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EX-3.1 - CERTIFICATE OF DESIGNATIONS - CICERO INC | cicn_ex31.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act
of 1934
Date of Report (Date of earliest event reported): August 11,
2017
CICERO INC.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or other jurisdiction of incorporation)
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000-26392
(CommissionFile
Number)
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11-2920559
(IRS
EmployerIdentification No.)
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8000 Regency Parkway
Suite 542
Cary, North Carolina
(Address
of principal executive offices)
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27518
(Zip
Code)
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Registrant’s
telephone number, including area code (919) 380-5000
(Former
name or former address, if changed since last report.)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instructions
A.2. below):
☐
Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check
mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (§230.405 of
this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter).
Emerging growth company ☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act ☐
Item 5.03 — Amendments to Articles of Incorporation or
Bylaws; Change in Fiscal Year
On August 11, 2017, the Company filed a Certificate of
Designations, Preferences and Rights of Series A Convertible
Preferred Stock (the “Certificate of Designation”) with
the Secretary of State of the State of Delaware, which authorizes
the Company to issue up to 5,083 shares of Series A Convertible
Preferred Stock, par value $0.001 per share (“Series A
Preferred Stock”). The Series A Preferred Stock ranks senior
in preference and priority to the Company’s common stock with
respect to dividend and liquidation rights and, except as provided
in the Certificate of Designation or otherwise required by law,
will vote with the common stock on an as converted basis on all
matters presented for a vote of the holders of common stock,
including directors.
The Series A Preferred Stock is convertible at any time at the
option of the holder at an initial conversion ratio of 20,000
shares of Common Stock for each share of Series A Preferred Stock.
The initial conversion ratio shall be adjusted in the event of any
stock splits, stock dividends and other recapitalizations. The
holders of the Series A Preferred Stock are entitled to a
liquidation preference of $1,000 per share of Series A Preferred
Stock plus any declared but unpaid dividends upon the liquidation
of the Company.
The Series A Preferred Stock may be redeemed by the Company at any
time and must be redeemed by the Company, upon the written request
of the holders of at least a majority of the then outstanding
shares of Series A Preferred Stock, after the occurrence of one of
the following events: (x) the Company’s trailing 12-month
EBITDA exceeds $5,000,000, (y) the sale of all, or substantially
all of the assets of the Company, or (z) the sale of all or
substantially all the intellectual property of the Company, which
in the case of “y” or “z” result in net
proceeds to the Company in excess of $6,000,000, at a redemption
price equal to $1,000 plus all declared but unpaid dividends, which
amount will be paid in three annual installments..
The approval of at least two-thirds of the holders of Series A
Preferred Stock, voting together as a separate class, is required
for: (i) the merger, sale of all, or substantially all of the
assets or intellectual property, recapitalization, or
reorganization of the Company, unless such action (x) results in
net proceeds to the stockholders of the Company in excess of
$5,000,000, and (y) has received the prior approval of the Board of
Directors; (ii) the authorization or issuance of any equity
security having any right, preference or priority superior to or on
parity with the Series A Preferred Stock; (iii) the redemption,
repurchase or acquisition, directly or indirectly, through
subsidiaries or otherwise, of any equity securities (other than the
redemption of the Series A Preferred Stock) or the payment of
dividends or other distributions on equity securities by the
Company (other than on the Series A Preferred Stock); (iv) any
amendment or repeal of any provision of the Company’s
Certificate of Incorporation or By-laws that would adversely affect
the rights, preferences, or privileges of the Series A Preferred
Stock; and (v) the liquidation, dissolution or winding-up of the
business and affairs of the Company, the effectuation of any
Liquidation Event (as defined in Certificate of Designation), or
the consent to any of the foregoing, unless such action (x) results
in net proceeds to the stockholders of the Company in excess of
$5,000,000, and (y) has received the prior approval of the Board of
Directors.
A copy of the Certificate of Designation is attached hereto as
Exhibit 3.1 and is incorporated herein by reference.
2
Item 1.01 — Entry into a Material Definitive
Agreement
On August 14, 2017, Cicero Inc. (the “Company”) entered
into an Exchange Agreement with John L. Steffens, the
Company’s Chairman of the Board, to convert an aggregate of
$5,083,405 of principal amount of debt and accrued but unpaid
interest into 5,083 shares of the Company’s Series A
Preferred Stock at a conversion rate of $1,000 per share. The debt
was represented by various promissory notes issued by the Company
to Mr. Steffens between March 2012 and June 2017. In connection
with the Exchange Agreement, the Company also issued a warrant to
Mr. Steffens to purchase up to 20,333,620 shares of the
Company’s common stock, par value $0.001 per share
(“Common Stock”). The Warrant is exercisable for a
period of ten years at an exercise price of $0.07 per share. The
Warrant contains a cash-less exercise provision and is subject to
customary anti-dilution protections.
Item 3.02 — Unregistered Sales of Equity
Securities
The securities described in Item 1.01 above are not registered
under the Securities Act of 1933, as amended (the “Securities
Act”), and therefore may not be offered or sold in the United
States without registration or an applicable exemption from the
registration requirements of the Securities Act. The securities
were issued in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act.
The information required by this Item 3.02 is incorporated by
reference to Item 1.01 of this Current Report on Form
8-K.
Item 9.01 — Financial Statements and Exhibits
(d)
Exhibits
Exhibit
No.
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Description
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Certificate of Designations,
Preferences and Rights of Series A Convertible Preferred
Stock.
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3
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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Cicero
Inc.
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Date:
August 14, 2017
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By:
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/s/
John Broderick
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John
Broderick,
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Chief
Executive Officer
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