NOTE 10 – COMMON STOCK, PREFERRED STOCK AND WARRANTS

Common Stock

In 2020, the Company issued 17,392,343 shares of common stock as follows:

In total, $3,441,401 of obligations were converted into shares of common stock in 2020 at a price of $0.22 per share. Due to the timing of the conversions and the Company’s stock price at that time of conversion, the Company recorded the following losses from liability conversions in 2020: $495,320 from the conversion of Bridge Notes including accrued interest, $68,373 from the conversion of a debenture and note payable with unrelated parties, and $271,210 from the conversion of accrued salary, bonus, directors’ fees and notes payable with related parties. During the year ended December 31, 2020, the Company recorded a loss $834,903 on these obligations converted into shares of common stock as presented on the consolidated statements of operations.

In 2020, the Company also effected a 25:1 reverse stock split and all share numbers herein have been adjusted for that change.

The Company did not issue any common shares in 2019.

For the years ended December 31, 2020 and 2019, the Company recognized $258,667 and $115,714 of compensation expense for several service agreements.

Series A Redeemable Convertible Preferred Stock

The Company has 600 shares of Preferred Stock issued and outstanding as of December 31, 2020, which currently are convertible at $0.16 per share of the Company’s common stock (the “Conversion Price”), which was adjusted to match the conversion price of the Company’s Series B Preferred Stock. The Preferred Stock bears a 6% dividend per annum, calculable and payable per quarter in cash or additional shares of common stock as determined in the Certificate of Designation. The Preferred Stock has no voting rights until converted to common stock and has a liquidation preference equal to the aggregate purchase price of $600,000 plus accrued dividends. The Preferred Stock is currently in default, and the Company is negotiating a modification with the holders, including the conversion of these shares into common stock. Each share of Preferred Stock received warrants, of which all but 46,154 warrants expired in 2020.

The Preferred Stock has price protection provisions in the case that the Company issues any shares of stock not pursuant to an “Exempt Issuance” at a price below the Conversion Price. Exempt Issuances include: (i) shares of Common Stock or common stock equivalents issued pursuant to the original merger of the company or any funding contemplated by that transaction; (ii) any common stock or convertible securities outstanding as of the date of closing; (iii) common stock or common stock equivalents issued in connection with strategic acquisitions; (iv) shares of common stock or equivalents issued to employees, directors or consultants pursuant to a plan, subject to limitations in amount and price; and (v) other similar transactions. The Certificate of Designation contains restrictive covenants not to incur certain debt, repurchase shares of common stock, pay dividends or enter into certain transactions with affiliates without consent of holders of 67% of the Preferred Stock.

Management has determined that the Preferred Stock is more akin to a debt security than equity primarily because it contains a mandatory 2-year redemption at the option of the holder, which only occurs if the Preferred Stock is not converted to common stock. Therefore, management has presented the Preferred Stock outside of permanent equity as mezzanine equity, which does not factor into the totals of either liabilities or equity.

The Preferred Stock carries a 6% per annum dividend calculated on the stated value of the stock and is cumulative and payable quarterly beginning July 1, 2016. These dividends are accrued at each reporting period. They add to the redemption value of the stock; however, as the Company shows an accumulated deficit, the charge has been recognized in additional paid-in capital.

Series B Preferred Stock

On December 29, 2020, the Company filed an amendment to its Articles of Incorporation to authorize the issuance of up to 2,500 shares of Series B Convertible Preferred Stock (the “Series B Stock”), par value $0.001 per share, pursuant to a Certificate of Designation. The Series B Preferred Shares provide the holders a 10% annual paid-in-kind dividend, a liquidation preference equal to the purchase price of the shares ($1,000 per share) followed by the right to participate with the common stockholders in the instance of a liquidation or other exit event, and provide the holders the right to vote along with the common holders based on the common conversion amount of their holdings. The Series B Preferred Shares are convertible into common stock at a price of $0.16 per share, subject to anti-dilution protections in the case of certain issuances of securities below that conversion price. The Series B Preferred Shares are not redeemable.

In December 2020, the Company commenced a private offering of its Series B Stock for $1,000 per share. As of December 31, 2020, 281 shares of Series B Stock were issued and outstanding in connection with the issuance of 156 shares upon the conversion of a note payable in the amount $156,000, inclusive of unpaid and accrued interest and the sale of 125 shares for total prices of $125,000, $25,000 of which was received in 2021 and recorded as a subscription receivable as of December 31, 2020. There was no gain or loss recognized on the conversion of the notes payable into Series B Stock as the conversion rate was equal to the Series B per share purchase price.

Series E-1 Preferred Stock

On December 3, 2020 the Company filed an amendment to its Articles of Incorporation to authorize the issuance of up to 8,500 shares of Series E-1 Preferred Stock (the “Series E-1 Stock”) pursuant to a Certificate of Designation. The shares of Series E-1 Stock are incentive-based, vesting and forfeitable securities that provide the holders the right in the aggregate to receive an “earnout” equal to 20% of the total consideration received by the Company in the instance of a sale or sub-license of its core licensed radiopharmaceutical Technology, or sale or merger of the Company, which is paid on a priority, senior basis. In addition, the holders of the Series E-1 Stock can convert their vested preferred stock at anytime or after an event resulting in an earnout payment, such as an acquisition of the Company, into an aggregate of 8.5 million common shares. The holders of the Series E-1 Stock have the right to vote along with the common stockholders based on the common conversion amount of their holdings, and have the right to nominate two members of the Board of Directors. On December 30, 2020, 7,650 shares of Series E-1 Stock had been issued to five individuals, including the Company’s Executive Chairman, CEO and General Counsel which vest starting in July 2021 through January 2023 and are forfeitable by the holders prior to vesting. Upon these shares of Series E-1 preferred stock becoming fully vested, they are convertible in the aggregate into 7,650,000 shares of common stock which had a value of approximately $3.9 million as of December 31, 2020. The Company computed the grant date fair value of the Series E-1 Stock to be approximately $5.34 million using an option pricing model and the following assumptions: expected term of four years, dividend yield of -0-%, volatility of 96.12%, and a risk-free rate of .27%, which will be recognized as stock-based compensation expense over the vesting period through January 2023. Since the vesting period began on December 30, 2020, compensation expense as of December 31, 2020 was not significant. As of December 31, 2020, all 7,650 Series E-1 Stock issued remains unvested.

Warrants

During the year ended December 31, 2020, the Company issued no warrants and 80,000 warrants expired. During the year ended December 31, 2019, the Company did not issue any warrants and 81,340 warrants expired. The following is a summary of all outstanding common stock warrants as of December 31, 2020:

During the year ended December 31, 2018, the Company committed to issuing warrants to purchase 6,000 shares of common stock at $1.00 per share and expiring in five years. These warrants are provisional and are not considered outstanding or granted as of December 31, 2020.