NOTE 14 – STOCKHOLDERS’ DEFICIT

Common stock issued for 3:1 forward split of Class A Common Stock

On August 1, 2013, the Company issued 214,578 shares of Common Stock to non-affiliate shareholders, pursuant to a recapitalization. (See Note 16)

Common stock issued for cash 

On January 27, 2014, the Company entered into an agreement to issue 25,000 shares of common stock at $2.40 per share to one accredited investor in exchange for $60,000. The company received the funds in three equal payments of $20,000 with the final $20,000 received on April 22, 2014. The Company also issued warrants to purchase 18,750 shares of common stock at an exercise price of $2.40 per share with this offering.

On February 14, 2014, the Company issued 20,831 shares of common stock at $2.40 per share to one accredited investor in exchange for $50,000. The Company also issued warrants to purchase 15,623 shares of common stock at an exercise price of $2.40 per share with this offering.

On October 24, 2013, the Company issued 25,000 shares of common stock at $2.40 per share to one accredited investor in exchange for $60,000. The Company also issued 18,750 warrants with the investment (See Note 15).

On December 22, 2013, the Company entered into an agreement to issue 41,663 shares of common stock at $2.40 per share to one accredited investor in exchange for $100,000. The Company received the funds in early January 2014 and issued the 41,663 shares. The Company also issued 31,247 warrants with this offering (See Note 15). 

Common stock issued for cashless warrant exercise

On February 10, 2014, the Company issued 22,255 shares of common stock in connection with the cashless exercise of warrants to purchase 18,750 and 20,625 shares of the Company’s common stock exercisable at $2 per share and based upon the market values of the Company’s common stock of $4.60 per share.

Common stock issued for services

On May 5, 2014, the Company signed a letter of authorization with Hayden IR authorizing the conversion of four past due Hayden IR invoices which totaled $12,000 to be converted into 5,000 shares of common stock at a conversion price of $2.40. Based on prior cash sales with warrants, the value of the shares was $1.36 and a gain was recorded of $5,200. The shares are to be split up amongst Hayden IR and its subsidiary Stratcon Partners.

On July 17, 2013, the Company granted a consulting firm 30,000 restricted shares of common stock for a one year agreement.  The purpose of the agreement is to provide consultation to the Company with respect to various fund raising and other capital market activities related to international sources of funding. 10,000 shares were issued on August 23, 2013. As a result of the reclassification of the Company’s common stock and subsequent dividend, an additional 20,000 shares were issued on August 30, 2013. The shares were valued at $1.34 or $40,000 based on the quoted trading price on the grant date and the company recorded a prepaid expense to be amortized over the one-year term of the agreement.

On June 1, 2013, the Company granted a consulting firm 22,500 common shares for a one year investor relations agreement.  The shares were issued September 26, 2013. The shares were valued at $0.87 or $19,500 based on the quoted trading price on the grant date and the company recorded a prepaid expense to be amortized over the one-year term of the agreement.

Conversion of notes payable related parties to common stock

Between November 7 and November 20, 2014 the principal of $58,059 and accrued interest of $21,986 were converted into 84,653 shares of the Company’s common stock, the fair value of which were $152,322, resulting in loss on debt conversion in amount of $72,277. (see Note 5)

On August 1, 2014, the Company converted principal and interest payment of $100,000 into 41,667 shares of common stock. No gain or loss on conversion was recorded as the shares were issued at fair market value. In conjunction with the note conversion, the company issued the lender five year warrants to purchase 31,250 shares of common stock at an exercise price of $2.40. The warrants were valued at a fair value of $77,997 based on using the Black-Scholes pricing model assuming a dividend yield of 0%, an expected volatility of 280%, and a risk free interest rate of 1.65%. The $77,997 is included in interest expense in the accompanying unaudited consolidated financial statements.

On May 10, 2013 the Board of Directors adopted the resolution to issue a shareholder 1,250 shares as a condition of an additional investment.  The Company originally issued the shareholder 3,750 shares, at $6.60 per share, for a $25,000 investment on July 14, 2011.  This July 14, 2011, investment was repriced at $5 per share resulting in the additional 1,250 shares.  These shares were issued on May 23, 2013.  The Company recorded an additional expense of $1,833 related to the share issuance based on the quoted share price on the grant date of $1.40.

On May 11, 2013, the shareholder verbally requested to convert a $13,750 note into 4,125 shares common stock at the contractual conversion rate. The shares were issued during the third quarter when the Company received the appropriate conversion notice (See Note 8).

On August 1, 2013, a settlement agreement was reached to convert a convertible note in the amount of $68,750 plus default penalty and interest of $24,063, which was expensed, into 27,844 shares of common stock. The conversion occurred at the contractual conversion rate of $3.33 (See Note 8).