,175 of its Series C Preferred Stock issued and outstanding.

The Series C Preferred Stock is entitled to vote as a single class with the holders of the Company’s Common Stock and preferred stock, with each share of Series C Preferred Stock having the right to 20 votes.

Upon the liquidation, sale or merger of the Company, each share of Series C Preferred Stock is entitled to receive an amount equal to the greater of (A) a liquidation preference equal to two and a half (2.5) times the Series C Preferred Stock original issue price, or $6,270,875 in aggregate, subject to certain customary adjustments, or (B) the amount such share of Series C Preferred Stock would receive if it participated pari passu with the holders of Common Stock on an as-converted basis. The liquidation preference is calculated by taking the product of the issued and outstanding shares of Series C Preferred Stock times $5.00. Series C Preferred Stock is senior to Series A Preferred Stock and to Series B Preferred Stock as it pertains to liquidation preferences.

Each share of Series C Preferred Stock is convertible into 20 shares of Common Stock, subject to adjustment and at the option of the holder of the Series C Preferred Stock.

For so long as any shares of Series C Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the Series C Preferred Stock is required to approve (A) any amendment to the Company’s certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special rights of the Series C Preferred Stock or (B) any amendment to the Company’s certificate of incorporation to create any shares of capital stock that rank senior to the Series C Preferred Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series C Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series C Preferred Stock is required to effect or validate any merger, sale of substantially all of the assets of the Company or other fundamental transaction, unless such transaction, when consummated, will provide the holders of Series C Preferred Stock with an amount per share equal to two and a half (2.5) times the Series C Preferred Stock original issue price, or $6,270,875, in aggregate for all issued and outstanding Series C Preferred Stock.

Stock Options

During the six months ended June 30, 2019, options for 125,000 shares of Common Stock, which were previously granted to a former executive of the Company, expired in accordance with the terms of such stock options.

There are 30,000,000 shares of our Common Stock authorized to be issued under the Company’s 2010 Equity Compensation Plan, of which 28,421,980 shares of our Common Stock remain available for future stock option grants.

The Company recorded compensation expense pertaining to employee stock options and warrants in the amount of $6,250 and $3,599 for the six months ended June 30, 2019 and 2018, respectively.

The value of equity compensation not yet expensed pertaining to unvested equity compensation for options to purchase common stock was $0 as of June 30, 2019.

A summary of the Company's outstanding stock options to purchase Common Stock is as follows:

	Number			Weighted				Weighted
	Of Shares			Average		Weighted		Average		Aggregate
	Underlying			Exercise		Average		Remaining		Intrinsic
	Options			Price		Fair Value		Contractual Life		Value (1)
									(in years)
Outstanding at December 31, 2018		700,000		$	0.10	$	0.05		2.0	$	-
For the period ended June 30, 2019
Granted		-			-		-
Exercised		-			-		-
Expired		(125,000	)		0.10		-
Outstanding at June 30, 2019		575,000		$	0.10	$	0.05		1.7	$	-
Outstanding and exerciseable at June 30, 2019		575,000		$	0.10	$	0.05		1.7	$	-

(1) The aggregate intrinsic value is based on the $0.0477 closing price as of June 30, 2019, for the Company’s Common Stock.

 Common Stock Warrants

The Company has no outstanding common stock warrants as of June 30, 2019 and December 31, 2018.

Series A Preferred Stock Warrants

Outstanding warrants to purchase the Company’s Series A Preferred Stock at June 30, 2019, have a remaining contractual life of 0.1 years. A summary of the status of the Company's outstanding Series A Preferred Stock warrants is as follows:

			Weighted
	Common		Average
	Stock		Exercise
	Warrants		Price
Outstanding and exercisable at December 31, 2018		25,000	$	4.00
For the period ended June 30, 2019
Issued		-		-
Exercised		-		-
Expired		-		-
Outstanding and exercisable at June 30, 2019		25,000	$	4.00

Series B Preferred Stock Warrants

During the six months ended June 30, 2019, warrants to purchase 2,780,000 shares of Series B Preferred Stock expired in accordance with the terms of such warrants.

Outstanding preferred stock warrants to purchase the Company’s Series B Preferred Stock at June 30, 2019, have a remaining contractual life of 1.4 years. A summary of the status of the Company's outstanding Series B Preferred Stock warrants is as follows:

				Weighted
	Preferred			Average
	Stock			Exercise
	Warrants			Price
Outstanding and exercisable at December 31, 2018		2,820,000		$	3.00
For the period ended  June 30, 2019
Granted		-			-
Exercised		-			-
Expired		(2,780,000	)		-
Outstanding and exerciseable at June 30, 2019		40,000		$	3.00

Registration Rights

As of June 30, 2019, the Company has not received a demand notice in connection with any of the Company’s various registration rights agreements.