Stockholders’ Equity (Deficit)

3 Months Ended

Mar. 31, 2023

Stockholders' Equity Note [Abstract]

Equity [Text Block]

Note 12: Stockholders’ Equity (Deficit)

Common Stock

The Company has authorized 500,000,000 shares of common stock, par value $0.01; 4,995,573 shares were issued and outstanding on March 31, 2023.

Common Stock Transactions During the Three Months Ended March 31, 2023

On January 23, 2023, the Company issued 150,000 shares of common stock at the market price of $3.45 per share to a service provider. The aggregate value of $517,500 was charged to non-cash compensation during the three months ended March 31, 2023.

On February 21, 2023, the Company issued 150,000 shares of common stock at the market price of $2.53 per share to a service provider. The aggregate value of $379,500 was charged to non-cash compensation during the three months ended March 31, 2023.

During the three months ended March 31, 2023, GS Capital converted principal and accrued interest in a convertible note payable into shares of common stock as follows: On February 14, 2023, principal of $15,000, accrued interest of $1,632, and fees of $500 were converted at a price of $1.74 per share into 9,846 shares of common stock; on February 28, 2023, principal of $17,777, accrued interest of $2,057, and fees of $500 were converted at a price of $1.50 per share into 13,555 shares of common stock; on March 9, 2023, principal of $20,000, accrued interest of $2,399, and fees of $500 were converted at a price of $1.50 per share into 15,265 shares of common stock; and on March 28, 2023, principal of $20,000, accrued interest of $2,581, and fees of $500 were converted at a price of $1.25 per share into 18,472 shares of common stock. These conversions were made pursuant to the terms of the convertible note agreement and no gain or loss was recognized on these transactions.

On March 31, 2023, the Company issued a total of 8,063 shares of common stock for accrued dividends on its Series X Preferred Stock. Of this amount, a total of 1,066 shares were issued to officers and directors, 4,160 were issued to a related party shareholder, and 2,837 were issued to no-related parties.

Common Stock Transactions During the Three Months Ended March 31, 2022

On January 12, 2022, the Company entered into a settlement agreement with an ex-employee. Pursuant to the terms of this agreement, the Company agreed to pay the amount of $19,032 for accrued salary, and the employee returned to the Company for cancellation 8,000 shares of common stock previously issued as compensation. These shares were valued at par value of $0.01 or a total value of $4,000; the Company recorded a gain on cancellation of these shares in the amount of $15,032.

The Company entered into a debt-for-equity exchange agreement with Gardner Builders Holdings, LLC (“Gardner”) on January 7, 2022 (the “Debt for Equity Agreement”). Pursuant to the Debt for Equity Agreement, the Company issued shares of restricted common stock to Gardner in exchange for the Company Debt Obligations, as defined below.

The Agreement settled for certain accounts payable amounts owed by the Company to the Creditor (the “Accounts Payable Amount”) as well as upcoming amounts that will become due between the date of the Agreement and April 1, 2022. The Agreement also settled accrued interest and penalties on the amounts due through January 5, 2022, as well as future interest payments on amounts to be accrued in the first quarter of 2022 (collectively, the “Additional Costs”, and combined with the Accounts Payable Amount, the “Company Debt Obligations”). The Accounts Payable Amount was $500,000, the Additional Costs were $294,912 and the conversion price was $12.50. As a result, 63,593 Restricted Shares were authorized to be issued. The Company’s Board of Directors approved the Agreement on January 5, 2022.

On March 22, 2022 and March 31, 2022, the Company issued an aggregate 30,834 shares of common stock as waiver fees to holders of the Series C and Series D Preferred Stock for their waivers of certain covenants as set forth and defined in the Series C and Series C Certificates of Designations. The Company valued these shares at their contractual price of $12.50 per share and recorded the amount of $385,431 as waiver fees during the three months ended March 31, 2022. The Company recorded an aggregate gain upon issuance of these shares in the amount of $198,273 based on the market price of the Company’s common stock on the date of issuance.

On March 31, 2022, the Company issued 34,400 Commitment Fee Shares to AJB Capital Investors, LLC; see note 8. The Company utilized an outside valuation consultant to value the commitment fee shares, the True-Up Provision, and warrants. A Monte Carlo model was used to value the warrants and call features, and a probability weighted expected return model was used to value the True-Up Provision. The contractual price of the common stock $12.50 per share; valuation purposes, the common stock was valued at the market price on the date of the transaction of $6.14 per share. The derivative liability was valued at $106,608 on the date of the transaction. The discount on the notes due to the Commitment Fee Shares and warrants was valued at $349,914. The Company recorded the amount of $226,106 to additional paid-in capital pursuant to this transaction.

On March 31, 2022, the Company issued 7,647 shares of common stock at a price of $12.50 per share which were previously subscribed for the conversion of accounts payable in the amount of $95,558.

Preferred Stock

We have authorized to issue 100,000,000 shares of Preferred Stock with such rights designations and preferences as determined by our Board of Directors. We have designated 500,000 shares of Series A Preferred, 3,000,000 shares of Series C Preferred, 10,000,000 shares of Series D Preferred, 10,000 shares of Series E Preferred,  140,000 shares of Series F Preferred, and  27,324 shares of Series X Preferred.

Series A Preferred Stock Transactions During the Three Months Ended March 31, 2023

None.

Series A Preferred Stock Transactions During the Three Months Ended March 31, 2022

None.

Series C Preferred Stock

Series C Preferred Stock Transactions During the Three Months Ended March 31, 2023

The Company accrued dividends in the amount of $16,521 on the Series C Preferred Stock.

Series C Preferred Stock Transactions During the Three Months Ended March 31, 2022

The Company accrued dividends in the amount of $16,395 on the Series C Preferred Stock.

Series D Preferred Stock

Series D Preferred Stock Transactions During the Three Months Ended March 31, 2023

The Company accrued dividends in the amount of $48,156 on the Series D Preferred Stock.

Series D Preferred Stock Transactions During the Three Months Ended March 31, 2022

The Company accrued dividends in the amount of $48,156 on the Series D Preferred Stock.

Series E Preferred Stock

On November 7, 2022, the Company filed a Certificate of Designations, Preferences and Rights of Series E Convertible Perpetual Preferred Stock (the “Series E”) with the Delaware Secretary of State. The number of shares of Series E designated is 10,000 and each share of Series E has a stated value equal to $1,000. Each share of Series E Preferred Stock shall have a par value of $0.01.

Each share of Series E shall become convertible, at the option of the holder, commencing on the date of issuance, into such number of fully paid and non-assessable shares of Common Stock. The conversion price shall be, as of the conversion date, (a) prior to the date of the qualified offering the average VWAP per share of the Common Stock for the five (5) trading days prior to the date of conversion and (b) on or following the date of the qualified offering, the qualified offering price (the “Conversion Price”). Immediately following the 120th day following the qualified offering, the Conversion Price shall be adjusted to the lesser of (a) the average VWAP per share of the Common Stock for the five (5) trading days immediately following the 120th day following the qualified offering and (b) the Conversion Price on such date, which shall in no event be less than $0.05.

Series E Preferred Stock Transactions During the Three Months Ended March 31, 2023

None.

Series F Preferred Stock

On March 23, 2023, the Company filed a Certificate of Designation, Preferences and Rights of Series F 12% PIK Convertible Perpetual Preferred Stock (the "Series F”) with the Delaware Secretary of State. The number of shares of Series F designated is 140,000 and each share of Series F has a stated value equal to $1,000. Each share of Series F Preferred Stock shall have a par value of $0.01. Holders of the Series F are entitled to receive payment in kind dividends ("PIK Dividends”) at the quarterly rate of three-hundredths of one share outstanding per Series F Share. The Series F can be converted, at the option of the Series F shareholder into shares of the Company’s common stock at a price equal to 65% of the Volume Weighted Average Price ("VWAP”) on the conversion date. No conversions can occur until the Company has successfully completed an uplist to NASDAQ.

Series F Preferred Stock Transactions During the Three Months Ended March 31, 2023

None.

Series X Preferred Stock

The Company has 24,227 shares of its 10% Series X Cumulative Redeemable Perpetual Preferred Stock (the “Series X Preferred Stock”) outstanding as of March 31, 2023 and December 31, 2022. The Series X Preferred Stock has a par value of $0.01 per share, no stated maturity, a liquidation preference of $25.00 per share, and will not be subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Company decides to redeem or otherwise repurchase the Series X Preferred Stock; the Series X Preferred Stock is not redeemable prior to November 4, 2020. The Series X Preferred Stock will rank senior to all classes of the Company’s common and preferred stock and accrues dividends at the rate of 10% on $25.00 per share. The Company reserves the right to pay the dividends in shares of the Company’s common stock at a price equal to the average closing price over the five days prior to the date of the dividend declaration. Each one share of the Series X Preferred Stock is entitled to 20,000 votes on all matters submitted to a vote of our shareholders.

Series X Preferred Stock Transactions During the Three Month Ended March 31, 2023

The Company accrued dividends in the amount of $15,141 on the Series X Preferred Stock.

On March 31, 2023, the Company issued 8,063 shares of common stock at an average price of $4.38 per share for accrued dividends on the Series X Preferred Stock.

Series X Preferred Stock Transactions During the Three Months Ended March 31, 2022

The Company accrued dividends in the amount of $15,141 on the Series X Preferred Stock.

Stock Options

The following table summarizes the options outstanding at March 31, 2023 and the related prices for the options to purchase shares of the Company’s common stock:

						Weighted				Weighted
				Weighted		average				average
				average		exercise				exercise
Range of		Number of		remaining		price of		Number of		price of
exercise		options		contractual		outstanding		options		exercisable
prices		outstanding		life (years)		options		exercisable		options
$	1.50- 16.00		215,881		7.94	$	9.39		129,148	$	7.73
			215,881		7.94	$	9.39		129,148	$	7.73

Transactions involving stock options are summarized as follows:

	Shares			Weighted- Average Exercise Price ($) (A)
Outstanding at December 31, 2022		310,692		$	10.01
Granted		-		$	-
Expired		(94,811	)	$	11.44
Outstanding at March 31, 2023		215,881		$	9.39
Options vested and exercisable		129,148		$	7.73

At March 31, 2023, the total stock-based compensation cost related to unvested awards not yet recognized was $2.1 million.

Warrants

The following table summarizes the warrants outstanding on March 31, 2023, and the related prices for the warrants to purchase shares of the Company’s common stock:

	Shares		Weighted- Average Exercise Price ($)
Outstanding on December 31, 2022		672,334	$	30.68
Granted		-	$	-
Exercised		-	$	-
Outstanding on March 31, 2023		672,334	$	30.68