Share Capital

9 Months Ended

Jun. 30, 2020

Equity [Abstract]

SHARE CAPITAL

NOTE 5 – SHARE CAPITAL

Preferred stock

The Company's Board of Directors is authorized to issue, at any time, without further stockholder approval, up to 15,000,000 shares of preferred stock. The Board of Directors has the authority to fix and determine the voting rights, rights of redemption and other rights and preferences of preferred stock.

Common stock and Series A preferred stock sold for cash

On June 7, 2016, the Company sold to CMH 15,450,000 shares of common stock and 100,000 shares of Series A preferred stock for $1,000,000. The common stock was recorded as equity and the Series A preferred stock was recorded as a liability.

The Series A preferred stock has the following key terms:

1) A stated value of $10 per share;

2) The holder is entitled to receive cumulative dividends at the annual rate of 1.5% of stated value payable semi-annually on June 30 and December 31;

3) The preferred stock must be redeemed at the stated value plus any unpaid dividends in 5 years (on or before June 7, 2021);

4) The Series A preferred stock is non-voting. However, without the affirmative vote of the holders of the shares of the Series A preferred stock then outstanding, the Company may not alter or change adversely the powers, preferences or rights given to the Series A preferred stock or alter or amend the Certificate of Designation except to the extent that such vote relates to the amendment of the Certificate of Designation;

5) The holders of the Series A preferred stock are not entitled to receive any preference upon the liquidation, dissolution or winding up of the business of the Company. Each holder of Series A preferred stock shall share ratably with the holders of the common stock of the Company.

The $1,000,000 of proceeds received was allocated to the common stock and Series A preferred stock according to their relative fair values determined at the time of issuance, and as a result, the Company recorded a total discount of $45,793 on the Series A preferred stock, which is being amortized to interest expense to the date of redemption. For both the three months ended June 30, 2020 and 2019, amortization of debt discount amounted to $572. For both the nine months ended June 30, 2020 and 2019, amortization of debt discount amounted to $1,717.

The terms of the Series A preferred stock issued represent mandatory redeemable shares, with a fixed redemption date (in 5 years) and the Company has a choice of redeeming the instrument either in cash or a variable number of shares of common stock based on a formula in the certificate of designation. The conversion price has a floor of $0.20 per share. As such, all dividends accrued and/or paid and any accretions are classified as part of interest expense. For the three months ended June 30, 2020 and 2019, dividends on redeemable preferred stock amounted to $938 and $937, respectively. For the nine months ended June 30, 2020 and 2019, dividends on redeemable preferred stock amounted to $2,813 and $2,812, respectively.

At June 30, 2020 and September 30, 2019, Series A redeemable preferred stock consisted of the following:

	June 30, 2020			September 30, 2019
Redeemable preferred stock (stated value)	$	250,000		$	250,000
Less: unamortized debt discount		(2,118	)		(3,835	)
Redeemable preferred stock, net	$	247,882		$	246,165