UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14C INFORMATION
Information
Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check
the appropriate box:
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[X] |
Preliminary
Information Statement |
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Confidential,
for Use of the Commission Only (as permitted by Rule
14A-6(e)(2)) |
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Definitive
Information Statement |
DATA443 RISK MITIGATION, INC.
(Name
of Registrant as Specified In Its Charter)
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of Filing Fee (Check the appropriate box):
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computed on table below per Exchange Act Rules 14c-5(g) and
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(1) |
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(2) |
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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(4) |
Proposed
maximum aggregate value of transaction:____________ |
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DATA443
RISK MITIGATION, INC.
101
J Morris Commons Lane, Suite 105
Morrisville,
NC 27560
(919)
858-6542
FEBRUARY
23, 2021
NOTICE
OF ACTIONS TO BE TAKEN PURSUANT TO THE WRITTEN CONSENT OF
STOCKHOLDERS HOLDING A MAJORITY OF THE VOTING POWER OF THE
OUTSTANDING CAPITAL STOCK OF THE COMPANY IN LIEU OF A SPECIAL
MEETING OF THE STOCKHOLDERS.
This
Information Statement is being furnished to the holders of record
of the outstanding shares of (i) common stock, $0.001 par value per
share (“Common Stock”); (ii) Convertible Preferred Series A
Stock, $0.001 par value per share (“Series A Preferred
Stock”); and, (iii) Convertible {referred Series B Stock,
$0.001 par value per shares (“Series B Preferred Stock”), of
Data443 Risk Mitigation, Inc., a Nevada corporation (the
“Company”; “we”; “us”; “our”; or,
similar terminology), as of February 22, 2021 (the “Record
Date”). The purpose of this Information Statement is to notify
the Company’s stockholders that on February 19, 2021, in accordance
with Section 78.320 of the Nevada Revised Statutes (the
“NRS”), the written consent of the holders of a majority of
the voting power of the outstanding capital stock of the Company as
of the Record Date (the “Consenting Stockholders”) approved the
following corporate actions:
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(1) |
Amendment
of our articles of incorporation (the “Articles of
Incorporation”) to provide for a decrease in the authorized
shares of the Company’s Common Stock from 1,800,000,000 to a number
of not less than 10,000,000 and not more than 1,000,000,000 (the
“Authorized Common Stock Reduction”), at any time prior to
the one year anniversary of the filing of the Definitive
Information Statement on Schedule 14C with respect to the actions
envisioned hereunder (the “Definitive Information
Statement”), with the Board of Directors of the Company (the
“Board”) having the discretion to determine whether or not
the Authorized Common Stock Reduction is to be effected, and if
effected, the exact number of the Authorized Common Stock Reduction
within the above range. |
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(2) |
That
the Board be authorized to implement through the amendment to our
Articles of Incorporation a reverse stock split of the Company’s
Common Stock by a ratio of not less than 1-for-10 and not more than
1-for-2,000, (the “Reverse Split”), at any time prior to the
one year anniversary of the filing of the Definitive Information
Statement, with the Board having the discretion to determine
whether or not the Reverse Split is to be effected, and if
effected, the exact ratio for the Reverse Split within the above
range. |
The
consents that we have received approving the Authorized Common
Stock Reduction and the Reverse Split constitute the only
stockholder approval required under the NRS, our Articles of
Incorporation, as amended, and our Bylaws. Accordingly, the
Authorized Common Stock Reduction and the Reverse Split will not be
submitted to the other stockholders of the Company for a
vote.
The
accompanying Information Statement, which describes the Authorized
Common Stock Reduction and the Reverse Split in more detail, is
being furnished to all our stockholders for informational purposes
only, pursuant to Section 14(c) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”). Stockholders of
record at the close of business on the Record Date are entitled to
receive this Information Statement.
Pursuant
to Rule 14c-2 of the Exchange Act, the actions described herein
will not become effective until at least twenty (20) calendar days
following the date on which this Information Statement is first
mailed to our stockholders of record. This Information Statement
will be mailed on or about February 24, 2021 to our stockholders of
record as of the Record Date.
The
accompanying Information Statement is solely for information
purposes only and does not require or request you to do anything.
You are encouraged to carefully read the accompanying Information
Statement, including exhibits, for further information regarding
the Reverse Split.
THIS
IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO
STOCKHOLDER MEETING WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED
HEREIN.
WE
ARE NOT ASKING YOU FOR A PROXY
AND
YOU ARE NOT REQUESTED TO SEND US A PROXY
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By
order of the Board of Directors, |
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DATA
443 RISK MITIGATION, INC. |
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/s/ Jason Remillard |
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JASON
REMILLARD, |
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Chief
Executive Officer and Director |
|
February
23, 2021 |
DATA443
RISK MITIGATION, INC.
101
J Morris Commons Lane, Suite 105
Morrisville,
NC 27560
(919)
858-6542
INFORMATION
STATEMENT
PURSUANT
TO SECTION 14
OF
THE SECURITIES EXCHANGE ACT OF 1934
AND
REGULATION 14C AND SCHEDULE 14C THEREUNDER
FEBRUARY
23, 2021
WE
ARE NOT ASKING YOU FOR A PROXY
AND
YOU ARE NOT REQUESTED TO SEND US A PROXY
THIS
IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO
STOCKHOLDERS’
MEETING
WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN
To
the Company’s Stockholders:
NOTICE
IS HEREBY GIVEN that the following actions has been approved
pursuant to the written consent (the “Written Consent”) of
the holders of a majority of the voting power of the outstanding
capital stock of the Company dated February 19, 2021, in lieu of a
special meeting of the stockholders:
An
amendment to the Company’s Articles of Incorporation to (i)
decrease the authorized shares of the Company’s Common Stock from
1,800,000,000 to a number of not less than 10,000,000 and not more
than 1,000,000,000 (the “Authorized Common Stock
Reduction”), at any time prior to the one year anniversary of
the filing of the Definitive Information Statement on Schedule 14C
with respect to the actions envisioned hereunder (the
“Definitive Information Statement”), with the Board of
Directors of the Company (the “Board”) having the discretion
to determine whether or not the Authorized Common Stock Reduction
is to be effected, and if effected, the exact number of the
Authorized Common Stock Reduction within the above range; and, (ii)
effect a reverse stock split of the Company’s Common Stock by a
ratio of not less than 1-for-10 and not more than 1-for-2,000 (the
“Reverse Split”), at any time prior to the one year
anniversary of the filing of the Definitive Information Statement,
with the Board having the discretion to determine whether or not
the Reverse Split is to be effected, and if effected, the exact
ratio for the Reverse Split within the above range.
These
actions are more fully described in this Information Statement. The
actions were taken by Written Consent pursuant to Section 78.320 of
the Nevada Revised Statutes (the “NRS”) and our Bylaws, each
of which permits that any action which may be taken at any annual
or special meeting of stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents
in writing, setting forth the action so taken, is signed by the
holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted. The accompanying Information Statement is
being furnished to all our stockholders in accordance with Section
14(c) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the rules promulgated by the U.S.
Securities and Exchange Commission (“SEC”) thereunder,
solely for the purpose of informing our stockholders of the actions
taken by the Written Consent before it becomes
effective.
Stockholders
of record as of and on February 22, 2021 (the “Record Date”)
will be entitled to receive this notice and Information
Statement.
Pursuant
to Rule 14c-2 under the Exchange Act, the actions described herein
will not be implemented until a date at least twenty (20) calendar
days after the date on which this Information Statement has been
mailed to the stockholders, or on or about February 24,
2021.
This
Information Statement will serve as written notice to stockholders
pursuant to Section 78.320 of the NRS.
OUTSTANDING
SHARES AND VOTING RIGHTS
As of
February 22, 2021, the Company’s authorized capitalization
consisted of (i) 1,800,000,000 shares of Common Stock, $0.001 par
value per share, of which 1,271,368,930 shares were issued and
outstanding; and, (ii) 337,500 shares of preferred stock, $0.001
par value per share, of which (a) 150,000 shares are designated
Series A Preferred Stock, of which 150,000 shares of Series A
Preferred Stock were issued and outstanding; and, (b) 80,000 shares
are designated Series B Preferred Stock, of which 15,660 shares of
Series A Preferred Stock were issued and outstanding. In addition,
an aggregate of 583,631,070 shares of common stock are reserved for
future issuance pursuant to outstanding warrants, convertible
notes, our stock incentive plan, or otherwise.
Each
share of Common Stock entitles its holder to one vote on each
matter submitted to the stockholders. Each share of Series A
Preferred Stock entitles its holder to 15,000 votes, or an
aggregate of 2,250,000,000 votes. Each share of Series B Preferred
Stock entitles its holder to no (-0-) votes on matters submitted to
the stockholders. A majority of holders of all outstanding shares
of voting securities, as of February 19, 2021, have voted in favor
of the actions by resolution dated February 19, and no other
stockholder consents will be solicited in connection with this
Information Statement.
Common Stock
The
holders of our common stock have equal ratable rights to dividends
from funds legally available therefor, when, as and if declared by
our board of directors. Holders of common stock are also entitled
to share ratably in all of our assets available for distribution to
holders of common stock upon liquidation, dissolution, or winding
up of the affairs.
The
holders of shares of our common stock do not have cumulative voting
rights, which means that the holders of more than 50% of such
outstanding shares, voting for the election of directors, can elect
all of the directors to be elected, if they so choose, and in such
event, the holders of the remaining shares will not be able to
elect any of our directors. The holders of 50% percent of the
outstanding common stock constitute a quorum at any meeting of
stockholders, and the vote by the holders of a majority of the
outstanding shares or a majority of the stockholders at a meeting
at which quorum exists are required to effect certain fundamental
corporate changes, such as liquidation, merger or amendment of our
articles of incorporation.
The
authorized but unissued shares of our common stock are available
for future issuance without stockholder approval. These additional
shares may be used for a variety of corporate purposes, including
future offerings to raise additional capital, corporate
acquisitions, and employee benefit plans. The existence of
authorized but unissued shares of common stock may enable our board
of directors to issue shares of stock to persons friendly to
existing management, which may deter or frustrate a takeover of the
Company.
Series A Preferred Stock
All
issued and outstanding shares of Series A Preferred Stock are held
by Jason Remillard, Chief Executive Officer and sole director of
the Company. The terms of the Series A Preferred Stock are set
forth below:
Seniority.
The shares of Series A Preferred Stock rank senior to the common
stock.
Dividends.
The shares of Series A Preferred Stock are not entitled to receive
any dividends in any amount.
Liquidation
Preference. In the event of any liquidation, dissolution or
winding up of the Company, either voluntary or involuntary, the
holders of Series A Preferred Stock are entitled to receive, prior
and in preference to any distribution of any of the assets or
surplus funds of the Company to the holders of common stock, an
amount equal to $0.125 per share (the “Liquidation
Preference”). If upon such liquidation, dissolution, or winding
up of the Company, the assets of the Company available for
distribution to the holders of the Series A Preferred Stock are
insufficient to permit payment in full of the Liquidation
Preference, then all such assets of the Company shall be
distributed ratably among the holders of the Series A Preferred
Stock. Neither the consolidation or merger of the Company nor the
sale, lease or transfer by the Company of all or a part of its
assets shall be deemed a liquidation, dissolution, or winding up of
the Company for these purposes.
Voting.
Except as required by law, each holder of outstanding shares of
Series A Preferred Stock shall be entitled to vote on any and all
matters considered and voted upon by the holders of common stock.
The holders of Series A Preferred Stock are entitled to fifteen
thousand (15,000) votes per share of Series A Preferred
Stock.
Optional
Conversion. Each share of Series A Preferred Stock is
convertible, at the option of the holder thereof, at any time, into
one thousand (1,000) shares of common stock, subject to customary
adjustments in the event of reclassifications, consolidations and
mergers.
Series B Preferred Stock
All
issued and outstanding shares of Series A Preferred Stock are held
by Geneva Roth Remark Holdings, Inc. The terms of the Series B
Preferred Stock are set forth below:
Seniority.
The shares of Series B Preferred Stock rank senior to the common
stock, and junior to the Series A Preferred Stock.
Dividends.
The shares of Series B Preferred Stock are entitled to receive an
annual dividend in the amount of nine percent (9%) of the Stated
Value, which shall percentage shall be increased to twenty two
percent (22%) in the event of an event of default by the Company in
regard to the Series B Preferred Stock.
Stated
Value. Each share of Series B Preferred Stock shall has a
stated value of $10.00.
Liquidation
Preference. In the event of any liquidation, dissolution or
winding up of the Company, either voluntary or involuntary, the
holders of Series B Preferred Stock are entitled to receive, prior
and in preference to any distribution of any of the assets or
surplus funds of the Company to the holders of common stock, and
after the holders of Series A Preferred Stock, an amount equal to
$10.00 per share (the “Liquidation Preference”). If upon such
liquidation, dissolution, or winding up of the Company, the assets
of the Company available for distribution to the holders of the
Series B Preferred Stock are insufficient to permit payment in full
of the Liquidation Preference, then all such assets of the Company
shall be distributed ratably among the holders of the Series B
Preferred Stock. Neither the consolidation or merger of the Company
nor the sale, lease or transfer by the Company of all or a part of
its assets shall be deemed a liquidation, dissolution, or winding
up of the Company for these purposes.
Voting.
Except as required by law, each holder of outstanding shares of
Series B Preferred Stock shall have no voting rights, except that
any action altering any rights of the Series B Preferred Stock
shall require the consent of the holders of a majority of the
issued Series B Preferred Stock.
Optional
Redemption. The Company has the right, at the Company’s option,
to redeem all or any portion of the shares of Series B Preferred
Stock, as follows:
(i)
beginning on the date of the issuance of shares of Series B
Preferred Stock (the “Issuance Date”) and ending on the date
which is thirty (30) days following the Issuance Date, 115% of the
Stated Value;
(ii)
beginning on the date thirty one (31) days after the Issuance Date
and ending on the date which is sixty (60) days following the
Issuance Date, 120% of the Stated Value;
(iii)
beginning on the date sixty one (61) days after the Issuance Date
and ending on the date which is ninety (90) days following the
Issuance Date, 125% of the Stated Value;
(iv)
beginning on the date ninety one (91) days after the Issuance Date
and ending on the date which is one hundred twenty (120) days
following the Issuance Date, 130% of the Stated Value;
(v)
beginning on the date one hundred twenty one (121) days after the
Issuance Date and ending on the date which is one hundred fifty
(150) days following the Issuance Date, 135% of the Stated Value;
and
(vi)
beginning on the date one hundred fifty one (151) days after the
Issuance Date and ending on the date which is one hundred eighty
(180) days following the Issuance Date, 140% of the Stated
Value;
After
the expiration of one hundred eighty (180) days following the
Issuance Date of the applicable shares of Series B Preferred Stock,
the Company shall have no right of redemption.
Optional
Conversion. Each share of Series B Preferred Stock is
convertible, at the option of the holder thereof, at any time after
one hundred eighty (180) days following the Issuance Date, in whole
or in part, into fully paid and non-assessable shares of Common
Stock, as such Common Stock exists on the Issuance Date, or any
shares of capital stock or other securities of the Company into
which such Common Stock shall hereafter be changed or reclassified
at the conversion price. The conversion price shall be 61%
multiplied by the lowest trading price for the Company’s common
stock during the twenty (20) days of trading ending on the latest
complete trading day prior to the conversion date.
Convertible Notes
The
Company has issued and outstanding seven (7) convertible notes
which are convertible into shares of our Common Stock
(collectively, the “Convertible Notes”). Four of the
Convertible Notes were issued to the same investor in the original
total principal amount of $975,000, which is also the current
outstanding principal balance of those four Convertible Notes, and
which are convertible at fixed conversion prices ($150,000 at
$0.01; $200,000 at $0.01; $300,000 at $0.005; and, $325,000 at
$0.15). The remaining three Convertible Notes were issued to three
investors in the original total principal amount of $100,000, which
is also the current outstanding principal balance of those three
Convertible Notes, and which are convertible at a fixed conversion
price of $0.01.
Other Warrants and Options
The
Company has no other warrants or options issued and
outstanding.
Combinations with Interested Stockholders Provisions of the Nevada
Revised Statutes
Pursuant
to provisions in our Articles of Incorporation, we have elected not
to be governed by certain Nevada statutes that may have the effect
of discouraging corporate takeovers.
Nevada’s
“combinations with interested stockholders” statutes (NRS 78.411
through 78.444, inclusive) prohibit specified types of business
“combinations” between certain Nevada corporations and any person
deemed to be an “interested stockholder” for two years after such
person first becomes an “interested stockholder” unless the
corporation’s board of directors approves the combination (or the
transaction by which such person becomes an “interested
stockholder”) in advance, or unless the combination is approved by
the board of directors and sixty percent of the corporation’s
voting power not beneficially owned by the interested stockholder,
its affiliates and associates. Furthermore, in the absence of prior
approval certain restrictions may apply even after such two-year
period. For purposes of these statutes, an “interested stockholder”
is any person who is (1) the beneficial owner, directly or
indirectly, of ten percent or more of the voting power of the
outstanding voting shares of the corporation, or (2) an affiliate
or associate of the corporation and at any time within the two
previous years was the beneficial owner, directly or indirectly, of
ten percent or more of the voting power of the then-outstanding
shares of the corporation. The definition of the term “combination”
is sufficiently broad to cover most significant transactions
between a corporation and an “interested stockholder.” Our articles
of incorporation opt out of these provisions, as provided for in
the NRS, and accordingly, the combinations with interested
stockholders statutes are not applicable to us.
ABOUT THE INFORMATION STATEMENT
What is the purpose of the Information
Statement?
This
Information Statement is being furnished to you pursuant to Section
14 of the Exchange Act, to notify the Company’s stockholders as of
the Record Date of the corporate actions expected to be taken
pursuant to the consents or authorizations of stockholders
representing a majority of the voting rights of the Company’s
outstanding capital stock.
Stockholders
holding in excess of fifty one (51%) of the voting power of the
Company’s outstanding voting securities voted in favor of the
corporate matters outlined in this Information Statement,
consisting of the approval of:
An
amendment to the Articles of Incorporation to (i) decrease the
authorized shares of the Company’s Common Stock from 1,800,000,000
to a number of not less than 10,000,000 and not more than
1,000,000,000, at any time prior to the one year anniversary of the
filing of the Definitive Information, with the Board having the
discretion to determine whether or not the Authorized Common Stock
Reduction is to be effected, and if effected, the exact number of
the Authorized Common Stock Reduction within the above range; and,
(ii) effect a reverse stock split of the Company’s Common Stock by
a ratio of not less than 1-for-10 and not more than 1-for-2,000, at
any time prior to the one year anniversary of the filing of the
Definitive Information Statement, with the Board having the
discretion to determine whether or not the Reverse Split is to be
effected, and if effected, the exact ratio for the Reverse Split
within the above range.
Who is entitled to notice?
Each
holder of outstanding voting securities, as of the Record Date will
be entitled to notice of the actions. Stockholders as of the close
of business on the Record Date that held in excess of fifty one
(51%) of the voting power of the Company’s outstanding shares of
voting securities voted in favor of the actions.
What actions were taken by written consent?
Stockholders
holding in excess of fifty one (51%) of the voting power of the
Company’s outstanding voting securities have voted in favor of the
following actions:
An
amendment to the Articles of Incorporation to (i) decrease the
authorized shares of the Company’s Common Stock from 1,800,000,000
to a number of not less than 10,000,000 and not more than
1,000,000,000, at any time prior to the one year anniversary of the
filing of the Definitive Information, with the Board having the
discretion to determine whether or not the Authorized Common Stock
Reduction is to be effected, and if effected, the exact number of
the Authorized Common Stock Reduction within the above range; and,
(ii) effect a reverse stock split of the Company’s Common Stock by
a ratio of not less than 1-for-10 and not more than 1-for-2,000, at
any time prior to the one year anniversary of the filing of the
Definitive Information Statement, with the Board having the
discretion to determine whether or not the Reverse Split is to be
effected, and if effected, the exact ratio for the Reverse Split
within the above range.
What vote is required to approve the actions?
The
affirmative vote of a majority of the voting power of the Company’s
voting securities outstanding on the Record Date is required for
approval of the amendment to our Articles of
Incorporation.
What vote was obtained to approve the actions described in this
Information Statement?
We
obtained the approval of the holders of 6,048,075 issued and
outstanding shares of Common Stock and the holder of 150,000 issued
and outstanding shares of Series A Preferred Stock (which
represents the vote of 2,250,000,000 shares of common stock),
representing approximately 65.1% of the voting
securities.
Is consent to action in lieu of a meeting authorized under Nevada
law?
Section
78.320 of the NRS provides that any action required or permitted to
be taken at a meeting of stockholders of a corporation may be taken
without a meeting if a written consent thereto is signed by the
stockholders holding at least a majority of the voting
power.
This
Information Statement is being distributed pursuant to the
requirements of Section 14(c) of the Exchange Act to the Company’s
stockholders as of the Record Date. The corporate actions described
herein will be effective approximately 20 days after the mailing of
this Information Statement.
Who is bearing the cost of mailing this Information
Statement?
The
entire cost of furnishing this Information Statement will be borne
by the Company.
What is a reverse stock split?
A
reverse stock split reduces the total number of a company’s
outstanding shares in proportion to the split ratio chosen.
Following the effectiveness of a reverse stock split, a
pre-determined number of existing shares is exchanged for one new
share, resulting in an initially higher, yet proportionate, price
per share. A reverse stock split has no impact on a stockholder’s
pro rata ownership of the company.
What is the reverse stock split ratio?
The
Board will determine, in its sole discretion, the ratio of the
reverse split, should it decide to proceed with the transaction.
The range of the ratio will be between 1-for-10 and 1-for-2,000.
Stockholders who otherwise would hold fractional shares because the
number of shares of common stock they held before the reverse stock
split would not be evenly divisible based upon the split ratio will
not be entitled to cash payments. Rather, their fractional share
would be increased to the next highest while number.
What will be the impact of the reverse stock split on the
outstanding shares of the Company’s preferred
stock?
Any
reverse stock split under the Amendment will have no effect upon
the authorized or issued shares of the Company’s preferred stock.
However, the number of shares of common stock into which the
preferred shares will be converted will be reduced by the same
reverse split ratio.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth, as of the Record Date, information
concerning the beneficial ownership of the Company’s Common Stock
by (i) each person or group of persons known to beneficially own
more than 5% of the outstanding shares of our Common Stock, (ii)
each person who is our executive officer or director and (iii) all
such executive officers and directors as a group. Beneficial
ownership and percentage ownership are determined in accordance
with the rules of the SEC. Under these rules, beneficial ownership
generally includes any shares as to which the individual or entity
has sole or shared voting power or investment power and includes
any shares that an individual or entity has the right to acquire
beneficial ownership of within 60 days of the Record Date through
the exercise of any option, warrant, conversion privilege or
similar right. In computing the number of shares beneficially owned
by a person and the percentage ownership of that person, shares of
our common stock that could be issued upon the exercise of
outstanding options and warrants that are exercisable within 60
days of the Record Date are considered to be outstanding. These
shares, however, are not considered outstanding as of the Record
Date when computing the percentage ownership of each other person,
except as specifically set forth below. Unless otherwise indicated,
the address of each of the following beneficial owner is c/o
Data443 Risk Mitigation, Inc., 101 J Morris Commons Lane, Suite
105, Morrisville, NC 27560.
To
our knowledge, except as indicated in the footnotes to the
following table, all beneficial owners named in this table have
sole voting and investment power with respect to all shares shown
as beneficially owned by them.
Name and address of beneficial owner (1) |
|
Shares of Common Stock Beneficially Owned |
|
|
Shares of Series A Preferred Stock |
|
|
Percentage of Common Shares Beneficially Owned |
|
|
Percentage of Voting Capital Stock (2) |
|
Directors and Named
Executive Officers |
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Jason Remillard |
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156,181,409 |
|
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150,000 |
(2) |
|
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12.29 |
%(3) |
|
|
64.07 |
% |
All officers
and directors as a group |
|
|
156,181,409 |
|
|
|
150,000 |
|
|
|
12.29 |
% |
|
|
64.07 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5%
stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jason Remillard |
|
|
156,181,409 |
|
|
|
150,000 |
|
|
|
12.29 |
% |
|
|
64.07 |
% |
(1) |
Address
is 101 J Morris Commons Lane, Suite 105, Morrisville, NC
27560. |
|
|
(2) |
The
shares of Series A Preferred Stock carry the aggregate voting
rights of 2,250,000,000 votes. |
|
|
(3) |
Includes
(i) 150,000,000 shares which would be issued to Mr. Remillard upon
conversion of his Series A Preferred Stock; (ii) 133,334 shares to
be issued to Mr. Remillard in connection with the acquisition of
Data443 Risk Mitigation, Inc., a North Carolina corporation and
wholly-owned subsidiary of the Company; and, (iii) 6,048,075 shares
currently owned by Mr. Remillard. |
ACTION 1
THE AUTHORIZED COMMON STOCK REDUCTION
General
The
proposed amendment to the Company’s Articles of Incorporation (the
“Amendment”) would decrease the authorized shares of the
Company’s Common Stock from 1,800,000,000 to a number of not less
than 10,000,000 and not more than 1,000,000,000 (the “Authorized
Common Stock Reduction”), at any time prior to the one year
anniversary of the filing of the Definitive Information Statement
on Schedule 14C with respect to the actions envisioned hereunder
(the “Definitive Information Statement”), with the Board of
Directors of the Company (the “Board”) having the discretion
to determine whether or not the Authorized Common Stock Reduction
is to be effected, and if effected, the exact number of the
Authorized Common Stock Reduction within the above range. If the
Board, in its sole discretion, determines not to implement the
Reverse Split, the Board could still implement the Authorized
Common Stock reduction. If it chooses not to do so, we will
continue to be authorized to issue up to 1,800,000,000 shares of
Common Stock.
The
reduction in authorized shares will not be directly proportional to
the reverse stock split. Instead, the Board will determine, its
sole discretion, the number of authorized shares of Common Stock
within the established range. The Board will select a number which
it believes will provide adequate flexibility to the Company to
engage in future capital raising transactions, acquisitions or
other transactions which might require the issuance of Common
Stock.
Reasons for the Reduction in Authorized Shares
The
Board believes that the reason for the Authorized Common Stock
Reduction, among other reasons, is the potential for the large
number of outstanding shares of our Common Stock may have
contributed to the difficulty with some business transactions and,
contributed to a lack of investor and specialized fund interest in
the Company, at a time when the data security and privacy market is
active, and has made it difficult to attract new investors,
specialized funds and potential business candidates.
The
Board further believes that the Authorized Common Stock Reduction
may also decrease the potential dilution to our stockholders
following the Reverse Split. If we do not reduce the number of
authorized shares, the number of remaining authorized shares could
substantially dilute the ownership of the Company by our existing
stockholders. If we reduce the number of shares we are authorized
to issue after we implement the reverse stock split to 60,000,000,
then there would be less shares available for dilution. Although
the issuance of these shares would still be dilutive to our current
stockholders, the potential dilution would be substantially less
than that which would be possible if our authorized shares remain
at 1,800,000,000. The Board also believes that 1,800,000,000
authorized shares of Common Stock would be disproportionately large
in relation to the Company’s outstanding Common Stock after the
reverse stock split. This could make it more difficult for the
Company to obtain equity financing in the future because the
Company would have the ability to dilute equity investments
significantly at any time.
Effects of the Reduction in Authorized Shares
The
Authorized Common Stock Reduction will have no material effect on
the rights of existing stockholders, since it will not change the
percentage of ownership of the Company of any stockholder.
Moreover, the adoption of the Amendment will not, without further
action of our Board, cause or result in any changes in our current
capital accounts or outstanding common stock.
In
the event a combination of the Reverse Split and the Authorized
Common Stock Reduction results in a large percentage increase in
authorized but unissued common shares compared to outstanding
common shares, it could have an anti-takeover effect, such as
permitting the issuance of shares to purchasers who might oppose a
hostile takeover bid or oppose stockholder efforts to amend or
repeal the Articles of Incorporation or Bylaws of the Company.
Using available authorized shares in this manner could render more
difficult or discourage an attempt to acquire control of the
Company even if such a transaction would be beneficial to
stockholders. The issuance by the Company of such authorized Common
Stock or preferred stock could dilute the equity ownership, voting
impact and future earnings per share of our existing stockholders,
and depending on the amount of shares issued, such dilution may be
substantial.
See
the next section, “The Reverse Split”, for further discussion on
the adoption and effect of the Amendment.
ACTION 2
THE REVERSE SPLIT
General
The
Amendment would effect a reverse stock split of the Company’s
Common Stock by a ratio of not less than 1-for-10 and not more than
1-for-2,000, at any time prior to the one year anniversary of the
filing of the Definitive Information Statement, with the Board
having the discretion to determine whether or not the Reverse Split
is to be effected, and if effected, the exact ratio for the Reverse
Split within the above range. The form of the Amendment to effect
the Reverse Split and the Authorized Common Stock Reduction will be
substantially as set forth on Exhibit A, subject to any changes
required by applicable law. The Reverse Split proposal would permit
(but not require) our Board to effect a reverse stock split of our
issued and outstanding Common Stock at any time prior to the one
year anniversary of filing the Definitive Information Statement,
within the range noted above, with the exact ratio to be set at a
whole number within this range as determined by our Board in its
sole discretion. We believe that enabling our Board to set the
ratio within the stated range will provide us with the flexibility
to implement the Reverse Split in a manner designed to maximize the
anticipated benefits for our stockholders. In determining a ratio,
if any, our Board may consider, among other things, factors such
as:
|
● |
the
historical trading price and trading volume of our Common
Stock; |
|
|
|
|
● |
the
number of shares of our Common Stock outstanding; |
|
|
|
|
● |
the
then-prevailing trading price and trading volume of our Common
Stock and the anticipated impact of the Reverse Split on the
trading market for our Common Stock; |
|
|
|
|
● |
the
anticipated impact of a particular ratio on our ability to reduce
administrative and transactional costs; and |
|
|
|
|
● |
prevailing
general market and economic conditions. |
Our
Board reserves the right to elect to abandon the Reverse Split,
including any or all proposed reverse stock split ratios, if it
determines, in its sole discretion, that the Reverse Split is no
longer in the best interests of the Company and its
stockholders.
Depending
on the ratio for the Reverse Split determined by our Board,
Stockholders with less than 10 shares and no more than 2,000 shares
of existing Common Stock, may be combined into one share of Common
Stock. Any fractional shares will be rounded up to the next whole
number. The Amendment, if any, will include only the Reverse Split
ratio determined by our Board to be in the best interests of our
Stockholders and all of the other proposed amendments at different
ratios will be abandoned.
Following
a reverse stock split, the number of our outstanding shares of
common stock will be significantly reduced. The reverse stock split
is not being proposed in response to any effort of which we are
aware to accumulate our shares of common stock or preferred stock
or obtain control of the Company, nor is it a plan by management to
recommend a series of similar actions to our Board or our
stockholders.
There
are certain risks associated with a reverse stock split, and we
cannot accurately predict or assure the Reverse Split will produce
or maintain the desired results. However, our Board believes that
the benefits to the Company and our stockholders outweigh the risks
of granting the Board the discretionary authority to effect the
Reverse Split.
Purpose and Effect; Potential Consequences of the Reverse
Split
The
Company currently does not have any plans, arrangements or
understandings, written or oral, to issue any of the authorized but
unissued shares that would become available as a result of the
Reverse Split. The Reverse Split and Authorized Share Amendment are
not being proposed in response to any effort of which we are aware
to accumulate shares of Common Stock or obtain control of the
Company, and the Board also does not intend for this transaction to
be the first step in a series of plans or proposals of a “going
private transaction” within the meaning of Rule 13e-3 of the
Securities Exchange, nor is it part of a plan by management to
recommend to the Board and stockholders a series of amendments to
our certificate of incorporation, except for those proposed in this
Information Statement. The Board does not currently contemplate
recommending the adoption of any other amendments to our Article of
Incorporation that could be construed to reduce or interfere with
the ability of third parties to take over or change the control of
the Company.
The
primary purpose for effecting the Reverse Split, should the Board
choose to effect one, would be to, absent other factors, increase
the per share price of our common stock, although we cannot provide
any assurance that the post reverse stock split price would remain
following the Reverse Split. However, other factors, such as our
financial results, market conditions and the market perception of
our business may adversely affect the market price of our Common
Stock. As a result, there can be no assurance that the Reverse
Split, if completed, will increase the market price of our Common
Stock following the Reverse Split or that the market price of our
Common Stock will not decrease in the future. Additionally, we
cannot assure you that the market price per share of our Common
Stock after a Reverse Split will increase in proportion to the
reduction in the number of shares of our Common Stock outstanding
before the Reverse Split. Accordingly, the total market
capitalization of our Common Stock after the Reverse Split may be
lower than the total market capitalization before the Reverse
Split.
The
Board believes that, should the appropriate circumstances arise,
effecting the Reverse Split would, among other things, help us
to:
Meet
the Nasdaq or NYSE Listing Requirements. Our Common Stock is
currently quoted on the OTC Pink tier of the OTC Markets, Inc.
under the symbol “ATDS”. Both the NYSE and Nasdaq require a minimum
trading price per share in order to list on either exchange. The
NYSE and Nasdaq Rules and Regulations require, among other things,
that in order to list on their exchanges, the average closing price
of a company’s common stock must be at least $3.00 or $4.00 per
share over a consecutive 30 trading-day period. In connection with
the implementation of the Reverse Split, we intend to apply to have
our Common Stock transferred from its current listing on OTC Pink
to the Nasdaq Capital Market.
Appeal
to a Broader Range of Investors to Generate Greater Investor
Interest in the Company. An increase in our stock price may
make our Common Stock more attractive to investors. Brokerage firms
may be reluctant to recommend lower-priced securities to their
clients. Many institutional investors have policies prohibiting
them from holding lower-priced stocks in their portfolios, which
reduces the number of potential purchasers of our Common Stock.
Investment funds may also be reluctant to invest in lower-priced
stocks. Investors may also be dissuaded from purchasing
lower-priced stocks because the brokerage commissions, as a
percentage of the total transaction, tend to be higher for such
stocks. Moreover, the analysts at many brokerage firms do not
monitor the trading activity or otherwise provide coverage of
lower-priced stocks. Giving the Board the ability to effect a
reverse stock split, and thereby increase the price of our Common
Stock, would give the Board the ability to address these issues if
it is deemed necessary.
Improve
the Perception of Our Common Stock as an Investment Security.
Our Board unanimously approved the discretionary authority to
effect a reverse stock split as one potential means of increasing
the share price of our Common Stock to improve the perception of
our Common Stock as a viable investment security. Lower-priced
stocks have a perception in the investment community as being risky
and speculative, which may negatively impact not only the price of
our common stock, but also our market liquidity.
Possible Disadvantages and Risks Associated with the Reverse Split
and Authorized Share Amendment
There
can be no assurance that the total market capitalization of the
Common Stock (the aggregate value of all the Company’s Common Stock
at the then market price) after the Reverse Split and Authorized
Share Amendment will be equal to or greater than the total market
capitalization before the Reverse Split and Authorized Share
Amendment, or that the per share market price of the Company’s
Common Stock following the Reverse Split will either equal or
exceed the current per share market price.
There
can be no assurance that the Reverse Split will increase the market
price of our Common Stock or that any increase will be proportional
to the reverse-split ratio. Accordingly, the total market
capitalization of our Common Stock immediately after the Reverse
Split or at any time thereafter could be lower than the total
market capitalization before the Reverse Split. The percentage
decline in the market price of our Common Stock after the Reverse
Split might be greater than it would have been in the absence of
the Reverse Split, and the liquidity of our Common Stock could be
adversely affected following such the Reverse Split.
If
the Reverse Split is effected, and the market price of our Common
Stock declines, the percentage decline may be greater than would
occur in the absence of the Reverse Split. The market price of our
Common Stock, however, will reflect our performance, as well as
other factors unrelated to the number of shares outstanding.
Furthermore, the liquidity of our Common Stock could be adversely
affected by the reduced number of shares that would be outstanding
after the Reverse Split. Reducing the amount of shares available
for trading can reduce the shares’ liquidity, although the board of
directors expects that this effect would not occur in this
particular case.
Any
increased per-share stock price resulting from the Reverse Split
might not make our shares more attractive to investors, so the
Reverse Split might not improve the trading liquidity of our Common
Stock.
Although
the Board believes that a higher stock price might help generate
increased investor interest in our shares, there can be no
assurance of such an outcome, so greater trading in our stock, and
the increased liquidity in the market for our stock that we hope
greater trading will engender, might not materialize.
Effect of the Reverse Split on Holders of Outstanding Common
Stock
As of
February 22, 2021, the Company had 1,271,368,930 shares of its
Common Stock issued and outstanding. Depending on the ratio for the
Reverse Split determined by our Board, a minimum of 10 and a
maximum of 2,000 shares of existing Common Stock will be combined
into one new share of Common Stock. The table below shows, as of
February 22, 2021 the number of outstanding shares of Common Stock
that would result from the listed hypothetical Reverse Split ratios
(without giving effect to the treatment of fractional
shares):
Reverse Split Ratio |
|
Approximate Number of Outstanding Shares of
Common Stock Following the Reverse Split |
|
|
|
|
|
1-for-10 |
|
|
127,136,893 |
|
1-for-100 |
|
|
12,713,690 |
|
1-for-200 |
|
|
6,356,845 |
|
1-for-500 |
|
|
2,542,738 |
|
1-for-1,000 |
|
|
1,271,369
|
|
1-for-1,500 |
|
|
847,580
|
|
1-for-2,000 |
|
|
635,685
|
|
The
actual number of shares issued after giving effect to the Reverse
Split, if implemented, will depend on the Reverse Split ratio that
is ultimately determined by our Board and by the number of issued
and outstanding shares at the time of the Board
decision.
The
Reverse Split will affect all holders of our Common Stock uniformly
and will not affect any Stockholder’s percentage ownership interest
in the Company, except that as described below in “Fractional
Shares,” record holders of Common Stock otherwise entitled to a
fractional share as a result of the Reverse Split will be rounded
up to the next whole number. In addition, the Reverse Split will
not affect any Stockholder’s proportionate voting power (subject to
the treatment of fractional shares).
The
implementation of the Reverse Split will result in an increased
number of available authorized shares of Common Stock. The
resulting increase in such availability in the authorized number of
shares of Common Stock could have a number of effects on the
Company’s Stockholders depending upon the exact nature and
circumstances of any actual issuances of authorized but unissued
shares. The increase in available authorized shares for issuance
could have an anti-takeover effect, in that additional shares could
be issued (within the limits imposed by applicable law) in one or
more transactions that could make a change in control or takeover
of the Company more difficult. For example, additional shares could
be issued by the Company so as to dilute the stock ownership or
voting rights of persons seeking to obtain control of the Company,
even if the persons seeking to obtain control of the Company offer
an above-market premium that is favored by a majority of the
independent stockholders. Similarly, the issuance of additional
shares to certain persons allied with the Company’s management
could have the effect of making it more difficult to remove the
Company’s current management by diluting the stock ownership or
voting rights of persons seeking to cause such removal. The Company
does not have any other provisions in its Articles of
Incorporation, Bylaws, employment agreements, credit agreements or
any other documents that have material anti-takeover consequences.
Additionally, the Company has no plans or proposals to adopt other
provisions or enter into other arrangements that may have material
anti-takeover consequences. The Board is not aware of any attempt,
or contemplated attempt, to acquire control of the Company, and
this proposal is not being presented with the intent that it be
utilized as a type of anti- takeover device.
Additionally,
because holders of Common Stock have no preemptive rights to
purchase or subscribe for any unissued stock of the Company, the
issuance of additional shares of authorized Common Stock that will
become newly available as a result of the implementation of the
Reverse Split will reduce the current stockholders’ percentage
ownership interest in the total outstanding shares of Common
Stock.
The
Company may issue the additional shares of authorized Common Stock
that will become available as a result of the Reverse Split without
the additional approval of its Stockholders.
The
Reverse Split may result in some stockholders owning “odd lots” of
less than 2,000 shares of Common Stock. Odd lot shares may be more
difficult to sell, and brokerage commissions and other costs of
transactions in odd lots are generally somewhat higher than the
costs of transactions in “round lots” of even multiples of 2,000
shares.
After
the effectiveness of the Reverse Split, our Common Stock will have
a new Committee on Uniform Securities Identification Procedures
(CUSIP) number, which is a number used to identify our equity
securities, and stock certificates with the older CUSIP numbers
will need to be exchanged for stock certificates with the new CUSIP
number by following the procedures described below. After the
Reverse Split, we will continue to be subject to the periodic
reporting and other requirements of the Securities Exchange Act of
1934, as amended. Our Common Stock will continue to be listed on
the OTC Markets under the symbol “ATDS”.
Procedure for Implementing the Reverse Split
The
Reverse Split would become effective upon the filing of the
Amendment with the Secretary of State of the State of Nevada, and
the approval of FINRA. We are required to file with FINRA an Issuer
Company Related Action Notification Form. The Reverse Split will
not be effective until we obtain approval from FINRA. Our failure
to timely make such filing with FINRA may constitute fraud under
Section 10 of the Exchange Act.
The
exact timing of the filing of the Amendment and filing with FINRA
to effect the Reverse Split will be determined by our Board based
on its evaluation as to when such action will be the most
advantageous to the Company and our stockholders. In addition, our
Board reserves the right, notwithstanding stockholder approval and
without further action by the stockholders, to elect not to proceed
with the Reverse Split if, at any time prior to filing the
Amendment, our Board, in its sole discretion, determines that it is
no longer in our best interest and the best interests of our
stockholders to proceed with the Reverse Split. If the Amendment
effecting the Reverse Split has not been filed with the Secretary
of State of the State of Nevada by the close of business on March
10, 2022, our Board will abandon the Reverse Split.
Beneficial Holders of Common Stock (i.e. Stockholders who hold in
street name)
Upon
the implementation of the Reverse Split, we intend to treat shares
held by Stockholders through a bank, broker, custodian or other
nominee in the same manner as registered Stockholders whose shares
are registered in their names. Banks, brokers, custodians or other
nominees will be instructed to effect the Reverse Split for their
beneficial holders holding our Common Stock in street name.
However, these banks, brokers, custodians or other nominees may
have different procedures than registered Stockholders for
processing the Reverse Split. Stockholders who hold shares of our
Common Stock with a bank, broker, custodian or other nominee and
who have any questions in this regard are encouraged to contact
their banks, brokers, custodians or other nominees.
Registered “Book-Entry” Holders of Common Stock (i.e. Stockholders
that are registered on the transfer agent’s books and records but
do not hold stock certificates)
Certain
of our registered holders of Common Stock may hold some or all of
their shares electronically in book-entry form with the transfer
agent. These Stockholders do not have stock certificates evidencing
their ownership of the Common Stock. They are, however, provided
with a statement reflecting the number of shares registered in
their accounts. Stockholders who hold shares electronically in
book-entry form with the transfer agent will not need to take
action (the exchange will be automatic) to receive whole shares of
post-Reverse Split Common Stock, subject to adjustment for
treatment of fractional shares.
Holders of Certificated Shares of Common Stock
Until
surrendered, we will deem outstanding certificates representing
shares of our Common Stock (the “Old Certificates”) held by
stockholders to be cancelled and only to represent the number of
whole shares of post-Reverse Split Common Stock to which these
Stockholders are entitled, subject to the treatment of fractional
shares. Any Old Certificates submitted for exchange, whether
because of a sale, transfer or other disposition of stock, will
automatically be exchanged for certificates representing the
appropriate number of whole shares of post-Reverse Split Common
Stock (the “New Certificates”). If an Old Certificate has a
restrictive legend on the back of the Old Certificate(s), the New
Certificate will be issued with the same restrictive legends that
are on the back of the Old Certificate(s).
STOCKHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT
ANY STOCK CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Fractional Shares
We do
not currently intend to issue fractional shares in connection with
the Reverse Split. Therefore, we will not issue certificates
representing fractional shares. In lieu of issuing fractions of
shares, we will round up to the next whole number.
Effect of the Reverse Split on Employee Plans, Options, Restricted
Stock Awards and Units, Warrants, and Convertible or Exchangeable
Securities
Based
upon the Reverse Split ratio determined by the Board, proportionate
adjustments are generally required to be made to the per share
exercise price and the number of shares issuable upon the exercise
or conversion of all outstanding options, warrants, convertible or
exchangeable securities entitling the holders to purchase, exchange
for, or convert into, shares of Common Stock. This would result in
approximately the same aggregate price being required to be paid
under such options, warrants, convertible or exchangeable
securities upon exercise, and approximately the same value of
shares of Common Stock being delivered upon such exercise, exchange
or conversion, immediately following the Reverse Split as was the
case immediately preceding the Reverse Split. The number of shares
deliverable upon settlement or vesting of restricted stock awards
will be similarly adjusted, subject to our treatment of fractional
shares. The number of shares reserved for issuance pursuant to
these securities will be proportionately based upon the Reverse
Split ratio determined by the Board, subject to our treatment of
fractional shares.
Accounting Matters
The
proposed amendment to the Company’s Articles of Incorporation, as
amended, will not affect the par value of our Common Stock per
share, which will remain $0.001 par value per share. As a result,
as of the effectiveness of the Reverse Split, the stated capital
attributable to Common Stock and the additional paid-in capital
account on our balance sheet will not change due to the Reverse
Split. Reported per share net income or loss will be higher because
there will be fewer shares of Common Stock outstanding.
Certain Federal Income Tax Consequences of the Reverse
Split
The
following summary describes certain material U.S. federal income
tax consequences of the Reverse Split to holders of our Common
Stock:
Unless
otherwise specifically indicated herein, this summary addresses the
tax consequences only to a beneficial owner of our Common Stock
that is a citizen or individual resident of the United States, a
corporation organized in or under the laws of the United States or
any state thereof or the District of Columbia or otherwise subject
to U.S. federal income taxation on a net income basis in respect of
our Common Stock (a “U.S. holder”). A trust may also be a
U.S. holder if (1) a U.S. court is able to exercise primary
supervision over administration of such trust and one or more U.S.
persons have the authority to control all substantial decisions of
the trust or (2) it has a valid election in place to be treated as
a U.S. person. An estate whose income is subject to U.S. federal
income taxation regardless of its source may also be a U.S. holder.
This summary does not address all of the tax consequences that may
be relevant to any particular investor, including tax
considerations that arise from rules of general application to all
taxpayers or to certain classes of taxpayers or that are generally
assumed to be known by investors. This summary also does not
address the tax consequences to (i) persons that may be subject to
special treatment under U.S. federal income tax law, such as banks,
insurance companies, thrift institutions, regulated investment
companies, real estate investment trusts, tax-exempt organizations,
U.S. expatriates, persons subject to the alternative minimum tax,
traders in securities that elect to mark to market and dealers in
securities or currencies, (ii) persons that hold our Common Stock
as part of a position in a “straddle” or as part of a “hedging,”
“conversion” or other integrated investment transaction for federal
income tax purposes, or (iii) persons that do not hold our Common
Stock as “capital assets” (generally, property held for
investment).
If a
partnership (or other entity classified as a partnership for U.S.
federal income tax purposes) is the beneficial owner of our Common
Stock, the U.S. federal income tax treatment of a partner in the
partnership will generally depend on the status of the partner and
the activities of the partnership. Partnerships that hold our
Common Stock, and partners in such partnerships, should consult
their own tax advisors regarding the U.S. federal income tax
consequences of the Reverse Split.
This
summary is based on the provisions of the Internal Revenue Code of
1986, as amended, U.S. Treasury regulations, administrative rulings
and judicial authority, all as in effect as of the date of this
proxy statement. Subsequent developments in U.S. federal income tax
law, including changes in law or differing interpretations, which
may be applied retroactively, could have a material effect on the
U.S. federal income tax consequences of the Reverse
Split.
PLEASE
CONSULT YOUR OWN TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE,
LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE REVERSE
STOCK SPLIT IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE INTERNAL
REVENUE CODE AND THE LAWS OF ANY OTHER TAXING
JURISDICTION.
U.S. Holders
The
Reverse Split should be treated as a recapitalization for U.S.
federal income tax purposes. Therefore, a Stockholder generally
will not recognize gain or loss on the Reverse Split, except to the
extent of cash, if any, received in lieu of a fractional share
interest in the post-Reverse Split shares. The aggregate tax basis
of the post-split shares received will be equal to the aggregate
tax basis of the pre-split shares exchanged therefore (excluding
any portion of the holder’s basis allocated to fractional shares),
and the holding period of the post-split shares received will
include the holding period of the pre-split shares exchanged. A
holder of the pre-split shares who receives cash will generally
recognize gain or loss equal to the difference between the portion
of the tax basis of the pre-split shares allocated to the
fractional share interest and the cash received. Such gain or loss
will be a capital gain or loss and will be short term if the
pre-split shares were held for one year or less and long term if
held more than one year. No gain or loss will be recognized by us
as a result of the Reverse Split.
No Appraisal Rights
Under
Nevada law and our charter documents, holders of our Common Stock
will not be entitled to dissenter’s rights or appraisal rights with
respect to the Reverse Split.
Interests of Directors and Executive Officers
Our
directors and executive officers have no substantial interests,
directly or indirectly, in the Reverse Split except to the extent
of their ownership of shares of our common stock and/or preferred
stock.
Reservation of Right to Abandon Reverse Split
We
reserve the right to abandon the Reverse Split without further
action by our stockholders at any time before the effectiveness of
the filing with the Secretary of the State of Nevada of the
Amendment, even though the authority to effect the Reverse Split
has been approved by our stockholders. The Board is also expressly
authorized to delay, not to proceed with, and abandon, the Reverse
Split if it should so decide, in its sole discretion, that such
action is in the best interests of the stockholders.
FORWARD-LOOKING
STATEMENTS AND INFORMATION
This
Information Statement includes forward-looking statements. You can
identify the Company’s forward-looking statements by the words
“expects”, “projects”, “believes”, “anticipates”, “intends”,
“plans”, “predicts”, “estimates”, and similar
expressions.
The
forward-looking statements are based on management’s current
expectations, estimates and projections about us. The Company
cautions you that these statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that
we cannot predict. In addition, the Company has based many of these
forward-looking statements on assumptions about future events that
may prove to be inaccurate. Accordingly, actual outcomes and
results may differ materially from what the Company has expressed
or forecast in the forward-looking statements.
You
should rely only on the information the Company has provided in
this Information Statement. The Company has not authorized any
person to provide information other than that provided herein. The
Company has not authorized anyone to provide you with different
information. You should not assume that the information in this
Information Statement is accurate as of any date other than the
date on the front of the document.
ADDITIONAL
INFORMATION
Reports
and other information filed by the Company can be viewed at the
website maintained by the SEC: www.sec.gov.
|
By
order of the Board of Directors, |
|
DATA
443 RISK MITIGATION, INC. |
|
|
|
/s/ Jason Remillard |
|
JASON
REMILLARD, |
|
Chief
Executive Officer and Director |
|
February
23, 2021 |
Exhibit
A
Certificate
of Amendment to Articles of Incorporation
For
Nevada Profit Corporations
(Pursuant
to NRS 78.385 and 78.390● After Issuance of
Stock)
1.
Name of Corporation:
Data443
Risk Mitigation, Inc.
2.
The articles have been amended as follows:
ARTICLE
III
Attachment To Certificate of Change Pursuant to NRS
78.209
DATA443 RISK MITIGATION, INC.
ARTICLE
V
A.
The Corporation is authorized to issue two classes of shares of
stock to be designated as “Common Stock” and Preferred Stock”. The
total number of shares of Common Stock which this Corporation is
authorized to issue is [*] shares, par value $0.001. The
total number of shares of Preferred Stock which this Corporation is
authorized to issue is three hundred thirty seven thousand five
hundred (337,500) shares, par value $0.001, of which one hundred
fifty thousand (150,000) shares are designated as Series A
Preferred Stock, and eighty thousand (80,000) shares designated as
Series B Preferred Stock.
|
* |
Whole
number not less than 10,000,000 and not more than
1,000,000,000 |
B.
Upon the filing of this Amendment with the Secretary of State of
the State of Nevada (the “Effective Time”), each [**]
issued and outstanding shares of Common Stock immediately prior to
the Effective Time (the “Old Common Stock”) shall be split
and converted into one (1) validly issued, fully paid and
non-assessable share of Common Stock (the “New Common
Stock”), without any further action by the Corporation or the
holder thereof. No fractional shares shall be issued to any holder,
and instead of issuing such fractional shares, the Corporation
shall round shares up to the nearest whole number. Prior to the
Effective Time, there were 1,271,368,930 shares of Old Common Stock
issued and outstanding; after the Effective Time, there will be
______________ shares of New Common Stock issued and outstanding.
There will be no change to the Preferred Stock.
|
* |
Whole
number not less than 10 and not more than 2,000. |
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