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.

 

In October 2012, the Board of Directors voted to amend the Company's Articles of Incorporation to designate the Series C and Series D Convertible Preferred Stock setting forth the rights and preferences of the Series C and D Convertible Preferred Stock, par value $.00001 per share. Among other things, the Certificate of Designation for the Series C Preferred (i) authorizes fifty million (50,000,000) shares of the Corporation's preferred stock to be designated as "Series C Convertible Preferred Stock"; (ii) grants conversion rights to the holders of the Series C Preferred Stock; (iii) provides that each share of Series C Preferred Stock shall ten votes for any election or other vote placed before the shareholders of the Corporation; (iv) provides for anti-dilutive rights; (v) provides for liquidation rights; (vi) establishes the initial price at $2.50 per share; (vii) entitles the holder of the Series C Preferred Stock to receive dividends when, as and if declared by the Board of Directors. Among other things, the Certificate of Designation for the Series D Preferred (i) authorizes ten million (10,000,000) shares of the Corporation's preferred stock to be designated as "Series D Convertible Preferred Stock"; (ii) grants conversion rights to the holders of the Series D Preferred Stock; (iii) provides that each share of Series D Preferred Stock shall ten votes for any election or other vote placed before the shareholders of the Corporation; (iv) provides for anti-dilutive rights; (v) provides for liquidation rights; (vi) establishes the initial price at $5.00 per share; (vii) entitles the holder of the Series D Preferred Stock to receive dividends when, as and if declared by the Board of Directors.                                                                                                                

 

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.

 

In October 2012, the Company issued 14,000 shares of series C Preferred stock for cash proceeds of $35,000.

 

During the year ended September 30, 2013, the Company entered into exchange agreements with 82 common stockholders to exchange 61,434 shares of common stock into 2,190,045 shares of Series C Convertible Preferred stock. The total fair value of the Series C Convertible Preferred Stock issued as consideration in the exchange was approximately $1,287,000. The total market value of the common stock exchanged was approximately $21,100. The Company recognized a loss for the difference between the consideration given and the market value of the stock of approximately $1,266,000. The Company will cancel all shares of common stock received in the exchange.

 

Between October and December 2012, three note-holders converted $143,703 in principal and accrued interest into 57,481 shares of Series C Convertible Preferred stock valued at $41,961. The Company recognized a gain on the conversions of $101,742.

 

During the year ended September 30, 2013, the Company issued 24,000 shares of Series C Convertible Preferred stock to 2 consultants for services valued at $17,520. The Company also converted $623,215 in accounts payable into 211,786 shares of Series C Convertible Preferred stock valued at $136,883. The Company recognized a gain of $357,543 on the conversion of accounts payable and accrued expenses.

 

During the year ended September 30, 2013, the Company issued 32,595 shares of Series C Convertible Preferred stock warrant and option holders for the cancellation of 5,162 warrants and 399 options. The Company recognized a loss on the exchange of $7,769.

 

Dividends payable on Series A Convertible Preferred Stock of approximately $84,925 and $21,657 are included in Accrued Expenses as of September 30, 2013 and 2012, 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 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.

 

In October 2012, the Company issued 1,000,000 shares of restricted common stock to the Company's CEO under the terms of an employment agreement for services valued at $909,000.

 

In October 2012, the Company issued 25,000 shares of common stock to a consultant for professional services valued at $22,728.

 

In March 2013, the Company issued 5,800,000 shares of common stock to nine consultants for services to be rendered valued at a total of $580,000.

 

In July 2013, the Company issued 1,000,000 shares of common stock to nine consultants for services to be rendered valued at a total of $50,000.

 

Common stock issued for conversion of accounts payable and accrued expenses

 

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.

 

In October 2012, the Company issued 141,666 shares of common stock to five consultants for the conversion of $93,750 of accounts payable. The Company recognized a loss on the conversion of accounts payable of $35,037.

 

Common Stock issued in lieu of cash dividends

 

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 preferred stock

 

In January 2013, the CEO of the Company exercised the conversion of 8,000 shares of Series C Preferred stock at the stated conversion rate of 250,000 shares of common stock for each share of Series C Preferred stock resulting in the issuance of 2,000,000,000 restricted shares of common stock.

 

In February 2013, a shareholder converted 250,000 shares of Series A Preferred stock into 25,000,000 shares of common stock.

 

In March 2013, five shareholders converted a total of 250,000 shares of Series A Preferred Stock into 25,000,000 shares of common stock.

 

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.

 

During October and November 2012, a noteholder converted $7,700 of a convertible promissory note into 27,501 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, 2013:

 

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, 2013, the Company granted no options, and 399 options expired.

 

Outstanding options held by officers as of September 30, 2013 amounted to 583 and as of September 30, 2012 amounted to 583.

 

Warrants

 

During the year ended September 30, 2013 no warrants were issued and 5,496 warrants were cancelled or expired.

 

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 warrants 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.