NOTE 10 – STOCK TRANSACTIONS

Preferred Stock

On March 17, 2017, the Company held an annual meeting of its shareholders. At the annual meeting, the majority shareholders of the Company approved an amendment to the articles of incorporation, authorizing one share of Series A Preferred stock, which would be issued to Joseph Segelman. The share of Series A Preferred stock shall vote together as a single class with the holders of the Company’s common stock, and the holders of any other class or series of shares entitled to vote with the common stock, with the holder of the Series A Preferred stock being entitled to fifty-one percent (51%) of the total votes on all such matters regardless of the actual number of shares of Series A Preferred stock then outstanding, and the holders of the common stock and any other shares entitled to vote shall be entitled to their proportional share of the remaining forty-nine percent (49%) of the total votes based on their respective voting power. The share of Series A Preferred stock shall not be entitled to receive any distributions in the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary. The share of Series A Preferred stock shall not be eligible to receive dividends. The class of Series A Preferred stock shall be automatically cancelled ten (10) years after the initial issue date of such Series A Preferred stock.

On May 19, 2017, the Company received the file stamped certificate of amendment from the state of Delaware, which lists an effective date of March 20, 2017. On May 23, 2017, the Company issued the share of Series A Preferred stock to Joseph Segelman, valued at $270,000 (based on the estimated fair value of the stock and control premium on the date of grant), which will allow Mr. Segelman to maintain fifty-one percent (51%) voting control of the Company regardless of how many shares of common stock are issued and outstanding. Therefore, the Company considers the Series A Preferred stock to be issued on May 23, 2017.

Common Stock

On August 10, 2020, a reverse stock split of the Company’s common stock, par value $0.0001 per share, at a ratio of 150:1, became effective. The reverse stock split was announced by FINRA on August 7, 2020. At the effective time of the reverse stock split, every 150 issued and outstanding shares of the Company’s common stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value per share or number of authorized shares of common stock. All share and per share amounts contained in this Quarterly Report on Form 10-Q and the accompanying financial statements have been adjusted to reflect the reverse stock split for all prior periods presented.

On March 31, 2020, the Company issued a total of 16,667 restricted common shares to a third-party in conjunction with a joint venture, valued at $13,750 (based on the Company’s stock price on the measurement date) (see Note 14).

On February 25, 2020, the Company issued a total of 33,333 restricted common shares to a third-party for outside consulting services with 11,111 shares vesting each month for three months. The Company recorded $16,334 and $13,166 in the three and nine months ended September 30, 2020 (based on the Company’s stock price on the measurement date). The Company valued the shares at each vesting period and recognized expense for the portion of the shares earned.

In January and March 2020, holders of the Company’s December 2015 Notes elected to convert principal of $10,000 and $7,500 of accrued interest due on the December 2015 Notes into a total of 46,667 common shares.