STOCKHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2021

Stockholders' Equity Note [Abstract]

STOCKHOLDERS’ EQUITY

11 STOCKHOLDERS’ EQUITY

a. Common Stock

The Company has authorized 500,000,000 common shares with a par value of $0.0001 each. The Company has issued and outstanding 367,901,679 and 193,637,747 shares of common stock as of December 31, 2021 and 2020, respectively.

The following shares of common stock were issued by the Company during the year ended December 31, 2021:

● In terms of debt conversion notices received between January 5, 2021 and February 23, 2021, the Company issued an aggregate of 61,793,616 shares of common stock for the conversion of $2,259,221 of convertible debt and interest thereon, realizing a loss on conversion of $5,498,820.

● In terms of warrant exercise notices received between February 18, 2021 and June 23, 2021, the Company issued 60,186,982 shares of common stock for gross proceeds of $3,009,349.

● On March 17, 2021, the Company, entered into Securities Purchase Agreements with several institutional investors, pursuant to which the Company agreed to sell to the Investors in a private placement (i) 30,333,334 shares of its common stock (the “Shares”) and (ii) warrants (the “Warrants”) to purchase up to an aggregate of 15,166,667 shares of its common stock for gross proceeds of approximately $4,550,000. The combined purchase price for one share of common stock and associated Warrant is $0.15.

● Pursuant to an engagement letter dated as of March 6, 2021, by and between the Company and H.C. Wainwright & Co., LLC (“Wainwright”), the Company engaged Wainwright to act as the Company’s exclusive placement agent in connection with the private placement. Pursuant to the engagement agreement, the Company agreed to pay Wainwright a cash fee of 8.0% of the gross proceeds raised by the Company in the private placement. The Company also agreed to pay Wainwright (i) a management fee equal to 1.0% of the gross proceeds raised in the private placement; (ii) $35,000 for non-accountable expenses and (iii) up to $50,000 for fees and expenses of legal counsel and other out-of-pocket expenses. In addition, the Company agreed to issue to Wainwright (or its designees) placement agent warrants (the “Placement Agent Warrants”) to purchase a number of shares equal to 8.0% of the aggregate number of Shares sold under the Purchase Agreement or warrants to purchase an aggregate of up to 2,426,667 shares of the Company’s common stock. The Placement Agent Warrants generally will have the same terms as the Warrants, except they will have an exercise price of $0.1875.

● On April 5, 2021, the Board of directors approved advisory board agreements with four individuals, each agreement for a period of two years form the effective date of the agreement and may be terminated by each party with 30 days’ notice. As compensation the Company awarded each advisory board member 2,000,000 restricted shares of common stock, the restricted shares of common stock vest as to 75% on the effective date and 25% on the anniversary date of the agreement.

The following shares of common stock were issued by the Company during the year ended December 31, 2021:

● On July 22, 2021, the Board of directors approved the issuance of 7,000,000 shares of common stock to board members that were appointed during the year. In Addition, a further 300,000  shares of common stock were issued to an employee of the Company and a further 3,650,000  shares of common stock were issued to various consultants.

● On August 9, 2021, the Board of directors approved the issuance of 2,000,000 shares of common stock to a third party vendor.

● The 1,500,000 shares of unvested restricted stock which was not physically issued to an employee were not earned due to the cessation of employment with the Company and were therefore cancelled.

b. Restricted stock awards

On December 15, 2020, in terms of an employment agreement entered into with an employee, the Company granted 2,500,000 restricted shares of which 1,000,000 vested on January 1, 2021 and the remaining 1,500,000 shares vest over a period of two years. The 1,500,000 shares of unvested restricted stock which was not physically issued to the employee were not earned due to the cessation of employment with the Company.

A summary of restricted stock activity during the period January 1, 2020 to December 31, 2021 is as follows:

	Total restricted shares			Weighted average fair market value per share			Total unvested restricted shares			Weighted average fair market value per share			Total vested restricted shares		Weighted average fair market value per share
Outstanding January 1, 2020		-		$	-			-		$	-			-	$	-
Granted		20,495,000			0.049			20,495,000			0.049			-		-
Forfeited/Cancelled		-			-			-			-			-		-
Vested		-			-			(5,123,750	)		(0.049	)		5,123,750		0.049
Outstanding December 31, 2020		20,495,000			0.049			15,371,250			0.049			5,123,750	$	0.049
Granted		2,500,000			0.050			2,500,000			0.050			-		-
Forfeited/Cancelled		(1,500,000	)		(0.050	)		(1,500,000	)		(0.050	)		-		-
Vested		-			-			(6,123,750	)		(0.049	)		6,123,750		0.049
Outstanding December 31, 2021		21,495,000		$	0.049			10,247,500		$	0.049			11,247,500	$	0.049

The restricted stock granted and exercisable at December 31, 2021 is as follows:

		Restricted Stock Granted				Restricted Stock Vested
Grant date Price		Number Granted		Weighted Average Fair Value per Share		Number Vested		Weighted Average Fair Value per Share
$	0.049		20,495,000	$	0.049		10,247,500	$	0.049
$	0.050		1,000,000		0.050		1,000,000		0.050
			21,495,000	$	0.049		11,247,500	$	0.049

The Company has recorded an expense of $301,064 and $502,127 for the years ended December 31, 2021 and 2020, respectively.

c. Preferred Stock

The Company has authorized 25,000,000 shares of preferred stock with a par value of $0.0001 authorized, no preferred stock is issued and outstanding as of December 31, 2021 and December 31, 2020.

d. Warrants

In terms of the Senior Secured convertible notes entered into with various noteholders as described in note 9 above, the Company issued five year warrants exercisable for a total of 28,709,182 shares of common stock at initial exercise prices ranging from $0.05 to $0.24 per share. The warrants have a cashless exercise option and an exercise limitation based on a certain beneficial ownership percentage of 4.99% which may be adjusted to 9.99%. The exercise price of the warrant is adjustable under the following conditions; i) subsequent equity sales are at a price below the exercise price of the warrant; ii) the Company issues options with an exercise price lower than the exercise price of the warrants; iii) issues convertible securities which are convertible into common stock at a price lower than the warrant exercise price; and iv) the option exercise price or rate of conversion for convertible securities results in a lower exercise price than the exercise price of the warrants.

The warrant holders also have the option to acquire subsequent rights offering rights, under certain circumstances and are entitled to pro-rata distributions made by the Company in assets or securities other than common stock.

The warrants include a fundamental transaction clause which will give the warrant holder the right on an as converted basis to the proceeds which common shareholders would be entitled to as a result of a fundamental transaction. Notwithstanding the aforementioned rights, provided the warrants are not registered under an effective registration statement, the holder of the warrant has the right to receive cash equal to the Black-Scholes value of the unexercised portion of the warrant in accordance with the terms of the warrant agreement.

On February 22, 2021, the Board of Directors of the Company appointed William Corbett, its Chief Executive Officer and then Interim Chief Financial Officer, as its Chairman of the Board and issued him a five-year warrant to purchase 20,000,000 shares of the Company’s common stock at an exercise price of $0.24, valued at $4,327,899 and expensed as stock based compensation during the current period.

In connection with the Securities Purchase Agreements with several institutional investors, disclosed in Note 9(a) above, the Company sold warrants to purchase up to an aggregate of 15,166,667 shares of its common stock. The combined purchase price for one share of common stock and associated Warrant is $0.15. The warrants were valued at $2,028,509 using a Black Scholes valuation model and using the assumptions disclosed below.

The Warrants are exercisable for a period of five years from the date of issuance and have an exercise price of $0.15 per share, subject to adjustment as set forth in the Warrants for stock splits, stock dividends, recapitalizations and similar events. The Investors may exercise the Warrants on a cashless basis if after the six month anniversary of date of issuance the shares of common stock underlying the Warrants (the “Warrant Shares”) are not then registered pursuant to an effective registration statement. Each Investor has contractually agreed to restrict its ability to exercise the Warrants such that the number of shares of the Company’s common stock held by the Investor and its affiliates after such exercise does not exceed the beneficial ownership limitation set forth in the Warrants which may not exceed initially 4.99% or 9.99% of the Company’s then issued and outstanding shares of common stock.

Pursuant to an engagement letter dated as of March 6, 2021, by and between the Company and Wainwright, the Company engaged Wainwright to act as the Company’s exclusive placement agent in connection with the private placement, discussed above. The Company agreed to issue to Wainwright (or its designees) Placement Agent Warrants to purchase an aggregate of up to 2,426,667 shares of the Company’s common stock. The Placement Agent Warrants generally will have the same terms as the Warrants, except they will have an exercise price of $0.1875. The warrants were valued at $323,924 using a Black Scholes valuation model and using the assumptions disclosed below.

On August 16, 2021, the Company and Mr. Corbett entered into an Executive Employment Agreement that replaced and superseded the previous executive employment agreement whereby the 20,000,000 warrants previously issued to Mr. Corbett were cancelled and as a replacement for the warrants, he was granted options to purchase 20,000,000 shares of common stock of the Company at a per share exercise price of $0.15.

The fair value of the warrants granted and issued were determined by using a Black Scholes valuation model using the following assumptions:

	Year ended December 31, 2021
Exercise price		$0.05 to $0.24
Risk free interest rate		0.46% to 0.92	%
Expected life		5.0 years
Expected volatility of underlying stock		213.84% to 215.33	%
Expected dividend rate		0	%

A summary of warrant activity during the period January 1, 2020 to December 31, 2021 is as follows:

	Shares Underlying Warrants			Exercise price per share		Weighted average exercise price
Outstanding January 1, 2020		852,775		$	2.00 to 6.25	$	5.10
Granted		51,188,572			0.05		0.05
Forfeited/Cancelled		(852,775	)		2.00 to 6.25		5.10
Exercised		-			-		-
Outstanding December 31, 2020		51,188,572		$	0.05	$	0.05
Granted		66,302,515			0.05 to 0.24		0.16
Forfeited/Cancelled		(20,000,000	)		0.24		0.24
Exercised		(60,186,982	)		0.05		0.05
Outstanding December 31, 2021		37,304,105		$	0.05 – 0.1875	$	0.12

The warrants outstanding and exercisable at December 31, 2021 are as follows:

		Warrants Outstanding						Warrants Exercisable
Exercise Price*		Number Outstanding		Weighted Average Remaining Contractual life in years		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price		Weighted Average Remaining Contractual life in years
$	0.05		10,823,813		3.78				10,823,813				3.78
$	0.15		24,053,625		4.18				24,053,625				4.18
$	0.1875		2,426,667		4.21				2,426,667				4.21
			37,304,105		4.07	$	0.12		37,304,105	$	0.12		4.07

The warrants outstanding have an intrinsic value of $0 as of December 31, 2021 and 2020.

e. Stock options

On June 18, 2018, the Company established its 2018 Stock Incentive Plan (the “Plan”). The purpose of the Plan is to promote the interests of the Company and the stockholders of the Company by providing directors, officers, employees and consultants of the Company with appropriate incentives and rewards to encourage them to enter into and continue in the employ or service of the Company, to acquire a proprietary interest in the long-term success of the Company and to reward the performance of individuals in fulfilling long-term corporate objectives. The Plan terminates after a period of ten years in June 2028.

The Plan is administered by the board of directors or a Committee appointed by the Board of Directors who have the authority to administer the Plan and to exercise all the powers and authorities specifically granted to it under the Plan.

The maximum number of securities available under the Plan is 800,000 shares of common stock. The maximum number of shares of common stock awarded to any individual during any fiscal year may not exceed 100,000 shares of common stock.

On October 22, 2021, the Company (with the approval of the Company’s shareholders) established its 2021 Stock Incentive Plan (“2021 Plan”). The purpose of the 2021 Plan is to promote the interests of the Company and the stockholders of the Company by providing directors, officers, employees and consultants, advisors and service providers of the Company with appropriate incentives and rewards to encourage them to enter into and continue in the employ or service of the Company, to acquire a proprietary interest in the long-term success of the Company and to reward the performance of individuals in fulfilling long-term corporate objectives. The 2021 Plan terminates after a period of ten years in August 2031.

The 2021 Plan is administered by the board of directors or a Compensation Committee appointed by the Board of Directors who have the authority to administer the 2021 Plan and to exercise all the powers and authorities specifically granted to it under the 2021 Plan.

The maximum number of securities available under the 2021 Plan is 53,000,000 shares of common stock.

Under the 2021 Plan the company may award the following: (i) non-qualified stock options; (ii)) incentive stock options; (iii) stock appreciation rights; (iv) restricted stock; (v) restricted stock unit; and (vi) other stock-based awards.

On February 22, 2021, the board awarded each of its directors, James Fuller and Andrey Novikov, options under the Company’s 2018 Stock Incentive Plan to purchase 208,333 shares of the Company’s common stock. The options are exercisable for a period of ten years from the date of grant, vest in full on the date of grant and have an exercise price of $0.24 per share.

On August 16, 2021, the Company and Mr. Corbett entered into an Executive Employment Agreement that replaced and superseded the previous executive employment agreement whereby the 20,000,000 warrants previously issued to Mr. Corbett were cancelled and as a replacement for the warrants, he was granted options to purchase 20,000,000 shares of common stock of the Company at a per share exercise price of $0.15. The options are exercisable for a period of ten years from the date of grant, vesting as to 50% on grant date and the remaining 50%, equally over a period of 36 months.

In terms of an employment agreement dated August 16, 2021, on August 31, 2021, the Board awarded Richard Rosenblum, the Company’s Chief Financial Officer an option to purchase 10,000,000 shares of the Company’s common stock at an exercise price of $0.15 per share. The options are exercisable for a period of ten years from the date of grant, vesting as to 50% on grant date and the remaining 50%, equally over a period of 36 months.

The fair value of the options granted and issued were determined by using a Black Scholes valuation model using the following assumptions:

	Year ended December 31, 2021
Exercise price	$	0.15
Risk free interest rate		1.26% to 1.27	%
Expected life		10.0 years
Expected volatility of underlying stock		209.3% to 210.4	%
Expected dividend rate		0	%

On July 22. 2021, the board of directors authorized the reduction in the exercise price of the options exercisable for 208,333 shares of common stock granted to Mr. Fuller on February 22, 2021, from $0.24 per share to $0.15 per share, resulting in an immediate compensation charge of $6, the remaining terms of the option were unchanged.

The value of the reduction in the exercise price was determined using a Black Scholes valuation model utilizing the following assumptions:

	Year ended December 31, 2021
Revised exercise price	$	0.15
Original exercise price	$	0.24
Risk free interest rate		1.27	%
Expected life		9.6 years
Expected volatility of underlying stock		210.4	%
Expected dividend rate		0	%

No options were granted for the year ended December 31, 2020.

A summary of option activity during the period January 1, 2020 to December 31, 2021 is as follows:

	Shares Underlying options		Exercise price per share		Weighted average exercise price
Outstanding January 1, 2020		100,000	$	0.40	$	0.40
Granted		-		-		-
Forfeited/Cancelled		-		-		-
Exercised		-		-		-
Outstanding December 31, 2020		100,000		0.40		0.40
Granted		30,416,666		0.15 – 0.24		0.15
Forfeited/Cancelled		-		-		-
Exercised		-		-		-
Outstanding December 31, 2021		30,516,666	$	0.15 to 0.40	$	0.15

The options outstanding and exercisable at December 31, 2021 are as follows:

		Options Outstanding						Options Exercisable
Exercise Price*		Number Outstanding		Weighted Average Remaining Contractual life in years		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price		Weighted Average Remaining Contractual life in years
$	0.15		30,208,333		9.64				16,875,000				9.64
$	0.24		208,333		9.15				208,333				9.15
$	0.40		100,000		6.99				100,000				6.99
			30,516,666		9.63	$	0.15		17,183,333	$	0.15		9.62

The options outstanding have an intrinsic value of $0 as of December 31, 2021 and 2020, respectively. The option expense was $1,382,639 and $0 for the years ended December 31, 2021 and 2020.