STOCKHOLDERS' EQUITY (DEFICIT)

9 Months Ended

Jun. 30, 2015

Notes to Financial Statements

STOCKHOLDERS' EQUITY (DEFICIT)

Series A Convertible Preferred Stock

At June 30, 2015, we had 10 million authorized shares of Series A Prefs. At June 30, 2015 and September 30, 2014, we had 1,360,874 and 1,500,000 shares of Series A Prefs outstanding. We accounted for the Series A Prefs as a derivative liability (See Note 8).

Each share of Series A Prefs has a stated value of $2.00 and is convertible into shares of common stock equal to the stated value (and all accrued but unpaid dividends) divided by a conversion price equal to the lower of (i) $0.02 and (ii) twenty percent (20%) of the lowest dollar volume weighted average price, as defined (“VWAP”) of the common stock on the trading day during the twenty (20) consecutive trading days ending on the trading day immediately preceding the conversion date (subject to adjustment).  The Series A Prefs accrue dividends at a rate of 12% per annum, payable quarterly in arrears in cash or in kind, subject to certain conditions being met.  The Series A Prefs contain a seven year “make-whole” provision such that if Series A Prefs are converted prior to the seventh anniversary of the date of original issuance, the holder is entitled to receive the remaining amount of dividends that would accrue from the date of the conversion until such seven year anniversary.  The Company is prohibited from effecting the conversion of Series A Prefs to the extent that as a result of such conversion, the holder would beneficially own more than 2.49%, in the aggregate, of the issued and outstanding shares of the Company’s common stock, calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series A Prefs.

Paid dividends related to Series A Prefs at June 30, 2015 amounted to $233,657. Undeclared dividends related to Series A Prefs as of June 30, 2015 and September 30, 2014 amounted to approximately $244,500 and $0, respectively and is included under “Accrued Expenses” in the balance sheet.

Series B Convertible Preferred Stock

At June 30, 2015, we had 3,200,000 authorized and outstanding shares of Series B Prefs. We accounted for the Series B Prefs as a derivative liability (See Note 8).

Each share of Series B Prefs has a stated value of $0.50 and is convertible into shares of common stock equal to the stated value (and all accrued but unpaid dividends) divided by a conversion price equal to the lower of (i) $2.50 and (ii) during the period commencing on the Initial Issuance Date and ending on the first Trading Day following the six (6) month anniversary of the Initial Issuance Date that there is traded a minimum of 30,000,000 shares at a price of $0.50 or greater, twenty percent (20%) of the lowest VWAP of the Common Stock on the Trading Day during the twenty  (20) consecutive Trading Days ending on the Trading Day immediately preceding the Conversion Date, subject to adjustment..

Series C Convertible Preferred Stock

At June 30, 2015, we had 3,500,000 authorized and issued shares of Series C Convertible Preferred Stock (“Series C Prefs”). Each share of Series C Prefs has a stated value of $0.001 and is convertible into 3.3514834 shares of our common stock for each share of Series C Prefs surrendered.

Common Stock

On March 19, 2014, the holders of our outstanding voting capital approved an amendment to our Articles of Incorporation to increase the number of shares of our authorized common stock from 40 million to 80 million.

On August 22, 2014, we filed a Certificate of Amendment to our Articles of Incorporation to effect a 1-for-200 reverse split of our issued and outstanding common stock.

On December 9, 2014, we filed a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of Nevada which effected a 1-for-10 reverse stock split of our common stock; reduced the number of shares of our authorized common stock from 800,000,000 to 80,000,000; reduced the par value of our common stock from $0.001 per share to $0.0001 per share. FINRA confirmed the effectiveness of the reverse stock split on January 27, 2015.

At June 30, 2015 we had 80 million shares of authorized $0.0001 par value common stock. At June 30, 2015 and September 30, 2014, we had 80 million and 233,808 shares issued and outstanding, respectively, of common stock.

Transactions during the Nine Months Ended June 30, 2015

During the nine months ended June 30, 2015, we issued 734,895 shares of common stock to athletes and marketing consultants valued at approximately $316,739 pursuant to termination agreements; 676,000 shares of common stock to management valued at approximately $2,230,800 pursuant to termination agreements; 69,818,787 shares of common stock valued at approximately $9,211,461 pursuant to conversions of Series A Prefs; and 3,269,808 shares of common stock valued at approximately $10,790,367 in connection with the Merger. Holders of 1,252 shares of Series A Prefs were converted into 5,266,702 shares of common stock.