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Common Stock and Preferred Stock
6 Months Ended
Jun. 30, 2022
Equity [Abstract]  
Common Stock and Preferred Stock

Note 10. Common Stock and Preferred Stock

 

Common stock

 

Common Stock Issuances

 

In connection with the conversion of 115 shares of Series C Preferred Stock during the year ended December 31, 2021 (see Preferred Stock below) the Company issued 29,870,130 shares of common stock.

 

During the year ended December 31, 2021, in connection with the conversions of $120 and $110, with accrued interest, of the December 2020 convertible note payable (see Note 7), the Company issued 4,761,905 and 6,673,384 shares of common stock, respectively.

 

On July 21, 2021, as part of a corporate fundraising of $990, net of issuance costs, the Company issued 35,385,703 shares of common stock and 35,385,703 warrants to purchase common stock (see Warrants below).

 

During the year ended December 31, 2021, 14,270,833 warrants with an embedded conversion feature were exercised on a cashless basis for the issuance of 23,500,000 shares of common stock (see below).

 

During the three months ended March 31, 2022, 11,197,930 warrants with an embedded conversion feature were exercised on a cashless basis for the issuance of 34,000,000 shares of common stock (see below).

 

During the three months ended June 30, 2022, 4,364,897 warrants with an embedded conversion feature were exercised on a cashless basis for the issuance of 20,000,000 shares of common stock (see below). Of those shares, 10,000,000 were ordered on June 30, 2022, but issued on July 5, 2022, and classified on the balance sheet as common stock to be issued.

 

Preferred Stock

 

On January 11, 2019, the Company’s Board of Directors approved the authorization of 10,000 shares of Series B Preferred Stock with a par value of $0.001 and a Stated Value of $100 each (“Series B Preferred Shares”). The holders of the Series B Preferred Shares shall be entitled to receive, when, as, and if declared by the Board of Directors of the Company, out of funds legally available for such purpose, dividends in cash at the rate of 12% of the Stated Value per annum on each Series B Preferred Share. Such dividends shall be cumulative and shall accrue without interest from the date of issuance of the respective share of the Series B Preferred Shares. Each holder shall also be entitled to vote on all matters submitted to stockholders of the Company and shall be entitled to 55,000 votes for each Series B Preferred Share owned at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited. In the event of a liquidation event, any holders of the Series B Preferred Shares shall be entitled to receive, for each Series B Preferred Shares, the Stated Value in cash out of the assets of the Company, whether from capital or from earnings available for distribution to its stockholders. The Series B Preferred Shares are not convertible into shares of the Company’s common stock. No shares of Series B Preferred Shares have been issued or are outstanding.

 

On April 12, 2019, the Company’s Board of Directors approved the authorization of 200 Series C Preferred Shares with a par value of $0.001 (“Series C Preferred Shares”). The holders of the Series C Preferred Shares have no voting rights, receive no dividends, and are entitled to a liquidation preference equal to the stated value. At any time, the Company may redeem the Series C Preferred Shares at 1.2 times the stated value. Given the right of redemption is solely at the option of the Company, the Series C Preferred Shares are not considered mandatorily redeemable, and as such are classified in shareholders’ equity on the Company’s balance sheet.

 

Each Series C Preferred Share is convertible into shares of the Company’s common stock in an amount equal to the greater of: (a) 200,000 shares of common stock or (b) the amount derived by dividing the stated value by the product of 0.7 times the market price of the Company’s common stock, defined as the lowest trading price of the Company’s common stock during the ten-day period preceding the conversion date. The holder may not convert any Series C Preferred Shares if the total amount of shares held, together with holdings of its affiliates, following a conversion exceeds 9.99% of the Company’s common stock.

 

 

The common shares issued upon conversion of the Series C Preferred Shares have been registered under the Company’s then-effective registration statement on Form S-3. On April 12, 2019, the Company sold 190 Series C Preferred Shares for $1,890, net of issuance costs and on July 15, 2019 sold 10 Series C Preferred Shares for $100. During the second and third quarters of 2019, holders converted 50 Series C Preferred Shares into 14,077,092 shares of common stock and 35 Series C Preferred Shares into 13,528,575 shares of common stock, respectively. The remaining 115 shares of Series C Preferred Stock were converted into 29,870,130 shares of common stock during the year ended December 31, 2021.

 

Warrants

 

On July 21, 2021, as part of a corporate fundraising, the Company issued 35,385,703 shares of common stock and 35,385,703 warrants to purchase common stock for net cash proceeds of $990 (see above). The warrants were valued at $1,271 which resulted in the recording of a warrant derivative liability in that amount. Non-operating expense of $306 was recorded in respect of the value warrant derivative liability of $1,271 in excess of the value of common shares issued of $990.

 

On September 30, 2021, the Company exchanged the outstanding principal of $1,481 and accrued interest of $60 of the March 2021 Note for 53,500,000 warrants to purchase common stock (see Note 7).

 

During the year ended December 31, 2021, 14,270,833 warrants were exercised on a cashless basis for the issuance of 23,500,000 shares of common stock. Upon cashless exercise, the Company calculated the fair value of derivative liability on warrants of $406, compared it to the fair value of 23,500,000 shares of $635 and recorded a loss on extinguishment of $228. The Company valued the warrant derivative liability using the Black-Scholes option pricing model using the following assumptions on the date of each exercise: 1) stock prices of $0.017 - $0.043, 2) exercise prices of $0.05, 3) remaining lives of 4.24.3 years, 4) dividend yields of 0%, 5) risk free rates of 1.19% - 1.33%, and 6) volatility of 175.7% - 177.2%.

 

During the six months ended June 30, 2022, 15,562,827 warrants were exercised on a cashless basis for the issuance of 54,000,000 shares of common stock. Upon cashless exercise, the Company calculated the fair value of derivative liability on warrants of $209, compared it to the fair value of 54,000,000 shares of $788 and recorded a loss on extinguishment of $579. The Company valued the warrant derivative liability using the Black-Scholes option pricing model using the following assumptions on the date of each exercise: 1) stock prices of $0.007 - $0.019, 2) exercise prices of $0.05, 3) remaining lives of 3.74.2 years, 4) dividend yields of 0%, 5) risk free rates of 1.53% - 2.99%, and 6) volatility of 171.8% - 175.6%.

 

The following table summarizes information about shares issuable under warrants outstanding during the six months ended June 30, 2022:

 

   Warrant
shares
outstanding
   Weighted
average
exercise price
   Weighted average remaining life   Intrinsic value 
    -    -    -    - 
Outstanding at January 1, 2021      $    -    - 
Issued   88,885,704    0.05    5.0    - 
Exercised   (14,270,833)   0.05    -    - 
Expired or cancelled   -         -    - 
Outstanding and exercisable at December 31, 2021   74,614,871    0.05    4.47    - 
Exercised   (15,562,827)   0.05    -    - 
Outstanding and exercisable at June 30, 2022   59,052,044   $0.05    3.91   $-