Stockholders Equity

12 Months Ended

Nov. 30, 2014

Equity [Abstract]

Stockholders Equity

8.       Stockholders’ Equity

Issuance of common stock to settle debt

During fiscal 2014, $297,730 in outstanding debt was converted into 390,000,000 shares of the Company's common stock, and the Company recognized a gain of $213,961 in conjunction with the settlement of the underlying derivative liabilities. During fiscal 2013, $1,291,878 of outstanding debt and $13,277 of interest was converted into 496,362,183 shares of the Company’s common stock, and the Company recognized a gain of $1,493,939 in conjunction with the settlement of the underlying derivative liabilities.

During the first quarter of fiscal 2014, the Company’s chief executive officer converted $10,565 of outstanding debt into 5,000,000 shares of common stock.

Amendments to Designate Preferred Shares

On August 29, 2013, the Board authorized a Series D of the Company’s previously authorized preferred stock and designated a par value per share of $0.00001 (the “Series D Preferred”).  The number of shares of Series D Preferred was set at 51 shares. The Series D shares have dividend rights equal to common stock on a share-for-share basis, but no liquidation rights.

All 51 shares of the Series D Preferred were issued to the Company’s Chief Executive Officer and Chief Information Officer (the “Officers”) in exchange for the 51 outstanding shares of the Company’s Series C Preferred Stock held by the Officers. The terms of the Series D Preferred Stock are substantially identical to the terms of the Series C Preferred Stock, except that the redemption date was been changed. The Company shall redeem all shares of Series D Preferred, in cash, for $1.00 per share on the earlier to occur of (1) the first anniversary of the date upon which all obligations of the Company to 112359 Factor Fund, LLC (and/or its assign(s)) have been satisfied in full, or (2) December 31, 2019.

All shares of Series D Preferred rank senior to the Company’s (i) common stock, par value $0.00001,  (ii) Series A Convertible Preferred Stock, par value $.00001 per share, (iii) Series B Convertible Preferred Stock, par value $.00001 per share, and any other class or series of capital stock of the Company creates.

Each one (1) share of the Series D Preferred has voting rights equal to (x) 0.019607 multiplied by the total issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. As a result, the holders of the Series D Preferred Stock have voting control of the Company.

With respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series D Preferred Stock shall vote together with the holders of Common Stock without regard to class, except as to those matters on which separate class voting is required by applicable law or the Certificate of Incorporation or by-laws.

So long as any shares of Series D Preferred are outstanding, the Company shall not, without first obtaining the unanimous written consent of the holders of Series D Preferred, (i) alter or change the rights, preferences or privileges of the Series D Preferred so as to affect adversely the holders of Series D Preferred or (ii) create Pari Passu Shares or Senior Shares. The Series D shares have dividend rights equal to common stock on a share-for-share basis, but no liquidation rights.

On April 14, 2014, the Board authorized a Series E, F and G of the Company’s previously authorized preferred stock and designated a par value per share of $0.00001 (the “Series E Preferred” the “Series F Preferred” and the “Series G Preferred”).  The number of shares of Series E Preferred, Series F Preferred and Series G Preferred was set at 10, 10,000,000 and 10,000,000 shares, respectively.

The Series E Preferred has voting rights equal to 400% of the sum of the common stock, Series D Preferred, Series F Preferred and Series G Preferred, but no dividend rights and no liquidation rights.

The Series F Preferred has voting rights equal to 100 million common shares and a liquidation preference of $10,000,000 over junior securities. Each share of Series F Preferred Stock shall be convertible at par value $0.00001 per share, at any time, and from time to time, into the number of shares of the Corporation's common stock, equal to the price of the Series F Preferred Stock of $2.50 per share, divided by the par value of the Series F Preferred, subject to adjustment as may be determined by the Board of Directors.

The Series G Preferred has voting rights equal to 10 million common shares and a liquidation preference of $10,000,000 over junior securities. Each share of Series G Preferred Stock shall be convertible, at any time, and from time to time, into 500 shares of the Corporation's common stock. Both Series F Preferred and Series G Preferred Stock are anti-dilutive to reverse splits.

On January 13, 2015, 10 shares of Series E Preferred, 10,000,000 shares of Series F Preferred and 10,000,000 shares of Series G preferred were issued to our chief executive officer in exchange for $100,000 in debt.

On March 19, 2015 the Company filed a certificate of amendment of its certificate of incorporation in which the Board of Directors designated the Series H Preferred Stock from the Company’s previously authorized preferred stock with a par value per share of $0.00001. The number of shares of Series H Preferred Stock was set at 800,000 shares. Shares of Series H Preferred Stock have conversion rights into shares of Common Stock. The number of shares of Common Stock to which a holder of Series H Preferred Stock shall be entitled upon a Conversion shall equal the product obtained by (a) multiplying the number of fully-diluted Common Shares by four (4), then (b) multiplying the result by a fraction, the numerator of which will be the number of shares of Series H Preferred Stock being converted and the denominator of which will be the number of authorized shares of Series H Preferred Stock.

Each share of Series H Preferred Stock shall entitle the holder thereof, on all matters submitted to a vote of the stockholders of the Corporation, to that number of votes as shall be equal to the aggregate number of shares of Common Stock into which such holder's shares of Series H Preferred Stock are convertible on the record date for the stockholder action.

In the event that the Corporation’s Board of Directors declares a dividend payable to holders of any class of stock, the holder of each share of Series H Preferred Stock shall be entitled to receive a dividend equal in amount and kind to that payable to the holder of the number of shares of the Company’s Common Stock into which that holder’s Series H Preferred Stock could be converted on the record date for the dividend.

Upon the liquidation, dissolution and winding up of the Corporation, the holders of the Series H Preferred Stock shall be entitled to receive in cash out of the net assets of the Corporation, whether from capital or from earnings available for distribution to its stockholders, before any amount shall be paid to the holders of common stock or to the holders of any other class or series of equity stock, an amount equal to eighty percent (80%) of said net assets multiplied by a fraction, the numerator of which shall be the number of outstanding shares of Series H Preferred Stock on the record date for the distribution and the denominator of which shall be the number of authorized shares of Series H Preferred Stock.

Effective March 26, 2015, the Company issued 1,000,000,000 shares of common stock and 100,000 shares of its Series H Preferred stock to Flux Carbon Corporation, in conjunction with the purchase of 90% of the equity of Canalytix.

Amendments to Increase Authorized Shares

On January 23, 2012, the Company filed an amendment to the Company’s articles of incorporation with the State of New York to increase the Company’s authorized common stock from one hundred and fifty million (150,000,000) to two hundred fifty million (250,000,000) shares of common stock, and to change the par value of the common stock to $0.001 per share.

On August 21, 2012, the Company filed an amendment to the Company’s articles of incorporation with the State of New York to increase the Company’s authorized common stock from two hundred and fifty million (250,000,000) to four hundred million (400,000,000) shares of common stock, par value $0.001 per share. 

On January 18, 2013, the Company filed an amendment to the Company’s articles of incorporation with the Secretary of State of the State of New York increasing the Company’s authorized common stock from four hundred million (400,000,000) shares of common stock to eight hundred million (800,000,000) shares of common stock.

On December 13, 2013, the Company filed an amendment to the Company’s articles of incorporation with the Secretary of State of the State of New York increasing the Company’s authorized common stock from eight hundred million (800,000,000) shares to one billion five hundred million (1,500,000,000) shares of common stock.

On April 14, 2014, the Company filed an amendment to the Company’s articles of incorporation with the Secretary of State of the State of New York (i) increasing the Company’s authorized common stock from one billion five hundred million (1,500,000,000) shares of common stock to eight billion nine hundred seventy-eight million nine hundred ninety-nine thousand nine hundred ninety (8,978,999,990) shares of common stock; (ii) increasing the number of shares of undesignated preferred stock from one million shares (1,000,000) to twenty-one million and ten shares (21,000,010); and (iii) reducing the par value of the common stock and the preferred stock from $0.001 to $0.00001.

Stock Options

The Company issued contingent stock options to a marketing consultant (the “Contingent Grant”) that granted an option to purchase 10 million shares of the Company’s common stock.  Under the Contingent Grant, stock options were granted at an exercise price of $0.005 cents per share, which was in excess of the fair market value of the Company’s stock on the date of grant. The Contingent Grant expires on December 31, 2014.  These options are scheduled to vest based upon the marketing consultant exceeding monthly sales targets, as defined in the Contingent Grant. The Company determined that the performance condition was not probable of achievement, and accordingly, no compensation cost was recognized during the years ended November 30, 2014 and 2013.

	Options Outstanding						Options Exercisable
			Weighted-
			Average		Weighted-				Weighted-
			Remaining		Average				Average
	Number		Contractual		Exercise		Number		Exercise
Range of Exercise Prices	Outstanding		Life (Years)		Price		Outstanding		Price
As of November 30, 2014
$.01 - $2.40		17,800,000		0.92	$	0.01		7,800,000	$	0.01
As of November 30, 2013
$.01 - $2.40		23,793,000		2.15	$	0.03		9,543,000	$	0.06

The following tables summarize information about options outstanding at November 30, 2014 and 2013:

	Number of Shares			Exercise Price Per Share		Average Exercise Price
Outstanding November 30, 2012		14,450,500			$ 0.01 - $2.65	$	.05
Granted during year ended November 30, 2013		10,000,000			$0.005	$	0.005
Exercised/canceled during year ended November 30, 2013		(657,500	)		$0.10 - $2.65	$	0.22
Outstanding November 30, 2013		23,793,000			$ 0.01 - $2.40	$	0.03
Granted during year ended November 30, 2014		—			—	$	—
Exercised/canceled during year ended November 30, 2014		(5,993,000	)		$0.01 - $2.40	$	0.08
Outstanding November 30, 2014		17,800,000			$ 0.005 - $0.10	$	0.01
Options exercisable, November 30, 2014		7,800,000			$0.01 - $0.10	$	0.01

The aggregate intrinsic value was $0 for both years ended November 30, 2014 and 2013.

Warrants

The following tables summarize information about warrants outstanding at November 30, 2014 and 2013:

	Warrants Outstanding						Warrants Exercisable
			Weighted-
			Average		Weighted-				Weighted-
Range of			Remaining		Average				Average
Exercise	Number		Contractual		Exercise		Number		Exercise
Prices	Outstanding		Life (Years)		Price		Outstanding		Price
As of November 30, 2014
$.005 - $1.20		63,125,833		7.12	$	0.02		63,125,833	$	0.02

	Number of Shares		Exercise Price Per Share		Average Exercise Price
Outstanding December 1, 2012		7,792,500		$ 0.10 -  $ 0.20	$	0.10
Issued during year ended November 30, 2013		55,333,333		$ 0.005 - $ 0.01	$	0.006
Exercised/canceled during year ended November 30, 2013		—		—	$	—
Outstanding November 30, 2013		63,125,833		$ 0.005 - $1.20	$	.02
Issued during year ended November 30, 2014					$
Exercised/canceled during year ended November 30, 2014		—		—	$	—
Warrants outstanding November 30, 2014		63,125,833		$ 0.005 - $1.20	$	.02
Warrants exercisable, November 30, 2014		63,125,833		$ 0.005 - $1.20	$	.02

The aggregate intrinsic value was $0 for both year ended November 30, 2014 and 2013.

During June 2013, the Company sold to its chief executive officer a warrant to purchase 25,333,333 shares of common stock, par value $0.00001, of the Company and its chief information officer a warrant to purchase 20,000,000 shares of common stock for total proceeds of $68,000, or $0.0015 per share. The warrants have a ten-year life and exercise price of $0.005.

Equity Incentive Plans and Restricted Stock Award Plan

The Company’s 2004 Equity Incentive Plan (the “2004 Plan”) provides for the grant of up to 100,000 incentive stock options, non-qualified stock options, tandem stock appreciation rights, and stock appreciation rights of shares of common stock.  Under the 2004 Plan, incentive stock options may be granted at no less than the fair market value of the Company’s stock on the date of grant, and in the case of an optionee who owns directly or indirectly more than 10% of the outstanding voting stock (an “Affiliate”), 110% of the market price on the date of grant.  As of November 30, 2014 and 2013, 19,000 option shares remain unissued.

On October 24, 1996, the shareholders of the Company adopted the eLEC Communications Corp. 1996 Restricted Stock Award Plan (the “Restricted Stock Award Plan”).  An aggregate of 40,000 shares of common stock of the Company have been reserved for issuance in connections with awards granted under the Restricted Stock Award Plan.  Such shares may be awarded from either authorized and unissued shares or treasury shares. The maximum number of shares that may be awarded under the Restricted Stock Award Plan to any individual officer or key employee is 10,000.  No shares were awarded during fiscal 2014 and 2013.

The Company’s 2007 Equity Incentive Plan (the “2007 Plan”) provides for the grant of up to 200,000 incentive stock options, non-qualified stock options, tandem stock appreciation rights, and stock appreciation rights of shares of common stock.  Under the 2007 Plan, incentive stock options may be granted at no less than the fair market value of the Company’s stock on the date of grant, and in the case of an optionee who is an Affiliate, 110% of the market price on the date of grant.  As of November 30, 2014 and 2012, 152,500 and 149,500 option shares, respectively remain unissued.

The Company’s 2009 Equity Incentive Plan (the “2009 Plan”) provides for the grant of up to 500,000 incentive stock options, non-qualified stock options, tandem stock appreciation rights, and stock appreciation rights of shares of common stock.  Under the 2009 Plan, incentive stock options may be granted at no less than the fair market value of the Company’s stock on the date of grant, and in the case of an optionee who is an Affiliate, 110% of the market price on the date of grant.  As of November 30, 2014 and 2013, 171,000 and 31,000 option shares, respectively remain unissued.

The Company’s 2010 Equity Incentive Plan (the “2010 Plan”), as amended, provides for the grant of up to 25,000,000 incentive stock options, non-qualified stock options, tandem stock appreciation rights, and stock appreciation rights of shares of common stock.  Under the 2010 Plan, incentive stock options may be granted at no less than the fair market value of the Company’s stock on the date of grant, and in the case of an optionee who is an Affiliate, 110% of the market price on the date of grant.  The 2010 Plan was amended in fiscal 2012 from 500,000 option shares to 25,000,000 option shares.  As of November 30, 2014 and 2013, 24,650,253 option shares, respectively, remain unissued.

The Company’s 2011 Equity Incentive Plan (the “2011 Plan”) provides for the grant of up to 20,000,000 incentive stock options, non-qualified stock options, tandem stock appreciation rights, and stock appreciation rights of shares of common stock.  Under the 2011 Plan, incentive stock options may be granted at no less than the fair market value of the Company’s stock on the date of grant, and in the case of an optionee who is an affiliate, 110% of the market price on the date of grant.  As of November 30, 2014 and 2013, 10,700,000 and 6,500,000 option shares, respectively remain unissued.

The Company’s Non-employee Director Stock Option Plan provides for the grant of options to purchase 1,000 shares of the Company’s common stock to each non-employee director on the first business day following each annual meeting of the shareholders of the Company.  Under this Plan, options may be granted at no less than the fair market value of the Company’s common stock on the date of grant.