11. Stockholder's Equity

12 Months Ended

Dec. 31, 2020

Equity [Abstract]

Stockholder's Equity

In December 2020, the number of authorized shares of the Company’s common stock increased from 90,000,000 to 150,000,000.

Issuance of Common Stock for Cash

During 2020, the Company sold units consisting of 5,742,858 from sale of shares of its common stock and 5,742,858 warrants to purchase shares of common stock for total proceeds of $2,010,000. Offering costs associated with the sale totaled $196,932.

During 2019, the Company sold units consisting of 904,082 shares of its common stock and 452,041 warrants to purchase shares of common stock for total proceeds of $433,960. Offering costs associated with the sale totaled $29,761.

Issuance of Common Stock for Services to Officers and Directors

During the year ended December 31, 2020, the Company awarded, but did not issue, common stock with a value of $110,000 to its Board of Directors as compensation for their services as directors. In connection with the issuances, the Company recorded $110,000 in director compensation expense and accrued common stock payable.

In June 2020, the Company issued the Board members 295,463 shares of the Company’s common stock for services provided during 2019 which was accrued at December 31, 2019, with a value of $130,483.

During the years ended December 31, 2019, the Company awarded but did not issue, common stock with a value of $134,375 to its Board of Directors as compensation for their services as directors. In connection with the issuances, the Company recorded $134,375 in director compensation expense and accrued common stock payable.

In January 2019, the Company issued Daniel Parks, the Company’s Chief Financial Officer, 200,000 shares of the Company’s common stock with a fair value of $136,000 to retain his services.

Common Stock Warrants

The Company's Board of Directors has the authority to issue stock warrants for the purchase of preferred or unregistered common stock to directors and employees of the Company.

At December 31, 2019, warrants for purchase of 250,000 shares of the Company’s common stock for $0.25 per share were outstanding and have no expiration date. These warrants were owned by the Company’s previous President and Chairman, John Lawrence. The warrants were exercised on March 18, 2020 in exchange for a reduction of $62,500 in an amount payable to Mr. Lawrence.

Warrants for purchase of 452,041 shares of the Company’s common stock were sold with shares of common stock in 2019.    The warrants have an exercise price of $0.65 per share and expire in 2022.  

Warrants for purchase of 5,742,858 shares of the Company’s common stock were sold with shares of common stock in July 2020.    The warrants have an exercise price of $0.46 per share and expire in 2025. The warrants can be exercised on a cashless basis. The warrants contain a repricing provision whereby if the Company raises at least $6,000,000 in gross proceeds from the sale of its common stock at an effective price per share less than the warrants’ exercise price, the exercise price of the warrants will be repriced to the lower price.

Transactions in common stock purchase warrants for the years ended December 31, 2020 and 2019 are as follows:

	Number of Warrants			Exercise Prices
Balance December 31, 2018		250,000		$	0.25
Issued		452,041		$	0.65
Balance December 31, 2019		702,041		$	0.25 - $0.65
Issued		5,742,858		$	0.46
Exercised		(250,000	)	$	0.25
Balance December 31, 2020		6,194,899		$	0.46 - $0.65

Preferred Stock

The Company's Articles of Incorporation authorize 10,000,000 shares of $0.01 par value preferred stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine.

Series B

During 1993, the Board established a Series B preferred stock, consisting of 750,000 shares. The Series B preferred stock has preference over the Company's common stock and Series A preferred stock (none of which are outstanding); has no voting rights (absent default in payment of declared dividends); and is entitled to cumulative dividends of $0.01 per share per year, payable if and when declared by the Board of Directors. During each of the years ended December 31, 2020 and 2019 the Company recognized $7,500 in Series B preferred stock dividend. In the event of dissolution or liquidation of the Company, the preferential amount payable to Series B preferred stockholders is $1.00 per share plus dividends in arrears. No dividends have been declared or paid with respect to the Series B preferred stock. The Series B Preferred stock is no longer convertible to shares of the Company’s common stock. At December 31, 2020 and 2019, cumulative dividends in arrears on the outstanding Series B shares were $195,000 and $187,500, respectively.

Series C

During 2000, the Board established a Series C preferred stock. The Series C preferred stock has preference over the Company’s common stock and has voting rights equal to that number of shares outstanding, but no conversion or dividend rights. In the event of dissolution or liquidation of the Company, the preferential amount payable to Series C preferred stockholders is $0.55 per share.

Series D

During 2002, the Board established a Series D preferred stock, authorizing the issuance of up to 2,500,000 shares. The Series D preferred stock has preference over the Company’s common stock but is subordinate to the liquidation preferences of the holders of the Company’s outstanding Series A, Series B and Series C preferred stock. Series D preferred stock carries voting rights and is entitled to annual dividends of $0.0235 per share. The dividends are cumulative and payable after payment and satisfaction of the Series A, B and C preferred stock dividends. No dividends have been declared or paid with respect to the Series D preferred stock. At December 31, 2020 and 2019, the cumulative dividends in arrears on the 1,751,005 outstanding Series D shares were $707,258 and $666,109, respectively, payable if and when declared by the Board of Directors. In the event of dissolution or liquidation of the Company, the preferential amount payable to Series D preferred stockholders is $2.50 per share. At December 31, 2020 and 2019, the liquidation preference for Series D preferred stock was $5,084,770 and $5,043,622, respectively. Holders of the Series D preferred stock have the right, subject to the availability of authorized but unissued common stock, to convert their shares into shares of the Company's common stock on a one-to-one basis without payment of additional consideration and are not redeemable unless by mutual consent. The majority of Series D preferred shares are held by the Estate of  John Lawrence, the previous President and Chairman of the Company.