Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On
February 1, 2023, Amergent filed a Certificate of Designation of the Preferences, Rights and Limitations Series B Convertible Preferred
Stock (“Certificate”) with the Secretary of State of Delaware, which becomes effective upon filing. The Certificate, which
forms a part of the company’s Certificate of Incorporations, specifies the terms of the Series B Preferred.
The company is authorized to issue up to 400 shares
of Series B Preferred. Each share has a stated value of $20,000.00. Series B Preferred converts to common stock at an initial
conversion price of $0.50 per share. The holders of Series B Preferred shall receive cumulative dividends in an amount equal to 12% of
the stated value ($2,400.00 per share of Series B Preferred) on an annual basis, payable in cash, or in shares of common stock
based on 30 day VWAP of common stock on the trading market. Conversion of Series B Preferred shall be subject to a 4.99% beneficial
ownership limitation, which may be increased, decreased or waived by holder in its sole discretion. Upon any liquidation, dissolution
or winding-up of the company, whether voluntary or involuntary, the holders of Series B Preferred shall be entitled to receive out of
the assets of the company an amount equal to the stated value plus any accrued and unpaid interest, for each share of Series B Preferred,
after any distributions and payment shall be made to holders of any senior securities and before any distribution or payment shall be
made to the holders of common stock and any other junior securities.
The
company has the right to redeem the Series B Preferred: (a) commencing May 1, 2023 through December 31, 2023, at a price of $25,000.00
per share plus the amount of accrued but unpaid dividends, (b) commencing January 1, 2024 through December 31, 2024, at a price of $30,000.00
per share plus the amount accrued but unpaid dividends, and (c) commencing January 1, 2025 through December 31, 2025, at a price of $35,000.00
per share plus the amount accrued but unpaid dividends. Redemptions may be made in part, pro-rata among holders, or in whole and require
30 days’ notice to holders. In the event of redemption, the investors will retain the Warrants.
Each
holder of Series B Preferred will have the right, at any time, to convert each share of Series B Preferred into 40,000 shares of common
stock based on the initial conversion price of $0.50, subject to the beneficial ownership limitation and certain adjustments as provided
in the Certificate.
The
conversion price of the Series B Preferred shall be subject to customary proportional adjustment for stock splits, stock dividends, and
distributions. In the event of a pro-rata distribution of assets or rights offering to holders of common stock, holders of Series
B Preferred will be allowed to participate on an as converted basis. Holders of Series B Preferred shall also have customary protections
in the event of a fundamental transaction.
The holders of Series B Preferred shall
vote together with the holders of common stock as a single class on an as-converted basis on all matters presented to the holders
of common stock and shall vote as a separate class on all matters presented to the holders of Series B Preferred. The approval
of a majority in interest of holders of Series B Preferred shall be required to take any action that alters the rights of Series B Preferred.
The
Series B Preferred investor’s interests will be subordinated to all of the company’s indebtedness for borrowed money, whether
or not such indebtedness for borrowed money is secured.
A
copy of the Certificate is attached as Exhibit 3.1 and is incorporated herein by reference.
The
foregoing summary description of the Certificate is not complete and is qualified in its entirety by reference to the full text of the
Certificate, which is incorporated herein by reference and filed as Exhibit 3.1 to this Current Report on Form 8-K.
Forward
Looking Statements
This
Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995, including with respect to the company’s expectations regarding the closing of the asset purchase transaction. Forward-looking
statements are not historical facts or statements of current conditions, but instead represent only management’s beliefs regarding
future events, many of which, by their nature, are inherently uncertain and outside of the company’s control. These statements
are subject to risks, uncertainties, assumptions and other important factors. Factors that could cause the company’s actual results
to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to: the occurrence
of any event, change or other circumstances that could give rise to the termination of the Agreements; the inability to complete the
proposed transaction due to the failure to satisfy other conditions to completion of such transaction; the risk that the transaction
will not be consummated in a timely manner.
Additional
factors that could cause the company’s actual outcomes or results to differ materially from those described in the forward-looking
statements can be found in the section entitled “Risk Factors” included in the company’s Annual Report on Form 10-K
for the year ended December 31, 2021, originally filed with the SEC on March 15, 2022, as such factors may be amended and updated from
time to time in the company’s subsequent periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov.
Readers are cautioned not to put undue reliance on such forward-looking statements because actual results may vary materially from those
expressed or implied. The company assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.