UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to ss.240.14a-12
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QS ENERGY,
INC.
(Name of Registrant as Specified In Its Charter)
_____________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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QS ENERGY, INC.
23902 FM 2978
Tomball, Texas 77375
NOTICE OF CONSENT SOLICITATION
July 27, 2017
To Our Stockholders:
The Board of Directors
of QS Energy, Inc. (the “Company”) is writing to solicit your consent on behalf of the Company to approve a proposal
to increase the number of authorized shares of common stock and create and authorize shares of preferred stock of the Company (the
“Proposal”).
The Proposal was previously
included on the ballot at our July 14, 2017, Annual Meeting of Shareholders. Although over 80 million shares voted in favor of
the Proposal at that meeting, and only approximately four million shares voted against, with approximately 966,000 abstaining,
the Company requires, under Nevada law, a majority of the Company’s issued and outstanding shares of common stock for approval
of the Proposal, approximately 103 million shares. The Proposal was therefore not approved at the Annual Meeting of Shareholders.
Given the importance
of the Proposal to the Company and significant stockholder support for the Proposal, we are soliciting here your consent to approve
the Proposal, rather than seeking your approval at next year’s annual meeting of the stockholders or calling a special meeting
of our stockholders and incurring the expense and time associated with holding a special meeting. For these reasons, the Board
has elected to obtain stockholder approval of the Proposal by written consent pursuant to Section 78.320 of the Nevada Revised
Statues. This Notice of Consent Solicitation (“Notice”) and accompanying Consent Solicitation Statement are furnished
to you by the Company in connection with this solicitation
We have established
the close of business on August 6, 2017, as the record date for determining stockholders entitled to submit written consents for
the Proposal. Stockholders holding a majority of Common Stock issued and outstanding as of the close of business on the record
date must vote in favor of the Proposal for it to be approved by stockholders. For additional information, see the Consent Solicitation
Statement.
This solicitation is
being made on the terms and subject to the conditions set forth in the accompanying Consent Solicitation Statement. To be counted,
we ask that your properly completed written consent form, accompanying this Notice and the Consent Solicitation Statement (the
“Written Consent”), be received before 5:00 p.m. Pacific Standard Time, on October 5, 2017.
Your consent is important
regardless of the number of shares of Common Stock that you hold.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED WRITTEN CONSENT
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
Failure to submit the Written Consent will have the same effect as a vote against
the Proposal. An executed written consent form may be revoked at any time before the action authorized by the executed consent
becomes effective.
The Board recommends
that you consent to the Proposal by marking the box titled “CONSENT” with respect to the Proposal and submitting the
Written Consent by one of the methods set forth therein.
Please read the accompanying
consent solicitation material carefully. Your vote is important and we appreciate your cooperation in considering and acting on
the matter presented.
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By Order of the Board of Directors,
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/s/Jason Lane
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Jason Lane
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Chief Executive Officer
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July 27, 2017
Tomball, Texas
Stockholders Should Read the Entire Consent
Solicitation Statement
Carefully Prior to Returning Their Written
Consents.
This Consent Solicitation Statement, our
Annual Report on Form 10K for the fiscal year ended December 31, 2016, and our Form 10-Q for the quarter ended March 31, 2017 are
available at www.qsenergy.com or www.sec.gov.
QUESTIONS AND ANSWERS ABOUT THE WRITTEN
CONSENT SOLICITATION
Who is making the solicitation?
The solicitation is
being made by the Board of Directors of QS Energy, Inc., a Nevada corporation (which may be referred to in this Written Consent
Solicitation Statement as “we,” “us,” “our,” the “Company” or “QS Energy”).
The Company’s headquarters are located at 23902 FM 2978, Tomball, Texas 77375.
What are we asking that the stockholders consent to?
We are asking you to
consent to the approval of a proposal to increase the number of authorized shares of common stock and create and authorize shares
of preferred stock of the Company (the “Proposal”).
Does the Board recommend that I consent?
Yes. Our Board recommends
that you “CONSENT” to the approval of the increase in the number of authorized shares of common stock and creation
and authorization of shares of preferred stock of the Company.
What information is contained in this
Consent Solicitation Statement?
The information included
in this Consent Solicitation Statement relates to the Proposal, the consent process, and certain other required information, including
but not limited to the compensation of directors and the most highly paid executive officers, and beneficial ownership of the Company’s
common stock.
Why are we soliciting your consent?
As described more fully
below, the Company may require additional capital and may be required to issue additional shares of capital stock in anticipation
of what the Board hopes will be a period of development and commercialization of the Company’s AOT technology. This same
proposal was made at the 2017 Annual Meeting of the Shareholders of the Company. At that meeting, although over 80 million shares
voted in favor of the proposal and only approximately four million shares voted against, with approximately 966,000 abstaining,
the Company needed, under Nevada law, approximately 103 million shares for approval. Therefore the Proposal was not approved. We
are now therefore soliciting your consent to approve the Proposal, rather than waiting to submit the Proposal at the next annual
meeting of the stockholders, or incurring the expense and time of holding a special meeting of the stockholders.
Who may consent to the approval of the Proposal?
Only stockholders of
record at the close of business on August 6, 2017 are entitled to consent to the approval of the Proposal. We refer to this date
as our “Record Date.”
You may consent all
shares of QS Energy common stock you own as of the Record Date, including (1) shares that are held directly in your name as the
stockholder of record, and (2) shares held for you as the beneficial owner through a broker, trustee or other nominee, such as
a bank.
As of August 6, 2017,
we had 229,899,500 shares of common stock issued and outstanding.
What are the consent rights of the Company’s
holders of common stock?
Each outstanding share
of the Company’s common stock owned as of the Record Date will be entitled to one consent on the Proposal.
How many consents must be granted in
order to approve the Proposal?
The Proposal
will be approved when properly completed, unrevoked consents are submitted by the holders of a majority of the issued and outstanding
shares of Common Stock of the Company as of the Record Date, provided that such consents are delivered to the Company within 60
calendar days of the date of the earliest dated consent delivered to the Company.
As of August 6, 2017,
229,899,500 shares of our Common Stock were issued and outstanding. Accordingly, if the holders of at least 114,949,751 shares
of our Common Stock consent to the approval of the Proposal, the Company will promptly announce that stockholders have consented
to the approval of the Proposal, at which time the action being sought by this written consent solicitation will become effective.
When is the deadline for submitting consents?
For the Proposal
to be approved, properly completed and unrevoked written consents from the holders of record of a majority of the shares of
our Common Stock, outstanding as of the as of the close of business on the Record Date must be delivered to the Company,
under Nevada law, within 60 days of the record date.
While we seek to receive all consents by October 5, 2017, we reserve
the right to extend such deadline. Effectively, this means that you have until October 5, 2017, to consent to the approval of
the Proposal. We urge you to act promptly to ensure that your consent will count.
May the consent solicitation be terminated?
Yes, the Company may terminate the consent
solicitation at any time.
What is the difference between holding
shares as a stockholder of record and holding shares as a beneficial owner?
Many of our stockholders
hold their shares through a broker or other nominee rather than directly in their own name. We have summarized below some of the
distinctions between being a stockholder of record and being a beneficial owner:
Stockholder of Record:
If your shares are registered directly in your name or as a joint holder with our transfer agent, NATCO, you are considered,
with respect to those shares, the stockholder of record, and this Consent Solicitation Statement and Notice of Consent Solicitation
are being sent to you directly by the Company. As a stockholder of record, you have the right to consent directly to us.
Beneficial Owner
:
If your shares are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in
street name, and the Notice of Consent Solicitation and solicitation materials, together with consent solicitation card, are being
forwarded to you by your broker or other nominee. As a beneficial owner, you have the right to direct your broker, trustee or nominee
how to vote on the Proposal via written consent. Your broker, trustee or nominee is responsible for providing consent instructions
for you to use in directing the broker, trustee or nominee how to vote your shares via written consent.
What should I do to consent?
If you hold shares
of Common Stock as a Stockholder of Record, please submit your consent to us by signing, dating and returning the enclosed written
consent form in the postage-paid envelope provided, or by fax or email.
If you hold shares
of Common Stock as a Beneficial Owner, only the brokerage firm, bank, dealer, trust company or other nominee holding those shares
can execute a consent representing those shares and only upon receipt of your specific instructions. Accordingly, you should follow
the instructions included in the materials that you have received or contact the person responsible for your account and give instructions
to consent to the approval of the Proposal on your behalf.
If you hold some shares
as a Stockholder of Record and some as a Beneficial Owner, you must consent each set of shares separately pursuant to the instructions
above. Similarly, if you are the Beneficial Owner of shares held by more than one firm, bank, dealer, trust company, or other nominee,
you must instruct each such account holder to consent to the approval of the Proposal on your behalf for those shares.
What should I do if I decide to revoke my consent?
An executed written
consent form may be revoked at any time before the action authorized by the executed consent becomes effective by signing, dating
and delivering a written revocation. A revocation may be in any written form validly signed by the record holder as long as it
clearly states that the consent previously given is no longer effective. The delivery of a subsequently dated written consent form
that is properly completed will constitute a revocation of any earlier consent. The revocation may be delivered to the Company
at 23902 FM 2978, Tomball, Texas 77375. If the holders of at least 114,949,751 shares consent to the approval of the Proposal,
the Company will promptly announce that stockholders have consented to the approval of the Proposal, at which time the stockholder
action being sought by this written consent solicitation will become effective and stockholders will no longer be entitled to revoke
executed written consent forms.
Please note, however,
if your shares are held in the name of a brokerage firm, bank or other nominee, only it can execute a revocation of a previously
executed consent representing your shares and only on receipt of your specific instructions. Accordingly, if you wish to revoke
a previously executed consent, you should follow the instructions included in the materials that you have received or contact the
person responsible for your account and give instructions to execute a written revocation on your behalf. You can also revoke your
consent by signing, dating and returning to that nominee a later dated written consent form.
Who can help answer my questions?
If you have any questions
about the Written Consent Solicitation or how to vote or revoke your consent, you should e-mail questions to Michael McMullen at
mike.mcmullen@qsenergy.com. You may also contact us if you need additional copies of this Written Consent Solicitation Statement
or voting materials.
Is my consent confidential?
Consents and voting
instructions and tabulations that identify individual stockholders will be tabulated and will be handled in a manner that protects
your privacy. Your consent or non-consent will not be disclosed either within QS Energy or to third parties, except as necessary
to meet applicable legal requirements and to allow for the tabulation of consents and certification of the consent.
What is a broker non-vote?
If you hold shares
beneficially in street name and do not provide your broker with consent instructions, your shares may constitute “broker
non-votes.” Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions
from the beneficial owner and such instructions are not given. Under the rules that govern brokers, brokers have the discretion
to vote on routine matters, but not on non-routine matters.
The Proposal is a non-routine
matter, and approval of the Proposal requires the affirmative consent of a majority of the outstanding shares of common stock of
the Company. As such, a broker non-vote will have the effect of a vote against the Proposal. If you hold your shares in street
name and you want your shares voted on the Proposal, it is critical that you provide consent instructions to your broker. We encourage
you to provide consent instructions to the organization that holds your shares in order to minimize the number of broker non-votes.
If the shareholders approve the Proposal
to increase the number of authorized shares of common stock and authorize preferred stock of the Company, what limits will be placed
on the Board with respect to the issuance of such stock?
If the Proposal is
approved, and except for the issuance of stock options under the Company’s existing Director Compensation Policy, any issuance
of common or preferred shares of the Company shall require unanimous approval of the Board. Notwithstanding, the Company’s
CEO, Jason Lane, exercising his business judgment, will be permitted to issue common or preferred shares of the Company in furtherance
of a commercial transaction, subject to ratification by a majority vote of the Board.
Who will serve as Tabulation Agent?
Nevada Agency and Transfer
Company (“NATCO”) will act as Tabulation Agent.
What does it mean if I receive more
than one Notice of Consent Solicitation and/or set of solicitation materials?
If you receive more
than one Notice of Consent Solicitation and/or set of solicitation materials, it means your shares are not all registered or held
in the same way (for example, some are registered in your name and others are registered jointly with a spouse) and are in more
than one account. In order to ensure that you consent all of the shares that you are entitled to consent, you should authorize
a consent on all consent solicitation cards to which you are provided access. Similarly, for all shares you hold in street name,
you should follow the consent instructions provided by each broker, trustee or nominee for the shares held on your behalf by that
broker, trustee or nominee.
Who will bear the cost of soliciting
consents for the Proposal?
The Company will pay
all costs of the written consent solicitation and will not seek reimbursement of those costs. In addition to the solicitation by
mail, the directors, officers and employees of the Company may also solicit consents from stockholders by telephone or in person.
These individuals will not receive any additional compensation for such solicitation activities. QS Energy may, if appropriate,
retain an independent proxy solicitation firm to assist in soliciting proxies. If QS Energy does retain a proxy solicitation firm,
QS Energy would pay such firm’s customary fees and expenses. Upon request, we will also reimburse brokerage houses and other
custodians, nominees and fiduciaries for forwarding proxy materials to stockholders.
Where can I find the results of the
Consent Solicitation?
We intend to report
final results of the Consent Solicitation in a Current Report on Form 8-K to be filed with the Securities and Exchange Commission.
Where can I find the voting results
of the 2017 Annual Meeting of the Stockholders?
On July 19, 2017, the
Company reported final results of the 2017 Annual Meeting of the Stockholders in a Current Report on Form 8-K filed with the Securities
and Exchange Commission.
What if I have questions for QS Energy’s
transfer agent?
Please contact our
transfer agent, at the phone number or address listed below, if you are a registered stockholder and have questions concerning
stock certificates, transfers or ownership or other matters pertaining to your stock account.
Nevada Agency and Transfer Company
50 West Liberty Street, Suite 880
Reno, Nevada 89501
Attention: Proxy Department
Fax #775-322-5623 or stocktransfer@natco.org
CONSENT SOLICITATION STATEMENT
OF
QS ENERGY, INC.
This Consent
Solicitation Statement is furnished to you by QS Energy, Inc., a Nevada corporation (the “Company” or “us”
or “we” or “our”), in connection with the solicitation of written consents (“Written Consents”)
from holders of the Company’s common stock (“Common Stock”) to take action without a meeting of our stockholders.
The Board of Directors of the Company is writing to solicit your consent on behalf of the Company to approve a proposal to increase
the number of authorized shares of common stock and create and authorize shares of preferred stock of the Company (the “Proposal”).
The Proposal was previously
included on the ballot at the July 14, 2017, Annual Meeting of the Shareholders of the Company. Although over 80 million shares
voted in favor of the Proposal at that meeting, and only approximately four million shares voted against with 966,000 abstaining,
the Company requires a majority of the Company’s issued and outstanding shares of common stock for approval of the Proposal,
approximately 103 million shares. Therefore the Proposal was not approved at the Annual Meeting of Shareholders.
Given the importance
of the Proposal to the Company and significant stockholder support for the Proposal, the Board has determined to seek stockholder
approval of the Proposal by written consent, rather than placing the Proposal on the ballot for next year’s annual meeting
of the stockholders or calling a special meeting of our stockholders and incurring the expense and time associated with holding
a special meeting. The Board has elected to obtain stockholder approval of the Proposal by written consent pursuant to Section
78.320 of the Nevada Revised Statues. This Notice of Consent Solicitation and accompanying Consent Solicitation Statement are furnished
to you by the Company in connection with this solicitation
If stockholder approval
of the Proposal is obtained through the Written Consents, the Company will promptly file with the Nevada Secretary of State an
amendment to the articles of incorporation of the Company, effectuating the Proposal. The amendment will be effective upon the
Nevada Secretary of State’s acceptance of such filing.
TO BE COUNTED, WE ASK
THAT YOUR PROPERLY COMPLETED WRITTEN CONSENT BE RECEIVED BY THE TABULATION AGENT, NEVADA AGENCY AND TRANSFER COMPANY, BEFORE 5:00
P.M. PACIFIC STANDARD TIME, ON OCTOBER 5, 2017 (EXPIRATION DATE), IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH IN THE WRITTEN
CONSENT. WE WILL CONCLUDE THE SOLICITATION AT SUCH TIME AS WE HAVE RECEIVED CONSENTS REPRESENTING A MAJORITY OF THE COMMON SHARES
QUALIFIED TO VOTE, WHICH CONCLUSION MAY OCCUR PRIOR TO OCTOBER 5, 2017.
The Company expressly
reserves the right, in its sole discretion and regardless of whether any of the conditions of the consent solicitation have been
satisfied, subject to applicable law, at any time prior to the Expiration Date to (i) terminate the consent solicitation for any
reason, including if requisite approval is obtained, (ii) waive any of the conditions to the consent solicitation, or (iii) amend
the terms of the consent solicitation, including any extension of time to return the Written Consents.
Your consent is important
regardless of the number of shares of Common Stock that you hold. Failure to submit your Written Consent will have the same effect
as a vote against the Proposal. If you sign and send in the Written Consent form but do not indicate how you want to vote as to
the Proposal, your Written Consent form will be treated as a “CONSENT” to the Proposal.
This consent solicitation
statement and the consent solicitation card are first being delivered or mailed to stockholders on or about August 8, 2017. Our
Annual Report for the year ended December 31, 2016, on Form 10-K (the “10-K”) and our Quarterly Report for the fiscal
quarter ended March 31, 2017, on Form 10-Q (the “10-Q”) are available on our website at www.qsenergy.com or at www.sec.gov.
Neither our Annual Report to Stockholders on Form 10-K nor our Quarterly Report to Stockholders on Form 10-Q is to be regarded
as soliciting material or as a communication by means of which any solicitation of consents is to be made.
VOTING RIGHTS AND SOLICITATION
We have established
the close of business on August 6, 2017, as the record date (the “Record Date”) for determining stockholders entitled
to submit written consents for the Proposal. As of the Record Date, we had 229,899,500 shares of common stock, par value $.001
per share, issued and outstanding, and only those shares are entitled to submit written consents for the Proposal. Holders of the
common stock of record as of the Record Date will have one vote via written consent for each share of common stock so held.
All consents will be
tabulated by the Tabulation Agent, who will separately tabulate affirmative and negative consents, abstentions and broker non-votes.
Stockholders holding
a majority of Common Stock outstanding as of the close of business on the Record Date must consent in favor of the Proposal for
it to be approved by stockholders. Shares which abstain from consenting as to the Proposal will have the same effect as a vote
against the Proposal. In the event of a broker non-vote with respect to the Proposal, the broker non-vote will have the effect
of a vote against the Proposal.
An executed written
consent form may be revoked at any time before the action authorized by the executed consent becomes effective by signing, dating
and delivering a written revocation. A revocation may be in any written form validly signed by the record holder as long as it
clearly states that the consent previously given is no longer effective. The delivery of a subsequently dated written consent form
that is properly completed will constitute a revocation of any earlier consent. The revocation may be delivered to the Company
at 23902 FM 2978, Tomball, Texas 77375. If the holders of at least 114,949,751 shares of our Common Stock consent to the approval
of the Proposal, the Company will promptly announce that stockholders have consented to the approval of the Proposal, at which
time the stockholder action being sought by this written consent solicitation will become effective and stockholders will no longer
be entitled to revoke executed written consent forms.
Please note, however,
if your shares are held in the name of a brokerage firm, bank or other nominee, only it can execute a revocation of a previously
executed consent representing your shares and only on receipt of your specific instructions. Accordingly, if you wish to revoke
a previously executed consent, you should follow the instructions included in the materials that you have received or contact the
person responsible for your account and give instructions to execute a written revocation on your behalf. You can also revoke your
consent by signing, dating and returning to that nominee a later dated written consent form.
The entire cost of
soliciting written consents will be borne by the Company. Written Consents will be solicited principally through the use of the
mails, but, if deemed desirable, may be solicited personally or by telephone or by e-mail, or special letter by our officers and
regular employees for no additional compensation. Arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to send consent solicitation material to the beneficial owners of our common stock, and such persons may be reimbursed
for their expenses.
Absence
of Appraisal Rights
Stockholders who abstain
from approving the Proposal, or who withhold their consent to the Proposal, do not have the right to an appraisal of their shares
of Common Stock, or any similar dissenters’ rights under the Nevada Revised Statutes, or the Articles of Incorporation and
Amended and Restated Bylaws of the Company.
Interest
of Directors and Executive Officers in the Proposal
Certain members of
the Board and certain of the Company’s executive officers own shares of Common Stock and/or warrants, options or other derivative
securities of the Company. Accordingly, such individuals have a substantial interest in the Proposal.
The Company’s
transfer agent, Nevada Agency and Transfer Company (“NATCO”), will serve as Tabulation Agent for the solicitation.
Any questions for the Tabulation Agent may be directed to:
Nevada Agency and Transfer Company
50 West Liberty Street, Suite 880
Reno, Nevada 89501
Attention: Proxy Department
Fax #775-322-5623 or stocktransfer@natco.org
PROPOSAL
INCREASE IN AUTHORIZED SHARES OF COMMON
STOCK AND
CREATION AND ISSUANCE OF SHARES OF PREFERRED
STOCK
The Board of Directors
has approved a proposal to amend the Company’s Articles of Incorporation to increase the number of authorized shares
of the Company’s common stock from 300 million to 500 million and to create a new class of preferred stock and authorize
the Company to issue up to 100 million shares of preferred stock, with such rights and on such terms as the Board of Directors
may decide (the “Proposal”). The proposed amendment would replace the first paragraph of Article Four of the Articles
of Incorporation of the Company with the following language:
“This corporation is authorized
to issue two (2) classes of stock, designated “Common Capital Shares” and “Preferred Capital Shares.” The
corporation shall have authority to issue an aggregate of Five Hundred Million (500,000,000) Common Capital Shares, par value one
mill ($0.001) per share for total par value of Five Hundred Thousand Dollars ($500,000). The corporation shall have authority to
issue an aggregate of One Hundred Million (100,000,000) Preferred Capital Shares, with such rights and on such terms as the Board
may decide, par value one mill ($0.001) per share for total par value of One Hundred Thousand Dollars ($100,000).”
In addition, if the
Proposal is approved, and except for the issuance of stock options under the Company’s existing Director Compensation Policy,
any issuance of common or preferred shares of the Company shall require unanimous approval of the Board. Notwithstanding, the Company’s
CEO, Jason Lane, exercising his business judgment, may issue common or preferred shares of the Company in furtherance of a commercial
transaction, subject to ratification by a majority vote of the Board.
The Board of Directors
made this same proposal by motion at the 2017 Annual Meeting of the Shareholders of the Company. At that meeting, although over
80 million shares voted in favor of the proposal and only approximately four million shares voted against, with 966,000 abstaining,
the Company needed a majority of the Company’s issued and outstanding shares of common stock for approval of the Proposal,
approximately 103 million shares. Therefore the motion was not approved.
Given the importance
of the Proposal to the Company and significant stockholder support for the Proposal, the Board has determined to seek stockholder
approval of the Proposal by written consent, rather than placing the Proposal on the ballot for next year’s annual meeting
of the stockholders, or incurring the time and expense associated with holding a special meeting of the stockholders.
The Board of Directors
believes it is in the best interest of the Company to increase the number of authorized shares of common stock and create and authorize
a new share class of preferred stock in order to give the Company greater flexibility in considering and planning for future corporate
needs, including, but not limited to, stock dividends, grants of stock, grants of equity compensation, grants under equity compensation
plans, grants of options and warrants, stock splits, financings, potential strategic transactions, including mergers, acquisitions,
and business combinations, as well as other general corporate transactions, and to satisfy the issuance of shares of our common
stock on the exercise of prior grants of our options and warrants. The Company may also require additional capital in order to
proceed with the acquisition of properties, assets or transactions. The Board believes that additional authorized shares of common
stock and newly authorized shares of preferred stock will enable the Company to take timely advantage of market conditions and
favorable financing and acquisition opportunities that become available to the Company without the delay and expense associated
with convening a special meeting of the Company’s stockholders. This is particularly true given the recent change in the
Company’s management and Board and their efforts to commercialize the Company’s AOT technology and other business opportunities.
The Company has
no current plan, commitment, arrangement, understanding or agreement regarding the issuance of additional shares of common stock
or preferred stock that will result from the Company’s adoption of the proposed amendment, and will issue additional shares
only on such terms and only when the Company believes it would be in the Company’s best interest to do so, and only in accordance
with the Company’s Board’s fiduciary responsibilities to the Company and its shareholders. Except as otherwise required
by law, the newly authorized shares of common stock and preferred stock will be available for issuance at the discretion of the
Board (without further action by the stockholders) for various future corporate needs, including those outlined above. While adoption
of the proposed amendment would not have any immediate dilutive effect on the proportionate voting power or other rights of the
Company’s existing stockholders, any future issuance of additional authorized shares of the Company’s common stock
and preferred stock may, among other things, dilute the earnings per share of the common stock and the equity and voting rights
of those holding common stock at the time the additional shares are issued.
In addition to the
corporate purposes mentioned above, an increase in the number of authorized shares of the Company’s common stock and preferred
stock may make it more difficult to, or discourage an attempt to, obtain control of the Company by means of a takeover bid that
the Board determines is not in the best interest of the Company and its stockholders. However, the Board does not intend or view
the proposed increase in the number of authorized shares of the Company’s common stock or preferred stock as an anti-takeover
measure and is not aware of any attempt or plan to obtain control of the Company.
Any newly authorized
shares of the Company’s common stock will be identical to the shares of common stock now authorized and outstanding. The
proposed amendment will not affect the rights of current holders of the Company’s common stock, none of whom has preemptive
or similar rights to acquire the newly authorized shares.
With respect to the
preferred stock, the Board of Directors will be authorized to determine or alter the powers, preferences and rights, and the qualifications,
limitations and restrictions granted to or imposed upon any wholly unissued preferred stock, and within the limitations or restrictions
stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series
of preferred stock, to increase or decrease (but not below the number of shares of preferred stock then outstanding) the number
of shares of any such preferred stock, and to fix the number of shares of any series of preferred stock. In the event that the
number of shares of any series of preferred stock shall be so decreased, the shares constituting such decrease shall resume the
status which such shares had prior to the adoption of the Board resolution originally fixing the number of shares of such series
of preferred stock subject to the requirements of applicable law.
The Board of Directors
unanimously recommends a CONSENT to the proposed amendment to increase the number of authorized shares of the Company’s Common
Stock from 300 million to 500 million and to create a new class of Preferred Stock and authorize the Company to issue up to 100
million shares of preferred stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table
sets forth certain information regarding the beneficial ownership of our common stock as of August 6, 2017, for:
|
·
|
each person, or group of affiliated persons, known by us to be the beneficial owner of 5% or more of the outstanding shares of our common stock;
|
|
·
|
our Chief Executive Officer and each of our two other most highly-compensated executive officers serving as such as of August 6, 2017, whose total annual salary and bonus exceeded $100,000, for services rendered in all capacities to the Company (such individuals are hereafter referred to as the “Named Executive Officers”), and all of our current directors and executive officers serving as a group;
|
Name and Address of Beneficial Owner
(1)
|
|
Number of
Shares of
Common Stock
Beneficially
Owned
(2)
|
|
|
Percentage of
Shares
Beneficially
Owned
(2)
|
|
|
|
|
|
|
|
|
Named Executive Officers and Directors
|
|
|
|
|
|
|
Jason Lane, Chief Executive Officer, Director, Chairman of the Board
(3)
|
|
|
178,571
|
|
|
|
0.1%
|
|
Thomas Bundros, Director, Chairman of the Audit Committee
(4)
|
|
|
4,355,283
|
|
|
|
1.9%
|
|
Don Dickson, Director
(5)
|
|
|
1,740,823
|
|
|
|
0.8%
|
|
Eric Bunting, Director
(6)
|
|
|
8,068,711
|
|
|
|
3.5%
|
|
Gary Buchler, Director
(7)
|
|
|
–
|
|
|
|
–
|
|
Richard Munn, Director
(8)
|
|
|
372,000
|
|
|
|
0.2%
|
|
William Green, Director
(9)
|
|
|
–
|
|
|
|
–
|
|
Named Executive Officers not serving as Directors
|
|
|
|
|
|
|
Michael McMullen, Chief Financial Officer
(10)
|
|
|
425,000
|
|
|
|
0.2%
|
|
All current directors and executive officers as a group
|
|
|
15,140,389
|
|
|
|
6.6%
|
|
|
(1)
|
Unless otherwise indicated, the address of each listed person is c/o QS Energy, Inc., 23902 FM 2978, Tomball, Texas 77373.
|
|
(2)
|
Percentage of beneficial ownership is based upon 229,866,500 shares of our common stock outstanding as of August 6, 2017 Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options and warrants currently exercisable or convertible, or exercisable or convertible within 60 days, are deemed outstanding for determining the number of shares beneficially owned and for computing the percentage ownership of the person holding such options or warrants, but are not deemed outstanding for computing the percentage ownership of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.
|
|
(3)
|
Mr. Lane was issued options in April 2017 under his employment contract to purchase 3,000,000 shares of common stock of the Company at prices ranging from $0.15 to $0.40 per share, vesting in one and two years, and expiring ten years from the date of issuance. Mr. Lane was issued options in April 2017 under the Company’s Board of Directors compensation policy to purchase 535,714 shares of common stock at an exercise price of 0.07 per share, vesting monthly over nine months, and expiring ten years from the date of issuance.
|
|
(4)
|
Mr. Bundros, as a Member of the Board and, beginning effective April 1, 2017, Chairman of the Audit Committee of the Board, was issued options to purchase 1,912,426 shares common stock under the Company’s Board of Directors compensation policy from January 2015 through April 2017 at prices ranging from $0.05 to $0.46 per share, vesting over periods of up to one year, and expiring ten years from the date of issuance. In July 2017, Mr. Bundros was issued 2,200,000 shares of common stock on the conversion of a convertible note at $0.10 per share and was issued a warrant to purchase 1,100,000 shares of common stock at $0.10 per share which expires in July 2018.
|
|
|
|
|
(5)
|
Mr. Dickson was issued options to purchase 1,427,153 shares common stock under the Company’s Board of Directors compensation policy from August 2014 through January 2017 at prices ranging from $0.05 to $1.71 per share, vesting over periods of up to one year, and expiring ten years from the date of issuance.
|
|
(6)
|
Dr. Bunting was issued options to purchase 535,714 shares of common stock in April 2017 under the Company’s Board of Directors compensation policy to purchase at an exercise price of 0.07 per share, vesting monthly over nine months, and expiring ten years from the date of issuance. Dr. Bunting owns 5,704,426 shares of common stock. In addition, Dr. Bunting has the right to convert the balance due under a convertible note to 1,100,000 shares of common stock at a conversion price of $0.05 per share, and holds a warrant under which he has the right purchase 550,000 shares of common stock at a price of $0.05 per share.
|
|
(7)
|
Mr. Buchler was issued options to purchase 250,000 shares of common stock in May 2017 under the Company’s Board of Directors compensation policy to purchase at an exercise price of 0.13 per share, vesting monthly over eight months commencing May 31, 2017, and expiring ten years from the date of issuance.
|
|
(8)
|
Mr. Munn was issued options to purchase 250,000 shares of common stock in May 2017 under the Company’s Board of Directors compensation policy to purchase at an exercise price of 0.13 per share, vesting monthly over eight months commencing May 31, 2017, and expiring ten years from the date of issuance. Mr. Munn owns 262,000 shares of common stock, and holds a warrant under which he has the right to purchase 110,000 shares of common stock at a price of $0.05 per share.
|
|
(9)
|
Mr. Green was issued options to purchase 122,567 shares of common stock in July 2017 under the Company’s Board of Directors compensation policy to purchase at an exercise price of 0.19 per share, vesting monthly over eight months commencing July 14, 2017, and expiring ten years from the date of issuance.
|
|
(10)
|
Mr. McMullen was issued options to purchase 800,000 shares common stock as employee compensation from May 2015 through April 2017 at prices ranging from $0.07 to $0.80 per share, vesting over periods of up to two years, and expiring ten years from the date of issuance.
|
EXECUTIVE COMPENSATION
The following table
sets forth certain information regarding the compensation earned during the last three fiscal years by the Named Executive Officers,
as well as the compensation earned by former executive officer, Greggory Bigger, who resigned from all positions with the Company
effective April 1, 2017:
Summary Compensation Table
|
|
|
|
Long-Term Compensation Awards
|
|
Name and Principal Position
|
|
Fiscal
Year
|
|
|
Annual
Compensation
Salary ($)
|
|
|
|
Restricted
Stock
Awards
($)
|
|
|
|
Securities
Underlying
Options
(#)
|
|
|
|
All
Other
Compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jason Lane (1)
|
|
2017
|
|
$
|
150,000
|
|
|
$
|
–
|
|
|
|
3,000,000
|
|
|
$
|
–
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael McMullen (2)
|
|
2017
|
|
$
|
158,400
|
|
|
$
|
–
|
|
|
|
250,000
|
|
|
$
|
–
|
|
Chief Financial Officer
|
|
2016
|
|
|
158,400
|
|
|
|
–
|
|
|
|
500,000
|
|
|
|
–
|
|
|
|
2015
|
|
|
158,400
|
|
|
|
–
|
|
|
|
50,000
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greggory Bigger (3)
|
|
2017
|
|
$
|
290,000
|
|
|
$
|
–
|
|
|
|
1,000,000
|
|
|
$
|
–
|
|
Former Chief Executive Officer, President,
|
|
2016
|
|
|
290,000
|
|
|
|
–
|
|
|
|
114,583
|
|
|
|
–
|
|
and Chief Financial Officer
|
|
2015
|
|
|
290,000
|
|
|
|
|
|
|
|
263,158
|
|
|
|
–
|
|
______________________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr. Lane was appointed Chief Executive
Officer (“CEO”) effective April 1, 2017. Mr. Lane’s annual base salary under his employment agreement as
CEO is $150,000, for a two year term. Additionally, Mr. Lane will be entitled to a bonus for any leased-based contract for the
Company’s AOT technology and for any sales or other non-leased contracts for the Company’s AOT technology sourced by
Mr. Lane. The Company has also issued options (“Options”) to Mr. Lane to purchase 3,000,000 shares of restricted common
stock of the Company. The Options shall vest pursuant to a two year vesting schedule, pursuant to which 500,000 of the Options,
priced at $0.15 per share, and 500,000 of the Options priced at $0.25 per share, shall vest on April 1, 2018; thereafter, 1,000,000
of the Options, priced at $0.30 per share and 1,000,000 of the Options priced at $0.40 per share shall vest on April 1, 2019. Please
see the section below under the title Employment Agreements for greater detail concerning Mr. Lane’s Employment Agreement
with the Company.
|
|
|
|
|
(2)
|
Mr. McMullen was appointed Chief Financial
Officer (“CFO”) effective April 1, 2017. Mr. McMullen’s annual base salary under his employment agreement as
CFO is $158,400, for a two year term. The Company has also issued options (“Options”) to Mr. McMullen to purchase 250,000
shares of restricted shares of common stock of the Company at a per share exercise price equal to the stock price listed on the
OTCBB market at market close on April 3, 2017. 125,000 of the Options vested on April 1, 2017, and 125,000 Options shall vest on
April 1, 2018. Please see the section below under the title Employment Agreements for greater detail concerning Mr. Lane’s
Employment Agreement with the Company.
From January 2014 through March 2017, prior
to his appointment as CFO, Mr. McMullen served as Controller of the Company, Mr. McMullen was under an at-will contract at an annual
salary rate of $158,400. As Controller, Mr. McMullen was issued options to purchase 550,000 shares common stock as employee compensation
from May 2015 through May 2016 at prices ranging from $0.18 to $0.80 per share, vesting over periods of up to two years, and expiring
ten years from the date of issuance.
|
|
(3)
|
On February 1, 2012, Mr. Bigger was appointed
Chief Financial Officer. In 2012, Mr. Bigger received options for 4,000,000 exercisable at $0.25 per share, vesting over four years.
Of the 4,000,000 options, 500,000 vested on February 1, 2012, 500,000 vested on February 1 2013, 1,000,000 vested on February 1,
2014, 1,000,000 vested on February 1, 2015, and 1,000,000 vested on February 1, 2016. On March 10, 2016, the Board of Directors
agreed to amend Mr. Bigger’s employment contract, effective March 10, 2016, such that the contract will terminate on March
8, 2019, the business day immediately preceding the third anniversary of the effective date of the amendment. Prior to this amendment,
Mr. Bigger’s contract was scheduled to terminate on January 31, 2017, subject to automatic one-year extensions of the contract.
From January 2015 through January 2017,
Mr. Bigger was issued options under the Company’s Board compensation policy to purchase 1,350,741 shares of common stock
at prices ranging from $0.05 to $0.48 per share, vesting over a one year period, and expiring ten years from the date of issuance.
Mr. Bigger resigned from all positions
with the Company effective on April 1, 2017. As part of a separation agreement with Mr. Bigger, the Company agreed to pay him a
total of $613,000 on an equal installment basis over 24 months. In addition, the Company also immediately vested the stock options
granted to him in January 2017 to purchase 1,000,000 shares of common stock at $0.05 per share.
|
OPTION GRANTS IN LAST FISCAL YEAR
The following table
sets forth information concerning the stock option grants made to each of the Named Executive Officers and Former Control Persons
during the 2016 fiscal year. No stock appreciation rights were granted to any of the Named Executive Officers or Former Control
Persons during the 2016 fiscal year.
|
|
Individual Grants
|
Name
|
|
Number of
Securities
Underlying
Options
Granted
|
|
|
Percent of
Total Options
Granted to
Employees in
Fiscal 2016
|
|
|
Exercise or
Base Price
Per Share
|
|
Expiration
Date
|
Greggory Bigger
|
|
|
263,158
|
|
|
|
32.8%
|
|
|
|
$0.19
|
|
1/4/2026
|
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR
AND YEAR-END OPTION VALUES
No options were exercised
by any of the Named Executive Officers or Greggory Bigger, former Chief Executive Officer, President, and Chief Financial Officer
during the 2016 fiscal year. The following table sets forth the number of shares of our common stock subject to exercisable and
unexercisable stock options which the Named Executive Officers and Mr. Bigger held at the end of the 2016 fiscal year.
|
|
Shares
|
|
|
Value
|
|
|
Number of Securities
Underlying Unexercised
Options at
Fiscal Year-End (#)
|
|
|
Value of Unexercised
In-the-Money Options ($)
(1)
|
|
|
|
Acquired on
|
|
|
Realized
|
|
|
|
|
|
|
|
Name
|
|
Exercise (#)
|
|
|
($)
|
|
|
Exercisable
|
|
Unexercisable
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
Jason Lane
|
|
|
–
|
|
|
$
|
–
|
|
|
–
|
|
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Greggory Bigger
|
|
|
–
|
|
|
$
|
–
|
|
|
5,462,592
|
|
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Michael McMullen
|
|
|
–
|
|
|
$
|
–
|
|
|
425,000
|
|
|
375,000
|
|
|
$
|
–
|
|
|
$
|
–
|
|
______________________
(1)
|
Market value of our common stock at fiscal year-end minus the exercise price. The closing price of our common stock on December 31, 2016 the last trading day of the year was $0.05 per share.
|
EQUITY COMPENSATION PLAN INFORMATION
FOR 2016
The following table
sets forth information regarding outstanding options and shares reserved for future issuance under our equity compensation plans
as of December 31, 2016:
Plan Category
|
|
Number of Securities
to be Issued upon
Exercise of
Outstanding Options,
Warrants and Rights
|
|
|
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in the
First Column)
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by security holders
|
|
|
–
|
|
|
$
|
–
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not approved by security holders
|
|
|
6,500,000
|
|
|
$
|
0.05
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,500,000
|
|
|
$
|
0.05
|
|
|
|
–
|
|
Certain Relationships and Related Transactions
As of December 31,
2016 and 2015, total accrued expenses – related parties amounted to $135,000 and $191,000, respectively. Included in these
accruals are the unpaid salaries to a former President and current member of the Company’s Board of Directors of $15,000
and $75,000, respectively. The Company agreed to a monthly payment of $5,000 to the current Board member until his unpaid salary
is fully settled.
In addition, certain
executive officers and Directors of the company have acquired common stock of the Company, as well as convertible notes, options
and warrants that are convertible into common stock, under the Board Compensation Policy of the Company, approved on June 19, 2015,
and otherwise. Such acquisitions are reported in Company Director filings under SEC Forms 3 and 4.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the
Exchange Act requires our directors, executive officers and holders of more than 10% of a registered class of our equity securities
to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and our other equity
securities. Directors, executive officers and greater than 10% stockholders are required by SEC regulation to furnish us with copies
of all Section 16(a) reports they file. Based solely on our review of the copies of such forms received by us, if any, we believe
that all reporting requirements under Section 16(a) for the 2016 fiscal year were met by our directors, executive officers and
greater than 10% beneficial owners.
ANNUAL REPORT ON FORM 10-K
We filed our Annual
Report on Form 10-K with the SEC on March 31, 2017. We filed our Quarterly Report on Form 10-Q with the SEC on May 15, 2017. Stockholders
may obtain additional copies of the 10-K or 10-Q and the exhibits thereto, on our website at www.qsenergy.com or at www.sec.gov.
Copies are also available to Stockholders, without charge, by writing to the Corporate Secretary at our principal executive office
at 23902 FM 2978, Tomball, Texas 77373. Neither our Annual Report to Stockholders on Form 10-K nor our Quarterly Report to Stockholders
on Form 10-Q is to be regarded as soliciting material or as a communication by means of which any solicitation of consents is to
be made.
It is important that
your shares be represented, regardless of the number of shares that you hold.
YOU ARE, THEREFORE, URGED TO EXECUTE PROMPTLY
AND RETURN THE ACCOMPANYING CONSENT IN THE ENVELOPE THAT HAS BEEN ENCLOSED FOR YOUR CONVENIENCE.
|
By Order of the Board of Directors,
|
|
|
|
|
|
/s/Jason Lane
|
|
Jason Lane
Chief Executive Officer and Chairman
|
July 27, 2017
Tomball, Texas
QS ENERGY, INC.
CONSENT SOLICITATION
Your written consent is solicited by the
Board of Directors of QS Energy, Inc. (the “Company”) to take action without a meeting of our stockholders. By signing
this consent, you revoke all prior consents, acknowledge receipt of the Notice of Consent Solicitation and Consent Solicitation
Statement, and vote via written consent all your shares of common stock of QS Energy, Inc. which you are entitled to vote, on the
proposal shown below (the “Proposal”).
The shares of stock you hold in your account
will be voted via written consent as you specify below. If no choice is specified, the consent will be voted for the Proposal.
THE COMPANY’S BOARD OF DIRECTORS
RECOMMENDS CONSENT TO THE PROPOSAL.
Please mark, sign and date your consent
solicitation card and return it
today in the postage-paid envelope provided,
or via fax or email to:
Nevada Agency and Transfer Company
50 West Liberty Street, Suite 880
Reno, Nevada 89501
Attention: Proxy Department
Fax #775-322-5623 or stocktransfer@natco.org
THIS CONSENT MUST BE RETURNED BY October
5, 2017.
PROPOSAL to approve an amendment to the Articles of Incorporation of the Company to increase the Company’s authorized shares of common stock from 300 million to 500 million and to create a new class of preferred stock and authorize the Company to issue up to 100 million shares of preferred stock
|
|
o
|
CONSENT
|
|
|
o
|
WITHHOLD CONSENT
|
|
|
o
|
ABSTAIN
|
THIS CONSENT, WHEN PROPERLY EXECUTED AND DELIVERED, AND UNLESS TIMELY REVOKED, WILL BECOME EFFECTIVE WHEN THE COMPANY PUBLICLY ANNOUNCES THAT SUFFICIENT CONSENTS ARE RECEIVED BY THE COMPANY TO APPROVE THE PROPOSAL.
|
Date:
|
|
|
Signature
|
|
|
Signature (if joint or common ownership)
|
|
Please sign exactly as your name(s) appears on the Consent. If held in joint tenancy, all persons must sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Consent. If a partnership, please sign partnership name by authorized person.
|
|
For address change: Mark Box and indicate changes below:
|
o
|
|
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