surfkast Sunday, 04/05/20 09:36:20 AM Re: surfkast post# 82326 Post # of 82457 Series B Preferred Stock The Company is authorized to issue 150,000 shares of Series B Preferred Stock at a par value of $0.0001. The Series B Preferred Stock shall have no liquidation preference over any other class of stock and there will be no dividends due or payable on the Series B Preferred Stock. The Series B Preferred Stock converts into common stock at a ratio of 1:1,000. However, the Series B Preferred Stock may not be converted for a period of 12 months. The Company evaluated the conversion feature and concluded that it did not qualify as a derivative transaction. The Company evaluated the convertible preferred stock under FASB ACS 470-20-30 and determined it does not contain a beneficial conversion feature. F-12 Table of Contents On December 22, 2017, the board of directors approved the issuance of 1,678 shares of Series B Convertible Preferred Stock to four officers as part of compensation of $15,000 per officer. On March 10, 2017, the Company issued 23,430 shares of Series B Preferred Stock to our officers as compensation for a value of $42,172. During the year ended May 31, 2017, 17,078 shares of Series B Preferred Stock were converted at rate of 1 preferred share to 1,000 common shares, resulting in the issuance of 17,078,000 shares of common stock. As of May 31, 2018 and 2017, 150,000 and 148,322 shares of Series B Preferred Stock were issued and outstanding, respectively.