Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

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Stockholders' Equity
6 Months Ended
Jun. 30, 2020
Equity [Abstract]  
Stockholders' Equity
13 STOCKHOLDERS’ EQUITY

 

Preferred Stock

 

Series “A” Preferred Stock

 

As of June 30, 2020 and December 31, 2019, there were 13,000,000 shares of Series A issued and outstanding.

 

Series “C” Convertible Preferred Stock

 

As of June 30, 2020 and December 31, 2019, there were 721,598 shares of Series C issued and outstanding.

 

Common Stock

 

As discussed above in Note 1, on January 30, 2020, the Company entered into a Membership Interest Purchase Agreement and Stock Purchase Agreement with ECS Prepaid, ECS, CSLS and the Winfreys. Pursuant to the agreements, the Company acquired all of the membership interests of ECS Prepaid and all of the issued and outstanding stock of each ECS and CSLS. The agreements provide that the consideration is to be paid by the Company through the issuance of 500,000 shares of the Company’s Common Stock. In addition, the agreements called for 25,000 shares of Common Stock to be issued to the Winfreys on a monthly basis over a 12-month period. During the six months ended June 30, 2020, the Company issued 125,000 shares of Common Stock pursuant to the agreements.

 

As discussed in Note 9 above, during the six months ended June 30, 2020, the Company granted 2,322,000 shares of Common Stock pursuant to debt agreements executed with various lenders. The shares were valued on execution date and recorded as a debt discount on the condensed consolidated balance sheets.

 

During the six months ended June 30, 2020, the Company sold an aggregate of 2,014,285 shares of Common Stock and 214,284 warrants, with each warrant exercisable for one share of Common Stock at an exercise price of $0.75, resulting in gross proceeds to the Company of $705,000.

 

As of June 30, 2020 and December 31, 2019, there were 112,923,912 and 102,193,579 shares of Common Stock issued and outstanding, respectively.

 

Stock Warrants

 

The following is a summary of the Company’s warrant activity:

 

    Warrants     Weighted
Average
Exercise Price
 
             
Outstanding – December 31, 2019     6,849,635     $ 0.71  
Exercisable – December 31, 2019     6,849,635     $ 0.71  
Granted     714,284     $ -  
Exercised     -     $ -  
Forfeited/Cancelled     -     $ -  
Outstanding – June 30, 2020     7,563,919     $ 0.69  
Exercisable – June 30, 2020     7,563,919     $ 0.69  

 

 

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  
                                             
$ 0.40 – 3.00       7,563,919       1.61 years     $ 0.69       7,563,919     $ 0. 69  

  

At June 30, 2020 the total intrinsic value of warrants outstanding and exercisable was $0.

 

On February 15, 2019, the Company executed a consulting agreement with a third party for professional services. Upon execution of the agreement, the Company agreed to issue 100,000 warrants to purchase the Company’s Common Stock with an exercise price of $3.00 per share, a term of 3 years, and immediate vesting. In addition, the consultant is eligible to receive 150,000 warrants upon achievement of certain milestones as discussed in the agreement. The 250,000 warrants have an aggregated fair value of approximately $30,782 that was calculated using the Black-Scholes.

 

For the six months ended June 30, 2019, when computing fair value of share-based payments, the Company has considered the following variables:

 

    June 30, 2019  
Risk-free interest rate     2.50 %
Expected life of grants     3 years  
Expected volatility of underlying stock     168.71 %
Dividends     0 %

 

The estimated warrant life was determined based on the “simplified method,” giving consideration to the overall vesting period and the contractual terms of the award.

 

The Company did not issue any warrants as compensation for services during the six months ended June 30, 2020.

 

During the six months ended June 30, 2020 and 2019, the Company recorded total stock-based compensation expense related to the warrants of $0 and $33,673, respectively. The unrecognized compensation expense at June 30, 2020 was approximately $0.