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Subsequent Events
12 Months Ended
Dec. 31, 2022
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 22 SUBSEQUENT EVENTS

 

Executive Officer and Board of Director Developments

 

On April 26, 2023, Bill J. White joined the Board of Directors of the Company. Mr. White will serve on the Board until the next annual meeting of stockholders of the Company at which directors are elected, at which time he is expected to stand for re-election. Mr. White will be serving as chair of the Board’s Audit Committee. Pursuant to our director compensation program for non-employee members of our board of directors, Mr. White is entitled to a total cash fee of $60,000 per year for service on our board of directors.

 

Business Developments

 

On March 20, 2023, pursuant to the SKS Sale Agreement, the Company completed the sale of SKS and recorded a note receivable for the remaining $600,000 due on March 20, 2025.

 

In January 2023, the Company idled the employees of RF Engineering & Energy Resource, LLC.

 

Debt and Equity Developments

 

On January 17, 2023 and February 1, 2023, the Company sold unsecured promissory notes in the principal amounts of $90,000 and $80,000, which were due on or before July 30, 2023 and July 31, 2023, respectively. Of the $90,000 of proceeds from the first note, usage of $88,000 is restricted to make interest payments due to certain holders of outstanding convertible debentures dated January 29, 2021 (Note G – see Note 14 – Debt). Both notes become immediately due and payable if the Company raises at least $2.5 million in an equity or debt offering. Both notes pay 8% interest per annum, which increases to 15% per annum if the notes aren’t repaid by the maturity date. The issuance of the second note made the principal and accrued interest of both notes convertible if they aren’t repaid by the maturity date and the conversion price will equal 81% of the closing market price of the common stock on the day that the holder elects to convert the note(s), subject to a floor price of $5.00 per share. These notes remain outstanding and in default.

 

During January 2023, pursuant to a limited time offer, certain Note N convertible note holders agreed to amend their note and convert an aggregate of $1.3 million principal of their notes and $0.3 million of accrued interest into 280,625 shares of the Company’s common stock.

 

On March 14, 2023, the Company amended Note F to extend the maturity date to July 29, 2024 with an interest rate of 8%. Effective September 15, 2023, the holder also has ability to convert principal and interest into shares of the Company’s common stock at a 10% discount to the closing price on which the conversion is elected and became secured with a second priority security interest on the assets of its Lighter Than Air Systems Corp. (d/b/a Drone Aviation Corp) business. In addition, the Company extended the term of the advisory agreement for an additional two years and will issue 12,000 shares of the Company’s common stock for each year while the note is outstanding. Pursuant to the amended terms, the Company issued 12,000 shares of the Company’s common stock to the advisor as consideration for their services on April 13, 2023.

 

On March 31, 2023, the Company amended Note I to extend the maturity date to December 31, 2023 with an interest rate of 5.5% commencing on April 1, 2023.

 

On September 1, 2023, Dustin H. McIntire, our CTO, loaned $260,000 to the Company which was used to secure a software license for the Company. Upon being notified of the proposed loan, the Audit Committee reviewed the transaction under the related party transaction policy and approved the transaction. The Company gave Mr. McIntire a secured convertible promissory note for the $260,000 loan, due September 1, 2024, with eight per cent (8%) interest, secured by the software license.

 

Litigation, Claims and Contingencies Developments

 

On January 9, 2023, a former employee of a subsidiary of InduraPower, filed suit against the Company and the former CEO, Daniel Hodges, in the Pima County Superior Court, Arizona, Case No. C20230116. The plaintiff has alleged that he is owed for unpaid minimum wages and overtime wages, breach of employment contract, retaliatory termination, and alleges an unspecified amount in damages. The Company strongly dispute plaintiff’s allegations and intends to vigorously defend the lawsuit.

 

On or about January 10, 2023, a recruiting and staffing company obtained a default judgment against the Company in County Court, Collin County, Texas, Case No. 004-01539-2022, for $145,917 and post-judgment interest at 7%. As of December 31, 2022, the Company accrued for the full amount of the judgment. The judgment holder obtained a garnishment order against Company’s banking accounts and has received approximately $17,100 in cash through the date of this filing.

 

On or about May 22, 2023, a landlord filed suit against the Company in the Circuit Court, Fairfax County, Virgina, Case No. 202307755, for breach of a commercial lease. The plaintiff obtained a default judgment in the amount of approximately $230,000 which remains unpaid as of the date of this filing. As of December 31, 2022, the Company accrued for the full amount of the judgment in accrued liabilities on the Consolidated Balance Sheet.

 

Nasdaq Compliance Developments

 

Throughout most of 2022, our common stock was not in compliance with the $1.00 minimum closing bid price requirement. We were given grace periods and regained compliance on or about February 27, 2023, by having the closing bid price of our common stock exceed $1.00 for a minimum of ten (10) consecutive trading days during the grace period by implementing a 1-for-100 reverse stock split of our outstanding common stock on February 10, 2023.

 

On February 27, 2023, the Company regained compliance with Nasdaq Listing Rule 5550(a)(2), the $1.00 minimum closing bid price requirement (“minimum bid price”) price of the Company’s common stock following the successful filing of its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022, and September 30, 2022 pursuant to Nasdaq Listing Rule 5250(c)(1), which requires listed companies to timely file all required periodic financial reports (“filing requirements”) with the Securities and Exchange Commission (“SEC”).

 

On March 31, 2023, the Company filed a notice of late filing on Form 12b-25 with the Securities and Exchange Commission (the “SEC”) to report that its Annual Report on Form 10-K for the year ended December 31, 2022 (the “Form 10-K”) would not be timely filed. On April 18, 2023, the Company received a notice from The Nasdaq Stock Market LLC (“Nasdaq”) stating that because the Company has not yet filed the Form 10-K, the Company is no longer in compliance with Nasdaq Listing Rule 5250(c)(1), which requires listed companies to timely file all required periodic financial reports with the SEC. On May 17, 2023, the Company received a notice from Nasdaq stating that because the Company has not yet filed the Form 10-K or its Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (the “Form 10-Q”), the Company is not in compliance with Nasdaq Listing Rules. On August 16, 2023, the Company received a notice from Nasdaq stating that because the Company has not yet filed its Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, the Company is not in compliance with Nasdaq Listing Rules. On October 16, 2023, the Company received notice from the Listing Qualifications Staff (the “Staff”) indicating that the Staff had determined to delist the Company’s securities unless the Company timely requests a hearing before the Nasdaq Hearings Panel (the “Panel”). The Staff’s determination was based upon the Company’s continued non-compliance with the filing requirement set forth in Nasdaq Listing Rule 5250(c)(1) because the Company has not filed its Form 10-K for the year ended December 31, 2022, and the Forms 10-Q for the periods ended March 31, 2023 and June 30, 2023. On November 16, 2023, the Company received a notice from Nasdaq stating that because the Company has not yet filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, the Company is not in compliance with Nasdaq Listing Rules.

 

The Company requested and obtained a hearing before the Panel as well as a further stay of any additional action by Nasdaq pending the issuance of a decision by the Panel. There can be no assurance that a favorable decision will be obtained.

 

If the Company fails to timely regain compliance with the Nasdaq Listing Rule within any grace period granted by the Nasdaq Hearings Panel, the Company’s common stock, warrants and 9.25% Series A Cumulative Redeemable Perpetual Preferred Stock will be subject to delisting from Nasdaq. There is no assurance that the Company will regain compliance during any grace periods or be able to maintain compliance with Nasdaq’s listing requirements in the future. If we are not able to regain compliance during a grace period, Nasdaq will notify us that our common stock, warrants, and 9.25% Series A Cumulative Redeemable Perpetual Preferred Stock will be delisted from The Nasdaq Capital Market.

 

On June 21, 2023, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the last 30 consecutive business days, the Company’s minimum Market Value of Publicly Held Shares, as defined by Nasdaq (“MVPHS”), of the Company’s 9.25% Series A Cumulative Redeemable Perpetual Preferred Stock (“Preferred Stock”) has been below the minimum $1 million requirement for continued listing on Nasdaq under Nasdaq Listing Rule 5555(a)(4) (the “Minimum Market Value of Publicly Held Shares Requirement”). Under Nasdaq rules, the Company will have the opportunity to appeal the delisting decision to a Nasdaq Hearings Panel. There can be no assurance that, if the Company decides to appeal the delisting determination, such appeal would be successful.

 

In accordance with Nasdaq Listing Rule 5810(c)(3)(D), the Company has been provided a compliance period of 180 calendar days from receipt of the letter, or until December 18, 2023, to regain compliance with the Minimum Market Value of Publicly Held Shares Requirement. To regain compliance with the Minimum Market Value of Publicly Held Shares Requirement, the Company’s Preferred Stock MVPHS must be $1 million or more for a minimum of 10 consecutive business days during the compliance period ending on December 18, 2023. There can be no assurance that the Company will be able to regain compliance with either listing requirement.