Equity

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Equity

10. EQUITY

Preferred Stock

During the year ended December 31, 2018, the Company authorized its preferred shares to have voting rights equal to two-thirds of all the issued and outstanding shares of common stock, shall be entitled to vote on all matters of the corporation, and shall have the majority vote of the board of directors. The subject preferred stock lacks any dividend rights, does not have liquidation preference, and is not convertible into common stock. During the year ended December 31, 2018, the Company issued one million shares to certain officers and board members. The Company retained a third-party valuation firm whose input was utilized in determining the related per share valuation of the preferred shares. Based on Management’s assessment and the valuation report, the fair value of the preferred shares was determined to be $0.0463 per share or an aggregate of $46,363.

Common Stock

The Company issued the following shares of common stock for the years ended December 31:

	2018				2017
	Value of Shares		# of shares		Value of Shares		# of shares
Shares issued for services rendered	$	60,999		39,580,667	$	94,250		216,667
Shares issued for conversion of debt		194,829		11,116,826		392,620		2,328,414
Common shares issued upon exercise of warrants		-		2,419,961		-		-
Shares issued for financing		19,090		856,000		20,325		40,000
Total shares issued	$	274,918		53,973,454	$	507,195		2,585,081

Shares issued for services rendered were to various members of management, employees and consultants and are generally expensed as Stock-Based Compensation in the accompanying consolidated statement of operations. Also included are shares of common stock issued to our 2018 investors in conjunction with their note and share purchase agreements. Shares issued for conversion of debt relate to conversions of both short and long term debt as discussed in Note 8. Shares issued for financing in 2018 relate to shares granted to investors for their participation in the 2018 financings.

During the year ended December 31, 2018 the Company issued 80,667 shares of common stock with a fair value of $17,770 at the date of grant for services.

On October 16, the Company created a long-term employment retention bonus plan and issued 39,500,000 of restricted common shares to the plan. The shares have a 3-year vesting period and those eligible, employees, directors and advisors must have been with the Company for at least 7 years with an additional 2 years necessary in order to participate in the plan and 3 to become fully vested. The shares will vest with a mandatory 2 year minimum requirement for such vesting to become valid with 33.4% in year two and 66.66% at the end of year three. If the individual leaves the Company prior to vesting the Company or its assignee retains the option to repurchase the unvested shares at par. The shares had a fair value of $622,500 at the date of grant, which cost will be amortized over the three-year vesting period. For the period ending December 31, 2018, the company had amortized expense of $43,229 related to the retention plan and the remaining $579,231 will be recognized as compensation cost as the shares vest.

During the year ended December 31, 2018 the Company issued 856,000 shares of common stock with a fair value of $19,090 at the date grant for financing costs.

Common Stock Warrants

Since inception, the Company has issued numerous warrants to purchase shares of the Company’s common stock to shareholders, consultants and employees as compensation for services rendered.

A summary of the Company’s warrant activity and related information is provided below (the exercise price and the number of shares of common stock issuable upon the exercise of outstanding warrants have been adjusted to reflect a 1-for-75 reverse stock split.):

	Exercise Price $		Number of Warrants
Outstanding and exercisable at December 31, 2016		0.0125 - 0.03		3,852,000
Warrants exercised		-		-
Warrants granted		0.015 - 0.02		10,000,000
Warrants expired		-		-
Outstanding and exercisable at December 31, 2017		0.0125 - 0.03		13,852,000
Warrants exercised		0.0125 - 0.015		(2,865,000	)
Warrants granted		0.01 - 0.04		750,000
Warrants expired		0.015 - 0.02		(182,000	)
Outstanding and exercisable at December 31, 2018		0.0125 - 0.04		11,555,000

Stock Warrants as of December 31, 2018
Exercise		Warrants		Remaining		Warrants
Price		Outstanding		Life (Years)		Exercisable
$	0.0125		500,000		0.30		500,000
$	0.015		5,135,000		0.54		5,135,000
$	0.01		250,000		1.96		250,000
$	0.020		5,000,000		0.87		5,000,000
$	0.040		500,000		1.23		500,000
$	1.125		128,000		0.34		128,000
$	2.25		42,000		0.51		42,000

During the period ended December 31, 2018, 2,865,000 warrants were exercised on a cashless basis that resulted in the issuance of 2,419,962 shares of common stock, in addition warrants 182,000 expired and 750,000 were issued. The outstanding and exercisable warrants at December 31, 2018 has no intrinsic value.

Common Stock Options

Under the Company’s 2008 Plan, we are authorized to grant stock options intended to qualify as Incentive Stock Options, “ISO”, under Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified options, restricted and unrestricted stock awards and stock appreciation rights to purchase up to 7,000,000 shares of common stock to our employees, officers, directors and consultants, with the exception that ISOs may only be granted to employees of the Company and its subsidiaries, as defined in the 2008 Plan.

The Plan provides for the issuance of a maximum of 7,000,000 shares of which, after adjusting for estimated pre-vesting forfeitures and expired options, approximately 2,235,000 were available for issuance as of December 31, 2018.

No options were granted during 2018 and 2017.