Note 7 – Stockholders’ Deficit

Common Stock

The Company has authorized 500,000,000 shares of common stock, par value $0.01; 98,796,144 and 81,268,443 shares were issued and outstanding at June 30, 2020 and December 31, 2019, respectively.

Common Stock Transactions During the Six Months Ended June 30, 2020

During the six months ended June 30, 2020, the Company issued 2,901,440 shares of common stock for the cashless exercise of warrants. These warrants were issued pursuant to a settlement agreement with a note holder regarding the effective price of warrants issued with regard to a variable conversion price feature which resulted in the issuance of 1,011,967 more shares than would have been issued prior to the settlement agreement. The Company recorded a loss in the amount of $24,894 on this transaction based upon the additional shares issued at the market price of the Company’s common stock.

Also, during the six months ended June 30, 2020, the holder of the Eagle Equities Note 1 converted the following amounts of principal and accrued interest to common stock: On June 5, 2020, principal of $25,000 and accrued interest of $1,608 were converted at a price of $0.0132 per share into 2,015,783 shares of common stock; On June 17, 2020, principal of $25,000 and accrued interest of $1,708 were converted at a price of $0.0132 per share into 2,023,358 shares of common stock; On June 23, 2020, principal of $40,000 and accrued interest of $2,813 were converted at a price of $0.0132 per share into 3,243,434 shares of common stock; and on June 26, 2020, principal of $26,000 and accrued interest of $1,855 were converted at a price of $0.01362 per share into 2,045,130 shares of common stock. There were no gains or losses recorded, as these conversions were made pursuant to the terms of the agreement.

Also, during the six months ending June 30, 2020, the Company issued 200,000 restricted shares of the Company’s common stock at valued $7,680 in exchange for services conducted on behalf of the Company. The value of these shares was based on the closing market price on the respective date of grant.

Also, during the six months ended June 30, 2020, the Company charged the amount of $53,050 to operations in connection with the vesting of stock granted to its officers and board members; the Company also charged the amount of $27,580 to operations in connection with the vesting of options granted to officers and board members.

Also, during the six months ended June 30, 2020, the Company entered into agreements to issue 500,000 options to each of four consultants (a total of 2,000,000 options). The options have a fair value of $20,930 per consultant (a total of $83,720). These agreements will become effective April 6, 2020, at which time the Company will begin to charge the value of these options to operations. The Company valued these options using the Black-Scholes valuation model.

Also, during the six months ended June 30, 2020, the Company entered into agreements with two note holders regarding the exercise price of warrants held by the note holders. These agreements resulted in the following: (i) the Company issued 1,000,000 shares of common stock, and the note holders agreed to cancel 2,769,482 warrants; the Company recorded a gain in the amount of $77,652 on this transaction; (ii) the Company issued 4,098,556 shares of common stock for the exercise of 4,480,938 warrants in a cashless transaction; the Company recorded a gain in the amount of $259,947 on this transaction, which is included in gain on derivative liabilities.

Common Stock Transactions During the Six Months Ended June 30, 2019

During the six months ending June 30, 2019, the Company issued 200,000 restricted shares of the Company’s common stock at valued $17,480 in exchange for services conducted on behalf of the Company. The value of these shares was based on the closing market price on the respective date of grant.

Also, during the six months ended June 30, 2019, the Company charged the amount of $2,875 to additional paid-in capital in connection with the vesting of stock granted to its President.

Also during the six months ended June 30, 2019, the Company issued, in seven transactions, a total of 1,918,625 shares in connection with the conversion of notes payable principal and accrued interest in the aggregate amount of $86,000 and $4,260, respectively; a loss in the aggregate amount of $99,724 was recognized on these transactions.

Also, during the six months ended June 30, 2019, the Company cancelled 400,000 shares of common stock issued to a former executive officer.

Preferred Stock

The Company has authorized 100,000,000 shares of Preferred Stock. At June 30, 2020, designations have been filed for the issuance of up to 400,000 shares of its Series X preferred stock, and for the issuance of up to 500,000 shares of its Series A Preferred stock.

Series A Preferred Stock

The Company has issued 4,800 and 0 shares of its 10% Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”) as of June 30, 2020 and December 31, 2019, respectively. The Series A Preferred Stock has a par value of $0.01 per share, no stated maturity, a liquidation preference of $25.00 per share, and will not be subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Company decides to redeem or otherwise repurchase the Series A Preferred Stock. The Series A Preferred Stock is not redeemable prior to March 3, 2023. The Series A Preferred Stock will rank senior to all classes of the Company’s common stock and will accrue dividends at the rate of 10% on $25.00 per share. The Company reserves the right to pay the dividends in shares of the Company’s common stock at a price equal to the average closing price over the five days prior to the date of the dividend declaration. The Series A Preferred Stock will have no voting rights. The Company valued the 4,800 shares of Series A Preferred Stock at $71,558 or approximately $14.91 per share based upon an analysis performed by an independent valuation consultant.

Series A Preferred Stock Transactions During the Six Months Ended June 30, 2020

On March 2, 2020, the Company issued 4,800 shares of its Series A Preferred Stock to four individuals with certain skills and know-how to assist the Company in the development of its newly-formed subsidiary The Good Clinic, LLC. The Company has valued these shares at $71,558 or approximately $14.91 per share based upon an analysis performed by an independent valuation consultant. During the six months ended June 30, 2020, the Company accrued dividends in the amount of $3,967 on the Series A Preferred Stock. At June 30, 2020, dividend payable on the Series A Preferred Stock was $3,967. At June 30, 2020, if management determined to pay these dividends in shares of the Company’s common stock, this would result in the issuance of 98,780 shares of common stock based upon the average price of $0.0402 per share for the five day period ended June 30, 2020.

Series X Preferred Stock

The Company has issued 26,227 shares of its 10% Series X Cumulative Redeemable Perpetual Preferred Stock (the “Series X Preferred Stock”) as of June 30, 2020 and December 31, 2019 and 2018. The Series X Preferred Stock has a par value of $0.01 per share, no stated maturity, a liquidation preference of $25.00 per share, and will not be subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Company decides to redeem or otherwise repurchase the Series X Preferred Stock; the Series X Preferred Stock is not redeemable prior to November 4, 2020. The Series X Preferred Stock will rank senior to all classes of the Company’s common stock and will accrue dividends at the rate of 10% on $25.00 per share. The Company reserves the right to pay the dividends in shares of the Company’s common stock at a price equal to the average closing price over the five days prior to the date of the dividend declaration. The Series X Preferred Stock will have “super” voting rights such that each share of Series X Preferred Stock will be entitled to 20,000 votes. The Series X Preferred Stock has a fair value of $34.73 as determined by the Company’s independent valuation consultant.

Series X Preferred Stock Transactions During the Six Months Ended June 30, 2020

During the six months ended June 30, 2020, the Company accrued dividends in the amount of $32,784 on the Series X Preferred Stock. At June 30, 2020, dividend payable on the Series X Preferred Stock was $32,784. At June 30, 2020, if management determined to pay these dividends in shares of the Company’s common stock, this would result in the issuance of 816,335 shares of common stock based upon the average price of $0.0402 per share for the five day period ended June 30, 2020.

Stock Options

The following table summarizes the options outstanding at June 30, 2020 and the related prices for the options to purchase shares of the Company’s common stock:

						Weighted				Weighted
				Weighted		average				average
				average		exercise				exercise
Range of		Number of		remaining		price of		Number of		price of
exercise		options		contractual		outstanding		options		exercisable
prices		outstanding		life (years)		options		exercisable		options
$	0.03		250,000		9.93	$	0.03		-	$	-
$	0.05		7,000,000		9.70	$	0.05		-	$	-
$	21.40		67,879		2.67	$	21.40		67,879	$	21.40
			7,317,879		9.70	$	0.25		67,879	$	21.40

Transactions involving stock options are summarized as follows:

	Shares			Weighted- Average Exercise Price ($)
Outstanding at December 31, 2018		67,879		$	21.40
Granted		-			-
Cancelled		-			-

Outstanding at December 31, 2019		67,879		$	21.40

Granted		8,750,000		$	0.05
Cancelled		(1,500,000	)		-
Outstanding at June 30, 2020		7,317,879		$	0.25

Exercisable at June 30, 2020		67,879		$	21.40

At June 30, 2020, the total stock-based compensation cost related to unvested awards not yet recognized was $253,582.

Warrants

The following table summarizes the warrants outstanding at June 30, 2020 and the related prices for the warrants to purchase shares of the Company’s common stock:

	Shares			Weighted- Average Exercise Price ($)

Outstanding at December 31, 2018		1,167,653		$	2.18

Granted		400,000		$	0.00858
Additional warrants due to trigger of ratchet feature		6,659,382		$	0.00858
Exercised – cashless conversion		(3,514,900	)	$	0.00858
Forfeited		(2,769,482	)	$	0.00858
Expired		(142,653	)		17.42
Outstanding at December 31, 2019		1,800,000		$	0.00858

Granted		6,582,382		$	0.00858
Exercised		(8,382,382	)	$	0.0561
Outstanding at June 30, 2020		-		$	-