Preferred Stock |
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Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock Our Certificate of Incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock. The following table shows our authorized, issued, and outstanding preferred stock as of December 31, 2020:
Series A-2 Preferred Stock Each share of Series A-2 Preferred Stock has a stated value of $7,500 per share (the “A-2 Stated Value”), a liquidation preference equal to the Series A-2 Stated Value, and is convertible at the holder’s election into common stock at a conversion price per share of $16.11 as of December 31, 2020. Therefore, each share of Series A-2 Preferred Stock is convertible into 466 shares of common stock, for an aggregate of 20,950 shares of common stock, as of December 31, 2020. The conversion price is subject to adjustment upon the occurrence of certain events set forth in our Certificate of Incorporation. The Series A-2 Preferred Stock is senior to all outstanding classes of the Company’s equity, has weighted average anti-dilution protection and, effective January 1, 2013, entitled to cumulative dividends at a rate of 5.0% per annum, payable quarterly, based on the Series A-2 Stated Value and payable at the option of the holder in cash or through the issuance of a number of additional shares of Series A-2 Preferred Stock with an aggregate liquidation preference equal to the dividend amount payable on the applicable dividend payment date. As of December 31, 2020 and 2019, the Company has recorded $4,000 and $99,000, respectively, in accrued dividends on the accompanying Consolidated Balance Sheets related to the Series A-2 Preferred Stock outstanding. During the year ended December 31, 2020, $17,000 in dividends were accrued, $13,000 in accrued dividends were paid, and $99,000 in accrued and unpaid dividends were exchanged for 13 additional shares of Series A-2 Preferred Stock. The Company, at its option, may redeem all or a portion of the Series A-2 Preferred Stock in cash at a price per share of $8,250 (equal to $7,500 per share multiplied by 110%) plus all accrued and unpaid dividends. In accordance with ASC Topic 815, we evaluated whether our convertible preferred stock contains provisions that protect holders from declines in our stock price or otherwise could result in modification of the exercise price and/or shares to be issued under the respective preferred stock agreements based on a variable that is not an input to the fair value of a “fixed-for-fixed” option and require a derivative liability. The Company determined no derivative liability is required under ASC Topic 815 with respect to our convertible preferred stock. A contingent beneficial conversion amount is required to be calculated and recognized when and if the adjusted $16.11 conversion price of the Series A-2 Preferred Stock is adjusted to reflect a down round stock issuance that reduces the conversion price below the $11.16 fair value of the common stock on the issuance date of the Series A-2 Preferred Stock. On January 28, 2021, all outstanding shares of the series A-2 Preferred Stock, and accrued dividends, were converted into shares of common stock. Refer to Note 20 - Subsequent Events, for further discussion of the conversion. Series C Preferred Stock On January 25, 2018, the Company closed a registered direct offering of 1,750 shares of its Series C Preferred Stock for total gross proceeds to the Company of $1,750,000. The shares of Series C Preferred Stock were sold at a price equal to their stated value of $1,000 per share and were convertible into shares of the Company’s common stock at a conversion price of $3.00 per share. During the years ended December 31, 2020 and 2019, 475 and 50 shares of Series C Preferred Stock were converted to 158,333 and 16,667 shares of the Company’s common stock, respectively. As of December 31, 2020, no shares of Series C Preferred Stock remain issued and outstanding. Series D Preferred Stock In connection with the Acquisition (see Note 3 - Oblong Industries Acquisition), the Company issued an aggregate of 1,686,659 shares of Series D Preferred Stock and an aggregate of 49,967 restricted shares of Series D Preferred Stock (“Restricted Series D Preferred Stock”), the latter of which are subject to vesting over a two-year period following the Closing Date of the Acquisition. Each share of Series D Preferred Stock is automatically convertible into a number of shares of the Company’s common stock equal to the accrued value of the share (initially $28.50), plus any accrued dividends thereon, divided by the Conversion Price (initially $2.85 per share, subject to specified adjustments) upon the completion of both (i) approval of such conversion by the Company’s stockholders (which occurred on December 19, 2019); and (ii) the receipt of all required authorizations and approval of a new listing application for the combined organization from the NYSE American or any such other exchange upon which the Company’s securities are then listed for trading. Pursuant to the terms of the Series D Certificate of Designations, each share of Series D Preferred Stock is entitled to receive an annual dividend equal to 6% of its then-existing Accrued Value per annum, commencing on the first anniversary of the issuance of the Series D Preferred Stock (or October 1, 2020). Prior to the first anniversary of the issuance of the Series D Preferred Stock no dividends will accrue on such stock. Dividends are cumulative and accrue daily in arrears. If the Company’s Board of Directors does not declare any applicable dividend payment in cash, the Accrued Value of the Series D Preferred Stock will be increased by the amount of such dividend payment. The undeclared dividends for the Series D Preferred Stock, as of December 31, 2020, were $732,000, and increased the value of the Series D Preferred Stock by such amount. During the years ended December 31, 2020 and 2019, 28,618 and 1,725 of Restricted Series D Preferred Stock were forfeited, respectively, and, in 2020, $8,325 shares of Series D Preferred Stock were surrendered to cover the taxes on vesting shares. As of December 31, 2020, there are 1,647,991 shares of Series D Preferred Stock, and 49,967 shares of Restricted Series D Preferred Stock outstanding. Series E Preferred Stock On October 1, 2019, Oblong entered into a Series E Preferred Stock Purchase Agreement (the “Purchase Agreement”) with the investors party thereto, who, prior to the closing of the Acquisition, were stockholders of Oblong Industries (the “Purchasers”), relating to the offer and sale by the Company in a private placement (the “Offering”) of up to 131,579 shares of its Series E Preferred Stock at a price of $28.50 per share. At an initial closing on October 1, 2019 and a subsequent closing on December 18, 2019, the Company sold a total of 131,579 shares of Series E Preferred Stock for net proceeds of approximately $3,750,000. The 131,579 shares of Series E Preferred Stock issued by the Company in the Series E Financing have an aggregate Accrued Value of $3,750,000 and upon their conversion will convert at a conversion price of $2.85 per share into 1,315,790 common shares. Like the Series D Preferred Stock, each share of Series E Preferred Stock is automatically convertible into common stock upon the receipt of all required authorizations and approval of a new listing application for the combined organization from the NYSE American or any such other exchange upon which the Company’s securities are then listed for trading. Pursuant to the terms of the Series E Certificate of Designations, each share of Series E Preferred Stock is entitled to receive an annual dividend equal to 6.0% of its then-existing Accrued Value per annum, commencing on the first anniversary of the issuance of the Series E Preferred Stock (or October 1, 2020 or December 18, 2020, as applicable). Prior to the first anniversary of the issuance of the Series E Preferred Stock no dividends will accrue on such stock. Dividends are cumulative and accrue daily in arrears. If the Company’s Board of Directors does not declare any applicable dividend payment in cash, the Accrued Value of the Series E Preferred Stock will be increased by the amount of such dividend payment. The undeclared dividends for the Series E Preferred Stock, as of December 31, 2020, were $56,000, and increased the value of the Series E Preferred Stock by such amount. During the years ended December 31, 2020 and 2019 no shares of Series E Preferred Stock were forfeited and 131,579 shares remain outstanding as of December 31, 2020. Subsequent Conversion If the outstanding shares of Series D and Series E Preferred Stock had been converted to common stock as of December 31, 2020, 17,020,100 and 1,315,790 shares of common stock would have been issued for the Series D and Series E Preferred Stock, respectively, which would have increased our outstanding shares of common stock from 7,748,629 to 26,084,519. In 2021 all outstanding shares of the Series D and Series E Preferred Stock, plus the value of the 6.0% dividend, were converted into shares of common stock. Refer to Note 20 - Subsequent Events, for further discussion of the conversion.
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