Common stock

On October 23, 2015, the Company amended its Articles of Incorporation to increase the number of authorized shares of Common Stock from five hundred million (500,000,000) shares to five billion (5,000,000,000) shares with no par value. On May 31, 2016, the registrant filed Articles of Amendment to increase the number of shares of common stock the corporation is authorized to issue to 10,000,000,000. 

On June 17, 2016, the Financial Industry Regulatory Authority (“FINRA”) announced the registrant’s 1:2,500 reverse stock split of the registrant’s common stock. The reverse stock split took effect on June 20, 2016.As of March 31, 2016, there are 998,236 shares of common stock issued and outstanding and 1,221 shares of common stock to be issued.

During the year ended March 31, 2016, the Company issued 989,180 shares of common stock for conversion of $546,872 of principal and $28,847of accrued interest, for a total of $575,719.

During the year ended year ended March 31, 2016, the Company issued 1,412 shares of common stock for fees, pursuant to a debt agreement. The shares were valued at $75,000 (see Note 5).

During the year ended year ended March 31, 2016, the Company issued 59 shares of common stock for the shares of common stock to be issued that were outstanding as of March 31, 2015. The shares were valued at $55,480.

During the year ended year ended March 31, 2016, the Company issued 14 shares of common stock in exchange for legal services valued at $9,000.

On June 15, 2015, the Company issued 856 shares of common stock to Global pursuant to a settlement agreement (see Note 4 and below).

During the year ended March 31, 2015, the Company effected the following stock transactions: 

During the year ended March 31, 2015, the company cancelled 384 shares of common stock. 

During the year ended March 31, 2015, the company issued 1,196 shares of common stock for debt conversions with a value of $507,316. 

During the year ended March 31, 2015 the company issued 164 shares of common stock for compensation valued at $421,558. The per share price of the shares ranged from $750 to $4,750. 

During the year ended March 31, 2015, the Company entered into private placement subscription agreements that offered a total of 59 units for a value of $147,000, or $2,500 per unit. Each unit consists of one (1) share of the Company’s common stock, and one-half (1/2) common stock purchase Warrant. One full warrant entitles the holder to purchase one (1) share of the Corporation’s common stock at a price of $3,750 per share at any time within a 12 month period from the date of closing. 

During the year ended March 31, 2015, the Company issued 14 shares of common stock in exchange for legal services valued at $14,447. 

Preferred Stock

10,000,000 shares of preferred stock, $0.0001 par value have been authorized.

Series A Convertible Preferred Stock.

5,000,000 shares of preferred stock are designated as Series A Convertible Preferred Stock (“Series A Preferred Stock”). Each share of Series A Convertible Preferred Stock is convertible at the election of the holder into .004 shares of common stock, subject to a 4.9% beneficial ownership limitation, but has no voting rights until converted into common stock. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the outstanding shares of Series A Convertible Preferred Stock shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders, whether from capital, surplus funds or earnings, and before any payment is made in respect of the shares of Common Stock, an amount equal to $2.50 per share of Series A Convertible Preferred Stock, subject to adjustment for stock dividends, combinations, splits, recapitalizations and the like with respect to the Series A Convertible Preferred Stock, plus any and all accrued but unpaid dividends. The holders of Series A Convertible Preferred Stock are entitled to dividends when declared by the board of directors. As of March 31, 2016, there are no shares of Series A Preferred Stock outstanding. Share information included in the financial statements and notes thereto have been retroactively adjusted for the stock split as if such stock split occurred on the first day of the first period presented. Certain amounts in the notes to the financial statements may be slightly different than previously reported due to rounding of fractional shares as a result of the reverse stock split.

On June 15, 2015. pursuant to the Settlement Agreement with Global (see Note 4), Global returned 2,377,500 shares of Series A Convertible Preferred Stock to the Company and the Company issued 856 shares of common stock to Global.

On July 20, 2015, the Company entered into a Settlement Agreement (the “Micro-Tech Settlement Agreement”) with Micro-Tech Industries, Ltd., lender and preferred shareholder of the Company (“Micro-Tech”). Micro-Tech owns 839,500 shares of the Company’s shares of Series A Convertible Preferred Stock. Pursuant to the Micro-Tech Settlement Agreement, Micro-Tech agreed to immediately return the 839,500 shares of Series A Preferred Stock to the Company for cancellation and the Company agreed to issue 319 shares of common stock to Micro-Tech.

Also on July 20, 2015, the Company entered into a Settlement Agreement (the “Whonon Settlement Agreement”) with Whonon Trading S. A., lender and preferred shareholder of the Company (“Whonon”). Whonon owns 1,783,000 shares of the Company’s shares of Series A Convertible Preferred Stock. Pursuant to the Whonon Settlement Agreement, Whonon agreed to immediately return the 1,783,000 shares of Series A Preferred Stock to the Company for cancellation and the Company agreed to issue 678 shares of common stock to Whonon. As of March 31, 2016, Micro-Tech and Whonon have not yet tendered their preferred stock certificates for cancellation and the Company has not issued the shares of common stock. As of March 31, 2016, the Company has included 997 shares as common stock to be issued.

Series B Preferred Stock

350,000 shares of preferred stock are designated as Series B Preferred Stock. Each share of Series B Preferred Stock is convertible at the election of the holder into .004 shares of common stock, subject to a 4.9% beneficial ownership limitation. Series B Preferred Stock has no voting rights until converted into common stock. The holders of the Series B Preferred Stock do not have any rights to dividends or any liquidation preferences. As of March 31, 2016, there are 264,503 shares of Series B Preferred Stock outstanding.

On June 2, 2015, the Company entered into an Asset Purchase Agreement with Dependable Critical Infrastructure, Inc., f/k/a DTREDS Consolidated Inc., a Delaware corporation (“DCI”), and Viking Telecom Services, LLC, a Minnesota limited liability company (“Viking”). Pursuant to the Agreement, the parties agreed that the Company would purchase assets of DCI relating to Viking which DCI had acquired from Viking (general intangibles, including contract rights, office furniture totaling $7,392, IBM server, 2011 Chevrolet Silverado 2500 Diesel truck for $35,608, and accounts receivable after January 1, 2015 totaling $0), in consideration of the Company (1) assuming limited liabilities associated with Viking (loan payment for Chevrolet truck with a principal balance of $36,202, loan payment to Joshua Claybaugh of $5,000 per month for 11 months totaling $55,000), (2) issuing the owners of DCI a total of 2,489 shares of Company common stock valued at $740,000, and (3) paying DCI $200,000, which was paid on June 19, 2015, and an initial deposit of $59,204. Since the Company’s CEO owned approximately 30% of DCI, the Company recorded a loss on the acquisition of $1,044,817 for the year ended March 31, 2016. On July 9, 2015, the Company issued a total of 1,208 and reserved 224 shares of common stock and 264,503 shares of Series B Preferred Stock to the owners of DCI. The shares of Series B Preferred Stock are convertible into 1,048 shares of common stock (ignoring the 4.9% conversion limitation in the Series B designation of rights). The 224 shares reserved for issuance are included in common stock to be issued as of March 31, 2016.

 Series C Preferred Stock

1,000,000 shares of preferred stock are designated as Series C Preferred Stock. Each share of Series C Preferred stock is convertible at the election of the holder into 100 shares of common stock. On October 23, 2015, (the “Amendment Date”), the Company amended the terms and conditions of the Series C Preferred stock, whereby each share of Series C Preferred stock entitles the holder thereof to 10,000 votes on all matters submitted to a vote of the stockholders of the Company. The holders of the Series C Preferred stock do not have any rights to dividends or any liquidation preferences. During the year ended March 31, 2016, the Company’s CEO and another shareholder returned a total of 12,791 shares of common stock to the Company for cancellation in exchange for the issuance of 319,768 shares of Series C Preferred Stock. As of March 31, 2016, there are 319,768 shares of Series C preferred stock outstanding, of which 223,768 shares are owned by our Chairman and CEO, Dr. Thomas Cellucci. The Company determined that on the Amendment Date, the amended voting rights of the preferred stock resulted in a change of control of the Company. The Company determined that fair value of the 223,768 shares issued to the Company’s CEO was $208,951. The fair value was determined as set forth in the Statement of Financial Accounting Standard ASC 820-10-35-37, Fair Value in Financial Instruments.

Stock Options

On July 23, 2015 (the “Grant Date”), the Company granted non-qualified stock options to two of its directors as compensation for their services. The directors are entitled to purchase a total of thirty (30) shares each of restricted common stock for a price equal to $250.00 per share (Exercise Price), exercisable over a ten-year period thereafter. The option shall be vested during the 12-month period. As to the total number of Shares with respect to which the Option is granted, the Option shall be exercisable as follows: (i) 25% of the Option in the aggregate may be exercised upon the mutual execution of this Agreement (ii) 50% of the Option in the aggregate may be exercised on or after the four month anniversary of the Grant Date; (iii) 75% of the Option in the aggregate may be exercised on or after the eight month anniversary of the Grant Date; and (iv) 100% of the Option in the aggregate may be exercised on or after the twelve month anniversary of the Grant Date (the twelve month period commencing on the Grant Date and ending on the twelve month anniversary of the Grant Date being referred to as the “Vesting Period”). As of March 31, 2016, none of the options have been exercised. The total fair value of these options at the date of grant was estimated to be $15,750 and was determined using the Black-Scholes option pricing model with an expected life of 10 years, a risk-free interest rate of 2.28%, a dividend yield of 0% and expected volatility of 230.55%. For the year ending March 31, 2016, the Company has included $11,813 as stock based compensation expense based on 75% of 60 options vested.

On August 26, 2015 (the “Grant Date”), the Company granted non-qualified stock options to a member of its board of directors as compensation for his services. The director is entitled to purchase a total of thirty (30) shares of restricted common stock for a price equal to $250.00 per share (Exercise Price), exercisable over a ten-year period thereafter. The option shall be vested during the 12-month period. As to the total number of Shares with respect to which the Option is granted, the Option shall be exercisable as follows: (i) 25% of the Option in the aggregate may be exercised upon the mutual execution of this Agreement (ii) 50% of the Option in the aggregate may be exercised on or after the four month anniversary of the Grant Date; (iii) 75% of the Option in the aggregate may be exercised on or after the eight month anniversary of the Grant Date; and (iv) 100% of the Option in the aggregate may be exercised on or after the twelve month anniversary of the Grant Date (the twelve month period commencing on the Grant Date and ending on the twelve month anniversary of the Grant Date being referred to as the “Vesting Period”). As of March 31, 2016, none of the options have been exercised. The total fair value of these options at the date of grant was estimated to be $5,775 and was determined using the Black-Scholes option pricing model with an expected life of 10 years, a risk-free interest rate of 2.18%, a dividend yield of 0% and expected volatility of 230.25%. For the year ending March 31, 2016, the Company has included $4,331 as stock based compensation expense based on 75% of 30 options vested.

The following table summarizes stock option information as of March 31, 2016:

Warrants

On March 27, 2015, the Company granted a non-qualified cashless stock warrant to its officer as compensation for his services. The officer is entitled to purchase a total of one thousand two hundred (1,200) shares of restricted common stock for a price equal to $750.00 per share (Exercise Price), exercisable over a five-year period thereafter. The total fair value of these options at the date of grant was estimated to be $813,827 and was determined using the Black-Scholes option pricing model with an expected life of 5 years, a risk-free interest rate of 1.42%, a dividend yield of 0% and expected volatility of 207.12%. $813,827 was recorded as stock based compensation expense for the year ended March 31, 2015 based on the 1,200 warrants vesting. As of March 31, 2016, the warrants to purchase 1,200 shares of common stock are outstanding and exercisable.

During the year ended March 31, 2015, the Company entered into a private placement subscription agreement that offers a total of 59 units for a value of $147,000, or $250.00 per unit. Each unit consists of one (1) share of the Company’s common stock, and one-half (1/2) common stock purchase warrant. One full warrant entitles the holder to purchase one (1) share of the Corporation’s common stock at a price of $3,750.00 per share at any time within a 12-month period from the date of closing. Warrants to purchase 29 shares of common stock were issued during the year ended March 31, 2015, and expired during the year ended March 31, 2016.

On February 3, 2015, and in conjunction with the convertible note issued by the Company and the three promissory notes issued to the Company for the three additional tranches of funding to the Company, the Company issued four warrants for a total number of shares equal to $123,750 ($41,250 for the first warrant corresponding to funding on February 6, 2015, and $27,500 for the other three warrants corresponding to the future tranches of funding to the Company) divided by the conversion market price in the convertible note. The warrants have an exercise price of $2,500.00, subject to adjustment, and expire on January 3, 2020. Each of the warrants are only exercisable after the corresponding tranche of funding to the Company has been paid. During the year ended March 31, 2016, warrants to purchase 37 shares of common stock were cancelled as part of a debt settlement.

On August 17, 2015, the Company issued 2,063 warrants in conjunctions with a convertible note issued by the Company with an estimated value of $412,698. The warrants have an exercise price of $270.00, subject to adjustment, and expire on August 17, 2020. As of March 31, 2016, the warrants to purchase 2,063 shares of common stock are outstanding and exercisable.

The total fair value of these warrants at the date of grant was estimated to be $453,948 and was determined using the Black-Scholes option pricing model with an expected life of 5 years, a risk-free interest rate of 1.28%to 1.58%, a dividend yield of 0% and expected volatility of 191.21% to 209.94%. $453,948 was recorded as derivative expense as of the date of issuance and as of March 31, 2016, a derivative liability of $1,029 is reflected on the balance sheet.