6. STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2018

NOTE 6 – STOCKHOLDERS’ EQUITY

Preferred Stock

On June 3, 2013, the Company filed a Certificate of Amendment of Articles of Incorporation with the State of Nevada Secretary of State giving it the authority to issue 50,000,000 shares of preferred stock with a par value of $0.0001 per share. As of March 31, 2018, there were 200,000 Series A Non-Voting Convertible Stock shares and 250,000 Series B Voting Convertible Preferred Stock shares issued and outstanding.

On March 31, 2014, the Board of Directors of the Company approved the creation of a Series A Non-Voting Convertible Preferred Stock (the “Series A Preferred Stock”). On April 1, 2014, the Company filed a Certificate of Designation for the Company’s Series A Preferred Stock in Nevada of which the Company is authorized to issue up to 7,000,000 shares with a par value of $0.0001 per share. In general, each share of Series A Preferred Stock has no voting or dividend rights, a stated value of $1.00 per share (the “Stated Value”), and is convertible three months after issuance into common stock at the conversion price equal to one-tenth (1/10) of the Stated Value, or at $0.10 per common share.

On December 11, 2015, the Board of Directors of the Company approved the creation of the Corporation’s Series B Voting Convertible Preferred Stock (“Series B Preferred Stock”). On December 16, 2015, the Corporation filed a Certificate of Designation for the Series B Preferred Stock in Nevada of which the Company is authorized to issue up to 250,000 shares with a par value of $0.0001 per share. Holders of Series B Preferred Stock shall be entitled to 1,000 votes for each share of Series B Preferred Stock. Votes of shares of Series B Preferred Stock shall be added to votes of shares of common stock of the Company at any meeting of stockholders of the Company at which stockholders have the right to vote. Series B Preferred Stock shall have voting rights for a period of three years from the date of issuance. On the third anniversary of the issuance of shares of Series B Preferred Stock, each share of Series B Preferred Stock shall be converted into four shares of common stock without further action of the Board of Directors. Series B Preferred Stock shall have the same dividends per share and, except as provided above, the same powers, designations, preferences and relative rights, qualifications, limitations or restrictions as those of shares of Series A Preferred Stock of the Company.

Common Stock

On June 22, 2017, the Board of Directors of the Company approved, and recommended to the holders of a majority of the total voting power of all issued and outstanding voting capital of the Company (the “Majority Stockholders”) that they approve an increase in the total number of authorized shares of the Company’s common stock from 450,000,000 to 1,400,000,000. On June 23, 2017, the Company received written consent in lieu of a meeting from the Majority Stockholders, amending the Company's Certificate of Incorporation, as amended, to this increase in authorized shares. The Company filed the amendment with the State of Nevada on August 14, 2017.

During the three months ended March 31, 2018, the Company entered into a series of stock purchase agreements with accredited investors for the sale of 10,167,000 shares of its common stock in amount of $203,339. Additionally, 11,046,137 shares of common stock were issued for consulting services valued at prices ranging from $0.028 to $0.030 per share, based upon the fair value of the common stock on the measurement date totaling $643,619, which was recognized immediately as general and administrative expense.

Unless otherwise set forth above, the securities described above were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering.

Options for Common Stock

A summary of option activity as of March 31, 2018 is presented below:

Number

Outstanding

Weighted-Average

Exercise Price

Per Share

Weighted-Average

Remaining

Contractual Life

(Years)

Aggregate

Intrinsic

Value

Outstanding at January 1, 2017

1,650,000

0.04

4.53

–

Granted

–

Exercised

–

Canceled/forfeited/expired

–

Outstanding at December 31, 2017

1,650,000

0.04

3.52

–

Granted

–

Exercised

–

Canceled/forfeited/expired

–

Outstanding at March 31, 2018

1,650,000

0.04

2.78

28,080

Options vested and exercisable at March 31, 2018

1,650,000

0.04

2.78

28,080

On September 30, 2014, the Board of Directors of the Company approved a new employment agreement with the Company’s Chief Executive Officer, Randy Letcavage (the “Employment Agreement”). The Employment Agreement has a retroactive effective date of January 1, 2014 and replaces all prior agreements between the Company and Mr. Letcavage. The Employment Agreement provides for an annual base salary of $240,000, a discretionary bonus of $50,000 over each 12-month period, expense reimbursement, and a grant of stock options for 5,000,000 shares vesting over 2 years at an initial exercise price per share equal to $.0025 per share. Stock options have vested at the following rate:

·	1,000,000 (one million) shares of common stock on the Commencement Date (January 1, 2014);
·	1,000,000 (one million) shares of common stock on the sixth (6th) month anniversary of the Commencement Date;
·	1,000,000 (one million) shares of common stock on the first anniversary of the Commencement Date;
·	1,000,000 (one million) shares of common stock on the 18th month anniversary of the Commencement Date; and
·	1,000,000 (one million) shares of common stock on the second anniversary of the Commencement Date.

In addition, the Company agreed to indemnify Mr. Letcavage to the fullest extent permitted by law for claims related to Mr. Letcavage’s role as an officer and director of the Company, or its subsidiaries. As of December 31, 2015, $872,316 had been recorded as his stock based compensation related to the stock options, with $0 unrecognized cost related to the stock options remaining. On October 8, 2015, Mr. Letcavage exercised 4,000,000 options for common stock at an aggregate price of $10,000, which was paid through the reduction of accounts payable owed Mr. Letcavage.

On December 31, 2014, the Board of Directors of the Company granted 150,000 stock options to each of its three board members with vesting immediately at an initial exercise price per share equal to $.15 per share.

The Company valued the options using the Black-Scholes option pricing model with the following assumptions: dividend yield of zero, years to maturity of between 0.5 and 5 years, risk free rates of between 1.65 and 1.73 percent, and annualized volatility of between 108% and 217%.

Warrants for Common Stock

A summary of warrant activity as of March 31, 2018 is presented below:

	Number Outstanding			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value

Outstanding at January 1, 2017		227,271,136		$	0.089		1.44	$	–
Granted		78,395,012			0.080		0.76		–
Exercised		–			–		–		–
Canceled/forfeited/expired		(158,166,661	)		0.085		–		–
Warrants vested and exercisable at December 31, 2017		147,499,487			0.089		1.50		–

Granted		35,184,000			0.070		1.07		–
Exercised		–			–		–		–
Canceled/forfeited/expired		(1,486,666	)		0.073		–		–
Outstanding at March 31, 2018		181,196,821			0.085		1.23		–
Warrants vested and exercisable at March 31, 2018		181,196,821		$	0.085		1.23	$	–

During the three months ended March 31, 2018, the Company issued 35,184,000 warrants included with certain stock purchases from accredited investors, with exercise prices ranging from $0.07 to $0.10, and expiration dates ranging from 1 to 2 years. There was no expense resulting from these warrants.

PREMIER HOLDING CORP. 10-Q