Common Stock and Preferred Stock

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Common Stock and Preferred Stock

Note 8. Common Stock and Preferred Stock

Common stock

Common Stock Issuances

On August 5, 2022, the Company issued 22,800,000 shares of common stock and 22,800,000 warrants to purchase common stock for consideration of $228.

During the year ended December 31, 2022, 18,380,379 warrants with an embedded conversion feature were exercised on a cashless basis for the issuance of 74,000,000 shares of common stock.

During the three months ended March 31, 2023, 4,157,044 warrants with an embedded conversion feature were exercised on a cashless basis for the issuance of 20,000,000 shares of common stock.

During the three months ended June 30, 2023, 2,217,090 warrants with an embedded conversion feature were exercised on a cashless basis for the issuance of 20,000,000 shares of common stock.

During the three months ended June 30, 2023, 10,000,000 shares of common stock were issued in respect of the Lease Agreement (See Note 9).

During the three months ended September 30, 2023, 22,800,000 warrants were settled with the issuance of 11,400,000 shares of common stock.

During the three months ended September 30, 2023, 12,000,000 shares of common stock were issued in respect of the Lease Agreement (See Note 9).

During the three months ended September 30, 2023, 20,000,000 shares of common stock were issued for the partial conversion of the September 2022 Note. (See Note 5)

Preferred Stock

On January 11, 2019, the Company’s Board of Directors approved the authorization of 10,000 shares of Series B Preferred Stock with a par value of $0.001 and a Stated Value of $100 each (“Series B Preferred Shares”). The holders of the Series B Preferred Shares shall be entitled to receive, when, as, and if declared by the Board of Directors of the Company, out of funds legally available for such purpose, dividends in cash at the rate of 12% of the Stated Value per annum on each Series B Preferred Share. Such dividends shall be cumulative and shall accrue without interest from the date of issuance of the respective share of the Series B Preferred Shares. Each holder shall also be entitled to vote on all matters submitted to stockholders of the Company and shall be entitled to 55,000 votes for each Series B Preferred Share owned at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited. In the event of a liquidation event, any holders of the Series B Preferred Shares shall be entitled to receive, for each Series B Preferred Shares, the Stated Value in cash out of the assets of the Company, whether from capital or from earnings available for distribution to its stockholders. The Series B Preferred Shares are not convertible into shares of the Company’s common stock. No shares of Series B Preferred Shares have been issued or are outstanding.

On April 12, 2019, the Company’s Board of Directors approved the authorization of 200 Series C Preferred Shares with a par value of $0.001 (“Series C Preferred Shares”). The holders of the Series C Preferred Shares have no voting rights, receive no dividends, and are entitled to a liquidation preference equal to the stated value. At any time, the Company may redeem the Series C Preferred Shares at 1.2 times the stated value. Given the right of redemption is solely at the option of the Company, the Series C Preferred Shares are not considered mandatorily redeemable, and as such are classified in shareholders’ equity on the Company’s balance sheet.

Each Series C Preferred Share is convertible into shares of the Company’s common stock in an amount equal to the greater of: (a) 200,000 shares of common stock or (b) the amount derived by dividing the stated value by the product of 0.7 times the market price of the Company’s common stock, defined as the lowest trading price of the Company’s common stock during the ten-day period preceding the conversion date. The holder may not convert any Series C Preferred Shares if the total amount of shares held, together with holdings of its affiliates, following a conversion exceeds 9.99% of the Company’s common stock. During 2019 and 2020, 190 Series C Preferred Shares were issued and subsequently converted into Common Shares. No shares of Series C Preferred Shares are currently issued and outstanding.

Warrants

On August 5, 2022, the Company sold 22,800,000 shares of common stock and issued three warrants, each to purchase 7,600,000 shares of common stock for consideration of $228,000. Subject to the terms and adjustments in the Warrants, the Warrants are exercisable at initial prices of $0.03, $0.06, and $0.12 per share, for three years from August 5, 2022. On July 20, 2023, these warrants were extinguished with the issuance of 11,400,000 shares of common stock. As a result, we recorded a gain of $46 on the settlement of the warrants and the related warrant derivative liability.

During the year ended December 31, 2022, 18,380,379 warrants were exercised on a cashless basis for the issuance of 74,000,000 shares of common stock. Upon cashless exercise, the Company calculated the fair value of derivative liability on warrants of $231, compared it to the fair value of 74,000,000 shares of $988 and recorded a loss on extinguishment of $757. The Company valued the warrant derivative liability using the Black-Scholes option pricing model using the following assumptions on the date of each exercise: 1) stock prices of $0.007 - $0.019, 2) exercise prices of $0.05, 3) remaining lives of 3.5 – 4.2 years, 4) dividend yields of 0%, 5) risk free rates of 1.53% -3.79%, and 6) volatility of 169.28% - 175.6%.

During the six months ended June 30, 2023, 6,374,134 warrants were exercised on a cashless basis for the issuance of 40,000,000 shares of common stock. Upon cashless exercise, the Company calculated the fair value of derivative liability on warrants of $38, compared it to the fair value of 40,000,000 shares of $300 and recorded a loss on extinguishment of $262. The Company valued the warrant derivative liability using the Black-Scholes option pricing model using the following assumptions on the date of exercise: 1) stock price of $0.01-0.05, 2) exercise price of $0.05, 3) remaining life of 2.7-3.1 years, 4) dividend yield of 0%, 5) risk free rate of 3.76-4.17%, and 6) volatility of 171.4-181.8%.

The following table summarizes information about shares issuable under warrants outstanding during the nine months ended September 30, 2023:

	Warrant shares outstanding			Weighted average exercise price		Weighted average remaining life		Intrinsic value
Outstanding at January 1, 2022		74,614,871		$	0.05		4.47		-
Issued		626,329,010			0.07		3.00		-
Exercised		(18,380,379	)		0.05		-		-
Expired or cancelled		-			-		-		-
Outstanding and exercisable at December 31, 2022		682,563,502			0.06		4.47		-
Issued		113,668,194			0.01		-		-
Exercised		(29,174,134	)		0.07		-		-
Expired or cancelled		-			-		-		-
Outstanding and exercisable at September 30, 2023		767,057,562		$	0.03		2.75		-

(*) Of the 626,329,010 warrants issued during the year ended December 31, 2022 and 682,563,502 warrants outstanding and exercisable at December 31, 2022, the weighted average exercise price and weighted average remaining life was not included for 603,529,010 warrants because their amount and exercise price is variable. In addition, 77,668,194 warrants issued during the nine months ended September 30, 2023, are a result of an adjustment to the number of X, Y and Z warrants, as a result of the terms of the agreement. See Note 5 for the exercise prices of Series X, Y, and Z warrants. Series X, Y, and Z warrants expire on September 11, 2025.