Note 9 - Stockholders' Equity | 9 Months Ended |
Feb. 28, 2014 |
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Note 9 - Stockholders' Equity | ' |
NOTE 9 – STOCKHOLDERS’ EQUITY |
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The Company is authorized to issue 600,000,000 shares of Common Stock, 5,000,000 shares of “blank check” Preferred Stock, 2,000,000 shares of Series ‘A’ Preferred Stock, 600,000 shares of Series ‘B’ Super Voting Preferred Stock and 2,000,000 shares of Series ‘C’ Preferred Stock, each with a par value of $0.001 per share. |
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On September 6, 2013, the Company approved the filing of a Certificate of Amendment to the Company’s Articles of Incorporation, Article IV (the “Certificate”) (a) to authorize 600,000,000 shares of $0.001 par value per share common stock and (b) to re-authorize 5,000,000 shares of “blank check” preferred stock, $0.001 par value per share of Preferred Stock. |
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On November 7, 2013, the Company approved the filing of a Certificate of Amendment to the Articles of Incorporation, setting forth the Designation of Rights & Preferences for three (3) series of Preferred Stock, namely; 2,000,000, Series ‘A’ Preferred Stock, 600,000 Series ‘B’ Super Voting Preferred Stock and 2,000,000 Series ‘C’ Preferred Stock, pursuant to Nevada (NRS) 78.385 & 78.390 – After Issuance of Stock and further pursuant to NR 78.1955. |
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The designations, rights and preferences of the 2,000,000 shares of Series A Preferred Stock include: |
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• each share is entitled to the number of votes as shall equal the number of shares of our common stock into which it is then convertible, and the holders of the Series A Preferred Stock will vote together with the holders of our common stock as a single class on all matters submitted to a vote of our stockholders, except as required by law or as otherwise provided, |
• the shares are convertible at our option at any time, or by the option of the holder at any time within the first 12 months of issuance, into shares of our common stock at a conversion ratio determined by (i) multiplying the number of shares of Series A Preferred Stock to be converted by $2.50 plus any declared but unpaid dividends, and (ii) dividing the result thereof by the conversion price of $2.50, and the multiplying this amount by two, subject to proportional adjustment in the event of stock splits, stock dividends or similar corporate events, |
• cumulative dividends accrue on each share of Series A Preferred Stock at the rate of 10% per annum payable twice per calendar year, if and when declared by our Board of Directors. Any declared dividends are payable in cash, shares of our common stock, additional shares of Series A Preferred Stock, or any combination thereof in our discretion, |
• each share has a liquidation preference of $2.50 per share, subject to proportional adjustment in the event of stock splits, stock dividends or similar corporate events, plus any accrued but unpaid dividends, |
• so long as any shares of Series A Preferred Stock are outstanding, the consent of the holders of at least 51% of the shares is necessary to create any series of preferred stock which is not junior to the Series A Preferred Stock, |
• at any time upon 10 days notice, and providing that we receive the consent of the holders of at least 51% of the then outstanding shares of Series A Preferred Stock, we are entitled to redeem the shares for a redemption price of (i) $2.50 per share plus declared but unpaid dividends, payable in cash, and (ii) two shares of our common stock, and |
• at any time that we (i) complete a “qualified financing,” or (ii) a “qualified registration statement” has occurred, the holders of the Series A Preferred Stock have the right to put the shares back to us and we are obligated to pay them an amount, in cash, equal to 125% of the stated value of the Series A Preferred Stock. For the purposes of the designations, “qualified financing” means gross proceeds received by us from the issuance of equity, debt or equity-linked securities of at least $10 million, and “qualified registration statement” means any registration statement undertaken by us of any equity or equity-linked securities. |
The designations, rights and preferences of the 600,000 shares of Series ‘B’ Super Voting Preferred Stock include: |
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• the holders have 1,000 times the number of votes on all matters submitted to a vote of our stockholders that each stockholder of our common stock is entitled to on any matter submitted to a vote of our stockholders. The Series B Super Voting Preferred Stock and common stock vote together as a single class, |
• the shares of Series B Super Voting Preferred Stock are not convertible into any other security, |
• the shares pay an annual dividend of 3% of the original issuance price of $0.001 per share if and when declared by the Board of Directors. If, in any 12 month period, the Board declared dividends on our common stock which would exceed the declared dividends on the Series B Super Voting Preferred Stock in such period determined on a common share equivalent basis, the Board is obligated to declare and pay additional dividends on the Series B Super Voting Preferred Stock so that the total dividends on are parity determined on a common stock equivalent basis, and |
• subject to any preferential liquidation rights, upon the liquidation or winding up of our company, the holders of Series B Super Voting Preferred Stock are entitled to a distribution in an amount equal to the amount available for distribution to our common stockholders. |
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The designations, rights and preferences of the 2,000,000 shares of Series ‘C’ Preferred Stock include: |
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• each share is entitled to the number of votes as shall equal the number of shares of our common stock into which it is then convertible, and the holders of the Series C Preferred Stock will vote together with the holders of our common stock as a single class on all matters submitted to a vote of our stockholders, except as required by law or as otherwise provided, |
• each share is convertible at the option of the holder into two shares of our common stock; provided, however, that such shares may be converted into shares of our common stock with our permission, but restricted for a period of (i) six months after purchase if we file public reports pursuant to Section 12 or 15 of the Securities Exchange Act of 1934, or (ii) 12 months if we do not file such public reports, |
• cumulative dividends accrue on each share of Series C Preferred Stock at the rate of 10% per annum, if and when declared by our Board of Directors. Any declared dividends are payable in cash, shares of our common stock, additional shares of Series C Preferred Stock, or any combination thereof in our discretion, |
• each share has a liquidation preference of $5.00 per share, subject to proportional adjustment in the event of stock splits, stock dividends or similar corporate events, plus any accrued but unpaid dividends, |
• with the consent of the holders of at least 51% of the then outstanding shares of Series C Preferred Stock, the company may call for and or convert the shares into shares of our common stock , |
• at any time upon 10 days notice, and providing that we receive the consent of the holders of at least 51% of the then outstanding shares of Series C Preferred Stock, we are entitled to redeem the shares for a redemption price |
of (i) $5.00 per share plus declared but unpaid dividends, payable in cash, and (ii) one share of our common stock, and |
• at any time that we (i) complete a “qualified financing,” or (ii) a “qualified registration statement” has occurred, the holders of the Series C Preferred Stock have the right to put the shares back to us and we are obligated to pay them an amount, in cash, equal to 125% of the stated value of the Series C Preferred Stock. For the purposes of the designations, “qualified financing” means gross proceeds received by us from the issuance of equity, debt or equity-linked securities of at least $20 million, and “qualified registration statement” means any registration statement undertaken by us of any equity or equity-linked securities. |
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On November 11, 2013 the Board of Directors and a majority in interest of the Shareholders approved the issuance of 600,000 Series B Super Voting Preferred Shares, issued on the same date, par value $0.001, to redeem a Promissory Note in the amount of $56,000 bearing 6% interest, that would have matured on December 31, 2013, payable to majority shareholder, HSC Holdings, LLC. Such Promissory Note was issued in conjunction with the change of control on July 30, 2013. The redemption of such Promissory Note and the Issuance of the Preferred Shares is reflected on the Financial Statements of the Company attached herein and by reference. |
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At February 28, 2014, there were 67,815,000 shares of Common Stock and 600,000 shares Series B Super Voting Preferred Stock issued and outstanding. |