Note 6 – Stockholders’ Equity
The Company’s authorized capital consists of 54,000,000 shares of common stock with a $0.0001 par value, 720,000 shares of restricted common stock with a $0.0001 par value, and 1,000,000 shares of preferred stock with a $0.0001 par value.
The restricted common stock shares carried voting rights and had no rights to dividends except in the case of liquidation of the Company. The restricted common stock shares would have converted on a one for one basis into shares of common stock if at any time within five years of their issue the ten-day average share price of the common stock exceeded $6.90 or if there was a change in control (as defined in the Company’s certificate of incorporation). Because none of the events that would have triggered conversion had occurred prior to the five year anniversary of the issuance of the restricted common stock shares, all of the restricted common stock shares were mandatorily redeemed at par value and cancelled as of March 2, 2012.
No preferred stock had been issued at September 30, 2012.
In connection with the Company’s 2007 private placement, the Company issued 20,000,000 warrants that entitled the holder to purchase one share of common stock at $4.00 per share. All of these warrants expired in June 2011.
As part of the private placement, the Company granted an option to Sunrise Securities Corp. to acquire 2 million units at a price of $6.60 (each unit consisted of one share of common stock and one warrant to acquire one share of common stock at $4.00 per share). Subsequent to the expiration of the warrants, the options were only exercisable for one share of common stock at an exercise price of $5.50 per share. All of these options expired in June 2012.