NOTE 20. 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, 4,000 shares of Series B, 400 shares of Series C-1, 2,000 shares of Series C-2, 110 shares of Series C-3, and 2,000,000 shares of Series D, 1,980,000 of Series F and 1,780 shares of Series G.

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 12,286,847 and 5,798,281 shares of common stock were issued and outstanding as of December 31, 2018 and 2017, 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)

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 $553 for settlement of legal matters.

During the year ended December 31, 2017, the Company issued 836 shares of its common stock with a fair value of $8 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.

During the year ended December 31, 2017, the Company issued 211,511 shares of its common stock to individual investors, which resulted in net proceeds to the Company of $577.

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 pursuant to consulting agreements.

During the year ended December 31, 2017, the Company issued 93,959 shares of its common stock with a fair value of $1,321 pursuant to consulting agreements.

Share-Based Compensation

During the year ended December 31, 2018, the Company issued 1,328,663 shares of its common stock with a fair value of $16,606 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 $533 to board of directors.

During the year ended December 31, 2017, the Company issued 800 shares of its common stock with a fair value of $9 to 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 $1,097 to its Senior Lender.

During the year ended December 31, 2017, the Company issued 256,801 shares of its common stock with a fair value of $5,650 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 to settle debt having an approximate value.

During the year ended December 31, 2017, the Company issued 170,765 shares of its common stock with a fair value of $1,587 to settle debt having an approximate value.

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 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 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 $185 to its convertible note holders as certain financing, settlement and prepayment costs.

During the year ended December 31, 2017, the Company issued 200,470 shares of its common stock with a fair value of $1,925 to its convertible note holders upon conversion of outstanding convertible notes to common shares.

During the year ended December 31, 2017, the Company issued 27,970 shares of its common stock with a fair value of $347 to its convertible note holders as an inducement upon the funding of the respective convertible note

During the year ended December 31, 2017, the Company issued 6,800 shares of its common stock with a fair value of $114 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 for the exercise of warrant shares.

During the year ended December 31, 2017, the Company issued 6,346 shares of its common stock with a fair value of $94 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 $75.

Benchmark Acquisition

During the year ended December 31, 2017, the Company issued 1,069,538 shares of its common stock with a fair value of $21,658 to the former owners for the acquisition of Benchmark. See additional details in Note 5 Acquisitions.

Employees

During the year ended December 31, 2017, the Company issued 164,610 shares of its common stock with a fair value of $3,780 to employees.

Investor Relations Firm

During the year ended December 31, 2017, the Company issued 12,346 shares of its common stock with a fair value of $211 to an investor relations firm for services rendered.

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, 2018 and 2017.

Dividend charges recorded during the years ended December 31, 2018 and 2017 are as follows:

Accrued dividends payable in accrued expenses at December 31, 2018 and 2017 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.

Series B Convertible Preferred Stock

The Company previously designated 4,000 shares of Series B Convertible Preferred Stock (“Series B”), of which no shares are currently issued and outstanding.

Series C-1, Series C-2 and Series C-3 Convertible Preferred Stock

The Company previously designated 400, 2,000 and 110 shares of Series C-1 Convertible Preferred Stock (“Series C-1”), Series C-2 Convertible Preferred Stock (“Series C-2”) and SeriesC-3 Convertible Preferred Stock (“Series C-3), respectively. There are no shares of Series C-1, Series C-2 or Series C-3 currently issued or outstanding.

Series D Convertible Preferred Stock

The Company previously designated 2,000,000 shares of Series D Convertible Preferred Stock (“Series D”), of which no shares are currently issued and outstanding as of December 31, 2018 and 2017.

Series F Convertible Preferred Stock

The Company previously designated 1,980,000 shares of Series F Convertible Preferred Stock (“Series F”), of which none were issued and outstanding as of December 31, 2018 and 2019, 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, out of its available “blank check preferred stock” and authorized the issuance of up to 1,780 shares of the Series G Convertible Preferred Stock. A Certificate of Designation was filed with the Secretary of State of the State of Nevada on December 4, 2017. The Series G Convertible Preferred Stock 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 and the rights are junior and subordinate to any shares of Preferred Stock issued prior to this issuance.

On December 4, 2017, an Agreement to Exchange Common Stock for Series G Convertible Preferred Stock (“Exchange Agreement”) was entered in between the Company and an affiliate. The Company and the affiliate agreed to the exchange of 178,000 shares of the Company’s common stock for 1,780 shares of the Company’s Series G Convertible Preferred Stock, par value $0.01 per share (“Series G Preferred Stock”). The affiliate transferred and assigned 178,000 shares of the Company’s common stock and the Company issued the affiliate 1,780 shares of the Company Series G Preferred Stock.

On September 13, 2018, the affiliate converted 1,780 shares of the Series G Preferred Stock into 178,000 shares of the Company’s common stock. As of December 31, 2018, no shares of the Series G Preferred Stock were outstanding.

Preferred Stock Transactions

During each of the years ended December 31, 2018 and 2017, the Company accrued an additional $80 of preferred stock dividends, respectively.