NOTE 7 – STOCKHOLDERS’ DEFICIT

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 September 30, 2020 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 September 30, 2020 and June 30, 2020. Mr. Nathanielsz directly beneficially owns such one share of Series B Preferred Stock.

No shares of Series A Preferred Stock or Series B Preferred Stock were issued during the three months ended September 30, 2020 and in the fiscal year 2020.

Common Stock:

Shares issued for conversion of convertible debt

From July 1, 2020 through September 30, 2020, the Company issued an aggregate of 442,031,352 shares of its common stock (24,426,642 are considered issuable) at an average contractual conversion price of $0.00096, ranging from $0.00056 to $0.0020, as a result of the conversion of principal of $391,935, interest of $25,735 and conversion fees $6,750 underlying certain outstanding convertible notes converted during such period. The total recorded to equity was $480,575. Notes totaling $75,000 contained bifurcated embedded conversion option derivatives. Accordingly, the fair market value of the shares issued was $134,155 resulting in a loss on extinguishment at the time of conversion of $56,155 and $106,141 of derivative fair value was recorded as a gain on extinguishment at the time of conversion. The Company reclassified $204,919 in put premiums to additional paid in capital following conversions during the three months ended September 30, 2020.

The Company has 282,421,876 shares of its common stock reserved for future issuances based on lender reserve requirements pursuant to underlying financing agreements at September 30, 2020.

Shares issued for exercise of warrants

During the three months ended September 30, 2020, the Company received aggregate gross proceeds of $201,044 from the exercise of 10,445,482 prefunded warrants and 5,000,000 Series B Warrants.

Warrants:

The following table summarizes warrant activity for the three months ended September 30, 2020:

Exercise of Warrants

During the three months ended September 30, 2020, the Company received aggregate gross proceeds of $201,044 from the exercise of 10,445,482 prefunded warrants and 5,000,000 Series B Warrants.

Options:

A summary of the Company’s option activity during the three months ended September 30, 2020 is presented below:

During the three months ended September 30, 2020, the Company recognized stock-based compensation of $20,718 related to vested stock options. There was $134,669 of unvested stock options expense as of September 30, 2020 that will be recognized through May 2022 or 1.62 years.

No stock options were granted during the three months ended September 30, 2020.