11.  STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock

On January 25, 2019, the Board of Directors of the Company approved a resolution to increase the number of authorized preferred shares to 20,000,000 shares.

Series A Preferred Stock

In March 2015, the Company filed with the State of Nevada a Certificate of Designation establishing the designations, preferences, limitations and relative rights of 1,000,000 shares of the Company's Series A preferred stock.  Holders of the Series A preferred stock have the right to vote in aggregate, on all shareholder matters equal to 1,000 votes per share of Series A preferred stock.  The shares of Series A preferred stock are not convertible into shares of common stock.

The Company has 1,000,000 shares of Series A preferred stock authorized, with 500,000 shares issued and outstanding as of June 30, 2022 and 2021, which were issued in March 2015 to members of the Company’s Board of Directors in consideration for services.

Series B Preferred Stock

On December 21, 2015, the Company filed a Certificate of Designation for a new Series B convertible preferred stock with the State of Nevada following approval by the board of directors of the Company. Five Hundred Thousand (500,000) shares of the Company's authorized preferred stock are designated as the Series B convertible preferred stock, par value of $0.001 per share and with a stated value of $0.001 per share (the "Stated Value"). Holders of Series B preferred stock shall be entitled to receive dividends, when and as declared by the Board of Directors out of funds legally available therefor. At any time and from time to time after the issuance of shares of the Series B preferred stock, each issued share of Series B preferred stock is convertible into 100 shares of the Company’s common stock.  The holders of the Series B preferred stock shall have the right to vote together with holders of common stock, on an as "converted basis", on any matter that the Company's shareholders may be entitled to vote on, either by written consent or by proxy. Upon any liquidation, dissolution or winding-up of the Company, the holders of the Series B preferred stock shall be entitled to receive out of the assets of the Company, whether such assets are capital or surplus, for each share of Series B preferred stock an amount equal to the Stated Value, and all other amounts in respect thereof then due and payable prior to any distribution or payment shall be made to the holders of any junior securities.  The number of authorized Series B preferred stock was later increased to 1,000,000 shares.

The Company had 902,633 and 727,370 shares issued and outstanding as of June 30, 2022 and 2021, respectively.

During the year ended June 30, 2021, the Company issued to Mr. Rubakh 350,000 shares of Series B convertible preferred stock valued on an “as converted to common” basis at $16,537,500, using the closing market price of the Company’s common stock on that date. Each share of Series B preferred stock is convertible into 100 shares of the Company’s common stock. This non-cash, related party stock-based compensation is included in operating expenses in the accompanying statements of operations. 

In February 2021, Mr. Rubakh converted 52,630 shares of Series B preferred stock into 5,263,000 shares of common stock in a transaction recorded at the par value of the shares. 

During the year ended June 30, 2022, the Company issued to Mr. Rubakh 200,000 shares of Series B convertible preferred stock valued on an “as converted to common” basis at $2,438,700, using the closing market price of the Company’s common stock on that date. Each share of Series B preferred stock is convertible into 100 shares of the Company’s common stock. This non-cash, related party stock-based compensation is included in operating expenses in the accompanying statements of operations.

In August 2021, Mr. Rubakh converted 24,737 shares of Series B preferred stock into 2,473,700 shares of common stock in a transaction recorded at the par value of the shares. 

Common Stock

On January 25, 2019, the Board of Directors of the Company approved a resolution to increase the number of authorized common shares to 250,000,000.  The Company had 207,246,592 and 194,487,662 common shares issued and outstanding as of June 30, 2022 and 2021, respectively.

During the year ended June 30, 2021, the Company issued a total of 91,323,202 shares of its common stock:  30,000,000 shares issued for cash of $8,135,000; 52,723,031 shares in conversion of $960,311 note principal, $34,258 accrued interest payable, and $5,300 in fees; 55,555 shares in the repayment of a stock subscription payable of $33,888, 281,616 shares for services valued at $49,149; 5,263,000 shares issued in conversion of Series B preferred stock recorded at par value of $5,263; and 3,000,000 shares issued as equity incentive shares in the sale of Series C and D preferred stock recorded at total market value of $384,100 and recorded as a cost of capital.  No gain or loss was recorded as the conversions were completed within the terms of the debt agreements and the transactions resulted in the extinguishment of derivative liabilities totaling 466,093. 

During the year ended June 30, 2022, the Company issued a total of 12,758,930 shares of its common stock:  2,473,700 shares issued in conversion of Series B preferred stock recorded at par value of $2,474; 8,000,000 shares for common stock payable of $5,480,000, 285,230 shares for services valued at $45,943, and $2,000,000 shares as an inducement to enter Promissory Note (see Note 9).

On March 30, 2021, the Company entered into securities purchase agreements (the “Purchase Agreements”) with two institutional investors (the “Purchasers”), for the offering (the “Offering”) of (i) 30,000,000 shares of common stock (“Shares”), par value $0.001 per share, of the Company (“Common Stock”) and (ii) common stock purchase warrants (“Warrants”) to purchase up to an aggregate of 30,000,000 shares of Common Stock, which are exercisable for a period of five years after issuance at an initial exercise price of $0.30 per share, subject to certain adjustments, as provided in the Warrants. Each of the Purchasers received Warrants in the amount equal to 100% of the number of Shares purchased by such Purchaser. Each Share and accompanying Warrant were offered at a combined offering price of $0.30. Pursuant to the Purchase Agreements, the Purchasers purchased the Shares and accompanying Warrants for an aggregate purchase price of $9,000,000.  The transaction closed on April 1, 2021, with the Company receiving proceeds of $8,135,000 after payment of expenses.

Common Stock Payable

As of June 30, 2021, the Company was obligated to issue a total of 8,000,000 shares of its common stock to two consultants and recorded a common stock payable of $5,480,000, based on the market value of the common shares on the date of the consulting agreements. In July 2021, the Company issued 8,000,000 shares of its common stock in satisfaction of this obligation.