XML 26 R14.htm IDEA: XBRL DOCUMENT v3.22.4
Commitments and Contingent Liabilities
12 Months Ended
Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingent Liabilities

Note 8. Commitments and Contingent Liabilities

 

In February 2022, the Company entered into a consulting agreement with Spivak Management, Inc. (the “Consultant”). Under the agreement, the Consultant will provide business strategy advice and introductions to the Company fir a period of five years unless mutually terminated sooner. Concurrently, the Consultant entered into a stock purchase agreement with the Company to purchase 6,000,000 shares of common stock for $25,000 cash. The purchase and issuance of the shares was to be completed by June 30, 2022 but has not yet occurred.

 

The Consultant will be paid a signing bonus of $25,000 upon receipt by the Company of the $25,000 cash under the stock purchase agreement described above. The Consultant will also receive the larger of $12,500 per month, or 50% of the CEO’s fixed cash compensation under the amended employment agreement described in Note 4. The Consultant may elect to receive this payment in stock.

 

The Consultant may also receive a bonus in each calendar year of the agreement equal to the larger of any bonus awarded by the Board of Directors to the Consultant or 50% of the largest bonus payable by the Company to anyone other than the Consultant. If the agreement is terminated with one year of a change of control of the Company, the Consultant will be entitled to receive a payment equal to 2.99 times the larger of the total compensation paid to the Consultant over the prior 12 month period or the average compensation paid or payable to the Consultant over the prior three years.

 

The Consultant also received 39,000,000 warrants with an exercise price of $0.009 per share, and an exercise period of 5 years. The Company estimated the fair value of the warrants to be $322,266 which was recognized as general and administrative expense during the nine months ended June 30, 2022, using the following assumptions: 1) volatility of 254.4%; 2) risk free rate of 1.76%; 3) dividend yield of 0% and 4) expected term of 5 years. The Consultant is also entitled to additional warrants in the event of the Company issuing equity or equity equivalents in the future, with the Consultant receiving an equal amount of warrants as those instruments that are issued. The exercise price of these additional warrants will be 110% of the price per equity equivalent, and they will vest 50% immediately and the remainder over two years.

 

Litigation

 

From time to time, the Company may be subject to routine litigation, claims, or disputes in the ordinary course of business. In the opinion of management, no pending or known threatened claims, actions or proceedings against the Company are expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company cannot predict with certainty, however, the outcome or effect of any of the litigation or investigatory matters specifically described above or any other pending litigation or claims. There can be no assurance as to the ultimate outcome of any lawsuits and investigations.