UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
TO
(Amendment
No. 2)
TENDER
OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
SIDECHANNEL,
INC.
(Name
of Subject Company (Issuer) and Name of Filing Person (Issuer))
Warrants
to Purchase Common Stock with an Exercise Price of $0.36
(Title
of Class of Securities)
N/A
(CUSIP
Number of Warrants)
Ryan
Polk
Chief
Financial Officer
SideChannel,
Inc.
146
Main Street, Suite 405
Worcester,
MA 01608
Phone:
(508) 925-0114
(Name,
Address and Telephone Number of Person
Authorized
to Receive Notices and Communications on Behalf of Filing Persons)
with
a copy to:
Michael
E. Storck, Esq. Paul J. Schulz, Esq. Lippes Mathias LLP
50
Fountain Plaza, Suite 1700
Buffalo,
New York 14202
(716)
853-5100
CALCULATION
OF FILING FEE
Transaction
valuation* $4,463,442.48; Amount of filing fee* $658.80
*
Estimated for purposes of calculating the amount of the filing fee only. SideChannel, Inc. (“SideChannel” or the “Company”)
is offering to holders of certain of its warrants, as more fully described herein, the opportunity to exchange such warrants for shares
of the Company’s common stock, par value $0.001 per share (“Shares” or “Common Stock”) by tendering six
(6) warrants with an exercise price of $0.36 in exchange for one (1) share of our Common Stock and to exchange such warrants for new
warrants (“New Warrant” or “New Warrants”) by tendering two and one-half (2.5) warrants with an exercise price
of $0.36 in exchange for one (1) New Warrant. The amount of the filing fee assumes that all outstanding warrants that are the subject
of the offer will be exchanged and is calculated pursuant to Rule 0-11(b) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). The transaction value was determined assuming that all warrants to purchase SideChannel’s Common Stock eligible to
participate in the Offer are exchanged, and that the approximately 9,276,824 Shares issued as a result of the Offer have an aggregate
value of $463,841.20 calculated based on the average of the low and high trading price on October 31, 2023 which was $0.05, and that
the approximately 22,219,896 New Warrants issued as a result of the Offer have an aggregate value of $3,999,581.28 calculated using an
exercise price of $0.18.
The
amount of the filing fee, calculated in accordance with Rule 0-11(b) under the Exchange Act, equals $147.60 per million dollars
of the transaction valuation.
| Amount
Previously Paid: N/A |
Filing
Party: N/A |
| Form
or Registration No.: N/A |
Date
Filed: N/A |
| ☐ |
Check
the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. |
Check
the appropriate boxes below to designate any transactions to which the statement relates:
| |
☐ |
third-party
tender offer subject to Rule 14d-1. |
| |
☒ |
issuer
tender offer subject to Rule 13e-4. |
| |
☐ |
going-private
transaction subject to Rule 13e-3. |
| |
☐ |
amendment
to Schedule 13D under Rule 13d-2. |
Check
the following box if the filing is a final amendment reporting the results of the tender offer: ☐
SCHEDULE
TO
Amendment
No. 2
This
Amendment No. 2 (this “Amendment”) amends the Tender Offer Statement (together with any amendments and supplements thereto,
the “Schedule TO”), filed with the Securities and Exchange Commission on November 7, 2023 by SideChannel, Inc., a Delaware
corporation (the “Company” or “SideChannel”).
This
Schedule TO relates to the offer by the Company to holders of certain of the Company’s outstanding warrants (“2021 Investor
Warrants”). The offer is made upon the terms and subject to the conditions set forth in the Company’s offer to exchange,
dated November 6, 2023 (the “Offer to Exchange”), and in the related Offer to Exchange materials which are filed as Exhibits
(a)(1)(A), (a)(1)(B), (a)(1)(C), and (a)(1)(F) to this Schedule TO (which the Offer to Exchange and related Offer to Exchange materials,
as amended or supplemented from time to time, collectively constitute the “Offer Materials”). This is an Offer for all or
none of the 2021 Investor Warrants. The Offer is subject to the requirement that all of the 2021 Investor Warrants must be tendered by
all eligible holders of the 2021 Investor Warrants.
The
55,549,615 2021 Investor Warrants subject to our Offer to Exchange consist of warrants to purchase an aggregate of 55,549,615 Shares
issued to certain investors in 2021 with a five (5) year term and with an exercise price of $0.36. Under the Offer to Exchange,
the holders of the 2021 Investor Warrants will be entitled to receive one (1) share of Common Stock for each six (6) 2021 Investor Warrants
exchanged (“Investor Exchange Ratio for Stock”) and one (1) New Warrant (attached as Exhibit (a)(1)(F)) for each two and
one half (2.5) 2021 Investor Warrants exchanged, exercisable for five (5) years at an exercise price of $0.18 per share (“Investor
Exchange Ratio for Warrants”). The Investor Exchange Ratio for Stock and the Investor Exchange Ratio for Warrants are collectively
referred to as the “Investor Exchange Ratios”. The “Offer Period” is the period commencing on November 6, 2023
and ending at 5:00 p.m., Eastern Time, on December 15, 2023, or such later date to which the Company may extend the Offer (the “Expiration
Date”). If all of the 2021 Investor Warrants are tendered, the Company will issue approximately 9,267,824 Shares and 22,219,896
New Warrants. The Investor Exchange Ratios were selected by the Company in order to provide the holders of the 2021 Investor Warrants
with an incentive to exchange the 2021 Investor Warrants.
Except
as otherwise set forth in this Amendment, the information set forth in the Schedule TO remains unchanged and is incorporated herein by
reference to the extent relevant to the items in this Amendment. Capitalized terms used but not defined herein have the meanings ascribed
to them in the Schedule TO.
Items
1 through 10 and 12
Items
1 through 10 and 12 of the Schedule TO, including items that incorporate by reference the information contained in the Offer to Exchange,
are hereby amended by adding the following text thereto:
“On
December 1, 2023, the Company amended the Offer to Exchange Common Stock for Certain Outstanding Warrants attached as Exhibit (a)(1)(A).
The modifications include correcting typographical errors, clarifying defined terms, and adding disclosures as suggested by the Securities
and Exchange Commission (“SEC”) in a letter to the Company dated November 21, 2023 (“Amended Offer to Exchange”).
The form of the Amended Offer to Exchange is attached as Exhibit (a)(1)(H).
No
changes were made to the Investor Exchange Ratios or other terms of the Offer to Exchange.
References
to consideration in the Schedule TO whether stated only as “Shares” or as “Shares and New Warrants” are intended
to convey all of the consideration appropriate for the context of the Schedule TO Item.
Item
4(a) of this Schedule TO erroneously indicated we were authorized to issue “10,0000,000” undesignated shares of Preferred
Stock. Schedule TO Item 4(a) is amended to clarify in pertinent part that “Our Certificate of Incorporation authorizes the issuance
of 10,000,000 undesignated shares of Preferred Stock and permits our Board of Directors to issue Preferred Stock with rights, powers,
prerogatives or preferences that could impede the success of any attempt to change control of the Company.”
Item
5(a) of this Schedule TO is amended to provide that: “In July 2021, we engaged Paulson Investment Company (“Paulson”)
for strategic advisory services to be delivered over a four-year term in exchange for 4,000,000 shares of common stock. We have been
consulting with Paulson regarding the Offer to Exchange through this strategic advisory services agreement. We did not incur additional
costs with Paulson related to the Offer to Exchange. Paulson did not solicit the tender of any of the 2021 Investor Warrants.”
Schedule
TO Item 7(a) is amended to provide that “No funds will be paid by the Company to exchanging 2021 Investor Warrant holders in connection
with the Offer to Exchange. The Company will use funds on hand to pay the other expenses of issuing Shares and New Warrants. The Company
will use newly issued Shares or Shares held in treasury, if any, to effect the Offer to Exchange.”
Item
10 of this Schedule TO incorporates by reference the information in Item 8 of the Offer to Exchange, Financial Information Regarding
the Company, including the summarized financial information contained therein. We have determined that pro forma financial information
is not material in the context of this Offer to Exchange because the tender does not impact earnings, assets, or liabilities.
The
Company has indicated that as of 5:00 p.m. Eastern Time on November 30, 2023, approximately 35,097,127 warrants had been validly tendered
into and not validly withdrawn from The Offer, representing approximately 63.2% of the 2021 Investor Warrants.”
Amendments
to the Offer to Exchange and Exhibits to the Schedule TO
All
references to the Offer to Exchange Common Stock for Certain Outstanding Warrants (Exhibit (a)(1)(A) are hereby amended and replaced
with the Amended Offer to Exchange attached hereto as Exhibit (a)(1)(H).
Exhibit (a)(1)(J), a break-even
analysis prepared for discussion with the Holders of the 2021 Investor Warrants, has been added to the Schedule TO.
The
Company has amended the Calculation of Filing Fee Section to include the New Warrants in the calculation and has updated the format of
the Filing Fee Table to this Schedule TO as Exhibit 107.
Item
12. Exhibits.
*
Filed herewith.
SIGNATURE
After
due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete
and correct.
| SIDECHANNEL,
INC. |
|
|
| |
|
|
| Date:
December 4, 2023 |
By: |
/s/
Ryan Polk |
| |
Name: |
Ryan
Polk |
| |
Title: |
Chief
Financial Officer |
Exhibit
99(a)(1)(H)
OFFER
TO EXCHANGE COMMON STOCK
FOR
CERTAIN OUTSTANDING WARRANTS OF
SIDECHANNEL,
INC.
NOVEMBER
6, 2023
(Amended
December 1, 2023)
THE
OFFER PERIOD AND YOUR RIGHT TO WITHDRAW WARRANTS THAT YOU TENDER WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON DECEMBER 15, 2023, UNLESS
THE OFFER PERIOD IS EXTENDED. THE COMPANY MAY EXTEND THE OFFER PERIOD AT ANY TIME. THIS IS AN OFFER FOR ALL OR NONE OF THE WARRANTS SUBJECT
TO THE OFFER.
THE
OFFER IS BEING MADE SOLELY UNDER THIS OFFER LETTER AND THE RELATED LETTERS OF TRANSMITTAL TO ALL HOLDERS OF CERTAIN WARRANTS DESCRIBED
HEREIN. THE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF WARRANTS RESIDING IN ANY U.S. STATE
IN WHICH THE MAKING OF THE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES, BLUE SKY OR OTHER LAWS OF SUCH
U.S. STATE.
SideChannel,
Inc. which is referred to in this Offer to Exchange as “we”, “us”, “our”, “SideChannel”
or the “Company” is making an offer, upon the terms and conditions in this Offer to Exchange and the related Letters
of Transmittal (which together constitute the “Offer”), to holders of certain of the Company’s outstanding warrants
to receive an aggregate of approximately 9,276,824 shares of the Company’s common stock, par value $0.001 per share (“Common
Stock” or “Shares”) and 22,219,896 new warrants to purchase Common Stock at an exercise price of $0.18 per
share for a period of five (5) years (“New Warrants”).
The
warrants subject to our Offer to Exchange consist of warrants to purchase an aggregate of 55,549,615 Shares issued to certain
investors in 2021 with a five-year term and with an exercise price of $0.36 (“2021 Investor Warrants”). Under this
Offer to Exchange, the holders of the 2021 Investor Warrants will be entitled to receive one (1) share of Common Stock for every six
(6) 2021 Investor Warrants exchanged and one (1) New Warrant for every two and one half (2.5) 2021 Investor Warrants exchanged.
The
foregoing offer is for all outstanding 2021 Investor Warrants. All 2021 Investor Warrants must be tendered for the Offer to Exchange
to close, subject to SideChannel’s right to waive the requirement. The “Offer Period” is the period commencing
on November 6, 2023 and ending at 5:00 p.m., Eastern Time, on December 15, 2023, or such later date to which the Company
may extend the Offer (the “Expiration Date”). If all of the 2021 Investor Warrants are tendered, the Company will
issue approximately 9,276,824 Shares and 22,219,896 New Warrants.
Our
Shares trade on the OTCQB, under the symbol SDCH. On November 30, 2023, the closing sales price for the Shares was $0.04 per share.
No
scrip or fractional shares will be issued. 2021 Investor Warrants may only be exchanged for whole shares and whole warrants. Holders
of 2021 Investor Warrants who would otherwise have been entitled to receive fractional shares will, after aggregating all such fractional
shares and fractional warrants of such holder, receive the number of shares and warrants as rounded up to the nearest whole share and
warrant. Holders continue to be entitled to exercise their 2021 Investor Warrants on a cash basis, as applicable, during the Offer Period
in accordance with the terms of such 2021 Investor Warrants until the expiration date of such 2021 Investor Warrants.
This
Offer is for all or none of the 2021 Investor Warrants and is subject to the condition that all of the 2021 Investor Warrants must be
tendered for the Offer to close, which SideChannel may waive. If you elect to tender 2021 Investor Warrants in response to the Offer,
please follow the instructions in this Offer to Exchange and the related documents, including the Letter of Transmittal. If you elect
to exercise your 2021 Investor Warrants on a cash basis in accordance with their terms, please follow the instructions for exercise included
in the 2021 Investor Warrants.
If
you tender 2021 Investor Warrants, you may withdraw your tendered 2021 Investor Warrants before the Expiration Date and retain them on
their terms by following the instructions herein.
Investing
in the Shares involves a high degree of risk. See the “Risk Factors” section of this Offer to Exchange for a discussion of
information that you should consider before tendering 2021 Investor Warrants in the Offer.
The
Offer will commence on November 6, 2023 (the date the materials relating to the Offer are first sent to the 2021 Investor Warrant holders)
and end on the Expiration Date. Only the 2021 Investor Warrants are subject to the Offer.
A
detailed discussion of our Offer to Exchange Common Stock for the 2021 Investor Warrants is contained in this Offer to Exchange. Holders
of the 2021 Investor Warrants are strongly encouraged to read this entire package of materials, and the publicly filed information about
the Company referenced herein, before deciding regarding the Offer.
THE
COMPANY’S BOARD OF DIRECTORS HAS APPROVED THE OFFER. HOWEVER, NONE OF THE COMPANY, ITS DIRECTORS, OFFICERS OR EMPLOYEES (EACH AS
DEFINED BELOW) MAKES ANY RECOMMENDATION WHETHER YOU SHOULD EXCHANGE YOUR WARRANTS. EACH HOLDER OF A 2021 INVESTOR WARRANT MUST MAKE HIS,
HER OR ITS OWN DECISION WHETHER TO TENDER ALL OF HIS, HER OR ITS WARRANTS.
WE
HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER OR NOT YOU SHOULD PARTICIPATE IN THE OFFER TO EXCHANGE.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS DOCUMENT.
Neither
the Securities and Exchange Commission (the “SEC”) nor any state securities commission, bureau or authority has approved
or disapproved of this transaction or passed upon the fairness or merits of this transaction or the accuracy or adequacy of the information
contained in this Offer to Exchange. Any representation to the contrary is a criminal offense.
IMPORTANT
PROCEDURES
If
you want to tender all of your 2021 Investor Warrants, you must:
| |
● |
complete
and sign the Letter of Transmittal applicable to the 2021 Investor Warrants you are tendering according to its instructions, and
deliver the Letter of Transmittal, together with any other documents required by the Letter of Transmittal, to the Company. |
TO
TENDER YOUR 2021 INVESTOR WARRANTS, YOU MUST CAREFULLY FOLLOW THE PROCEDURES DESCRIBED IN THIS OFFER LETTER, THE LETTER OF TRANSMITTAL
APPLICABLE TO YOUR 2021 INVESTOR WARRANTS AND THE OTHER DOCUMENTS DISCUSSED HEREIN RELATED TO THE OFFER. NO SCRIP OR FRACTIONAL SHARES
WILL BE ISSUED. WARRANTS MAY ONLY BE EXCHANGED FOR WHOLE SHARES AND WHOLE NEW WARRANTS.
Holders
of 2021 Investor Warrants who would otherwise have been entitled to receive fractional shares will, after aggregating all such fractional
shares of such holder, receive the number of shares as rounded up to the nearest whole share.
If
you have any questions or need assistance, you should contact SideChannel, Inc. You may request additional copies of this Offer to Exchange
and the Letter of Transmittal from the Company. The Company may be reached at:
The
address of the Company is:
SideChannel,
Inc.
146
Main Street, Suite 405
Worcester,
MA 01608
Email:
accounting@sidechannel.com
Phone:
(508) 925-0114
TABLE
OF CONTENTS
| SUMMARY |
1 |
| |
|
| CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS |
3 |
| |
|
| RISK
FACTORS |
4 |
| |
|
| THE
OFFER |
5 |
| |
|
| 1. |
GENERAL
TERMS |
5 |
| |
|
|
| 2. |
PROCEDURE
FOR TENDERING WARRANTS |
6 |
| |
|
|
| 3. |
BACKGROUND
AND PURPOSE OF THE OFFER |
10 |
| |
|
|
| 4. |
PRICE
RANGE OF SHARES |
12 |
| |
|
|
| 5. |
SOURCE
AND AMOUNT OF FUNDS |
12 |
| |
|
|
| 6. |
FEES
AND EXPENSES |
12 |
| |
|
|
| 7. |
TRANSACTIONS
AND AGREEMENTS CONCERNING THE WARRANTS |
12 |
| |
|
|
| 8. |
FINANCIAL
INFORMATION REGARDING THE COMPANY |
12 |
| |
|
|
| 9. |
EXTENSIONS;
AMENDMENTS; CONDITIONS; TERMINATION; PLANS |
13 |
| |
|
|
| 10. |
MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES |
14 |
| |
|
|
| 11. |
ADDITIONAL
INFORMATION; MISCELLANEOUS |
16 |
SUMMARY
The
following summary is qualified in its entirety by the more detailed information appearing elsewhere in this Offer to Exchange. An investment
in our Shares involves risks. You should carefully consider the information provided under the heading “Risk Factors.”
| |
A.
|
The
Company - SideChannel, Inc., a Delaware corporation. Our principal executive offices are located at 146 Main Street, Suite 405,
Worcester, MA 01608. |
| |
|
|
| |
B.
|
The
2021 Investor Warrants - As of September 30, 2023, the Company has a total of
69,281,020 warrants to purchase shares of Common Stock outstanding (“Outstanding
Warrants”). Of the Outstanding Warrants, 55,549,615 warrants to purchase
an aggregate of 55,549,615 Shares that were issued to certain investors in 2021 with a five-year
term and with an exercise price of $0.36 (“2021 Investor Warrants”) are
subject to the Offer. By their terms, the 2021 Investor Warrants will expire on dates varying
from March 31, 2026 to April 16, 2026.
Only
the 2021 Investor Warrants are eligible to be tendered for exchange in this Offer. |
| |
|
|
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C.
|
Market
Price of the Shares - Our Shares trade on the OTCQB, under the symbol SDCH . On November 30, 2023, the closing
sales price for the Shares was $0.04 per share. |
| |
|
|
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D.
|
The
Offer - After the closing of the Offer, the holders who have tendered their 2021 Investor Warrants will be entitled to receive
one (1) share of Common Stock for every six (6) 2021 Investor Warrants tendered for exchange (“Investor Exchange Ratio for
Stock”), and one (1) New Warrant for every two and one half (2.5) 2021 Investor Warrants tendered for exchange (“Investor
Exchange Ratio for Warrants”). The Investor Exchange Ratio for Stock and the Investor Exchange Ratio for Warrants are collectively
referred to as the “Investor Exchange Ratios”. |
The
Investor Exchange Ratios were selected by the Company in order to provide the holders of the 2021 Investor Warrants with an incentive
to exchange the 2021 Investor Warrants. The “Offer Period” is the period commencing on November 6, 2023 and ending
at 5:00 p.m., Eastern Time, on December 15, 2023, or such later date to which the Company may extend the Offer (the “Expiration
Date”). This is an all or none offer pursuant to which all 2021 Investor Warrants outstanding are required be tendered subject
to SideChannel’s reserved right to waive this requirement.
If
all of the 2021 Investor Warrants are tendered as required, the Company will issue approximately 9,276,824 Shares and 22,219,896
New Warrants. A holder must tender all or none of the 2021 Investor Warrants they hold to participate in the Offer. 2021 Investor
Warrants may only be exchanged for whole shares. Holders continue to be entitled to exercise their 2021 Investor Warrants on a cash basis
during the Offer Period in accordance with the terms of the 2021 Investor Warrants. See Section 1, “General Terms”.
| |
E. |
Material
Terms of the New Warrants – The New Warrants contain the following material terms: |
| |
● |
Each
(1) New Warrant can subscribe for and purchase one (1) share of common stock from the Company at an exercise price of eighteen cents
($0.18) during a five (5) year period from the date of issuance. |
| |
● |
The
New Warrant can be exercised on a cash or cashless basis. |
| |
● |
The
New Warrants will automatically convert if the common stock trades at a bid price equal to or greater than thirty-six cents ($0.36)
for thirty (30) consecutive trading days. New Warrant holders will be notified if the automatic conversion is triggered and will
be provided with twenty (20) trading days to deliver a notice of exercise to the Company. |
| |
● |
The
New Warrants will be adjusted for stock dividends and stock splits should such an event occur during the term of the New Warrant. |
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F.
|
Reasons
for the Offer - The Offer is being made to all holders of certain classes of 2021 Investor Warrants. The purpose of the Offer
is to (i) remove impediments to effectively engaging the capital markets caused by certain terms in the 2021 Investor Warrants (ii)
reduce the aggregate number of warrants outstanding, and (iii) increase the number of Shares in the market. See Subsection 3(C),
“Background and Purpose of the Offer— Purpose of the Offer.” |
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|
|
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G.
|
Expiration
Date of Offer - The Expiration Date is 5:00 p.m., Eastern Time, on December 15, 2023, or such date to which we may extend the
Offer. All 2021 Investor Warrants and related paperwork must be received by the Company by this time, as instructed herein. See Section
9, “Extensions; Amendments; Conditions; Termination; Plans.” |
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H.
|
Withdrawal
Rights - If you tender your 2021 Investor Warrants and change your mind, you may withdraw your tendered 2021 Investor Warrants
at any time until the Expiration Date, as described in greater detail in Section 2 herein. See Section 2.B., “Withdrawal Rights.” |
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|
|
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I.
|
Participation
by Officers and Directors - No directors or officers hold any warrants subject to the Offer (see Subsection 3(D)., “Background
and Purpose of the Offer—Interests of Directors and Officers”). |
| |
J.
|
Conditions
of the Offer - The conditions of the Offer are that no action or event shall have occurred, no action shall have been taken,
and no statute, rule, regulation, judgment, order, stay, decree or injunction shall have been promulgated, enacted, entered or enforced
applicable to the Offer or the exchange of 2021 Investor Warrants for Shares and New Warrants under the Offer by or before any court
or governmental regulatory or administrative agency, authority or tribunal of competent jurisdiction, including, without limitation,
taxing authorities, that challenges the making of the Offer or the exchange of 2021 Investor Warrants for Shares and New Warrants
under the Offer or would reasonably be expected to, directly or indirectly, prohibit, prevent, restrict or delay consummation of,
or would reasonably be expected to otherwise adversely affect in any material manner, the Offer or the exchange of 2021 Investor
Warrants for Shares and New Warrants under the Offer, and that all of the 2021 Investor Warrants must be tendered; however, the Company
may waive this condition in its discretion if all 2021 Investor Warrants are not tendered by the Expiration Date. |
| |
|
|
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K.
|
Termination
- We may terminate the Offer if the Conditions of the Offer are not satisfied prior to the Expiration Date. See Section 9, “Extensions;
Amendments; Conditions; Termination.” |
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|
|
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L.
|
Fractional
Shares and Fractional Warrants - No scrip or fractional shares or warrants will be issued. 2021 Investor Warrants may only be
exchanged for whole Shares and whole New Warrants. Holders of 2021 Investor Warrants who would otherwise have been entitled to receive
fractional shares or fractional warrants will, after aggregating all such fractional shares and warrants of such holder, receive
the number of Shares and New Warrants as rounded up to the nearest whole Share and New Warrant. See Subsection 1(B), “General
Terms—Partial Tender Permitted.” |
| |
|
|
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M.
|
Board
of Directors’ Recommendation - Our Board of Directors has approved the Offer. However, none of the Company, its directors,
officers or employees makes any recommendation as to whether to tender 2021 Investor Warrants. You must make your own decision as
to whether to tender some or all of your 2021 Investor Warrants. See Subsection 1(C), “General Terms—Board Approval of
the Offer; No Recommendation; Holder’s Own Decision.” |
| |
|
|
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N.
|
Solicitation
Agent - The Company has not retained a solicitation agent for the Exchange Offer. |
| |
|
|
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O.
|
How
to Tender 2021 Investor Warrants - To tender your 2021 Investor Warrants, you must complete
the actions described herein under Section 2 before the Offer expires. You may also contact
the Company for assistance. The contact Information for the Company is SideChannel, Inc.,
146 Main Street, Suite 405, Worcester, MA 01608, Phone: (508) 925-0114. You may also contact
the Company via email using accounting@sidechannel.com.
See
Section 2, “Procedure for Tendering 2021 Investor Warrants.” |
| |
P.
|
Certain
Material U.S. Federal Tax Consequences - Holders are urged to consult their personal tax advisors concerning the tax consequences
of an exchange pursuant to the Offer based on their particular circumstances. For a general discussion of certain tax considerations,
see Section 10, “Material U.S. Federal Income Tax Consequences.” |
| |
|
|
| |
Q.
|
Further
Information - Please direct questions or requests for assistance, or for additional copies
of this Offer to Exchange, Letter of Transmittal or other materials, in writing, to the Company
at:
SideChannel,
Inc., 146 Main Street, Suite 405, Worcester, MA 01608
Email
accounting@sidechannel.com
Phone:
(508) 925-0114.
See
Section 11, “Additional Information; Miscellaneous.” |
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Offer to Exchange contains forward-looking statements. Forward-looking statements are those that predict or describe future events or
trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as statements containing
the words “believe,” “expect,” “may,” “anticipate,” “intend,” “estimate,”
“project,” “plan,” “assume,” “potential,” “could,” “should,”
or other similar expressions, or negatives of those expressions, although not all forward-looking statements contain these identifying
words. All statements contained or incorporated by reference in this Offer to Exchange regarding our future strategy, future operations,
projected financial position, estimated future revenues, projected costs, future prospects, the future of our industries and results
that might be obtained by pursuing management’s current plans and objectives are forward-looking statements.
You
should not place undue reliance on our forward-looking statements because the matters they describe are subject to known and unknown
risks, uncertainties and other unpredictable factors, many of which are beyond our control. Our forward-looking statements are based
on the information currently available to us and speak only as of the date on the cover of this Offer to Exchange, or, in the case of
forward-looking statements in documents incorporated by reference, as of the date of the date of the filing of the document that includes
the statement. New risks and uncertainties arise from time to time, and it is impossible for us to predict these matters or how they
may affect us. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance
or achievements that are expressed or implied by our forward-looking statements, and such difference might be significant and materially
adverse to our security holders. Except with respect to our obligation to provide amendments for material changes to this Offer to Exchange
during the duration of the Offer, we do not undertake and specifically disclaim any obligation to update any forward-looking statements
or to publicly announce the results of any revisions to any statements to reflect new information or future events or developments.
We
have identified some of the important factors that could cause future events to differ from our current expectations and they are described
in this Offer to Exchange under the caption “Risk Factors,” below, and elsewhere in this Offer to Exchange which you should
review carefully. Please consider our forward-looking statements in light of those risks as you read this Offer to Exchange.
RISK
FACTORS
An
investment in our Shares involves a high degree of risk. You should carefully consider each of the risks described below, together with
all of the other information set forth elsewhere on this Offer to Exchange and the risks and other information described in our annual
report on Form 10-K filed on December 20, 2022 and our subsequently filed quarterly reports on Form 10-Q. Additional risks and uncertainties
not presently known to the Company or that the Company currently deems immaterial also may impair our business operations. If any of
the matters identified as potential risks materialize, our business could be harmed. In that event, the trading price of our Common Stock
could decline.
There
is no guarantee that your decision whether to tender your 2021 Investor Warrants in the Offer will put you in a better future economic
position.
We
can give no assurance as to the price at which a stockholder may be able to sell our Common Stock in the future following the completion
of the Offer. If you choose to tender your 2021 Investor Warrants in the Offer, certain future events may cause an increase in our Common
Stock price and may result in receiving fewer shares of Common Stock now than you might receive from future warrant exercises had you
not agreed to exchange your 2021 Investor Warrants. Similarly, if you do not tender your 2021 Investor Warrants in the Offer, you will
continue to bear the risk of ownership of your 2021 Investor Warrants after the closing of the Offer, which includes the expiration of
the 2021 Investor Warrants by their own terms, and there can be no assurance that you can sell your 2021 Investor Warrants (or exercise
them for Common Stock) in the future at a higher price than would have been obtained by participating in the Offer. You should consult
your own individual tax and/or financial advisor for assistance on how this may affect your individual situation.
There
is no assurance that the Offer will be successful.
There
is no assurance that all of the 2021 Investor Warrants will be tendered in the Offer or that the Company will exercise its right to waive
that requirement. Moreover, there is no assurance that the price of our Common Stock will increase. The price of our Common Stock and
the decision of any investors to make an equity investment in the Company are based on numerous material factors, of which our 2021 Investor
Warrant overhang is only one. Eliminating or significantly reducing our 2021 Investor Warrant overhang will not generate any capital
for our Company.
If
the holders of all of our 2021 Investor Warrants accept the Offer, we will issue them additional shares of Common Stock. The issuance
of additional Common Stock upon the exchange of tendered 2021 Investor Warrants will dilute our existing stockholders as well as our
future stockholders. The issuance will dilute the percentage ownership interests in the Company of other stockholders.
The
market price of our Common Stock will fluctuate, and it may adversely affect 2021 Investor Warrant holders who tender their 2021 Investor
Warrants for Common Stock.
The
market price of our Shares will fluctuate between the date the Offer is commenced, the Expiration Date of the Offer and the date on which
Shares are issued to tendering 2021 Investor Warrant holders. Accordingly, the market price of Shares upon settlement of the Offer could
be less than the price at which the 2021 Investor Warrants could be sold or the price of our Common Stock when the 2021 Investor Warrants
were tendered. The Company does not intend to re-adjust the Investor Exchange Ratios based on any fluctuation in the price of our Shares.
The
value of the Shares and New Warrants that you receive may fluctuate.
We
are offering Shares and New Warrants for validly tendered 2021 Investor Warrants. The price of our Shares may fluctuate widely in the
future. If the market price of our Shares declines, the value of the Shares and New Warrants you will receive in exchange for your 2021
Investor Warrants will decline. The trading value of our Shares could fluctuate depending upon any number of factors, including those
specific to us and those that influence the trading prices of equity securities generally, many of which are beyond our control.
The
number of Shares outstanding as a result of the Offer may depress the price of the Common Stock.
As
a result of this Offer, the number of Shares outstanding and trading will increase. This could adversely affect the prevailing market
price of the Shares. As a result, holders may not be able to sell the Shares at or above their purchase price or exercise New Warrants
and it may impair the Company’s ability to raise capital through future sales of Common Stock or other equity securities.
No
rulings or opinions have been received as to the tax consequences of the Offer to holders of 2021 Investor Warrants.
The
tax consequences that will result to a 2021 Investor Warrant holder that participates in the Offer are not well defined by the existing
authorities. No ruling of any governmental authority and no opinion of counsel has been issued or rendered on these matters. 2021 Investor
Warrant holders must therefore rely on the advice of their own tax advisors in assessing these matters. For a general discussion of certain
tax considerations, see Section 10, “Material U.S. Federal Income Tax Consequences.”
Our
Common Stock is deemed a “Penny Stock” and, as a result, holders of our Common Stock may have their ability to sell their
Shares of the Common Stock impaired.
Our
Common Stock is considered a “penny stock” subject to the requirements of Rule 15g-9, promulgated under the Exchange Act
of 1934, as amended (“Exchange Act”). “Penny Stock” is generally defined as any equity security not traded
on an exchange or quoted on NYSE or Nasdaq that has a market price of less than $5.00 per share. Under such rule, broker-dealers who
recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice
requirements, including making an individualized written suitability determination for the purchaser and obtaining the purchaser’s
consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure
in connection with any trades involving a stock defined as a penny stock.
The
required penny stock disclosures include the required delivery, prior to any transaction, of a disclosure schedule explaining the penny
stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the
ability of purchasers to sell their securities in the secondary market. In addition, various state securities laws impose restrictions
on transferring “penny stocks” and as a result, investors in the common stock may have their ability to sell their shares
of the common stock impaired.
THE
OFFER
Risks
of Participating In the Offer
Participation
in the Offer involves a number of risks, including, but not limited to, the risks identified in “Risk Factors” above. Holders
should carefully consider these risks and are urged to speak with their personal financial, investment and/or tax advisors as necessary
before deciding whether to participate in the Offer. In addition, the Company strongly encourages you to read this Offer to Exchange
in its entirety and review the documents referred to in “Risk Factors,” above as well, including the risks and other information
described in our annual report on Form 10-K filed on December 20, 2022 and our subsequently filed quarterly reports on Form 10-Q .
Subject
to the terms and conditions of the Offer, the Company is making an offer to the holders of certain of our warrants to tender their warrants
in exchange for Shares of our Common Stock and New Warrants. The warrants subject to our Offer to Exchange are warrants to purchase an
aggregate of 55,549,615 Shares that were issued to certain investors in 2021 with a five-year term and with an exercise price
of $0.36 (“2021 Investor Warrants”). Under this Offer to Exchange, (i) the holders of the 2021 Investor Warrants will
be entitled to receive one (1) share of Common Stock for every six (6) 2021 Investor Warrants exchanged (“Investor Exchange Ratio
for Stock”) and one (1) New Warrant for every two and one half (2.5) 2021 Investor Warrants exchanged (“Investor Exchange
Ratio for Warrants”). The “Offer Period” is the period commencing on November 6, 2023 and ending at 5:00
p.m., Eastern Time, on December 15, 2023, or such later date to which the Company may extend the Offer (the “Expiration
Date”).
This
Offer is an all or none offer, and holders must tender all their 2021 Investor Warrants to participate. The Offer is subject to the condition
that all the 2021 Investor Warrants must be tendered for exchange for the Offer to close, subject to the Company’s reserved right
to waive the requirement and close the Offer. 2021 Investor Warrants may only be exchanged for whole shares and whole warrants. No scrip
or fractional shares or warrants will be issued. Holders of 2021 Investor Warrants who would otherwise have been entitled to receive
fractional shares or warrants will, after aggregating all such fractional shares of such holder, receive the number of shares and warrants
as rounded up to the nearest whole share and warrant. Holders continue to be entitled to exercise their 2021 Investor Warrants on a cash
basis during the Offer Period in accordance with the terms of the warrant.
If
you elect to tender 2021 Investor Warrants in response to the Offer, please follow the instructions in this Offer to Exchange and the
related documents, including the Letter of Transmittal.
If
you tender your 2021 Investor Warrants, you may withdraw your tendered 2021 Investor Warrants before the Expiration Date and retain them
on their terms by following the instructions herein.
This
Offer to Exchange is made pursuant to the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended
(the “Securities Act”).
The
Offer will only be open for a period beginning on November 6, 2023 and ending on the Expiration Date. The Company expressly reserves
the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is open. There
can be no assurance, however, that the Company will exercise its right to extend the Offer.
| |
B. |
Partial
Tender Not Permitted |
This
is an all or none Offer. If you choose to participate in the Offer, you must tender all of your 2021 Investor Warrants pursuant to the
terms of the Offer. Although the Company has reserved the right to waive this condition, there can be no assurance that the Company will
in fact waive this condition if all eligible 2021 Investor Warrants are not tendered.
HOLDERS
MAY ALSO BE ENTITLED TO EXERCISE THEIR 2021 INVESTOR WARRANTS ON A CASH BASIS DURING THE OFFER PERIOD IN ACCORDANCE WITH THE TERMS OF
THE 2021 INVESTOR WARRANT, RATHER THAN TENDERING THEM FOR EXCHANGE.
| |
C. |
Board
Approval of the Offer; No Recommendation; Holder’s Own Decision |
THE
COMPANY’S BOARD OF DIRECTORS HAS APPROVED THE OFFER. HOWEVER, NONE OF THE COMPANY, ITS DIRECTORS, OFFICERS OR EMPLOYEES MAKES ANY
RECOMMENDATION AS TO WHETHER TO TENDER WARRANTS. EACH HOLDER OF A 2021 INVESTOR WARRANT MUST MAKE HIS, HER OR ITS OWN DECISION AS TO
WHETHER TO TENDER SOME OR ALL OF HIS, HER OR ITS 2021 INVESTOR WARRANTS.
| |
D. |
Extensions
of the Offer |
The
Company expressly reserves the right, in its sole discretion, and at any time or from time to time, to extend the period of time during
which the Offer is open. There can be no assurance, however, that the Company will exercise its right to extend the Offer. If the Company
extends the Offer, it will give notice of such extension by press release or other public announcement no later than 9:00 a.m., Eastern
Time, on the next business day after the previously scheduled Expiration Date of the Offer.
| 2. |
PROCEDURE
FOR TENDERING WARRANTS |
| |
A. |
Procedures
for Tendering 2021 Investor Warrants |
You
do not have to participate in the Offer. If you decide not to participate in the Offer, you do not need to do anything, and your 2021
Investor Warrants will remain outstanding until they expire or are exercised in accordance with their terms.
To
participate in the Offer, you must properly complete, sign and date the Letter of Transmittal and mail or otherwise deliver to the Company
the Letter of Transmittal so that the Company receives it no later than 5:00 P.M., Eastern Time, on the Expiration Date (or such later
date and time if we extend the Offer), at the address set forth in the Letter of Transmittal. The Company will accept email delivery
of the Letter of Transmittal and any related documents at accounting@sidechannel.com.
The
Letter of Transmittal must be executed by the record holder of the tendered 2021 Investor Warrants. However, if the signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or another person acting in a fiduciary or representative
capacity, the signer’s full title and proper evidence of the authority of such person to act in such capacity must be indicated
on the Letter of Transmittal.
If
you do not submit a Letter of Transmittal for your 2021 Investor Warrants prior to the Expiration Date of the Offer, or if you submit
an incomplete or incorrectly completed Letter of Transmittal, you will be considered to have rejected the Offer to Exchange.
THE
METHOD OF DELIVERY OF THE APPLICABLE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE COMPANY IS AT THE ELECTION, EXPENSE
AND RISK OF THE HOLDER. IT IS RECOMMENDED THAT HOLDERS ALLOW SUFFICIENT TIME TO ASSURE DELIVERY TO THE COMPANY BEFORE THE EXPIRATION
DATE.
You
may change your election and withdraw your tendered 2021 Investor Warrants only if you properly complete, sign and date the Withdrawal
Form included with the Offer and mail, email or otherwise deliver the Withdrawal Form to us so that we receive it no later than 5:00
P.M., Eastern Time, on the Expiration Date, Attention: SideChannel, Inc., 146 Main Street, Suite 405, Worcester, MA 01608 or by email
at accounting@sidechannel.com. You may also withdraw your tendered 2021 Investor Warrants pursuant to Rule 13e-4(f)(2)(ii) under the
Exchange Act, if they have not been accepted by us within forty (40) business days from the commencement of the Offer. Delivery of the
Withdrawal Form by facsimile will not be accepted.
The
Withdrawal Form must be executed by the record holder of the 2021 Investor Warrants to be withdrawn. However, if the signature is by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or another person acting in a fiduciary or representative
capacity, the signer’s full title and proper evidence of the authority of such person to act in such capacity must be indicated
on the Withdrawal Form.
Withdrawals
of 2021 Investor Warrants may not be rescinded. Any 2021 Investor Warrants properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn 2021 Investor Warrants may be re-tendered by again following one of the
procedures described in the Offer at any time prior to the Expiration Date.
ALL
QUESTIONS AS TO THE FORM AND VALIDITY (INCLUDING TIME OF RECEIPT) OF ANY NOTICE OF WITHDRAWAL WILL BE DETERMINED BY THE COMPANY, IN ITS
REASONABLE DISCRETION, WHOSE DETERMINATION WILL BE FINAL AND BINDING. NONE OF THE COMPANY OR ANY OTHER PERSON WILL BE UNDER ANY DUTY
TO GIVE NOTIFICATION OF ANY DEFECTS OR IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL OR INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH
NOTIFICATION.
NOTWITHSTANDING
THE FOREGOING, THE 2021 INVESTOR WARRANT HOLDERS ARE NOT FORECLOSED FROM CHALLENGING THE COMPANY’S DETERMINATION IN A COURT OF
COMPETENT JURISDICTION.
THE
METHOD OF DELIVERY OF YOUR WITHDRAWAL FORM TO THE COMPANY IS AT THE ELECTION, EXPENSE AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY
MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT, HAND DELIVERY SERVICE, OR ELECTRONIC DELIVERY AND THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE COMPANY. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE
COMPANY BEFORE THE EXPIRATION DATE.
| |
C. |
Determination
of Validity; Rejection of 2021 Investor Warrants; Waiver of Defects; No Obligation to Give Notice of Defects |
We
will determine, in our discretion, all questions as to form, validity, including time of receipt, eligibility and acceptance of any tender
of 2021 Investor Warrants or withdrawal of tendered 2021 Investor Warrants. Our determination of these matters will be final and binding
on all parties. We may reject any or all tenders of or withdrawals of tendered 2021 Investor Warrants that we determine are not in appropriate
form or that we determine are unlawful to accept or not timely made. Otherwise, we expect to accept all properly and timely tendered
2021 Investor Warrants which are not validly withdrawn. We may waive, as to all eligible 2021 Investor Warrant holders, any defect or
irregularity in any tender with respect to any particular warrant. Any waiver granted as to one 2021 Investor Warrant holder will be
afforded to all holders of 2021 Investor Warrants. We may also waive any of the conditions of the Offer in our reasonable discretion,
so long as such waiver is made with respect to all 2021 Investor Warrant holders. No tender of 2021 Investor Warrants or withdrawal of
tendered 2021 Investor Warrants will be deemed to have been properly made until all defects or irregularities have been cured by the
tendering 2021 Investor Warrant holder or waived by us. Notwithstanding the foregoing, the 2021 Investor Warrant holders are not foreclosed
from challenging the Company’s determination in a court of competent jurisdiction.
NEITHER
WE NOR ANY OTHER PERSON IS OBLIGATED TO GIVE NOTICE OF ANY DEFECTS OR IRREGULARITIES IN TENDERS OR WITHDRAWALS, AND NO ONE WILL BE LIABLE
FOR FAILING TO GIVE NOTICE OF ANY DEFECTS OR IRREGULARITIES.
| |
D. |
Acceptance
of 2021 Investor Warrants; Issuance of Common Stock |
The
Offer is scheduled to expire at 5:00 P.M., Eastern Time, on the Expiration Date, December 15, 2023, (subject to our right to extend the
Offer). Upon the terms and subject to the conditions of the Offer, we expect, upon the expiration of the Offer, to:
| |
● |
accept
for exchange 2021 Investor Warrants properly tendered and not validly withdrawn pursuant to the Offer; and |
| |
|
|
| |
● |
issue
Common Stock and New Warrants in exchange for tendered 2021 Investor Warrants pursuant to the Offer, within two (2) trading days
after the Expiration Date. The Company will round the number of Shares and New Warrants to which such holder is entitled, after aggregating
all fractions, up to the next whole number of Shares and New Warrants. |
If
you elect to tender your 2021 Investor Warrants pursuant to the Offer and you do so according to the procedures described herein, you
will have accepted the Offer. Our acceptance of your outstanding 2021 Investor Warrants for tender in the Offer will form a binding agreement
between you and us upon the terms and subject to the conditions of the Offer upon the expiration of the Offer. A tender of 2021 Investor
Warrants made pursuant to any method of delivery set forth herein will also constitute an acknowledgement by the tendering 2021 Investor
Warrant holder that regardless of any action that we take with respect to any applicable tax related to the Offer and the disposition
of 2021 Investor Warrants, such 2021 Investor Warrant holder acknowledges that the ultimate liability for all tax is and remains his,
her or its sole responsibility. In that regard, a tender of 2021 Investor Warrants authorizes us to withhold such Shares of Common Stock
as may be necessary to cover any applicable tax payable by a tendering 2021 Investor Warrant holder.
If
you elect not to participate in the Offer, your 2021 Investor Warrants will remain outstanding until they expire or are exercised by
their original terms.
Our
Common Stock is considered a “penny stock”, and subject to the requirements of Rule 15g-9, promulgated under the Exchange
Act of 1934, as amended. “Penny stock” is generally defined as any equity security not traded on an exchange or quoted on
NASDAQ that has a market price of less than $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons
other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that
they make an individualized written suitability determination for the purchaser and receive the purchaser’s consent prior to the
transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure in connection
with any trades involving a stock defined as a penny stock.
The
required penny stock disclosures include the required delivery, prior to any transaction, of a disclosure schedule explaining the penny
stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the
ability of purchasers to sell their securities in the secondary market. In addition, various state securities laws impose restrictions
on transferring “penny stocks” and as a result, investors in the common stock may have their ability to sell their shares
of the common stock impaired.
If
you tender 2021 Investor Warrants pursuant to the Offer, you will receive restricted Shares, that may not be resold or transferred by
you, except pursuant to an available exemption such as Rule 144 of the Securities Act and you will generally be entitled to “tack”
your holding period of the 2021 Investor Warrants so tendered for purposes of Rule 144. The Shares and New Warrants are being issued
by the Company in reliance on the exemption from registration set forth in Section 3(a)(9) of the Securities Act.
| |
E. |
Extension
of the Offer; Termination; Amendment |
Although
we do not currently intend to do so, we may, from time to time, at our discretion, extend the Offer at any time as provided above. If
we extend the Offer, we will continue to accept validly tendered 2021 Investor Warrants until the new Expiration Date.
We
also expressly reserve the right, in our reasonable judgment, prior to the Expiration Date, to terminate or amend the Offer and to postpone
our acceptance of any tendered 2021 Investor Warrant upon the occurrence of any of the conditions specified below under “The Offer—Conditions
to the Offer.”
Extension
or amendments to, or a termination of, the Offer may be made at any time and from time to time by an announcement. In the case of an
extension, the announcement must be issued no later than 9:00 A.M., Eastern Time, on the next business day after the last previously
scheduled or announced Expiration Date. Any announcement made pursuant to the Offer will be disseminated promptly to holders of 2021
Investor Warrants in a manner reasonably designed to inform such holders of such amendment. Without limiting the manner in which we may
choose to make an announcement, except as required by applicable law, we have no obligation to publish, advertise or otherwise communicate
any such announcement other than by issuing a press release.
If
we materially change the terms of the Offer or the information concerning the Offer, or if we waive a material condition of the Offer,
we will extend the Offer to the extent required by Rules 13e-4(d)(2), 13e-4(e)(3), and 13e-4(f)(1)(ii) under the Exchange Act. These
rules require that the minimum period during which an offer must remain open following material changes in the terms of the Offer or
information concerning the offer, other than a change in price or a change in percentage of securities sought, will depend on the facts
and circumstances, including the relative materiality of such terms or information.
| |
F. |
Conditions
of the Offer |
The
Offer is subject to the following conditions: no action or event shall have occurred, no action shall have been taken, and no statute,
rule, regulation, judgment, order, stay, decree or injunction shall have been promulgated, enacted, entered or enforced applicable to
the Offer or the exchange of 2021 Investor Warrants for Shares and New Warrants under the Offer by or before any court or governmental
regulatory or administrative agency, authority or tribunal of competent jurisdiction, including, without limitation, taxing authorities,
that challenges the making of the Offer or the exchange of 2021 Investor Warrants for Shares and New Warrants under the Offer or would
reasonably be expected to, directly or indirectly, prohibit, prevent, restrict or delay consummation of, or would reasonably be expected
to otherwise adversely affect in any material manner, the Offer or the exchange of 2021 Investor Warrants for Shares and New Warrants
under the Offer.
The
Offer is also subject the condition that all of the 2021 Investor Warrants must be tendered for exchange; however, the Company may waive
this condition in its reasonable discretion if all 2021 Investor Warrants are not tendered by the Expiration Date.
We
may terminate the Offer if the Conditions of the Offer are not satisfied prior to the Expiration Date. In the event that we terminate
the Offer, all 2021 Investor Warrants tendered by a 2021 Investor Warrant holder in connection with the Offer shall be returned to such
2021 Investor Warrant holder and the 2021 Investor Warrants will expire in accordance with their terms on their respective expiration
dates and will otherwise remain subject to their original terms.
| 3. |
BACKGROUND
AND PURPOSE OF THE OFFER |
| |
A. |
Information
Concerning SideChannel, Inc. |
SideChannel’s
mission is to make cybersecurity simple and accessible for mid-market and emerging companies, a market we believe is currently underserved.
Our cybersecurity offerings identify and develop cybersecurity, privacy, and risk management solutions for our customers. We target customers
that need cost-effective security solutions. Our growth plan to address the needs of our customers is to provide more effective and cost-efficient
products and tech-enabled services cybersecurity and related including virtual Chief Information Security Officer (“vCISO”),
zero trust, third-party risk management, due diligence, privacy, threat intelligence, and managed end-point security solutions.
Our
growth strategy focuses on these three initiatives: (i) securing new vCISO clients; (ii) adding new Cyber Security Software and Services
(“Cyber Security Software” and “Services”); and (iii) increasing adoption of Cybersecurity Software,
including our new product we are developing known as Enclave.
Our
principal executive offices are located at 146 Main Street, Suite 405, Worcester, MA 01608. Our telephone number is: (508) 925-0114.
| |
B. |
Establishment
of Offer Terms; Approval of the Offer |
The
Company’s Board of Directors has approved the terms of the Offer, including the Investor Exchange Ratios, but are not recommending
whether you should or should not tender your 2021 Investor Warrants, nor passing upon the fairness of the Investor Exchange Ratios. The
Board set the Investor Exchange Ratios to provide the holders of the 2021 Investor Warrants with an incentive to exchange the 2021 Investor
Warrants.
SideChannel
is pursuing growth through organic initiatives and acquisition opportunities. Further, the Company is considering an uplist on a national
stock exchange. Successfully executing one or more of these objectives may require the issuance of equity. The warrants issued in the
2021 Private Placement contain anti-dilution clauses that impede the Company’s ability to effectively engage the capital markets
in support of these objectives. As such, the Company believes the warrants are inhibiting its ability to grow and create value.
Secondarily,
the purpose of the Offer is to increase the public float as a percentage of the total outstanding Shares in the market. In the event
the Company’s Board authorizes a reverse stock split, the public float percentage of total outstanding Shares would be unchanged.
The
Offer is being made to all holders of 2021 Investor Warrants, as more particularly described above.
We
conducted a tender offer in August 2023 to accomplish these purposes. The August 2023 tender offer provided certain warrant holders Shares
only. This Offer differs from the August 2023 tender offer in that it provides a New Warrant in addition to the Shares provided in the
August 2023 tender offer. The August 2023 tender included 2021 Investor Warrants and warrants held by placement agents of Paulson Investment
Company versus only the 2021 Investor Warrants. The August 2023 tender offer was intended to accomplish the same purpose as this Offer.
Since
the current exercise price of the 2021 Investor Warrants is significantly higher than the market price of the Shares and the 2021 Investor
Warrants may expire on their respective expiration dates “out-of-the-money” according to their terms, the Company’s
Board of Directors established the condition that all of the 2021 Investor Warrant holders must tender their 2021 Investor Warrants.
Holders who tender 2021 Investor Warrants will receive Shares with a legend and holders will generally be entitled to “tack”
their holding period for purposes of Rule 144. Therefore, the Board of Directors expects the number of freely tradable shares will increase
as a result of the completion of this Offer.
In
addition, the Company’s Board of Directors believes that by allowing holders of 2021 Investor Warrants to exchange their warrants
for Shares of Common Stock and New Warrants according to the Investor Exchange Ratios, the Company can potentially reduce the substantial
number of Shares that would be issuable upon exercise of the 2021 Investor Warrants, thus providing investors and potential investors
with greater certainty as to the Company’s capital structure.
The
Offer is not made pursuant to a plan to periodically increase a securityholder’s proportionate interest in the assets or earnings
and profits of the Company. The 2021 Investor Warrants acquired pursuant to the exchange will be retired and cancelled.
| |
D. |
Interests
of Directors and Officers |
The
names of the executive officers and directors of the Company are set forth below. The business address for each such person is: SideChannel,
Inc., 146 Main Street, Suite 405, Worcester, MA 01608, and the telephone number for each such person is (508) 925-0114.
| Name |
|
Position |
| Anthony
Ambrose |
|
Director |
| Brian
Haugli |
|
Chief
Executive Officer, Director |
| Deborah
MacConnel |
|
Director,
Chairwoman |
| Kevin
Powers |
|
Director |
| Hugh
Regan, Jr. |
|
Director |
| Ryan
Polk |
|
Chief
Financial Officer |
None
of the Directors or Executive Officers possess SideChannel warrants.
Except
as set forth below, there are no present plans or proposals by the Company that relate to or would result in: (a) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation involving the Company or any of its subsidiaries; (b) a purchase, sale or
transfer of a material amount of assets of the Company or any of its subsidiaries; (c) any change in the present Board of Directors or
management of the Company including, but not limited to, any plans or proposals to change the number or the term of directors, to fill
any existing vacancy on the Board or to change any material term of the employment contract of any executive officer; (d) any material
change in the present dividend rate or policy, or indebtedness or capitalization of the Company; (e) any other material change in the
Company’s corporate structure or business; (f) changes in the Company’s Articles of Incorporation or instruments corresponding
thereto or other actions which may impede the acquisition of control of the Company by any person; (g) a class of equity security of
the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (h) the suspension
of the issuer’s obligation to file reports pursuant to Section 15(d) of the Exchange Act. The following are exceptions to the foregoing
statement: (i) the exchange of 2021 Investor Warrants pursuant to the Offer will result in the acquisition of one (1) Share of the Company
for every six (6) 2021 Investor Warrants and one (1) New Warrant for every two and one half (2.5) 2021 Investor Warrants and (ii) at
the Company’s Annual Meeting of Stockholders held on February 15, 2023, SideChannel’s stockholders granted discretionary
authority to our Board of Directors to combine outstanding shares of our common stock into a lesser number of outstanding shares, or
a “reverse stock split,” at a specific ratio within a range of 2-to-1 to a maximum of a 100-1 combination, with the exact
ratio to be determined by our Board of Directors in its sole discretion; and to effect the reverse stock split, if at all, within two
years of the date the proposal is approved by stockholders. The Board of Directors has not yet determined what if any action will be
taken pursuant to this reverse stock split authorization. In the event of a reverse stock split, the 2021 Investor Warrant quantities
and exercise price would be adjusted by the reverse stock split ratio such that the aggregate value of the exercise price multiplied
by the quantities after the reverse stock split would be equal to the aggregate value prior to the reverse stock split.
THE
COMPANY’S BOARD OF DIRECTORS HAS APPROVED THE OFFER. HOWEVER, NONE OF THE COMPANY, ITS DIRECTORS, OFFICERS OR EMPLOYEES OR MAKES
ANY RECOMMENDATION WHETHER YOU SHOULD TENDER ANY 2021 INVESTOR WARRANTS. EACH HOLDER OF A 2021 INVESTOR WARRANT MUST MAKE HIS, HER OR
ITS OWN DECISION WHETHER TO TENDER SOME OR ALL OF HIS, HER OR ITS 2021 INVESTOR WARRANTS.
Our
shares traded on the OTCQB under the symbol SDCH. On November 30, 2023, the closing sales price for the Shares was $0.04. Our 2021 Investor
Warrants are not publicly traded.
The
Company recommends that holders obtain current market quotations for the Common Stock, among other factors, before deciding whether or
not to tender their 2021 Investor Warrants.
The
high and low closing sales price per share of the Company’s common stock for each quarter during the last three (3) fiscal years.
| | |
Low | | |
High | |
| Fiscal
Year 2023 | |
| | | |
| | |
| Fourth
Quarter (July 1 – September 30) | |
$ | 0.05 | | |
$ | 0.12 | |
| Third
Quarter (April 1 – June 30) | |
$ | 0.05 | | |
$ | 0.12 | |
| Second
Quarter (January 1 – March 31) | |
$ | 0.06 | | |
$ | 0.12 | |
| First
Quarter (October 1 – December 31) | |
$ | 0.09 | | |
$ | 0.15 | |
| | |
| | | |
| | |
| Fiscal
Year 2022 | |
| | | |
| | |
| Fourth
Quarter (July 1 – September 30) | |
$ | 0.08 | | |
$ | 0.18 | |
| Third
Quarter (April 1 – June 30) | |
$ | 0.07 | | |
$ | 0.12 | |
| Second
Quarter (January 1 – March 31) | |
$ | 0.09 | | |
$ | 0.15 | |
| First
Quarter (October 1 – December 31) | |
$ | 0.08 | | |
$ | 0.19 | |
| | |
| | | |
| | |
| Fiscal
Year 2021 | |
| | | |
| | |
| Fourth
Quarter (July 1 – September 30) | |
$ | 0.14 | | |
$ | 0.24 | |
| Third
Quarter (April 1 – June 30) | |
$ | 0.19 | | |
$ | 0.50 | |
| Second
Quarter (January 1 – March 31) | |
$ | 0.19 | | |
$ | 0.45 | |
| First
Quarter (October 1 – December 31) | |
$ | 0.24 | | |
$ | 0.52 | |
| 5. |
SOURCE
AND AMOUNT OF FUNDS |
Because
this transaction is an offer to holders to exchange their existing 2021 Investor Warrants for Shares and New Warrants, there is no source
of funds to disclose as there is no cash consideration being paid by the Company to those tendering the 2021 Investor Warrants. The Company
will use funds on hand to pay any incidental expenses.
The
Company has not retained a solicitation agent for the exchange offer. We will use our existing funds to pay expenses associated with
the Offer. We will not receive any proceeds from this Offer.
| 7. |
TRANSACTIONS
AND AGREEMENTS CONCERNING THE WARRANTS |
There
are no agreements, arrangements or understandings between the Company, or any of its directors or executive officers, and any other person
with respect to the 2021 Investor Warrants, other than our engagement of Paulson as a consultant regarding the structure of the Offer
to Exchange.
In
July 2021, we engaged Paulson Investment Company (“Paulson”) for strategic advisory services to be delivered over a four-year
term in exchange for 4,000,000 shares of common stock. We have been consulting with Paulson regarding the Offer to Exchange through this
strategic advisory services agreement. We did not incur additional costs with Paulson related to the Offer to Exchange. Paulson has not
and will not solicit tender of the 2021 Investor Warrants.
| 8. |
FINANCIAL
INFORMATION REGARDING THE COMPANY |
The
Company incorporates by reference the Company’s financial statements that were filed in Item 8 of its Annual Report on Form 10-K
filed with the SEC on December 20 2022. Additionally, the Company incorporates by reference the Company’s unaudited financial statements
that were filed in Part 1, Item 1 of its Quarterly Reports on Form 10-Q filed with the SEC on February 9, 2023, May 9, 2023, and August
9, 2023.
The
full text of the Quarterly Reports on Form 10-Q and the Annual Report on Form 10-K, as well as the other documents the Company has filed
with the SEC prior to, or will file with the Commission subsequent to, the filing of this Tender Offer Statement on Schedule TO, can
be accessed electronically on the SEC’s website at www.sec.gov. Copies of our SEC filings are also available without charge
upon written request addressed to SideChannel, Inc., at 146 Main Street, Suite 405, Worcester, MA 01608, attn.: Corporate Secretary .
Our telephone number is: (508) 925-0114.
Net
loss per common share is provided in the table below for the four most recent financial statements files with the SEC.
| | |
Twelve
Months Ended
September 30,
2022 | | |
Three
Months Ended
December 31,
2022 | | |
Three
Months Ended
March 31,
2023 | | |
Three
Months Ended
June 30,
2023 | |
| Net loss
per common share (1) | |
$ | (0.14 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) | |
$ | (0.00 | ) |
| (1) | Diluted
loss per share is the same as basic loss per share during periods where net losses are incurred
since the inclusion of the potential common stock equivalents would be anti-dilutive as a
result of the net loss. |
Our
book value as of June 30, 2023 was approximately $7.8 million or approximately $0.04 per share. Book value per share represents
our total assets less total liabilities, divided by the number of shares of common stock outstanding as of June 30, 2023.
Our
tangible book value as of June 30, 2023 was approximately $1.5 million or approximately $0.01 per share. Tangible book value per share
represents our total tangible assets less total liabilities, divided by the number of shares of common stock outstanding as of June 30,
2023.
| 9. |
EXTENSIONS;
AMENDMENTS; CONDITIONS; TERMINATION; PLANS |
The
Company expressly reserves the right, in its reasonable discretion, and at any time or from time to time, to extend the period of time
during which the Offer is open. There can be no assurance, however, that the Company will exercise its right to extend the Offer. If
the Company extends the Offer, it will give notice of such extension by press release or other public announcement no later than 9:00
a.m., Eastern Time, on the next business day after the previously scheduled Expiration Date of the Offer.
Amendments
to the Offer will be made by written notice thereof to the holders of the 2021 Investor Warrants. Material changes to information previously
provided to holders of the 2021 Investor Warrants in this Offer to Exchange or in documents furnished subsequent thereto will be disseminated
to holders of 2021 Investor Warrants. Also, should the Company, pursuant to the terms and conditions of the Offer, materially amend the
Offer, the Company will ensure that the Offer remains open long enough to comply with U.S. federal securities laws.
The
minimum period during which an Offer must remain open following any material change in the terms of the Offer or information concerning
the Offer (other than a change in price or change in percentage of securities sought, all of which require up to 10 additional business
days) will depend on the facts and circumstances, including the relative materiality of such terms or information.
The
Offer is subject to the conditions that no action or event shall have occurred, no action shall have been taken, and no statute, rule,
regulation, judgment, order, stay, decree or injunction shall have been promulgated, enacted, entered or enforced applicable to the Offer
or the exchange of 2021 Investor Warrants for Shares and New Warrants under the Offer by or before any court or governmental regulatory
or administrative agency, authority or tribunal of competent jurisdiction, including, without limitation, taxing authorities, that challenges
the making of the Offer or the exchange of 2021 Investor Warrants for Shares and New Warrants under the Offer or would reasonably be
expected to, directly or indirectly, prohibit, prevent, restrict or delay consummation of, or would reasonably be expected to otherwise
adversely affect in any material manner, the Offer or the exchange of 2021 Investor Warrants for Shares and New Warrants under the Offer.
The Offer is also subject the condition that all of the 2021 Investor Warrants must be tendered for exchange; however, the Company may
waive this condition in its reasonable discretion if all 2021 Investor Warrants are not tendered by the Expiration Date.
We
may terminate the Offer if the conditions of the Offer are not satisfied prior to the Expiration Date. In the event that we terminate
the Offer, all 2021 Investor Warrants tendered by a 2021 Investor Warrant holder in connection with the Offer shall be returned to such
2021 Investor Warrant holder and the 2021 Investor Warrants will expire in accordance with their terms on their respective expiration
dates and will otherwise remain subject to their original terms. If you tender your 2021 Investor Warrants, you will be agreeing to purchase
the Shares and New Warrants issuable pursuant to the Offer, pursuant to the terms and subject to the condition described herein and the
Letter of Transmittal.
No
plans or proposals described in this Offer to Exchange or the related Schedule TO or in any materials sent to the holders of the 2021
Investor Warrants in connection with the Offer relate to or would result in the conditions or transactions described in Regulation M-A,
Items 1006(c)(1)-(10), except as follows: (i) the exchange of 2021 Investor Warrants pursuant to the Offer will result in the acquisition
of one (1) Share of the Company for every six (6) 2021 Investor Warrants and one (1) New Warrant for every two and one half (2.5) 2021
Investor Warrants and (ii) at the Company’s Annual Meeting of Stockholders held on February 15, 2023, SideChannel’s stockholders
granted discretionary authority to our Board of Directors to combine outstanding shares of our common stock into a lesser number of outstanding
shares, or a “reverse stock split,” at a specific ratio within a range of 2-to-1 to a maximum of a 100-1 combination, with
the exact ratio to be determined by our Board of Directors in its sole discretion; and to effect the reverse stock split, if at all,
within two years of the date the proposal is approved by stockholders. The Board of Directors has not yet determined what if any action
will be taken pursuant to this reverse-split authorization.
| 10. |
MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES |
Certain
U.S. Federal Income Tax Consequences to U.S. Holders
The
following summary describes certain U.S. federal income tax considerations that may be relevant to U.S. Holders (as defined below) that
participate in the Offer to exchange 2021 Investor Warrants for our Common Stock. This summary does not address any other U.S. federal
tax, such as estate and gift, alternative minimum, or any state, local, or foreign tax consequences that may be relevant to a holder
that participates in the Offer. Moreover, this discussion does not describe U.S. federal income tax considerations that may be relevant
to persons that are not United States persons (within the meaning of Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended
(the “Code”)) and other 2021 Investor Warrant holders that are not U.S. Holders.
This
summary applies only to holders who hold the 2021 Investor Warrants and will hold the Common Stock as a capital asset within the meaning
of Section 1221 of the Code. This description does not purport to address all potential tax considerations that may be relevant to a
holder based on his, her or its particular situation and does not address the tax considerations applicable to holders that may be subject
to special tax rules, such as:
| |
● |
financial
institutions; |
| |
● |
insurance
companies; |
| |
● |
real
estate investment trusts; |
| |
● |
regulated
investment companies; |
| |
● |
grantor
trusts; |
| |
● |
tax-exempt
organizations; |
| |
● |
dealers
or traders in securities or currencies; |
| |
● |
holders
that hold common stock or warrants as part of a position in a straddle or as part of a hedging, conversion or integrated transaction
for U.S. federal income tax purposes; |
| |
● |
holders
that have a functional currency other than the U.S. dollar; |
| |
● |
holders
that received their warrants as compensation for the performance of services; |
| |
● |
holders
that actually or constructively own 5% or more of our outstanding shares; or |
| |
● |
certain
U.S. expatriates or long-term U.S. residents. |
If
an entity treated as a partnership for U.S. federal income tax purposes holds 2021 Investor Warrants, the tax treatment of a partner
in the partnership will generally depend on the status of the partner and the activities of the partnership. Holders owning their 2021
Investor Warrants through a partnership should consult their tax advisors regarding the U.S. federal income tax consequence of exchanging
Warrants for Shares and New Warrants pursuant to the Offer.
This
summary is based on the Code, existing and proposed Treasury Regulations, administrative pronouncements and judicial decisions, each
as in effect on the date hereof. All of the foregoing are subject to change, possibly with retroactive effect, or to differing interpretations
by the Internal Revenue Service or a court, which could alter the tax consequences described herein. For purposes of this description,
a U.S. Holder is a beneficial owner of 2021 Investor Warrants or Common Stock that is for U.S. federal income tax purposes:
| |
● |
in
individual who is a citizen or resident of the United States; |
| |
● |
a
corporation (including an entity taxed as a corporation for U.S. federal income tax purposes) created or organized in or under the
laws of the United States, any state thereof, or the District of Columbia; |
| |
● |
an
estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
| |
● |
a
trust if (x) a court within the United States is able to exercise primary supervision over the administration of such trust and one
or more United States persons (within the meaning of Section 7701(a)(30) of the Code) have the authority to control all substantial
decisions of such trust or (y) it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a United
States person. |
This
summary is included herein as general information only. No statutory or judicial authority directly addresses all aspects of transactions
similar to the Offer. We have not sought and do not intend to seek any rulings from the IRS or opinions of counsel regarding the tax
consequences described herein, and accordingly, there is no assurance that the IRS will not successfully challenge any of the tax consequences
described herein. Accordingly, each 2021 Investor Warrant holder is strongly urged to consult his, her or its own tax advisor with respect
to the U.S. federal, state, local and non-U.S. income and other tax consequences of participating in the Offer.
Participation
in the Offer
If
you participate in the Offer in accordance with the procedures set forth in the Offer, the Company intends to treat your participation
for U.S. federal income tax purposes in the applicable manner described below.
Though
applicable law and regulations are unclear, the Company believes that there is sufficient justification to treat the tender of 2021 Investor
Warrants in exchange for Shares and New Warrants as a tax-free exercise of the rights conferred by the 2021 Investor Warrants. As such,
the Company believes that it is more likely than not that if and to the extent you elect to participate in the Offer by tendering 2021
Investor Warrants for Shares and New Warrants, the Company will treat the transaction as a “recapitalization” exchange of
2021 Investor Warrants for Shares and New Warrants. The consequences of such characterization in respect of the 2021 Investor Warrants
exchanged into Shares and New Warrants should be that (i) your aggregate tax basis in the new Shares and New Warrants received in the
exchange should be equal to the aggregate tax basis in your exchanged 2021 Investor Warrants, and (ii) your holding period for the Shares
and New Warrants received in the exchange would include your holding period for the exchanged 2021 Investor Warrants. Special tax basis
and holding period rules apply to holders that acquired different blocks of 2021 Investor Warrants at different prices or at different
times. Holders should consult their tax advisors as to the applicability of these special rules to their particular circumstances.
Although
the Company believes the tender pursuant to the Offer is not a taxable exchange, the IRS may take a contrary position and assert that
the tender gave rise to taxable income. There is no assurance that a court would agree with the position of the Company or the IRS. Under
that approach, the value of the Shares and New Warrants received could serve as the proxy value received, all of which might be subject
to income taxation. Alternatively, if the IRS or a court were to view the exchange pursuant to the Offer as the issuance of Shares and
New Warrants to an exchanging holder, and the value of the Shares and New Warrants having a value in excess of the 2021 Investor Warrants
surrendered by such holder, such excess value could be viewed as a constructive dividend under Section 305 of the Code. Although not
free from doubt, we expect that such constructive dividend, if any, should be considered a dividend of common stock on common stock,
which generally should be nontaxable for most holders.
HOLDERS
ARE ADVISED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE EXCHANGE TO THEIR PARTICULAR SITUATION.
| 11. |
ADDITIONAL
INFORMATION; MISCELLANEOUS |
The
Company has filed with the SEC a Tender Offer Statement on Schedule TO, of which this Offer to Exchange is a part. This Offer to Exchange
does not contain all of the information contained in the Schedule TO and the exhibits to the Schedule TO. The Company recommends that
holders review the Schedule TO, including the exhibits, and the Company’s other materials that have been filed with the SEC before
deciding on whether to accept the Offer.
The
Company is subject to the reporting requirements of the Exchange Act and in accordance therewith files and furnishes reports and other
information with the SEC. All reports and other documents the Company has filed with or furnished to the SEC, including the Schedule
TO relating to the Offer, or will file with or furnish to the SEC in the future, can be accessed electronically on the SEC’s website
at www.sec.gov.
IF
YOU WOULD LIKE COPIES OF ANY OF THE DOCUMENTS TO WHICH WE HAVE REFERRED YOU, OR IF YOU HAVE QUESTIONS ABOUT THE TRANSACTION, YOU MAY
CONTACT THE COMPANY BY TELEPHONE OR IN WRITING AT THE FOLLOWING ADDRESS:
SideChannel,
Inc.
146
Main Street, Suite 405
Worcester,
MA 01608
Email:
accounting@sidechannel.com
Phone:
(508) 925-0114
ANY
QUESTION OR REQUEST FOR ASSISTANCE MAY BE DIRECTED TO THE COMPANY AT THE ADDRESS, PHONE NUMBER AND EMAIL ADDRESS LISTED ABOVE. REQUESTS
FOR ADDITIONAL COPIES OF THE OFFER, THE LETTER OF TRANSMITTAL OR OTHER DOCUMENTS RELATED TO THE OFFER MAY ALSO BE DIRECTED TO THE COMPANY.
Exhibit 99(a)(1)(I)
Exhibit (99)(a)(1)J
Exhibit
107
Calculation
of Filing Fee Tables
SC
TO-I
(Form
Type)
SideChannel,
Inc.
(Name
of Issuer)
SideChannel,
Inc.
(Name
of Person(s) Filing Statement)
Table
1: Transaction Valuation
| | |
Transaction
Valuation | | |
Fee
rate | | |
Amount
of Filing Fee | |
| Fees to Be Paid | |
$ | 4,463,422.48 | (1) | |
$ | 0.00014760 | | |
$ | 658.80 | (2) |
| Fees Previously Paid | |
| | | |
| | | |
| | |
| Total Transaction
Valuation | |
$ | 4,463,422.48 | | |
| | | |
| | |
| Total Fees
Due for Filing | |
| | | |
| | | |
$ | 658.80 | |
| Total Fees
Previously Paid | |
| | | |
| | | |
| | |
| Total Fee
Offsets | |
| | | |
| | | |
| | |
| Net Fee
Due | |
| | | |
| | | |
$ | 658.80 | |
(1)
Estimated for purposes of calculating the amount of the filing fee only. SideChannel, Inc. (“SideChannel” or the “Company”)
is offering to holders of certain of its warrants, as more fully described herein, the opportunity to exchange such warrants for shares
of the Company’s common stock, par value $0.001 per share (“Shares” or “Common Stock”) by tendering six
(6) warrants with an exercise price of $0.36 in exchange for one (1) share of our Common Stock and to exchange such warrants for new
warrants (“New Warrant” or “New Warrants”) by tendering two and one-half (2.5) warrants with an exercise price
of $0.36 in exchange for one (1) New Warrant. The amount of the filing fee assumes that all outstanding warrants that are the subject
of the offer will be exchanged and is calculated pursuant to Rule 0-11(b) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). The transaction value was determined assuming that all warrants to purchase SideChannel’s Common Stock eligible to
participate in the Offer are exchanged, and that the approximately 9,276,824 Shares issued as a result of the Offer have an aggregate
value of $463,841.20 calculated based on the average of the low and high trading price on October 31, 2023 which was $0.05, and that
the approximately 22,219,896 New Warrants issued as a result of the Offer have an aggregate value of $3,999,581.28 calculated using an
exercise price of $0.18.
(2)
The amount of the filing fee, calculated in accordance with Rule 0-11(b) under the Exchange Act, equals $147.60 per million dollars
of the transaction valuation.
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