Stockholders’ Equity

3 Months Ended

Mar. 31, 2024

Stockholders’ Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 7.  STOCKHOLDERS’ EQUITY

2021 Preferred stock dividends

The Company’s Series A Preferred is convertible into 300 shares of common stock per share of Series A Preferred Stock upon the consummation of a capital raise of not less than $5,000,000.   Series A Preferred Stock has no par value per share and has the following rights, restrictions, preferences and privileges summarized as follows:

● Authorized Number of Shares – 5,000

● Voting Rights – None

● Dividends – 6% per annum, ‘paid in kind’ in shares of Series A Preferred

● Conversion – Each share of Series A Preferred is mandatorily convertible into 300 shares of Common Stock upon a minimum capital raise of $5,000,000; sale, merger or business combination of the Company; or the Company listing on a national securities exchange.

● Redemption – No rights of redemption by 2021 Investors, nor mandatory redemption

As of March 31, 2024 and December 31, 2023, we have recorded accrued dividends of $123,900 and $106,200, respectively. Dividends were $17,700 and $17,700 for the three months ended March 31, 2024 and 2023, respectively.

Stock-based compensation

Stock-based Awards

As of March 31, 2024, the Company has two active plans, the 2020 Omnibus Incentive Plan approved by the Board in November 2020 (“2020 Plan”) and the 2014 Equity Incentive Plan approved by the Board in October 2014 (“2014 Plan” and collectively with the 2020 Plan the “Stock Incentive Plans”) that allow the Board of Directors to grant stock-based awards to eligible employees, non-employee directors, and consultants of the Company and its subsidiaries. Under the Stock Incentive Plans, the Board may grant non-statutory and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, deferred stock units, performance awards, non-employee director awards, and other stock-based awards. Subject to adjustment, the maximum number of shares of our common stock to be authorized for issuance under the Stock Incentive Plans is 25 million shares. As of March 31, 2024, stock-based awards for approximately 17.5 million shares are available to be issued under the Stock Incentive Plans.

Stock Options

The following summarizes Employee Awards activity:

					Weighted-
			Weighted-		Average
			Average		Remaining
	Number of		Exercise Price		Contractual		Aggregate
	Shares		per Share		Term (in years)		Intrinsic Value
Outstanding as of December 31, 2023		4,796,825	$	1.08		4.4	$	22,000
Granted		—		—
Forfeited or expired		—		—
Outstanding as of March 31, 2024		4,796,825	$	1.08		4.2	$	22,000
Exercisable as of March 31, 2024		4,796,825	$	1.08		4.2	$	22,000

As of March 31, 2024, there was no unrecognized compensation expense related to unvested employee awards.

We recorded nil in compensation expense for the three months ended March 31, 2024 and 2023, respectively.

Restricted Stock Awards

During the three months ended March 31, 2024, the Company granted 429,630 Restricted Stock Units pursuant to the 2020 Omnibus Incentive Plan to directors and an employee (“2024 RSUs”). The 2024 RSUs vest seven years from the grant date, or earlier upon certain triggering events as defined in the agreement, and upon vesting convert into one share of the Company’s common stock. The fair value of the 2024 RSUs is determined based on the closing price of the Company’s common stock on the grant date.

The Company recorded $14,968 and $13,894 in compensation expense during the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024 none of the RSU’s have vested.

A summary of the Company’s grants of restricted stock units under the 2020 Omnibus Incentive Plan is presented below:

			Weighted-
			Average
	Number of		Grant
	Shares		Date Value
Outstanding as of December 31, 2023		2,240,462	$	0.04
Granted		429,630		0.07
Forfeited or expired		—		—
Outstanding as of March 31, 2024		2,670,092	$	0.5

Contingent Earnout Liability

On December 12, 2022, we completed the Green Tree Acquisition which consisted of the acquisition of substantially all of the assets of Ancient Alternatives LLC, Natural Alternatives For Life, LLC, Mountainside Industries, LLC, Hillside Enterprises, LLC, and GT Creations, LLC, each a Colorado limited liability company (collectively, the “Green Tree Entities”). We paid cash in the amount of $500,000 and stock consideration of 17,977,528 shares of our Common Stock. The closing price of our Common Stock on December 12, 2022, the date of license transfer, was $0.165 per share, as such, fair value of the equity consideration is $2,966,292. Additionally, we had a potential obligation to issue additional stock consideration up to 4,879,615 shares of our Common Stock on the achievement of certain performance indicators on or before June 12, 2024. In November 2023, the Company transferred a majority of the Green Tree Entities back to the original owners. Subsequent to this transfer, the aforementioned debt was modified. This liability is included in Notes payable- current and Notes payable- non-current in the accompanying consolidated balance sheets.

The fair value of the contingent earnout liability was $469,907 and $367,056 at March 31, 2024 and December, 31 2023, respectively. The change in fair value in the three months ended March 31, 2024 resulted in a loss on change in fair value of $102,851. The contingent earnout liability remained after the Green Tree Acquisition was partially reversed in Q3 2023.