Balance, December 31, 2017 971,454 503,339 468,116 4,106,521
Issuance of convertible notes 3,242,734 3,208,525 34,209 4,900,329
Conversion of convertible notes (830,145) (175,000) (655,144) (1,267,049)
Repayment of convertible notes (75,269) (75,269)
Change in fair value of derivatives — — — (2,608,997)
Amortization — (917,870) 917,870 —
Balance September 30, 2018 $ 3,308,774 $ 2,618,994 $ 689,782 $ 5,130,804
During the nine months ended September 30, 2018, $830,145 of notes and $69,037 of accrued interest was converted into 6,673,717 shares of
com.....As a condition of management employment, the Board of Directors approved employment agreements with three key executives. This agreement
provided that additional shares will be granted each year at February 1 over the term of the agreement should their shares as a percentage of the total
shares outstanding fall below prescribed ownership percentages. The CEO received an annual grant of additional shares each year to maintain his
ownership percentage at 10% of the outstanding stock. The other two executives receive a similar grant to maintain each executive’s ownership
percentage at 7.5% of the outstanding stock. At September 30, 2018, there is $392,998 accrued for the annual grants, representing 1,849,091 shares.
The Company recorded compensation expense of $544,647 for the nine months ended September 30, 2018. The Company issued 748,896 shares that
were accrued during 2018. The Company issued 1,161,065 shares of common stock that were accrued in 2017 and classified as shares to be issued at
December 31, 2017.
Common stock warrant activity:
The Company has determined that certain of its warrants are subject to derivative accounting. The table below provides a reconciliation of the
beginning and ending balances for the warrant liabilities measured using fair significant unobservable inputs (Level 3) for the nine months ended
September 30, 2018:
Balance at December 31, 2017 $ 192,350
Issuance of warrants —
Change in fair value during period (180,269)
Balance at September 30, 2018 $ 12,081 !!! DILUTION !!!
