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12. Stockholder's Equity
12 Months Ended
Dec. 31, 2019
Equity [Abstract]  
Stockholder's Equity

Issuance of Common Stock for Cash

 

During 2019, the Company sold units consisting of 904,082 shares of its common stock and 452,041 warrants to purchase shares of common stock for $0.48 per unit for total proceeds of $433,960. The warrants are exercisable at $0.65 and expire in 2022. Offering costs associated with the sale totaled $29,761.

 

The Company did not issue any common stock or warrants for cash in 2018.

 

Issuance of Common Stock for Services to Directors and Consultants

 

In January 2019, the Company issued Daniel Parks, the Company’s Chief Financial Officer, 200,000 shares of the Company’s common stock with a fair value of $136,000 to retain his services. As part of the agreement, Mr. Parks’ hours worked and cash compensation was reduced.

 

During the year ended December 31, 2019, the Company awarded, but did not issue, common stock with a value of $134,375 to its Board of Directors as compensation for their services as directors. In connection with the issuances, the Company recorded $134,375 in director compensation expense and accrued common stock payable.

 

In April 2019, the Company issued the Board members 330,183 shares of the Company’s common stock for services provided during 2018 which was accrued at December 31, 2018, with a value of $175,000.

 

During the year ended December 31, 2018, the Company awarded, but did not issue, common stock with a value of $175,000 to its Board of Directors as compensation for their services as directors. In connection with the issuances, the Company recorded $175,000 in director compensation expense and accrued common stock payable.

 

In May 2018, the Company issued the Board members 739,018 shares of the Company’s common stock for services provided during 2017 which was accrued at December 31, 2017, with a value of $175,000.

 

Common Stock Warrants

 

The Company's Board of Directors has the authority to issue stock warrants for the purchase of preferred or unregistered common stock to directors and employees of the Company.

 

At December 31, 2019 and 2018, warrants for purchase of 250,000 shares of the Company’s common stock for $0.25 per share are outstanding and have no expiration date. These warrants are owned by the Company’s president.

 

In addition to the warrants owed by the Company’s president, common stock purchase warrants were sold with shares of common stock during the year ended December 31, 2019. Total warrants for purchase of 452,041 shares of the Company’s common stock were issued with an exercise price of $0.65 per share and expire in 2022. None were exercised in 2019 and all are outstanding at December 31, 2019.

 

Preferred Stock

 

The Company's Articles of Incorporation authorize 10,000,000 shares of $0.01 par value preferred stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine.

 

Series B

 

During 1993, the Board established a Series B preferred stock, consisting of 750,000 shares. The Series B preferred stock has preference over the Company's common stock and Series A preferred stock (none of which are outstanding); has no voting rights (absent default in payment of declared dividends); and is entitled to cumulative dividends of $0.01 per share per year, payable if and when declared by the Board of Directors. During each of the years ended December 31, 2019 and 2018 the Company recognized $7,500 in Series B preferred stock dividend. In the event of dissolution or liquidation of the Company, the preferential amount payable to Series B preferred stockholders is $1.00 per share plus dividends in arrears. No dividends have been declared or paid with respect to the Series B preferred stock. The Series B Preferred stock is no longer convertible to shares of the Company’s common stock. At December 31, 2019 and 2018, cumulative dividends in arrears on the outstanding Series B shares were $187,500 and $180,000, respectively.

 

Series C

 

During 2000, the Board established a Series C preferred stock, consisting of 205,996 shares. In 2002, 28,092 shares were converted to common stock and cancelled, leaving 177,904 Series C preferred shares authorized and outstanding. The Series C preferred stock has preference over the Company’s common stock and has voting rights equal to that number of shares outstanding, but no conversion or dividend rights. In the event of dissolution or liquidation of the Company, the preferential amount payable to Series C preferred stockholders is $0.55 per share.

 

Series D

 

During 2002, the Board established a Series D preferred stock, authorizing the issuance of up to 2,500,000 shares. The Series D preferred stock has preference over the Company’s common stock but is subordinate to the liquidation preferences of the holders of the Company’s outstanding Series A, Series B and Series C preferred stock. Series D preferred stock carries voting rights and is entitled to annual dividends of $0.0235 per share. The dividends are cumulative and payable after payment and satisfaction of the Series A, B and C preferred stock dividends. No dividends have been declared or paid with respect to the Series D preferred stock. At December 31, 2019 and 2018, the cumulative dividends in arrears on the 1,751,005 outstanding Series D shares were $666,109 and $624,960, respectively, payable if and when declared by the Board of Directors. In the event of dissolution or liquidation of the Company, the preferential amount payable to Series D preferred stockholders is $2.50 per share. At December 31, 2019 and 2018, the liquidation preference for Series D preferred stock was $5,043,622 and $5,002,473, respectively. Holders of the Series D preferred stock have the right, subject to the availability of authorized but unissued common stock, to convert their shares into shares of the Company's common stock on a one-to-one basis without payment of additional consideration and are not redeemable unless by mutual consent. The majority of Series D preferred shares are held by John Lawrence, president of the Company.