Stockholders Equity

12 Months Ended

Nov. 30, 2015

Equity [Abstract]

Stockholders Equity

7.       Stockholders’ Equity

Issuance of common stock to settle debt

During fiscal 2015, $309,170 of outstanding debt and $39,100 of interest was converted into 2,328,556,212 shares of the Company’s common stock, and the Company recognized a gain of $1,535,614 in conjunction with the settlement of the underlying derivative liabilities. 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 the fourth quarter of fiscal 2015, the Company issued 88,889,500 shares of common stock as part of a settlement of a $10,000 judgment.

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.

Outstanding Series of Preferred Stock

Series D Preferred Stock

On August 30, 2013, Pervasip issued 51 shares of Series D Preferred Stock to the Company’s Chief Executive Officer and another individual who was an officer at that time. The Series D shares have dividend rights equal to common stock on a share-for-share basis, but no liquidation rights. Each 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 - i.e. the ratio of the voting power of the aggregate Series D shares to the aggregate Common Stock is 51 to 49. The Company is required to 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.

Series E, F and G Preferred Stock

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. 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 E Preferred is convertible into the number of common shares equal to its voting 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 is convertible by the holder into 250,000 shares of the Company's Common Stock. Shares of Series F Preferred Stock are anti-dilutive to reverse splits, so that in the event of a reverse split, the shares are convertible into the same number of common shares after the reverse split as would have been issued before the reverse split. The conversion rate of Series F Preferred Stock, however, increases proportionately in the case of forward splits, and may not be diluted by a reverse split following a forward split.

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 is convertible into 500 shares of the Company's Common Stock. Shares of Series G Preferred Stock are anti-dilutive to reverse splits, so that in the event of a reverse split, the shares are convertible into the same number of common shares after the reverse split as would have been issued before the reverse split. The conversion rate of Series G Preferred Stock, however, increases proportionately in the case of forward splits, and may not be diluted by a reverse split following a forward split.

Series H Preferred Stock

Shares of Series H Preferred Stock are convertible by the holder into shares of Common Stock. The conversion ratio is such that if all authorized shares of Series H Preferred Stock are converted, the holder would own shares of Common Stock equal to 80% of the fully-diluted Common Shares. Each share of Series H Preferred Stock shall entitle the holder thereof, on all matters submitted to a vote of the stockholders of the Company, 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 Company’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 Company, the holders of the Series H Preferred Stock shall be entitled to receive in cash out of the net assets of the Company, 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.

Series I Preferred Stock

Each share of Series I Preferred Stock is convertible by the holder into shares of Common Stock at a conversion ratio equal to $10 divided by the conversion price, except that no conversion may result in the holder becoming the beneficial owner of more than 4.99% of the outstanding common shares. The conversion price is one hundred percent (100%) of the average of the five (5) lowest closing bid prices for the Common Stock during the ten (10) consecutive trading days immediately preceding the conversion date or other date of determination, as quoted by Bloomberg, LP

Each share of Series I Preferred Stock shall entitle the holder thereof, on all matters submitted to a vote of the stockholders of the Company, 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 I Preferred Stock are convertible on the record date for the stockholder action without taking into account potential conversions of any other convertible securities issued by the Company.

The Company’s Board of Directors shall not declare a dividend payable to holders of any class of stock other than Series I Preferred Stock until the Company shall have declared and paid dividends to the holders of Series I Preferred Stock equal in aggregate to the $10 Stated Value of the outstanding shares of Series I Preferred Stock.

Upon the liquidation, dissolution and winding up of the Company, the holders of the Series I Preferred Stock shall be entitled to receive in cash out of the net assets of the Company, 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 (a) $10 less (b) the amount of any dividends previously paid to the holders of the Series I Preferred Stock.

A total of 175,000 and 100,000 shares of Series I preferred stock issued to TCA as advisory fees are redeemable upon the occurrence of certain events that are outside the control of the company. These shares (and the common shares into which these shares may be converted, together, “Advisory Fee Shares”) are also mandatorily redeemable in the event that TCA has not realized net proceeds from the sale of the Advisory Fee Shares by the earlier of an event of default or on October 14, 2016 and November 18, 2016, for $175,000 and $100,000, respectively, less cash proceeds received from prior sales of Advisory Fee Shares. The total redemption amount of $275,000 is being accreted over the respective twelve month periods using the effective interest method. A total of $710 of preferred dividends were accreted for the Series I Preferred Stock issued to TCA during the year ended November 30, 2015.

Series J Preferred Stock

There are no liquidation rights associated with the Series J Preferred Stock. The Series J Preferred Stock is not convertible into any other class of stock.

Upon the Company’s receipt of notice of a default or an event of default under or pursuant to any document or agreement executed by the Company and TCA Global Credit Master Fund, LP (“TCA”), each share of the Series J Preferred Stock shall have voting rights equal to (x) 0.019607 multiplied by the total issued and outstanding Common Stock and Preferred Stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. Accordingly, the delivery of a notice of default by TCA would give TCA voting control of the Company.

Amendments to Increase Authorized Shares

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 in October 2013 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 expired on December 31, 2014.  These options were 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, 2015 and 2014.

	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, 2015
$.01		4,000,000		0.99	$	0.01		4,000,000	$	0.01
As of November 30, 2014
$.01 - $2.40		17,800,000		0.92	$	0.01		7,800,000	$	0.01

The following tables summarize information about options outstanding at November 30, 2015 and 2014: 

	Number of Shares			Exercise Price Per Share		Average Exercise Price
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
Granted during year ended November 30, 2015		—			—	$	—
Exercised/canceled during year ended November 30, 2015		(13,800,000	)		$0.01 - $0.10	$	0.01
Outstanding November 30, 2015		4,000,000			$ 0.01	$	0.01
Options exercisable, November 30, 2015		4,000,000			$0.01	$	0.01

The aggregate intrinsic value was $0 for both years ended November 30, 2015 and 2014. 

Warrants

The following tables summarize information about warrants outstanding at November 30, 2015 and 2014:

	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, 2015
$.001 - $1.00		83,123,333		5.13	$	0.02		83,123,333	$	0.02
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, 2013		63,125,833			$ 0.005 - $1.20	$	.02
Issued during year ended November 30, 2014						$
Exercised/canceled during year ended November 30, 2014		—			—	$	—
Outstanding November 30, 2014		63,125,833			$ 0.005 - $1.20	$	.02
Issued during year ended November 30, 2015		20,000,000			$0.001	$	0.001
Exercised/canceled during year ended November 30, 2015		(2,500	)		$1.20	$	$1.20
Warrants outstanding November 30, 2015		83,123,333			$ 0.001 - $1.00	$	.02
Warrants exercisable, November 30, 2015		83,123,333			$ 0.001 - $1.00	$	.02

Equity Incentive Plans and Restricted Stock Award Plan

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 2015 and 2014.

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, 2015 and 2014, 152,500 option shares 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, 2015 and 2014, 171,000 option shares 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, 2015 and 2014, 24,650,253 option shares 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, 2015 and 2014, 16,000,000 and 12,200,000 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.