Common Stock

3 Months Ended

Mar. 31, 2019

Note (4) Common Stock

Between March 20, 2018 and March 29, 2018, the Company sold a total of 206,000 units for cash consideration of $123,600 at price of $.60, each unit was comprised of one share of common stock and one class B warrant exercisable at $1.20 per share with a term of 24 months. The relative fair value of the stock with embedded warrants was $44,454 for the common stock and $79,146 for the class B Warrants.

Between April 3, 2018 and May 14, 2018, the Company sold a total of 1,150,500 units for cash consideration of $690,300 at price of $.60, each unit was comprised of one share of common stock and one class B warrant exercisable at $1.20 per share with a term of 24 months. The relative fair value of the stock with embedded warrants was $290,996 for the common stock and $399,304 for the class B Warrants.

Between October 18, 2018 and October 22, 2018, the Company sold a total of 345,166 units for cash consideration of $207,004 at price of $.60, each unit was comprised of one share of common stock and one class B warrant exercisable at $1.20 per share with a term of 24 months. The relative fair value of the stock with embedded warrants was $64,431 for the common stock and $142,573 for the class B Warrants.

Between November 5, 2018 and November 28, 2018, the Company sold a total of 187,483 units for cash consideration of $224,980 at price of $1.20 , each unit was comprised of one share of common stock and one class D warrant exercisable at $2.40 per share with a term of 24 months. Of these shares, 12,500 shares were recorded as subscribed share capital. The relative fair value of the stock with embedded warrants was $70,026 for the common stock and $154,954 for the class B Warrants

During the year ended December 31, 2018 50,000 shares were issued to one officer for services provided to the Company. Such shares were valued at $26,000.

On May 1, 2018 one consultant was issued a two-year Class B Warrants to acquire an aggregate of 41,000 shares of common stock at an exercise price of $1.20 per share. The fair value of these warrants is $26,731. The warrants were valued using the Black-Scholes model with volatility of 139% and discount rate of 2.50%. The Class B warrants are fully vested and were accordingly included in expenses as stock based compensation.

On December 10, 2018 three consultants were issued 750,000 Class J Warrants exercisable for a three-year period to acquire one (1) share of common stock at a price of $0.30 per share; The fair value of these warrants is $1,199,643. The warrants were valued using the Black-Scholes model with volatility of 390% and discount rate of 2.73%. The Class J warrants are fully vested and were accordingly included in expenses as stock based compensation.

On December 10, 2018 three consultants were issued 450,000 Class I Warrants exercisable for a two-year period to acquire one (1) share of common stock at a price of $0.01 per share; The fair value of these warrants is $719,774. The warrants were valued using the Black-Scholes model with volatility of 390% and discount rate of 2.72%. The Class I warrants are fully vested and were accordingly included in expenses as stock based compensation.

On November 1, 2018 two consultants were issued 200,000 Class E Warrants exercisable for a four-year period to acquire one share of common stock at a price of $0.01 per share; The fair value of these warrants are $ 249,998. The warrants were valued using the Black-Scholes model with volatility of 388% and discount rate of 2.94%. The Class E warrants are fully vested and were accordingly included in expenses as stock based compensation.

On November 1, 2018 one consultant was issued 100,000 Class F Warrants exercisable for a five-year period to acquire one share of common stock at a price of $3.00 per share; The fair value of these warrants is $124,997. The warrants were valued using the Black-Scholes model with volatility of 388% and discount rate of 2.96%. The Class F warrants are fully vested and were accordingly included in expenses as stock based compensation.

On November 1, 2018 one consultant was issued 200,000 Class G Warrants exercisable for a five-year period to acquire one share of common stock at a price of $5.00 per share; The fair value of these warrants is $249,994. The warrants were valued using the Black-Scholes model with volatility of 388% and discount rate of 2.96%. The Class G warrants are fully vested and were accordingly included in expenses as stock based compensation.

On November 1, 2018 one consultant was issued 100,000 Class H Warrants exercisable for a five-year period to acquire one share of common stock at a price of $1.00 per share; The fair value of these warrants is $124,999. The warrants were valued using the Black-Scholes model with volatility of 388% and discount rate of 2.96%. The Class H warrants are fully vested and were accordingly included in expenses as stock based compensation.

On December 12, 2018 one consultant was issued 50,000 Class C Warrants exercisable for a four-year period to acquire one share of common stock at a price of $2.40 per share; The fair value of these warrants is $62,492. The warrants were valued using the Black-Scholes model with volatility of 388% and discount rate of 2.94%.

On December 12, 2018, one consultant was issued 75,000 Class E Warrants exercisable for a five-year period to acquire one share of common stock at a price of $0.01 per share. The warrants are vesting equally over eight quarters, thus the fair value of the vested amount recorded as expense as of March 31, 2019 was $9,439 in 2108 plus $35,655 in Q1 2019 out of $180,374 total value. The warrants were valued using the Black-Scholes model with volatility of 389% and discount rate of 2.22%.

On January 1, 2019, the Company issued two officers in consideration for services 300,000 Class I Warrants exercisable for a period of three years at an exercise price of $.01 per share and 300,000 Class J Warrants exercisable for a period of three years at an exercise price of $.30 per share. The warrants vest one third immediately, one third on December 31, 2019 and one third on December 31, 2020. Thus the fair value of the vested amount recorded as expense as of March 31, 2019 was $149,966 out of $449,898 total value. The warrants were valued using the Black-Scholes model with volatility of 394% and discount rate of 2.47%. On February 28, 2019, 100,000 class I warrants were converted to 99,576 shares of common stock in a cashless exercise.

On January 24, 2019, the Company sold a total of 334,000 units for cash consideration of $334,000 at price of $1.00, each unit was comprised of one share of common stock, one Class F warrant exercisable at $3.00 per share with a term of 36 months and one Class G warrant exercisable at $5.00 per share with a term of 60 months. The relative fair value of the stock with embedded warrants was $73,513 for the common stock and $260,187 for the class F and class G Warrants.

On January 27, 2019, 12,500 shares subscribed for in 2018 and recorded as stock payable were issued to a shareholder who the company sold common stock to on November 21, 2019 and recorded subscribed share capital for during the period ending December 31, 2018.

On January 31, 2019 one consultant was issued 50,000 Class E Warrants exercisable for a four-year period to acquire one share of common stock at a price of $0.01 per share; The fair value of these warrants are $94,999. The warrants were valued using the Black-Scholes model with volatility of 390% and discount rate of 2.43%. The Class E warrants are fully vested and were accordingly included in expenses as stock based compensation.

Following is a table of warrant and options outstanding as of March 31, 2019 and exercisable along with the exercise price and range of remaining term.

Type	Quantity		Exercise Price		Remaining Term
Warrants Class A		1,000,000	$	0.50	12 Months
Warrants Class B		1,599,166	$	1.20	12-18 Months
Warrants Class C		50,000	$	2.4	48 Months
Warrants Class D		330,983	$	2.4	8 Months
Warrants Class E		275,000	$	0.01	48 Months
Warrants Class F		100,000	$	3.00	36 Months
Warrants Class G		200,000	$	5.00	60 Months
Warrants Class H		100,000	$	1.00	60 Months
Warrants Class I		650,000	$	0.01	24 Months
Warrants Class J		1,050,000	$	0.30	36 Months
Total		4,855,149

On March 31, 2019 and December 31, 2018 there were approximately 227 and 226 holders of record and 10,964,302 and 10,518,226 shares of the Company’s common stock par value $0.00001 per share, outstanding, respectively. All shares of common stock are entitled to one vote per share in all matters submitted to the shareholders. No preferred shares were issued and outstanding at March 31, 2019 and December 31, 2018.

Dividends

The Company has not declared or paid any cash dividends on its common stock nor does it anticipate paying any in the foreseeable future. Furthermore, the Company expects to retain any future earnings to finance its operations and expansion. The payment of cash dividends in the future will be at the discretion of its Board of Directors and will depend upon its earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.

Securities Authorized for Issuance under Equity Compensation Plans – None.

CANNAPOWDER, INC. 10-Q