SCHEDULE
14C INFORMATION STATEMENT
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Statement Pursuant to Section 14(c)
of the
Securities Exchange Act of 1934
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Preliminary Information Statement
[ ]
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Definitive Information Statement
iMEDICOR,
INC.
(Name
of Registrant As Specified In Its Charter)
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computed on table below per Exchange Act Rules 14c5(g) and
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iMEDICOR,
INC.
13506
Summerport Parkway #160
Windermere,
FL 34786
INFORMATION
STATEMENT OF ACTION BY WRITTEN
CONSENT
OF STOCKHOLDERS
To our
Stockholders:
On
March 30, 2017, stockholders of iMedicor, Inc. (the
“Company”) holding not less than two-thirds of the
outstanding shares of each of its Common Stock, its Series A
Preferred Stock and its Series B Preferred Stock approved a
recapitalization of the Company (the
“Recapitalization”), that will include:
1.
The amendment of
the Articles of Incorporation of the Company to increase the number
of shares of Common Stock that the Company is authorized to issue
from two billion (2,000,000,000) to twenty billion
(20,000,000,000).
2.
The amendment of
the Series A Preferred Stock Certificate of Designation to provide
that the Series A Preferred Stock may be converted by the Company
into shares of Common Stock at any time.
3.
The amendment of
the Series B Preferred Stock Certificate of Designation to provide
that the Series B Preferred Stock may be converted by the Company
into shares of Common Stock at any time.
4.
The conversion by
holders of convertible debt in an aggregate principal amount of
approximately $6,300,000 (as of April 30, 2017) into shares of
Common Stock.
5.
The conversion of
the Series B Preferred Stock into shares of Common
Stock.
6.
The conversion of
the Series A Preferred Stock into shares of Common
Stock.
7.
The combination of
the outstanding shares of Common Stock so that immediately
following such reverse split the number of shares of Common Stock
outstanding shall be 10,000,000 shares (the “Reverse
Split”), provided, however, no fractional share of Common
Stock shall remain outstanding following the Reverse Split and in
lieu thereof each holder who otherwise would receive a fractional
share shall be entitled to receive cash therefor.
8.
The amendment and
restatement of the Articles of Incorporation to provide that the
Company shall be authorized to issue 610,000,000 shares, consisting
of 600,000,000 shares of Common Stock, of which approximately
10,000,000 shares shall be outstanding, and 10,000,000 shares of
Preferred Stock, none of which shall be outstanding.
9.
The amendment and
restatement of the By-Laws of the Company.
The
Recapitalization will be effective upon the filing of certain
certificates with the Secretary of the State of Nevada and is
scheduled to occur on April 30, 2017 (the "Recapitalization
Date").
Immediately
following the Recapitalization, the Company will further amend and
restate its Articles of Incorporation to change the name of the
Company from iMedicor, Inc. to iCoreConnect Inc.
Also,
the stockholders of the Company have approved the 2016 Long-Term
Incentive Compensation Plan of the Company and the 2016 Incentive
Bonus Compensation Plan of the Company that the Board of Directors
had previously approved and adopted subject to the approval of the
stockholders of the Company.
This
Definitive Information Statement is being mailed on April ___, 2017
to all stockholders of record as of the close of business on April
1, 2017.
By
Order of the Board of Directors:
Robert
McDermott
President
iMEDICOR,
INC.
13506
Summerport Parkway #160
Windermere
FL, 34786
INFORMATION
STATEMENT OF ACTION BY WRITTEN
CONSENT
OF STOCKHOLDERS
WE ARE
NOT ASKING YOU FOR A PROXY,
AND YOU
ARE REQUESTED NOT TO SEND US A PROXY
I.
INTRODUCTORY STATEMENT
The
Company was incorporated under the laws of the State of Nevada on
November 2, 1992 as E & M Management, Inc. ("E&M"). E&M
entered into a certain Plan and Agreement of Merger (the "Merger
Agreement") dated July 29, 1998 with Omninet International, Inc.
("Omninet"), and, subject to numerous terms and conditions, E&M
was to be merged with and into Omninet, whereby Omninet would be
the surviving corporation. In anticipation of the proposed merger,
on September 18, 1998 E&M changed its name to Omninet
International, Inc. As a result of a failed business venture at
Omninet, Omninet and E&M entered into a Mutual Termination
Agreement and Release dated as of October 27, 1999 that terminated
the Merger Agreement. On December 6, 1999, the Company changed its
name to OMII Corp.
Pursuant to a Share
Exchange Agreement dated October 12, 2005, the Company issued an
aggregate of 17,600,000 shares of Common Stock, representing
approximately 80% of the Common Stock immediately outstanding after
the transaction, to the stockholders of Vemics, Inc., a Delaware
corporation ("Vemics-Delaware"), in exchange for all of the
outstanding stock of Vemics-Delaware. Following this transaction,
Vemics-Delaware became a wholly owned subsidiary of the Company,
though for accounting purposes Vemics-Delaware was deemed to have
been the acquirer in a "reverse merger."
On
October 25, 2005, the Company amended its Articles of Incorporation
to increase the total number of its authorized shares of Common
Stock from twenty five million (25,000,000) shares to seventy five
million (75,000,000) shares and changed its name to Vemics,
Inc.
On
April 15, 2008, the Company amended and restated its Articles of
Incorporation to increase the aggregate number of shares of stock
that the Company had authority to issue to three hundred million
(300,000,000) shares, consisting of two hundred million
(200,000,000) shares of common stock (the "Common Stock") and one
hundred million (100,000,000) shares of preferred stock (the
"Preferred Stock").
On July
24, 2009, the Company amended its Articles of Incorporation to
change the name of the Company to iMedicor, Inc.
On May
3, 2010, the Company amended its Articles of Incorporation to
provide that the aggregate number of shares of stock that the
Company had authority to issue was seven hundred million
(700,000,000) shares, consisting of six hundred million
(600,000,000) shares of Common Stock and one hundred million
(100,000,000) shares of Preferred Stock (the “Preferred
Stock’).
On
October 10, 2011, the Company filed a Certificate of Designation
creating a series of Preferred Stock consisting of 28 authorized
shares of Preferred Stock designated as “Series A Preferred
Stock” and setting forth the voting powers, designation,
preferences, limitations, restrictions and related rights of the
Series A Preferred Stock (the “Series A Preferred Stock
Certificate of Designation”).
On
October 10, 2011, the Company filed a Certificate of Designation
creating a series of Preferred Stock consisting of 60 authorized
shares of Preferred Stock designated as “Series B Preferred
Stock” and setting forth the voting powers, designation,
preferences, limitations, restrictions and related rights of the
Series B Preferred Stock (the “Series B Preferred Stock
Certificate of Designation”).
On July
27, 2012, the Company amended its Articles of Incorporation to
provide that the number of shares of stock that the Company had
authority to issue was two billion (2,000,000,000)
shares.
On
December 19, 2012, the Company filed a Certificate of Correction to
correct its Articles of Incorporation to provide that the aggregate
number of shares of stock that the Company had authority to issue
was two billion one hundred million (2,100,000,000) shares,
consisting of two billion (2,000,000,000) shares of Common Stock
and one hundred million (100,000,000) shares of Preferred
Stock.
On
March 22, 2013, the Company amended the Series A Preferred Stock
Certificate of Designation to increase the number of shares
constituting such series to up to 37 and to redefine the powers,
preferences, rights and limitations of the Series A Preferred
Stock.
On
March 22, 2013, the Company amended the Series B Preferred Stock
Certificate of Designation to increase the number of shares
constituting such series to up to 63 and to redefine the powers,
preferences, rights and limitations of the Series B Preferred
Stock.
Throughout the
period commencing with the incorporation of the Company to the date
of this Information Statement the Company has issued shares of its
Series A Preferred Stock, Series B Preferred Stock and Common
Stock, as well as securities convertible into or exercisable or
exchangeable for shares of its Common Stock in exchange for funds
used by the Company to operate the business of the Company and/or
for services rendered to or on behalf of the Company.
As of
the date of this Information Statement (i.e. before the Reverse
Split referred to in paragraph 6 under Section III of this
Information Statement), the Company has or will have issued and
outstanding:
(i)
convertible debt convertible into shares of Common Stock as
follows:
Amount of
Principal and
Accrued and
Unpaid Interest
(as of April 30,
2017)
|
|
|
|
|
|
$
14,527,187
|
6,318,282,638
|
(ii)
shares of stock as follows:
|
Class of Stock
|
|
|
Series
A Preferred Stock
|
35.75
|
|
Series
B Preferred Stock
|
63.075
|
|
Common
Stock
|
1,419,651,828
|
(iii)
options and warrants exercisable for shares of Common Stock as
follows:
|
Type of Security
|
|
|
Options
|
441,633,333
|
|
Warrants
|
104,684,654
|
II.
ELECTION OF DIRECTORS AND OFFICERS
The
Company had not held an annual meeting of stockholders of the
Company for the election of directors for more than eighteen (18)
months. As a result, stockholders holding not less than a majority
of the voting power of the Company signed a written consent dated
June 7, 2016 determining that the number of directors constituting
the Board of Directors is three (3) and electing JD Smith, Robert
McDermott and Jeffrey Stellinga as Directors of the Company to
serve until the next annual meeting of the stockholders of the
Company and until their successors are duly elected and
qualified.
At a
meeting of the Board of Directors of the Company held on August 17,
2016 the Board of Directors of the Company elected Robert McDermott
as President and Donald Douglas as Secretary of the Company and
designated Mr. McDermott as Chief Executive Officer, Donald Sproat
as Chief Financial Officer and Mr. Douglas as Chief Operating
Officer of the Company. At the same meeting, the Board appointed
Mr. Smith and Mr. Stellinga as members of the Audit Committee, the
Compensation Committee and the Nominating and Governance Committee
and designated Mr. Smith as Chairman of the Compensation Committee
and the Nominating and Governance Committee and Mr. Stellinga as
Chairman of the Audit Committee.
III.
THE RECAPITALIZATION
On
March 30, 2017, stockholders of the Company holding not less than
two thirds of the outstanding shares of each of the Series A
Preferred Stock of the Company (the “Series A Preferred
Stock”) and the Series B Preferred Stock of the Company (the
“Series B Preferred Stock” and, together with the
Series A Preferred Stock, the “Preferred Stock”) and
the holders of not less than a majority of the outstanding shares
of Common Stock, as well as the holders of convertible debt of the
Company (the “Convertible Debt Holders”) who will hold
as of April 30, 2017 approximately $6,300,000 of indebtedness
(principal and accrued and unpaid interest thereon) of the Company
convertible into shares of Common Stock of the Company (the
“Convertible Debt”),
entered into a Recapitalization Agreement dated as
of November 1, 2016 (the "Recapitalization Agreement") for the
purpose of recapitalizing the Company (the "Recapitalization"). A
copy of the Recapitalization Agreement is attached to this
Information Statement as Exhibit I.
The
parties to the Recapitalization Agreement agreed that the
Recapitalization would take place on such date as the Company, in
its sole discretion, would designate in a written notice to all of
the parties to the Recapitalization Agreement (the
"Recapitalization Date”). The Board of Directors has
designated April 30, 2017 as the Recapitalization Date and written
notice thereof has been given to all of the parties to the
Recapitalization Agreement.
Pursuant
to the Recapitalization:
1.
Amendment of Articles of
Incorporation.
Section 3.1 of the Articles of Incorporation
shall be amended to increase the number of shares of Common Stock
that the Company is authorized to issue from two billion
(2,000,000,000) to twenty billion (20,000,000,000) and, in
connection therewith, the Company shall prepare, execute, and file
with the Secretary of State of the State of Nevada an Amendment of
Articles of Incorporation.
The
purpose of this amendment is to increase the number of authorized
but unissued shares of Common Stock in order that the Company shall
have available enough authorized shares of Common Stock to issue if
all outstanding debt securities, shares of Series B Preferred Stock
and shares of Series A Preferred Stock convertible into or for
which options or warrants may be exercisable or exchangeable are
converted, exercised and/or exchanged.
2.
Amendment of Series B
Preferred Stock Certificate of Designation.
Clause (b) of
Section 4 of the Series B Preferred Stock Certificate of
Designation shall be amended to read as follows:
“(b) at the
option of the Company at any time”.
and, in
connection therewith, the Company shall prepare, execute, and file
with the Secretary of State of the State of Nevada an Amendment of
Certificate of Designation amending the Series B Preferred Stock
Certificate of Designation.
The
purpose of this amendment is to permit the Company at its option to
cause the conversion of all outstanding shares of Series B
Preferred Stock.
3.
Amendment of Series A Preferred Stock
Certificate of Designation.
Clause (b) of Section 4 of the
Series A Preferred Stock Certificate of Designation shall be
amended to read as follows:
“(b) at the
option of the Company at any time”.
and, in
connection therewith, the Company shall prepare, execute, and file
with the Secretary of State of the State of Nevada an Amendment of
Certificate of Designation amending the Series A Preferred Stock
Certificate of Designation.
The
purpose of this amendment is to permit the Company at its option to
cause the conversion of all outstanding shares of Series A
Preferred Stock.
4.
Conversion
of
Convertible Debt.
The holders
of the Convertible Debt (the “Convertible Debt
Holders”) shall convert all of the Convertible Debt
(consisting of approximately $6,300,000 aggregate principal amount
of indebtedness) held by the Convertible Debt Holders at a price
per share of $0.001 into approximately 6,300,000,000 shares of
Common Stock, in the manner set forth in the instruments relating
to the Convertible Debt.
If
for any reason the Recapitalization occurs either before April 30,
2017, based on the amount of interest due and not paid, the number
of shares of Common Stock into which the Convertible Debt shall
convert will decrease and, if for any reason the Recapitalization
occurs after April 30, 2017, based on the amount of interest due
and not paid, the number of shares of Common Stock into which the
Convertible Debt shall convert will increase.
The
conversion of the Convertible Debt into shares of Common Stock will
simplify and add equity to the capitalization of the
Company.
5.
Conversion of the Series B Preferred
Stock and, immediately thereafter conversion of the Series A
Preferred Stock.
Immediately following the conversion of the
Convertible Debt into shares of Common Stock, the Company shall
convert the Series B Preferred Stock and immediately thereafter the
Series A Preferred Stock into shares of Common Stock in the manner
set forth in section 4(b) of the Series B Preferred Stock
Certificate of Designation and section 4(b) of the Series A
Preferred Stock Certificate of Designation,
respectively.
The
purpose of causing all outstanding shares of Series B Preferred
Stock and all outstanding shares of Series A Preferred Stock to be
converted into shares of Common Stock is to simplify the
capitalization of the Company and eliminate the potential
dilution
that the
outstanding shares of Series B Preferred Stock and Series A
Preferred Stock represent which the Company believes may depress
the value of the Common Stock and restrict the ability of the
Company to raise funds to conduct its operations and to add value
to the Company and its Common Stock.
6.
Reverse Split of Shares of Common
Stock.
Immediately following the conversion of the
Convertible Debt, the Series B Preferred Stock and the Series A
Preferred Stock, the Company shall combine its outstanding shares
of Common Stock by a ratio to be determined by the Company’s
Board of Directors, in its sole discretion, so that immediately
following such reverse split the number of shares of Common Stock
shall be 10,000,000 shares (the “Reverse Split”);
provided however, no fractional share of Common Stock shall remain
outstanding and in lieu of any fractional share of Common Stock
that otherwise would be outstanding, the holder thereof shall be
entitled to receive and the Company shall pay to such holder of
such fraction, that amount equal to such fraction times that amount
that the Board shall determine in good faith to be the value of a
share of Common Stock on the Recapitalization Date.
In
order for a stockholder to receive a new stock certificate
evidencing the shares of Common Stock of the Company into which the
shares of Common Stock owned by such stockholder on the
Recapitalization Date shall have been converted as a result of the
Reverse Split and the Cash Payment which such stockholder shall be
entitled to receive in lieu of any fractional share of Common Stock
which such stockholder otherwise would have been entitled to
receive, such stockholder should complete the Letter of Transmittal
accompanying this Information Statement and return it, accompanied
by the stock certificates evidencing such stockholder’s
shares in the Company, to Pacific Stock Transfer
Company.
7.
Dissenter’s Rights.
Nevada Revised Statutes (“NRS”) 78.205 provides that
any proposed corporate action that would result in only money being
paid or scrip being issued to stockholders who:
(i)
before the proposed
corporate action becomes effective, hold 1 percent or more of the
outstanding shares of the affected class or series;
and
(ii)
would otherwise be
entitled to receive a fraction of a share in exchange for the
cancellation of all their outstanding shares,
is
subject to the provisions of NRS 92A.300 to 92A.500, inclusive. If
the proposed corporate action is subject to those provisions, any
stockholder who is obligated to accept money or scrip rather than
receive a fraction of a share resulting from the action taken
pursuant to Section 78.205 may dissent in accordance with those
provisions and obtain payment of the fair value of the fraction of
a share to which the stockholder would otherwise be entitled.
Copies of NRS 78.205 and NRS 92A.300 to 92A.500 are attached hereto
as Exhibit II.
Accordingly,
because the Reverse Split could conceivably result in the payment
of cash to a stockholder in lieu of the issuance of a fractional
share as provided in NRS 78.205 and was approved by a written
consent of stockholders without a meeting, it is possible that a
stockholder may be entitled to the notice prescribed by NRS 92A.430
of such stockholder’s dissenter’s rights
(“Dissenter’s Rights”) as set forth in NRS
92A.300 to 92A.500. If such a stockholder of record exists,
iMedicor, Inc. will give to such stockholder the notice prescribed
by NRS 92A.430. iMedicor, Inc. considers the cash payment that any
such stockholder would receive to satisfy the requirements of
Nevada law to pay “fair value” in lieu of fractional
shares. If, however, a stockholder does not agree that such payment
represents “fair value,” such stockholder may assert
Dissenter’s Rights.
The
Notice prescribed by NRS 92A.430 is hereby given to each
stockholder of record who held 1 percent or more of the outstanding
shares of Common Stock and is entitled to receive cash in lieu of
the fractional share of Common Stock that such stockholder would
otherwise be entitled to receive. Accordingly, if any such
stockholder does not agree that the cash payment that such
stockholder would receive does not represent “fair
value,” such stockholder may assert such stockholder’s
Dissenter’s Rights by making a written demand, accompanied by
the stock certificates evidencing such stockholder’s shares
of the Company no later than the date thirty (30) days following
the date on which the Company mails notice of the Reverse Split to
each of its stockholders, delivered to the Company, 13506
Summerport Parkway, Suite 160, Windermere, Florida 34786. Attached
hereto as Exhibit III is a form for asserting Dissenter’s
Rights which any stockholder who wants to assert Dissenter’s
Rights should complete and return to the Company. If a stockholder
who is otherwise entitled to assert Dissenter’s Rights in the
manner described above does not do so by _________, 2017, such
stockholder will be deemed to have waived such stockholder’s
Dissenter’s Rights under the Nevada Revised Statutes. If a
stockholder has any questions regarding the foregoing, such
stockholder should review the instructions included in the Letter
of Transmittal, a copy of which is attached hereto as Exhibit IV or
feel free to contact the exchange agent at the number and/or
address shown in the Letter of Transmittal.
8.
Amendment and Restatement of Articles
of Incorporation.
The Articles of Incorporation shall be
amended and restated in its entirety to read as set forth in
Exhibit 2.8 of the Recapitalization Agreement (the "Reverse Split
Amendment") to reflect the Reverse Split and to provide that,
following the filing of the Reverse Split Amendment, the Company
shall be authorized to issue six hundred ten million (610,000,000)
shares, consisting of six hundred million (600,000,000) shares of
Common Stock, of which approximately ten million (10,000,000)
shares shall be outstanding, and ten million (10,000,000) shares of
Preferred Stock, none of which shall be outstanding. Following the
filing of the Reverse Split Amendment, the Company anticipates that
the Company shall continue to have outstanding convertible debt in
the aggregate principal amount of approximately $8,227,187
convertible into 18,282,638 shares of Common Stock and
Non-Convertible Debt (exclusive of trade debt and other payables
incurred in the operation of the business of the Company in the
ordinary course) of approximately $2,019,560.
9.
Amendment of By-Laws.
The
By-Laws of the Company shall be amended and restated in their
entirety to read as set forth in Exhibit 2.9 of the
Recapitalization Agreement.
The
Recapitalization will be effective upon the filing of the Reverse
Split Amendment with the Secretary of the State of the State of
Nevada (the "Effective Date") which the Company intends to occur
promptly following the date 20 days following the date on which
this Information Statement is sent or given to each holder of
shares of Class A Preferred Stock, Class B Common Stock and Common
Stock and to each holder of a security issued by the Company
convertible into or excisable or exchangeable for shares of Common
Stock.
IV.
CHANGE OF COMPANY NAME
Immediately
following the Recapitalization, the Company will further amend and
restate its Articles of Incorporation to change the name of the
Company from iMedicor, Inc. to iCoreConnect Inc. In connection
therewith, the Company will file with the Secretary of State of the
State of Nevada amended and restated Articles of Incorporation in
the form attached hereto as Exhibit V.
The
purpose of this amendment to change the name of the Company is to
reflect the fact that the business of the Company has expanded and
is no longer limited to the medical field.
The
Company has been raising, and continues to raise, funds on a best
efforts basis up to a maximum amount of $10,000,000 for working
capital by issuing convertible promissory notes (the “Bridge
Notes”) with warrants (the “Bridge Warrants”).
The Bridge Notes bear interest at the rate of 18% per annum and are
payable at the earlier of December 31, 2016 (the “Maturity
Date”) or conversion. The Bridge Notes (principal and accrued
and unpaid interest) are convertible into shares of Common Stock at
a price (following the Reverse Split) equal to $0.45 per share of
Common Stock. Investors purchasing the Bridge Notes receive one
Bridge Warrant for every $1.00 in principal amount of the Bridge
Notes purchased in the Bridge Offering. Each Bridge Warrant is
exercisable until December 31, 2019 to purchase one share of Common
Stock at an exercise price (following the Reverse Split) of $1.35
per share, subject to adjustment in certain
circumstances.
As
of the date of this Disclosure Statement, the Company has issued
Bridge Notes in the aggregate principal amount of $4,684,654 and
Bridge Warrants to purchase 4,684,654 shares of Common Stock of the
Company.
The Bridge Notes are
convertible
into shares of Common Stock at any time at the
option of the Bridge Note holder. The Bridge Notes (principal and
accrued and unpaid interest) are convertible at a price (following
the Reverse Split) equal to $0.45 per share of Common Stock,
subject to adjustment as provided below. If the Company’s
fully diluted shares of Common
Stock outstanding
on the date of conversion is greater or less than 10 million, the
Conversion Price shall be adjusted proportionately to equate to a
Conversion Price based upon a $4.5 million pre-money valuation of
the Company on a fully diluted basis on the date of conversion
(i.e., a 10% discount to a $5.0 million pre-money valuation on a
fully diluted basis on the date of conversion). The Conversion
Price (following the Reverse Split) will be $0.45 per share of
Common Stock assuming the Company has 10 million shares of Common
Stock issued and outstanding on a fully diluted basis on the date
of conversion.
As of
the date of this Disclosure Statement, the Company has entered into
separate Conversion Agreements (a “Conversion
Agreement”) with the holders of Bridge Notes holding Bridge
Notes in the aggregate principal amount of $4,391,000 pursuant to
which on the Recapitalization Date immediately following the
Recapitalization the Bridge Notes held by such holders will be
converted into shares of Common Stock at a conversion price of
$0.45 per share of Common Stock.
The
Bridge Notes by their terms are also exchangeable for convertible
notes (“PIPE Notes”) if offered by the Company in a
PIPE Financing, or exchangeable for PIPE Notes as provided herein.
In addition, if (i) the Company is current (as of the date of this
Information Statement, the Company is not current) in filing its
reports (other than reports required to be filed on Form 8-K) under
Section 13(a) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and (ii) the gross combined
proceeds of the Bridge Financing and the PIPE Financing are at
least the Minimum PIPE, as defined below, then the Bridge Notes
will automatically be exchanged for PIPE Notes in a principal
amount equal to (A) the sum of (1) the total outstanding principal
balance of the Bridge Notes plus (2) all accrued and unpaid
interest thereon, multiplied by (B) 111% (the “Exchange
Ratio”). For this purpose a PIPE Financing means a private
offering of securities consisting of convertible notes and warrants
in a minimum amount equal to the greater of (i) $4.0 million or
(ii) $1.0 million more than the aggregate principal amount of
Bridge Notes sold in the Bridge Financing (including the principal
of and accrued interest on the Bridge Notes exchanged for PIPE
Notes) (the “Minimum PIPE”) and a maximum amount of
$2.0 million more than the Minimum PIPE (the “Maximum
PIPE”) undertaken prior to the Maturity Date of the Bridge
Notes.
However, as of the
date of this Disclosure Statement the Company has no plans to
undertake a PIPE Financing. The Company had entered into a Letter
Agreement with GVC Capital LLC (“GVC”) dated November
12, 2015 (the “GVC Letter Agreement”) pursuant to which
GVC would have been willing to act as the placement agent of the
Company’s securities in a PIPE Financing. However, as of
October 31, 2016, the Company and GVC mutually agreed to terminate
the GVC Letter Agreement.
Investors
purchasing Bridge Notes also receive one Bridge Warrant for every
$1.00 in principal amount of Bridge Notes purchased in the Bridge
Offering. Each Bridge Warrant is exercisable until December 31,
2019 to purchase one share of Common Stock at an exercise price
(following the Reverse Split) equal to $1.35 per share (the
“Bridge Warrant Exercise Price”), assuming the Company
has 10 million shares of common stock issued and outstanding on a
fully
diluted basis. If
the Company’s fully diluted shares of Common Stock
outstanding on the date of issuance of the Bridge Warrants is
greater or less than 10 million, the Bridge Warrant Exercise Price
shall be adjusted proportionately to equate to a Bridge Warrant
Exercise Price based upon a $4.5 million pre-money valuation of the
Company on a fully diluted basis (i.e., a 10% discount to a $5.0
million pre-money valuation on a fully diluted basis). The Bridge
Warrants are callable by the Company if (i) there exists a public
trading market for the shares of Common Stock, (ii) there is an
effective registration statement registering for resale under the
Securities Act of 1933, as amended (the “Securities
Act”), the shares of Common Stock issuable upon exercise of
the Bridge Warrants ( the “Bridge Warrant Shares”) and
(iii) the closing price of the Common Stock on an exchange
registered with the SEC has equaled at least 150% of the then
current Bridge Warrant Exercise Price for 20 of the preceding 30
trading days and the volume for such 30 trading days has averaged
50,000 shares per day (for example, if the Bridge Warrant Exercise
Price (following the Reverse Split) is $1.35 the Bridge Warrants
are callable if the Common Stock closes above $2.02 per share for
20 of the preceding 30 trading days with the average volume in
excess of 50,000 shares per day for such 30 trading
days.
A
term sheet (titled “Fifth Amended and Restated Term
Sheet”) dated November 28, 2016 setting forth the terms of
the Bridge Financing is attached hereto as Exhibit VI (the
“Bridge Financing Term Sheet”). The information
provided in this Paragraph V. with respect to the Bridge Financing
is qualified in its entirety by reference to the terms of the
Bridge Financing Term Sheet and incorporated herein by
reference.
As
of the date of this Disclosure Statement, the Company has issued
and sold to investors Bridge Notes in the aggregate principal
amount of $4,684,654 and Bridge Warrants exercisable to purchase
4,684,654 shares of Common Stock. The form of the Bridge Note
issued by the Company to the holders of Bridge Notes is attached
hereto as Exhibit VII. The Company has reported such sales on Form
D and amendments thereto filed with the SEC.
As
of the date of this Disclosure Statement, the Company has entered
into separate Conversion Agreements with the holders of Bridge
Notes in an aggregate principal amount of $4,391,000. A form of the
Conversion Agreement is attached hereto as Exhibit
VIII.
Neither
the Bridge Notes or Bridge Warrants nor any of the securities of
the Company issuable upon the conversion of the Bridge Notes or the
exercise of the Bridge Warrants has been or will be registered
under the Securities Act of 1933, as amended, and may not be
offered or sold in the United States absent registration thereunder
or an applicable exemption from registration
requirements.
VI.
2016 LONG-TERM INCENTIVE COMPENSATION PLAN
On
August 17, 2016 (i.e. before the Reverse Split) the Board of
Directors approved and adopted, subject to the approval of the
stockholders of the Company, the 2016 Long-Term Incentive
Compensation Plan of the Company which provides for the granting to
directors, officers, employees and consultants of and service
providers to, the Company and its affiliates of awards under the
plan including options, SARs (including limited SARs), restricted
stock,
deferred
stock, stock granted as a bonus or in lieu of other awards,
dividend equivalents and other stock based awards to enable such
persons to acquire or increase a proprietary interest in the
Company, thereby promoting a closer identity of interests between
such persons and the Company’s stockholders, all upon the
terms and provisions set forth in the plan, a copy of which is
attached hereto as Exhibit IX.
Subject
to adjustment in the event of an extraordinary or unusual event
effecting the Common Stock of the Company such as a
recapitalization, forward or reverse split or a stock dividend,
following the Reverse Split referred to in the Recapitalization
Agreement, the aggregate number of shares of Common Stock for which
Awards may be granted under the Plan shall not exceed 2,500,000
shares.
The
stockholders of the Company holding not less than a majority of the
voting power of the Company approved the 2016 Long-Term Incentive
Compensation Plan by signing a written consent dated as of November
1, 2016.
The
information provided in this Paragraph VI with respect to the 2016
Long-Term Incentive Compensation Plan is qualified in its entirety
by reference to the terms of the 2016 Long-Term Incentive
Compensation Plan, a copy of which is attached to this Information
Statement as Exhibit IX and incorporated herein by
reference.
VII.
2016 INCENTIVE BONUS COMPENSATION PLAN
On
August 17, 2016 the Board of Directors approved and adopted,
subject to the approval of the stockholders of the Company, the
2016 Incentive Bonus Compensation Plan of the Company which
provides for the granting to key senior executives of the Company
of bonus awards based on the extent to which specified performance
goals for specified periods shall have been achieved or exceeded,
all upon the terms and provisions set forth in the plan, a copy of
which is attached hereto as Exhibit X.
The
stockholders of the Company holding not less than a majority of the
voting power of the Company approved the 2016 Incentive Bonus
Compensation Plan by signing a written consent dated as of November
1, 2016.
The
information provided in this Paragraph VII with respect to the 2016
Incentive Bonus Compensation Plan is qualified in its entirety by
reference to the terms of the 2016 Incentive Bonus Compensation
Plan, a copy of which is attached to this Information Statement as
Exhibit X and incorporated herein by reference.
The
table below presents the range of closing bid quotations prior to
the Reverse Split for the Company's Common Stock during the fiscal
quarters ended September 30 and December 31, 2016 and three most
recent fiscal years ended June 30, 2016, 2015, 2014:
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First
quarter.
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0.0012
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0.0002
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0.001
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0.0004
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0.009
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0.0035
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0.024
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0.0086
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Second
quarter.
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0.0018
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0.0002
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0.0006
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0.0001
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0.0065
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0.0013
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0.02
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0.005
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Third
quarter.
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0.001
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0.0002
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0.0048
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0.0013
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0.0295
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0.0047
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Fourth
quarter.
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0.001
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0.0004
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0.002
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0.0006
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0.0085
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0.004
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The
prices presented are bid prices, which reflect interdealer
transactions and do not include retail markups and markdowns or any
commission to the parties involved. As such, the prices may not
reflect prices in actual transactions. There is no established
market for the Common Stock except for limited and sporadic
quotations. For example, reported trading indicates that between
October 1, 2016 and December 31, 2016 (i.e. prior to the Reverse
Split) a total of only 45,182,900 shares were traded at prices
ranging from $0.0010 per share to $0.0004 per share.
The
Company has never declared a Common Stock dividend. At present,
management anticipates that no dividend will be declared or paid
with respect to the Common Stock at any time during the foreseeable
future.
Copies
of the Company’s Annual Report on Form 10-K for the fiscal
year ended June 30, 2014 and Quarterly Reports on Form 10-Q for the
fiscal quarters ended September 30, 2014, December 31, 2014 and
March 31, 2015 are available on the Company website
(www.imedicor.com) and on the Securities and Exchange Commission
(“SEC”) website (www.sec.gov). The Company is in the
process of preparing and anticipates filing with the SEC within the
next 120 days its Annual Report on Form 10-K for the fiscal year
ended June 30, 2015, its Quarterly Reports on Form 10-Q for the
fiscal quarters ended September 30, 2015, December 31, 2015 and
March 31, 2016, its Annual Report on Form 10-K for the fiscal year
ended June 30, 2016 and its Quarterly Reports on Form 10-Q for the
fiscal quarters ended September 30, 2016, December 31, 2016 and
March 31, 2017
[to be updated as
appropriate].
On
March 31, 2017 the Company filed with the SEC a current report on
Form 8-K describing the contemplated Recapitalization as well as
the Bridge Financing referred to therein. A copy of the Form 8-K is
attached as Exhibit XI.
The
Company anticipates that for the foreseeable future the Company
will continue to be a company whose Common Stock will be registered
with the SEC and that the Company will file the periodic reports
provided for under the Securities and Exchange Act of 1934, as
amended.
1.
HOW THE REVERSE
SPLIT WILL BE IMPLEMENTED
The
Reverse Split of the Company's outstanding Common Stock will
automatically occur on the Recapitalization Date.
.
Following the
Recapitalization Date, each holder of 1,768.3195 shares of Common
Stock will automatically become the holder of one share of Common
Stock. Fractional shares will not be issued in connection with the
Reverse Split, and all fractional shares that may result will be
redeemed in an amount equal to such fraction times the value of a
share of Common Stock on the Recapitalization Date as determined by
the Board of Directors of the Company in good faith.
Shares
held by stockholders affiliated with one another will be aggregated
for this purpose to the extent commercially
practicable.
The
certificates representing the Common Stock prior to the Reverse
Split will not be required to be exchanged for new certificates
representing shares of Common Stock following the Reverse Split.
Rather, the certificates representing Common Stock prior to the
Reverse Split will be deemed automatically to constitute and
represent the correct number of shares of Common Stock following
the Reverse Split without further action by the Company's
stockholders, and certificates representing Common Stock will be
issued only as certificates of Common Stock are delivered to the
Company's transfer agent when transfers of shares occur after the
Recapitalization Date or as otherwise requested by the
stockholders.
The
Company anticipates that it will pay out less than $100 to holders
of Common Stock that would otherwise be holders of fractional
shares of Common Stock following the Reverse Split based on the
value of a share of Common Stock on the Recapitalization Date as
determined by the Board of Directors of the Company in good
faith.
2.
WHAT WILL YOU
RECEIVE WHEN THE REVERSE SPLIT IS EFFECTIVE?
When
the Reverse Split is implemented:
(i)
Each holder of
1,768.3195 shares of Common Stock will automatically be entitled to
one post-Reverse Split share of Common Stock.
(ii)
No new certificates
representing fractional shares will be issued. Instead, the holder
of a fractional share will receive cash in an amount equal to such
fraction times the amount that the Board of Directors of the
Company shall determine in good faith to be the value of a share of
Common Stock on the Recapitalization Date. This transaction will
not involve commissions or other transaction fees that would be
charged if you sold shares on the open market. We estimate that an
aggregate amount of less than $100
will be paid for resulting
fractional shares.
3.
HOW WILL THE
OWNERSHIP INTERESTS OF HOLDERS OF FEWER THAN 1,768.3195 SHARES
PRIOR TO THE REVERSE SPLIT BE AFFECTED BY THE REVERSE
SPLIT?
Holders
of fewer than 1,768.3195 shares of Common Stock prior to the
Reverse Split will no longer have voting or ownership rights in the
Company after the Reverse Split is effected and will instead be
entitled to receive a cash payment in lieu of their interest. As a
result, such holders will no longer be able to participate in the
potential future growth, if any, of the Company.
4.
FEDERAL INCOME TAX
CONSEQUENCES OF THE REVERSE SPLIT FOR STOCKHOLDERS?
The
receipt of cash in the Reverse Split will be taxable for federal
income tax purposes. Each stockholder is advised to consult with
his or her own tax specialist for the specific tax consequences.
Stockholders who receive only shares of Common Stock should not be
subject to taxation as a result of the Reverse Split.
Stockholders who
receive cash in lieu of fractional shares of Common Stock will
recognize capital gain or loss in an amount equal to the difference
between the amount of cash received and the adjusted basis of the
fractional shares surrendered for cash.
5.
DO HOLDERS OF
COMMON STOCK HAVE APPRAISAL OR DISSENTER’S
RIGHTS?
Under
Nevada law, there is a provision for appraisal or dissenter's
rights in the event of a Reverse Split. However, it is unlikely
that very many stockholders, if any, will qualify to assert
dissenter’s rights inasmuch as NRS 78.2055 provides that any
stockholder who may dissent in accordance with the provisions of
NRS 92A.300 to 92A.500, before the proposed corporate action
becomes effective must hold 1% or more of the outstanding Common
Stock and would otherwise be entitled to receive a fraction of a
share in exchange for the cancellation of all of such
stockholder’s outstanding shares.
6.
HOW DOES A HOLDER
RECEIVE CASH FOR A FRACTIONAL SHARE?
You
should complete the enclosed Letter of Transmittal and return it
together with your stock certificates to Pacific Stock Transfer
Company, the Company's Transfer Agent, at the address shown on the
enclosed envelope.
LIST OF EXHIBITS ATTACHED
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Recapitalization Agreement
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Nevada Revised Statutes - Dissenter’s Rights
Provisions
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Dissenter’s Rights Form
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Letter of Transmittal
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Form of Amended and Restated Articles of Incorporation
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Current Bridge Financing Term Sheet (the Fifth Amended and Restated
Term Sheet)
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Form of Bridge Note issued to the Holders of the Bridge
Notes
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Form of Conversion Agreement between the Company and Holders of
Bridge Notes
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2016 Long-Term Incentive Compensation Plan
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2016 Incentive Bonus Compensation Plan
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Form 8-K dated March 31, 2017
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