Note 14 – Series A Preferred Stock

Preferred Stock

The Company has 10,000,000 authorized shares of $0.001 par value “blank check” preferred stock, of which 500,000 shares have been designated Series A Preferred Stock. Each share of Preferred Stock is currently convertible into fifty (50) shares of the Company’s common stock. The Series A Preferred Stock accrues dividends at the rate of 6% per annum, payable annually in cash or additional shares of Series A Preferred Stock, at the Company’s election. As of September 30, 2020, there were 147,833 shares of Series A Preferred Stock issued and outstanding. The Series A Preferred Stock is presented as mezzanine equity on the balance sheet due to it carrying a stated value of $10 per share, and a deemed liquidation clause, which entitles the holder to receive, before and in preference to any distribution or payment of assets of the Corporation or the proceeds thereof may be made or set apart for the holders of junior securities an amount in cash equal to the stated value per share, plus an amount equal to any accrued and unpaid dividends.

Preferred Stock Sales

On various dates between April 14, 2020 and September 14, 2020, the Company received total proceeds of $1,478,330 from the sale of 147,833 units, consisting in the aggregate of 147,833 shares of Series A Preferred Stock and five-year warrants to purchase 7,391,650 shares of common stock at an exercise price of $0.25 per share to fourteen accredited investors. The proceeds received were allocated between the Series A Preferred Stock and warrants on a relative fair value basis.

Preferred Stock Dividends

The Series A Preferred Stock accrues dividends at the rate of 6% per annum, payable annually in cash or additional shares of Series A Preferred Stock, at the Company’s election. A total of $14,870 of dividends were payable as of September 30, 2020.