STOCKHOLDERS’ EQUITY |
9 Months Ended |
|---|---|
Sep. 30, 2024 | |
| Equity [Abstract] | |
| STOCKHOLDERS’ EQUITY | NOTE 3: STOCKHOLDERS’ EQUITY
Common Stock
The Company has authorized shares of Common Stock. As of September 30, 2024 and December 31, 2023, there are and shares of Common Stock issued and outstanding, respectively.
Preferred Stock
The Company has authorized shares of Preferred Stock. There are currently three series of Preferred Stock outstanding; Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C Convertible Preferred Stock. The Company’s Board of Directors is authorized to provide for the issuance of shares of Preferred Stock in one or more series, fix or alter the designations, preferences, rights, qualifications, limitations or restrictions of the shares of each series, including the dividend rights, dividend rates, conversion rights, voting rights, term of redemption including sinking fund provisions, redemption price or prices, liquidation preferences and the number of shares constituting any series or designations of such series without further vote or action by the shareholders. The issuance of Preferred Stock may have the effect of delaying, deferring or preventing a change in control of management without further action by the shareholders and may adversely affect the voting and other rights of the holders of Common Stock. The issuance of Preferred Stock with voting and conversion rights may adversely affect the voting power of the holders of Common Stock, including the loss of voting control to others.
Series A Convertible Preferred Stock
On June 30, 2015, a certificate of designations was filed with the Delaware Secretary of State to designate shares of the Company’s Preferred Stock as Series A Convertible Preferred Stock, par value $ per share (“Series A Preferred”) (the “Series A COD”). Effective March 31, 2016, the Company amended the Series A COD, increasing the maximum number of shares of Series A Preferred from shares to shares. As of September 30, 2024 and December 31, 2023, there are shares of Series A Preferred issued and outstanding, respectively.
The following summarizes the current rights and preferences of the Series A Preferred:
Liquidation Preference. The Series A Preferred has a liquidation preference of $5.00 per share.
Dividends. Shares of Series A Preferred do not have any separate dividend rights.
Conversion. Subject to certain limitations set forth in the Series A COD, each share of Series A Preferred is convertible, at the option of the holder, into that number of shares of Common Stock (the “Series A Conversion Shares”) equal to the liquidation preference thereof, divided by Conversion Price (as such term is defined in the Series A COD), currently $4.00.
In the event the Company completes an equity or equity-based public offering, registered with the SEC, resulting in gross proceeds to the Company totaling at least $5.0 million, all issued and outstanding shares of Series A Preferred at that time will automatically convert into Series A Conversion Shares.
Redemption. Subject to certain conditions set forth in the Series A COD, in the event of a Change of Control (defined in the Series A COD), or at such time as a third party not affiliated with the Company or any holders of the Series A Preferred shall have acquired, in one or a series of related transactions, equity securities of the Company representing more than fifty percent (50%) of the outstanding voting securities of the Company), the Company, at its option, will have the right to redeem all or a portion of the outstanding Series A Preferred in cash at a price per share of Series A Preferred equal to 100% of the Liquidation Preference.
Voting Rights. Holders of Series A Preferred are entitled to vote on all matters, together with the holders of Common Stock, and have the equivalent of five votes for every Series A Conversion Share issuable upon conversion of such holder’s outstanding shares of Series A Preferred. However, the Series A Conversion Shares, when issued, will have all the same voting rights as other issued and outstanding Common Stock of the Company, and none of the rights of the Series A Preferred.
Liquidation. Upon any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the holders of Series A Preferred shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount equal to the liquidation preference of the Series A Preferred before any distribution or payment shall be made to the holders of any junior securities, and if the assets of the Company are insufficient to pay in full such amounts, then the entire assets to be distributed to the holders of the Series A Preferred shall be ratably distributed among the holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.
Certain Price and Share Adjustments.
a) Stock Dividends and Stock Splits. If the Company (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common Stock equivalents; (ii) subdivides outstanding shares of Common Stock into a larger number of shares; (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares; or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the conversion price shall be adjusted accordingly.
b) Merger or Reorganization. If the Company is involved in any reorganization, recapitalization, reclassification, consolidation or merger in which the Common Stock is converted into or exchanged for securities, cash or other property than each share of Series A Preferred shall be convertible into the kind and amount of securities, cash or other property that a holder of the number of shares of Common Stock issuable upon conversion of one share of Series A Preferred prior to any such merger or reorganization would have been entitled to receive pursuant to such transaction.
Series B Convertible Preferred Stock
On October 10, 2018, a certificate of designation was filed with the Delaware Secretary of State to designate shares of our Preferred Stock as Series B Convertible Preferred Stock, par value $ per share (“Series B Preferred”) (the “Series B COD”). As of September 30, 2024 and December 31, 2023, there are shares of Series B Preferred issued and outstanding, respectively.
The following summarizes the current rights and preferences of the Series B Preferred:
Liquidation Preference. The Series B Preferred has a liquidation preference of $1.00 per share.
Dividends. Shares of Series B Preferred do not have any separate dividend rights.
Conversion. Subject to certain limitations set forth in the Series B COD, each share of Series B Convertible is convertible, at the option of the holder, into that number of shares of Common Stock (the “Series B Conversion Shares”) equal to the liquidation preference thereof, divided by the Conversion Price (as such term is defined in the Series B COD), currently $0.08.
Redemption. Subject to certain conditions set forth in the Series B COD, in the event of a Change of Control (defined in the Series B COD), or at such as a third party not affiliated with the Company or any holders of the Series B Convertible shall have acquired, in one or a series of related transactions, equity securities of the Company representing more than fifty percent (50%) of the outstanding voting securities of the Company), the Company, at its option, will have the right to redeem all or a portion of the outstanding Series B Preferred in cash at a price per share of Series B Preferred equal to 100% of the Liquidation Preference.
Voting Rights. Holders of Series B Preferred are entitled to vote on all matters, together with the holders of Common Stock, and have the equivalent of two votes for every Series B Conversion Share issuable upon conversion of such holder’s outstanding shares of Series B Preferred. However, the Series B Conversion Shares, when issued, will have the same voting rights as other issued and outstanding shares of Common Stock of the Company, and none of the rights of the Series A Preferred.
Liquidation. Upon any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the holders of Series B Preferred shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount equal to the liquidation preference of the Series B Preferred before any distribution or payment shall be made to the holders of any junior securities, and if the assets of the Company are insufficient to pay in full such amounts, then the entire assets to be distributed to the holders of the Series B Preferred shall be ratably distributed among the holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.
Certain Price and Share Adjustments.
a) Stock Dividends and Stock Splits. If the Company (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common Stock equivalents; (ii) subdivides outstanding shares of Common Stock into a larger number of shares; (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares; or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the conversion price shall be adjusted accordingly.
b) Merger or Reorganization. If the Company is involved in any reorganization, recapitalization, reclassification, consolidation or merger in which the Common Stock is converted into or exchanged for securities, cash or other property than each share of Series B Preferred shall be convertible into the kind and amount of securities, cash or other property that a holder of the number of shares of Common Stock issuable upon conversion of one share of Series B Preferred prior to any such merger or reorganization would have been entitled to receive pursuant to such transaction.
Series C Convertible Preferred Stock
On March 27, 2019, a certificate of designation was filed with the Delaware Secretary of State to designate shares of our Preferred Stock as Series C Convertible Preferred Stock, par value $ per share (“Series C Preferred”) (the “Series C COD”). As of September 30, 2024 and December 31, 2023, there were shares of Series C Preferred issued and outstanding, respectively.
The following summarizes the current rights and preferences of the Series C Preferred:
Liquidation Preference. The Series C Preferred has a liquidation preference of $1.00 per share.
Dividends. Shares of Series C Preferred do not have any separate dividend rights.
Conversion. Subject to certain limitations set forth in the Series C COD, each share of Series C Preferred is convertible, at the option of the holder, into that number of shares of Common Stock (the “Series C Conversion Shares”) equal to the liquidation preference thereof, divided by Conversion Price (as such term is defined in the Series C COD), currently $0.08.
The Series C Preferred will only be convertible at any time after the date that the Company shall have amended its Certificate of Incorporation to increase the number of shares of Common Stock authorized for issuance thereunder or effect a reverse stock split of the outstanding shares of Common Stock by a sufficient amount to permit the conversion of all Series C Preferred into shares of Common Stock (“Authorized Share Approval”) (such date, the “Initial Convertibility Date”), each share of Series C Preferred shall be convertible into validly issued, fully paid and non-assessable shares of Common Stock on the terms and conditions set forth in the Series C COD under the definition “Conversion Rights”.
Redemption. Subject to certain conditions set forth in the Series C COD, in the event of a Change of Control (defined in the Series C COD), or at such time as a third party not affiliated with the Company or any holders of the Series C Preferred shall have acquired, in one or a series of related transactions, equity securities of the Company representing more than fifty percent (50%) of the outstanding voting securities of the Company), the Company, at its option, will have the right to redeem all or a portion of the outstanding Series C Preferred in cash at a price per share of Series C Preferred equal to 100% of the Liquidation Preference.
Voting Rights. Holders of Series C Preferred are entitled to vote on all matters, together with the holders of Common Stock, and have the equivalent of thirty-two votes for every Series C Conversion Share issuable upon conversion of such holder’s outstanding shares of Series C Preferred. However, the Series C Conversion Shares, when issued, will have the same voting rights as other issued and outstanding shares of Common Stock of the Company, and none of the rights of the Series C Preferred.
Liquidation. Upon any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the holders of Series C Preferred shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount equal to the liquidation preference of the Series C Preferred before any distribution or payment shall be made to the holders of any junior securities, and if the assets of the Company are insufficient to pay in full such amounts, then the entire assets to be distributed to the holders of the Series C Preferred shall be ratably distributed among the holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.
Certain Price and Share Adjustments.
a) Stock Dividends and Stock Splits. If the Company (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common Stock equivalents; (ii) subdivides outstanding shares of Common Stock into a larger number of shares; (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares; or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the conversion price shall be adjusted accordingly.
b) Merger or Reorganization. If the Company is involved in any reorganization, recapitalization, reclassification, consolidation or merger in which the Common Stock is converted into or exchanged for securities, cash or other property than each share of Series C Preferred shall be convertible into the kind and amount of securities, cash or other property that a holder of the number of shares of Common Stock issuable upon conversion of one share of Series C Preferred prior to any such merger or reorganization would have been entitled to receive pursuant to such transaction.
Common and Preferred Stock Issuances
Common and Preferred Stock Issuances - 2024
From January 1, 2024 through September 30, 2024, the Company issued shares of Common Stock and warrants to purchase 7,000,000 shares of Common Stock pursuant to the Regulation A+ Offerings for cash proceeds of $839,000.
The Company issued shares of Common Stock for services rendered valued at $69,395.
The Company issued shares of Common Stock in the cashless exercise of 25,034,000 warrants.
The Company settled RSUs for Common Stock.
The Company adjusted their common shares for vested RSUs in prior periods that were cancelled.
Common and Preferred Stock Issuances – 2023
In April 2023, the Company issued shares of Common Stock, Series A warrants and Series B warrants in their Regulation A+ Offerings for $640,000. The Company sold the warrants for $10,665.
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