NOTE 9 -EQUITY TRANSACTIONS

 

 

Preferred Stock

 

 

In June 2010, the Board of Directors voted to amend the Company's Articles of Incorporation in order to authorize the issuance of 200 million shares of Preferred Stock with a par value of $0.001 per share. Concurrently, the Board designated the preferred stock as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred stock is convertible into the Company's common stock after two years at a conversion price of $0.01 per share at the holder's option. Each Series A Preferred Holder is also entitled to receive cumulative dividends at the rate of 8% of $1.00 per annum on each outstanding share of Series A Preferred then held by such Series A Preferred Holder, on a pro rata basis

 

In August 2012, the Board of Directors voted to amend the Company's Articles of Incorporation to designate the Series B Preferred Stock setting forth the rights and preferences of the Series B Preferred Stock. Among other things, the Certificate of Designation (i) authorizes ten (10) shares of the Corporation's preferred stock to be designated as "Series B Preferred Stock"; (ii) grants no conversion rights to the holders of the Series B Preferred Stock; (iii) provides that the holders of Series B Preferred Stock shall vote with the holders of the Corporation's common stock and any class or series of capital stock of the Corporation hereafter created; and (iv) provides that if at least one share of Series B Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series B Preferred stock at any given time, regardless of their number, shall have voting rights equal to two (2) times the sum of: i) the total number of shares of Common Stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of any Preferred Stocks which are issued and outstanding at the time of voting.

 

On September 13, 2012, the Board of Directors voted to decrease the par value of the Company's authorized preferred stock from $.001 per share to $.00001 per share.

 

As further discussed in Note 12, the Board of Directors voted to amend the Company's Articles of Incorporation to designate Series C and Series D Convertible Preferred Stock.

 

During the year ended September 30, 2011, the Company issued 650,000 shares of Series A Convertible Preferred Stock to the preferred shareholder for $650,000. In addition, in May 2011, the Company issued 174,000 shares of Series A Convertible Preferred Stock to the preferred shareholder in exchange for the shareholder's agreement to cancel 5,800 shares of the Company's common stock issued and registered to the shareholder.

In September 2012, the Board of directors authorized the issuance of one share of Series B Preferred Stock along with 6,567 shares of its common stock to its sole director in lieu of accrued consulting fees amounting to $27,850.

 

Dividends payable on Series A Convertible Preferred Stock of approximately $21,657 and $42,249 are included in Accrued Expenses as of September 30, 2012 and 2011, respectively.

 

Common Stock

 

On September 13, 2012, the Board of Directors voted to increase the Company's authorized shares of common stock to 5,000,000,000 shares and to decrease the par value to $.00001 per share.

 

Common Stock issued for services

 

In April 2011, the Company issued 2,860 shares of the Company's common stock to two consultants in exchange for services valued at approximately $54,000.

 

In January 2012, the Company issued 1,666 shares of the Company's common stock to one consultant in exchange for services valued at approximately $12,500.

 

In February 2012, the Company issued 1,250 shares of the Company's common stock to one consultant in exchange for services valued at approximately $11,250.

 

In March 2012, the Company issued 6,667 shares of the Company's common stock to one consultant in exchange for services valued at approximately $37,500. The Company cancelled 5,000 of these shares in September 2012 due to non-performance.

 

In July 2012, the Company issued 11,750 shares of the Company's common stock to one consultant in exchange for services valued at approximately $35,250.

 

Common stock issued for conversion of accounts payable and accrued expenses

 

In September 2011, two officers and directors of the Company converted accrued consulting fees of $50,800 into 2,932 shares of common stock.

 

In December 2011, the Company issued 1,224 shares of the Company's common stock to one consultant in exchange for services valued at $7,342.

In April 2012, two officers and directors of the Company converted accrued consulting fees of $36,000 into 3,286 shares of common stock and the 1,279 shares of the Company's common stock to one consultant for conversion of accrued expenses valued at $14,000.

 

In June 2012, an officer and director of the Company converted accrued consulting fees of $56,703 into 4,785 shares of common stock and a former officer and director of the Company converted accrued consulting fees of $56,251 into 4,747 shares of common stock.

 

In September 2012, an officer and director of the Company converted accrued consulting fees of $27,850 into 6,568 shares of common stock and one share of Series B Preferred stock. The Company also issued 12,681 shares of the Company's common stock to three consultants for conversion of accrued expenses valued at approximately $51,000.

 

Common Stock issued in lieu of cash dividends

 

In April 2011, the Company issued 791 shares of the Company's common stock to preferred shareholders in lieu of a cash dividend of $23,724.

 

In September 2012, the Company issued 7,117 shares of the Company's common stock in lieu of accrued dividends due to the stockholder in the amount of approximately $106,745.

 

Common Stock issued for conversion of notes payable

 

In May 2012, $50,000 of a notes payable - stockholder were converted into 6,667 shares of the Company's common stock.

 

In May 2012, the convertible noteholder converted $8,000 of the November 15, 2011 convertible note into 1,481 shares of the Company's common stock.

 

In June 2012, the convertible noteholder converted $8,000 of the November 15, 2011 convertible note into 2,930 shares of the Company's common stock.

 

In August 2012, the convertible noteholder converted $8,000 of the November 15, 2011 convertible note into 4,598 shares of the Company's common stock.

 

In September 2012, the convertible noteholder converted $8,800 of the

 

November 15, 2011 convertible note into 18,334 shares of the Company's common stock.

 

 

Consultant Stock Plans

 

During the year ended September 30, 2011, the Company adopted the Cleartronic, Inc. 2011 Consultant Stock Plan to assist the Company in obtaining and retaining the services of persons providing consulting services to the Company. In April 2011, the Company filed a registration statement with the Securities and Exchange Commission registering 6,666 shares of the Company's common stock for issuance under the plan.

 

During the year ended September 30, 2005, the Company adopted the GlobalTel IP, Inc. 2005 Incentive Equity Plan (the "Plan") allocating up to 1,666 shares of the Company's common stock to offer incentives to key employees, contractors, directors and officers.

The following table summarizes information about stock options outstanding at September 30, 2012:

 

The following table summarizes the number of outstanding options with their corresponding contractual life, as well as the exercisable weighted average (WA) outstanding exercise price, and number of vested options with the corresponding exercise price by price range.

 

 

 

In October 2010, the 2005 Incentive Equity Plan expired. During the year ended September 30, 2012, the Company granted no options, and 267 options expired.

 

Outstanding options held by officers parties as of September 30, 2012 amounted to 583 and as of September 30, 2011 amounted to 1,233.

 

Warrants

 

During the year ended September 30, 2011, 4,067 warrants were issued to three consultants for services rendered (including one officer and director). The Company recorded an expense of $71,000 as a result of the issuance.

 

The Company applied fair value accounting for these share based payment awards. The fair value of each warrant granted is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes assumptions used are as follows:

 

During the year ended September 30, 2012, 1,095 warrants were issued to a consultant for conversion of accrued fees totaling $12,000. In addition, during the year ended September 30, 2012, 167 warrant expired.

 

The following is a summary of the Company's warrant activity:

The following table summarizes the number of outstanding warrants with their corresponding contractual life, as well as the exercisable weighted average (WA) outstanding exercise price, and number of vested warrants with the corresponding exercise price by price range.