| Capital Stock |
NOTE H - CAPITAL STOCK
Preferred Stock
On July 18, 2010, the Board of Directors unanimously
approved the designation of a series of preferred stock to be known as “Series A Convertible Preferred Stock” (hereinafter
“Series A”) with a stated par value of $0.0001 per share. The designations, powers, preferences and rights, and the
qualifications, limitations or restrictions hereof, in respect of the Series A shall be as hereinafter described. The holders of
Series A, shall not be entitled to receive dividends, nor shall dividends be paid on common stock or any other Series of Preferred
Stock while Series A shares are outstanding. The holders of Series A shall be entitled to vote on all matters submitted to a vote
of the Shareholders of the Company. The holders of the Series A shall be entitled to one thousand (1,000) votes per one share of
Series A held. Upon the availability of a sufficient number of authorized but unissued and unreserved shares of common stock, the
holders of any Series A Preferred Stock shall be entitled to convert such shares in to fully paid and non-assessable shares of
common stock at the rate of 1000 shares of common stock for each share of Series A. In the event of any liquidation, dissolution
or winding up of the Corporation, either voluntarily or involuntarily, after setting apart or paying in full the preferential amounts
due the Holders of senior capital stock, if any, the Holders of Series A and parity capital stock, if any, shall be entitled to
receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the Holders of
junior capital stock, including Common Stock, an amount equal to $0.125 per share.
On June 26, 2017, the Company entered into
a conversion agreement with Saint James Capital Management LLC and agreed to convert 2,000,000 shares of the Company’s Series
A Preferred Stock held by Saint James into a warrant to purchase 5,000,000 shares of the Company’s common stock at an exercise
price of $0.30 per share and a term of three years. On August 23, 2017, the Company’s Board of Directors approved a reduction
of the warrant exercise price from $0.30 to $0.20 per share. On June 20, 2020, the warrant expired.
At September 30, 2020 and December 31, 2019,
there were 0 and 0 shares of Series A issued and outstanding, respectively.
On January 22, 2020, the Board of Directors
unanimously approved the designation of a series of preferred stock to be known as “Series B Convertible Preferred Stock”
(hereinafter “Series B”) with a par value of $0.0001 per share and authorization of 100,000 shares. The designations,
powers, preferences and rights, and the qualifications, limitations or restrictions hereof, in respect of the Series B shall be
as hereinafter described.
The holders of the Series B, shall not be entitled
to receive dividends, nor shall dividends be paid on common stock or any other Series of Preferred Stock while Series B shares
are outstanding. The holders of Series B shall be entitled to vote on all matters submitted to a vote of the Shareholders of the
Company. The holders of the Series B shall be entitled to twenty thousand (20,000) votes per one share of Series B held. Upon the
availability of a sufficient number of authorized but unissued and unreserved shares of common stock, the holders of any Series
B Preferred Stock shall be entitled to convert such shares in to fully paid and non-assessable shares of common stock at the following
conversion feature: the Conversion Price for each share of Series B Preferred Stock in effect on any Conversion Date shall be (i)
eighty five percent (85%) of the average closing bid price of the Common Stock over the twenty (20) trading days immediately preceding
the date of conversion, (ii) but no less than Par Value of the Common Stock. For purposes of determining the closing bid price
on any day, reference shall be to the closing bid price for a share of Common Stock on such date on the NASD OTC Bulletin Board,
as reported on Bloomberg, L.P. Any conversion shall be for a minimum Stated Value of $500.00 of Series B shares.
If the Corporation shall commence a voluntary
case under the U.S. Federal bankruptcy laws or any other applicable bankruptcy, insolvency or similar law, or consent to the entry
of an order for relief in an involuntary case under any law or to the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or make an assignment
for the benefit of its creditors, or admit in writing its inability to pay its debts generally as they become due, or if a decree
or order for relief in respect of the Corporation shall be entered by a court having jurisdiction in the premises in an involuntary
case under the U.S. Federal bankruptcy laws or any other applicable bankruptcy, insolvency or similar law resulting in the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of its affairs, and any such decree or order shall
be unstayed and in effect for a period of sixty (60) consecutive days and, on account of any such event, the Corporation shall
liquidate, dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve or wind up, including, but not limited
to, the sale or transfer of all or substantially all of the Corporation’s assets in one transaction or in a series of related
transactions (a “Liquidation Event”), no distribution shall be made to the holders of any shares of capital stock of
the Corporation (other than Senior Securities and Pari Passu Securities) upon liquidation, dissolution or winding up unless prior
thereto the Holders of shares of Series B Preferred Stock shall have received the Liquidation Preference (equal to the stated value
or $1.00 per share) with respect to each share. If, upon the occurrence of a Liquidation Event, the assets and funds available
for distribution among the Holders of the Series B Preferred Stock and Holders of Pari Passu Securities shall be insufficient to
permit the payment to such holders of the preferential amounts payable thereon, then the entire assets and funds of the Corporation
legally available for distribution to the Series B Preferred Stock and the Pari Passu Securities shall be distributed ratably among
such shares in proportion to the ratio that the Liquidation Preference payable on each such share bears to the aggregate Liquidation
Preference payable on all such shares.
On January 22, 2020, the Company issued 25,000
shares of Series B Preferred Stock to Bill Edmonds in satisfaction of $25,000 of the Company’s deferred compensation liability
to Mr. Edmonds.
On June 3, 2020, the Company issued 6,000 shares
of its Series B Convertible Preferred Stock to Bill Edmonds in satisfaction of $6,000 loans payable to Mr. Edmonds
At September 30, 2020 and December 31, 2019,
there were 31,000 and 0 shares of Series B Preferred Stock issued and outstanding, respectively.
Common Stock
Holders of the Company’s common stock
are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative
voting rights. A vote by the holders of a majority of the Company’s outstanding voting shares is required to effectuate certain
fundamental corporate changes such as liquidation, merger or an amendment to the Company’s articles of incorporation.
Holders of the Company’s common stock
are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In
the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all
assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the
common stock. The Company’s common stock has no pre-emptive rights, no conversion rights and there are no redemption provisions
applicable to the Company’s common stock.
In 2017, our majority shareholder and our board
of directors approved an amendment to our Articles of Incorporation for the purpose of approving a reverse split of one to one
thousand in which each shareholder was issued one common share in exchange for every one thousand common shares of their issued
common stock. Prior to approval of the reverse split we had a total of 99,997,102,862 issued and outstanding shares of common stock,
par value $0.0001. On September 27, 2017, the effective date of the reverse split, we had a total of 99,997,102 issued and 90,697,102
outstanding shares of common stock, par value $0.0001.
Common Stock and Preferred Stock Issuances
For the nine months ended September 30, 2020
and fiscal year ended December 31, 2019, the Company issued and/or sold the following securities:
Common Stock
2020
On January 24, 2020, the Company issued Lloyd
Spencer 840,000 shares of its common stock with an estimated fair value of $33,600 as per the terms of the Employment Agreement
entered into between the Company and Mr. Spencer dated December 4, 2019.
For the three months ended September 30, 2020,
the Company issued a total of 10,892,592 shares of its common stock (with a total fair value of $207,578 at the respective issuance
dates) to the holders of convertible notes payable in satisfaction of debt totaling $92,926 ($91,000 principal plus $1,926 interest).
On September 9, 2020, the Company issued Lloyd
Spencer 1,020,000 shares of its common stock with an estimated fair value of $18,768 as per the terms of the Employment Agreement
entered into between the Company and Mr. Spencer dated December 4, 2019.
2019
None.
The number of common shares authorized with
a par value of $0.0001 per share at September 30, 2020 and December 31, 2019 is 250,000,000 and 250,000,000, respectively. At September
30, 2020 and December 31, 2019, there are 118,066,613 and 105,051,540 shares of common stock issued and outstanding, respectively.
Preferred Stock
2020
On January 22, 2020, the Company issued 25,000
shares of Series B Preferred Stock to Bill Edmonds in satisfaction of $25,000 of the Company’s deferred compensation liability
to Mr. Edmonds.
On June 3, 2020, the Company issued 6,000 shares
of its Series B Convertible Preferred Stock to Bill Edmonds in satisfaction of $6,000 loans payable to Mr. Edmonds.
The number of preferred shares authorized with
a par value of $0.0001 per share at September 30, 2020 and December 31, 2019 is 2,000,000 and 2,000,000, respectively. At September
30, 2020 and December 31, 2019, there are 31,000 and 0 shares of preferred stock issued and outstanding, respectively.
Warrants and options
A summary of warrants and options activity
follows:
| |
|
Shares Equivalent |
|
| |
|
Options |
|
|
Warrants |
|
|
Total |
|
| Balance, December 31, 2019 |
|
|
- |
|
|
|
6,290,431 |
|
|
|
6,290,431 |
|
| Warrants (exercisable at $0.04 per share) issued to an investor in connection with the sale of a $23,000 Convertible Promissory Note on March 12, 2020 (i) |
|
|
- |
|
|
|
262,500 |
|
|
|
262,500 |
|
| Warrants expired on June 20, 2020 |
|
|
|
|
|
|
(5,000,000 |
) |
|
|
(5,000,000 |
) |
| Cashless exercise of warrants on August 19, 2020 |
|
|
- |
|
|
|
(262,500 |
) |
|
|
(262,500 |
) |
| Balance, September 30, 2020 |
|
|
- |
|
|
|
1,290,431 |
|
|
|
1,290,431 |
|
| (i) |
On March 12, 2020, the Company issued to Armada Investment Fund, LLC (“ARMADA”) a Convertible Promissory Note (the “Note”) in the amount of Twenty-Three Thousand and NO/100 Dollars ($23,000). On March 6, 2020, ARMADA entered into an Assignment Agreement (the “Agreement”) with Sylios Corp (“Assignor”). Under the terms of the Agreement, the Assignor sold, assigned, conveyed and transferred its interest in the Securities Purchase Agreement, the Convertible Promissory Note (principal amount of $23,000), the Stock Purchase Warrant Agreement (262,500 shares of common stock) and the Registration Rights Agreement entered into by the Assignor and Company, all dated January 13, 2020. |
As of September 30, 2020, the Company had 18
warrants issued and outstanding granting the holders the right to purchase up to a total of 1,290,431 shares of its common stock.
The following table summarizes information
about warrants outstanding as of September 30, 2020:
| Number Outstanding |
|
|
|
|
|
|
| At September 30, 2020 |
|
|
Exercise Price |
|
|
Expiration Date |
| |
|
|
|
|
|
|
| |
500,000 |
|
|
$ |
0.175 |
|
|
October 30, 2020 |
| |
200,000 |
|
|
$ |
0.175 |
|
|
October 20, 2020 |
| |
25,000 |
|
|
$ |
0.175 |
|
|
November 20, 2020 |
| |
30,000 |
|
|
$ |
0.175 |
|
|
February 19, 2021 |
| |
50,000 |
|
|
$ |
0.175 |
|
|
March 16, 2021 |
| |
485,431 |
|
|
$ |
0.20 |
|
|
November 30, 2020 |
| |
1,290,431 |
|
|
|
|
|
|
|
|
