Stockholders' Equity

12 Months Ended

Dec. 31, 2020

Equity [Abstract]

Stockholders' Equity

6. STOCKHOLDERS’ EQUITY

Preferred Stock

The Company has authorized 10,000,000 shares of preferred stock. These shares may be issued in series with such rights and preferences as may be determined by the Board of Directors.

Series A Convertible Redeemable Preferred Stock

The Company’s Board of Directors has authorized 2,000,000 shares of $2.00 stated value, Series A Preferred Stock. The preferred stock has a senior liquidation preference value of $2.00 per share and does not bear dividends.

As of December 31, 2020, and 2019, the Company has 200,500 shares of Series A Preferred Stock outstanding.

Series D Convertible Preferred Stock

The Company has established a class of preferred stock designated “Series D Convertible Preferred Stock” (Series D preferred stock) and authorized an aggregate of 1,000,000 non-voting shares with a stated value of $1.00 per share. Holders of the Series D preferred stock are entitled to receive dividends at the annual rate of 8% based on the stated value per share computed on the basis of a 360-day year and twelve 30-day months. Dividends are cumulative, shall be declared quarterly, and are calculated from the date of issue and payable on the 15th day of April, July, October, and January. The dividends may be paid, at the option of the holder either in cash or by the issuance of shares of the Company’s common stock valued at the market price on the dividend record date. Shares of the Series D preferred stock are redeemable at the Company’s option. At the option of the holder, shares of the Series D preferred stock plus any declared and unpaid dividends are convertible to shares of the Company’s common stock at a conversion rate of $1.00 per share.

As of December 31, 2020, and 2019, the Company had 375,000 shares of Series D Preferred Stock outstanding.

For years ended December 31, 2020 and 2019, the Company declared $30,000 in preferred dividends. During the years ended December 31, 2020 and 2019, the Company paid $30,000 and $30,000, respectively, for Series D preferred stock dividends. Dividends declared of $7,500 were accrued as of December 31, 2020 and will be paid in 2021. Dividends declared of $7,500 were accrued as of December 31, 2019 and were paid in 2020.

Common Stock

On August 18, 2020, the Company’s Board of Directors approved the repurchase for redemption of 443,431 shares of the Company’s $0.05 par value common stock (“Common Stock”) for $75,385, or $0.17 per share, in a privately negotiated transaction. The redemption has been completed and the shares of Common Stock were cancelled.

On November 13, 2020, the Company’s Board of Directors approved the repurchase for redemption of 104,715 shares of Common Stock for $26,178, or $0.25 per share, in a privately negotiated transaction. The redemption has been completed and the shares of Common Stock were cancelled.

On December 9, 2020, the Company’s Board of Directors approved the repurchase for redemption of 60,000 shares of Common Stock for $24,000, or $0.40 per share, in a privately negotiated transaction. The redemption and cancellation of these shares has not yet been completed prior to December 31, 2020, nor as of date of filing.

The Company issued 636,363 shares of common stock to directors and executive officers for compensation during 2019. The fair value of the common stock issued for compensation was measured at the volume weighted average price of the Company’s common stock for the ten trading days prior to issuance.

For the years ended December 31, 2020 and 2019, the Company did not pay dividends on common stock.

Restricted Stock Awards

The following table summarizes the restricted stock unit activity during the years ended December 31:

	2020			2019
Outstanding Non-Vested Restricted Stock Units, Beginning		75,000			150,000
Granted		-			636,363
Vested		(75,000	)		(711,363	)
Outstanding Non-Vested Restricted Stock Units, Ending		-			75,000

In connection with these director and executive restricted stock grants, the Company recognized stock-based compensation of $280,087 for the year ended December 31, 2019. No stock-based compensation expense was recognized for restricted stock grants for the year ended December 31, 2020. However, during the year ended December 31, 2020, the Company recognized a reversal of stock-based compensation of $8,750 due to forfeitures of restricted stock awards granted in the prior year.

Common Stock Warrants

As of December 31, 2020, and 2019, the Company had 2,708,130 and 2,598,130, respectively, of outstanding warrants to purchase common stock at a weighted average exercise price of $0.50 and $0.54, respectively, and weighted average remaining term of 0.93 years and 2.10 years, respectively. The aggregate intrinsic value of common stock warrants outstanding as of December 31, 2020 and 2019 was $82,680 and $0, respectively.

Activity for the years ended December 31, 2020 and 2019 related to common stock warrants is as follows:

	2020					2019
	Number of Warrants			Weighted Average Exercise Price		Number of Warrants			Weighted Average Exercise Price
Beginning Balance		2,598,130		$	0.54		3,142,586		$	0.60
Issued		410,000			0.50		-			-
Cancelled		-			-		-			-
Expired		(300,000	)		0.75		(544,456	)		0.88
Ending Balance		2,708,130		$	0.50		2,598,130		$	0.54

Effective January 28, 2020, the Company issued 100,000 warrants in connection with the exchange of outstanding Senior Secured 10% Notes for 11% Senior Secured Promissory Notes. Effective February 5, 2020 and March 3, 2020, the Company issued 60,000 and 100,000 warrants, respectively, in connection with sales of its 11% Senior Secured Notes. The 100,000 warrants issued on March 3, 2020 were to a related party. Effective October 31, 2020, the Company issued 150,000 warrants in connection with the exchange of outstanding Senior Unsecured 10% Notes for 11% Senior Secured Promissory Notes. See Note 5 for full disclosure of these transactions.

Common Stock Options

As of December 31, 2020, and December 31, 2019, the Company had 600,000 and 600,000, respectively, of outstanding options to purchase common stock at a weighted average exercise price of $0.36, with a weighted average remaining term of 2.00 and 3.00 years, respectively. During the years ended December 31, 2020 and 2019, no options expired. The aggregate intrinsic value of the common stock options outstanding at December 31, 2020 and 2019 was $102,000 and $0, respectively.