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Item 5.01
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Changes in Control of Registrant
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The disclosure set forth in Item 3.02 of
this Current Report on Form 8-K is incorporated herein by reference.
Prior to the issuance of the shares of
“Series A Supervoting Preferred Stock” (as defined below) to Messrs. Emmons and Mitta and Ms. McNemar, based on 141,825,630
shares of the Company’s Common Stock issued and outstanding as of September 11, 2020 (as reported in the Company’s
Quarterly Report on Form 10-Q for the period ended June 30, 2020):
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Mr. Emmons held 1,560,000 unissued, vested shares (1.1% of the voting power of the Company) of
the Company’s Common Stock;
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Mr. Mitta held 1,728,425 issued shares and 1,000,000 awarded but unissued shares (1.92% of the
voting power of the Company) of the Company’s Common Stock; and
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Ms. McNemar held 1,409,000 unissued, vested shares (1.0% of the voting power of the Company) of
the Company’s Common Stock.
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After the issuance of the shares of “Series
A Supervoting Preferred Stock” (as defined below) to Messrs. Emmons and Mitta and Ms. McNemar, based on 141,825,630 shares
of the Company’s Common Stock issued and outstanding as of September 11, 2020 (as reported in the Company’s Quarterly
Report on Form 10-Q for the period ended June 30, 2020):
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Mr. Emmons now holds securities representing 28.75% of the voting power of the Company’s
issued and outstanding voting securities and a 1.1% economic interest in the Company, assuming conversion of the “Series
A Supervoting Preferred Stock” (as defined below). There are no arrangements or understandings among the Company and Mr.
Emmons with respect to the election of directors or other matters.
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Mr. Mitta now holds securities representing 44.22% of the voting power of the Company’s issued
and outstanding voting securities and a 1.0% economic interest in the Company, assuming conversion of the “Series A Supervoting
Preferred Stock” (as defined below). There are no arrangements or understandings among the Company and Mr. Mitta with respect
to the election of directors or other matters.
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Ms. McNemar now holds securities representing 22.28% of the voting power of the Company’s
issued and outstanding voting securities and a 1.1% economic interest in the Company, assuming conversion of the “Series
A Supervoting Preferred Stock” (as defined below). There are no arrangements or understandings among the Company and Ms.
McNemar with respect to the election of directors or other matters.
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Item 5.03
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Amendment to Articles of Incorporation or Bylaws; Change in Fiscal Year
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On July 2, 2020, the Company filed an amendment
to the Company’s Articles of Incorporation (the “Articles of Incorporation”), in the form of a Certificate
of Designation that authorized for issuance of up to 15,600 shares of a new series of Preferred Stock, par value $0.001 per share,
of the Company designated “Series A Supervoting Preferred Stock” and established the rights, preferences and limitations
thereof. On November 9, 2020, the Company filed an amendment to the Certificate of Designation to increase the shares authorized
to 25,845 shares of Series A Supervoting Preferred Stock. The Board authorized the Supervoting Preferred Stock pursuant to the
authority given to the Board under the Articles of Incorporation, which authorizes the issuance of up to 10,000,000 shares of Preferred
Stock, par value $0.001 per share, and authorizes the Board, by resolution, to establish any or all of the unissued shares of Preferred
Stock, not then allocated to any series into one or more series and to fix and determine the designation of each such shares, the
number of shares which shall constitute such series and certain preferences, limitations and relative rights of the shares of each
series so established.
Dividends
Initially, there will be no dividends due
or payable on the Series A Supervoting Preferred Stock.
Liquidation Rights
Upon the occurrence of a Liquidation Event
(as defined below), the holders of Series A Supervoting Preferred Stock are entitled to receive net assets on a pro-rata basis.
Each holder of Series A Supervoting Preferred Stock is entitled to receive ratably any dividends declared by the Board, if any,
out of funds legally available for the payment of dividends. As used herein, “Liquidation Event” means (i) the liquidation,
dissolution or winding-up, whether voluntary or involuntary, of the Company, (ii) the purchase or redemption by the Company of
shares of any class of stock or the merger or consolidation of the Company with or into any other corporation or corporations,
or (iii) the sale, license or lease of all or substantially all, or any material part of, the Company’s assets.
Conversion Rights
Each holder of Series A Supervoting Preferred
Stock may voluntarily convert its shares into shares of Common Stock of the Company at a rate of 1:100 (as may be adjusted for
any combinations or splits with respect to such shares).
Voting Rights
If at least one share of Series A Supervoting
Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series A Supervoting Preferred Stock at any
given time, regardless of their number, shall have voting rights equal to 20 times the sum of: i) the total number of shares of
Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred
stocks which are issued and outstanding at the time of voting.
Each individual share of Series A Supervoting
Preferred Stock shall have the voting rights equal to:
[twenty times the sum of: {all shares of
Common stock issued and outstanding at the time of voting + all shares of Series A and any newly designated Preferred stock issued
and outstanding at the time of voting}]
Divided by:
[the number of shares of Series A Supervoting
Preferred Stock issued and outstanding at the time of voting]
The summary of the rights, privileges and
preferences of the Supervoting Preferred Stock described above is qualified in its entirety by reference to the Certificate of
Designation, a copy of which is attached as Exhibits 3.1 and 3.2 to this Current Report on Form 8-K and are incorporated herein
by reference.