Stockholder's Equity (Deficit)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Stockholder's Equity (Deficit)

Note 10 – Stockholders’ Equity (Deficit)

Series C Preferred Stock

On December 16, 2019, Diego Pellicer Worldwide sold 140,000 of its Series C Convertible Preferred Shares, with an annual accruing dividend of 10%, to Geneva Roth Remark Holdings, Inc. (“Geneva”), for $130,000 pursuant to a Series C Preferred Purchase Agreement with Geneva. To accommodate this transaction, Registrant’s Board of Directors approved and filed a certain Certificate of Designations with the Secretary of State of Delaware, designating 1,500,000 of its available preferred shares as Series C Preferred Convertible Stock, Stated Value of $1.00 per share, and with a par value of $0.0001 per share. This Certificate of Designations provides Registrant with the opportunity to redeem the Series C Shares at various increased prices at time intervals up to the 6-month anniversary of the closing and mandates full redemption on the 24-month anniversary. Geneva may convert the Series C Shares into Registrant’s common shares, commencing on the 6-month anniversary of the closing at a 30% discount to the public market price. The Company recorded a derivative liability of $165,218, valued using a Binomial Option Pricing Model, associated with Series C Preferred Shares. On December 31, 2019, the fair value of the conversion feature was a derivative liability of $190,131, valued using a Binomial Option Pricing Model, associated with Series C Preferred Shares. The Series C Preferred Stock is classified as temporary equity due to that the shares are immediately convertible at the option of the note holder. During the year ended Decembers 31, 2019, we recorded $8,750 accretion of discount. As of December 31, 2019, there were 140,000 shares outstanding and a discount of $131,250. On March 31, 2020, the fair value of the conversion feature was a derivative liability of $210,347, valued using a Binomial Option Pricing Model, associated with Series C Preferred Shares. During the three months ended March 31, 2020, we recorded $12,639 accretion of discount and $4,343 of accrued dividend. As of March 31, 2020, there were 140,000 shares outstanding and a discount of $118,611.

On March 3, 2020, Diego Pellicer Worldwide sold 55,800 of its Series C Convertible Preferred Shares, with an annual accruing dividend of 10%, to Geneva Roth Remark Holdings, Inc. (“Geneva”), for $50,000 pursuant to a Series C Preferred Purchase Agreement with Geneva. The Company recorded a derivative liability of $88,868 valued using a Binomial Option Pricing Model, associated with Series C Preferred Shares. On March 31, 2020, the fair value of the conversion feature was a derivative liability of $82,342, valued using a Binomial Option Pricing Model, associated with Series C Preferred Shares. The Series C Preferred Stock is classified as temporary equity due to that the shares are immediately convertible at the option of the note holder. During the three months ended March 31, 2020, we recorded $2,170 accretion of discount and $436 of accrued dividend. As of March 31, 2020, there were 55,800 shares outstanding and a discount of $53,630.

The following assumptions were used in the Binomial Option Pricing Model in calculating the embedded conversion features and current liabilities for the three months ended March 31, 2020 and the year ended December 31, 2019.

	March 31, 2020		December 31, 2019
Risk-free interest rates	0.23 – 0.71	%		1.58 – 1.66	%
Expected life (years)	1.70 – 2.00			1.95 – 2.00
Expected dividends	0	%		0	%
Expected volatility	246-251	%		248-250	%

Common Stock

During the three months ended March 31, 2020:

$89,000 of notes, $6,282 of accrued interest and $210 additional fee was converted into 13,767,631  shares of common stock. A loss on extinguishment of debt of $1,993, extinguishment of debt discount of $25,377 and reduction of derivative liabilities of $97,838 have been recorded related to these conversions. As of March 31, 2020, 35,844 shares, valued at $35,844 for debt conversion were authorized, but not issued as of March 31, 2020.

As March 31, 2020, 406,160 shares, valued at $13,601 for services were authorized, but not issued as of March 31, 2020. These were classified as shares to be issued at March 31, 2020.

As March 31, 2020,  4,951,781 shares, valued at $106,842 for related party services were authorized, but not issued as of March 31, 2020. These were classified as shares to be issued at March 31, 2020.

During the three months ended March 31, 2019:

Holders of convertible notes converted $450,212 of notes, and $31,345 of accrued interest was converted into 12,242,678 shares of common stock and 434,783 shares were issued which were authorized as of December 31, 2018. A gain on extinguishment of debt of $130,031 has been recorded related to these conversions.

We issued 878,579 shares of common stock, valued at $50,000, for services. Additionally, 44,584 shares, valued at $2,024 for services, were authorized but not issued as of March 31, 2019. We issued 1,968,671 shares of common stock that were authorized in 2018 and classified as shares to be issued at December 31, 2018.

We authorized 4,380,509 shares, valued at 315,017 for share-based compensation to related parties. These were classified as shares to be issued at March 31, 2018.

Common stock warrant activity:

The Company has determined that certain of its warrants are subject to derivative accounting. The table below provides a reconciliation of the beginning and ending balances for the warrant liabilities measured using fair significant unobservable inputs (Level 3) for the three months ended March 31, 2020:

Balance at December 31, 2019	$	967
Issuance of warrants		—
Change in fair value during period		(97	)
Balance at March 31, 2020	$	870

The following assumptions were used in calculations of the Binomial Option Pricing Model for the periods ended March 31, 2020 and the year ended December 31, 2019.

	March 31, 2020			December 31, 2019
Annual dividend yield		0	%		0	%
Expected life (years)		0.42-7.4			0.42 – 8.13
Risk-free interest rate		1.60 – 1.83	%		1.56 – 2.40	%
Expected volatility		189 - 236	%		165 - 318	%

The following represents a summary of all common stock warrant activity:

	Number of    Warrants			Weighted Average    Exercise Price		Weighted Average    Remaining    Contractual Term
Balance outstanding, December 31, 2019		211,826		$	10.08		3.51
Expired		(23,750	)		30.00		-
Balance outstanding, March 31, 2020		188,076		$	7.57		3.69
Exercisable, March 31, 2020		188,076		$	7.57		3.69

Common stock option activity:

The Company maintains an Equity Incentive Plan pursuant of which 124,000 shares of Common Stock are reserved for issuance thereunder. This Plan was established to award certain founding members, who were instrumental in the development of the Company, as well as key employees, directors and consultants, and to promote the success of the Company’s business. The terms allow for each option to vest immediately, with a term no greater than 10 years from the date of grant, at an exercise price equal to par value at date of the grant. As of March 31, 2020, 88,750 shares had been granted, with 10,000 of those shares granted with warrants attached. There remain 35,250 shares available for future grants.

During the three months ended March 31, 2020 and 2019, the Company recorded total option expense of $40,595. Unamortized stock option expense at March 31, 2020 is $46,011, which will be charged to expense in remaining months of 2020. The aggregate intrinsic value of stock options outstanding at March 31, 2020 is $0.

 The following represents a summary of all common stock option activity:

	Number of    Options		Weighted Average    Exercise Price		Weighted Average    Remaining    Contractual Term
Balance outstanding, December 31, 2019		172,479	$	5.29		5.47
Granted		—		—
Balance outstanding, March 31, 2020		172,479	$	5.29		5.22
Exercisable, March 31, 2020		162,479	$	5.25		5.47