Equity

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Note 7 - Equity

Preferred Stock

Cool Technologies has 15,000,000 preferred shares authorized and 20 Series A and 2,727,270 Series B preferred shares issued and outstanding as of December 31, 2018.

In addition to the preferred stock, the Securities Purchase Agreement included warrants to purchase (i) 3,636,360 shares of the Company’s common stock at an exercise price of $0.07 per share. The aggregate purchase price of the preferred stock and warrants was $200,000, of which $150,000 was paid in cash and $50,000 was paid in services.

In connection with the sale of the Preferred Stock, on October 20, 2016, the Company filed with the Secretary of the State of Nevada, an amended Certificate of Designations of the Rights, Preferences, Privileges and Restrictions, which have not been set forth in the Certificate of Designation of the Series B Convertible Preferred Stock nor the first Amendment to Certificate of Designation filed on August 12, 2016.

The preferred stock has the same rights as if each share of Series B Convertible Preferred Stock were converted into one share of common stock. For so long as the Series B Convertible Preferred Stock is issued and outstanding, the holders of such Series B Convertible Preferred Stock vote together as a single class with the holders of the common stock and the holders of any other class or series of shares entitled to vote with the common stock, with the holders of Series B Stock being entitled to 66 2/3% of the total votes on all such matters.

In the event of the death of a holder of the Class B Preferred Stock, or a liquidation, winding up or bankruptcy of a holder which is an entity, all voting rights of the Class B Preferred Stock shall cease.

The holder of any shares of Class B Preferred Stock have the right to convert their shares into common stock at any time, in a conversion ratio of one share of common stock for each share of Class B Preferred. If the Company’s common stock trades or is quoted at a price per share in excess of $2.25 for any twenty consecutive day trading period, the Class B Preferred Stock will automatically be convertible into the common stock of the Company in a conversion ratio of one share of common stock for each share of Class B Preferred.

The holders of Class B Preferred Stock are not entitled to receive any distributions in the event of any liquidation, dissolution or winding up of the Company.

The warrants cannot be exercised on a cashless basis.

On October 31 and November 1, 2016, three of the accredited investors provided $51,000 to Cool Technologies and are due to receive an additional 927,270 Series B Preferred shares.

On October 31 and November 1, 2016, three of the accredited investors provided $51,000 to the Company. Pursuant to signed approval from the investors, on July 25, 2017, CoolTech issued 309,090 shares of common stock to each of the investors.

On May 8, 2017, Inverom Corporation converted its 909,090 Series B preferred shares into 909,090 shares of common stock. This represented all of the shares of Series B stock held by Inverom Corporation.

Preferred stock issuable on the consolidated balance sheets represents preferred stock to be issued for either cash received or services performed. As of December 31, 2018 and 2017, the number of shares of preferred stock to be issued was 0.

Spirit Bear holds 17 shares of Cool Technologies’ Series A Preferred Stock and KHIC, Inc., a related party holds the remaining 3 shares of Series A Preferred Stock. Each share of Series A Preferred Stock ("Preferred Stock") is convertible into 50,000 shares of common stock. Each share of preferred stock has voting rights as if they were converted into 50,000 shares of common stock. The holders of each share of preferred stock then outstanding shall be entitled to be paid out of the Available Funds and Assets (as defined in the "Certificate of Designation"), and prior and in preference to any payment or distribution (or any setting a part of any payment or distribution) of any Available Funds and Assets on any shares of common stock, an amount per preferred share equal to the Preferred Stock Liquidation Price ($2,500 per share). On January 25, 2019, Spirit Bear converted all of their shares of Series A Preferred Stock into 850,000 shares of the Company’s common stock.

Common stock

On February 10, 2017, stockholders holding shares that entitled them to exercise at least a majority of the voting power, voted in favor of increasing the number of authorized shares of common stock, from 140,000,000 shares to 350,000,000 shares.

Common stock issuable on the consolidated balance sheets represents common stock to be issued for either cash received or services performed. As of December 31, 2018 and 2017, the number of shares of common stock to be issued was 1,144,697 and 9,320,635 shares, respectively.

Common stock warrants issued with the sale of CoolTech’s common stock

When the Company sells shares of its common stock the buyer also typically receives fully-vested common stock warrants with a maximum contractual term of 3-5 years. A summary of common stock warrants issued with the sale of common stock as of December 31, 2018, and changes during the years then ended is presented below:

	Number of Warrants			Weighted-average Exercise Price		Weighted-average Remaining Life (Years)		Aggregate Intrinsic Value
Outstanding, December 31, 2016		34,045,467		$	0.30
Granted		25,941,558			0.08
Forfeited or expired		(12,549,437	)		0.26
Outstanding, December 31, 2017		47,437,588			0.19		2.1	$	114,000
Exercisable, December 31, 2017		47,437,588			0.19		2.1	$	114,000
Granted		5,431,944			0.06
Exercised		--			--
Forfeited or expired		(501,645	)		0.29
Outstanding, December 31, 2018		52,367,887			0.18		1.3		-
Exercisable, December 31, 2018		52,367,887		$	0.18		1.3	$	-