SERIES A CONVERTIBLE PREFERRED STOCK

3 Months Ended

Mar. 31, 2021

Series A Preferred Stock

Class of Stock [Line Items]

SERIES A CONVERTIBLE PREFERRED STOCK

NOTE 6 — SERIES A CONVERTIBLE PREFERRED STOCK

As of March 31, 2021 and December 31, 2020, the Company had 90,000 shares of Series A Convertible Preferred Stock (the “Preferred Stock”) outstanding. These shares of Preferred Stock were issued at $10 per share (the “stated value”), accrue 5% in cumulative annual dividends, and are convertible into the Company’s common stock at a price of  $4.385 per share. For the three months ended March 31, 2021, preferred stockholders collectively earned, but were not paid, dividends totaling approximately $11,000,  which were equivalent to 2,530 shares of common stock based on a conversion price of $4.385 per share. As of March 31, 2021 and December 31, 2020, cumulative and unpaid dividends were approximately $266,000 and approximately $255,000, respectively, which is equivalent to 60,758 and 58,288 shares of common stock, respectively, based on a conversion price of $4.385 per share.

On any matter presented to the stockholders of the Company for vote, holders of Preferred Stock are entitled to cast the number of votes equal to the number of shares of common stock into which their shares of Preferred Stock are convertible as of the record date to vote on such matter. As long as any shares of Preferred Stock are outstanding, the Company has certain restrictions on share repurchases and amendments to the Certificate of Incorporation in a manner that adversely affects any rights of the holders of Preferred Stock.

In addition, the holders of Preferred Stock have a liquidation preference for purposes of which the Preferred Stock would be valued at $10 per share plus accrued cumulative annual dividends. At March  31, 2021 and December 31, 2020, the liquidation preference was valued at $1,166,000 and $1,155,000, respectively. In the event of any liquidity event, holders of Preferred Stock shall be entitled to be paid their liquidation preference out of the assets of the Company legally available before any sums shall be paid to holders of common stock.

The Company is entitled to redeem any or all of the outstanding shares of Preferred Stock at a per share price equal to 125% of the stated value, plus accumulated dividends, payable in cash. As of March 31, 2021, the aggregate amount to redeem all outstanding shares of Preferred Stock was $1,391,000.