REDEEMABLE PREFERRED STOCK	12 Months Ended
Dec. 31, 2019
REDEEMABLE PREFERRED STOCK
REDEEMABLE PREFERRED STOCK	NOTE 7 — REDEEMABLE PREFERRED STOCK Pursuant to our Certificate of Incorporation we are authorized to issue 10,000,000 shares of $0.001 per share par value preferred stock. The authorized but unissued shares of preferred stock may be issued in designated series from time to time by one or more resolutions adopted by the Board. The Board has the authority to determine the preferences, limitations and relative rights of each series of preferred stock. During the year ended December 31, 2019, the Company issued 14,000 shares of Series A Preferred in a series of private placement agreements. The Series A Preferred Shares were priced at $100.00/ share and are convertible at any time at the holder’s discretion into common shares whereby one preferred share converts at a price of $0.27/common share to 370.37 common shares. The conversion price was set at the closing price of the Company’s common stock on March 12, 2019, which was the day before announcement of the private placement. Upon maturity or full repayment of the Senior Convertible Notes and Promissory Notes currently outstanding, there will be mandatory redemption of the preferred shares in exchange for equivalent cash for the principal invested, plus any accrued and unpaid dividends. The holders of the Series A Preferred Shares are entitled to receive, when and if declared by the Board of Directors and in preference to the common stock, cumulative cash or in-kind dividends at a rate per annum of 5% of the original issue price. In the event of a liquidation, dissolution, or winding up of the Company, the proceeds would be distributed first to the holders of Series A Preferred Shares prior to any distributions to holders of other stock in an amount per share equal to the original issue price plus any declared but unpaid dividends. The holders of Series A Preferred Shares are entitled to vote, together with the holders of common stock, as if the Series A Preferred Shares had been converted to common stock on all matters submitted to stockholders for vote. In addition, the Series A Preferred Shares contains certain protective rights that require the vote or consent of the holders of at least a majority of the shares of Series A Preferred Shares. Of the 14,000 shares issued during the year ended December 31, 2019, 5,000 shares were issued to MHMI. On May 29, 2019, MHMI assigned their interest in 4,500 of the shares to various investors in their entity. MHMI retained 500 shares. In addition to the Series A Convertible Preferred Shares terms described in Note 1 above, MHMI and their investors have a one-time right to require the Company to redeem all or a portion of the Series A Convertible Preferred Shares upon the receipt of a minimum of $5,000,000 from the close of Tranche 3 of the amended AMER Investment Agreement. MHMI and their investors converted all of their preferred shares to 1,851,844 common shares during the fourth quarter of 2019. As the Series A Preferred Shares are redeemable upon maturity or full repayment of the Senior Convertible Notes and Promissory Notes, it has been classified as mezzanine equity in our Consolidated Balance Sheets. The Company recognizes change in the redemption value as they occur by adjusting the carrying amount of the mezzanine equity at each reporting date. The change in the redemption value of the Series A due to accrued and unpaid dividends since its issuance is insignificant. On August 2, 2019, the Company filed a Certificate of Designation of Series B Preferred Stock with the Delaware Secretary of State, designating 5,000 shares of preferred stock the Series B Convertible Preferred Shares. On August 5, 2019, the Company executed the Series B Purchase Agreement with the Investors. Pursuant to the Series B Purchase Agreement, the Investors agreed to purchase up to $400,000 of Series B Convertible Preferred Shares. This transaction closed on August 7, 2019. The Series B Convertible Preferred Shares were issued at a price of $100.00 per share, and each Series B Convertible Preferred Share will be convertible at any time at the holder’s discretion into 500 shares of common stock of the Company. The Series B Convertible Preferred Shares carry a 5% annual dividend, which may be paid, in the Company’s sole discretion, in cash, additional shares of Series B Convertible Preferred Shares or a combination thereof. The Series B Convertible Preferred Shares, like the Series A Convertible Preferred Shares, are mandatorily redeemable at such time that the Company’s $7.2 million Convertible Note debt currently outstanding become due and payable in accordance with their terms, as such terms may be modified from time to time. On March 27, 2020, the Company filed Certificates of Amendment to the Certificates of Designation for the Series A and B Convertible Preferred Stock clarifying that the private exchange offer completed by the Company in December 2019, constituted a modification of the Old Notes for purposes of the mandatory redemption provisions of the Series A and B Preferred Shares. Accordingly, the Series A and B Preferred Shares are mandatorily redeemable on such date as a majority of the then-outstanding principal amount of the Exchange Notes become due and payable in accordance with their terms (as may be altered by modification, amendment, exchange or otherwise, from time to time).

NOTE 7 — REDEEMABLE PREFERRED STOCK

Pursuant to our Certificate of Incorporation we are authorized to issue 10,000,000 shares of $0.001 per share par value preferred stock. The authorized but unissued shares of preferred stock may be issued in designated series from time to time by one or more resolutions adopted by the Board. The Board has the authority to determine the preferences, limitations and relative rights of each series of preferred stock.

During the year ended December 31, 2019, the Company issued 14,000 shares of Series A Preferred in a series of private placement agreements. The Series A Preferred Shares were priced at $100.00/ share and are convertible at any time at the holder’s discretion into common shares whereby one preferred share converts at a price of $0.27/common share to 370.37 common shares. The conversion price was set at the closing price of the Company’s common stock on March 12, 2019, which was the day before announcement of the private placement. Upon maturity or full repayment of the Senior Convertible Notes and Promissory Notes currently outstanding, there will be mandatory redemption of the preferred shares in exchange for equivalent cash for the principal invested, plus any accrued and unpaid dividends. The holders of the Series A Preferred Shares are entitled to receive, when and if declared by the Board of Directors and in preference to the common stock, cumulative cash or in-kind dividends at a rate per annum of 5% of the original issue price. In the event of a liquidation, dissolution, or winding up of the Company, the proceeds would be distributed first to the holders of Series A Preferred Shares prior to any distributions to holders of other stock in an amount per share equal to the original issue price plus any declared but unpaid dividends. The holders of Series A Preferred Shares are entitled to vote, together with the holders of common stock, as if the Series A Preferred Shares had been converted to common stock on all matters submitted to stockholders for vote. In addition, the Series A Preferred Shares contains certain protective rights that require the vote or consent of the holders of at least a majority of the shares of Series A Preferred Shares.

Of the 14,000 shares issued during the year ended December 31, 2019, 5,000 shares were issued to MHMI. On May 29, 2019, MHMI assigned their interest in 4,500 of the shares to various investors in their entity. MHMI retained 500 shares. In addition to the Series A Convertible Preferred Shares terms described in Note 1 above, MHMI and their investors have a one-time right to require the Company to redeem all or a portion of the Series A Convertible Preferred Shares upon the receipt of a minimum of $5,000,000 from the close of Tranche 3 of the amended AMER Investment Agreement. MHMI and their investors converted all of their preferred shares to 1,851,844 common shares during the fourth quarter of 2019.

As the Series A Preferred Shares are redeemable upon maturity or full repayment of the Senior Convertible Notes and Promissory Notes, it has been classified as mezzanine equity in our Consolidated Balance Sheets. The Company recognizes change in the redemption value as they occur by adjusting the carrying amount of the mezzanine equity at each reporting date. The change in the redemption value of the Series A due to accrued and unpaid dividends since its issuance is insignificant.

On August 2, 2019, the Company filed a Certificate of Designation of Series B Preferred Stock with the Delaware Secretary of State, designating 5,000 shares of preferred stock the Series B Convertible Preferred Shares. On August 5, 2019, the Company executed the Series B Purchase Agreement with the Investors. Pursuant to the Series B Purchase Agreement, the Investors agreed to purchase up to $400,000 of Series B Convertible Preferred Shares. This transaction closed on August 7, 2019.

The Series B Convertible Preferred Shares were issued at a price of $100.00 per share, and each Series B Convertible Preferred Share will be convertible at any time at the holder’s discretion into 500 shares of common stock of the Company. The Series B Convertible Preferred Shares carry a 5% annual dividend, which may be paid, in the Company’s sole discretion, in cash, additional shares of Series B Convertible Preferred Shares or a combination thereof. The Series B Convertible Preferred Shares, like the Series A Convertible Preferred Shares, are mandatorily redeemable at such time that the Company’s $7.2 million Convertible Note debt currently outstanding become due and payable in accordance with their terms, as such terms may be modified from time to time.

On March 27, 2020, the Company filed Certificates of Amendment to the Certificates of Designation for the Series A and B Convertible Preferred Stock clarifying that the private exchange offer completed by the Company in December 2019, constituted a modification of the Old Notes for purposes of the mandatory redemption provisions of the Series A and B Preferred Shares. Accordingly, the Series A and B Preferred Shares are mandatorily redeemable on such date as a majority of the then-outstanding principal amount of the Exchange Notes become due and payable in accordance with their terms (as may be altered by modification, amendment, exchange or otherwise, from time to time).