Note 10 – Stockholders’ Equity (Deficit)

Common Stock

The Company has authorized 500,000,000 shares of common stock, par value $0.01; 155,381,183 and 81,268,443 shares were issued and outstanding at December 31, 2020 and December 31, 2019, respectively.

Common Stock Transactions During the Year Ended December 31, 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) on January 29, 2020, 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) on February 19, 2020, 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 $182,295 on this transaction, which is included in gain on derivative liabilities.

On May 27, 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.

The Company issued, in nineteen transactions and at prices ranging from $0.0108 to $0.0120 per share, a total of 63,374,555 shares in connection with the conversion of principal and interest of convertible notes payable in the aggregate amounts of $813,000 and $70,658. No gain or loss was recognized on these transactions. See note 8.

On January 2, 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.

On August 27, 2020, the Company issued 386,985 shares of common stock at a price of $0.034 per share to an ex-employee for accrued compensation. A gain in the amount of $6,988 was recognized on this transaction.

The Company charged the amount of $67,623 to operations in connection with the vesting of stock granted to its officers, Board members, and employees.

The Company charged the amount of $421,502 to operations in connection with the vesting of stock options granted to its officers, Board members, consultants and employees.

On December 31, 2020. the Company issued 2,151,204 shares of common stock at a price of $0.0305 per share as payment of accrued dividends on the Series X Preferred Stock.

Common Stock Transactions During the Year Ended December 31, 2019

The Company issued 300,000 restricted shares of the Company’s common stock with a fair value of $22,005 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 grants.

The Company issued 38,179,083 shares of common stock with a fair value of $788,937 for the conversion of convertible debt and accrued interest in the amount of $627,479. The Company recorded a loss in the amount of $161,458 on these transactions.

The Company issued 1,401,224 shares of common stock for the conversion of a note payable and accrued interest pursuant to a legal settlement; the Company had a liability on its balance sheet in the amount of $74,104 in connection with this matter, and recorded a loss in the amount of $26,924 on this transaction.

The Company cancelled 700,000 shares of common stock returned by a former executive officer; the par value in the amount of $7,000 was charged to additional paid-in capital.

The Company issued 6,975,000 shares of common stock with a fair value at the date of the grant of $273,300 to employees, officer, and directors, subject to vesting requirements; the par value in the amount of $69,750 was charged to additional paid-in capital and the remaining fair value will be charged to operations over the term of the vesting period.

The Company recognized the amount of $212,187 for the vesting of shares issued to employees, officer, and directors; this amount was charged to additional paid-in capital.

The Company settled derivative liabilities in the amount of $881,296 and charged this amount to additional paid-in capital.

The Company recognized discounts on convertible notes payable in connection with beneficial conversion features and charged the amount of $225,393 to additional paid-in capital.

The Company recognized discounts on convertible notes payable in connection with warrants and charged the amount of $34,500 to additional paid-in capital.

The Company issued 3,514,900 shares of common stock in connection with the cashless exercise of warrants and credited the amount of $35,149 from additional paid-in capital.

The Company credited the amount of $35,532 to additional paid-in capital in connection with a reduction in the amount of accounts payable due to a related party due to a settlement agreement.

The Company recorded imputed interest on a note payable to a related party and charged the amount of $9,018 to additional paid-in capital.

Preferred Stock

We have authorized to issue 100,000,000 shares of Preferred Stock with such rights designations and preferences as determined by our Board of Directors. We have designated 27,324 shares as Series X Preferred Stock, and 3,000,000 as Series A Preferred Stock. There are no Series A Preferred shares issued as of the date of this filing.

Series A Preferred Stock

We issued 4,800 and 0 shares of our 12% Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”) as of December 31, 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 is not 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, 2022. The Series A Preferred Stock will accrue dividends at the rate of 12% on $25.00 per share.

The designation includes, among other terms, that:

	■	The Series A Preferred Stock ranks junior to our Series X Preferred Stock;
	■	The Series A Preferred Stock has limited voting rights only on matters impacting certain of our securities that are senior to the Series A and in transactions involving mergers or similar transactions that adversely affects and deprives holders of the Series A Preferred Stock;
	■	The Series A Preferred Stock is on a parity with all equity securities issued by us with terms specifically providing that those equity securities rank on a parity with the Series A Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up;
	■	The Series A Preferred Stock is junior to all equity securities issued by us with terms specifically providing that those equity securities rank senior to the Series A Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up;
	■	The Series A Preferred Stock is effectively junior to all of our existing and future indebtedness;
	■	The Series A Preferred Stock will remain outstanding indefinitely unless we decide to redeem or otherwise repurchase it at our option;
	■	The Series A Preferred Stock will accrue cumulative cash dividends at the rate of 10% of the $25.00 per share liquidation preference per annum which will accrue if we do not have funds to pay the dividend;
	■	We have not yet generated revenues from our current business plan and we do not presently have a reserve to pay dividends that will be due in the future on the Series A Preferred Stock;
	■	No dividends will be paid or set apart for payment by us at any time if it would violate the terms of any agreement in which we are a party to or that we may enter into in the future;
	■	The Series A Preferred Stock may be redeemed by us on or after March 3, 2022, for a cash redemption price of $25.00 per share if certain requirements are met;
	■	The Series A Preferred Stock is not convertible into our Common Stock; and
	■	If we fail to pay a dividend on the Series A Preferred, holders will not receive additional interest or fees in respect to such dividend.

Series A Preferred Stock Transactions During the Year Ended December 31, 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 year ended December 31, 2020, the Company accrued dividends in the amount of $9,967 on the Series A Preferred Stock. At December 31, 2020, dividend payable on the Series A Preferred Stock was $9,967. At December 31, 2020, if management determined to pay these dividends in shares of the Company’s common stock, this would result in the issuance of 755,076 shares of common stock based upon the average price of $0.0132 per share for the five day period ended December 31, 2020. Subsequent to year end the Company cancelled these shares and instead issued a total of 600,000 shares of restricted common stock to the holders.

Series A Preferred Stock Transactions During the Year Ended December 31, 2019

None.

Series X Preferred Stock

The Company has 26,227 shares of its 10% Series X Cumulative Redeemable Perpetual Preferred Stock (the “Series X Preferred Stock”) outstanding as of December 31, 2020 and December 31, 2019. 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 and preferred stock and accrues 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. Each one share of the Series X Preferred Stock is entitled to 20,000 votes on all matters submitted to a vote of our shareholders.

Series X Preferred Stock Transactions During the Year Ended December 31, 2020

During the year ended December 31, 2020, the Company accrued dividends in the amount of $65,568 on the Series X Preferred Stock. On December 31, 2020, the Company issued 2,151,204 shares of common stock at a price of $0.0305 per share in satisfaction of the accrued dividends on the Series X Preferred Stock. The price of the common stock issued was equal to the average closing price over the five days prior the date of conversion. At December 31, 2020, dividend payable on the Series X Preferred Stock was $0.

Series X Preferred Stock Transactions During the Year Ended December 31, 2019

On December 31, 2019, the Company issued a total of 26,227 shares of Series X Preferred Stock in settlement of various liabilities. All of the entities who received these shares were related parties, either because they were officer and or directors, or because the voting rights attached to these shares created a related party relationship.

The shares of Series X Preferred Stock were issued as follows:

	Type of			Share		Liability
Name	Liability	# shares		Value		Amount			Loss

Ronald Riewold, Director	Deferred Compensation		1,200	$	41,675	$	30,000		$	(11,675	)
Larry Diamond, Director and CEO	Deferred Compensation		2,000	$	69,458	$	50,000		$	(19,458	)
Julie R. Smith, Director and President (now ex-Officer and Director)	Deferred Compensation		2,000	$	69,458	$	50,000		$	(19,458	)
James Crone, ex-Officer and Director	Deferred Compensation		2,884	$	100,158	$	72,089		$	(28,069	)
Louis Deluca, ex-Officer and Director	Deferred Compensation		2,400	$	83,350	$	60,000		$	(23,350	)
Irish Italian Retirement Fund	Consulting services, notes payable (a)		12,503	$	434,216	$	312,572	(a)	$	(121,644	)
Frank Lightmas	Legal fees		3,240	$	112,522	$	81,000	(b)	$	(31,522	)
Total			26,227	$	910,837	$	655,661		$	(255,176	)

(a) amount consists of accounts payable for consulting services of $174,813, and principal plus interest due on notes payable in the amount of $137,759.

(b) Amount consists of $71,279 in legal fees due and $9,721 in prepaid legal fees.

Stock Options

The following table summarizes the options outstanding at December 31, 2020 and the related prices for the options to purchase shares of the Company’s common stock:

Weighted

average

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

13,453,879

9.42

0.03

11,303,879

0.03

13,453,879

9.42

0.03

11,303,879

0.03

Transactions involving stock options are summarized as follows:

	Shares			Weighted- Average Exercise Price ($) (A)
Outstanding at December 31, 2018		67,879		$	0.03
Granted		-			-
Cancelled		-			-

Outstanding at December 31, 2019		67,879		$	0.03

Granted		14,886,000		$	0.03
Cancelled		(1,500,000	)		0.03
Outstanding at December 31, 2020		13,453,879		$	0.03

Exercisable at December 31, 2020 (B)		11,303,879		$	0.03

(A)

On December 14, 2020, the Company reset the exercise price of all the options then outstanding options to $0.03 per share. This included 150,000 options previously priced at $0.04 per share; 7,450,000 options previously priced at $0.05 per share; 1,000,000 options previously priced at $0.06 per share; and 67,879 options previously prices at $21.40 per share. The Company valued these options as of December 14, 2020, at the original exercise price and at the new price of $0.03 per share and charged the increase in value in the amount of $4,113 to operations during the year ended December 31, 2020. The exercise prices of all options are shown at the restated price of $0.03 per share.

(B)

On December 28, 2020, the Company accelerated the vesting of certain of its options issued to Board members, management, and consultants, resulting in a charge to operations in the amount of $164,647 during the year ended December 31, 2020.

At December 31, 2020, the total stock-based compensation cost related to unvested awards not yet recognized was $71,156.

The Company valued stock options during the years ended December 31, 2020 and 2019 using the Black-Scholes valuation model utilizing the following variables:

	December 31,			December 31,
	2020			2019
Volatility		149.4% to 209.6	%		228.0% to 229.4	%
Dividends	$	-		$	-
Risk-free interest rates		0.55% to 1.30	%		1.75% to 2.53	%
Term (years)		5.00			5.00

Warrants

The following table summarizes the warrants outstanding at December 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 December 31, 2020		-		$	-