You are correct.
Here Is the verifiable story (gleaned from the 8k filings) of the change in control.
At the time the A/S was increased to 4 Billion, it was unlikely to happen as it would effectively put the Lily Li control block of 1,000,000 Preferred A shares in jeopardy, to which she, obviously, would not willingly agree.
So, in order to proceed, as reported in an 8K dated and filed on 7/14/2017, the Class A preferred shares voting rights were reduced from 1200 for each Class A preferred share to 400. They did this after previously intimidating and distracting her with a lawsuit. This move lowered her voting strength from 1.2 billion votes to 400 million votes.
Then, as reported in an 8K dated 9/18/2017 and filed on 9/21/2017, the board approved the issuance of 789,474 shares of newly designated Series E preferred shares to Michael Welch with voting rights of 2000 votes per share. This effectively gave Welch the control vote (1.578 billion votes) on any and all proposals to amend the Articles of Incorporation to increase the authorized capital stock of the company. The holders of Series E Preferred Stock shall have no other voting rights.
Welch and cronies were careful to have these filings separated by a couple of months, I suppose to keep their play from being too obvious to shareholders.
Clearly, these moves were undertaken to move their agenda forward and they have been rewarded handsomely with millions of shares.
The legality of the somewhat covert usurping of the control from Ms. Li is questionable and I doubt, should she choose to challenge through the courts, that it would stand.
What we have here is a huge potential mess that she may well address in a counterclaim to the action filed against her. We'll see in due course.
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