NOTE 19. STOCKHOLDERS’ EQUITY

Authorized Capital

The Company is currently authorized to issue up to 100,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of convertible preferred stock, par value $0.01 per share, of which the following series have been designated: 4,500 shares of Series A, 1,000 shares of Series A-1, 1,780 shares of Series G, 100 shares of Series H and 2,000 shares of Series I.

Common Stock

The Company is presently authorized to issue up to 100,000,000 shares of common stock, $0.001 par value per share, of which 21,218,464 and 12,286,847 shares of common stock were issued and outstanding as of December 31, 2019 and 2018, respectively. The holders of the Company’s common stock are entitled to receive dividends equally when, as and if declared by the Board of Directors, out of funds legally available.

The holders of the Company’s common stock have sole voting rights, one vote for each share held of record, and are entitled upon liquidation of the Company to share ratably in the net assets of the Company available for distribution after payment of all obligations of the Company and after provision has been made with respect to each class of stock, if any, having preference over the common stock, currently including the Company’s preferred stock. The shares of common stock are not redeemable and have no preemptive or similar rights.

Equity Transactions (in whole dollars)

2019

Investors

During the year ended December 31, 2019, the Company issued 160,000 shares of common stock to individual investors. Net proceeds of $1,280,000 were received by the Company during 2018 and the unissued shares were recorded in the Consolidated Balance Sheet as Shares to be Issued until the shares of common stock were issued in 2019.

Share-Based Compensation

During the year ended December 31, 2019, the Company issued shares 62,839 of common stock with a fair value of $218,052 to employees.

Board of Directors

During the year ended December 31, 2019, the Company issued 250,000 shares of common stock with a fair value of $247,500 as settlement with our former board of directors.

Senior Lender

During the year ended December 31, 2019, the Company issued 1,698,580 shares of common stock with a fair value of $2,921,557 to its Senior Lender in accordance with Amendment No. 4 to the Lateral Credit Agreement dated February 12, 2019.

During the year ended December 31, 2019, the Company issued 1,500,000 shares of common stock with a fair value of $1,590,000 to its Senior Lender in accordance with the Lateral Credit Agreement dated July 2, 2019.

Board of Directors

During the year ended December 31, 2019, the Company issued 356,513 shares of common stock with a market value of $613,202 to a member of the Board of Directors who was also an employee for providing the Company with $1,000,000 bridge note on February 12, 2019.

Other

During the year ended December 31, 2019, the Company issued 1,005,751 shares of common stock with a fair value of $1,961,214 to an affiliate of the Senior Lender to co-guarantee on a term note issued on February 20, 2019.

During the year ended December 31, 2019, the Company issued 505,724 shares of common stock with a fair value of $536,067 to an affiliate of its Senior Lender in connection with the extension of additional credit under the Lateral Credit Agreement dated July 2, 2019.

Convertible Notes – Conversions, Inducements and Related Costs

During the year ended December 31, 2019, the Company issued 35,056 shares of common stock with a fair value of $93,788 for inducement shares to certain convertible note holders.

During the year ended December 31, 2019, the Company issued 3,123,548 shares of common stock with a fair value of $6,786,311 for conversion shares to certain convertible note holders.

During the year ended December 31, 2019, the Company issued 353,202 shares of common stock with a market value of $155,754 in accordance with certain Settlement Agreements made with certain of the convertible note holders.

Shares Returned

During the year ended December 31. 2019, 119,593 shares of its common stock were returned to the Company from an employee as a term of a separation agreement.

2018

Settlement of Legal Matters

During the year ended December 31, 2018, the Company issued 58,083 shares of its common stock with a fair value of $552,962 for settlement of legal matters.

Investors

During the year ended December 31, 2018, the Company issued 902,784 shares of its common stock to individual investors, which resulted in net proceeds to the Company of $6,232,273.

Consultants

During the year ended December 31, 2018, the Company issued 810,106 shares of its common stock with a fair value of $8,686,205 pursuant to consulting agreements.

Share-Based Compensation

During the year ended December 31, 2018, the Company issued 1,328,663 shares of common stock with a fair value of $16,606,729 to employees.

Board of Directors

During the year ended December 31, 2018, the Company issued 33,000 shares of its common stock with a fair value of $532,680 to certain board of directors.

Senior Lender

During the year ended December 31, 2018, the Company issued 854,599 shares of its common stock with a fair value of $1,096,575 to its Senior Lender.

Settlement of Debt and Related Costs

During the year ended December 31, 2018, the Company issued 40,000 shares of its common stock with a fair value of $919,200 to settle debt having an approximate value $314.

Convertible Notes – Conversions, Inducements and Related Costs

During the year ended December 31, 2018, the Company issued 1,901,520 shares of its common stock with a fair value of $16,338,223 to its convertible note holders upon conversion of outstanding convertible notes to common shares.

During the year ended December 31, 2018, the Company issued 199,376 shares of its common stock with a fair value of $2,156,227 to its convertible note holders as an inducement upon the funding of the respective convertible note.

During the year ended December 31, 2018, the Company issued 11,519 shares of its common stock with a fair value of $18,923 to its convertible note holders as certain financing, settlement and prepayment costs.

Exercise of Warrant Shares

During the year ended December 31, 2018, the Company issued 429,027 shares of its common stock with a fair value of $1,818,700 for the exercise of warrant shares.

Shares Returned

During the year ended December 31, 2018, 80,114 shares of its common stock was returned to the Company with a fair value of $74,990.

Shares to be issued

During the year ended December 31, 2019, the Company acquired the assets of USHR, as part of the Rental Home Portfolio Asset Acquisition, 4,222,474 shares of common stock with a market value of $15,384,954 are to be issued to the seller. As of December 31, 2019, the fair value of the shares to issued is recorded as Shares to be Issued on the consolidated balance sheet.

Preferred Stock

The Company is authorized to issue a total of 5,000,000 shares of convertible preferred stock with such designations, rights, preferences and/or limitations as may be determined by the Board, and as expressed in a resolution thereof.

The following table presents the convertible preferred stock activity for the years ended December 31, 2019 and 2018.

Dividend charges recorded during the years ended December 31, 2019 and 2018 are as follows:

Accrued dividends payable in accrued expenses at December 31, 2019 and 2018 are as follows:

Series A and Series A-1 Convertible Preferred Stock

The Company has designated 4,500 shares of Series A Convertible Preferred Stock (“Series A”) and 1,000 shares of Series A-1 Convertible Preferred Stock (“Series A-1”), of which 500 and 295 shares, respectively, are currently issued and outstanding. Holders of the Series A and Series A-1 are entitled to receive contractual cumulative dividends in preference to any dividend on the common stock at the rate of 10% per annum on the initial investment amount commencing on the date of issue. Such dividends are payable on January 1, April 1, July 1 and October 1 of each year, upon the declaration of payment by the Board of Directors.

The Series A and Series A-1 shares also contain a right of redemption in the event of liquidation or a change in control. The redemption feature provides for payment of a liquidation fee of 110% of the face value of the Series A shares and 125% of the face value of the series A-1 shares plus any accrued unpaid dividends in the event of bankruptcy, change of control, or any actions to take the Company private.

On July 2, 2019, as consideration for amending and restating the Benchmark Notes, the Company entered into subscription agreements (the “Subscription Agreements”) pursuant to which it issued to Benchmark Sellers an aggregate of 1,951 shares of the Company’s Series A Preferred Stock and 296 shares of the Company’s Series A-1 Preferred Stock (collectively, the “Series A Preferred”), which the Benchmark Sellers immediately exchanged, pursuant to exchange agreements , for an aggregate of 100 shares of a new series of preferred stock ( Series H Preferred).

During the years ended December 31, 2019 and 2018, the Company accrued $80 and $80 of preferred stock dividends, respectively.

Series G Convertible Preferred Stock

The Board of Directors of the Company authorized the designation of a new series of preferred stock, the Series G Convertible Preferred Stock (“Series G”), out of its available “blank check preferred stock” and authorized the issuance of up to 1,780. A Certificate of Designation was filed with the Secretary of State of the State of Nevada on December 4, 2017. Series G had various rights, privileges and preferences, including conversion into 100 shares of Common Stock (subject to adjustments) upon the filing of an amendment to the Company’s Articles of Incorporation incorporating a reverse stock split Series G rights are junior and subordinate to any shares of Preferred Stock issued prior to its issuance.

On September 13, 2018, 1,780 shares of the Series G were converted into 178,000 shares of the Company’s common stock. No shares of Series G were issued and outstanding as of December 31, 2019 and 2018, respectively.

Series H Convertible Preferred Stock

The Board of Directors of the Company authorized the designation of a new series of preferred stock, the Series H Convertible Preferred Stock (“Series H”), out of its available “blank check preferred stock” and authorized the issuance of up to 100 shares. A Certificate of Designation was filed with the Secretary of the State of Nevada on June 28, 2019. Series H had no dividend rights, no liquidation preference, was not convertible and had perpetual voting rights equivalent to 51% of the total number of votes that could be cast by all outstanding shares of capital stock of the Company. On December 23, 2019, the Company entered into a Preferred Stock Repurchase Agreement (“Repurchase Agreement”) with the Benchmarks Sellers in which the Company repurchased 100 shares of the Series H for an aggregate price of $100, the 100 shares represented all of the issued and outstanding shares of Series H. No shares of Series H were issued and outstanding as of December 31, 2019.

Series I Preferred Stock

The Board of Directors of the Company authorized the designation of a new series of preferred stock, the Series I Preferred Stock (“Series I”), out of its available “blank check preferred stock” and authorized the issuance of up to 2,000 shares of the Series I. A Certificate of Designation was filed with the Secretary of the State of Nevada on December 19, 2019. Series I has no voting rights, no conversion rights, is not entitled to dividends paid on Common Stock, in the event of liquidation the holders Series I Preferred Shares by reason of their ownership are eligible to receive $100 per share after payment is made to Senior Securities but before any payment is made to holders of Common Stock. There were 2,000 shares of Series I shares issued during 2019 as part of the Rental Home Portfolio Asset Acquisition (See Note 4).