NOTE 8 -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. Among other things, the Certificate of Designation of Series A Convertible Preferred (i) authorizes 1,250,000 shares of the Corporation's preferred stock to be designated “Series A Convertible Preferred Stock (ii) 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 (iii) each holder of Series A Preferred Stock is entitled to receive cumulative dividends, payable quarterly in either cash or equivalent shares of common stock 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 10 (ten) shares of the Corporations 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 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 on 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.

 

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.
 

Preferred Share Designations

 

In December 2013, the Board of Directors voted to amend the Company's Articles of Incorporation to change the conversion rights of the Series C and Series D Convertible Preferred Stock. Each share of the Series C and Series D Preferred Stock is convertible into five shares of common stock.

 

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.

 

During the year ended September 30, 2014, the company issued 35,000 shares of Series C Convertible Preferred stock to a consulting firm for services valued at $10,000.

 

Dividends payable on Series A Convertible Preferred Stock of approximately $124,860 and $84,925 are included in Accrued Expenses as of September 30, 2014 and 2013, 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 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 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.

 

In February 2014, 3 shareholders converted 75,358 shares of Series C Convertible Preferred stock into 376,790 shares of common stock and 1 shareholder converted 100,000 shares of Series A Convertible preferred stock into 10,000,000 shares of common stock.

 

In April 2014, 3 shareholders converted 110,894 shares of Series C Convertible Preferred stock into 554,470 shares of common stock.

 

Common Stock issued for conversion of notes payable

 

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.

Common stock issued for cash

In November 2013, the Company issued 40,000,000 shares of common stock to one shareholder for $200,000 in cash.

 

In December 2013, the Company issued 10,000,000 shares of common stock to one shareholder for $100,000 in cash.

 

In April 2014, the Company issued 5,000,000 shares of common stock to 2 shareholders for $50,000 in cash.

 

In June 2014, the Company issued 900,000 shares of common stock to 2 shareholders for $9,000 in cash.

 

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.

 

 

In October 2010, the 2005 Incentive Equity Plan expired. During the year ended September 30, 2014, the Company granted no options, and 1,617 options expired.

 

No outstanding options were held by officers as of September 30, 2014. Outstanding options held by officers as of September 30, 2013 amounted to 583.

 

Warrants

 

During the year ended September 30, 2014 no warrants were issued and 5,496 warrants were cancelled or expired.

 

During the year ended September 30, 2013 no warrants were issued and 4,579 warrants were cancelled or expired.