Quarterly report pursuant to Section 13 or 15(d)

EQUITY TRANSACTIONS

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EQUITY TRANSACTIONS
3 Months Ended
Mar. 31, 2022
Equity [Abstract]  
EQUITY TRANSACTIONS

Note 5 - Equity Transactions

 

In January 2022, the Company offered certain warrant holders the opportunity to receive an additional warrant to purchase the Company’s Common Stock at $0.014 per share, for a period of five (5) years from issuance for the exercise by March 31, 2022 of each existing warrant originally issued in April 2020. As of March 31, 2022, the Company had eleven warrant holders exercise an aggregate of 83,579,296 warrants at $0.014 per share resulting in cash proceeds of approximately $1,170,000 to the Company.

 

Series A Preferred Stock

 

During the quarter ended March 31, 2022, 3,657,730 shares of Series A Preferred Stock were converted to 3,657,730 shares of Common Stock at the request of certain Series A Preferred Shareholders.

 

Voting Rights

 

Holders of Series A Preferred Stock (“Series A Holders”) have the right to receive notice of any meeting of holders of common stock and to vote upon any matter submitted to a vote of the holders of common stock. Each Series A Holder shall vote on each matter on an as converted basis submitted to them with the holders of common stock.

 

Conversion

 

Series A Preferred Stock converts to common stock at a 1:1 ratio immediately upon request of the Series A Holder.

 

Liquidation

 

Series A Preferred Stock does not have preferential treatment over common stock shareholders if the Company liquidates or dissolves.

 

Share-Based Compensation Plan

 

The Company utilizes the Black-Scholes valuation method to recognize stock-based compensation expense over the vesting period. The expected life represents the period that the stock-based compensation awards are expected to be outstanding.

 

 

Stock Option Activity

 

On April 1, 2021, the Board of Directors of the Company approved and granted to certain directors and officers of the Company an aggregate of 54,750,000 stock options of which 4,750,000 were immediately vested on the date of grant. Each option granted has an exercise price of $0.07 per share and an expiration date of ten years from the date of grant. These options are not included in the Company’s current stock option plan as they were granted outside of the plan.

 

The Board of Directors decided not to renew the former CEO’s (Robert Greif) employment contract; therefore, the unvested shares were forfeited resulting in a reduction of share-based compensation of approximately $205,000 for the period ended September 30, 2021 that was recognized during the period ended June 30, 2021.

 

At March 31, 2021, all outstanding stock options were fully vested, and related compensation expense recognized. At March 31, 2022, 29,635,000 options were outstanding and 18,218,333 were vested. For the three months ended March 31, 2022 and 2021, the Company recognized approximately $112,000 and $0 in stock-based compensation expense, respectively, which is included in share based compensation. At March 31, 2022, the Company has approximately $340,123 of unrecognized compensation costs related to non-vested stock options, which is expected to be recognized over a weighted average period of approximately 2.63 years.

 

Inputs used in the valuation models are as follows:

 

2021 Grants
Option value   $ 0.054     to   $ 0.056  
Risk Free Rate     0.90 %   to     1.37 %
Expected Dividend- yield     -     to     -  
Expected Volatility     173.99 %   to     176.04 %
Expected term (years)     5     to     7  

 

The following is a summary of stock option activity for the three months ended March 31, 2022 and 2021:

 

    Shares    

Weighted

Average

Exercise

Price

    Weighted Average Remaining Term (Years)
Outstanding at December 31, 2020     410,000     $ 1.39     6.72
Granted     -      

-

    -
Expired/Cancelled    

-

   

-

    -

Outstanding and exercisable at March 31, 2021

    410,000     $ 1.39     6.48
                     

Outstanding at December 31, 2021

    29,635,000       0.09     9.20
Granted     -      -      -
Outstanding at March 31, 2022     29,635,000      $ 0.09      8.96
                     
Exercisable at March 31, 2022     18,218,333      $ 0.10      8.93

 

 

The following is a summary of the Company’s non-vested shares for the three months ended March 31, 2022:

 

    Shares     Weighted
Average Grant
Date Fair Value
 
Non-vested at December 31, 2021     14,250,000     $ 0.06  
Granted     -       -  
Vested     (2,833,333 )     0.05  
Forfeited     -       -  
Non-vested at March 31, 2022     11,416,667     $ 0.07  

 

Net Loss Per Share

 

Basic loss per share is computed on the basis of the weighted average number of shares outstanding for the reporting period. Diluted loss per share is computed on the basis of the weighted average number of common shares plus dilutive potential common shares outstanding using the treasury stock and if-converted methods, as applicable. Any potentially dilutive securities are antidilutive due to the Company’s net losses.

 

The Company excluded the following securities from the calculation of basic and diluted net loss per share as the effect would have been antidilutive:

 

    2022     2021  
    For the Three Months Ended March 31,  
    2022     2021  
Warrants to purchase common stock (in the money)     384,693,796       389,486,207  
Series A Preferred Stock convertible to common stock     498,229,804       528,429,575  
Total     882,923,600       917,915,782  

 

Excluded from the above table are 2,196,355 warrants and 29,635,000 stock options for the three months ended March 31, 2022 and 23,937,765 warrants and 410,000 stock options for the three months ended March 31, 2021 as they are out of the money (exercise price greater than the stock price). Inclusion of such would be anti-dilutive.