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SHAREHOLDERS’ EQUITY
 12 Months Ended
Sep. 30, 2022
Equity [Abstract]  
SHAREHOLDERS’ EQUITY

NOTE 14 – SHAREHOLDERS’ EQUITY

 

On July 27, 2020, the Company amended the Company’s Certificate of Incorporation (the “Amended Certificate of Incorporation”) which was duly approved by the Company’s Board of Directors and duly adopted by the Company’s shareholders increasing the number of authorized shares of all classes of stock from 30,000,000 shares to 60,000,000 shares with 50,000,000 designated as Common Stock and 10,000,000 designated as Preferred Stock.

 

Preferred Stock

 

The Company is authorized to issue 10,000,000 shares of Preferred Stock, $0.001 par value. As of September 30, 2022, and September 30, 2021, there were 2,129,122 and 1,935,151 shares issued and 2,065,022 and 1,871,051 shares outstanding, respectively.

 

Series A Preferred stock

 

Each issued and outstanding Series A Preferred Share shall be entitled to the number of votes per share equal to the result of: (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Preferred Shares issued and outstanding at the time of such vote, at each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration, including the election of directors. Holders of Series A Preferred Shares shall vote together with the holders of Common Shares as a single class.

 

The Series A Preferred Stock has no liquidation value or preference.

 

The Series A Preferred Stock has no redemption rights.

 

During the twelve-month period ended September 30, 2021, the Company retired 1,000,000 shares of Series A Preferred Stock surrendered by Aron Govil as part of the settlement agreement. See Item 13 of Part III of this report for more details.

 

As of September 30, 2022, and September 30, 2021, there were no shares of Series A Preferred Stock issued and outstanding.

 

Series C Preferred Stock

 

On October 3, 2019, pursuant to Article IV of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series C Preferred Stock, consisting of up to one hundred thousand (100,000) shares, par value $0.001. Under the Certificate of Designation, holders of Series C Preferred Stock are entitled to the number of votes per share equal to the result of (i) the total number of shares of Common Stock outstanding at the time of such vote multiplied by 10.01, and divided by (ii) the total number of shares of Series C Preferred Stock outstanding at the time of such vote, at each meeting of our shareholders with respect to any and all matters presented to our shareholders for their action or consideration, including the election of directors.

 

The Series C Preferred Stock has no liquidation value or preference.

 

The Series C Preferred Stock has no redemption rights.

 

For the year ended September 30, 2020, 100,000 shares of Series C Preferred Stock were issued to Aron Govil, Executive former Director and CFO of the Company as part of his employment agreement. In order to determine the fair market value of these shares (estimated to be $0.95 per share), the Company used the closing price of its Series 1 preferred stock of $0.95 on October 3, 2019. On July 10, 2020, Aron Govil transferred 50,000 shares of the Series C Preferred Stock to Saagar Govil.

 

 

During the year ended September 30, 2021, the Company retired 50,000 shares of Series C Preferred Stock surrendered by Aron Govil as part of the settlement agreement. See Item 13 of Part III of this report for more details.

 

As of September 30, 2022, and September 30, 2021, there were 50,000 shares of Series C Preferred Stock issued and outstanding.

 

Series 1 Preferred Stock

 

Dividends

 

Holders of the Series 1 Preferred will be entitled to receive cumulative cash dividends at the rate of 10% of the purchase price per year, payable semiannually on the last day of March and September in each year. Dividends may also be paid, at our option, in additional shares of Series 1 Preferred, valued at their liquidation preference. The Series 1 Preferred rank senior to the common stock with respect to dividends. Dividends will be entitled to be paid prior to any dividend to the holders of our common stock.

 

Liquidation Preference

 

The Series 1 Preferred has a liquidation preference of $10 per share, equal to its purchase price. In the event of any liquidation, dissolution or winding up of our company, any amounts remaining available for distribution to stockholders after payment of all liabilities of our company will be distributed first to the holders of Series 1 Preferred, and then pari passu to the holders of the Series A preferred stock and our common stock. The holders of Series 1 Preferred have preference over the holders of our common stock on any liquidation, dissolution or winding up of our company. The holders of Series 1 Preferred also have preference over the holders of our Series A preferred stock.

 

Voting Rights

 

Except as otherwise provided in the certificate of designation, preferences and rights or as required by law, the Series 1 Preferred will vote together with the shares of our common stock (and not as a separate class) at any annual or special meeting of stockholders. Except as required by law, each holder of shares of Series 1 Preferred will be entitled to two votes for each share of Series 1 Preferred held on the record date as though each share of Series 1 Preferred were 2 shares of our common stock. Holders of the Series 1 Preferred will vote as a class on any amendment altering or changing the powers, preferences or special rights of the Series 1 Preferred so as to affect them adversely.

 

No Conversion

 

The Series 1 Preferred will not be convertible into or exchangeable for shares of our common stock or any other security.

 

Rank

 

The Series 1 Preferred will rank with respect to distribution rights upon our liquidation, winding-up or dissolution and dividend rights, as applicable:

 

  ● senior to our Series A preferred stock, common stock and any other class of capital stock we issue in the future unless the terms of that stock provide that it ranks senior to any or all of the Series 1 Preferred;
     
  ● on a parity with any class of capital stock we issue in the future the terms of which provide that it will rank on a parity with any or all of the Series 1 Preferred;
     
  ● junior to each class of capital stock issued in the future the terms of which expressly provide that such capital stock will rank senior to the Series 1 Preferred and the common stock; and
     
  ● junior to all of our existing and future indebtedness.

 

Redemption

 

Shares of Series 1 Preferred may be redeemed, in whole or in part, at the option of the Corporation, by the Corporation by giving notice of such redemption at any time. Notice of redemption may be given either by mailing notice to the holders of record or by public announcement, by press release or otherwise. If notice is given by public announcement, by press release or otherwise, such notice shall be effective as of the date of such announcement, regardless of whether notice is also mailed or otherwise given to holders of record. The redemption price for any shares of Series 1 Preferred to be redeemed (the “Redemption Price”) shall be payable in cash, out of funds legally available therefor, and shall be equal to the Preference Amount, plus any accrued but unpaid dividends. If fewer than all of the outstanding shares of Series 1 Preferred are to be redeemed at any time, the Corporation may choose to redeem shares proportionally from all holders, or may choose the shares to be redeemed by lot or by any other equitable method.

 

 

On March 30, 2020, the Company amended the Certificate of Designation (the “Amended Certificate of Designation”) for our Series 1 Preferred Stock (the “Series 1 Stock”). The Amended Certificate of Designation increased the number of authorized preferred shares under the designation for our Series 1 Preferred Stock from 3,000,000 shares to 4,000,000 shares.

 

During the year ended September 30, 2022 and 2021, 193,971 and 198,316 shares of Series 1 Preferred Stock were issued to pay dividends to holders of Series 1 Preferred Stock. respectively.

 

During the year ended September 30, 2021, the Company retired 469,949 shares of Series 1 Preferred Stock surrendered by Aron Govil as part of the settlement agreement. See Item 13 of Part III of this report for more details.

 

As of September 30, 2022, and September 30, 2021, there were 2,079,122 and 1,885,151 shares of Series 1 Preferred Stock issued and 2,015,022 and 1,821,051 shares outstanding, respectively. The Company currently holds 64,100 shares of Series 1 Stock in Treasury stock.

 

Common Stock

 

The Company is authorized to issue 50,000,000 shares of common stock, $0.001 par value. As of September 30, 2022, there were 26,413,296 shares issued and outstanding and at September 30, 2021, there were 20,782,194 shares issued and outstanding.

 

During the fiscal year ended September 30, 2022, we issued 5,481,102 shares of common stock to satisfy $4,688,524 of notes payable and accumulated interest.

 

During the fiscal year ended September 30, 2021, we issued 3,159,655 shares of common stock to satisfy $5,025,651 of notes payable and accumulated interest.

 

During fiscal year 2022, the Company issued 150,000 shares in exchange for $50,000 worth of services.

 

Series 1 Warrants

 

On January 31, 2022, warrants to purchase 433,965 shares of our common stock (issuable upon the exercise of our publicly traded Series 1 warrants), at an exercise price of $50.48 per share expired.

 

During the years ended September 30, 2022, and 2021, no outstanding Series 1 Warrants were exercised.