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Stockholders' Equity
6 Months Ended
Jun. 30, 2014
Stockholders' Equity Note [Abstract]  
Stockholders' Equity

10. Stockholders’ Equity

 

Authorized Shares

 

Effective April 4, 2014, the Company filed with the State of Nevada a Certificate of Amendment to Articles of Incorporation changing the Company’s number of authorized shares to 600,000,000. On or about June 10, 2014, the Company received approval from the Secretary of State of Nevada to increase the authorized shares to 2,000,000,000.

 

The Company has 2,000,000,000 authorized shares of its $0.00001 par value common stock and 20,000,000 shares of its $0.00001 par value Preferred Stock Series B as of June 30, 2014. On September 26, 2012, the Company authorized 10,000 Preferred Stock Series C shares, par value $0.00001.

 

Common Shares:

 

On September 2, 2013, effective September 1, 2013, Gopher International Trading Corp. (the “Company”) entered into an Evaluation License Agreement (the "ELA") with Micrologic Design Automation, Inc. ("MDA"), pursuant to which MDA temporarily licensed to the Company, on a non-exclusive and royalty-free basis, certain technology and related materials for any purpose related to evaluating NanoDRC, NanoRV and NanoLVS technology (the “Technology”).  On January 2, 2014, and effective December 31, 2013, the Company and MDA signed a letter agreement whereby MDA provided for a perpetual, royalty free, exclusive license of the Licensed Technology, as defined in the Evaluation License Agreement dated September 1, 2013, in exchange for 200 million shares of common stock (the “Shares”) of the Company.  MDA is not permitted to sell, assign, hypothecate or transfer the Shares in any way prior to the Company generating at minimum $50,000 in revenue through the use of the Technology (the “Revenue Target”).  A stop transfer legend shall be affixed to the certificate representing the Shares.  If the Revenue Target is achieved, then such stop transfer legend shall be removed.  The shares of common stock were issued under Section 4(2) of the Securities Act of 1933, as amended. (See Note 7)

 

During the six months ended June 30, 2014, Financier converted $44,200 of its note into 31,994,477 shares of common stock at an average conversion price of $0.0014 per share.

 

During the second quarter, Third Party converted $49,010 of its note into 91,000,000 shares at an average valuation of $0.000529 per share.

 

During the six months ended June 30, 2014, GV Global Communications, Inc converted 7,770 of its Series C Preferred Stocks into 54,651,667 common shares.

 

Treasury Stock

 

On April 25, 2011, the Company issued a press release announcing that its Board of Directors approved a share repurchase program. Under the program, the Company is authorized to purchase up to 1,000,000 of its shares of common stock in open market transactions at the discretion of management. All stock repurchases will be subject to the requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended and other rules that govern such purchases. As of December 31, 2013 and December 31, 2012, the Company had repurchased 38,000 of its common shares in the open market, which were returned to treasury.

 

    Total Number of     Average     Shares Purchased     Shares Remaining  
    Shares Purchased     Price Paid     Under Repurchase Plan     Under Repurchase Plan  
                         
Month                                
                                 
May 2011     23,500     $ 0.4095       23,500       976,500  
August 2011     9000     $ 0.1007       9,000       967,500  
November 2011     5500     $ 0.0964       5,500       962,000  
                                 
Weighted-average price paid per share     38,000     $ 0.2910       38,000          

  

Series B Preferred Shares

 

On November 1, 2011, the Company and certain creditors entered into a Settlement Agreement (the "Settlement Agreement") whereby without admitting any wrongdoing on either part, the parties settled all previous agreements and resolved any existing disputes. Under the terms of the Settlement Agreement, the Company agreed to issue the creditors 45,000 shares of Series B Preferred Stock of the Company on a pro-rata basis. Following the issuance and delivery of the shares of Series B Preferred Stock to said creditors, as well as surrendering the undelivered shares, the Settlement Agreement resulted in the settlement of all debts, liabilities and obligations between the parties.

 

The Series B Preferred Stock has a stated value of $100 per share and is convertible into the Company’s common stock at a conversion price of $0.30 per share representing 15,000,000 common shares. Furthermore, the Series B Preferred Stock votes on an as converted basis and carries standard anti-dilution rights. These rights were subsequently removed, except in cases of stock dividends or splits.

 

Series C Preferred Shares

 

On April 29, 2011, GV Global Communications, Inc. (“GV”) provided funding to the Company in the aggregate principal amount of $111,000 (the “Loan”).  On September 25, 2012, the Company and GV entered into a Conversion Agreement pursuant to which the Company agreed to convert the Loan into 10,000 shares of Series C Preferred Stock of the Company, which was approved by the Board of Directors.

 

Each share of Series C Preferred Stock is convertible, at the option of GV, into such number of shares of common stock of the Company as determined by dividing the Stated Value (as defined below) by the Conversion Price (as defined below).  The Conversion Price for each share is equal to a 50% discount to the average of the lowest three lowest closing bid prices of the Company’s common stock during the 10-day trading period prior to the conversion with a minimum conversion price of $0.002.  The stated value is $11.00 per share (the “Stated Value”).  The Series C Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series C Preferred Stock shall be entitled to one vote for each share of common stock that the Series C Preferred Stock shall be convertible into.   GV has contractually agreed to restrict its ability to convert the Series C Preferred Stock and receive shares of the Company's common stock such that the number of shares of the Company's common stock held by it and its affiliates after such conversion does not exceed 4.9% of the then issued and outstanding shares of the Company's common stock.

 

Effective October 21, 2013, GV notified the Company of its intention to convert 345 of Series C Preferred into 1,897,500 shares of common stock of the Company, representing a conversion price of $0.002 per share. The Company instructed its transfer agent to issue the required shares to GV. On November 5, 2013, 2013, GV notified the Company of the additional conversion of 380 of Series C Preferred into 2,090,000 shares of common stock of the Company. On November 11, 2013, 2013, GV notified the Company of the additional conversion of 380 of Series C Preferred into 2,090,000 shares of common stock of the Company. On November 26, 2013, 2013, GV notified the Company of the additional conversion of 425 of Series C Preferred into 2,337,500 shares of common stock of the Company. On January 2, GV notified the Company of the additional conversion of 1,800 of its Series C Preferred into 9,900,000 shares of common stock of the Company. After these conversions, GV holds 6,670 Series C Preferred shares as of March 31, 2014.

 

During the six months ended June 30, 2014, GV Global Communications, Inc converted 7,770 of its Series C Preferred Stocks into 54,651,667 common shares. As of June 30, 2014, GV still holds 700 Series C Preferred Shares.

 

The following table shows how the conversions were accounted for within the Series C and Common Stock Additional Paid in Capital accounts:

 

    Series C                 Series C        
    Convertible Preferred                 Convertible Preferred        
    Stock     Common Stock     Stock     Common Stock  
                            Additional Paid     Additional Paid  
    Shares     Amount     Shares     Amount     In Capital     In Capital  
Balances at December 31, 2013     8,470     $ -       247,303,586     $ 2,473     $ 188,322     $ 2,050,621  
                                                 
Conversion of Series C Preferred Stock to Common Stock     (7,770 )             64,551,667       646       (172,758 )     172,112  
Conversion of note payable to common stock                     122,994,477       1,230               91,980  
                                                 
Balances at June 30, 2014     700     $ -       434,849,730     $ 4,349     $ 15,564     $ 2,314,713  

 

This presentation shows the impact on the Additional Paid-in Capital account for the Series C Preferred and Common Stock, whereas the financial statements present the Additional Paid-in Capital as one combined account.

 

The issuance of the Series C Preferred Stock was made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated under Regulation D thereunder.  GV is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.