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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
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Preliminary
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Confidential,
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14c-5(d)(2))
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Definitive
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ISSUER DIRECT CORPORATION
(Name of Registrant As Specified In Its Charter)
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SCHEDULE
14C INFORMATION STATEMENT
(Pursuant
to Regulation 14C of the Securities Exchange Act of 1934 as
amended)
ISSUER DIRECT CORPORATION
500
Perimeter Park Drive, Suite D
Morrisville,
North Carolina 27560
WE ARE NOT ASKING FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
Notice of Written Consent of Shareholders in Lieu of
Special Meeting of Shareholders
This
Information Statement is being furnished by Issuer Direct
Corporation, a Delaware Corporation (the “Company”), to
the holders of record (the “Stockholders”)
of the outstanding common stock, $0.001 par value per share (the
“Common
Stock”) of as of the close of business on February 10,
2017 (the “Record Date”),
pursuant to Rule 14c-2 promulgated under the Securities Exchange
Act of 1934, as amended (the “Exchange
Act”). This Information Statement relates to a written
consent in lieu of a meeting, dated February 10, 2017 (the
“Written
Consent”) of stockholders of the Company owning common
and preferred shares that represent a majority of the outstanding
votes of the capital stock of the Company as of the Record Date
(the “Consenting
Stockholders”).
The
Written Consent authorized an amendment to our Certificate of
Incorporation to decrease the number of authorized shares of Common
Stock from 100,000,000 shares to 20,000,000 shares and to decrease
the number of authorized shares of Preferred Stock from 30,000,000
shares to 1,000,000 shares (the “Decrease
Amendment”).
The
Written Consent constitutes the consent of a majority of the votes
at any meeting of stockholders, and is sufficient under the
Delaware Corporation Law and the Company’s Certificate of
Incorporation to approve the Decrease Amendment. Accordingly, the
Decrease Amendment is not being submitted to the Company’s
other Stockholders for a vote. The action by Written Consent will
become effective on the date of filing of the Certificate of
Amendment that the Company will file with the Delaware Secretary of
State to effect the Decrease Amendment (the “Effective
Date”).
This is
not a notice of a meeting of Stockholders and no Stockholders
meeting will be held to consider the matters described herein. This
Information Statement is being furnished to you solely for the
purpose of informing Stockholders of the matters described herein
pursuant to Section 14(c) of the Exchange Act and the regulations
promulgated thereunder, including Regulation 14C. Except as
otherwise indicated by the context, references in this information
statement to “Company,” “we,”
“us,” or “our” are references to Issuer
Direct Corporation.
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By
Order of the Board of Directors,
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/s/
Brian R. Balbirnie
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Brian R. Balbirnie,
Chief Executive Officer
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GENERAL INFORMATION
This
Information Statement is being first mailed on or about February
__, 2017, to Stockholders of the Company by the board of directors
to provide material information regarding corporate actions that
have been approved by the Written Consent of the Consenting
Stockholders.
Only
one Information Statement is being delivered to two or more
Stockholders who share an address unless we have received contrary
instruction from one or more of such Stockholders. This practice
known as “householding” is intended to reduce the
Company’s printing and postage costs. We will promptly
deliver, upon written or oral request, a separate copy of the
Information Statement to a security holder at a shared address to
which a single copy of the document was delivered. If you would
like to request additional copies of the Information Statement, or
if in the future you would like to receive multiple copies of
information statements or proxy statements, or annual reports, or,
if you are currently receiving multiple copies of these documents
and would, in the future, like to receive only a single copy,
please so instruct us by writing to the corporate Chief Executive
Officer at the Company’s executive offices at the address
specified above.
PLEASE NOTE THAT THIS IS NOT A REQUEST FOR YOUR VOTE OR A PROXY
STATEMENT, BUT RATHER AN INFORMATION STATEMENT DESIGNED TO INFORM
YOU OF THE AMENDMENT OF OUR CERTIFICATE OF
INCORPORATION.
The
entire cost of furnishing this Information Statement will be borne
by the Company. We will request brokerage houses, nominees,
custodians, fiduciaries and other like parties to forward this
Information Statement to the beneficial owners of the Common Stock
held of record by them.
AUTHORIZATION BY THE BOARD OF DIRECTORS AND THE CONSENTING
STOCKHOLDERS
Under
the Delaware General Corporation Law, any action that can be taken
at an annual or special meeting of shareholders may be taken
without a meeting, without prior notice and without a vote, if the
holders of outstanding stock having not less than the minimum
number of votes that will be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted consent to such action in writing. The
approval of the Decrease Amendment requires the affirmative vote or
written consent of a majority of the issued and outstanding shares
of Common Stock. Each Stockholder is entitled to one vote per share
of Common Stock held of record on any matter which may properly
come before the stockholders.
On the
Record Date, we had 2,904,114 shares of Common Stock issued and
outstanding with the holders thereof being entitled to cast one
vote per share.
On
February 9, 2017, our board of directors (the “Board of
Directors”) unanimously executed a written consent
approving the Decrease Amendment and recommended that the
Stockholders approve the Decrease Amendment. In connection with the
adoption of this resolution, the Board of Directors elected to seek
the written consent of the holders of a majority of our outstanding
shares in order to reduce associated costs and implement the
proposals in a timely manner. Pursuant to Section 228 of the
Delaware General Corporation Law (“DGCL”), the Consenting
Stockholders voted in favor of the Decrease Amendment in a written
consent dated February 10, 2017. The Consenting Stockholders are
the record or beneficial owner of 1,504,110 shares of Common Stock,
which represents 51.8% of the total votes entitled to be case at
any meeting of Stockholders. No consideration was paid for the
consents. The Consenting Stockholders names, affiliations with the
Company and beneficial holdings are as follows:
Name of
Beneficial Owner
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Red Oak Partners,
LLC (1)
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632,422
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21.8%
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Brian R. Balbirnie
(2)
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620,588
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21.4%
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James
Michael (3)
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251,100
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8.6%
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Total
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1,504,110
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51.8%
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(1)
Consists of (i)
254,762 shares of Common Stock held by The Red Oak Fund, L.P., (ii)
112,000 shares of Common Stock held by The Red Oak Long Fund, L.P.
and (iii) 265,660 shares of Common Stock held by Pinnacle Capital
Partners, LLC. Red Oak Partners, LLC (“Red Oak
Partners”) is the general partner of each of these funds and
David Sandberg, a member of our Board Directors from August 2013
through August 2016, is the managing member of Red Oak Partners
and, therefore, may be deemed to share voting and dispositive power
over the shares held by Red Oak Partners. The address for these
entities is 1969 SW 17th St., Boca Raton, Florida 33486, Attn:
David Sandberg.
(2)
Mr.
Balbirnie is the Company’s Chief Executive Officer and also a
member of the Company’s Board of Directors.
(3)
Mr.
Michael is the Company’s Vice President of Sales, North
America.
Accordingly,
the Company has obtained all necessary corporate approvals in
connection with the Decrease Amendment. The Company is not seeking
written consent from any other Stockholders, and the other
Stockholders will not be given an opportunity to vote with respect
to the actions described in this Information Statement. This
Information Statement is furnished solely for the purposes of
advising Stockholders of the action taken by written consent and
giving Stockholders notice of such actions taken as required by the
Exchange Act.
The
Company will, when permissible following the expiration of the
20-day period mandated by Rule 14c-2 and the provisions of the
Delaware General Corporation Law, file the Decrease Amendment with
the Delaware Secretary of State’s Office. The Decrease
Amendment will become effective upon such filing and we anticipate
that such filing will occur approximately 20 days after this
Information Statement is first mailed to Stockholders.
DESCRIPTION OF THE COMPANY’S CAPITAL STOCK
The
authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, par value $0.001 per share, and 30,000,000
shares of Preferred Stock, of which there were 2,904,114 shares of
Common Stock and no shares of Preferred Stock outstanding as of the
Record Date.
Common Stock
Holders
of Common Stock are entitled to one vote for each share on all
matters submitted to a stockholder vote. Holders of Common Stock do
not have cumulative voting rights. Holders of Common Stock are
entitled to share in all dividends that the Board, in its
discretion, declares from legally available funds. In the event of
our liquidation, dissolution or winding up, subject to the
preferences of any shares of our Preferred Stock which may then be
outstanding, each outstanding share entitles its holder to
participate in all assets that remain after payment of liabilities
and after providing for each class of stock, if any, having
preference over the common stock.
Holders
of Common Stock have no conversion, preemptive or other
subscription rights, and there are no redemption provisions for the
common stock. The rights of the holders of Common Stock are subject
to any rights that may be fixed for holders of Preferred Stock,
when and if any Preferred Stock is authorized and issued. All
outstanding shares of Common Stock are duly authorized, validly
issued, fully paid and non-assessable.
Preferred stock
Our
Board, without further stockholder approval, may issue Preferred
Stock in one or more series from time to time and fix or alter the
designations, relative rights, priorities, preferences,
qualifications, limitations and restrictions of the shares of each
series. The rights, preferences, limitations and restrictions of
different series of Preferred Stock may differ with respect to
dividend rates, amounts payable on liquidation, voting rights,
conversion rights, redemption provisions, sinking fund provisions
and other matters. Our Board may authorize the issuance of
Preferred Stock in a series which ranks senior to our common stock
for the payment of dividends and the distribution of assets on
liquidation. In addition, our Board can fix limitations and
restrictions, if any, upon the payment of dividends on our common
stock to be effective while any shares of Preferred Stock are
outstanding. Currently, the Company has neither designated nor
outstanding shares of Preferred Stock. Additionally, it has no
current plans to either designate a series of Preferred Stock or
issue any shares of Preferred Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The
following table sets forth certain information, as of February 10,
2017, with respect to the beneficial ownership of our capital stock
by (i) all of our directors, (ii) each of our named executive
officers, (iii) all of our directors and named executive officers
as a group, and (iv) all persons known to us to be the beneficial
owner of more than five percent (5%) of any class of our voting
securities. Except as otherwise indicated, the address of each of
the stockholders listed below is: c/o Issuer Direct Corporation,
500 Perimeter Park Drive, Suite D, Morrisville, North Carolina
27560.
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Brian R. Balbirnie
(2)(3)
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622,568
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(5)
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21.4%
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Steven
Knerr (2)
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32,500
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(6)
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1.1%
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Andre M. Boisvert
(3)
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40,000
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1.4%
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William H. Everett
(3)
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60,400
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(7)
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2.0%
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J. Patrick Galleher
(3)
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56,000
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(8)
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1.9%
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James Michael
(4)
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251,100
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8.6%
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All officers,
directors, and management as a group (6 persons)
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1,062,568
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35.0%
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Other 5% or greater
beneficial holders:
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Red Oak Partners,
LLC (9)
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632,422
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21.8%
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Yorkmont Capital
Partners, LP
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284,765
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9.8%
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(1)
Applicable
percentage of ownership is based on a total of 3,157,134 shares of
common stock, which consist of 2,904,114 shares of common stock
outstanding on February 10, 2017, plus shares that are beneficially
owned as of that date. Beneficial ownership is determined in
accordance with rules of the Securities and Exchange Commission and
means voting or investment power with respect to securities. Shares
of our common stock issuable upon restricted stock units and the
exercise of stock options exercisable currently or within 60 days
of February 10, 2017 are deemed outstanding and to be beneficially
owned by the person holding such option for purposes of computing
such person’s percentage ownership, but are not deemed
outstanding for the purpose of computing the percentage ownership
of any other person.
(2)
Named
Executive Officer.
(3)
Member
of Board of Directors.
(4)
Vice
President of Sales, North America.
(5)
Includes 1,666
restricted stock units and options issued to spouse to purchase 314
shares of common stock that are currently exercisable or
exercisable within 60 days of February 10, 2017.
(6)
Includes 5,000
restricted stock units and options to purchase 22,500 shares of
common stock that are currently exercisable or exercisable within
60 days of February 10, 2017.
(7)
Includes 16,667
restricted stock units and options to purchase 35,000 shares of
common stock that are currently exercisable or exercisable within
60 days of February 10, 2017.
(8)
Includes 16,667
restricted stock units and options to purchase 30,000 shares of
common stock that are currently exercisable or exercisable within
60 days of February 10, 2017.
(9)
Consists of (i)
254,762 shares of Common Stock held by The Red Oak Fund, L.P., (ii)
112,000 shares of Common Stock held by The Red Oak Long Fund, L.P.
and (iii) 265,660 shares of Common Stock held by Pinnacle Capital
Partners, LLC. Red Oak Partners, LLC (“Red Oak
Partners”) is the general partner of each of these funds and
David Sandberg, a member of our Board Directors from August 2013
through August 2016, is the managing member of Red Oak Partners
and, therefore, may be deemed to share voting and dispositive power
over the shares held by Red Oak Partners. The address for these
entities is 1969 SW 17th St., Boca Raton, Florida 33486, Attn:
David Sandberg.
AMENDMENTS TO CERTIFICATE OF INCORPORATION
Summary of Decrease Amendment
On
February 9, 2017, our Board of Directors approved, subject to
receiving the approval of the holders of a majority of the
Company’s outstanding capital stock, an amendment to our
Certificate of Incorporation, which amends our current Certificate
of Incorporation to decrease our authorized shares of Common Stock
from 100,000,000 shares to 20,000,000 shares and our authorized
shares of Preferred Stock from 30,000,000 shares to 1,000,000
shares (the “Decrease
Amendment”). The Consenting Stockholders approved the
Decrease Amendment pursuant to a Written Consent dated as of
February 10, 2017.
Purpose of Deceasing the Company’s Authorized Shares of
Common Stock and Preferred Stock
The
Company is incorporated in the State of Delaware. The State of
Delaware’s formula for determining the amount of franchise
taxes that are due by Delaware corporations places undue weight on
the number of authorized shares of capital stock. As a result, the
Company had to pay a significant Delaware franchise tax in 2016 and
prior years, and will most likely have to pay a significant amount
in future years under its current capital structure. The Company
has a large number of authorized but unissued Common Stock and
Preferred Stock, which it does not have plans of issuing in the
foreseeable future. Therefore, the Board of Directors determined,
based on a recommendation from management, that it was advisable to
reduce its authorized shares down to a realistic level in order to
reduce its Delaware franchise taxes this fiscal year and for future
years. The Board and management believes even at the reduced level
the Company will have sufficient capital stock to issue for any
corporate purpose for the foreseeable future.
Advantages and Disadvantages of Decreasing Authorized
Shares
There
are certain advantages and disadvantages of voting for a decrease
in the Company’s authorized Common Stock and Preferred Stock.
The only advantage is the fact that the Company will pay lower
Delaware franchise taxes in 2017 and future years. The only
disadvantage is that the Company will have to incur the expense and
delay of obtaining shareholder approval of a further amendment to
its Certificate of Incorporation in future years in the event it
wants or needs to issue shares of Common Stock or Preferred Stock
in excess of the number that will be authorized after the Decrease
Amendment is filed.