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<P id=PARA1 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>UNITED STATES </B></FONT></P>
<P id=PARA2 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>SECURITIES AND EXCHANGE COMMISSION</B></FONT></P>
<P id=PARA3 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Washington, D.C. 20549</B></FONT></P>
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<P id=PARA5 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman, Times, serif"><B>FORM 8-K</B></FONT></P>
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<P id=PARA7 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman, Times, serif"><B>CURRENT REPORT</B></FONT></P>
<P id=PARA8 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934</B></FONT></P>
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<P id=PARA10 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Date of Report (Date of earliest event reported):<B> June 2, 2016</B></FONT></P>
<P id=PARA11 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
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<P id=PARA13 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 24pt; FONT-FAMILY: Times New Roman, Times, serif"><B>MIKROS SYSTEMS CORPORATION</B></FONT></P>
<P id=PARA14 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(Exact Name of Small Business Issuer as Specified in Its Charter)</FONT></P>
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<P id=PARA16 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Delaware&nbsp;</B></FONT></P>
<P id=PARA17 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">State or Other Jurisdiction of </FONT></P>
<P id=PARA18 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;Incorporation of Organization) <B>&nbsp;</B></FONT></P></TD>
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<P id=PARA19 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>000-14801</B></FONT></P>
<P id=PARA20 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(Commission </FONT></P>
<P id=PARA21 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">File Number)</FONT></P></TD>
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<P id=PARA22 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>14-1598200</B></FONT></P>
<P id=PARA23 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(IRS Employer</FONT></P>
<P id=PARA24 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Identification Number)</FONT></P></TD></TR></TABLE>
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<P id=PARA29 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>707 Alexander Road</B></FONT></P>
<P id=PARA30 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Building 2, Suite 208</B></FONT></P>
<P id=PARA31 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Princeton, NJ</B></FONT></P>
<P id=PARA32 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(Address of Principal Executive Offices)</FONT></P></TD>
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<P id=PARA33 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA34 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>08540</B></FONT></P>
<P id=PARA35 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(Zip Code)</FONT></P></TD></TR></TABLE>
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<P id=PARA38 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Registrant&#8217;s telephone number, including area code: <B>(609) 987-1513</B></FONT></P>
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<P id=PARA40 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(Former Name or Former Address, if Changed Since Last Report)</FONT></P>
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<P id=PARA44 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">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 (<I>see </I>General Instruction A.2. below):</FONT></P>
<P id=PARA45 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA46 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 18pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9744;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</FONT></P>
<P id=PARA47 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA48 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 18pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9744;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</FONT></P>
<P id=PARA49 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA50 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 18pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9744;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</FONT></P>
<P id=PARA51 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA52 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 18pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9744;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</FONT></P>
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<P id=PARA57 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Item 1.01&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Entry into a Material Definitive Agreement.</B></FONT></P>
<P id=PARA58 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA59 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The information provided in Item 3.02 is hereby incorporated by reference.</FONT></P>
<P id=PARA60 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA61 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Item 3.02&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unregistered Sales of Equity Securities.</B></FONT></P>
<P id=PARA62 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA63 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B></B>On June 16, 2016, Mikros Systems Corporation (the &#8220;<U>Company</U>&#8221;, &#8220;<U>we</U>&#8221; or &#8220;<U>us</U>&#8221;) completed the first step in a recapitalization transaction (the &#8220;<U>Recapitalization Transaction</U>&#8221;) pursuant to which all issued and outstanding shares of Convertible Preferred Stock, $0.01 par value per share (the &#8220;<U>Convertible Preferred Shares</U>&#8221;), Series B Preferred Stock, $0.01 par value per share (the &#8220;<U>Series B Shares</U>&#8221;), Series C Preferred Stock, $0.01 par value per share (the &#8220;<U>Series C Shares</U>&#8221;), and Series D Preferred Stock, $0.01 par value per share (the &#8220;<U>Series D Shares</U>&#8221; and together with the Convertible Preferred Shares, the Series B Shares, and the Series C Shares, collectively the &#8220;<U>Preferred Shares</U>&#8221;) will be exchanged or redeemed for a combination of cash and shares of our common stock, $.01 par value per share (&#8220;<U>Common Stock</U>&#8221;), for the amounts set forth in the table below. </FONT></P>
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<P id=PARA64 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Series of</B></FONT></P>
<P id=PARA66 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U><B>Preferred Stock</B></U></FONT></P></TD>
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<P id=PARA67 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Amount of</B></FONT></P>
<P id=PARA68 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U><B>Cash per Share</B></U></FONT></P></TD>
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<P id=PARA69 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Number of Shares of</B></FONT></P>
<P id=PARA70 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U><B>Common Stock Per Share</B></U></FONT></P></TD></TR>
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<TD style="WIDTH: 35.4%; VERTICAL-ALIGN: middle">&nbsp;</TD>
<TD style="WIDTH: 34.2%; VERTICAL-ALIGN: middle">&nbsp;</TD>
<TD style="WIDTH: 31.5%; VERTICAL-ALIGN: middle">&nbsp;</TD></TR>
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<P id=PARA71 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Convertible Preferred Shares</FONT></P></TD>
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<P id=PARA72 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">$0.165</FONT></P></TD>
<TD style="WIDTH: 31.5%; VERTICAL-ALIGN: middle; BACKGROUND-COLOR: #cceeff">
<P id=PARA73 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">1.95</FONT></P></TD></TR>
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<P id=PARA74 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Series B Shares</FONT></P></TD>
<TD style="WIDTH: 34.2%; VERTICAL-ALIGN: middle; BACKGROUND-COLOR: #ffffff">
<P id=PARA75 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">$0.0825</FONT></P></TD>
<TD style="WIDTH: 31.5%; VERTICAL-ALIGN: middle; BACKGROUND-COLOR: #ffffff">
<P id=PARA76 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">2.43</FONT></P></TD></TR>
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<P id=PARA77 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Series C Shares</FONT></P></TD>
<TD style="WIDTH: 34.2%; VERTICAL-ALIGN: middle; BACKGROUND-COLOR: #cceeff">
<P id=PARA78 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">$2.708</FONT></P></TD>
<TD style="WIDTH: 31.5%; VERTICAL-ALIGN: middle; BACKGROUND-COLOR: #cceeff">
<P id=PARA79 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">31.27</FONT></P></TD></TR>
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<P id=PARA80 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Series D Shares</FONT></P></TD>
<TD style="WIDTH: 34.2%; VERTICAL-ALIGN: middle; BACKGROUND-COLOR: #ffffff">
<P id=PARA81 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">$0.36232</FONT></P></TD>
<TD style="WIDTH: 31.5%; VERTICAL-ALIGN: middle; BACKGROUND-COLOR: #ffffff">
<P id=PARA82 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">5.072464</FONT></P></TD></TR></TABLE>
<P id=PARA84 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA85 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U>The Exchange Agreements</U></FONT></P>
<P id=PARA86 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA87 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Recapitalization Transaction is being effected through the execution and delivery of a series of Exchange Agreements (each an&#8220; <U>Exchange Agreement</U>&#8221;) between us Thomas Meaney, our President, Chief Executive Officer and a Director of the Company and certain shareholders owning in the aggregate all issued and outstanding Series C Shares, 643,908 issued and outstanding Series D Shares, 252,500 issued and outstanding Convertible Preferred Shares, and 893,462 issued and outstanding Series B Shares. In connection with the Exchange Agreements, holders of 59% of our Series B Shares and holders of 80% of our Series D Shares acted by written consent to amend the terms of the Certificates of Designations applicable to the Series B Shares and Series D Shares to provide for such shares to be redeemed for a combination of cash and shares of our Common Stock on the same terms as the Exchange Agreements as set forth in the table above.</FONT></P>
<P id=PARA88 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA89 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U>The SBA Exchange Agreement</U></FONT></P>
<P id=PARA90 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA91 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The United States Small Business Administration (&#8220;<U>SBA</U>&#8221;) owned 2,084,167 shares of our Common Stock, 202,500 Convertible Preferred Shares, 231,961 Series B Shares, and 138,000 Series D Shares. The SBA agreed to participate in the Recapitalization Transaction conditioned on us also repurchasing all shares of Common Stock currently held by the SBA and all shares of Common Stock issuable to it under the Recapitalization. As a result, we entered into a separate Exchange Agreement with the SBA (the &#8220;<U>SBA Exchange Agreement</U>&#8221;) pursuant to which we paid $250,000 to the SBA in exchange for all Preferred Shares, all shares of Common Stock then owned by the SBA, and all shares of Common Stock issuable to it under the Recapitalization Transaction.</FONT></P>
<P id=PARA242.1 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
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<DIV id=PGHDR242  style="WIDTH: 100%; TEXT-ALIGN: left">&nbsp;</DIV></DIV>
<P id=PARA242.2 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT>&nbsp;</P>
<P id=PARA93 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U>The Redemption and Repurchase</U></FONT></P>
<P id=PARA94 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA95 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">On June 16, 2016, we conducted closings under the Exchange Agreements and the SBA Exchange Agreement pursuant to which we issued an aggregate of 4,427,498 shares of Common Stock and made aggregate cash payment of $509,664. We commenced the second step of the Recapitalization Transaction by issuing notices of redemption to holders of the 208,971 remaining issued and outstanding Series B Shares and the 46,092 remaining issued and outstanding Series D Shares (the &#8220;<U>Redemption</U>&#8221;). The Redemption will be conducted on July 5, 2016 at which time we will issue 741,600 shares of Common Stock and make aggregate cash payment of $33,941 to the holders of these Preferred Shares. Finally, we have offered to enter into an Exchange Agreement with the holder of the remaining 2,500 outstanding Convertible Preferred Shares to repurchase such shares for the consideration set forth in the table above resulting in the issuance of an additional 4,875 shares of Common Stock and payment of $412. </FONT></P>
<P id=PARA96 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA97 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U>Background and Effect of Recapitalization Transaction </U></FONT></P>
<P id=PARA98 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA99 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Each series of the Preferred Shares included a &#8220;liquidation preference&#8221; which required payment to holders of our Preferred Shares prior and in preference to any payment to holders of our Common Stock in the event of a liquidation of the Company and in certain circumstances, upon a merger or sale of all or substantially all assets of the Company. Total liquidation preference for all Preferred Shares was $2,955,433 which would be paid prior to any payment to holders of our Common Stock. The amount and order of liquidation preference applicable to each series of the Preferred Shares is set forth below:</FONT></P>
<P id=PARA100 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA101 style="TEXT-ALIGN: left; MARGIN: 0pt 0pt 0pt 72pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">First: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Series C Shares $1.00 per share; $80,000 aggregate </FONT></P>
<P id=PARA102 style="TEXT-ALIGN: left; MARGIN: 0pt 0pt 0pt 72pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Second:&nbsp; &nbsp; Series B Shares $1.00 per share; $1,102,433 aggregate</FONT></P>
<P id=PARA103 style="TEXT-ALIGN: left; MARGIN: 0pt 0pt 0pt 72pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Third:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Convertible Preferred Shares $1.00 per share; $255,000 aggregate </FONT></P>
<P id=PARA104 style="TEXT-ALIGN: justify; MARGIN: 0pt 0pt 0pt 36pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Fourth:&nbsp;&nbsp;&nbsp;&nbsp; Series D Shares $2.20 per share; $1,518,000 aggregate</FONT></P>
<P id=PARA105 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA106 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">After closing the Recapitalization Transaction, including the Redemption and repurchase described above, we will have issued 5,173,973 shares of Common Stock, made cash payments of $544,017, repurchased 2,084,167 issued and outstanding shares of Common Stock from the SBA, and eliminated $2,955,433 of aggregate liquidation preferences applicable to our previously outstanding Preferred Shares. This will result in the net issuance of 3,089,806 additional shares of Common Stock.</FONT></P>
<P id=PARA107 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA108 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The foregoing securities were issued in a private placement transaction to a limited number of existing stockholders who are accredited investors pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act if 1933, as amended, without engaging in any advertising or general solicitation of any kind.</FONT></P>
<P id=PARA109 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA110 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U>Interest of our Directors, Executive Officers and Greater than 5% Stockholders</U></FONT></P>
<P id=PARA111 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA112 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Thomas Meaney, our President, Chief Executive Officer and a Director of the Company, owned 50,000 Convertible Preferred Shares, 649,925 Series B Shares, 5,000 Series C Shares, and 138,000 Series D Shares. The SBA beneficially owned 9.1% of our issued and outstanding shares of Common Stock. In light of these interests, our Board of Directors appointed a Corporate Administration Committee (the &#8220;<U>Committee</U>&#8221;) which consisted of Tom Schaffnit (Chair), Paul Casner and Thomas Lynch, none of whom have any economic or other interest in the Recapitalization Transaction. The Committee negotiated the terms of the Recapitalization Transaction with the holders of our Series D Shares, the SBA, and Mr. Meaney. </FONT></P>
<P id=PARA113 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA114 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Item 5.03&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.</B></FONT></P>
<P id=PARA115 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA116 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The information provided in Item 3.02 is hereby incorporated by reference.</FONT></P>
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<P id=PARA243.2 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B></B></FONT>&nbsp;<FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA124 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Item 9.01&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements and Exhibits</B></FONT></P>
<P id=PARA125 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA126 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(d) Exhibits</FONT></P>
<P id=PARA127 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
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<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">
<P id=PARA128 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U>Exhibit No.</U></FONT></P></TD>
<TD style="WIDTH: 90%; VERTICAL-ALIGN: top">
<P id=PARA129 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U>Description</U></FONT></P></TD></TR>
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<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">&nbsp;</TD>
<TD style="WIDTH: 90%; VERTICAL-ALIGN: top">&nbsp;</TD></TR>
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<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">
<P id=PARA130 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">3.1</FONT></P></TD>
<TD style="WIDTH: 90%; VERTICAL-ALIGN: top">
<P id=PARA134 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Certificate of Amendment to The Certificate of Designations of Series B Preferred Stock of Mikros Systems Corporation </FONT></P></TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">&nbsp;</TD>
<TD style="WIDTH: 90%; VERTICAL-ALIGN: top">&nbsp;</TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">
<P id=PARA131 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">3.2</FONT></P></TD>
<TD style="WIDTH: 90%; VERTICAL-ALIGN: top">
<P id=PARA135 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Certificate of Amendment to Certificate of Designations of Series D Preferred Stock of Mikros Systems Corporation</FONT></P></TD></TR></TABLE>
<P id=PARA138 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B></B></FONT>&nbsp;</P>
<P style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25">&nbsp;</P>
<P id=PARA139 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Signatures</B></FONT></P>
<P id=PARA140 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA141 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;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.</FONT></P>
<P id=PARA142 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA143 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<TABLE  style="TEXT-INDENT: 0;FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%" cellSpacing=0 cellPadding=0>

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<TD style="WIDTH: 50%">
<P id=PARA244 style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&nbsp;</P></TD>
<TD style="WIDTH: 50%">
<P id=PARA145 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>MIKROS SYSTEMS CORPORATION</B></FONT></P></TD></TR>
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<P id=PARA246 style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&nbsp;</P></TD>
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<P id=PARA247 style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&nbsp;</P></TD></TR>
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<P id=PARA248 style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&nbsp;</P></TD>
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<P id=PARA249 style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&nbsp;</P></TD></TR>
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<TD>
<P id=PARA250 style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">Dated: June 17, 2016</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid">
<P id=PARA148 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">/s/ Thomas J. Meaney</FONT>&nbsp;</P></TD></TR>
<TR>
<TD>
<P id=PARA252 style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt">&nbsp;</P></TD>
<TD>
<P id=PARA144 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Thomas J. Meaney</FONT></P>
<P id=PARA150 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">President and Chief Financial Officer</FONT></P></TD></TR></TABLE>
<P id=PARA144 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT>&nbsp;</P></BODY></HTML>
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mkrs20160616_8k.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):
June 2, 2016
MIKROS SYSTEMS CORPORATION
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware
State or Other Jurisdiction of
Incorporation of Organization)
000-14801
(Commission
File Number)
14-1598200
(IRS Employer
Identification Number)
707 Alexander Road
Building 2, Suite 208
Princeton, NJ
(Address of Principal Executive Offices)
08540
(Zip Code)
Registrant's telephone number, including area code:
(609) 987-1513
(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 Instruction 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))
Item 1.01     Entry into a Material Definitive Agreement.
The information provided in Item 3.02 is hereby incorporated by reference.
Item 3.02     Unregistered Sales of Equity Securities.
On June 16, 2016, Mikros Systems Corporation (the "
Company
", "
we
" or "
us
") completed the first step in a recapitalization transaction (the "
Recapitalization Transaction
") pursuant to which all issued and outstanding shares of Convertible Preferred Stock, $0.01 par value per share (the "
Convertible Preferred Shares
"), Series B Preferred Stock, $0.01 par value per share (the "
Series B Shares
"), Series C Preferred Stock, $0.01 par value per share (the "
Series C Shares
"), and Series D Preferred Stock, $0.01 par value per share (the "
Series D Shares
" and together with the Convertible Preferred Shares, the Series B Shares, and the Series C Shares, collectively the "
Preferred Shares
") will be exchanged or redeemed for a combination of cash and shares of our common stock, $.01 par value per share ("
Common Stock
"), for the amounts set forth in the table below.
Series of
Preferred Stock
Amount of
Cash per Share
Number of Shares of
Common Stock Per Share
Convertible Preferred Shares
$0.165
1.95
Series B Shares
$0.0825
2.43
Series C Shares
$2.708
31.27
Series D Shares
$0.36232
5.072464
The Exchange Agreements
The Recapitalization Transaction is being effected through the execution and delivery of a series of Exchange Agreements (each an"
Exchange Agreement
") between us Thomas Meaney, our President, Chief Executive Officer and a Director of the Company and certain shareholders owning in the aggregate all issued and outstanding Series C Shares, 643,908 issued and outstanding Series D Shares, 252,500 issued and outstanding Convertible Preferred Shares, and 893,462 issued and outstanding Series B Shares. In connection with the Exchange Agreements, holders of 59% of our Series B Shares and holders of 80% of our Series D Shares acted by written consent to amend the terms of the Certificates of Designations applicable to the Series B Shares and Series D Shares to provide for such shares to be redeemed for a combination of cash and shares of our Common Stock on the same terms as the Exchange Agreements as set forth in the table above.
The SBA Exchange Agreement
The United States Small Business Administration ("
SBA
") owned 2,084,167 shares of our Common Stock, 202,500 Convertible Preferred Shares, 231,961 Series B Shares, and 138,000 Series D Shares. The SBA agreed to participate in the Recapitalization Transaction conditioned on us also repurchasing all shares of Common Stock currently held by the SBA and all shares of Common Stock issuable to it under the Recapitalization. As a result, we entered into a separate Exchange Agreement with the SBA (the "
SBA Exchange Agreement
") pursuant to which we paid $250,000 to the SBA in exchange for all Preferred Shares, all shares of Common Stock then owned by the SBA, and all shares of Common Stock issuable to it under the Recapitalization Transaction.
The Redemption and Repurchase
On June 16, 2016, we conducted closings under the Exchange Agreements and the SBA Exchange Agreement pursuant to which we issued an aggregate of 4,427,498 shares of Common Stock and made aggregate cash payment of $509,664. We commenced the second step of the Recapitalization Transaction by issuing notices of redemption to holders of the 208,971 remaining issued and outstanding Series B Shares and the 46,092 remaining issued and outstanding Series D Shares (the "
Redemption
"). The Redemption will be conducted on July 5, 2016 at which time we will issue 741,600 shares of Common Stock and make aggregate cash payment of $33,941 to the holders of these Preferred Shares. Finally, we have offered to enter into an Exchange Agreement with the holder of the remaining 2,500 outstanding Convertible Preferred Shares to repurchase such shares for the consideration set forth in the table above resulting in the issuance of an additional 4,875 shares of Common Stock and payment of $412.
Background and Effect of Recapitalization Transaction
Each series of the Preferred Shares included a "liquidation preference" which required payment to holders of our Preferred Shares prior and in preference to any payment to holders of our Common Stock in the event of a liquidation of the Company and in certain circumstances, upon a merger or sale of all or substantially all assets of the Company. Total liquidation preference for all Preferred Shares was $2,955,433 which would be paid prior to any payment to holders of our Common Stock. The amount and order of liquidation preference applicable to each series of the Preferred Shares is set forth below:
First:         Series C Shares $1.00 per share; $80,000 aggregate
Second:    Series B Shares $1.00 per share; $1,102,433 aggregate
Third:       Convertible Preferred Shares $1.00 per share; $255,000 aggregate
Fourth:     Series D Shares $2.20 per share; $1,518,000 aggregate
After closing the Recapitalization Transaction, including the Redemption and repurchase described above, we will have issued 5,173,973 shares of Common Stock, made cash payments of $544,017, repurchased 2,084,167 issued and outstanding shares of Common Stock from the SBA, and eliminated $2,955,433 of aggregate liquidation preferences applicable to our previously outstanding Preferred Shares. This will result in the net issuance of 3,089,806 additional shares of Common Stock.
The foregoing securities were issued in a private placement transaction to a limited number of existing stockholders who are accredited investors pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act if 1933, as amended, without engaging in any advertising or general solicitation of any kind.
Interest of our Directors, Executive Officers and Greater than 5% Stockholders
Thomas Meaney, our President, Chief Executive Officer and a Director of the Company, owned 50,000 Convertible Preferred Shares, 649,925 Series B Shares, 5,000 Series C Shares, and 138,000 Series D Shares. The SBA beneficially owned 9.1% of our issued and outstanding shares of Common Stock. In light of these interests, our Board of Directors appointed a Corporate Administration Committee (the "
Committee
") which consisted of Tom Schaffnit (Chair), Paul Casner and Thomas Lynch, none of whom have any economic or other interest in the Recapitalization Transaction. The Committee negotiated the terms of the Recapitalization Transaction with the holders of our Series D Shares, the SBA, and Mr. Meaney.
Item 5.03     Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
The information provided in Item 3.02 is hereby incorporated by reference.
Item 9.01     Financial Statements and Exhibits
(d) Exhibits
Exhibit No.
Description
3.1
Certificate of Amendment to The Certificate of Designations of Series B Preferred Stock of Mikros Systems Corporation
3.2
Certificate of Amendment to Certificate of Designations of Series D Preferred Stock of Mikros Systems Corporation
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.
MIKROS SYSTEMS CORPORATION
Dated: June 17, 2016
/s/ Thomas J. Meaney
Thomas J. Meaney
President and Chief Financial Officer