Item 5.03 Amendments to Articles of Incorporation or Bylaws.
Series F Convertible Preferred Stock
On February 15, 2022, the Company filed a Certificate of Designation with the Nevada Secretary of State therein designating 2,500 shares of “blank check” preferred stock as Series F Convertible Preferred Stock with a stated value of $1,000 per share. The following is a summary of the principal terms of the Series F Convertible Preferred Stock:
The holders of Series F Convertible Preferred Stock will be entitled to dividends, on an as-if converted basis, equal to and in the same form as dividends actually paid on shares of common stock, when and if actually paid.
The Series F Convertible Preferred Stock has no voting rights, except:
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the right to vote, with the holders of common stock, as a single class, with each share of Series F Convertible Preferred Stock entitled to vote on an as converted basis (i.e., 5,000 votes per share), on any resolution presented to stockholders for the purpose of (i) obtaining approval of the Reverse Stock Split, and (ii) increasing the Company’s authorized shares of common stock. |
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otherwise, as long as any shares of Series F Convertible Preferred Stock are outstanding, the holders of the Series F Convertible Preferred Stock will be entitled to approve, by a majority vote of the then outstanding shares of Series F Convertible Preferred Stock if the Company seeks to (a) alter or change adversely the powers, preferences or rights given to the Series F Convertible Preferred Stock or alter or amend the Certificate of Designation governing the Series F Convertible Preferred Stock, (b) amend the Articles of Incorporation, as amended, or other charter documents in any manner that adversely affects any rights of the holders of the Series F Convertible Preferred Stock, (c) increase the number of authorized shares of Series F Convertible Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing. |
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation), the then holders of the Series F Convertible Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company the same amount that a holder of common stock would receive if the Series F Convertible Preferred Stock were fully converted (disregarding for such purposes any conversion limitations hereunder) to common stock which amounts shall be paid pari passu with all holders of common stock.
The Series F Convertible Preferred Stock is convertible into common stock at any time after the date of issuance. The conversion rate, subject to adjustment as set forth in the Certificate of Designation governing the Series F Convertible Preferred Stock, is determined by dividing the stated value of the Series F Convertible Preferred Stock by $0.20 (the “Conversion Price”). The Conversion Price can be adjusted as set forth in the Certificate of Designation governing the Series F Convertible Preferred Stock for stock dividends and stock splits or the occurrence of a fundamental transaction (as defined below). Upon conversion the shares of Series F Convertible Preferred Stock shall resume the status of authorized but unissued shares of preferred stock of the Company.
The Series F Convertible Preferred Stock can be converted at the option of the holder at any time and from time to time after the date of issuance.
Beneficial Ownership Limitation
The Series F Convertible Preferred Stock cannot be converted to common stock if the holder and its affiliates would beneficially own more than 4.99% (or 9.99% at the election of the holder) of the outstanding common stock. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99% upon notice to us, provided that any increase in this limitation will not be effective until 61 days after such notice from the holder to us and such increase or decrease will apply only to the holder providing such notice.
No holders of Series F Convertible Preferred Stock will, as holders of Series F Convertible Preferred Stock, have any preemptive rights to purchase or subscribe for our common stock or any of our other securities.
The shares of Series F Preferred Stock are not redeemable by the Company.
There is no established trading market for any of the Series F Convertible Preferred Stock, and we do not expect a market to develop. We do not intend to apply for a listing for any of the Series F Convertible Preferred Stock on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Series F Convertible Preferred Stock will be limited.
Series G Convertible Preferred Stock
On February 15, 2022, the Company filed a Certificate of Designation with the Nevada Secretary of State therein the designating 2,500 shares of “blank check” preferred stock as Series G Convertible Preferred Stock with a stated value of $1,000 per share. The following is a summary of the principal terms of the Series G Convertible Preferred Stock:
The holders of Series G Convertible Preferred Stock will be entitled to dividends, on an as-if converted basis, equal to and in the same form as dividends actually paid on shares of common stock, when and if actually paid.
The Series G Convertible Preferred Stock has no voting rights, except:
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the right to vote, with the holders of common stock, as a single class, with each share of Series G Convertible Preferred Stock entitled to 500,000 votes per share, on any resolution presented to stockholders for the purpose of (i) obtaining approval of the Reverse Stock Split, and (ii) increasing the Company’s authorized shares of common stock, in the same proportion as the aggregate shares of common stock voted on such proposal; and |
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otherwise, as long as any shares of Series G Convertible Preferred Stock are outstanding, the holders of the Series G Convertible Preferred Stock will be entitled to approve, by a majority vote of the then outstanding shares of Series G Convertible Preferred Stock if the Company seeks to (a) alter or change adversely the powers, preferences or rights given to the Series G Convertible Preferred Stock or alter or amend the Certificate of Designation governing the Series G Convertible Preferred Stock, (b) amend the Articles of Incorporation, as amended, or other charter documents in any manner that adversely affects any rights of the holders of the Series G Convertible Preferred Stock, (c) increase the number of authorized shares of Series G Convertible Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing. |
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or a Liquidation, the then holders of the Series G Convertible Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company the same amount that a holder of common stock would receive if the Series G Convertible Preferred Stock were fully converted (disregarding for such purposes any conversion limitations hereunder) to common stock which amounts shall be paid pari passu with all holders of common stock.
The Series G Convertible Preferred Stock is convertible into common stock after the date of issuance. The conversion rate, subject to adjustment as set forth in the Certificate of Designation governing the Series G Convertible Preferred Stock, is determined by dividing the stated value of the Series G Convertible Preferred Stock by $0.20 (the “Conversion Price”). The Conversion Price can be adjusted as set forth in the Certificate of Designation governing the Series G Convertible Preferred Stock for stock dividends and stock splits or the occurrence of a fundamental transaction (as defined below). Upon conversion the shares of Series G Convertible Preferred Stock shall resume the status of authorized but unissued shares of preferred stock of the Company.
Beneficial Ownership Limitation
The Series G Convertible Preferred Stock cannot be converted to common stock if the holder and its affiliates would beneficially own more than 4.99% (or 9.99% at the election of the holder) of the outstanding common stock. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99% upon notice to us, provided that any increase in this limitation will not be effective until 61 days after such notice from the holder to us and such increase or decrease will apply only to the holder providing such notice.
No holders of Series G Convertible Preferred Stock will, as holders of Series G Convertible Preferred Stock, have any preemptive rights to purchase or subscribe for our common stock or any of our other securities.
The shares of Series G Preferred Stock are not redeemable by the Company.
There is no established trading market for any of the Series G Convertible Preferred Stock, and we do not expect a market to develop. We do not intend to apply for a listing for any of the Series G Convertible Preferred Stock on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Series G Convertible Preferred Stock will be limited.
The summaries above only purport to be a summary of the principal terms of the Series F Convertible Preferred Stock and Series G Convertible Preferred Stock. The filed Certificates of Designation for each series of preferred stock are filed as exhibits to this Form 8-K and are incorporated by reference herein.