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Note 13 - Shareholders' Equity
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May 31, 2012
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| Stockholders' Equity Note Disclosure [Text Block] |
13. SHAREHOLDERS’
EQUITY
Terms
of Series A Preferred Stock (“Preferred
Stock”)
The
Preferred Stock is convertible at $.30 per share into $.001
par value Common Stock of Company, (equaling 60% of the
issued and outstanding Common Stock of the Company on a
fully diluted basis, excluding the Management Stock Option
(see below)). Initially, dividends were to be
paid (a) at an annual rate of 12% in each of the first
three years ending August 14, 2008, 2009, and 2010 and were
to be paid in preferred shares and (b) after the first
three years, at a rate of 12% if paid in cash or at a rate
of 15% if paid in preferred shares, at the election of the
Company. In February 2010, the preferred
shareholders voted to terminate the issuance of dividends
effective November 30, 2009. The preferred share
dividends shall convert into Common Stock at $.30 per
share.
So
long as over $1,500,000 of the Preferred Stock is issued
and outstanding the Company shall require the prior written
consent of Holders representing 2/3 of the Preferred Stock
issued and outstanding to (a) sell, merge with, acquire or
consolidate with another business entity, (b) incur
additional leverage beyond the leverage contemplated by the
Company and Holders as part of the Company’s
acquisition of Artisanal Cheese, LLC, or (c) issue any new
shares of common stock or securities convertible or
exercisable into Common Stock in excess of 2% of the shares
of Common Stock issued and outstanding on a fully diluted
basis at the Closing, excluding the Management Stock Option
below.
In
the event of a liquidation, the Preferred Stockholders
shall receive a cash payment of $1.20 per preferred
share.
Preferred
Stock Issuances
During
the quarter ended August 31, 2011, several private
investors made equity investments totaling $430,250 for
which these investors received 430,250 shares of
our preferred stock.
During
the quarter ended August 31, 2011, we issued a
secured lender 277,544 shares of our preferred
stock in lieu of a cash payment of interest owed on his
loan totaling $277,544.
In
August 2011, Artisanal issued 50,000 shares of preferred
stock to a lender in connection with a loan to us of
$200,000.
During
the quarter ended November 30, 2011, one private investor
made an investment of $370,000 for which he received
370,000 shares of our preferred stock.
As
of May 31, 2012, the total number of preferred shares
outstanding is 6,514,154.
Common
Stock Issuances
In
March 2011, a preferred shareholder converted 13,500 shares
of preferred stock at the conversion price of $.30 per
share into 45,000 shares of common stock.
In
July 2010, the Company issued 50,000 shares of common stock
to each of seven directors for a total of 350,000 shares
for their agreement to serve as board
members. The company recorded an expense of
$24,200 in connection with these shares over a one year
amortization period.
In
October, 2010, the Company issued a total of 65,000 shares
of common stock to two employees. The company has record an
expense of $38,786 in connection with these shares over a
one year amortization period.
In
December 2010, 25,000 shares of common stock previously
issued to an employee were cancelled.
In
March 2011, a preferred shareholder converted 13,500 shares
of preferred stock at the conversion rate of $.30 per share
for which the shareholder received 45,000 shares of common
stock.
In
September 2011, two preferred shareholders converted a
total of 263,300 shares of preferred stock at the
conversion rate of $.30 per share for which they received a
total of 877,666 shares of common stock.
In
October 2011, we issued a total of 155,000 shares of common
stock to three employees. We recorded an expense
of $75,950 in connection with these shares over a one year
amortization period.
In
February 2012, a preferred shareholder converted a total of
756,000 shares of preferred stock at the conversion rate of
$.30 per share for which he received a total of 2,520,000
shares of common stock.
In
the quarter ended May 31, 2012, Artisanal issued 341,000
shares of common stock to lenders in connection with loans
totaling $682,000.
As
of May 31, 2012, the total number of common shares
outstanding is 28,093,982.
Stock
Option
On
or about February 11, 2011, Artisanal entered a marketing
and distribution agreement with KeHE Distributors pursuant
to which we were obligated to issue up to 4,880,000 stock
options in specified tranches subject to KeHE achieving
certain purchase thresholds. During May 2011, we
amended the vesting terms of these options, whereby 440,000
of the options were immediately vested and the remainder
vested after our fiscal year end. The respective stock
options have an exercise period of three years from the
date of issuance and an exercise price of $.30 per
share.
In
September 2011, we issued a total of 550,000 stock options
to five board members to replace those options which
expired earlier in the year. The stock options
have an exercise period of three years from the date of
issuance and an exercise price of $.30 per
share. We have recorded an expense of $20,420 in
connection with these options.
A
summary of the activity of stock options for the years
ended May 31, 2012 and 2011 is as follows:
The
intrinsic value of the Company’s options outstanding
during the years ended May 31, 2012 and 2011 was $0 and $0,
respectively.
Information,
at date of issuance, regarding stock option grants for the
year ended May 31, 2012:
The
following table summarizes information about stock options
outstanding and exercisable at May 31, 2012:
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