Subsequent Events

12 Months Ended

Dec. 31, 2020

Subsequent Events

Subsequent Events

18. SUBSEQUENT EVENTS.

On January 5, 2021, we granted non-qualified stock options to purchase up to 368,000,000 shares of our common stock to six key employees and three directors, at an exercise price of $0.0068 per share. The stock options vest equally over a period of 36 months and expire January 5, 2026. These options allow the optionee to exercise on a cashless basis, resulting in no cash payment to the Company upon exercise, anytime after January 5, 2022.

On January 15, 2021, a certain accredited investor converted $183,130.74 in principal, interest and fees resulting in the issuance of 18,313,074 shares of common stock.

On January 22, 2021, the Company filed form S-3 to offer up to $100,000,000 worth of our stock to accredited investors. The offering became effective on February 16, 2021.

On January 28, 2021, CloudCommerce, Inc. (the “Company”) entered into an Unsecured Promissory Note (the “Promissory Note”) in the aggregate principal amount of $840,000, with Bountiful Capital, LLC (the “Investor”) for gross proceeds of $840,000. The Promissory Note was funded on January 28, 2021. The Investor is a related party. The chief financial officer of the Company, Greg Boden, is also the president of Bountiful Capital, LLC. The Promissory Note bears interest at a rate of 5% per year and is not convertible into shares of common stock of the Company. Principal and interest under the Promissory Note are due and payable upon maturity on January 28, 2022. The Promissory Note also enumerates certain customary events of default, which include failure to pay principal and interest, insolvency, and bankruptcy.

On February 4, 2021, CloudCommerce, Inc. (the “Company”) received loan proceeds of $780,680 under the Second Draw of the Paycheck Protection Program (“PPP2”). The PPP2 is evidenced by a promissory note (the “Note”), between the Company and the Cache Valley Bank (the “Lender”). The Note has a five-year term, bears interest at the rate of 1.00% per annum, and may be prepaid at any time without payment of any premium.  No payments of principal or interest are due during the six-month period beginning on the date of the Note (the “Deferral Period”).  The principal and accrued interest under the Note is forgivable after eight weeks if the Company uses the PPP2 Loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and otherwise complies with PPP2 requirements. In order to obtain forgiveness of the PPP2 Loan, the Company must submit a request and provide satisfactory documentation regarding its compliance with applicable requirements.  The Company must repay any unforgiven principal amount of the Note, with interest, on a monthly basis following the Deferral Period.  The Company intends to use the proceeds of the PPP2 Loan for eligible purposes and to pursue forgiveness, although the Company may take action that could cause some or all of the PPP Loan to become ineligible for forgiveness. No assurance is provided that forgiveness for all or any portion of the PPP2 Loan will be obtained. The Note contains customary events of default relating to, among other things, payment defaults and breaches of representations, warranties or covenants.  The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, or filing suit and obtaining judgment against the Company.

On February 18, 2021, the Company adopted the CloudCommerce, Inc. 2020 Equity Incentive Plan (the “Stock Plan”). The Stock Plan will be used as incentive for directors, executive officers, and employees of and key consultants to the Company. Pursuant to the Stock Plan, the Company may issue 200,000,000 shares of common stock. The plan is administered by the Company’s Board of Directors.

On February 19, 2021, the Company entered into a securities purchase agreement with an accredited investor for the purchase and sale of an aggregate of 85,000,000 shares of common stock (the “Shares”), (ii) pre-funded warrants to purchase up to 57,857,143 shares of common stock (the “Pre-funded Warrants), and (iii) warrants to purchase up to 142,857,143 shares of common stock (the “Common Warrants,” and together with the Pre-Funded Warrants, the “Warrants”), in a registered direct offering at a purchase price of $0.07 per Share and Common Warrant, or $0.069 per Pre-Funded Warrant and Common Warrant. The Common Warrants will be exercisable for a period of five years commencing upon issuance, at an exercise price of $0.07 per share, subject to certain adjustments set forth therein. The Pre-funded Warrants will be exercisable commencing upon issuance and expiring upon the exercise of the Pre-funded Warrants in full, at an exercise price of $0.001 per share, subject to certain adjustments set forth therein. The Company received gross proceeds of $10,000,000 from this accredited investor. On March 5, 2021, we and the purchaser entered into an amendment agreement to the Purchase Agreement (the “Amendment Agreement”) to reduce the exercise price of the Common Warrants from $0.07 to $0.0454 per share of common stock. We also agreed to issue an additional 28,571,421 Common Warrants to the purchaser. No other changes to the Common Warrants or other terms of the Purchase Agreement were made.

Following is the detail of the shares of common stock issued after December 31, 2020:

Date of Issuance	Type	Shares
January 15, 2021	Conversion		18,313,074
February 3, 2021	Preferred A Conv		40,000,000
February 3, 2021	Preferred A Conv		16,000,000
February 16, 2021	Preferred A Conv		44,000,000
February 18, 2021	Stock Options		2,160,294
February 22, 2021	Stock Sale		85,000,000
February 22, 2021	Debt Refinance		25,000,000
February 22, 2021	Stock Options		660,192
March 4, 2021	Stock Options		708,469
			231,842,029