Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Deficiency

v3.19.3
Stockholders' Deficiency
9 Months Ended
Sep. 30, 2019
Stockholders' Equity Note [Abstract]  
Note 6 - Stockholders' Deficiency

Series A Convertible Preferred Stock

 

The Board of Directors extended the expiration date of the Private Placement Memorandum ( PPM ), under which the Company continues to raise up to $10,000,000 via the sale of up to 1,000,000 shares of Series A Convertible Preferred Stock at $7.50 per share, on various dates in 2019, the latest of which occurred on September 26, 2019 when the Board of Directors further extended the expiration date of the PPM to November 29, 2019.

 

On March 31, 2019, in connection with the exchange of various notes payable, accrued interest and late payment penalties totaling $827,784, the Company issued 145,367 shares of Series A Convertible Preferred Stock under the terms of the PPM with a total value of $1,090,254, as more fully described in Note 5, Notes Payable and Convertible Notes Payable. As the value of those shares exceeded the carrying value of the note payable, accrued interest and late payment penalties, the difference of $262,470 was recorded in the condensed consolidated statement of operations during the nine months ended September 30, 2019 as a loss on exchange of notes payable for Series A Convertible Preferred Stock.

 

On various dates from January 7, 2019 through August 20, 2019, the Company received proceeds of $1,223,269 through the sale of 163,101 shares of Series A Convertible Preferred Stock at $7.50 per share.

 

During the three and nine months ended September 30, 2019, the Company accrued and recorded Series A Preferred Stock dividends of $197,911 and $534,919, respectively, with an increase in liabilities and a corresponding decrease in additional paid-in capital. During the three and nine months ended September 30, 2018, the Company accrued and recorded Series A Preferred Stock dividends of $110,666 and $327,626, respectively, with an increase in liabilities and a corresponding decrease in additional paid-in capital.

 

During the nine months ended September 30, 2019, the Company issued 401,860 shares of common stock valued at $0.75 per share for aggregate value of $301,379, pursuant to the terms of the Series A Convertible Preferred Stock Certificate of Designation, in connection with the partial payment of accrued dividends for Series A Convertible Preferred Stock, as more fully described in the Series A Convertible Preferred Stock section of this footnote.

 

Adoption of Equity Incentive Plan and Grant of Option

 

On August 13, 2019, the Company s Board of Directors approved the adoption of the Company s 2019 Equity Incentive Plan (the Plan ). A total of 7,900,000 shares of common stock are reserved for issuance under the Plan, which permits the Board of Directors to issue stock options, stock appreciation rights, restricted stock, restricted stock units, performance and other awards to employees, consultants and directors of the Company.

 

On the same date, the Board of Directors approved the grant under the Plan of ten-year stock options to purchase an aggregate of 3,782,004 shares of common stock at an exercise price of $0.75 per share to a consultant to the Company. The 3,782,004 shares vest immediately on the date of grant. The stock options had a grant date value of $825,100, which the Company recognized as expense on the date of the grant.

 

Stock-Based Compensation

 

During the three and nine months ended September 30, 2019, the Company recognized expense of $848,120 and $905,641, respectively, of stock-based compensation expense. During the three and nine months ended September 30, 2018, the Company did not recognize any stock-based compensation expense. As of September 30, 2019, there was no unrecognized stock-based compensation expense.

 

Stock Warrants

 

On June 25, 2019, the Company extended the expiration date of a warrant to purchase 1,600,000 shares of common stock at an exercise price of $0.75 per share originally from June 27, 2019 to June 27, 2023.

 

On July 20, 2019, the Company extended the expiration dates of certain warrants to purchase an aggregate of 377,500 shares of common stock at an exercise price of $0.75 per share from July 2019 to July 2023.

 

As a result of the above modifications, the Company recognized warrant modification expense of $54,100 and $283,500 during the three and nine months ended September 30, 2019, respectively.