EQUITY INSTRUMENTS

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

EQUITY INSTRUMENTS

NOTE 14 EQUITY INSTRUMENTS

Our Series C preferred stock is currently convertible into common stock at the rate of 316.28 common shares for each share of Series C preferred, adjustable for any dilutive issuances of common occurring in the future. Series C preferred shares vote with the common stockholders on an as-converted basis. The shares are nonparticipating except that dividends, when declared by our Board of Directors on the common stock, must be paid on the Series C stock on an as-converted basis before any dividends are paid on our common stock. The Series C is also cumulative with respect to dividends on common stock and junior series of preferred stock. Other significant rights and preferences of the Series C preferred include:

• the right to vote as a separate class to appoint five directors of the Company, and

• liquidation preferences, whereby the Series C holders have a claim against our assets senior to the claim of the holders of our common stock in the event of our liquidation, dissolution or winding-up (the value of the liquidation preference is $250 per share, or approximately $2,608,500 at December 31, 2019 and 2018).

We also have a class of convertible preferred stock, Series D, for which 7,000 shares are authorized and 250 shares were outstanding at December 31, 2019 and 2018. The shares, which were granted in January 2012, do not vest until the tenth anniversary of the grant date. Such shares were issued in exchange for the cancellation of 120 previously granted warrants to purchase Series D shares. Once vested, a Series D preferred share will be convertible at any time into 100,000 shares of common stock, subject to adjustment in the event of any common stock dividend, split, combination thereof or other similar recapitalization, without additional consideration. Prior to vesting and thereafter, each Series D convertible preferred share is entitled to all voting, dividend, liquidation and other rights accorded a share of Series D convertible preferred stock. As to dividends, the Series D stock is noncumulative. If a dividend is declared on the common stock, each share of Series D stock is entitled to receive a dividend equal to 50% of the dividend declared for the common stock as if the Series D stock had been converted. Despite their nonvested status, voting rights of each share nevertheless consist of the right to cast the number of votes equal to those of 500,000 shares of common stock. Unless otherwise required by applicable law, holders of shares of Series D have the right to vote together with holders of common stock as a single class on all matters submitted to a vote of our stockholders.

STOCK INCENTIVE COMPENSATION PLANS

WARRANTS:

To Purchase Common Stock

During the year ended December 31, 2019, warrants were issued as parts of financing transactions to consultants and to members of our Board of Directors.

The status of outstanding warrants for the year ended December 31, 2019 is as follows:

Warrants	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2019		32,468,588			0.20	1.77 years		—
Granted		17,912,108
Forfeited, expired or cancelled		(620,000	)
Exercisable at December 31, 2019		49,760,696			0.20	1.77 years		—

We recognized no compensation costs during the year ended December 31, 2019 and 2018 due to the issuance of these securities.

OPTIONS:

From time-to-time, we grant stock options as compensation for services to our employees, non-employee directors and certain consultants (“grantees”) allowing grantees to purchase our common stock pursuant to stockholder-approved stock option plans. We currently have one active incentive qualified option plan, 2009 Equity Compensation Plan, that provides for the granting of stock options, stock appreciation rights, limited stock appreciation rights, restricted preferred stock, and common stock grants to grantees. Grants issued under the Plans may qualify as incentive stock options (“ISOs”) under Section422A of the Internal Revenue Code of 1986, as amended. Options for ISOs may be granted for terms of up to ten years. For the 2009 Equity Compensation Plan, the vesting period is determined by our Compensation and Stock Option Committee. The exercise price for ISOs must equal or exceed the fair market value of the underlying shares on the date of grant. The Plan also provide for the full vesting of all outstanding options under certain change of control events. The maximum number of common shares authorized for issuance under the plan is 50,000,000. We did not issue any options during the year ended December 31, 2019. The information regarding the options is set forth below.

	2019		2018
Shares available		50,000,000		50,000,000
Options outstanding (Directors and employees)		3,695,000		3,695,000
Options exercisable		3,680,000		3,680,000

In addition, under our Non-employee Directors’ Stock Option Plan, we are authorized to issue non-qualified stock options to our non-employee directors for up to 1,000,000 common shares. Each non-qualified stock option is exercisable at a price equal to the average of the closing bid and asked prices of the common stock in the over-the-counter market for the most recent preceding day there was a sale of the stock prior to the grant date. Grants of options vest in accordance with vesting schedules established by our Board of Directors’ Compensation and Stock Option Committee. Upon joining our Board of Directors, directors receive an initial grant of 25,000 options for common shares. As of December 31, 2019, there were 10,000,000 shares available for option grants and 2,678,000 options for common shares outstanding under the non-qualified directors’ plan.

A summary of activity for the year ended December 31, 2019 is as follows:

Warrants	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2019		6,407,500		0.28	3.25 years		—
Granted		—
Forfeited, expired or cancelled		—
Exercisable at December 31, 2019		6,407,500		0.28	3.25 years		—

The following table summarizes information about options granted and vested during the year ended December 31, 2019.

	2019		2018
Options granted		0		0
Weighted-average grant-date fair value ($)		N/A		N/A
Options vested		0		0
Fair value of vested options		N/A		N/A

During 2019, we granted no options for common shares to employees, non-employee directors and consultants.

A summary of common stock options outstanding and exercisable as of December 31, 2019 follows:

Options Outstanding		Exercise Price Range		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Options Exercisable		Weight-Average Exercise Price of Exercisable Options
	6,407,500		0.28		0.25-0.65		9.85		—		N/A