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Stockholders' Deficit
 9 Months Ended
Sep. 30, 2018
Equity [Abstract]  
Stockholders' Deficit

NOTE 11 – STOCKHOLDERS’ DEFICIT

 

PREFERRED STOCK

 

Series A

 

As of September 30, 2018, there were 1,000,000 Series A preferred shares designated and 0 Series A preferred shares outstanding. The board of directors had previously set the voting rights for the preferred stock at 1 share of preferred to 250 common shares.

 

Series B

 

As of September 30, 2018, there was 1 preferred share designated and 0 preferred shares outstanding. Effective on September 30, 2016, with the divestiture of Quest Solution Canada Inc., the one share was redeemed by the Company and retired.

  

Series C

 

As of September 30, 2018, there were 15,000,000 Series C preferred share authorized and 4,828,530 Series C preferred share outstanding. It has preferential rights above common shares and the Series B preferred shares and is entitled to receive a quarterly dividend at a rate of $0.06 per share per annum. As part of a debt settlement agreement effective December 30, 2017, 1,685,000 shares were issued with the quarterly dividend at a rate of $.06 per share per annum were waived for a period of 24 months, with no dividends being accrued or paid. Each Series C preferred share outstanding is convertible into one (1) share of common stock of Quest Solution, Inc.

 

COMMON STOCK

 

In April 2017, the Company issued 640,000 shares to the Chief Executive Officer as a signing bonus under his Employment Agreement. In addition, the Company issued 70,000 shares to the Chief Financial Officer as additional fees pursuant to his Contractor Agreement.

 

On September 30, 2017, the Company issued 87,500 shares to board members in relation to the vesting schedule agreed to during 4th quarter 2015, which is based on an annual grant of 100,000 restricted shares every October and vesting over 8 quarters per independent board member as compensation.

 

On August 2, 2017, the Company authorized the issuance of 600,000 shares of common stock as part of a consulting agreement with Carlos Jaime Nissensohn. The shares were issued in November, 2017.

 

On December 30, 2017, the Company authorized the issuance of 600,000 shares of common stock valued at $59,400, as part of a debt extinguishment agreement with two related parties. The common shares were issued on June 9, 2018.

 

On March 08, 2018 and pursuant to the Plan, the Company granted a grand total of 1,700,000 Shares, as well as options to purchase up to 7,000,000 Shares (the “Options”) with an exercise price equal to the closing price of the Company’s common stock on Wednesday, March 07, 2018, $0.12 per share. A total of 1,000,000 Shares and 3,200,000 Options were issued to the Company’s Board of Directors as follows:

 

  ● Shai Lustgarten (Chairman of the Board) received 1,000,000 Shares and 2,000,000 Options;
  ● Andrew J. Macmillan received 400,000 Options;
  ● Yaron Shalem received 400,000 Options; and
  ● Niv Nissenson received 400,000 Options.

 

On March 08, 2018 and pursuant to the Plan, the Company granted 500,000 Shares to its Chief Financial Officer Benjamin Kemper.

 

On March 08, 2018, the Company issued 500,000 shares of the Company’s common stock, par value $0.001, to Mr. Carlos J Nissensohn, who is the father of Niv Nissensohn, a director of the Company, pursuant to a consulting agreement (the “Consulting Agreement”) dated August 02, 2017 which was previously filed with the SEC on the Company’s Form 8-K dated August, 04, 2017.

 

On March 08, 2018, the Company issued 200,000 shares of the Company’s common stock to the JSM SOC-DIG LP.

 

On June 7, 2018, the Company authorized the issuance of 8,600,000 shares of common stock to Jason Griffith valued at $2,666,000. The issuance was part of a convertible provision in an existing note held by Jason Griffith. With the issuance of stock, the debt and accrued interest was extinguished. The Company recognized a loss from the conversion in the amount of $1,264,237.

 

On June 26th, 2018, the Company issued 150,000 shares of stock, valued at $45,000, to Maren Life Reinsurance LTD as part of a debt settlement agreement.

 

On August 1st, 2018, the Company issued 200,000 shares of restricted stock, valued at $22,000, to John Nesbett as payment for services.

 

On August 1st, 2018, the Company issued 64,516 shares of restricted stock, valued at $20,000, to the Company’s legal team Sichenzia Ross Ference Kesner LLP as payment for services.

 

As of September 30, 2018, the Company had 48,709,773 common shares outstanding.

 

Warrants and Stock Options

 

On March 08, 2018, the Company adopted an Equity Incentive Plan (the “Plan”), as an incentive, to retain in the employ of and as directors, officers, consultants, advisors and employees to the Company. Ten million (10,000,000) shares of the Corporation’s common stock, par value $0.001 (the “Shares”), was set aside and reserved for issuance pursuant to the Plan.

 

Warrants - The following table summarizes information about warrants granted during the nine month periods ended September 30, 2018 and 2017:

 

    September 30, 2018     September 30, 2017  
    Number of
warrants		     Weighted
Average
Exercise Price		     Number of
warrants		     Weighted
Average
Exercise Price		  
                         
Balance, beginning of period     4,900,000     $ 0.21       1,405,000     $ 0.52  
                                 
Warrants granted     -       -       1,500,000       0.11  
Warrants expired     (200,000 )     1.00       -       -  
Warrants cancelled, forfeited     -       -       -       -  
Warrants exercised     -       -       -       -  
                                 
Balance, end of period     4,700,000     $ 0.17       2,905,000     $ 0.31  
                                 
Exercisable warrants     4,700,000     $ 0.17       2,905,000     $ 0.31  

  

Outstanding warrants as of September 30, 2018 are as follows:

 

Range of
Exercise Prices		     Weighted
Average
residual life
span
(in years)		     Outstanding
Warrants		     Weighted
Average
Exercise Price		     Exercisable
Warrants		     Weighted
Average
Exercise Price		  
                                 
$ 0.11       2.84       1,500,000     $ 0.11       1,500,000     $ 0.11  
$ 0.20       2.25       3,000,000     $ 0.20       3,000,000     $ 0.20  
$ 0.28       1.74       200,000     $ 0.28       200,000     $ 0.28  
                                             
$ 0.11 to 0.28       2.42       4,700,000     $ 0.17       4,700,000     $ 0.17  

 

Warrants outstanding at September 30, 2018 and 2017 have the following expiry date and exercise prices:

 

Expiry Date   Exercise Prices     September 30, 2018     September 30, 2017  
                   
June 22,2018   $ 1.00       -       300,000  
April 1, 2018   $ 0.25       -       900,000  
April 30, 2018   $ 0.25       -       5,000  
July 1, 2018   $ 1.00       -       200,000  
June 26, 2020   $ 0.28       200.000       -  
December 30, 2020   $ 0.20       3,000,000       -  
August 2, 2021   $ 0.11       1,500,000       -  
                         
              4.700,000       1,405,000  

 

Share Purchase Option Plan

 

The Company has a stock option plan adopted in on November 17, 2014, whereby the Board of Directors, may grant to directors, officers, employees, or consultants of the Company shares of common stock as well as options to acquire common shares. The Board of Directors of the Company has the authority to determine the terms, limits, restrictions and conditions of the grant of options, to interpret the plan and make all decisions relating thereto. The plan was adopted by the Company’s Board of Directors in order to provide an inducement and serve as a long-term incentive program. The maximum number of common shares that may be reserved for issuance under the Plan was set at 10,000,000.

 

The Company adopted an equity incentive plan on March 8, 2018, whereby the Board of Directors, may grant to directors, officers, employees, or consultants of the Company shares of common stock as well as options to acquire common shares. The Board of Directors of the Company has the authority to determine the terms, limits, restrictions and conditions of the grant of options, to interpret the plan and make all decisions relating thereto. The plan was adopted by the Company’s Board of Directors in order to provide an inducement and serve as a long-term incentive program. The maximum number of common shares that may be reserved for issuance under the plan was set at 10,000,000. On November 15, 2018, the Company’s Board of Directors approved an increase in the amount of shares available under the Plan to 16,000,000.

 

The equity incentive plan adopted on March 8, 2018 and amended on November 15, 2018, is a separate, additional plan to the Company’s stock option plan adopted on November 17, 2014.

 

The option exercise price is established by the Board of Directors and may not be lower than the market price of the common shares at the time of grant. The options may be exercised during the option period determined by the Board of Directors, which may vary, but will not exceed ten years from the date of the grant. There are 16,000,000 of the Company’s common shares which may be issued pursuant to the exercise of share options granted under the Plan. As of September 30, 2018, the Company had issued aggregate options, allowing for the subscription of 16,281,000 common shares of its share capital pursuant to the 2014 and 2018 stock incentive plans.

 

Stock Options - The following table summarizes information about stock options granted during the nine months ended September 30, 2017 and 2016:

 

    September 30, 2018     September 30, 2017  
    Number of
stock options		     Weighted
Average
Exercise Price		     Number of
stock options		     Weighted
Average
Exercise Price		  
                         
Balance, beginning of period     16,317,000     $ 0.17       5,625,000     $ 0.41  
                                 
Stock options granted     -       -       3,500,000     $ -  
Stock options expired     36,000     $ 0.33       -       -  
Stock options cancelled, forfeited     -       -       -       -  
Stock options exercised     -       -       -       -  
                                 
Balance, end of period     16,281,000     $ 0.17       9,125,000     $ 0.21  
                                 
Exercisable stock options     13,689,416     $ 0.18       3,339,750     $ 0.34  

  

Outstanding stock options as of September 30, 2018 are as follows:

 

Range of
Exercise Prices		     Weighted
Average
residual life
span
(in years)		     Outstanding
Stock Options		     Weighted
Average
Exercise Price		     Exercisable
Stock Options		     Weighted
Average
Exercise Price		  
                                 
$ 0.075 to 0.09       3.41       2,981,000     $ 0.08       2,220,666     $ 0.08  
$ 0.11       2.84       3,500,000     $ 0.11       3,500,000     $ 0.11  
$ 0.12       4.43       6,800,000     $ 0.12       5,000,000     $ 0.12  
$ 0.145       9.01       500,000     $ 0.145       500,000     $ 0.145  
$ 0.50       6.15       2,500,000     $ 0.50       2,468,750     $ 0.50  
                                             
$ 0.075 to 0.50       4.31       16,281,000     $ 0.17       13,689,416     $ 0.18  

 

Stock options outstanding at September 30, 2018, and 2017 have the following expiry date and exercise prices:

 

Expiry Date   Exercise Prices     September 30, 2018     September 30, 2017  
February 26, 2018   $ 0.37       -       72,000  
April 27, 2018   $ 0.38       -       36,000  
July 9, 2018   $ 0.33       -       36,000  
August 2, 2021   $ 0.11       3,500,000       3,500,000  
February 17, 2022   $ 0.075       760,333       760,333  
February 17, 2022   $ 0.09       1,520,667       1,520,667  
September 30, 2022   $ 0.09       700,000       700,000  
June 5, 2023   $ 0.12       6,800,000       -  
November 20, 2024   $ 0.50       2,500,000       2,500,000  
October 2, 2027   $ 0.145       500,000       -  
                         
              16,281,000       9,125,000  

 

Stock compensation expense is $1,124,553 for the nine months ended September 30, 2018 and $565,593 for the nine months ended September 30, 2017.