Stockholder's equity

3 Months Ended

Mar. 31, 2021

Stockholders' Equity Note [Abstract]

7. Stockholder’s equity

Common stock

In April 2018, the Company increased its authorized common stock from 70 million to 1 billion shares. The Company issued 46,839,439 shares of common stock and 19,000 shares of Series A Convertible Preferred Stock to the shareholders of PBG Water Solutions pursuant to PBG SEA. The 19,000 shares of Series A Convertible Preferred Stock were converted into 19,000,000 shares of common stock upon increase in the number of shares of authorized common stock.

In October 2018, the Company hired certain consultants to provide general advisory services relating to the Company operating as a publicly traded enterprise, strategic planning and execution, corporate governance and financial reporting. Pursuant to each agreement, the service term is 12 months and the Company shall pay the Consultants an aggregate of 1,500,000 shares of the Company’s common stock which was delivered at inception of the Agreements. The shares were issued in December 2018. In November 2018, the Company hired a consultant for investor relations and strategic planning, pursuant to an agreement whereby the Company shall issue to the consultant 20,000 shares of the Company’s common stock each month. The service was terminated in February 2020. As of March 31, 2020, the Company has issued 15,000 shares of common stock to the consultant. Cost for the consulting service was measured based on the fair value of the Company’s common stock at the date of the consulting agreement since the common stock was vested and non-forfeitable upon the entry into the agreement. The fair value of the common stock was estimated to be $0.4075, and resulted in $617,550 for the fair value of the 1,515,000 common shares issued. $160,963 consulting expense was incurred during the three months ended March 31, 2019.

In December 2018, the Company issued 6,655,750 shares of the Company’s common stock for aggregate consideration of $2,196,500.

Warrants

On May 1, 2018, the Company issued warrants to a shareholder pursuant to the Credit Loan Agreement (See Note 6). The warrants issued by the Company are classified as equity. The fair value of the warrants was recorded as additional-paid-in-capital, and no further adjustments are made.

The fair value of the stock warrants granted was estimated at $4,540,000 on the date granted using the Black-Scholes pricing model, with the following assumptions used for the valuation: exercise price of $ 0.01 per share, average risk-free interest rate of 2.66%, expected dividend yield of zero, expected lives of 3 years and an average expected volatility of 35%.

A summary of the status of the Company’s warrants as of March 31, 2021 is presented below:

	Number of
	warrants
	(Unaudited)
Warrants as at December 31, 2020		50,000,000
Warrants granted		-
Exercised, forfeited or expired		-
Outstanding at March 31, 2021		50,000,000
Exercisable at March 31, 2021		50,000,000

The following table summarizes information about the Company’s warrants as of March 31, 2021:

Warrants outstanding

Warrants exercisable

Exercise
price

Number
outstanding

Weighted
average
remaining
contractual
life (in years)

Weighted average
exercise price

Number
exercisable

Weighted
average
exercise
price

(Unaudited)

0.01

50,000,000

1.17

0.01

50,000,000

0.01

Equity Incentive Plan

In July 2018, the Company adopted the 2018 Equity Incentive Plan (the “2018 Plan”) which provides for the grant of stock options, stock appreciation rights, restricted stock, stock units, bonus stock, dividend equivalents, other stock related awards and performance awards. The maximum aggregate number of shares that may be subject to awards under the 2018 Plan is 10,000,000.

Following is a reconciliation of the shares available to be issued under the 2018 Plan as of March 31, 2021:

	Shares Available for Grant
	(Unaudited)
Balance as of December 31, 2020		8,485,000
Stock awards granted		-
Stock awards forfeited		-

Balance as of March 31, 2021		8,485,000

QHY GROUP 10-Q