ITEM 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On February 8, 2021, the Company filed a Certificate of Designations of Preferences, Rights and Limitations of Series D Stock (“Certificate of Designation”) with the Secretary of State of the State of Delaware. The number of shares of Series D Stock designated is 5,000 and each share of Series D Stock has a stated value equal to $1,000. Under the terms of the Series D Stock, the Company cannot issue any shares of Common Stock to any holder of Series D Stock, and no holder can convert the Series D Stock into Common Stock, to the extent it would result in the holder’s beneficial ownership being in excess of 9.99% of the outstanding Common Stock.
Voting Rights
Except as otherwise provided herein or as otherwise required by law, the Series D Stock shall have no voting rights. However, as long as any shares of Series D Stock is outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series D Stock, (a) alter or change adversely the powers, preferences or rights given to the Series D Stock or alter or amend the Certificate of Designation, (b) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series D Stock, (c) increase the number of authorized shares of Series D Stock, or (d) enter into any agreement with respect to any of the foregoing.
Liquidation.
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary that is not a Fundamental Transaction (as defined in the Certificate of Designation), the holders of Series D Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount equal to $1,000 per share of Series D Stock.
Conversion Price
The conversion price for the Series D Stock shall initially equal $0.0024. Going forward, the conversion price will be lesser of $0.0024 and either
• 85% of the average of the volume weighted average price (VWAP) during the 10 trading days immediately following the effective date and public announcement of the next reverse stock split of HCMC, if any such action shall occur, or
• 80% of the lowest daily VWAP during the 5 trading days immediately preceding the date the conversion shares are either registered for resale or may be sold pursuant to Rule 144.
The rights of the Series D Stock include certain protections in the event of dilutive equity issuances.
The foregoing description of the Series D Stock is not complete and is qualified in its entirety by reference to the full text of the Company’s Certificate of Designations of Preferences, Rights and Limitations of Series D Convertible Preferred Stock, which is filed herewith as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated by reference herein.