STOCKHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

STOCKHOLDERS’ EQUITY

6. STOCKHOLDERS’ EQUITY

Preferred Stock

The Company has authorized 10,000,000 shares of preferred stock. These shares may be issued in series with such rights and preferences as may be determined by the board of directors.

Series A Convertible Redeemable Preferred Stock

The Company’s Board of Directors has authorized 2,000,000 shares of $2.00 stated value, Series A Preferred Stock. The preferred stock has a senior liquidation preference value of $2.00 per share and does not bear dividends.

As of December 31, 2021, and 2020, the Company has 200,500 shares of Series A Preferred Stock outstanding.

Series D Convertible Preferred Stock

The Company has established a class of preferred stock designated “Series D Convertible Preferred Stock” (Series D preferred stock) and authorized an aggregate of 1,000,000 non-voting shares with a stated value of $1.00 per share. Holders of the Series D preferred stock are entitled to receive dividends at the annual rate of 8% based on the stated value per share computed on the basis of a 360-day year and twelve 30-day months. Dividends are cumulative, shall be declared quarterly, and are calculated from the date of issue and payable on the 15th day of April, July, October, and January. The dividends may be paid, at the option of the holder either in cash or by the issuance of shares of the Company’s common stock valued at the market price on the dividend record date. Shares of the Series D preferred stock are redeemable at the Company’s option. At the option of the holder, shares of the Series D preferred stock plus any declared and unpaid dividends are convertible to shares of the Company’s common stock at a conversion rate of $1.00 per share.

As of December 31, 2021, and 2020, the Company had 375,000 shares of Series D Preferred Stock outstanding.

For years ended December 31, 2021, and 2020, the Company declared $30,000 in preferred dividends. During the years ended December 31, 2021, and 2020, the Company paid $30,000 and $30,000, respectively, for Series D preferred stock dividends. Dividends declared of $7,500 were accrued as of December 31, 2021, were paid in 2022. Dividends declared of $7,500 were accrued as of December 31, 2020, and were paid in 2021.

Common Stock

The Company’s Board of Directors has authorized 50,000,000 shares of $0.05 par value, Common Stock. As of December 31, 2021, and 2020, the Company has 2,998,361 and 2,686,637 shares of common stock outstanding, respectively.

Additionally, on September 22, 2021, the Company received approval from FINRA and other regulators to execute a ten-for-one reverse stock split. Accordingly, all share and per-share amounts relating to the common stock, stock options and warrants for all periods presented in the accompanying consolidated financial statements have been retroactively adjusted, where applicable, to reflect the reverse stock split.

During the year ended December 31, 2021, the Company issued 3,000 shares of common stock in exchange for services which were valued at $18,750.

During the year ended December 31, 2021, the Company sold 150,000 shares of Common Stock at a purchase price of $5.00 per share for net proceeds of $713,625. The offering was conducted through a registered broker-dealer acting as a Placement Agent. The Placement Agent was paid a cash commission of 5% of the gross proceeds of the offering proceeds, which was reduced to 2.5% commission on the proceeds of investments by directors and officers of the Company and a three-year warrant exercisable to purchase 10% of the number of shares of common stock sold to non-officer or director investors in the offering at an exercise price of $5.00 per share. No warrants have yet been issued to the placement agent as of December 31, 2021.

On August 18, 2020, the Company’s Board of Directors approved the repurchase for redemption of 44,343 shares of the Company’s $0.05 par value common stock (“Common Stock”) for $75,385, or $1.70 per share, in a privately negotiated transaction. The redemption has been completed and the shares of Common Stock were cancelled.

On November 13, 2020, the Company’s Board of Directors approved the repurchase for redemption of 10,472 shares of Common Stock for $26,178, or $2.50 per share, in a privately negotiated transaction. The redemption has been completed and the shares of Common Stock were cancelled.

On December 9, 2020, the Company’s Board of Directors approved the repurchase for redemption of 6,000 shares of Common Stock for $24,000, or $4.00 per share, in a privately negotiated transaction. The redemption and cancellation of these shares has not yet been completed prior to December 31, 2021, nor as of date of filing.

There were no repurchases performed in the 2021 year.

Restricted Stock Awards

The following table summarizes the restricted stock unit activity during the years ended December 31:

	2021		2020
Outstanding Non-Vested Restricted Stock Units, Beginning		-		7,500
Granted		-		-
Vested		-		(7,500	)
Outstanding Non-Vested Restricted Stock Units, Ending		-		-

No stock-based compensation expense was recognized for restricted stock grants for the year ended December 31, 2020. However, during the year ended December 31, 2020, the Company recognized a reversal of stock-based compensation of $8,750 due to forfeitures of restricted stock awards granted in the prior year.

Common Stock Warrants

As of December 31, 2021, and December 31, 2020, the Company had 206,000 and 270,813, respectively, of outstanding warrants to purchase common stock at a weighted average exercise price of $5.00 and $5.00, respectively, and weighted average remaining term of 1.67 years and 0.93 years, respectively. The aggregate intrinsic value of common stock warrants outstanding as of December 31, 2021, and December 31, 2020 was $355,877 and $82,680, respectively. During the twelve months ended December 31, 2021, 64,813 warrants were exercised in a cashless transaction in exchange for 19,524 shares of common stock.

	2021					2020
	Number of Warrants			Weighted Average Exercise Price		Number of Warrants			Weighted Average Exercise Price
Beginning Balance		270,813		$	5.00		259,813		$	5.40
Issued		-			-		41,000			5.00
Exercised		(64,813	)		-		-			-
Expired		-			-		(30,000	)		7.50
Ending Balance		206,000		$	5.00		270,813		$	5.00

Effective January 28, 2020, the Company issued 10,000 warrants in connection with the exchange of outstanding Senior Secured 10% Notes for 11% Senior Secured Promissory Notes. Effective February 5, 2020 and March 3, 2020, the Company issued 6,000 and 10,000 warrants, respectively, in connection with sales of its 11% Senior Secured Notes. The 10,000 warrants issued on March 3, 2020 were to a related party. Effective October 31, 2020, the Company issued 15,000 warrants in connection with the exchange of outstanding Senior Unsecured 10% Notes for 11% Senior Secured Promissory Notes. See Note 4 for full disclosure of these transactions.

Common Stock Options

As of December 31, 2020, the Company had 60,000 of outstanding options to purchase common stock at a weighted average exercise price of $3.60, with a weighted average remaining term of 2.00 years. During the year ended December 31, 2020, no options expired. The aggregate intrinsic value of the common stock options outstanding at December 31, 2020 was $102,000.

As of December 31, 2021, the Company had no outstanding options to purchase common stock.