STOCKHOLDERS' DEFICIT | 3 Months Ended |
Sep. 30, 2014 |
Stockholders' Equity Note [Abstract] | ' |
STOCKHOLDERS' DEFICIT | ' |
NOTE 15 – STOCKHOLDERS’ DEFICIT |
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The Company has issued and outstanding Series N warrants for 25,725,733,990 common shares, as adjusted, with a current exercise price of $0.00006, as adjusted, which have price protection provisions that allow for the reduction in the current exercise price upon the occurrence of certain events, including the Company’s issuance of common stock or securities convertible into or exercisable for common stock, such as options and warrants, at a price per share less than the exercise price then in effect. Simultaneously with any reduction to the exercise price of the Series N warrants, the number of shares of common stock that may be purchased upon exercise of each of these warrants shall be increased proportionately, so that after such adjustment the aggregate exercise price payable for the adjusted number of warrants shall be the same as the aggregate exercise price in effect immediately prior to such adjustment. |
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The Company’s issuance of the following securities will not trigger the price protection provisions of the warrants described above: (a) shares of common stock or standard options to the Company’s directors, officers, employees or consultants pursuant to a board-approved equity compensation program or other contract or arrangement; (b) shares of common stock issued upon the conversion or exercise of any security, right or other instrument convertible or exchangeable into common stock (or securities exchangeable into common stock) issued prior to November 23, 2011; and (c) shares of common stock and warrants in connection with strategic alliances, acquisitions, mergers, and strategic partnerships, the primary purpose of which is not to raise capital, and which are approved in good faith by the Company’s board of directors. |
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The Company has issued and outstanding Series O and Series Q warrants for 30,488,720 common shares, as adjusted, with a current exercise price of $0.028, expiring November 23, 2016. |
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In conjunction with our acquisition of Computers & Telecom, Inc. and subsidiary in October, 2013, we issued a warrant to Agility Ventures, LLC covering a total of 3,675,000 shares with a term of two years and a conversion price of $0.055 per share. |
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Preferred Stock |
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Our authorized capital includes 10,000,000 shares of blank check preferred stock, par value $0.001 per share. Our Board of Directors, without further stockholder approval, may issue our preferred stock in one or more series from time to time and fix or alter the designations, relative rights, priorities, preferences, qualifications, limitations and restrictions of the shares of each series. In March 2005, our Board of Directors authorized a series of 1,666,667 shares of blank check preferred stock be designated as Series A Convertible Preferred Stock and on April 1, 2005 we filed a Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock with the Secretary of State of Delaware. In September 2005, our Board of Directors authorized a series of 833,334 shares of blank check preferred stock be designated as Series B Convertible Preferred Stock and on September 28, 2005, we filed a Certificate of Designations of Preferences, Rights and Limitations of Series B Preferred with the Secretary of State of Delaware. On December 29, 2005, we filed an Amended and Restated Certificate of Designations of Preferences, Rights and Limitations of Series B Convertible Preferred Stock increasing the number of shares authorized under this series to 1,833,334 shares. |
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A) Series B Convertible Preferred Stock |
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The designations, rights and preferences of the Series B Convertible Preferred Stock provide: |
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● | No dividends are payable on the Series B Convertible Preferred Stock. So long as these shares are outstanding, we cannot pay dividends on our common stock nor can it redeem any shares of its common stock, the shares of Series B Convertible Preferred Stock do not have any voting rights, except as may be provided under Delaware law, | | | | | | | | | | | | | | |
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● | So long as the shares are outstanding, we cannot change the designations of the Series B Convertible Preferred Stock, create a class of securities that in the instance of payment of dividends or distribution of assets upon our liquidation ranks senior to or pari passu with the Series B Convertible Preferred Stock or increase the number of authorized shares of Series B Convertible Preferred Stock, | | | | | | | | | | | | | | |
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● | Each share of Series B Convertible Preferred Stock is convertible at the option of the holder into one share of our common stock based upon an initial conversion value of $0.2727 per share. The conversion ratio is subject to adjustment in the event of stock dividends, stock splits or reclassification of our common stock. No conversion of the Series B Convertible Preferred Stock may occur if a conversion would result in the holder, and any of its affiliates beneficially owning more than 4.9% of our outstanding common shares following such conversion. This provision may be waived or amended only with the consent of the holders of all of the Series B Convertible Preferred Stock and the consent of the holders of a majority of our outstanding shares of common stock who are not affiliates, and | | | | | | | | | | | | | | |
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● | the shares of Series B Convertible Preferred Stock automatically convert into shares of our common stock in the event of change of control of the Company. | | | | | | | | | | | | | | |
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● | At September 30, 2014, there were 626,667 shares of Series B Convertible Preferred Stock outstanding. | | | | | | | | | | | | | | |
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B) Series AA Preferred Stock |
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On April 23, 2014, the Company authorized the creation of the Corporation’s Series AA Preferred Stock pursuant to the terms and conditions of that certain Certificate of Designations, Preferences and Rights and Limitations of Series AA Preferred Stock (the “Certificate of Designations”). The Corporation is authorized to issue 10,000,000 shares of preferred stock, of which 626,667 shares of Series B Convertible Preferred Stock have been previously issued and remain outstanding. Out of the remaining 9,373,333 authorized but unissued shares of preferred stock, the Certificate of Designations creates four hundred thousand (400,000) shares of Series AA Preferred Stock, $0.001 par value per share (the “Series AA Preferred Stock”), with the following powers and rights: |
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● | the holders of the Series AA Preferred Stock have five thousand (5,000) times that number of votes on all matters submitted to the shareholders of the Corporation that is equal to the number of shares of Common Stock of the Corporation, | | | | | | | | | | | | | | |
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● | the holders of the Series AA Preferred Stock shall vote together with the holders of Common Stock as a single class upon all matters submitted to the holders of Common Stock of the Corporation, | | | | | | | | | | | | | | |
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● | the holders of the Series AA Preferred Stock are not entitled to receive dividends paid on the Common Stock of the Corporation, | | | | | | | | | | | | | | |
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● | the holders of the Series AA Preferred Stock are not entitled to receive any preference over the holders of Common Stock of the Corporation following a liquidation, dissolution and winding up of the Corporation, and | | | | | | | | | | | | | | |
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● | on or after May 15, 2014, to the extent sufficient shares of Common Stock are authorized, the Series AA Preferred Stock is convertible into the shares of the Corporation’s fully diluted Common Stock, taking into account the exercise of all warrants, options or any other rights of issuance, of such number sufficient to provide the holders thereof, in the aggregate, ninety percent (90%) of all shares of Common Stock of the Corporation on a fully diluted basis. | | | | | | | | | | | | | | |
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● | At September 30, 2014, there were 400,000 shares of Series AA Preferred Stock outstanding. | | | | | | | | | | | | | | |
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Common Stock |
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On July 1, 2014, the Company obtained written consent from UnifiedOnline! LLC approving an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from One Billion (1,000,000,000) shares of Common Stock, par value $0.001 per share, to Five Billion (5,000,000,000) authorized shares of Common Stock, par value $0.001 per share; and to retain the class of its authorized stock known as Preferred Stock, comprised of Ten Million (10,000,000) shares, par value $0.001 per share. Series of the Preferred Stock may be created and issued from time to time, with such designations, preferences, conversion rights, cumulative, relative, participating, optional or other rights, including voting rights, qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions providing for the creation and issuance of such series of Preferred Stock as adopted by the Board of Directors. The Preferred Stock continues to maintain the same designations, preferences, conversion and other rights that existed prior to the amendment to the Certificate of Incorporation. |
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UnifiedOnline! LLC is the Company shareholder holding sufficient votes to approve this amendment. The amendment was previously approved by the Company’s Board of Directors, subject to shareholder approval. |
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On July 1, 2014, the Company filed a Certificate of Amendment of Certificate of Incorporation with the State of Delaware Secretary of State Division of Corporations to reflect the foregoing increase in authorized shares of Common Stock (the “Increase in Authorized”). The Increase in Authorized has an effective date with the State of Delaware Secretary of State Division of Corporations of July 1, 2014, the date the Certificate of Amendment of Certificate of Incorporation was filed. |
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Following the Certificate of Amendment of Certificate of Incorporation, the total number of shares of all classes of capital stock which the Company shall have the authority to issue is Five Billion Ten Million (5,010,000,000) shares of which Five Billion (5,000,000,000) shares shall be Common Stock, par value $0.001 per share and Ten Million (10,000,000) shares shall be Preferred Stock, par value $0.001 per share. Prior to the Certificate of Amendment of Certificate of Incorporation, the total number of shares of all classes of capital stock which the Company had the authority to issue was One Billion Ten Million (1,010,000,000) shares of which One Billion (1,000,000,000) shares were Common Stock, par value $0.001 per share, and Ten Million (10,000,000) shares were Preferred Stock, par value $0.001 per share. |
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Three months ended September 30, 2014 Transactions |
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In July, 2014, the Company issued 97,500,000 shares of common stock, at the original conversion terms, at a per share price ranging from $0.0006 to $0.00024 valued at $35,250 as a partial conversion of principal and interest due under a convertible note. |
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In July, 2014, the Company issued 52,958,333 shares of common stock, at the original conversion terms, at a per share price of $0.00024 valued at $12,710 as a partial conversion of principal and interest due under a convertible note. |
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In July, 2014, the Company issued 142,872,361 shares of common stock, at the original conversion terms, at a per share price ranging from $0.00048 to $0.00024 valued at $48,400 as a partial conversion of principal and interest due under a convertible note. |
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In August, 2014, the Company issued 47,845,667 shares of common stock, at the original conversion terms, at a per share price of $0.00018 valued at $8,612, in full satisfaction of $62,222 of principal and interest due under a convertible note. |
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In August, 2014, the Company issued 347,130,555 shares of common stock, at the original conversion terms, at a per share price ranging from $0.00018 to $0.00010 valued at $42,410 in full satisfaction of principal and interest due under a convertible note. |
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In August, 2014, the Company issued 376,802,778 shares of common stock, at the original conversion terms, at a per share price ranging from $0.00018 to $0.00006 valued at $38,714 as a partial conversion of principal and interest due under a convertible note. |
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In September, 2014, the Company issued 530,895,833 shares of common stock, at the original conversion terms, at a per share price ranging from $0.00008 to $0.00006 valued at $33,360 as a partial conversion of principal and interest due under a convertible note. |
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In September, 2014, the Company issued 377,184,334 shares of common stock, at the original conversion terms, at a per share price of $0.00006 valued at $22,631 in full satisfaction of principal and interest due under a convertible note. |
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In September, 2014, the Company issued 659,883,333 shares of common stock, at the original conversion terms, at a per share price of $0.00006 valued at $39,593 as a partial conversion of principal and interest due under a convertible note. |
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Common Stock Warrants |
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A summary of the status of the Company’s outstanding common stock warrants as of September 30, 2014 and changes during the three month period ending on that date is as follows: |
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| | Number of | | | Weighted Average | | | | | | | | |
| | Warrants | | | Exercise Price | | | | | | | | |
Balance at June 30, 2014 | | | 2,387,668,364 | | | $ | 0.028 | | | | | | | | |
Granted (due to ratchet provisions) | | | 23,387,030,900 | | | | 0.00006 | | | | | | | | |
Exercised | | | - | | | | - | | | | | | | | |
Forfeited | | | - | | | | - | | | | | | | | |
Balance at September 30, 2014 | | | 25,774,699,264 | | | $ | 0.00019 | | | | | | | | |
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The ratchet provision was triggered by the conversion of convertible debt. |
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The following table summarizes information about common stock warrants outstanding at September 30, 2014: |
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Warrants Outstanding | | | Warrants Exercisable | |
Number Outstanding at | | Weighted Average | | Weighted Average | | | Number Exercisable at | | | Weighted Average | |
30-Sep-14 | | Remaining Life | | Exercise Price | | | 30-Sep-14 | | | Exercise Price | |
| 25,725,733,990 | | 2.00 Years | | $ | 0.00006 | | | | 25,725,733,990 | | | $ | 0.00066 | |
| 30,488,720 | | 2.15 Years | | | 0.028 | | | | 30,488,720 | | | | 0.028 | |
| 14,801,554 | | 2.75 Years | | | 0.15 | | | | 14,801,554 | | | | 0.15 | |
| 3,675,000 | | 1.00 Year | | | 0.055 | | | | 3,675,000 | | | | 0.055 | |
| 25,774,699,264 | | 2.25 Years | | $ | 0.00019 | | | | 25,774,699,264 | | | $ | 0.00019 | |