Annual report pursuant to Section 13 and 15(d)

STOCKHOLDERS' EQUITY

v3.19.1
STOCKHOLDERS' EQUITY
12 Months Ended
Dec. 31, 2018
Equity [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 88,839,218 shares of common stock as of December 31, 2018 and 56,207,424 as of December 31, 2017.

  

On March 5, 2018, in terms of an amendment to the Company’s Articles of Incorporation, the authorized share capital was increased to 500,000,000 common shares with a par value of $0.001 each.

  

The following common shares were issued by the Company during the years ended December 31, 2018.

  

In terms of various debt conversion notices received between January 17, 2018 and December 31, 2018, the Company issued an aggregate of 32,325,999 shares of common stock in settlement of $2,461,705 of convertible notes, resulting in a net loss on conversion of $3,738,306.

  

On June 6, 2018, 115,795 of the commitment shares, valued at $34,739 that were issued to Labrys Fund, LLP, were recorded as issued as the Company had not repaid the note by the due date of June 16, 2018. The remaining 115,796 commitment shares were returned to the Company and were cancelled.

 

On June 29, 2018, in terms of a share option plan recently implemented by the Company, 120,000 restricted shares valued at $49,200 on the grant date were granted to a director as compensation for services rendered. These shares vested immediately. On December 27, 2018, a further 70,000 shares of common stock valued at $2,975 on the grant date were granted to a director. These shares vested immediately.

  

  b. 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 December 31, 2018 and 2017.

  

  c. Warrants

  

A summary of warrant activity during the period January 1, 2017 to December 31, 2018 is as follows:

 

      Shares
Underlying
Warrants
    Exercise
price per
share
    Weighted
average
exercise
price
 
Outstanding January 1, 2017       6,219,200     $ 0.625     $ 0.625  
Granted       2,308,513       0.20       0.20  
Forfeited/Cancelled                    
Exercised                    
Outstanding December 31, 2017       8,527,713     $ 0.20 to 0.625     $ 0.51  
Granted                    
Forfeited/Cancelled                    
Exercised                    
Outstanding December 31, 2018       8,527,713     $ 0.20 to 0.625     $ 0.51  

  

The warrants outstanding and exercisable at December 31, 2018 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
 
$ 0.625       6,219,200       1.75             6,219,200                
$ 0.20       2,308,513       1.50             2,308,513                
                                                 
          8,527,713       1.68     $ 0.51     8,527,713   $ 0.51       1.68  

  

The warrants outstanding have an intrinsic value of $0 and $0 as of December 31, 2018 and 2017, respectively.

  

  d. 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 8,000,000 shares of common stock. The maximum number of shares of common stock awarded to any individual during any fiscal year may not exceed 1,000,000 shares of common stock.

  

On June 29, 2018, the Company granted a director 120,000 shares of restricted common stock in terms of the Stock Incentive Plan. These shares were valued at $49,200 on the date of grant and were vested immediately.

  

On December 27, 2018, the Company granted a director 70,000 shares of restricted common stock in terms of the stock incentive plan. These shares were valued at $2,975 on the granted date and vested immediately.

 

On December 27, 2018, the company granted ten year options to purchase an aggregate of 2,000,000 shares of common stock at an exercise price of $0.04 per share, valued at $79,606, to the executive officers of the Company.

  

The fair value of the options issued were valued using a Black Scholes option pricing model using the following assumptions:

  

    Year ended
December 31,
2018
 
       
Calculated stock price   $ 0.04  
Risk-free interest rate     2.77 %
Expected life of warrants (in years)     10  
Expected volatility of the underlying stock     174.91 %
Expected dividend rate     0 %

  

The volatility of the common stock is estimated using historical data of the Company. The risk-free interest rate used in the Black-Scholes pricing model is determined by reference to historical U.S. Treasury constant maturity rates with maturities approximate to the life of the options granted. An expected dividend yield of zero is used in the valuation model, because the Company does not expect to pay any cash dividends in the foreseeable future. As of December 31, 2018, the Company does not anticipate any of the options will be forfeited in performing the valuation of the options.

  

A summary of option activity during the period January 1, 2018 to December 31, 2018 is as follows: 

 

      Shares
Underlying
options
    Exercise
price per
share
    Weighted
average
exercise
price
 
Granted       2,000,000     $ 0.04     $ 0.04  
Forfeited/Cancelled                    
Exercised                    
Outstanding December 31, 2018       2,000,000     $ 0.04     $ 0.04  

  

The options outstanding and exercisable at December 31, 2018 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
 
 0.04       2,000,000       10.00     $ 0.04       2,000,000 `   $ 0.04       10.00  

  

The options outstanding have an intrinsic value of $0 as of December 31, 2018.