United States
Securities and Exchange Commission
Washington, D.C. 20549
Schedule 14C Information
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934
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oPreliminary Information Statement
oConfidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
þDefinitive Information Statement
IronClad Encryption Corporation
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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IronClad Encryption Corporation
777 S. Post Oak Lane, Suite 1700
Houston, Texas 77056
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14C-2 THEREUNDER
_____________________________________________________________
November 8, 2019
Dear Shareholders:
The enclosed Information Statement is being furnished to the holders of record of the shares of the Class A common stock, par value $0.001 per share (the “Common Stock”) of IronClad Encryption Corporation, a Delaware corporation (the “Company”), as of the close of business on the record date of October 29, 2019 (the “Record Date”). The purpose of this Information Statement is to notify our shareholders that on November 4, 2019, the Board of Directors of the Company (the “Board”) and the holders of at least a majority of the outstanding shares of the Common Stock adopted resolutions by written consent (the “Consents”) which approve the Company’s amendment of its Certificate of Incorporation to increase the number of shares of Common Stock of the Company authorized to be issued, subject to shareholder approval.
The Board believes that the amendment of the Certificate of Incorporation is necessary to position the Company to be able to issue additional shares of its Common Stock in the future to finance the Company's growth and that the filing of a Certificate of Amendment of the Certificate of Incorporation (“Certificate of Amendment”) with the Secretary of State of Delaware is beneficial to the Company. The Board believes that it is in the best interest of the Company to file a Certificate of Amendment with the Secretary of State of Delaware to increase the number of shares of the Company's Class A Common Stock authorized to be issued from 6,000,000,000 to a maximum of 50,000,000,000.
The Board believes that it is in the best interest of the Company to increase the number of shares of the Company's Class A Common Stock authorized to be issued incrementally in the future up to a maximum of 50,000,000,000 shares as necessary to enable the Company to issue additional shares of its Common Stock. The full text of the Certificate of Amendment to be filed in Delaware is attached as Appendix A to this Information Statement.
The enclosed Information Statement is being furnished to you to inform you that the foregoing action has been approved by the holders of at least a majority of the outstanding shares of the voting stock of the Company and the approval of the action taken will become effective on a date that is not earlier than 21 days after this Information Statement is first mailed to our shareholders. The Board is not soliciting your proxy in connection with the adoption of these resolutions and proxies are not requested from shareholders. You are urged to read the Information Statement in its entirety for a description of the action taken by the majority shareholders.
The enclosed Information Statement was mailed on or about November 8, 2019 to shareholders of record on the Record Date.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. NO VOTE OR OTHER ACTION OF THE COMPANY’S SHAREHOLDERS IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
No action is required by you. The enclosed Information Statement is being furnished to you to inform you that the foregoing action has been approved by the holders of at least a majority of the outstanding shares of all voting stock of the Company. The approval of the action previously taken will become effective on a date that is not earlier than 21 days after this Information Statement is first mailed to our shareholders.
Because shareholders holding at least a majority of the voting rights of our outstanding Common Stock have voted in favor of the foregoing action, and such shareholders have sufficient voting power to approve such action through their ownership of the Common Stock, no other shareholder consent will be solicited in connection with the matter described in this Information Statement. The Board is not soliciting your proxy in connection with the adoption of these resolutions pursuant to the Consents, and proxies are not requested from shareholders. Our shareholders are not entitled to appraisal rights under the Company’s Certificate of Incorporation, bylaws or Delaware corporate law with respect to the actions taken.
DISTRIBUTION AND COSTS
We will pay all costs associated with the distribution of the Information Statement, including the costs of printing and mailing. In addition, we will only deliver one Information Statement to multiple security holders sharing an address, unless we have received contrary instructions from one or more of the security holders.
Also, we will promptly deliver a separate copy of this Information Statement and future shareholder communication documents to any security holder at a shared address to which a single copy of the Information Statement was delivered, or deliver a single copy of this Information Statement and future shareholder communication documents to any security holder or holders sharing an address to which multiple copies are now delivered, upon written request to us at our address noted above. Security holders may also address future requests regarding delivery of information statements by contacting us at the address noted above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Common Stock, Class A and B
The following table lists, as of October 29, 2019, the number of shares of the Common Stock beneficially owned by (i) each person or entity known to the Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security.
The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power. The percentages below are calculated based on 596,465,322 shares of the Common Stock outstanding as of October 29, 2019. The business address of the shareholder listed below is c/o IronClad Encryption Corporation, 777 South Post Oak Lane, Suite 1700, Houston, Texas 77056.
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Beneficial Owners of more than 5% of Shares,
Directors and Executive Officers:
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Number of Shares of Common Stock§
Beneficially Owned
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Percent of
Ownership §
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Director: John S. Reiland
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50,000(1)
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*%
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Director: Mark A. Watson
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1,950,000(2)
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*%
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Director and President: James D. McGraw
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36,837,091(3)
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5.8%
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Director and Vice President: Jeff B. Barrett
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16,900,000(4)
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2.8%
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Vice President: Daniel M. Lerner
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7,929,000(5)
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1.3%
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Vice President: Len E. Walker
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2,150,000(6)
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0.4%
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Vice President: David G. Gullickson
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1,025,000(7)
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0.2%
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Executives Officers and Directors as a Group
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† 45,841,091
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† 7.7%
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* Less than 1% of class.
† Shares in total for the group on this line exclude any shares related to the hypothetical exercise of any options outstanding; total shares of common stock issued and outstanding at October 29, 2019 were 596,465,322 (shares of Class A: 594,926,450, and Class B: 1,538,872).
§ Voting control of shareholders is based on both the Preferred stock, Series A, and Common Stock. The Preferred stock Series A has 80% of voting weight of preferred and common shareholders, and common shareholders have 20% of voting weight. See “Preferred Stock, Series A” section below for additional discussion.
(1) This amount includes: 50,000 shares of Class A Common Stock and options to purchase 0 shares of common stock.
(2) This amount includes: 1,950,000 shares of Class A Common Stock and options to purchase 0 shares of common stock.
(3) This amount includes: 22,837,091 shares of Class A Common Stock and options to purchase 4,000,000 and then 10,000,000 shares of common stock.
(4) This amount includes: 15,900,000 shares of Class A Common Stock and options to purchase 1,000,000 shares of common stock.
(5) This amount includes: 4,929,000 shares of Class A Common Stock and options to purchase 3,000,000 shares of common stock.
(6) This amount includes: 150,000 shares of Class A Common Stock and options to purchase 2,000,000 shares of common stock.
(7) This amount includes: 25,000 shares of Class A Common Stock and options to purchase 1,000,000 shares of common stock.
Preferred Stock, Series A
On April 12, 2019, the Board of Directors (the “Board”) ratified the amendment of the Company’s Certificate of Incorporation, effective as of April 3, 2019, upon filing a Certificate of Designation with the Secretary of State of Delaware, which sets forth the rights, preferences and privileges of the Preferred Stock, Series A. The Board also approved the issuance of 100 shares of the Preferred Stock, Series A with a stated value of $0.001 per share for no consideration to the Company’s President pursuant to Rule 4(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 of Regulation D as promulgated by the SEC under the Securities Act.
Except as otherwise required by law or by the Certificate of Incorporation, or by the Certificate of Designation, the outstanding shares of the Preferred Stock, Series A shall vote together with the shares of Common Stock and other voting securities of the Company as a single class and, regardless of the number of shares of the Preferred Stock, Series A outstanding and as long as at least one of such shares of the Preferred Stock, Series A is outstanding, shall represent eighty percent (80%) of all votes entitled to be voted at any annual or special meeting of shareholders of the Company or action by written consent of shareholders. Each outstanding share of the Preferred Stock, Series A shall represent its proportionate share of the 80% which is allocated to the outstanding shares of Preferred Stock, Series A.
The shares of the Preferred Stock, Series A are not convertible into Common Stock of the Company. The holder of the shares will not be entitled to receive any dividends.
As of October 29, 2019, the Company’s President beneficially owns 100 shares (100%) of the Preferred Stock, Series A and 22,837,091 shares of Common Stock, which represents approximately eighty and eight tenths of a percent (80.8%; 0.8% by virtue of the common shares owned directly by the President (3.8% of 20%) and 80.0% based on the Preferred stock, Series A held by the President) of the outstanding voting securities of the Company.
INTEREST OF CERTAIN PERSONS IN OR IN
OPPOSITION TO MATTERS TO BE ACTED UPON
Other than as described herein, no other person has any interest, direct or indirect, by security holdings or otherwise, in the matters herein which is not shared by all other shareholders.
OTHER MATTERS
The Board knows of no other matters other than those described in the enclosed Information Statement which have been approved or considered by the holders of a majority of the shares of the Company’s voting stock.
IF YOU HAVE ANY QUESTIONS REGARDING THIS INFORMATION STATEMENT, PLEASE CONTACT:
IronClad Encryption Corporation
777 S. Post Oak Lane, Suite 1700
Houston, Texas 77056
Sincerely,
BY:/S/ LEN E. WALKER
Name:Len E. Walker
Title:Vice President, Secretary and General Counsel
Appendix A
777 South Post Oak Lane, Suite 1700
Houston, TX 77056
(888) 362-7972
NOTICE OF ACTION TAKEN
Amendment of Certificate of Incorporation
Notice of Action Taken by Written Consent
To the Shareholders of IronClad Encryption Corporation
November 8, 2019
Dear Shareholder:
On November 4, 2019, through a written consent in lieu of meeting, the holders of more than a majority of the outstanding voting interests of IronClad Encryption Corporation (the “Company”), approved amending the Company’s Certificate of Incorporation. A copy of the Certificate of Amendment of Certificate of Incorporation is attached to this notice for your information.
The Certificate of Amendment of Certificate of Incorporation will be filed with the Secretary of the State of Delaware on or after November 29, 2019, subject to shareholder approval.
Sincerely,
/S/ LEN E. WALKER
Len E. Walker
Vice President, Secretary and General Counsel
Enclosure:Certificate of Amendment of Certificate of Incorporation
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
IRONCLAD ENCRYPTION CORPORATION
________________________________________
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
________________________________________
IronClad Encryption Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:
FIRST:Section 1 of Article VI of the Certificate of Incorporation of the Corporation is hereby amended and restated in its entirety to read as follows:
“Section 1 Aggregate Number of Shares. The total number of shares which the Corporation shall have authority to issue is 50,021,707,093, having a par value of $0.001 per share, of which (a) 20,000,000 shares shall be Preferred Stock, (b) 50,000,000,000 shares shall be Class A Common Stock, and (c) 1,707,093 shares shall be Class B Common Stock.”
SECOND:The amendment to the Certificate of Incorporation effected hereby has been proposed by the Board of Directors of the Corporation and adopted by the requisite vote of the stockholders of the Corporation in the manner prescribed by Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by its duly authorized officer this ___ day of ________________, 2019.
IronClad Encryption Corporation
By:
Name:Len E. Walker
Title:Vice President, Secretary and General Counsel
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