NOTE 14 - STOCKHOLDERS’ EQUITY
||On May 14, 2020, we entered into an equity distribution agreement (the “Sales Agreement”) with Canaccord, pursuant to which we could offer and sell, from time to time through an “at-the-market offering” program, with Canaccord as sales agent, shares of our common stock having an aggregate offering price of up to $25,000. The Sales Agreement provided for the Company to pay Canaccord a commission of 3.0% of the aggregate gross proceeds from each sale of common stock occurring pursuant to the Sales Agreement. The offer and sale of common stock in the ATM Offering were made pursuant to the Company’s shelf registration statement on Form S-3 that was declared effective by the SEC on November 27, 2019, the base prospectus contained therein dated November 27, 2019, and a prospectus supplement related to the ATM Offering dated May 14, 2020. The Company sold 810 shares of common stock through Canaccord under the Sales Agreement, received net proceeds from such sales of $4,000, and paid Canaccord $125 in commissions with respect to sales of common stock under the Sales Agreement. The Sales Agreement was terminated effective as of August 14, 2020.
||Redeemable Preferred stock:
The Company is authorized to issue 150 shares
of preferred stock, par value $0.01 per share of which 100 shares are designated Series A Preferred Stock and 45 shares are undesignated.
Series A Preferred Stock
In connection with the completion of the Transactions,
on October 3, 2019, the Company issued 50 shares of Series A Preferred Stock. During 2019 the Company issued an additional share
as payment for the earned dividends.
The Series A Preferred Stock has a liquidation
preference equal to the greater of (i) the original issuance price of $1,000.00 per share, subject to certain adjustments (the
“Series A Issue Price”), plus all accrued and unpaid dividends thereon (except in the case of a deemed liquidation
event, then 150% of such amount) and (ii) the amount such holder would have received if the Series A Preferred Stock had converted
into common stock immediately prior to such liquidation.
Holders of Series A Preferred Stock are entitled
to receive cumulative dividends at a minimum rate of 7.5% per annum (calculated on the basis of the Series A Issue Price), quarterly
in arrears. The dividends are payable at the Company’s election, in kind, through the issuance of additional shares of Series
A Preferred Stock, or in cash, provided no dividend payment failure has occurred and is continuing and that there has not previously
occurred two or more dividend payment failures. Commencing on the 66-month anniversary of the date on which any shares of Series
A Preferred Stock are first issued (the “Original Issuance Date”), and on each monthly anniversary thereafter, the
dividend rate will increase by 100 basis points, until the dividend rate reaches 17.5% per annum, subject to the Company’s
right to defer the increase for up to three consecutive months on terms set forth in the Charter. During the years ended December
31, 2019 and December 31, 2020, the Company issued dividends in the amounts of 1 and 4 shares respectively, to the holders of the
Series A Preferred Stock. As of December 31, 2019, and December 31, 2020, dividends in arrears were $-0- and $-0- respectively.
Voting; Consent Rights
The holders of Series A Preferred Stock will
be given notice by the Company of any meeting of stockholders or action to be taken by written consent in lieu of a meeting of
stockholders as to which the holders of common stock are given notice at the same time as provided in, and in accordance with,
the Company’s Amended and Restated Bylaws. Except as required by applicable law or as otherwise specifically set forth in
the Charter, the holders of Series A Preferred Stock are not entitled to vote on any matter presented to the Company’s stockholders
unless and until any holder of Series A Preferred Stock provides written notification to the Company that such holder is electing,
on behalf of all holders of Series A Preferred Stock, to activate their voting rights and in doing so rendering the Series A Preferred
Stock voting capital stock of the Company (such notice, a “Series A Voting Activation Notice”). From and after the
delivery of a Series A Voting Activation Notice, all holders of the Series A Preferred Stock will be entitled to vote with the
holders of common stock as a single class on an as-converted basis (provided, however, that any holder of Series A Preferred Stock
shall not be entitled to cast votes for the number of shares of common stock issuable upon conversion of such shares of Series
A Preferred Stock held by such holder that exceeds the quotient of (1) the aggregate Series A Issue Price for such shares of Series
A Preferred Stock divided by (2) $5.57 (subject to adjustment for stock splits, stock dividends, combinations, reclassifications
and similar events, as applicable)). So long as shares of Series A Preferred Stock are outstanding and convertible into shares
of common stock that represent at least 10% of the voting power of the common stock, or the Investors or their affiliates continue
to hold at least 33% of the aggregate amount of Series A Preferred Stock issued to the Investors on the Original Issuance Date,
the consent of the holders of at least a majority of the outstanding shares of Series A Preferred Stock will be necessary for the
Company to, among other things, (i) liquidate the Company or any operating subsidiary or effect any deemed liquidation event (as
such term is defined in the Charter), except for a deemed liquidation event in which the holders of Series A Preferred Stock receive
an amount in cash not less than the Redemption Price (as defined below), (ii) amend the Company’s organizational documents
in a manner that adversely affects the Series A Preferred Stock, (iii) issue any securities that are senior to, or equal in priority
with, the Series A Preferred Stock or issue additional shares of Series A Preferred Stock to any person other than the Investors
or their affiliates, (iv) incur indebtedness above the agreed-upon threshold, (v) change the size of the Company’s board
of directors to a number other than seven, or (vi) enter into certain affiliated arrangements or transactions.
At any time, each holder of Series A Preferred
Stock may elect to convert each share of such holder’s then-outstanding Series A Preferred Stock into the number of shares
of the Company’s common stock equal to the quotient of (x) the Series A Issue Price, plus any accrued and unpaid dividends,
divided by (y) the Series A Conversion Price in effect at the time of conversion. The Series A Conversion Price is initially equal
to $7.319, subject to certain adjustments as set forth in the Charter.
At any time after the third anniversary of
the Original Issuance Date, subject to certain conditions, the Company may redeem the Series A Preferred Stock for an amount per
share, equal to the greater of (i) the product of (x) 1.5 multiplied by (y) the sum of the Series A Issue Price, plus all accrued
and unpaid dividends and (ii) the product of (x) the number of shares of common stock issuable upon conversion of such Series A
Preferred Stock multiplied by (y) the volume weighted average price of the common stock during the 30 consecutive trading day period
ending on the trading date immediately prior to the date of such redemption notice or, if calculated in connection with a Deemed
Liquidation Event, the value ascribed to a share of common stock in such Deemed Liquidation Event (the “Redemption Price”).
At any time after (i) the 66-month anniversary of the Original Issuance
Date, (ii) following delivery of a Mandatory Conversion Notice, or (iii) upon a Deemed Liquidation Event holders of the Series
A Preferred Stock may elect to require us to redeem all or any portion of the outstanding shares of Series A Preferred Stock for
an amount per share equal to the Redemption Price.