NOTE 5 - CAPITAL STOCK
The Company was originally authorized to issue 100,000,000 common shares with a par value of $0.001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought. On April 16, 2007, the Company effected a one-for-three reverse split of its common stock. As a result of the reverse split, there are 33,333,333 shares of common stock authorized for issuance. In January 2011, the Company effected a one for one-hundred-fifty reverse split of its common stock. As a result of the reverse stock split there are 222,223 shares of common stock authorized for issuance. The financial statements of the Company have reflected the most recent reverse split as if it occurred at the date of inception.
At a special meeting of shareholders held in March 2011, resolutions were passed that 1) amended the Company’s Articles of Incorporation to increase the authorized shares of common stock for issuances to 100,000,000 from 222,223, and 2) amended the Company’s Articles of Incorporation to authorize 20,000,000 shares of preferred stock.
In November 2006 and January 2007, three of the participants in the Company’s June and July 2006 private placement offering surrendered a total of 1,786 shares of common stock to the Company for cancellation, which the Company repurchased for $241,300, the approximate amount originally paid for the stock. As a result of the foregoing, $8,160 of broker fees were refunded to the Company. The foregoing cancellations have been adjusted for the reverse stock split (1:150) that occurred in January 2011.
On August 25, 2008, the Company issued an aggregate of 50,000 shares of its common stock to Darren Breitkreuz and Alan Stier in connection with their resignation as the Company’s board members. The Company valued the common stock based on its stock trading price on the stock issuance date at $0.65 per share for $32,500, which was expensed as share-based compensation.
During October 2010, pursuant to a series of securities purchase agreements, the Company sold 66,000 shares of common stock at a purchase price of $0.30 per share for an aggregate purchase price of $19,800. In lieu of cash payment for the Shares purchased in the Offering to FEQ, DIT and CGIT, Notes payable to FEQ in the amount of $10,000 and DIT in the amount of $6,000 were cancelled and the principal amount outstanding under the Note payable to CGIT was reduced by $3,800 to $9,200. After consummation of this transaction these parties became related parties due to the size of their holdings. The foregoing issuances have been adjusted for the reverse stock split (1:150) that occurred in January 2011.
On August 1, 2007, the Company issued a stock option to one of its directors to purchase 250,000 shares of the Company’s common stock at $1.00 per share. The option vested immediately and expired in three years or three months after the individual terminated his affiliation with the Company’s Board of Directors. The Director resigned from the Company in September, 2008 and the Options expired in November, 2008. The estimated fair value of the aforementioned option was calculated using the Black-Scholes model. Consequently, the Company recorded a share-based compensation expense of $194,400 for the year ended September 30, 2007.
The estimated fair value of the aforementioned option was calculated using the Black-Scholes model. Consequently, the Company recorded a share-based compensation expense of $194,400 for the year ended September 30, 2007.
In connection with the resignation of the board member on August 25, 2008, all then outstanding options expired on November 25, 2008. As a result, the Company had no options outstanding at September 30, 2011 and 2012, respectively. The foregoing stock option activity has been adjusted for the reverse stock split (1:150) that occurred in January 2011.