SHARE CAPITAL

6 Months Ended

Mar. 31, 2019

Equity [Abstract]

SHARE CAPITAL

NOTE 5 – SHARE CAPITAL 

Authorized shares 

The Company is authorized to issue 900,000,000 shares of common stock at par value of $0.0001 and 15,000,000 shares of Series A preferred stock at par value of $0.0001. 

Common stock and Series A preferred stock sold for cash 

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 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 long-term liability. 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 the three months ended March 31, 2019 and 2018, amortization of debt discount amounted to $573 and $24,098, respectively. For the six months ended March 31, 2019 and 2018, amortization of debt discount amounted to $1,145 and $26,388, respectively. 

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 March 31, 2019 and 2018, dividends on redeemable preferred stock amounted to $937 and $2,229, respectively. For the six months ended March 31, 2019 and 2018, dividends on redeemable preferred stock amounted to $1,875 and $5,979, respectively.  

As a result of the termination of the IBIH transaction, the Company and CMH have agreed to enter into that certain Stock Redemption Agreement dated February 13, 2018 providing that 75,000 CMH Preferred Shares were redeemed and cancelled in consideration of $750,000 which occurred on February 13, 2018. 

At March 31, 2019 and September 30, 2018, Series A redeemable preferred stock consisted of the following: 

	March 31, 2019			September 30, 2018
Redeemable preferred stock (stated value)	$	250,000		$	250,000
Less: unamortized debt discount		(4,980	)		(6,125	)
Redeemable preferred stock, net	$	245,020		$	243,875