Quarterly report pursuant to Section 13 or 15(d)

STOCKHOLDERS' EQUITY

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STOCKHOLDERS' EQUITY
6 Months Ended
Jun. 30, 2020
Stockholders' Equity Attributable to Parent [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 163,142,595 and 128,902,124 shares of common stock as of June 30, 2020 and December 31, 2019.

 

The following common shares were issued by the Company during the six months ended June 30, 2020.

 

  In terms of debt conversion notices received between January 28, 2020 and June 22, 2020, the Company issued an aggregate of 7,023,501 shares of common stock for the conversion of $111,828 of convertible debt, realizing a loss on conversion of $149,774 and in terms of debt exchange agreements entered into on January 7, 2020, the Company issued an aggregate of 2,504,110 shares of common stock, in settlement of $50,082 of loans payable, resulting in a net loss on exchange of $50,082.

 

  In terms of subscription agreements entered into with investors on February 20, 2020 and March 16, 2020, the Company issued 1,400,000 shares of common stock for gross proceeds of $33,000.

 

  In terms of an agreement entered into with a supplier, the Company issued 535,714 shares of common stock valued at $30,000 on grant date, as partial compensation for services provided.

 

  In terms of an employment agreement entered into with the Company's Chief Operating Officer, the Company issued 282,146 shares of common stock valued at $13,500.

 

  The Company granted a director 2,000,000 shares of common stock for services to be rendered as a director of the Company, these shares were valued at grant date at $88,000.

  

  b. Restricted stock awards

 

The following restricted stock awards were made during the six months ended June 30, 2020.

 

  (a) An aggregate of 5,123,750 shares of restricted common stock were issued to our Chief Executive Officer in terms of an employment agreement entered into with him. These shares are restricted and were fully vested on January 1, 2020. These restricted shares were valued at $251,064 or $0.049 per share, the market price of the Company's common stock on grant date.

  

  (b) An aggregate of 15,371,250 shares of restricted common stock were issued to our Chief Operating Officer in terms of an employment agreement entered into with him. These shares are restricted and vest over a three year period commencing on December 31, 2020. These restricted shares were valued at $753,191 or $0.049 per share, the market price of the Company's common stock on grant date.

 

The restricted stock granted and exercisable at June 30, 2020 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     5,123,750   $ 0.049  

 

The Company has recorded an expense of $62,765 and $376,596 for the three months and six months ended June 30, 2020, respectively, relating to the restricted stock awards.

  

  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 June 30, 2020 and December 31, 2019.

 

  d. Warrants

 

In connection with the subscription agreement entered into with an investor, a three year warrant exercisable over 1,000,000 shares of common stock was granted to the investor, together with 1,000,000 shares of common stock for subscription proceeds of $25,000.

 

The fair value of the warrants issued were determined by allocating the proceeds received using the relative fair value method after the warrants were valued using a Black Scholes valuation model using the following assumptions:

 

    Six  months ended
June 30,
2020
 
Conversion price*   $ 0.05  
Risk free interest rate     1.35 %
Expected life of derivative liability     3 years  
Expected volatility of underlying stock     190.4 %
Expected dividend rate     0 %

 

A summary of warrant activity during the period January 1, 2019 to June 30, 2020 is as follows:

 

    Shares
Underlying
Warrants*
    Exercise
price per
share
    Weighted
average
exercise
price
 
Outstanding January 1, 2019     852,775     $ 2.00 to 6.25     $ 5.10  
Granted     -       -       -  
Forfeited/Cancelled     -       -       -  
Exercised     -       -       -  
Outstanding December 31, 2019     852,775     $ 2.00 to 6.25     $ 5.10  
Granted     1,000,000       0.05       0.05  
Forfeited/Cancelled     (318,630     2.00 to 6.25       3.37  
Exercised     -       -       -  
Outstanding June 30, 2020     1,534,145     $ 0.05 to 6.25     $ 2.14  

 

The warrants outstanding and exercisable at June 30, 2020 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
 
$ 6.25       519,520       0.25               519,520                  
$ 2.00       14,625       0.08               14,625                  
$ 0.05       1,000,000       2.64               1,000,000                  
          1,534,145       1.51     $ 2.14       1,534,145     $ 2.14       1.51  

  

The warrants outstanding have an intrinsic value of $0 and $0 as of June 30, 2020 and December 31, 2019.

 

  e. Stock options

 

On June 18, 2018, the Company established its 2018 Stock Incentive 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 either 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.

  

No options were granted for the three and six months ended June 30, 2020. 

  

A summary of option activity during the period January 1, 2019 to June 30, 2020 is as follows:

 

    Shares
Underlying
options
    Exercise
price per
share
    Weighted
average
exercise
price
 
Outstanding January 1, 2019     200,000     $ 0,40     $ 0,40  
Granted     -       -       -  
Forfeited/Cancelled     (100,000 )     -       -  
Exercised     -       -       -  
Outstanding December 31, 2019     100,000       0.40       0.40  
Granted     -       -       -  
Forfeited/Cancelled     -       -       -  
Exercised     -       -       -  
Outstanding June 30, 2020     100,000     $ 0.40     $ 0.40  

 

The options outstanding and exercisable at June 30, 2020 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
 
0.40     100,000       8.50     $ 0.40       100,000     $ 0.4       8.50  
                                                 

 

The options outstanding have an intrinsic value of $0 and $0 as of June 30, 2020 and December 31, 2019.