Note 9 – Stockholders’ Equity

Preferred stock

The Company is authorized to issue 20,000,000 shares of $0.001 par value preferred stock as of August 31, 2018 and 2017.  The Company has 1,000 shares of Series A preferred stock issued and outstanding as of August 31, 2018 and 2017.

Series B preferred stock

On May 30, 2018, the Company issued 803,969.73 shares of its Series B preferred stock in connection with the conversion of principal and accrued interest in the amounts of $764,195 and $31,735, respectively, payable under convertible notes payable.
Each share of Series B has a stated value of $0.99 and is convertible into shares of our common stock at a conversion price of $0.03 per share (subject to adjustments for stock splits, stock dividends, stock combinations, recapitalizations and similar events). The Series B offers the Holder price protection from future issuances of securities by the Company at a price below the conversion price then in effect and is redeemable upon the occurrence of certain triggering events. The Series B preferred stock accrues dividends at the rate of 10% per annum on the stated value. During the year ended August 31, 2018, the Company accrued dividends payable in the amount of $20,280 in connection with the Series B preferred stock. At August 31, 2018 and 2017, the Company had outstanding 803,969.73 and 0 shares, respectively, of its Series B preferred stock.

Common stock

The Company is authorized to issue 580,000,000 shares of $0.001 par value common stock as of August 31, 2018 and 2017.  The Company has 79,683,842 and 78,226,969 shares of common stock issued and outstanding as of August 31, 2018 and 2017.

Year Ended August 31, 2017:

On January 4, 2017, the Company issued 35,000 shares of common stock, valued at $68,950 as commitment shares to convertible note holders.  These shares were issued at fair value based on the market price at issuance of $1.80 per share.

On May 2, 2017, the Company issued 208,333 shares of common stock, for the conversion of $15,000 of principal and $10,000 of accrued interest of convertible notes payable.

On June 2, 2017, the Company issued 208,333 shares of common stock, for the conversion of $25,000 of principal of convertible notes payable.

Year Ended August 31, 2018:

On September 28, 2017, the Company issued 208,333 shares of common stock, for the conversion of $16,347 of principal and $8,653 of accrued interest of convertible notes payable.

On November 15, 2017, the Company issued 250,000 shares of common stock, for the conversion of $17,518 of principal and $12,482 of accrued interest of convertible notes payable. 

On January 29, 2018, the Company issued 998,540 shares of common stock, for the conversion of $28,148 of principal and $1,808 of accrued interest of convertible notes payable. 

Warrants

The following table summarizes the significant terms of warrants outstanding at August 31, 2018:

Transactions involving warrants are summarized as follows:

During the year ended August 31, 2018, the Company issued an aggregate of 2,054,405 five-year warrants at an exercise price of $0.01 in connection with convertible debt. The Company also issued 25,000,000 five-year warrants at an exercise price of $0.01 in connection with discontinued operations; of these, 15,000,000 were cancelled pursuant to the restructuring of discontinued operations; see note 3.

At August 31, 2018, outstanding warrants had an intrinsic value of $2,350,609. Intrinsic value is the difference between the exercise price of the warrants and the market price of the Company’s stock, which was $0.205 at August 31, 2018.