Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

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Stockholders' Equity
12 Months Ended
Jun. 30, 2017
Stockholders' Equity Note [Abstract]  
Stockholders' Equity
8. Stockholders’ Equity

 

Common stock

  

During the period from September to November 2015, the Company issued 10,500,000 common shares for a total cash consideration of $420,000 and 5,250,000 warrants to purchase up to an additional 2,625,000 common shares at $0.06 per share through a private placement of securities.

 

During the period from September to November 2015, the Company issued 9,500,000 common shares for a total fair value of $485,000 to settle $380,000 liabilities, and recognized a loss of $105,000. In addition, the Company also issued 4,750,000 warrants to purchase up to an additional 2,375,000 common shares at $0.06 per share.

 

In March 2017, the Company issued 5,600,000 common shares to its officer to settle accrued salary for $112,000.

 

In June 2016, the Company issued 105,611 common shares upon the conversion of 105,611 shares of Series C preferred stock.

 

During the year ended June 30, 2017, the Company issued 18,175,000 and obligated to issue an additional 7,475,000 common shares and 12,825,000 warrants for cash of $513,000 through a private placement of securities. The warrants are exercisable at a price of $0.001 per share and have a 2 year life. In connection with the private placement the Company issued 1,700,000 common shares and 850,000 warrants with a 2 year life, exercise price of $.06 for investment banking fees. In connection with an escrow agreement the Company is obligated to issue an additional 7,475,000 shares of common stock to 2 investors. In connection with the filing compliance default, the Company issued an additional 882,657 warrants and adjusted the exercise price to $0.001.

 

During the year ended June 30, 2017, the Company issued 2,500,000 common shares for services valued at $50,000.

 

Preferred Stock

 

The Company is authorized to issue 50,000,000 shares of Preferred Stock.

 

Series A Preferred Stock

 

The Company is authorized to issue 8,000,000 shares of Series A Preferred Stock. There are 8,000,000 shares of Series A Preferred Stock outstanding. No Series A Preferred Stock was issued for the years ended June 30, 2017 and 2016, respectively.

 

The Series A convertible preferred stock are convertible into common shares at a ratio of 100 to 1 and have no voting rights.

 

Series B Preferred Stock

 

The Company is authorized to issue 3,329,530 shares of Series B Preferred Stock. There are 749,740 shares of Series B Preferred Stock outstanding. No Series B Preferred Stock was issued for the years ended June 30, 2017 and 2016, respectively.

 

Series B Preferred Stock is convertible into common stock at a ratio of 1 to 1. Each share of Series B Preferred Stock will participate in dividends and other distributions on an equivalent basis with common stock. Holders of Series B Preferred Stock shall vote together with the holders of common stock as a single class, and each holder of outstanding shares of Series B Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of common stock into which the shares of Series B Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on a particular matter.

 

Series C Preferred Stock

 

The Company is authorized to issue 8,000,000 shares of Series C Preferred Stock. There are 3,874,560 shares of Series C Preferred Stock outstanding.

 

Each share of Series C Preferred Stock will be entitled to a liquidation preference equal to $0.001 per share. Otherwise, the Series C Preferred Stock will be equivalent in all respects to the Common Stock, with each share of Series C Preferred stock entitled to one vote and the holders of the Series C Preferred Stock voting together with the holders of the Common Stock. The Series C Preferred Stock is convertible into common stock at a ratio of 1 to 1.

 

During the year ended June 30, 2016, the Company issued 105,611 common shares upon the conversion of 105,611 shares of Series C Preferred Stock.

 

During the year ended June 30, 2017, the Company issued 52,806 common shares for the conversion of 52,806 Series C Preferred Stock.

 

Series D Preferred Stock

 

The Company is authorized to issue 20,000 shares of Series D Preferred Stock. There are 20,000 shares of Series D Preferred Stock outstanding.

 

In September 2014, the Company issued 20,000 shares of Series D convertible preferred stock (the “Series D Preferred Stock”), to officers and Directors for compensation valued at $40,000. The Series D Preferred Stock will be equivalent in all respects to the Company’s common stock, except that each share of Series D Preferred Stock will be entitled to cast 1,000 votes per share and contain liquidation preference. Series D Convertible Preferred Stock is convertible into common stock at a ratio of 1 to 1.

 

Series E Preferred Stock

 

The Company is authorized to issue 85,000 shares of Series E Preferred Stock. There are 85,000 shares of Series E Preferred Stock outstanding.

 

In March 2017, the Company issued 85,000 Series E shares with 1,000 to 1 voting rights pursuant to the November 2016 private placement of securities for $85 to Mr. Meadow. The Series E Preferred Stock shall automatically, and without any further action on the part of the holder, convert into one share of common stock, upon a “change in control” of the Company. Mr. Meadow will continue for the foreseeable future to have the ability to exert total influence over the outcome of all matters, including, director appointments, tender offers, mergers, proxy contests and equity transactions.

 

Non-controlling Interest

 

During the year ended June 30, 2017, LocatorX, Inc. issued 1,195,000 and 63,000 shares of its Series B and C preferred stock for $572,500. The issuance of the subsidiary shares resulted in an adjustment to non-controlling interest of $226,842.

 

During the year ended June 30, 2016, LocatorX, Inc. issued 240,962 shares of its Series B preferred stock for $481,924. The issuance of the subsidiary shares resulted in an adjustment to non-controlling interest of $70,095.

 

Filing Compliance Default

 

In connection with a private placement completed on November 26, 2016, the Company agreed to file its required financial reports in a timely manner pursuant to the requirements of the Securities Exchange Act of 1934 (“Exchange Act”). Not meeting the filing requirements of the Exchange Act constitutes a Filing Compliance Default under the terms of the private placement and triggers certain liquidated damages payments from the Company to the investors in the private placement. The liquidated damages payment is function of the overall investment of the investors; two percent (2%) of the aggregate of the subscription amount ($549,000) and the amount of the warrants purchased ($688,500) paid monthly (such payments being Public Information Failure Payments). To the extent the Company does not pay the monthly Public Information Failure Payments in a timely manner, such amounts shall accrue interest at 1.5% per month (18% per annum).

 

The Company was in default of its Exchange Act filing requirement as of March 17, 2017 and remained in such a status as of June 30, 2017. As of June 30, 2107, the Company had accrued $93,866 in Public Information Failure Payment obligations in its accrued expenses. The Company issued an additional 882,657 warrants and adjusted the exercise price to $0.001. Since June 30, 2017, and as of March 17, 2018, the Company has not met the filing requirements specified by the terms of the private placement and has in turn accrued $325,202 in Public Information Failure obligations in its accrued expenses.