Equity

9 Months Ended

Sep. 30, 2022

Stockholders' Equity

Note 15 Equity

Note 15 Equity

Permanent Equity

Preferred Stock

The Company has 20,000,000 shares of preferred stock authorized with a par value of $0.0001. No shares of Series A preferred stock were issued and outstanding as of September 30, 2022 and December 31,2021.

The Company has evaluated each series of the preferred stock for proper classification under ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. ASC 480 generally requires liability classification for financial instruments that are certain to be redeemed, as they represent obligations to purchase shares of stock or represent obligations to issue a variable number of common shares. Both Series B and Series C preferred stock are classified as liabilities within mezzanine equity on the consolidated balance sheet as of September 30, 2022.

Series D: On June 30, 2022, the Company entered into an exchange agreement with funds affiliated with Arena Investors LP (“Arena Investors”) pursuant to which the Company issued 1,177,023 shares of Series D preferred stock.  The Series D preferred stock was issued in exchange for the Arena Investors’ $3,000,000 principal amount of convertible notes issued on May 8, 2020, $3,888,889 principal amount convertible notes issued on November 3, 2020, and $5,610,000 principal amount convertible notes issued on May 19, 2021. The total principal was $12,498,889.  The remaining unamortized discount as of June 30, 2022 of $4,293,385 was fully amortized during the period ended June 30, 2022 and included in the amortization of debt discount on the consolidated statement of operations. As of September 30, 2022, there were 1,177,023 shares of Series D preferred stock issued and outstanding.

The Series D preferred stock has the following designations:

· Convertible at the option of the holder into common stock at $0.4248 per share

· The Series D liquidation preference is equal to $10.6191 per share

· The holders are entitled to receive cumulative quarterly dividends at a fixed annual rate of 2.25% of the liquidation preference, or $0.23893 per share

· No voting rights

In addition to the exchange of convertible notes, the related 11.8 million outstanding warrants to purchase common stock were amended to allow the holder to exercise for a to-be-issued class of our preferred stock, which shall be convertible into the same number of shares of common stock as would have been issued upon exercise of such warrants under the original terms.  This amendment caused the instruments to be treated as a derivative liability beginning on June 30, 2022.  The transition to derivative accounting created a derivative liability of $40.4 million and a related deemed dividend of $32.8 million.  Future changes in the fair value of the derivative liability will be marked to market through the consolidated statement of operations in the respective period. 

Common Stock

On April 20, 2022, the Company entered into a securities purchase agreement with an affiliate of Island Capital Group, LLC pursuant to which the Company issued 1,428,575 shares of Charge’s common stock and three-year warrants to purchase up to 2,000,000 shares of Charge’s common stock at $8.50 per share for an aggregate purchase price of $10,000,025.  The purchase price was allocated between common stock and warrants and is reported within common stock and additional paid-in capital on the consolidated balance sheet.

Mezzanine Equity

Preferred Stock

Series B: On May 21, 2021, the Company issued 2,395,105 shares as part of the acquisition of ANS at an aggregate purchase price of $6,850,000. On June 20, 2022, 2,155,594 shares were converted to 2,155,594 shares of common stock. On August 22, 2022, the remaining 239,511 shares were redeemed. As of September 30, 2022, there were no shares of Series B preferred stock issued and outstanding. As of December 31, 2021, there were 2,395,105 shares of Series B preferred stock issued and outstanding.

The Series B preferred stock had the following designations:

· Convertible at option of holder

· The holders are entitled to receive cumulative dividends at 4% per annum, payable quarterly on January 1, April 1, July 1, and October 1

· 1 preferred share is convertible to 1 common share

· The Series B holders are entitled to receive liquidation in preference to the common holders or any other class or series of preferred stock

· The Series B holders are entitled to vote together with the common holders as a single class

· Mandatorily redeemable 180 days following the mandatory redemption date

The shares of Series B preferred stock were mandatorily redeemable and, therefore, were required to be classified as a liability in the mezzanine section on the consolidated balance sheet as of December 31, 2021.

Series C: On December 17, 2021, the Company entered into a securities purchase agreement with funds affiliated with Arena Investors LP pursuant to which the Company issued 2,370,370 shares of Series C preferred stock at an aggregate face value of $7,407,406 for an aggregate purchase price of $6,666,800. In connection with the issuance of the Series C preferred stock, the Company also issued warrants to purchase 2,370,370 shares of the Company’s common stock. The Company has valued and recorded the beneficial conversion feature of the Series C preferred stock and the warrants resulting in a deemed dividend at the time of issuance.

On February 25, 2022, the Company entered into a securities purchase agreement with an affiliate of Island Capital Group LLC (the “February 2022 Investors”) pursuant to which it issued 3,856,000 Series C preferred stock at an aggregate face value of $12,050,000 for an aggregate purchase price of $10,845,000. The Company has valued and recorded the beneficial conversion feature of the Series C preferred stock resulting in a deemed dividend at the time of issuance. As of September 30, 2022 and December 31, 2021, there were 6,226,370 and 2,370,370 shares, respectively, of Series C preferred stock issued and outstanding.

The Series C preferred stock has the following designations:

· Convertible at option of holder at a conversion price of $3.125 per share

· The holders are entitled to receive cumulative dividends at 6% per annum, payable monthly

· In the event of reorganization, this class of Preferred will not be affected by any such capital reorganization

· The Series C liquidation preference is equal to the stated value, plus any accrued and unpaid dividends

· Change of control provision whereby the Series C Preferred shareholders would receive their stated value before all other shareholders

· No voting rights

· Redemption features:

○	If the closing price exceeds 200% of the effective conversion price, the Company may force the conversion of preferred stock with 10 days written notice;
○	At any time after the original issue date, the Company has the option to redeem some or all the outstanding preferred stock for cash with 10 days written notice; and
○	On the third anniversary of the issue date, the holder may request redemption, at the Company’s option of cash or common stock, at the conversion price equal to the four-year redemption amount (a) 100% of the aggregate stated value then outstanding, (b) accrued but unpaid dividends (c) additional cash consideration in order for the Purchasers to achieve a 20% internal rate of return and (d) all liquidated damages and other amounts due in respect of the preferred stock.

The Series C preferred stock provides that the Company shall redeem the preferred stock for cash or common stock at the Company’s option and, therefore, are not considered mandatorily redeemable.  However, due to the change in control provision, the Series C preferred stock have liquidation preference and are deemed a liability and presented within mezzanine equity on the consolidated balance sheet as of September 30, 2022.

Stock Options

Stock options activity is summarized as follows:

	Shares			Weighted Average Exercise Price
Options outstanding at December 31, 2021		44,920,000		$	1.78
Options granted		2,550,000			3.47
Options exercised		-			-
Options cancelled		(565,000	)		(3.16	)
Options outstanding at March 31, 2022		46,905,000		$	1.85
Options exercisable at March 31, 2022		14,737,501		$	1.14
Options granted		3,475,000			5.00
Options exercised		(10,000	)		(2.00	)
Options cancelled		(687,500	)		(2.96	)
Options outstanding at June 30, 2022		49,682,500		$	2.06
Options exercisable at June 30, 2022		18,361,001		$	1.47
Options granted		985,000			2.36
Options exercised		(261,959	)		(0.55	)
Options cancelled		(482,500	)		(4.46	)
Options outstanding at September 30, 2022		49,923,041		$	2.05
Options exercisable at September 30, 2022		18,797,522		$	1.52

At September 30, 2022, the weighted average remaining life of the stock options is 4.68 years. At September 30, 2022, there was $31,632,307 in unrecognized costs related to the stock options granted.

Warrants

Warrants activity is summarized as follows:

	Number of Warrants			Weighted Average Exercise Price			Weighted Average Remaining Contractual Life
Warrants outstanding at December 31, 2021		24,084,772		$	1.74		3.0 years
Issued		-			-			-
Exercised		-			-			N/A
Expired		-			-			N/A
Warrants outstanding at March 31, 2022		24,084,772		$	1.74		2.7 years
Warrants exercisable at March 31, 2022		24,084,772		$	1.74		2.7 years
Issued		2,000,000			8.50		2.8 years
Exercised		(8,044,848	)		(1.60	)		N/A
Expired		-			-			N/A
Warrants outstanding at June 30, 2022		18,039,924		$	2.55		2.3 years
Warrants exercisable at June 30, 2022		18,039,924		$	2.55		2.3 years
Issued		-			-			-
Exercised		(137,803	)		(0.91	)		N/A
Expired		-			-			N/A
Warrants outstanding at September 30, 2022		17,902,121		$	2.56		2.0 years
Warrants exercisable at September 30, 2022		17,902,121		$	2.56		2.0 years