UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 9, 2013
IMAGING3, INC.
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(Exact name of registrant as specified in its charter)
CALIFORNIA
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(State or other jurisdiction of incorporation)
000-50099 95-4451059
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(Commission File Number) (I.R.S. Employer Identification No.)
3200 W. VALHALLA DR., BURBANK, CALIFORNIA 91505
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(Address of principal executive offices) (Zip Code)
(818) 260-0930
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name, former address and former fiscal year, 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.
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR240.14d-2(b))
[_] Soliciting material pursuant to Rule 14a-12 under Exchange Act (17
CFR240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR240.13e-4(c))
ITEM 1.03. BANKRUPTCY OR RECEIVERSHIP.
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As previously disclosed, on September 13, 2012, Imaging3, Inc., a California
corporation ("Imaging3" or the "Company"), filed a voluntary petition under
chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"), in the
United States Bankruptcy Court for the Central District of California, Los
Angeles Division (the "Bankruptcy Court"), as Case No. 2:12-bk-41206-NB (the
"Bankruptcy Case").
CONFIRMATION OF THE PLAN
On March 5, 2013, the Company filed its First Amended Chapter 11 Plan of
Reorganization Dated March 5, 2013, and on April 30, 2013 the Company filed the
Motion for Order Confirming Debtor's First Amended Chapter 11 Plan of
Reorganization Dated March 5, 2013 as Modified with modifications to the First
Amended Plan of Reorganization (collectively and as amended and supplemented,
the "Plan"). On May 21, 2013 and May 22, 2013, the Bankruptcy Court held a
confirmation hearing and confirmed the Plan, and on July 9, 2013 entered an
Order Confirming Debtor's First Amended Chapter 11 Plan of Reorganization Dated
March 5, 2013, as Modified (the "Confirmation Order") and Findings of Fact and
Conclusions of Law Re Order Confirming Debtor's First Amended Chapter 11 Plan of
Reorganization Dated March 5, 2013, which approved and confirmed the Plan. By
the terms of the confirmed Plan and the Confirmation Order, absent any appeal
and a stay pending appeal, the Plan becomes effective, and the Company will
emerge from Chapter 11 protection, on July 30, 2013 (the "Effective Date").
All capitalized terms used in this Report but not otherwise defined herein shall
have the meanings ascribed to them in the Plan. Copies of the Plan, the
Confirmation Order, and the Findings of Fact and Conclusions of Law are attached
hereto as Exhibits 2.1,2.2 and 2.3, respectively, and are incorporated herein by
reference.
SUMMARY OF THE PLAN
The following is a summary of certain material terms of the Plan as confirmed.
This summary highlights only certain substantive provisions of the Plan and does
not include a description of all of the terms, conditions and other provisions
of the Plan, the Disclosure Statement, the Confirmation Order or other
documentation governing or contemplated by the Plan, and is qualified in all
respects by reference to the full text of the Plan and the Confirmation Order.
As of the Effective Date, the Company's Amended and Restated Certificate of
Incorporation will authorize the Company to issue up to 1,000,000,000 shares of
common stock and up to 1,000,000 shares of preferred stock. Pursuant to the
Plan, on the Effective Date the Company will issue 170,000,000 shares of common
stock, assuming that on the Effective Date the Company's outstanding
indebtedness to its junior secured lenders represented by Dane Medley as
collateral agent (the "Medley Lenders") is $1,000,000 and subject to the Warrant
Request described below under the caption "Modification of the Plan." The
issuance of New Common Stock under the Plan will be made pursuant to an
exemption from the registration requirements of the United States Securities Act
of 1933 contained in Section 1145(a) of the Bankruptcy Code. No shares of the
Company's preferred stock will be issued under the Plan. Each share of Company
common stock outstanding immediately before the Effective Date (including all
options and warrants to purchase such common stock) will, under the terms of the
Plan and the Confirmation Order, be canceled and of no further force or effect
after the Plan becomes effective. All such stock shall cease to be recognized as
an ownership interest in the Company as of the Effective Date.
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The Plan provides for the issuance of new shares of common stock in connection
with the implementation of the Plan and for the conversion of most of the
Company's pre-petition debt and pre-petition common stock into New Common Stock
of the reorganized Company. The classification and treatment of all Claims and
Equity Interests in the Company are set forth in detail in Article II.C of the
Plan, and are summarized as follows:
(i) all outstanding indebtedness due to North Surgery Center, L.P.,
which holds a judgment claim in the amount of $53,792.83 secured
by a blanket lien over the Company's assets, will be paid in full
over 36 months after the Effective Date with a 4% interest. The
lien will remain in place until the creditor has received full
payment.
(ii) all outstanding indebtedness due to Precision Forging Dies, which
holds a claim of $45,278.06 secured by a mechanic's lien over
certain of the Company's machinery/prototype, will be paid in full
on the first business day of the thirteenth calendar month
following the Effective Date. The lien will remain in place until
the creditor has received full payment.
(iii) all outstanding indebtedness due to the Company's senior secured
lenders, Gemini Master Fund, LTD ("Gemini"), Alpha Capital Anstalt
("Alpha") and Brio Capital, L.P. ("Brio"), totaling approximately
$1,073,032.66, will be converted into 56,439,175 shares of New
Common Stock in the reorganized Company. Each creditor will be
issued its PRO RATA share of such shares. However, if the Warrant
Request is approved by the Bankruptcy Court, such creditors will
receive an aggregate of 38,290,480 shares of the New Common Stock
and Gemini and Alpha will each receive a warrant to purchase the
rest of the shares of the New Common Stock to which each Gemini
and Alpha is entitled under the Plan.
(iv) all outstanding indebtedness due to the Company's junior secured
lenders represented by Jeffrey K. Lee as their collateral agent,
totaling approximately $288,796, will be converted into 15,536,859
shares of New Common Stock in the reorganized Company. Each
creditor will be issued its PRO RATA share of such shares.
(v) all outstanding indebtedness due to the Company's junior secured
lenders represented by Dane Medley as their collateral agent,
which may be up to $1,000,000 as of the Effective Date pursuant to
the Plan, will be converted into 53,823,965 shares of New Common
Stock in the reorganized Company. Each creditor will be issued its
PRO RATA share of such shares. In the event that the indebtedness
to such lenders is less than $1,000,000 on the Effective Date, the
number of shares issued to such lenders shall be reduced PRO RATA.
As of the date of this Report, such indebtedness is $730,715.
(vi) all outstanding indebtedness due to Los Angeles County Treasurer &
Tax Collector, which holds a secured tax claim in the amount of
$5,774.92, and to Kaiser Foundation Health Plan, which holds a
priority unsecured claim of $2,719, will be paid in full on the
first business day of the first calendar month following the
Effective Date;
(vii) approximately $2 million of unsecured indebtedness outstanding
under the Company's prepetition unsecured debt obligations will be
converted and exchanged 21,513,051 shares of New Common Stock in
the reorganized Company, except IRS' general unsecured claim of
$62,736.92 which will receive cash in an amount equal to the value
of shares of the New Common Stock which would have been issued to
it under the Plan but for the restriction on the form of payment
under IRC section 6311;
(viii) Dean Janes, CEO of the Company, will receive 3,986,949 shares of
New Common Stock on account of his secured claim in the amount of
$359,938 and 10,200,000 shares of New Common Stock contributed by
Gemini, Alpha and Brio from the shares to which they otherwise
would have been entitled under the Plan;
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(ix) The Company's pre-petition common stock will be cancelled and
8,500,000 shares of New Common Stock in the reorganized Company
will be issued to the shareholders of the pre-petition common
stock.
In addition, the Plan provides for the payment in full of all administrative
expenses allowed under section 507(a)(1) of the Bankruptcy Code on the Effective
Date. The Company's bankruptcy counsel, Greenberg Glusker Fields Claman &
Machtinger LLP, although entitled to payment in full on the Effective Date has
agreed to a separate installment payment agreement between the Company and the
law firm. The Plan further provides for the payment in full of priority tax
claims over a period not exceeding five years after September 13, 2012.
All of the Company's known service contracts with its customers are assumed as
obligations of the reorganized Company under the Plan. The Claim Exchange
Agreements entered into with Cranshire Capital, L.P. and Freestone Advantage
Partners, L.P. have been rejected under the Plan. The Bankruptcy Court has
approved the estimation of any claims based on the rejection of the Claim
Exchange Agreements at zero dollars ($0) for Plan distribution purposes.
On the Effective Date, the number of directors of the reorganized Company will
be set at five. Dean Janes, Xavier Aguilera and Raul Carrega will initially be
appointed to the board and there will be two vacancies, to be filled by board
upon the Company's finding a suitable candidate willing to serve. The officers
of the reorganized Company will be: Dean Janes, as Chief Executive Officer;
Xavier Aguilera as Chief Financial Officer and Secretary; and Haykaz Balian as
Vice President of Operations.
As to the shareholder derivative action titled VUKSICH V. IMAGING3, INC. AND
DEAN JANES ET AL., filed in the Superior Court of California, County of Los
Angeles Glendale Branch as case number EC058516 on May 16, 2012, (the "Vuksich
Litigation"), the Bankruptcy Court ruled in the Confirmation Order that after
the Effective Date, the plaintiffs in the Vuksich Litigation shall no longer
have any right or standing to continue to prosecute the Vuksich Litigation, or
to institute a new derivative shareholder action based on any events occurring
prior to the confirmation of the Plan. The Bankruptcy Court in its Memorandum
Decision Denying Vuksich's Motion for Abandonment of Potential Claims Against
Officers and Directors, entered on July 11, 2013 [Docket No. 411] , further
ruled that the former holders of those equity securities will not as of the
Effective Date have any right or standing to assert whatever pre-confirmation
derivative claims they might have had. Vuksich has appealed two orders of the
Bankruptcy Court, order denying his motion to dismiss the Bankruptcy Case and
order disallowing his claims against the Company, to the U.S. District Court for
the Central District of California.
The Plan also includes certain releases, injunctions and exculpation provisions.
The Plan contemplates that the Company will raise additional funding. However,
there can be no assurance that the Company will be able to find additional
funding on terms acceptable to it or at all.
MODIFICATION OF THE PLAN
The terms of the Plan confirmed by the Bankruptcy Court may be further modified
or amended. Presently, the Motion for Order (1) Approving Stipulation Between
Imaging3, Inc. and Gemini Master Fund, LTD, Alpha Capital Anstalt and Brio
Capital, L.P. to Modify Treatment of Class 3 Creditors Under the Debtor's
Chapter 11 Plan of Reorganization; and (2) Confirming the Modified Plan is
scheduled for a hearing on July 30, 2013 (the "Warrant Request"). If the Motion
is granted, the plan treatment of Class 3 Claims will be modified so that Gemini
and Alpha would each receive 13,000,000 shares of New Common Stock, Gemini would
receive a warrant to purchase 7,861,472 shares of New Common Stock and Alpha
would receive a warrant to purchase 10,287,224 shares of New Common Stock.
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SHARES OUTSTANDING
As of the date hereof, there are 565,291,689 shares of the Company's common
stock issued and outstanding and 3,000 shares of the Company's Series A
Preferred Stock issued and outstanding, all of which will be cancelled and
extinguished on the Effective Date.
Upon the Effective Date and assuming that on the Effective Date the Company's
outstanding indebtedness to the Medley Lenders is $1,000,000 and the approval of
the Warrant Request by the Bankruptcy Court, the Company expects to issue
151,851,305 shares of New Common Stock and to reserve 18,148,695 shares of New
Common Stock for issuance upon exercise of the Warrants, aggregating 170,000,000
shares. No other shares of the Company's stock will be reserved for issuance in
respect of claims and interests filed and allowed under the plan.
ASSETS AND LIABILITIES
As of June 30, 2013, the Company had assets of $378,103.43 and liabilities of $
22,466,039.31. The Company's unaudited balance sheet as of June 30, 2013, as
submitted to the Bankruptcy Court, is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
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EXHIBIT NO. DESCRIPTION
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2.1 First Amended Chapter 11 Plan of Reorganization Dated March 5,
2013 as Modified
2.2 Order Confirming Debtor's First Amended Chapter 11 Plan of
Reorganization Dated March 5, 2013, as Modified
2.3 Findings of Fact and Conclusions of Law
99.1 Company's Balance Sheet as of June 30, 2013 (unaudited), as
submitted to the Bankruptcy Court
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This current report on Form 8-K includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Exchange Act of 1934. Forward-looking statements are subject to known and
unknown risks and uncertainties, many of which may be beyond our control. We
caution you that the forward-looking information presented in this current
report is not a guarantee of future events, and that actual events and results
may differ materially from those made in or suggested by the forward-looking
information contained in this current report. In addition, forward-looking
statements generally can be identified by the use of forward-looking terminology
such as "may," "plan," "will," "expect," "intend," "estimate," "anticipate,"
"believe" or "continue" or the negative thereof or variations thereon or similar
terminology. A number of important factors could cause actual events and results
to differ materially from those contained in or implied by the forward-looking
statements, including those factors discussed in our Annual Report on Form 10-K,
filed on April 16, 2012 with the SEC, which can be found at the SEC's website
www.sec.gov, each of which is specifically incorporated into this current
report. Any forward-looking information presented herein is made only as of the
date of this current report, and we do not undertake any obligation to update or
revise any forward-looking information to reflect changes in assumptions, the
occurrence of unanticipated events, or otherwise.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
IMAGING3, INC.
By: /s/ Dean Janes, Chief Executive Officer
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Dean Janes, Chief Executive Officer
Date: July 15, 2013
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