NOTE 7 – STOCKHOLDERS’ DEFICIT

On November 17, 2020, the Company effected a one-for-one thousand (1:1,000) reverse stock split of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”). Proportional adjustments for the Reverse Stock Split were made to the Company’s outstanding stock options, warrants and equity incentive plans. All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the unaudited condensed consolidated financial statements to reflect the Reverse Stock Split.

Preferred Stock

The total number of shares of preferred stock that the Company is authorized to issue is 1,500,005, $0.01 par value per share. These preferred shares have no rights to dividends, profit sharing or liquidation preferences.

Of the total preferred shares authorized, 500,000 have been designated as Series A Preferred Stock (“Series A Preferred Stock”), pursuant to the Certificate of Designation filed with the Secretary of State of the State of Delaware on December 9, 2014. James Nathanielsz, the Company’s Chief Executive Officer and Chief Financial Officer, beneficially owns all of the outstanding shares of Series A Preferred Stock via North Horizon Pty Ltd., which entitles him, as a holder of Series A Preferred Stock, to vote on all matters submitted or required to be submitted to a vote of the Company’s stockholders, except election and removal of directors, and each share of Series A Preferred Stock entitles him to two votes per share of Series A Preferred Stock. North Horizon Pty Ltd. is a Nathanielsz Family Trust. Mr. James Nathanielsz, the Chief Executive Officer, Chief Financial Officer and a director of our Company, has voting and investment power over these shares. 500,000 shares of Series A Preferred Stock are issued and outstanding as of March 31, 2021 and June 30, 2020.

Of the total preferred shares authorized, pursuant to the Certificate of Designation filed with the Secretary of State of the State of Delaware on June 16, 2015, up to five shares have been designated as Series B Preferred Stock (“Series B Preferred Stock”). Each holder of outstanding shares of Series B Preferred Stock is entitled to voting power equivalent to the number of votes equal to the total number of shares of common stock outstanding as of the record date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company and entitled to vote on all matters submitted or required to be submitted to a vote of the stockholders of the Company. One share of Series B Preferred Stock is issued and outstanding as of March 31, 2021 and June 30, 2020. Mr. Nathanielsz directly beneficially owns such one share of Series B Preferred Stock.

No additional shares of Series A Preferred Stock or Series B Preferred Stock were issued during the nine months ended March 31, 2021 and in the fiscal year 2020.

Common Stock:

Shares issued for conversion of convertible debt

From July 1, 2020 through March 31, 2021, the Company issued an aggregate of 3,461,961 shares of its common stock and 130,039 common stock issuable at an average contractual conversion price of $0.28, ranging from $0.13 to $2.00, as a result of the conversion of principal of $808,648, interest of $92,420 and conversion fees $12,750 underlying certain outstanding convertible notes converted during such period. The total recorded to equity was $1,014,204 prior to the reversal of unissued shares and loss of extinguishment discussed below. Accordingly, there remains 130,039 shares of common stock to be issued as of March 31, 2021.

There were 24,427 unissued shares which were considered issuable for accounting purposes during the first quarter of fiscal 2021 related to conversion notices dated and received in September 2020. In November 2020, the Company was notified by the note holder of the cancellation of these conversion notices and as such the Company reversed the effects of these transactions thereby increasing the principal balance by $19,600, accrued interest of $416 and put premium by $11,785 and a corresponding decrease in equity of $31,801.

Converted notes totaling principal amount of $95,000 and accrued interest of $3,000 contained bifurcated embedded conversion option derivatives. Accordingly, the fair market value of the shares issued was $178,368 resulting in a loss on extinguishment at the time of conversion of $80,368 and $130,975 of derivative fair value was recorded as a gain on extinguishment at the time of conversion. The Company reclassified $448,573, net of reversal of put premium upon cancellation of conversion notices by two lenders discussed above, to additional paid in capital following conversions during the nine months ended March 31, 2021.

The Company has 801,162,107 shares of its common stock reserved for future issuances based on lender reserve requirements pursuant to underlying financing agreements at March 31, 2021.

Shares issued for services

During the three months ended March 31, 2021, the Company issued an aggregate of 225,037 shares of the Company’s common stock to a consultant for services rendered from January 1, 2021 to March 22, 2021. The Company issued 225,037 shares of the Company’s common stock valued at $0.30 per share, being the closing price of the stock on the date of grant to such consultant, or $67,511. The Company recorded $67,511 of consulting expense with respect to such shares of its common stock during the nine months ended March 31, 2021.

Shares issued for exercise of warrants

During the nine months ended March 31, 2021, the Company received aggregate gross proceeds of $526,044 from the exercise of 10,445 prefunded warrants and 13,125 Series B Warrants resulting in the issuance of 23,570 shares of common stock. Additionally, the Company issued 999,995 shares of common stock from the alternate cashless exercise of 4 Series A and 1 Series C warrants.

Warrants:

The following table summarizes warrant activity for the nine months ended March 31, 2021:

Exercise of Warrants

During the nine months ended March 31, 2021, the Company received aggregate gross proceeds of $526,044 from the exercise of 10,445 prefunded warrants and 13,125 Series B Warrants. Additionally, the Company issued 999,995 shares of common stock from the alternate cashless exercise of 4 Series A and 1 Series C warrants.

Options:

A summary of the Company’s option activity during the nine months ended March 31, 2021 is presented below:

During the three months ended March 31, 2021 and 2020, the Company recognized stock-based compensation of $20,718 and $20,718, respectively related to vested stock options. During the nine months ended March 31, 2021 and 2020, the Company recognized stock-based compensation of $62,154 and $62,155, respectively related to vested stock options. There was $93,233 of unvested stock option expense as of March 31, 2021 that will be recognized through May 2022 or 1.12 years.

No stock options were granted during the nine months ended March 31, 2021.