Item 5.01 Change of Control of Registrant.
As reported in Item 1.01 above, as a result of the issuance of the 28,500 shares of the Company's Series E Preferred Stock to the former shareholders of Omni, those shareholders acquired the right to vote 95% of the voting control of the Company. The Series E Preferred Stock is also convertible into common stock which, in the aggregate, would represent up to 95% of the outstanding common stock after the conversion. Additional information about the Series E Preferred Stock is provided in Item 5.03 below.
As reported in Item 5.02 below, Isaac Onn and Alex Ruckdaschel resigned as directors of the Company effective as of June 15, 2016, and Colm Wrynn was elected to fill one of the Board vacancies on June 21, 2016. Mr. Wrynn is the sole principal of one of the former Omni shareholders which, as of the Effective Date, acquired 9,500 shares of Series E Preferred Stock.
As also reported in Item 5.02 below, James Wemett resigned as a director effective as of ten (10) days after the delivery to the shareholders of the Company of the Information Statement pursuant to Rule 14f-1, and Dan Stelcer, the sole principal of one of the former Omni shareholders which holds 9,500 shares of Series E Preferred Stock, was elected to fill the vacancy when Mr. Wemett's resignation becomes effective.
Mr. Wemett's resignation as a director and Mr. Stelcer's election as a director are now effective.
As a result of the changes in the directors of the Company noted above and the changes in the officers of the Company reported in Item 5.02 below, each of Mr. Wrynn and Mr. Stelcer are now officers and directors of the Company and each, through an entity of which each is the sole beneficial owner, is the owner of voting control of 31.67% of the votes eligible to be cast on issues presented to the shareholders of the Company and, by virtue of the conversion provisions of the Series E Preferred Stock, the beneficial owner of at least that percentage of shares of Common Stock.
The information in Items 1.01 and 5.02 and other items of this Current Report are incorporated herein by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As disclosed in an Information Statement pursuant to Rule 14f 1 filed on June 28, 2016, two of the Company's directors, Isaac Onn and Alex Ruckdaschel, resigned from those positions on June 15, 2016. Neither resignation was the result of any disagreement with the management of the Company.
On June 21, 2016, to fill one of the Board vacancies, Colm Wrynn was elected as a director of the Company.
Effective as of the closing of the Exchange Transaction on the Effective Date, James Wemett, who had been the only officer of the Company, resigned as an officer of the Company, and Colm Wrynn, the President of Omni, became the President and Chief Executive Officer of the Company, and Daniel Stelcer, a Vice President of Omni, became the Secretary and Chief Operating Officer of the Company. Each of Mr. Wrynn and Mr. Stelcer, respectively, is the sole beneficial owner of one of the former Omni shareholders, each of which now owns 9,500 shares of Series E Preferred Stock. Mr. Wemett also resigned as a director of the Company, effective as of ten (10) days after the delivery to the shareholders of the Company of the Information Statement pursuant to Rule 14f-1, and Mr. Stelcer was elected to fill the vacancy when Mr. Wemett's resignation becomes effective. That Information Statement was delivered to the shareholders on July 1, 2016, and, accordingly Mr. Wemett's resignation and Mr. Stelcer's election are now effective. Mr. Wemett's resignation was not the result of any disagreement with the management of the Company.
In connection with the transaction contemplated by the Asset Purchase Agreement, Mr. Wemett waived all accumulated compensation due to him from the Company, the Transferee assumed certain liabilities relating to those transferred business activities, the Company and Mr. Wemett exchanged releases, and the Company issued to Mr. Wemett a six year divisible Warrant with cashless exercise to purchase up to 2,000,000 shares of the Company's common stock at a purchase price of $0.05 per share.
Biographical information relating to Mr. Wrynn and Mr. Stelcer were included in the Schedule 14f-1 filed by the Company with SEC on June 28, 2016.
The information in Item 1.01 and other items of this Current Report are incorporated herein by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws.
Series E Preferred Stock
On June 22, 2016, the Company filed the Certificate of Designation of Preferences, Rights and Limitations of Series E Preferred Stock (the "Certificate of Designation")
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with the Secretary of State of Nevada setting forth the rights and preferences of the Series E Preferred Stock. All of the authorized shares of Series E Preferred Stock were issued on June 23, 2016 (the "Effective Date").
A summary of material provisions of the Series E Preferred Stock as set forth in the Certificate of Designation is set forth below.
Designation, Amount and Par Value
The number of shares designated and authorized as Series E Preferred Stock is 28,500. Each share of Series E Preferred Stock has a par value of $0.001 per share and a stated value of $35.00 per share ("Stated Value").
Dividends
Holders of the Series E Preferred Stock will be entitled to receive cumulative dividends at the rate of 5% per annum of the Stated Value, payable quarterly commencing September 30, 2016. Such dividends shall be paid in duly authorized, fully paid, and non-assessable shares of Common Stock. The dividend share amount shall be valued at the volume weighted average price of the Common Stock for the ten consecutive trading days ending on the trading date that is immediately prior to the dividend payment date. Additionally, holders shall be entitled to receive dividends on shares of Series E Preferred Stock on an as if converted basis in the same form as dividends actually paid on shares of Common Stock if and when such dividends are paid. Dividends shall cease to accrue with respect to any shares of Series E Preferred Stock that is converted.
Conversion and Dilution
Each share of Series E Preferred Stock is convertible into shares of Common Stock according to a formula, which is based, depending on the date of conversion, on the actual issued and outstanding shares or the fully diluted shares as of the date of conversion (excluding shares outstanding then by reason of the conversion of any shares of Series E Preferred Stock or of the issuance of dividends on Series E Preferred Stock and subject to certain other adjustments as noted below). In general, conversion of all of the shares of the Series E Preferred Stock would represent up to 95% of the outstanding Common Stock after the conversion.
From the Effective Date until (but not including) the date which is 180 days before the second anniversary of the Effective Date, the determination of the number of shares of Common Stock outstanding is based on the actual number of outstanding shares as of the date of conversion. Thereafter and through the second anniversary of the Effective Date, the determination will be based on the outstanding shares on a fully diluted basis (excluding shares issuable on conversion of Series E Preferred Stock) on the conversion date. After the second anniversary of the Effective Date, such determination will be based on the outstanding on a fully diluted basis as of the second anniversary of the Effective Date (excluding shares issuable on conversion of Series E Preferred Stock).
As applied to the current outstanding shares as of the Effective Date, each share of Series E Preferred Stock would convert into approximately 1,940 shares of Common Stock. As the outstanding shares increases, that number will increase.
The Company will reserve and keep available
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out of its authorized unissued shares of Common Stock, sufficient shares for the sole purpose of issuance of shares upon conversion of the Series E Preferred Stock and payment of dividends on the Series E Preferred Stock. No fractional shares shall be issued upon conversion of the Series E Preferred Stock.
Liquidation
Holders of Series E Preferred Stock are not entitled to receive any distributions in the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary.
Voting
For so long as any Series E Preferred Stock is outstanding, each share of Series E Preferred Stock shall have the right to cast 1/300 of one (1) percent of the total votes eligible to be cast, so that if all 28,500 shares of Series E Preferred Stock are outstanding, the Series E Preferred Stock shall be entitled to an aggregate 95% of the total eligible votes on all matters, and the holders of the Common Stock and any other shares shall be entitled to a proportional share of the remaining 5%.
The foregoing summary of the provisions of the Series E Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the text of the Certificate of Designation, which is attached to this Current Report on Form 8-K/A, and is expressly made subject to the more complete information set forth therein.
Cancellation of Series B, C and D Preferred Stock
On the Effective Date, the holders of all of the Company's outstanding Series B and Series D Preferred Stock, including James Wemett (who was then a director of the Company and who, prior to the closing of the Exchange Transaction on the Effective Date, was the only officer and a principal shareholder of the Company), as the holder of the Series D shares, surrendered those shares to the Company.
After such surrender, there are no outstanding shares of the Company's Series B, Series C or Series D Preferred Stock. By resolution of the Board of Directors, on July 6, 2016, the Company filed with the office of the Secretary of State of Nevada a separate Certificate of Withdrawal of the Certificate of Designations of Preferences, Rights and Limitations for each of those Series. Copies of these Certificates of Withdrawal are attached as exhibits to this Current Report on Form 8-K/A.
The information in Item 1.01 and other items of this Current Report are incorporated herein by reference.
The statements made herein referencing the Exchange Agreement, the Asset Purchase Agreement,, the Warrant issued to Mr. Wemett, and the Series E Preferred Stock are qualified in their entirety by reference to the text of said documents, each of which is attached as an Exhibit to this Current Report on Form 8-K/A, and are expressly made subject to the more complete information set forth therein.