Capital Stock

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Capital Stock

8. Capital Stock

Common Stock

On March 13, 2023, we amended our Articles of Incorporation to increase the total number of authorized common shares from fifty million (50,000,000) to five hundred million (500,000,000), $0.00001 par value.

In 2022, we discovered an error whereby we previously reported our par value as $0.0001 per share. In accordance with Staff Accounting Bulletin (“SAB”) 99, Materiality, and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, we evaluated the materiality of the error from qualitative and quantitative perspectives, and concluded that the error was immaterial to the Balance Sheet as of December 31, 2021 and Statement of Operations, Changes in Stockholders’ Equity (Deficit), and Cash Flows for the year ended December 31, 2021. We have corrected this error by making an out-of-period adjustment as of December 31, 2022, reducing Balance Sheet accounts for both Common Stock and Common Stock to be Issued, and increasing the Balance Sheet account Additional Paid-In Capital.

Share Activity

The following share activity took place during the six-month periods ended June 30, 2024:

	Shares Issued			Shares to be Issued		Amount Recorded during Six Months Ended June 30, 2024
Private Placement Memoranda:
January 5, 2023, including warrant		250,000			–	$	25,000
April 13, 2023		–			1,000,000		25,000
Subtotal		250,000			1,000,000	$	50,000
Shares for services:
Bonus shares		100,000			250,000	$	22,750
Stock awards		1,000,000			916,667		275,000
Independent Contractor Agreement		2,100,000			–		142,800
Igala/Waterford Agreements		800,000			–		72,000
SRAX Agreement		–			1,850,559		50,000
Subtotal		4,000,000			3,017,226	$	562,550
Debt Modification shares		1,000,000				$	110,000
Share cancellations		(2,145,000	)
Total		3,105,000			4,017,226	$	722,550

In addition to the 4,017,226 Shares to be Issued shown above, there are the following shares still to be issued resulting from 2022 transactions: (a) 600,000 shares for a November 22, 2022 debt modification on our 10% convertible promissory note and (b) 24,000 shares from a November 1, 2022 settlement of a note payable.

Private Placement Agreements

On January 5, 2023, we entered into a Private Placement Subscription Agreement (“PPM”) with a third party (the “Subscriber”) under which the Subscriber agreed to purchase 250,000 units with each unit consisting of one share of our common stock and a warrant to purchase one additional share. The consideration received was $25,000. The warrants are exercisable immediately at $0.10 per share, which was the fair market value of our common stock on the date of the agreement and expire in three years from the date of issuance. In allocating the proceeds of the PPM between the common stock and the warrant, we valued the warrant using the Black-Scholes option pricing model and recorded the resulting amount of $12,500 as an increase to additional paid-in capital. The shares were issued in April 2023.

On April 13, 2023, we entered into a Private Placement Subscription Agreement (“PPM”) with a third party (the “Subscriber”) under which the Subscriber agreed to purchase 1,000,000 units with each unit consisting of one share of our common stock. The consideration received was $25,000. The shares have not yet been issued.

Shares for Services

Bonus shares

On April 21, 2023, our Board of Directors authorized bonuses totaling 350,000 shares to be issued as follows: 250,000 shares to our then CFO and 100,000 shares to a vendor. To date only 100,000 bonus shares have been issued to our then CFO and the remaining 250,000 bonus shares have yet to be issued.

Employment Agreement Shares

During the six months ended June 30, 2023, we issued 500,000 shares each to the CFO and CIO (total of 1,000,000 shares) as stock awards under the terms of their employment agreements. These shares had been vested as of December 31, 2022, but had not been issued until 2023. Additionally, in accordance with the terms of their employment agreements, a total of 916,667 shares became vested during the six months ended June 30, 2023 to these two individuals (500,000 shares to our CIO and 416,667 shares to our CFO). The shares vested during the six months ended June 30, 2023 were valued at $275,000, or $0.30 per share, which was the fair market value of the shares on November 17, 2021, the date they were awarded. This amount was recorded as a general and administrative expense during the six-month period ended June 30, 2023.

Share Cancellations

In February 2023, four stockholders agreed to cancel a total of 2,145,000 shares of our common stock they held. We did not pay any consideration to the stockholders for the cancellation of their shares.

Prior Year Share Activity

During the six months ended June 30, 2022 the following share activity took place (a) in connection with the issuance of the Convertible Promissory Note described in Note 6, we were committed to issue 1,320,000 shares, which shares were issued on February 28, 2022 and (b) effective April 21, 2022 a shareholder agreed to cancel 2,000,000 shares they held for which no consideration was paid.

2020 Stock Incentive Plan

Effective June 20, 2020, our Board of Directors adopted the 2020 Stock Incentive Plan (the “Plan”) authorizing a total of 2,500,000 shares of our common stock for future issuances under the Plan. Under the Plan, the exercise price of a granted option shall not be less than 100% of the fair market value on the date of grant (110% of the fair market value in the case of a 10% stockholder). Additionally, no option may be exercisable more than ten (10) years after the date it is granted (no more than five (5) years in the case of a 10% stockholder).

Stock Options

On June 20, 2020, we granted options to purchase 100,000 of our common shares to each of Messrs. Grimes, Prasad, and Ritacco, all Officers and/or Directors of our Company. The options are exercisable at $0.01 per share, expire five (5) years from the date of grant, and vest ratably beginning December 20, 2021 over the term of the option.

The fair value of each stock option was estimated on the date of grant using the Black-Scholes option pricing model and resulted in a de minimis valuation. The assumptions used in determining the fair value of the stock options were as follows:

	Year Ended December 31, 2020
Expected term in years	5 years
Risk-free interest rate	0.33%
Annual expected volatility	38.3%
Dividend yield	0.00%

Risk-free interest rate: The risk-free interest rate of a U.S. Treasury Bill with a similar term on the date of the option grant.

Volatility: Expected volatility of the stock price is based on the corresponding volatility of our historical stock price.

Dividend yield: 0% expected dividend yield as we have not paid dividends to date and do not anticipate declaring dividends in the near future.

Remaining term: The remaining term is based on the remaining contractual term of the stock options.

Activity related to stock options through June 30, 2024 is as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
Outstanding, January 1, 2020		–
Granted during 2020		300,000	$	0.01
Outstanding, December 31, 2021		300,000	$	0.01
Outstanding, December 31, 2022		300,000	$	0.01
Outstanding, December 31, 2023		300,000	$	0.01
Outstanding, June 30, 2024		300,000		0.01
Exercisable, end of period		300,000	$	0.01		2.0	$	0

Warrants

In connection with the transaction with the third-party lender discussed in Note 6, we issued the lender a three-year warrant to purchase 750,000 common shares at $1.00 per share. In allocating the proceeds of the Note between the Note, the Commitment Shares and the Warrant, we valued the Warrant using the Black-Scholes option pricing model and recorded a debt discount of $117,161 which is included in the total discount of $244,450 described in Note 6.

In connection with the PPM, we issued the Subscriber a three-year warrant to purchase 250,000 common shares at $0.10 per share.

The assumptions used in determining the fair value of the PPM warrant were as follows:

Expected term in years	3 years
Risk-free interest rate	4.18%
Annual expected volatility	1,237.9%
Dividend yield	0.00%

Risk-free interest rate: The risk-free interest rate of a U.S. Treasury Bill with a similar term on the date of the option grant.

Volatility: Expected volatility of the stock price is based on the corresponding volatility of our historical stock price.

Dividend yield: 0% expected dividend yield as we have not paid dividends to date and do not anticipate declaring dividends in the near future.

Remaining term: The remaining term is based on the remaining contractual term of the warrant.

Activity related to the warrants for the six months ended June 30, 2024 is as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
Outstanding, December 31, 2023		1,000,000	$	0.0625
Granted during six months ended June 30, 2024		0		0
Outstanding, June 30, 2024		1,000,000	$	0.0625
Exercisable, end of period		1,000,000	$	0.0625		3.3	$	0