Quarterly report pursuant to Section 13 or 15(d)

COMMON STOCK/PAID IN CAPITAL

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COMMON STOCK/PAID IN CAPITAL
3 Months Ended
Dec. 31, 2018
Stockholders' Equity Note [Abstract]  
COMMON STOCK/PAID IN CAPITAL

NOTE 7 – COMMON STOCK/PAID IN CAPITAL  

At the annual shareholder meeting in May of 2018, our shareholders approved increasing the number of authorized shares of common stock from 975,000,000 to 1,500,000,000. The number of authorized shares of preferred stock was not changed and is 50,000,000.

As discussed in Note 5, between June and November 2016, the Company issued 27.9 million warrants in conjunction with convertible notes payable. The warrants have an exercise price of $0.03 and a term of the earlier of three years or upon a change of control. Based upon the allocation of proceeds between the convertible notes payable and the warrants, approximately $452,422 was allocated to the warrants. During June through August 2017, the maturity date of all of the Bridge Financing Notes was extended to January 15, 2018 in exchange for the issuance of 25% additional warrants. The warrants have an exercise price of $0.03 and the same expiration date (three years from original transaction) as the original warrants. On January 15, 2018 the maturity date of the Bridge Financing Notes was extended to April 16, 2018 in exchange for the issuance of 10% additional warrants (see Note 5 for status of notes). The warrants have an exercise price of $0.10 per share and the same expiration date (three years from original transaction) as the original warrants.

The fair value of the warrants were determined using the Black Scholes valuation model with the following key assumptions:

 

    June 2016     July 2016     August 2016     November 2016     June 2017     July 2017     August 2017     January 2018  
Warrants Issued   12.9 million     10.0 million     3.3 million     1.7 million     3.2 million     2.5 million     1.25 million     2.8 million  
Stock Price (1)   $ 0.054     $ 0.040     $ 0.032     $ 0.029     $ 0.025     $ 0.019     $ 0.016     $ 0.11  
Exercise Price   $ 0.03     $ 0.03     $ 0.03     $ 0.03     $ 0.03     $ 0.03     $ 0.03     $ 0.10  
Term (2)     3 years       3 years       3 years       3 years       2 years       2 years       2 years       1.5 years  
Risk Free Rate     .87 %     .80 %     .88 %     1.28 %     1.35 %     1.35 %     1.33 %     1.89 %
Volatility     135 %     138 %     137 %     131 %     135 %     136 %     135 %     163 %

(1) Fair market value on the date of agreement.

(2) Average term. 

Below is a summary of warrants issued in conjunction with convertible notes which were paid in full as of September 30, 2018. The warrants are outstanding at December 31, 2018.

 

      Warrants Outstanding     Warrants Exercisable  
Exercise Price     Number Outstanding     Remaining Contractual Life (Yrs)     Weighted Average Exercise Price     Number Exercisable     Weighted Average Exercise Price  
 $ 0.10       550,000       3.00     $ 0.10       550,000     $ 0.10  
 $ 0.10       1,100,000       3.21     $ 0.10       1,100,000     $ 0.10  
 $ 0.10       1,100,000       3.79     $ 0.10       1,100,000     $ 0.10  
 $ 0.10       1,100,000       3.96     $ 0.10       1,100,000     $ 0.10  

 

During the three months ended December 31, 2018, the Company issued approximately 19.3 million shares of common stock and approximately 9.7 million warrants to accredited investors in a private placement. The funds were received in the prior quarter and moved to equity during the current quarter. Based upon the allocation of proceeds between the common stock and the warrants, approximately $259,000 was allocated to the warrants.

The fair value of the warrants were determined using the Black Scholes valuation model with the following key assumptions:  

 

    Effective Date December 2018
Number of Warrants Issued   9,662,500
Stock Price $ 0.044
Exercise Price $ 0.09
Term   3 years
Risk Free Rate   2.46%
Volatility   149%