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4. SHAREHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2018

Stockholders' Equity Note [Abstract]

SHAREHOLDERS' EQUITY

Preferred Stock

On October 11, 2013, the Company filed a Certificate of Designations, Number, Voting Power, Preferences and Rights of Series C Convertible Preferred Stock (the “Certificate of Designations”), under which it designated 100,000 shares of Series C Preferred Stock, par value $10.00. The Series C Preferred Stock was entitled to accruing dividends (payable, at the Company’s options, in either cash or stock) of 5% per annum until October 10, 2016, and 3% per annum until October 10, 2018.

The Series C Preferred Stock was senior to the Company’s Common Stock and any other currently issued series of the Company’s Preferred Stock upon liquidation and was entitled to a liquidation preference per share equal to the original issuance price of such shares of Series C Preferred Stock together with the amount of all accrued but unpaid dividends thereon. Each of the Series C Shares was convertible at the option of the holder into 1,000 shares of Common Stock as provided in the Certificate. Additionally, each holder of Series C Preferred Stock was entitled to vote on all matters submitted for a vote of the holders of Common Stock a number of votes equal to the number of full shares of Common Stock into which such holder’s Series C shares could have been converted.

As of December 31, 2017, there were 85,561 shares of Series C Preferred Stock issued and outstanding. In February and March 2018, the Company issued 100,567,691 shares of Common Stock for the conversion of 85,561 shares of Series C Convertible Preferred Stock and $1,050,468 of related Series C dividends. Dividends were converted at $0.07 per share. As of March 31, 2018, there were no shares of Series C Preferred Stock outstanding and all accrued dividends were converted to Common Stock.

Series C Preferred dividends were $28,061 and $12,936 for the quarters ended March 31, 2018 and March 31, 2017, respectively. As an inducement to encourage the Series C Preferred Stock shareholders to convert their Series C Preferred Stock to Common Stock prior to October 10, 2018, the Company offered to apply the full dividend, (accelerated to October 10, 2018) upon the shareholders exercise of their conversion. The fair value of the extra shares of Common Stock issued to Series C Stock shareholders was $103,197 for dividends that would have accrued from the date of their conversion through October 10, 2018.

Common Stock

On March 6, 2018, the Company issued 22,651,356 shares of Common Stock for the conversion of $1,200,000 in Related Party convertible debt and $385,594 in accrued interest. In February and March 2018, the Company issued 100,567,691 shares of Common Stock for the conversion of 85,561 shares of Series C Convertible Preferred Stock and $1,050,468 of related Series C dividends.

Warrants

A summary of the status of the warrants granted for the three-months ended March 31, 2018, and changes during the period then ended is presented below:

		For the Three-months Ended March 31, 2018
		Shares				Weighted Average Exercise Price
Outstanding at beginning of period			5,100,000			$	0.06
Granted			-				-
Exercised			-				-
Forfeited			-				-
Expired			-				-
Outstanding at end of period			5,100,000			$	0.06

	As of March 31, 2018
		Warrants Outstanding												Warrants Exercisable
	Range of Exercise Prices				Number Outstanding				Weighted-Average Remaining Contract Life				Weighted- Average Exercise Price				Number Exercisable				Weighted-Average Exercise Price
	$	0.06				4,500,000				0.05			$	0.06				4,500,000			$	0.06
		0.08				200,000				0.37				0.08				200,000				0.08
		0.09				400,000				0.23				0.09				400,000				0.09
	$	0.06 -0.09				5,100,000				.47			$	0.06				5,100,000			$	0.06

The aggregate intrinsic value of the exercisable warrants as of March 31, 2018, was $0.

Stock Options

A summary of the status of the stock options granted for the three-month period ended March 31, 2018, and changes during the period then ended is presented below:

		For the Three-months Ended March 31, 2018
		Options				Weighted Average Exercise Price
Outstanding at beginning of period			1,150,000			$	0.06
Granted			-				-
Exercised			-				-
Forfeited			-				-
Expired
Outstanding at end of period			1,150,000			$	0.06

	As of March 31, 2018																As of March 31, 2018
					Stock Options Outstanding												Stock Options Exercisable
	Exercise Price				Number Outstanding				Weighted-Average Remaining Contract Life				Weighted- Average Exercise Price				Number Exercisable				Weighted-Average Exercise Price
	$	0.06				1,150,000				4.75			$	0.06			$	-				-

On December 31, 2017, the Company granted a total of 1,150,000 options to five employees. The shares vest in equal annual amounts over three years and the aggregate fair value of the awards was determined to be $61,322.