Item
3.02 Unregistered Sales of Equity Securities.
Series
AA Preferred Shares
On
April 19, 2016, the Company issued 1,000 shares of its Series AA Super Voting Preferred Stock to Mark McWilliams, Chairman, 1,000
shares to Rand Mulford, Director, and 1,000 shares to Stan Pappelbaum, Director. Each share of the Series AA Super Voting Preferred
Stock carries 1,000,000 votes on matters submitted to shareholders for voting purposes. No other rights or privileges are attendant
to the Series AA Super Voting Preferred Stock. The Company’s Board of Directors believed it to be in the best interests
of the Company to issue the Series AA Super Voting Preferred Stock to Messrs. McWilliams, Mulford and Pappelbaum and approved
the issuance of the Series AA Super Voting Preferred Stock. (See discussion in Item 3.03 below for information pertaining to the
Series AA Super Voting Preferred Stock).
The
Company relied upon exemptions under Sections 4(2) and 3(b) under the Securities Act of 1933, as amended, due to the sophistication,
investment intent, and accredited investor status of Messrs. McWilliams, Mulford and Pappelbaum.
Item
3.03 Material Modification to Rights of Security Holders.
On
August 25, 2014, the Company previously filed with the Minnesota Secretary of State a Certificate of Amendment to its Amended
and Restated Articles of Incorporation (“Certificate of Amendment”).
The
Certificate of .Amendment (1) increased the Company’s authorized shares of capital stock from 250,000,000 shares to 750,000,000
shares and (2) authorized the creation of 50,000,000 shares of undesignated stock, in one or more classes, having such designations,
preferences, and relative, participating, optional, or other rights (including preferential voting rights), and qualifications,
limitations, and/or restrictions thereto all as may be determined by from time to time by the Board of Directors of the Company.
On
April 19, 2016, the Company filed with the Minnesota Secretary of State a Certificate of Designations relating to 3,000 shares
of preferred stock authorized by the Certificate of Amendment (“Series AA Super Voting Preferred Stock”).
The
features of the preferred stock as set forth in the Certificate of Designations are as follows:
1.
Voting.
A
Holder of the Series AA Super Voting Preferred Stock shall have One Million (1,000,000) votes for each share of Series AA Super
Voting Preferred Stock held by him on all matters submitted to the shareholders, either at a duly called meeting or by written
consent, other than for the election of directors. A holder of the Series AA Super Voting Preferred Stock shall vote together
with the holders of Common Stock as a single class upon all matters submitted to the Common Stock shareholders except for the
election of directors.
2.
Dividends.
The
holders of Series AA Super Voting Preferred Stock of the Corporation shall not be entitled to receive dividends paid on the Corporation’s
Common Stock.
3.
No Liquidation Distribution.
Upon
liquidation, dissolution and winding up of the Corporation, whether voluntary or involuntary, the holders of the Series AA Super
Voting Preferred Stock then outstanding shall not be entitled to receive out of the assets of the Corporation, whether from capital
or earnings available for distribution, any amounts which will be otherwise available to and distributed to the Common Stockholders.
4.No
Conversion.
The
shares of Series AA Super Voting Preferred Stock will not be convertible into the shares of the Corporation’s Common Stock.
5.Vote
to Change the Terms of or Issuance of Series AA Super Voting Preferred Stock. The affirmative vote at a meeting duly called for
such purpose, or written consent without a meeting, of the holders of not less than fifty-one (51%) of the then outstanding shares
of Series AA Super Voting Preferred Stock shall be required for (i) any change to the Corporation’s Articles of Incorporation
that would amend, alter, change or repeal any of the voting powers, preferences, limitations or relative rights of the Series
AA Super Voting Preferred Stock, or (ii) any issuance of additional shares of Series AA Super Voting Preferred Stock.
6.Notices.
In
case at any time:
(a)
the Corporation shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any
class or other rights; or
(b)
there shall be any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all
of the Corporation’s assets to another Person or other transaction in each case, which is effected in such a way that holders
of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect
to or in exchange for Common Stock, referred to herein as an “Organic Change”;
then,
in any one or more of such cases, the Corporation shall give, by first class mail, postage prepaid, or by facsimile or by recognized
overnight delivery service to non-U.S. residents, addressed to the Registered Holders of the Series AA Super Voting Preferred
Stock at the address of each such Holder as shown on the books of the Corporation, (i) at least twenty (20) Trading Days prior
written notice of the date on which the books of the Corporation shall close or a record shall be taken for such subscription
rights or for determining rights to vote in respect of any such Organic Change and (ii) in the case of any such Organic Change,
at least twenty (20) Trading Days’ prior written notice of the date when the same shall take place. Such notice in accordance
with the foregoing clause (i) shall also specify, in the case of any such subscription rights, the date on which the holders of
Common Stock shall be entitled thereto, and such notice in accordance with clause (ii) shall also specify the date on which the
holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such
Organic Change.
7.
Record Owner.
The
Corporation may deem the person(s) in whose name shares of Series AA Super Voting Preferred Stock shall be registered upon the
registry books of the Corporation to be, and may treat them as, the absolute owners of the Series AA Super Voting Preferred Stock
for all purposes, and the Corporation shall not be affected by any notice to the contrary. All such payments and such conversion
shall be valid and effective to satisfy and discharge the liabilities arising under this Certificate of Designations to the extent
of the sum or sums so paid or the conversion so made.