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Stockholders' Equity | 12 Months Ended
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Dec. 31, 2020
Equity [Abstract] |
Stockholders' Equity |
14 | STOCKHOLDERS’ EQUITY
Preferred Stock Series “A” Preferred Stock The Company, pursuant to the consent of the Board of Directors filed a Certificate of Designation with the Nevada Secretary of State which designated 10,000,000 shares of the Company’s authorized preferred stock as Series “A” Preferred Stock, par value $0.001. The Series “A” Preferred Stock has the following attributes:
| ● | Ranks senior only to any other class or series of designated and outstanding preferred shares of the Company;
| ● | Bears no dividend;
| ● | Has no liquidation preference, other than the ability to convert to Common Stock of the Company;
| ● | The Company does not have any rights of redemption;
| ● | Voting rights equal to ten shares of Common Stock for each share of Series “A” Preferred Stock;
| ● | Entitled to same notice of meeting provisions as common stockholders;
| ● | Protective provisions require approval of 75% of the Series “A” Preferred Shares outstanding to modify the provisions or increase the authorized Series “A” Preferred Shares; and
| ● | Each one Series “A” Preferred Shares can be converted into ten common shares at the option of the holder.
On April 11, 2018, the Company issued 3,000,000 shares of Series A Preferred Stock as consideration for the True Wireless, Inc. merger. As discussed in Note 1, the equity of the Company is the historical equity of TW retroactively restated to reflect the number of shares issued by the Company in the transaction. These preferred shares were recorded as a retroactive 2017 transaction as incentive to complete the merger. Upon close of the merger, the Company recorded 10,000,000 shares of Series A Preferred Stock as a part of the recapitalization transaction for services previously rendered by the Company’s former Chief Executive Officer and Chairman of the Board of Directors. As of December 31, 2020 and 2019, there were 13,000,000 shares of Series A issued and outstanding. Series “C” Convertible Preferred Stock On June 22, 2018, the Board of Directors approved a Certificate of Designation for Company Series C Convertible Preferred stock, which was filed with the Secretary of State of the State of Nevada on that date. The Certificate of Designations approved the creation of a new series of preferred stock consisting of 1,000,000 shares of Series C Convertible Preferred Stock par value $0.001 (“Series C Preferred Stock”) with an original issue price of $100.00 per share. The Series “C” Preferred Stock has the following attributes:
| ● | Ranks junior only to any other class or series of designated and outstanding preferred shares of the Company;
| ● | Bears a dividend per share of Series C Preferred Stock equal to the per share amount (as converted), and in the same form as, the dividend payable to the holders of the Common Stock;
| ● | With respect to such liquidation, dissolution or winding up, the holders of Series C Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of Junior Securities but after distribution of such assets among, or payment thereof to holders of any Senior Preferred Stock, an amount equal to the Series C Original Issue Price for each share of Series C Preferred Stock plus an amount equal to all declared but unpaid dividends on Series C Preferred Stock;
| ● | The Company does not have any rights of redemption;
| ● | Voting rights equal to 250 shares of Common Stock for each share of Series “C” Preferred Stock;
| ● | Entitled to same notice of meeting provisions as common stockholders;
| ● | Protective provisions require approval of 75% of the Series “C” Preferred Shares outstanding to modify the provisions or increase the authorized Series “C” Preferred Shares; and
| ● | Each one Series “C” Preferred Shares can be converted into ten common shares at the option of the holder.
As noted above, each share of Series C Preferred Stock is convertible into 250 shares of Company Common Stock (the same conversion rate utilized in the exchange transaction), but is only convertible on the first to occur of the following events:
| (i) | The Volume Weighted Average Price (“VWAP”) of the Company’s Common Stock during any then consecutive trading days is at least $2.00 per share; or
| (ii) | June 30, 2019.
On June 29, 2018, each of Kevin Brian Cox (“Cox”), the Company’s Chief Executive Officer, and Thirteen Nevada LLC (“13”) entered into separate Exchange Agreements with the Company whereby the Shareholders agreed to exchange an aggregate of 148,741,531 shares of previously issued Company Common Stock for an aggregate of 594,966 shares of newly-issued Company Series C Convertible Preferred Stock. The calculation of weighted average shares was retroactively restated in order to properly account for the above noted share exchange. During the year ended December 31, 2018, the Company issued 48,400 shares of Series C Preferred in exchange for the conversion of a note payable of $3,000,000 and accrued interest of $24,952. As discussed above in Note 1, on January 17, 2019, the Company announced the completion of an agreement to acquire a 40% equity ownership of Centercom. Upon execution of the agreement, the Company issued 72,000 shares of Preferred C stock (convertible into 18,000,000 shares of Common Stock) to a director, officer and minority owner of the Company who has a 50% interest in Centercom. The Company recorded its investment in Centercom of $178,508, which is the Company’s 40% ownership of Centercom’s net book value upon close of the completion of the transaction, as “Investment in Centercom” in long term assets on the accompanying consolidated balance sheets. On February 15, 2019, Carter Matzinger elected to exchange outstanding non-interest-bearing debt totaling $389,502 owed by the Company into 6,232 shares of Preferred C stock. As of December 31, 2020 and 2019, there were 721,598 shares of Series C issued and outstanding. Common Stock As discussed above in Note 1, on January 30, 2020, the Company entered into a Membership Interest Purchase Agreement and Stock Purchase Agreement with ECS Prepaid, ECS, CSLS and the Winfreys. Pursuant to the agreements, the Company acquired all of the membership interests of ECS Prepaid and all of the issued and outstanding stock of each ECS and CSLS. The agreements provide that the consideration is to be paid by the Company through the issuance of 500,000 shares of the Company’s Common Stock. In addition, the agreements called for 25,000 shares of Common Stock to be issued to the Winfreys on a monthly basis over a 12-month period. During the year ended December 31, 2020, the Company issued 275,000 shares of Common Stock pursuant to the agreements. As discussed in Note 10 above, during the year ended December 31, 2020, the Company granted 2,892,000 shares of Common Stock pursuant to debt agreements executed with various lenders. The shares were valued on execution date and recorded as a debt discount on the consolidated balance sheets. As discussed in Note 10 above, during the year ended December 31, 2020, the Company issued 13,426,698 shares of Common Stock for the conversion of debt totaling $2,280,040 in principal and interest. During year ended December 31, 2020, the Company sold an aggregate of 5,678,174 shares of Common Stock and 2,839,087 warrants, with each warrant exercisable for one share of Common Stock at an exercise price of $0.75, resulting in gross proceeds to the Company of $1,068,500. During the year ended December 31, 2020, the Company executed consulting agreements with third parties for professional services. Upon execution of the agreement, the Company agreed to issue 86,000 shares of the Company’s Common Stock. The 86,000 shares have an aggregated fair value of approximately $11,103 which was expensed immediately upon execution of the agreement. During the year ended December 31, 2019, the Company granted consultants 96,000 restricted shares for services pursuant to consulting agreements. On March 27, 2019, the Company reached a settlement with a consultant to issue 875,000 shares for services rendered. Upon execution of the settlement, the Company recorded a loss on settlement of $507,500. As discussed above in Note 5, on September 30, 2019, the Company entered into a Purchase Agreement with GBT Technologies Inc. Pursuant to the agreement, the Company acquired substantially all of the assets related to the ECS Business for total consideration of five million dollars ($5,000,000). The Purchase Agreement provides that the consideration is to be paid by the Company through the issuance of a convertible promissory note in the amount of $4,000,000 and through the issuance of 3,333,333 restricted shares of the Company’s Common Stock. In October 2019, the Company issued 70,000 shares of Common Stock to a consultant valued at $0.31 per share. On November 4, 2019, the Company granted 100,000 shares of Common Stock pursuant to a debt agreement executed with a lender. The shares were valued at $0.31 per share and was recorded as a debt discount. During the year ended December 31, 2019, the Company sold an aggregate of 9,172,855 shares of Common Stock and 4,462,135 warrants, with each warrant exercisable for one share of Common Stock at an exercise price of $0.75, resulting in gross proceeds to the Company of $3,210,500. During the year ended December 31, 2019 and 2018, the Company recorded total stock-based compensation expense of $295,900 and $146,000, respectively, in relation to shares issued for services. As of December 31, 2020 and 2019, there were 127,131,210 and 102,193,579 shares of Common Stock issued and outstanding, respectively. Stock Warrants The following is a summary of the Company’s warrant activity:
|  | Warrants |  |  | Weighted Average Exercise Price |
Outstanding – January 31, 2019 |  |  | 2,012,500 |  |  | $ | 0.43 |
Exercisable – December 31, 2019 |  |  | 2,012,500 |  |  | $ | 0.43 |
Granted |  |  | 984,284 |  |  | $ | 0.48 |
Exercised |  |  | - |  |  | $ | - |
Forfeited/Cancelled |  |  | - |  |  | $ | - |
Outstanding – December 31, 2019 |  |  | 6,849,635 |  |  | $ | 0.71 |
Granted |  |  | 3,116,230 |  |  | $ | 0.53 |
Exercised |  |  | - |  |  | $ | - |
Forfeited/Cancelled |  |  | (250,000 | ) |  | $ | - |
Outstanding – December 31, 2020 |  |  | 9,715,865 |  |  | $ | 0.65 |
Exercisable – December 31, 2020 |  |  | 9,715,865 |  |  | $ | 0.6 |
Warrants Outstanding |  |  | Warrants Exercisable |
Exercise Price |  |  | Number Outstanding |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |  |  | Number Exercisable |  |  | Weighted Average Exercise Price |
$ | 0.40 – 3.00 |  |  |  | 9,715,865 |  |  |  | 1.52 years |  |  | $ | 0.65 |  |  |  | 9,715,865 |  |  | $ | 0. 65 |
At December 31, 2020 the total intrinsic value of warrants outstanding and exercisable was $0. As discussed in Note 9, during the year ended December 31, 2020, the Company paid $95,000 for the cancellation of 250,000 warrants. On February 15, 2019, the Company executed a consulting agreement with a third party for professional services. Upon execution of the agreement, the Company agreed to issue 100,000 warrants to purchase the Company’s Common Stock with an exercise price of $3.00 per share, a term of 3 years, and immediate vesting. In addition, the consultant is eligible to receive 150,000 warrants upon achievement of certain milestones as discussed in the agreement. The 250,000 warrants have an aggregated fair value of approximately $30,782 that was calculated using the Black-Scholes. For the year ended December 31, 2019, when computing fair value of share-based payments, the Company has considered the following variables:
|  | December 31, 2019 |
Risk-free interest rate |  |  | 2.50 | %
Expected life of grants |  |  | 3 years |
Expected volatility of underlying stock |  |  | 168.71 | %
Dividends |  |  | 0 | %
The estimated warrant life was determined based on the “simplified method,” giving consideration to the overall vesting period and the contractual terms of the award. The Company did not issue any warrants as compensation for services during the year ended December 31, 2020. During the year ended December 31, 2020 and 2019, the Company recorded total stock-based compensation expense related to the warrants of $0 and $33,700, respectively. The unrecognized compensation expense at December 31, 2020 was approximately $0.

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