KARX 8-K
Karbon-X Corp. (KARX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
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 30, 2022 (
Karbon-X Corp. |
(Exact Name of Registrant as Specified in its Charter) |
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(State or Other Jurisdiction of Incorporation) |
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(Address of Principal Executive Offices) |
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Registrant’s Telephone Number, Including Area Code: (
Cocoluv, Inc., 1390 Main Street, Suite 20, San Francisco, CA 08204
(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
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
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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
On February 21, 2022 Karbon-X Corp, formerly known as Cocoluv, Inc., a Nevada Corporation (“Karbon-X”) entered into a Reorganization and Stock Purchase Agreement (the “Reorganization Agreement”) to acquire 100% of the issued and outstanding equity of Karbon-X Project, Inc., a British Columbia company (“Karbon-X Project”). Effective March 21, 2022, the parties closed the Reorganization Agreement. As part of the transaction, the majority shareholder of Karbon-X delivered 64,897,000 shares of common stock to shareholders of Karbon-X Project and certain other designees.
Item 2.01 Completion of Acquisition or Disposition of Assets
Pursuant to the Reorganization Agreement, effective on March 21, 2022, Karbon-X acquired 100% of the issued and outstanding equity of Karbon-X Project from the shareholders of Karbon-X Project. The business of Karbon-X Project is described in Item 8.01 Other Events, below.
Item 5.01 Changes in Control of Registrant
Pursuant to the Reorganization Agreement, the majority shareholder of Karbon-X delivered 64,897,000 shares of common stock, representing approximately 99% of the outstanding equity of Karbon-X to the previous shareholders of Karbon-X Project and other designees, resulting in a change of control of the Registrant.
Also as part of the transaction, the then director of Karbon-X Corp. elected Chad Clovis as Chief Executive Officer, President and Director, and Marita Dautel as Vice President and Director. The identity and percentage ownership of the controlling shareholders, officers and directors is set forth in Item 8.01 Other Events, below.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year End
Name Change
As part of the Reorganization Agreement, pursuant to an amendment filed with the Nevada Secretary of State on March 21, 2022 the name of the Company was changed from Cocoluv, Inc. to Karbon-X Corp.
Item 8.01 Other Events
As a result of the Reorganization Agreement, Karbon-X Corp. has altered its primary operation. The new primary business of the company is as follows:
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1. Business of the Company
Karbon-X Corp (or “Karbon-X” or “the Company”) is a public Nevada corporation that offers investors exposure to VERRA Certified carbon credits which are a key instrument used by both individuals and corporations to achieve their carbon neutral and net-zero carbon goals. The company is environmental and social governance (ESG) principled and focuses on partnering with high-quality projects and/or companies that generate or are actively involved in the voluntary carbon credit market.
The Company intends to invest capital into projects that have proven C02 reduction potential and that may not have been otherwise developed. The majority of these projects have significant social and economic benefits in addition to their carbon reduction or removal potential.
Karbon-X Corp is focused on customized transactional options for corporations to offset their carbon footprint and provides scalable access to the Verified Emissions Reduction markets. Karbon-X is changing the marketing framework of traditional carbon marketing by engaging with the public in order to fund multiple forms of technology based greenhouse gas reduction builds.
Carbon Credit Generation
Karbon-X Corp purchases verified carbon credits from numerous vendors and then resells to both industry and the general public. The Company has already begun funding projects in order to generate Karbon-X Corp carbon credits of its own. Once verified these projects will generate carbon credits that will be sold on its proprietary APP platform.
Recent Developments
Subsequent to March 31, 2022 and through June 1, 2022, Karbon-X Corp. completed a private placement pursuant to Rule 506(c) of the Securities Exchange Act of 1934, as amended. In that private placement the company sold 3,820,000 units at $0.25 per unit for total gross proceeds of $955,000. Each unit consisted of one share of common stock and one warrant to purchase a share of common stock for $0.75 per share for a period of two years.
In June 2022 the Company made two payments amounting to approximately $232,654 to a third-party app development company.
On April 26, 2022 the company signed a letter of intent with Silversmith Power and Light Company to explore the Silversmith Power and Light hydroelectric systems potential for generating carbon credits.
On May 6, 2022 the Company signed a lease agreement to rent office space for a one-year term beginning June 1, 2022 at a base rent of $1,627.50 per month.
On May 17, 2022 the company signed a letter of intent with Siviculture Systems Corp and 4Ever Forest Foundation of 512-55 Harbour Square Toronto ON to enter into a partnership.
On May 19, 2022 the company paid $70,000 to Silviculture Systems Corp to plant 20,000 trees in 2022.
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On June 22, 2022 the company signed a letter of intent with Heimdal Inc from Kailua-Kona, Hawaii to obtain 50% equity interest in all pending and/or future ocean-assisted carbon capture plants of Heimdal.
Historical Company Information
Karbon-X was incorporated in the State of Nevada on September 31, 2017 under the name Cocoluv, Inc. The articles provided for 200,000,000 authorized shares. At that time Reymund Guillermo was appointed as sole officer and director. On June 9, 2020 the Corporation filed a Certificate of Amendment with the State of Nevada effectuating a 50 for 1 forward stock split. On March 1, 2022, a change of control occurred when Mr. Guillermo resigned as director and all executive officer positions with the Company. Concurrent with Mr. Guillermo’s resignation, Mr. Chad Clovis was appointed as CEO, Director and President, and Ms. Marita Dautel was appointed as Vice President and Director.
On February 21, 2022 Karbon-X Corp, formerly known as Cocoluv, Inc., a Nevada Corporation (“Karbon-X”) entered into a Reorganization and Stock Purchase Agreement (the “Reorganization Agreement”) to acquire 100% of the issued and outstanding equity of Karbon-X Project, Inc., a British Columbia company (“Karbon-X Project”). Effective March 21, 2022, the parties closed the Reorganization Agreement. As part of the transaction, the majority shareholder of Karbon-X delivered 64,897,000 shares of common stock to shareholders of Karbon-X Project and certain other designees.
The Company’s principal office is located at 312 Doherty Drive, Quesnel, British Columbia, Canada V2J 1B5. Our telephone number is (844) 462-3637. The Company email is [email protected].
Competition
Many of our competitors have greater resources that may enable them to compete more effectively than us in the carbon credit industry.
The industry in which we operate is subject to intense and increasing competition. Some of our competitors have a longer operating history and greater capital resources and facilities, which may enable them to compete more effectively in this market. We expect to face additional competition from existing licensees and new market entrants, who are not yet active in the industry. If a significant number of competitors develop, we may experience increased competition for market share and may experience downward pricing pressure on our products as new entrants increase production. Such competition may cause us to encounter difficulties in generating revenues and market share, and in positioning our products in the market. If we are unable to successfully compete with existing companies and new entrants to the market, our lack of competitive advantage will have a negative effect on our business and financial condition.
We have identified many of our key competitors including the following:
Indigo Carbon
As the name most recognized name in the farming community, Indigo Carbon has an impressive list of well known corporate buyers like The North Face, Blue Bottle Coffee, and JP Morgan Chase. While Indigo is touted as a leader in the emerging industry, it may not be the best option for all. Indigo carbon has a proprietary software platform that allows farmers to easily input data from enrolled fields. After enrolling, farmers have access to Indigo’s agronomists and support teams to help implement changes and answer questions. Farmers only get paid for adopting new practices (ie. cover cropping, no-till, reduced N fertilizer, etc.), so if a farmer has been cover cropping for years, they are unlikely to be eligible. Right now they only service specific states (Arkansas, Colorado, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, and Texas).
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Nori
Nori is a blockchain-enabled company whose sole mission is to be a leading carbon marketplace. Unique to the carbon-removal industry, they are powered by cryptocurrency. Through this pioneering approach, they hope to create efficient and transparent carbon removal transactions. Companies can purchase NORI tokens (whose price depends on the market price of a carbon removal credit at time of purchase). Once it has a NORI token, the company can exchange it for an NRT (or Nori Removal Token). Farmers create NRTs when they sequester 1 ton of CO2. That NRT translates into a NORI token which is priced at market value and can be sold.
TruCarbon by TruTerra
TruTerra is a subsidiary of Land O’Lakes – the world’s largest farmer owned cooperative. The current state of the program is only available to farmers with data from 2016-2020. They have a tool called Truterra Insights Engine that allows farmers to aggregate data from the past five years in a format best suited to enroll in a carbon program. Enrollment is contingent upon committing to a 20 year reporting period using the Truterra Insights Engine (carbon reporting contracts are similar to conservation easements, meaning that they can be transferred in the case of transfer of property).
Bayer Carbon Initiative
Bayer’s recently announced Carbon Initiative is still in its beginning phases with very little public detail. That said, they (like many of the other carbon credit companies on this list), will only pay farmers for adopting new cover crop or no-till/strip till practices. Bayer is a hugely influential food and agriculture company in its own right, so they have the resources and expertise to roll out a strong program after this pilot season.
Nutrien Ag
Nutrien’s core businesses are creating seeds, fertilizers, herbicides, and software to optimize farm performance. In November 2020 they announced their involvement in the carbon marketplace. Nutrien has a deep bench of agronomists on staff to provide guidance for newly enrolled farmers, so entering the market may have additional benefits for farmers looking for guidance on how best to sequester carbon. As a global retailer they have plenty of connections to influential companies who might be interested in purchasing carbon credits once the program is officially launched.
Carbon Streaming Corp
Under stream agreements, Carbon Streaming Corp. makes upfront and ongoing delivery payments to project developers for future carbon credits. This financing structure creates carbon credit projects that reduce emissions in a sustainable manner. Our streams and investments then provide us with a diversified portfolio of carbon credits with exposure to potential rising carbon prices.
Base Carbon
Base Carbon partners with corporations, sovereign entities, academic institutions and carbon reduction project developers to produce and commercialize verified carbon credits. Base Carbon differentiates itself through sourcing and underwriting and financing the maturation of nature and technology based carbon reduction credit projects. Base Carbon seeks to simplify the carbon credit economy and become a financier within the voluntary carbon markets.
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Climeworks
Climeworks develops, builds and operates direct air capture machines. Climeworks captures carbon dioxide directly from the air; removing CO₂ emissions. The air-captured carbon dioxide can either be recycled and used as a raw material, or completely removed from the air by safely storing it. Climework’s machines consist of modular CO₂ collectors that can be stacked to build machines of any size.
Sales
The Company’s two main revenue streams include industrial sales and subscription-based sales through a mobile APP.
Industrial Sales
Karbon-X Corp primarily operates in the voluntary carbon offset market. The Company sells carbon offsets to mining, forestry, civic earthworks, transportation and oil & gas servicing companies based on their total fossil fuel consumption for individual projects. This simple platform offers companies a way to reach their carbon neutrality goals while supporting C02 reducing projects for years to come.
When companies purchase carbon offsets from Karbon-X Corp directly to offset their fossil fuel consumption the credits are retired in the name of the customer which provides transparency.
Subscription Based Sales
The general public will be able purchase carbon offsets from a mobile APP that is subscription based, with multiple levels of investment for every budget. Each subscription will support C02 reducing projects such as direct air capture, green hydroelectric energy production, or reforestation and will reduce greenhouse gas emissions with provable, verifiable carbon credits.
Karbon-X Corp allows the general public to offset their greenhouse gas emissions from daily life with an subscriber-based APP which is shareable on social media.
Totally Covered |
| Exceptional Reduction |
| Doing Your Part |
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Permanently offset 400 kg of CO2 /month, 4800 kg of CO2/,year |
| Permanently offset 300kg of CO2 /month, 3600KG of CO2/ year. |
| Permanently offset 200kg of CO2 /month, 2400kg of CO2 /year |
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200 kg per year is 60 days of central heating in a home! |
| 600kg per year is 1,460 miles/2,350km driving in a car! |
| 360 kg per year is 13 month energy used for one light bulb! |
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$24.99/month |
| $19.99/month |
| $14.99/month |
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$249.99/year |
| $199.99/year |
| $149.99/Year |
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Marketing
The Company has secured the services of a marketing firm to assist in defining the brand platform as well as to provide a strategic marketing plan to bring the APP to market. This development has been progressing according to the schedule outlined in the initial terms of service agreement and the visual identity is scheduled to be complete by the end of July 2022.
APP Development
The Company secured the services of an APP development company in February of 2022 to build the mobile APP and website which will be the Companies’ primary avenue to attract and retain customers through subscription based sales.
Employees
As of the date of this filing on Form 8-K, the Company has three employees. (See “Executive Compensation”). The Company believes that its relations with its employees are good.
Legal Proceedings
As of the date hereof the Company is not party to any material legal proceedings and is not aware of any material threatened litigation.
General
Karbon-X Corp (or “Karbon-X” or “the Company”) is a public Nevada corporation focused on customized transactional options, tailored insights, and scalable access to the Verified Emissions Reduction markets. Karbon-X is changing the marketing framework of traditional carbon marketing by engaging the public vs industry with multiple forms of technology based greenhouse gas reduction builds.
Karbon-X will allow the public to purchase carbon offsets from an APP that is subscription based, with multiple levels of investment for every budget. Each subscription will support clean energy projects such as solar or wind power, methane capture, or reforestation and will reduce greenhouse gas emissions with provable, verifiable carbon credits.
Subscription Application
The Karbon-X subscription app allows subscriber based sales allowing the general public to offset their greenhouse gas emissions from daily life in an easy, shareable on social media APP and to support clean energy
Totally Covered |
| Exceptional Reduction |
| Doing Your Part |
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Permanently offset 400 kg of CO2 /month, 4800 kg of CO2/,year |
| Permanently offset 300kg of CO2 /month, 3600KG of CO2/ year. |
| Permanently offset 200kg of CO2 /month, 2400kg of CO2 /year |
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200 kg per year is 60 days of central heating in a home! |
| 600kg per year is 1,460 miles/2,350km driving in a car! |
| 360 kg per year is 13 month energy used for one light bulb! |
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$24.99/month |
| $19.99/month |
| $14.99/month |
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$249.99/year |
| $199.99/year |
| $149.99/Year |
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Marketing will be social based, business to consumer towards building the brand, contact-based influencer, project donation for exposure.
References in this section to “Karbon-X” or the “Company” also include references to the operations of our subsidiary Karbon-X Project, Inc. which occurred prior to closing of the reorganization agreement.
Recent Developments
Subsequent to March 31, 2022 and through June 1, 2022, Karbon-X Corp. completed a private placement pursuant to Rule 506(c) of the Securities Exchange Act of 1934, as amended. In that private placement the company sold 3,820,000 units at $0.25 per unit for total gross proceeds of $955,000. Each unit consisted of one share of common stock and one warrant to purchase a share of common stock for $0.75 per share for a period of two years.
Subsequent to March 31, 2022 and through the date that these financial statements were available to be issued, the Company made two payments amounting to approximately $232,654 to a third-party app development company.
On May 19, 2022, the company paid $70,000 to plant 20,000 trees in 2022.
On May 6, 2022, the Company signed a lease agreement to rent office space for a one-year term beginning June 1, 2022 at a base rent of $1,627.50 per month.
On June 22nd 2022 Karbon X Corp entered into an LOI with Heimdal to obtain 50% equity share in future plant development.
On April 26 2022 Karbon X Corp entered into an LOI with Silversmith Power and Light Company in order to:
May 16 2022, Forever Forever Forest LOI signed.
Historical Company Information
Karbon-X was incorporated in the State of Nevada on September 31, 2017 under the name Cocoluv, Inc. The articles provided for 200,000,000 authorized shares. At that time Reymund Guillermo was appointed as sole officer and director. On June 9, 2020 the Corporation filed a Certificate of Amendment with the State of Nevada effectuating a 50 for 1 forward stock split. On March 1, 2022, a change of control occurred when Mr. Guillermo resigned as director and all executive officer positions with the Company. Concurrent with Mr. Guillermo’s resignation, Mr. Chad Clovis was appointed as CEO, Director and President, and Ms. Marita Dautel was appointed as Vice President and Director.
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On February 21, 2022 Karbon-X Corp, formerly known as Cocoluv, Inc., a Nevada Corporation (“Karbon-X”) entered into a Reorganization and Stock Purchase Agreement (the “Reorganization Agreement”) to acquire 100% of the issued and outstanding equity of Karbon-X Project, Inc., a British Columbia company (“Karbon-X Project”). Effective March 21, 2022, the parties closed the Reorganization Agreement. As part of the transaction, the majority shareholder of Karbon-X delivered 64,897,000 shares of common stock to shareholders of Karbon-X Project and certain other designees.
The Company’s principal office is located at 312 Doherty Drive, Quesnel, British Columbia, Canada V2J 1B5. Our telephone number is (778) 256-5730. The Company email is [email protected].
Risk Factors
The following “risk factors” contain important information about us and our business and should be read in their entirety. Additional risks and uncertainties not known to us or that we now believe to be not material could also impair our business. If any of the following risks actually occur, our business, results of operations and financial condition could suffer significantly. As a result, the market price of our common stock could decline and you could lose all of your investment. In this Section, the terms the “Company,” “we”, “our” and “us” refer to Karbon-X Corp. as well as its subsidiary Karbon-X Project, Inc.
Risks Related to Our Operations
We will incur losses and there is no guarantee that we will ever become profitable.
We are a newly formed company. There is no guarantee that we will ever become profitable. The costs for research, product development, along with marketing and selling expenses, and the general and administrative expenses, will be principal causes of our costs and/or potential losses. We may never become profitable and if we do not become profitable your investment could be harmed or lost completely.
We may need additional capital in the future in order to continue our operations.
We obtained approximately $955,000 in our recent private placements which we are using for development and operations. However, if in the future we do not turn profitable or generate cash from operations and additional capital is needed to support operations, economic and market conditions may make it difficult or impossible to raise additional funds through debt or equity financings. If funds are not sufficient to support operations, we may need to pursue a financing or reduce expenditures to meet our cash requirements. If we do obtain such financing, we cannot assure that the amount or the terms of such financing will be as attractive as we may desire, and your equity interest in the company may be diluted considerably. If we are unable to obtain such financing when needed, or if the amount of such financing is not sufficient, it may be necessary for us to take significant cost saving measures or generate funding in ways that may negatively affect our business in the future. To reduce expenses, we may be forced to make personnel reductions or curtail or discontinue development programs. To generate funds, it may be necessary to monetize future royalty streams, sell intellectual property, divest of technology platforms or liquidate assets. However, there is no assurance that, if required, we will be able to generate sufficient funds or reduce spending to provide the required liquidity. Long-term capital requirements will depend on numerous factors, including, but not limited to, the status of collaborative arrangements, the progress of research and development programs and the receipt of revenues from sales of products. Our ability to achieve and/or sustain profitable operations depends on a number of factors, many of which are beyond our control.
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We will launch our products in 2022 and as a company, we have limited sales and marketing experience.
We will launch marketing for our products in 2022, and although we have hired highly qualified personnel with specialized expertise, as a company, we have limited experience commercializing products on our own. In order to commercialize the app and our carbon credits business, we have to build our sales, marketing, distribution, managerial and other non-technical capabilities and make arrangements with third parties to perform these services when needed. We may have to hire sales representatives and district managers to fill sales territories. To the extent we are relying on third parties to commercialize our business, we may receive less revenues or incur more expenses than if we had commercialized the products ourselves. In addition, we may have limited control over the sales efforts of any third parties involved in our commercialization efforts. If we are unable to successfully implement our commercial plans and drive adoption by patients and physicians of our products through our sales, marketing and commercialization efforts, or if our partners fail to successfully commercialize our products, then we may not be able to generate sustainable revenues from product sales which will have a material adverse effect on our business and future product opportunities. Similarly, we may not be successful in establishing the necessary commercial infrastructure, including sales representatives, wholesale distributors, legal and regulatory affairs teams. The establishment and development of commercialization capabilities to market our products has been and will continue to be expensive and time-consuming. As we continue to develop these capabilities, we will have to compete with other companies to recruit, hire, train and retain sales and marketing personnel. If we have underestimated the necessary sales and marketing capabilities or have not established the necessary infrastructure to support successful commercialization, or if our efforts to do so take more time and expense than anticipated, our ability to market and sell our products may be adversely affected.
Commercialization of our products will require significant resources, and if we do not achieve the sales expected, we may lose the substantial investment made in our products.
We are continuing to make substantial expenditures commercializing our products. We are devoting substantial resources to building our research and development. We have and expect to continue to devote substantial resources to establish and maintain a marketing capability for our products. If we are unsuccessful in our commercialization efforts and do not achieve the sales levels of our products that we expect, we may be unable to recover the large investment we have made in research, development, and marketing efforts, and our business and financial condition could be materially adversely affected.
We will rely on third parties to perform many necessary services for our products, including services related to the distribution and invoicing.
We intend to retain and partner with third-party service providers to perform a variety of functions related to the sale and distribution of our products, key aspects of which are out of our direct control. If these third-party service providers fail to comply with applicable laws and regulations, fail to meet expected deadlines, or otherwise do not carry out their contractual duties to us, or encounter physical damage or natural disaster at their facilities, our ability to deliver product to meet commercial demand would be significantly impaired. In addition, we may utilize third parties to perform various other services for us relating to sample accountability and regulatory monitoring, including adverse event reporting, safety database management and other product maintenance services. If the quality or accuracy of the data maintained by these service providers is insufficient, our ability to continue to market our products could be jeopardized or we could be subject to regulatory sanctions. We do not currently have the internal capacity to perform these important commercial functions, and we may not be able to maintain commercial arrangements for these services on reasonable terms.
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The failure of any of our third-party distributors to market, distribute and sell our products as planned may result in us not meeting revenue and profit targets.
If one or more of these distributors fail to pursue the development or marketing of the products as planned, our revenues and profits may not reach expectations or may decline. The success of the marketing organizations of our partners, as well as the level of priority assigned to the marketing of the products by these entities, which may differ from our priorities, may determine the success of the product sales. Competition in this market could also force us to reduce the prices of our products below currently planned levels, which could adversely affect our revenues and future profitability.
If we cannot develop and market our products as rapidly or cost-effectively as our competitors, we may never be able to achieve profitable operations.
Our success depends, in part, upon maintaining a competitive position in the development of products. If we cannot maintain competitive products and technologies, our current and potential distribution partners may choose to adopt the products of our competitors. Our competitors may develop products that are more effective or are less costly than our products.
Some of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, and marketing and distribution than we do.
Others may bring infringement claims against us, which could be time-consuming and expensive to defend.
Third parties may claim that the use or sale of our technologies infringe their patent rights. As with any litigation where claims may be asserted, we may have to seek licenses, defend infringement actions or challenge the validity of those patents in the patent office or the courts. If these are not resolved favorably, we may not be able to continue to develop and commercialize our product candidates. Even if we were able to obtain rights to a third party’s intellectual property, these rights may be non-exclusive, thereby giving our competitors potential access to the same intellectual property. If we are found liable for infringement or are not able to have these patents declared invalid or unenforceable, we may be liable for significant monetary damages, encounter significant delays in bringing products to market or be precluded from participating in the development, use or sale of products covered by patents of others. Any litigation could be costly and time-consuming and could divert the attention of our management and key personnel from our business operations. We may not have identified, or be able to identify in the future, U.S. or foreign patents that pose a risk of potential infringement claims. Ultimately, we may be unable to commercialize some of our product candidates as a result of patent infringement claims, which could potentially harm our business.
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Our business could be harmed if we fail to comply with regulatory requirements and, as a result, are subject to sanctions.
If we, or companies with whom we are developing technologies or products on our behalf, fail to comply with applicable regulatory requirements, the companies, and we, may be subject to sanctions, including the following:
| • | warning letters; |
| • | fines; |
| • | injunctions; |
| • | total or partial suspension of production; |
| • | criminal prosecutions. |
Risks Related to our Common Stock
Future conversions or exercises by holders of options could dilute our common stock.
Purchasers of our common stock will experience dilution of their investment upon exercise of the employee stock option and other stock options or issued common shares.
Sales of our common stock by our officers and directors may lower the market price of our common stock.
Our officers and directors shall beneficially own a significant aggregate of shares of our outstanding common stock. If our officers and directors, or other stockholders, sell a substantial amount of our common stock, it could cause the market price of our common stock to decrease.
We do not expect to pay dividends in the foreseeable future.
We intend to retain any earnings in the foreseeable future for our continued growth and, thus, do not expect to declare or pay any cash dividends in the foreseeable future.
Anti-takeover effects of certain certificate of incorporation and bylaw provisions could discourage, delay or prevent a change in control.
Our certificate of incorporation and bylaws could discourage, delay or prevent persons from acquiring or attempting to acquire us. Our certificate of incorporation authorizes our board of directors, without action of our stockholders, to designate and issue preferred stock in one or more series, with such rights, preferences and privileges as the board of directors shall determine. In addition, our bylaws grant our board of directors the authority to adopt, amend or repeal all or any of our bylaws, subject to the power of the stockholders to change or repeal the bylaws. In addition, our bylaws limit who may call meetings of our stockholders.
Dependence upon Management and Key Personnel
The Company is, and will be, heavily dependent on the skill, acumen and services of the management of the Company. The loss of the services of this individuals or any other key individuals, including specifically Chad Clovis, and certain others, for any substantial length of time would materially and adversely affect the Company’s results of operation and financial position. (See “Management”).
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2. Management’s Discussion and Analysis and Results of Operations
As a result of the Reorganization Agreement and the change in business and operations of the Company, a discussion of the past financial results of the Company, formally known as Cocoluv, Inc., is not pertinent, and, under generally accepted accounting principles in the United States the historical financial results of Karbon-X Project, the acquirer for accounting purposes, prior to the Reorganization Agreement are considered the historical financial results of the Company.
The following discussion highlights the Company’s results of operations and the principal factors that have affected its consolidated financial condition as well as its liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the Company’s consolidated financial condition and results of operations presented herein. The following discussion and analysis are based on Karbon-X’s audited and unaudited financial statements contained in this Current Report, which have been prepared in accordance with generally accepted accounting principles in the United States. You should read the discussion and analysis together with such financial statements and the related notes thereto.
Forward-Looking Statements
The following Management’s Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this Report on Form 8-K. The Management’s Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Report on Form 8-K. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Risks Factors” in our various filings with the Securities and Exchange Commission. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report.
The following discussion highlights the Company’s results of operations and the principal factors that have affected its consolidated financial condition as well as its liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the Company’s consolidated financial condition and results of operations presented herein. The following discussion and analysis are based upon Karbon-X Corp’s unaudited financial statements contained in this Current Report on Form 10-Q, which have been prepared in accordance with generally accepted accounting principles in the United States. You should read the discussion and analysis together with such financial statements and the related notes thereto.
Overview
Cocoluv Inc. was incorporated in the State of Nevada on September 13, 2017 and established a fiscal year end of May 31.
| 14 |
| Table of Contents |
On February 21, 2022, pursuant to the terms of a Share Exchange Agreement, the Company acquired all of the issued and outstanding shares of common stock of Karbon-X Project Inc. (“Karbon-X”), and Karbon-X became the wholly owned subsidiary of the Company in a reverse merger (the “Reverse Acquisition”). Pursuant to the Reverse Acquisition, all of the issued and outstanding shares of Karbon-X common stock were converted, at an exchange ratio of 20,000-for-1, into an aggregate of 20,000,000 shares of the Company’s common stock, resulting in Karbon-X becoming a wholly owned subsidiary of the Company and all debt owed to the related party of Cocoluv, Inc. was forgiven. The accompanying financial statements’ share information has been retroactively adjusted to reflect the exchange ratio in the Reverse Acquisition.
Karbon-X provides customized transactional options, tailored insights, and scalable access to the Verified Emissions Reduction markets.
Karbon-X changes the marketing framework of traditional carbon marketing by engaging the public vs industry with multiple forms of technology based greenhouse gas reduction builds. Karbon-X will allow the public to purchase carbon offsets from an APP that is subscription based, with multiple levels of investment for every budget. Each subscription will support clean energy projects such as solar or wind power, methane capture, or reforestation and will reduce greenhouse gas emissions with provable, verifiable carbon credits.
Effects of COVID-19
In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and the related adverse public health developments have adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. Management has determined that there has been no significant impact to the Company’s operations, however management continues to monitor the situation.
Critical Accounting Policies
The unaudited consolidated financial statements include the accounts of the Company and its subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.
The accompanying audited and unaudited financial statements have been prepared in accordance with generally accepted accounting principles for financial information. Operating results for the nine-months ended February 28, 2022 are not necessarily indicative of the results that may be expected for the year ending May 31, 2022.
Use of Estimates and Assumptions
Preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Accordingly, actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
| 15 |
| Table of Contents |
Fair Value of Financial Instruments
The carrying amount of the Company’s financial assets and liabilities approximates their fair values due to their short-term maturities.
Earnings per Common Share
The basic loss per share is calculated by dividing the Company’s net loss available to common shareholders by the weighted average number of common shares during the year. The diluted loss per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted loss per share is the same as basic loss per share due to the lack of dilutive items in the Company. As of February 28, 2022, there were no common stock equivalents outstanding.
Reverse Acquisition
On February 21, 2022, pursuant to the terms of a Share Exchange Agreement, the Company acquired all of the issued and outstanding shares of common stock of Karbon-X Project Inc. (“Karbon-X”), and Karbon-X became the wholly owned subsidiary of the Company in a reverse merger (the “Reverse Acquisition”). Pursuant to the Reverse Acquisition, all of the issued and outstanding shares of Karbon-X common stock were converted, at an exchange ratio of 20,000-for-1, into an aggregate of 20,000,000 shares of the Company’s common stock, resulting in Karbon-X becoming a wholly owned subsidiary of the Company and all debt owed to the related party of Cocoluv, Inc. was forgiven. The accompanying financial statements’ share information has been retroactively adjusted to reflect the exchange ratio in the Reverse Acquisition.
Financial Condition and Results of Operations
To date the Company has generated no revenues from its business operations and has incurred operating losses since inception of $265. As of February 28, 2022, the Company has a working capital deficit of $125. The Company will require additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company intends to continue to fund its business by way of private placements and advances from related parties as may be required. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
Results of Operations
Comparison of Unaudited Results for the Three Months Ended February 28, 2022 compared to the Three Months Ended February 28, 2021
Sales and Revenue
For the three-month periods ended February 28, 2022 and February 28, 2021 we had no revenue. We are just at the beginning of our operations which we expect to improve during the current fiscal year.
Operating Expenses
Operating expenses for the three-month period ended February 28, 2022 totaled $1,865 compared to $12,299 for the three month period ended February 28, 2021. Operating expenses for the three-month period ended February 28, 2022 were negligible. Operating expenses for the three-month period ended February 28, 2021 were office and general expenses.
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| Table of Contents |
Net Loss
Net loss from operations after income taxes was $1,865 during the three months ended February 28, 2022 compared to $12,299 during the three-month period ended February 28, 2021. Again this was as a result of office and general expenses in 2021.
Comparison of Unaudited Results for the Nine Months Ended February 28, 2022 compared to the Nine Months Ended February 28, 2021
Sales and Revenue
For the nine-month periods ended February 28, 2022 and February 28, 2021 we had no revenue. We are just at the beginning of our operations which we expect to improve during the current fiscal year.
Operating Expenses
Operating expenses for the nine-month period ended February 28, 2022 totaled $34,871 compared to $28,062 for the nine month period ended February 28, 2021. Operating expenses for the nine-month period ended February 28, 2022 is a result of an adjustment to reconcile net loss to net cash. Operating expenses for the nine-month period ended February 28, 2021 was a result of office and general expenses primarily consisting of professional fees.
Net Loss
Net loss from operations after income taxes was $34,781 during the nine months ended February 28, 2022 compared to $28,062 during the three-month period ended February 28, 2021. The loss for 2022 was as a result of an accounting adjustment and the loss for 2021 was office and general expenses.
Liquidity and Capital Resources
The following table sets forth the major components of our statements and consolidated statements of cash flows for the periods presented.
|
| Three Months Ended February 28, 2022 |
| |
Cash used in operating activities |
| $ | 143 |
|
Cash from financing activities |
| $ | 0 |
|
Cash from (used in) investing activities |
| $ | 0 |
|
Change in cash during the period |
| $ | 141 |
|
Effect of exchange rate change |
| $ | (2 | ) |
Cash, beginning of period |
| $ | 0 |
|
Cash, end of period |
| $ | 141 |
|
As of February 28, 2022, the Company had $141 in current assets.
To date, the Company has financed its operations through equity sales.
| 17 |
| Table of Contents |
On March 7, 2022 the Company commenced a private placement pursuant to Rule 506(c) promulgated under Regulation D of the Securities Exchange Act of 1934, as amended. The private placement is ongoing. The private placement sought to raise $1,000,000 through the sale of Units at $0.25 per Unit, each consisting of one share of common stock and one warrant to purchase one share of common stock for two years at an exercise price of $0.50 per share. As of June 1, 2022 we have obtained $955,000 in gross proceeds from this offering.
Future Financing
In connection with its proposed business plan and possible acquisitions, in addition to the possible proceeds from this offering the Company will be required to complete substantial and significant additional capital formation. Such formation could be through additional equity offerings, debt, bank financings or a combination of any source of financing. There can be no assurance that the Company will be successful in completion of such financings.
Plan of Operations
As noted above, the continuation of our current plan of operations requires us to raise significant additional capital. If we are successful in raising capital through the sale of common shares, we believe that we will have sufficient cash resources to fund our plan of operations through 2022. If we are unable to do so, we may have to curtail and possibly cease some operations. We intend to use the net proceeds from the offering for research and development, operations, regulatory compliance, intellectual property, working capital and general corporate purposes.
We continually evaluate our plan of operations to determine the manner in which we can most effectively utilize our limited cash resources. The timing of completion of any aspect of our plan of operations is highly dependent upon the availability of cash to implement that aspect of the plan and other factors beyond our control. There is no assurance that we will successfully obtain the required capital or revenues, or, if obtained, that the amounts will be sufficient to fund our ongoing operations.
Capital Expenditures
As of February 28, 2022 we had no capital expenditures.
Commitments and Contractual Obligations
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Off-balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Going Concern
To date the Company has generated no revenues from its business operations and has incurred operating losses since inception of $265. As of February 28, 2022, the Company has a working capital deficit of $125. The Company will require additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company intends to continue to fund its business by way of private placements and advances from related parties as may be required. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
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| Table of Contents |
3. Financial Information
FORWARD LOOKING STATEMENTS: STATEMENTS ABOUT OUR FUTURE EXPECTATIONS ARE “FORWARD-LOOKING STATEMENTS” WITHIN THE MEANING OF APPLICABLE FEDERAL SECURITIES LAWS, AND ARE NOT GUARANTEES OF FUTURE PERFORMANCE. WHEN USED HEREIN, THE WORDS “MAY,” “WILL,” “SHOULD,” “ANTICIPATE,” “BELIEVE,” “APPEAR,” “INTEND,” “PLAN,” “EXPECT,” “ESTIMATE,” “APPROXIMATE,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INVOLVE RISKS AND UNCERTAINTIES INHERENT IN OUR BUSINESS, INCLUDING THOSE SET FORTH UNDER THE CAPTION “RISK FACTORS” IN THIS DISCLOSURE STATEMENT, AND ARE SUBJECT TO CHANGE AT ANY TIME. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS. WE UNDERTAKE NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENT.
Financial Statements
Financial Statements of Karbon-X, Inc. |
|
|
| F-2 | |
| F-4 | |
Statements of Operations from Inception to February 21, 2022 |
| F-5 |
Statements of Changes in Shareholders’ Equity from Inception to February 21, 2022 |
| F-6 |
Statements of Cash Flows from Inception to February 21, 2022 |
| F-7 |
| F-8 | |
Pro Forma Historical Financial Statements |
|
|
Unaudited Pro-Forma Consolidated Statement of Financial Position as at February 28, 2022 |
| F-11 |
Unaudited Pro-Forma Consolidated Statement of Loss for the Period Ended February 28, 2022 |
| F-12 |
| F-1 |
| Table of Contents |
MICHAEL GILLESPIE & ASSOCIATES, PLLC
CERTIFIED PUBLIC ACCOUNTANTS
10544 ALTON AVE NE
SEATTLE, WA 98125
206.353.5736
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors & Audit Committee:
Karbon-X Project Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Karbon-X Project Inc. as of February 21, 2022 and the related statements of operations, changes in stockholders’ (deficit)/equity and cash flows for the period from February 11, 2022 (inception) through February 21, 2022 and the related notes (collectively referred to as “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 21, 2022 and the results of its operations and its cash flows for the period from February 11, 2022 (inception) through February 21, 2022, in conformity with accounting principles generally accepted in the United States of America.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audits of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Going Concern
As described further in Note 1 to the financial statements, the Company has not established a revenue source and expects to incur additional losses in the future.
We determined the Company’s ability to continue as a going concern is a critical audit matter due to the estimation and uncertainty regarding the Company’s future cash flows and the risk of bias in management’s judgments and assumptions in estimating these cash flows.
Our audit procedures related to the Company’s assertion on its ability to continue as a going concern included the following, among others:
We reviewed the Company’s working capital and liquidity ratios and forecasted revenue, operating expenses, and uses and sources of cash used in management’s assessment of whether the Company has sufficient liquidity to fund operations for at least one year from the financial statement issuance date. This testing included inquiries with management, comparison of prior period forecasts to actual results, consideration of positive and negative evidence impacting management’s forecasts, the Company’s financing arrangements in place as of the report date, market and industry factors and consideration of the Company’s relationships with its financing partners.
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, although the Company has limited operations it has yet to attain profitability. This raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| F-2 |
| Table of Contents |
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.
/S/ MICHAEL GILLESPIE & ASSOCIATES, PLLC
We have served as the Company’s auditor since 2022.
Seattle, Washington
June 14, 2022
| F-3 |
| Table of Contents |
KARBON-X PROJECT INC.
Balance Sheet
As of February 21, 2021
(Audited)
|
| February 21, 2022 |
| |
ASSETS |
|
|
| |
Current assets |
|
|
| |
Cash and cash equivalents |
| $ | 8 |
|
Total current assets |
|
| 8 |
|
|
|
|
|
|
Total assets |
| $ | 8 |
|
|
|
|
|
|
LIABILITES AND SHAREHOLDERS’ EQUITY (DEFICIT) |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
| $ | - |
|
Total liabilities |
|
| - |
|
|
|
|
|
|
Shareholders’ equity (deficit) |
|
|
|
|
Common stock no par value Unlimited authorized Class B Common voting shares, no shares issued, or outstanding, as of February 21, 2022. |
|
| - |
|
Common stock no par value Unlimited authorized Class A Common voting shares 1,000 shares issued, and outstanding, as of February 21, 2022. |
|
| 8 |
|
Additional Paid-in capital |
|
| - |
|
Accumulated deficit |
|
| - |
|
Accumulated other comprehensive gain (loss) |
|
| - |
|
Total shareholders’ equity (deficit) |
|
| 8 |
|
Total liabilities and shareholders’ equity (deficit) |
| $ | 8 |
|
The accompanying notes are an integral part of these financial statements
| F-4 |
| Table of Contents |
KARBON-X PROJECT INC.
Statements of Operations
From February 11, 2022, (inception) through February 21, 2022
(Audited)
Operations |
| $ |
|
|
Total revenue |
|
| - |
|
Cost of revenue |
|
| - |
|
Gross profit |
|
| - |
|
|
|
|
|
|
Operating expenses |
|
| - |
|
|
|
|
|
|
Loss from Operations |
|
| - |
|
|
|
|
|
|
Other income (expenses) |
|
| - |
|
Federal income tax expense |
|
| - |
|
Net loss |
|
| - |
|
|
|
|
|
|
Other comprehensive loss |
|
|
|
|
Foreign currency translation gain (loss) |
|
| - |
|
Total comprehensive loss |
|
| - |
|
|
|
|
|
|
Earnings Per Share |
|
|
|
|
Weighted average shares outstanding |
|
| 1,000 |
|
Basic and fully diluted loss per share |
| $ | - |
|
The accompanying notes are an integral part of these financial statements
| F-5 |
| Table of Contents |
KARBON-X PROJECT INC.
Statements of Changes in Shareholders’ Equity
From February 11, 2022, (inception) through February 21, 2022
(Audited)
From Inception to February 21, 2022
|
| Common Stock |
|
| Additional |
|
|
|
| Accumulated other |
|
|
| |||||||||||
Description |
| Shares |
|
| Amount |
|
| Paid in Capital |
|
| Accumulated Deficit |
|
| Comprehensive gain (loss) |
|
| Total |
| ||||||
Capital Contribution |
|
| 1,000 |
|
| $ | 8 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 8 |
|
Net Income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Balance February 28, 2022 |
|
| 1,000 |
|
|
| 8 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 8 |
|
The accompanying notes are an integral part of these financial statements
| F-6 |
| Table of Contents |
KARBON-X PROJECT INC.
Statements of Cash Flow
From February 11, 2022, (inception) through February 21, 2022
(Audited)
Cash flows from operating activities |
|
|
| |
Net (loss) income |
| $ | - |
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts payable |
|
| - |
|
Cash used in operating activities |
|
| - |
|
|
|
|
|
|
Cash used in investing activities |
|
| - |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Capital contribution |
|
| 8 |
|
Cash used in financing activities |
|
| 8 |
|
|
|
|
|
|
Effect of translation changes on cash |
|
| - |
|
|
|
|
|
|
Change in cash and cash equivalents |
|
| 8 |
|
Cash, beginning of period |
|
| - |
|
Cash, end of period |
| $ | 8 |
|
|
|
|
|
|
Supplemental disclosures |
|
|
|
|
Cash paid for interest |
| $ | - |
|
Cash paid for income taxes |
|
| - |
|
The accompanying notes are an integral part of these financial statements
| F-7 |
| Table of Contents |
KARBON-X PROJECT INC.
Notes to Financial Statements
From February 11, 2022, (inception) through February 21, 2022
(Audited)
Note 1 – Nature of Operations and Basis of Presentation
Karbon-X Project Inc. was incorporated in British Columbia on February 11, 2022 and established a fiscal year end of May 31.
Going concern
To date the Company has generated no revenues from its business operations. As of February 28, 2022, the Company has a working capital of $8. The Company will require additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company intends to continue to fund its business by way of private placements and advances from related parties as may be required. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
Basis of Presentation
The financial statements present the balance sheet, statements of operations, stockholders’ equity and cash flows of the Company. These financial statements are presented in the United States dollar and have been prepared in accordance with accounting principles generally accepted in the United States.
Use of Estimates and Assumptions
Preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Accordingly, actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
Fair Value of Financial Instruments
The carrying amount of the Company’s financial assets and liabilities approximates their fair values due to their short-term maturities.
Foreign Currency Translation
The functional currency of the Company is the Canadian Dollar (“CAD”). For financial statement purposes, the reporting currency is the United States Dollar (“USD”).
For financial reporting purposes, the financial statements are translated into the Company’s reporting currency, USD. Asset, liability and equity accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using the average exchange rate prevailing during the reporting period.
| F-8 |
| Table of Contents |
Adjustments resulting from the translation, if any, are included in accumulated other comprehensive loss in stockholder’s equity (deficit).
Earnings per Common Share
The basic loss per share is calculated by dividing the Company’s net loss available to common shareholders by the weighted average number of common shares during the year. The diluted loss per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted loss per share is the same as basic loss per share due to the lack of dilutive items in the Company. As of February 21, 2022, there were no common stock equivalents outstanding.
Note 2 – Shareholders’ Equity
Class A Common Shares Voting Rights:
Each holder of Class A Common Voting Shares is entitled to 1 vote for each Class A Common Voting Share held at all meetings of Shareholders (and written actions in lieu of meetings), except meetings of other classes or series of shareholders. Each holder of Class A Common Voting Shares is entitled to receive notice of and to attend all meetings of Shareholders of the Corporation, except class meetings of other classes or series of shareholders.
In the event of any liquidation, dissolution, or winding-up of the Corporation, the holders of the Class A Common Voting Shares, subject to the rights of the holders of other classes of shares, are entitled to participate pro rata in the distribution of all remaining assets of the Corporation.
The holders of Class A Common Voting Shares are entitled, subject to the rights, restrictions, privileges and conditions attaching to any other class or series of shares of the Corporation, to receive a non-cumulative dividend if, as and when, and at any such rate, as declared by the Directors of the Corporation. The Directors of the Corporation may declare dividends on the Class A Common Voting Shares to the exclusion of other classes of shares.
As of February 21, 2022, there are 1,000 class A common shares issued and outstanding.
Class B Common Shares Voting Rights:
Each holder of Class B Common Non-Voting Shares shall not be entitled to receive notice of, attend, or vote at meetings of the shareholders, except as otherwise specifically provided for by the terms of the Business Corporations Act, SBC 2002, c 57.
In the event of any liquidation, dissolution, or winding-up of the Corporation, the holders of the Class B Common Non-Voting Shares, subject to the rights of the holders of other classes of shares, are entitled to participate pro rata in the distribution of all remaining assets of the Corporation.
The holders of Class B Common Non-Voting Shares are entitled, subject to the rights, restrictions, privileges and conditions attaching to any other class or series of shares of the Corporation, to receive a non-cumulative dividend if, as and when, and at any such rate, as declared by the Directors of the Corporation. The Directors of the Corporation may declare dividends on the Class B Common Non-Voting Shares to the exclusion of other classes of shares.
As of February 21, 2022, there are no class B common shares issued or outstanding.
| F-9 |
| Table of Contents |
Note 3 – Subsequent Events
The night of February 21, 2022, a purchase agreement was executed between Karbon-X Project Inc. and Cocoluv, Inc. for all the issued and outstanding shares of common stock of Karbon-X Project Inc. in exchange for 20,000,000 shares of Cocoluv, Inc. common stock.
Subsequent to March 31, 2022 and through June 1, 2022, Karbon-X Corp. completed a private placement pursuant to Rule 506(c) of the Securities Exchange Act of 1934, as amended. In that private placement the company sold 3,820,000 units at $0.25 per unit for total gross proceeds of $955,000. Each unit consisted of share of common stock and warrant to purchase a share of common stock for $0.75 per share for a period of two years. In connection with the private placement the Company paid $10,000 as a finder’s fee.
Subsequent to March 31, 2022 and through the date that these financial statements were available to be issued, the Company made two payments amounting to approximately $232,654 to a third-party app development company.
On May 19, 2022, the company paid $70,000 to plant 20,000 trees in 2022.
On May 6, 2022, the Company signed a lease agreement to rent office space for a one-year term beginning June 1, 2022 at a base rent of $1,627.50 per month.
Subsequent events have been evaluated through June 14, 2022, the date these financial statements were available to be released and noted no other events requiring disclosure.
| F-10 |
| Table of Contents |
Pro-Forma Consolidated Balance Sheet
(Unaudited)
|
| February 28, 2022 |
| |
ASSETS |
|
|
| |
Current assets |
|
|
| |
Cash and cash equivalents |
| $ | 141 |
|
Sales tax receivable |
|
| - |
|
Prepaid expenses and other current assets |
|
| - |
|
Total current assets |
|
| 141 |
|
|
|
|
|
|
Property and equipment |
|
| - |
|
Capital Work in Progress |
|
| - |
|
Total assets |
| $ | 141 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
| $ | 266 |
|
Due to related party- note payable |
|
| - |
|
Total liabilities |
|
| 266 |
|
|
|
|
|
|
Shareholders’ equity (deficit) |
|
|
|
|
Common stock $0.001 par value, 200,000,000 shares authorized, 64,900,000 shares issued and outstanding as of February 28, 2022. |
|
| 64,900 |
|
Additional Paid-in capital |
|
| (64,758 | ) |
Accumulated deficit |
|
| (265 | ) |
Accumulated other comprehensive gain (loss) |
|
| (2 | ) |
Total shareholders’ equity (deficit) |
|
| (125 | ) |
Total liabilities and shareholders’ equity (deficit) |
| $ | 141 |
|
| F-11 |
| Table of Contents |
Pro-Forma Consolidated Statement of Operations
(Unaudited)
|
| Nine Months Ended |
| |
|
| February 28, 2022 |
| |
Operations |
|
|
| |
Total revenue |
|
| - |
|
Cost of revenue |
|
| - |
|
Gross profit |
|
| - |
|
|
|
|
|
|
Operating expenses |
|
| 34,781 |
|
|
|
|
|
|
Loss from Operations |
|
| (34,781 | ) |
|
|
|
|
|
Other income (expenses) |
|
| - |
|
Federal income tax expense |
|
| - |
|
Net loss |
|
| (34,781 | ) |
|
|
|
|
|
Other comprehensive loss |
|
|
|
|
Foreign currency translation gain (loss) |
|
| (2 | ) |
Total comprehensive loss |
|
| (34,783 | ) |
|
|
|
|
|
Earnings Per Share |
|
|
|
|
Weighted average shares outstanding |
|
| 64,900,000 |
|
Basic and fully diluted loss per share |
| $ | (0.00 | ) |
| F-12 |
| Table of Contents |
4. Properties
On May 6, 2022 the Company entered into a Commercial Lease Agreement with 459061 Ltd. to lease office space at 1410 Columbia Ave., Castlegar, British Columbia, Canada V1N 3K3. The lease provides for monthly payments of $1,627.50 and is for a term of one year with an option to renew for a second year.
5. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth the number of shares of common stock beneficially owned by (i) those persons or groups known to beneficially own more than 5% of the Company’s common stock, (ii) each current director and executive officer of the Company, and (iii) all the current executive officers and directors as a group. The information is set forth as of the time immediately after closing the reorganization.
Pursuant to Rule 13d-3 under the Exchange Act, a beneficial owner of securities is a person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has, or shares, voting power and/or investment power with respect to the securities, and any person who has the right to acquire beneficial ownership of the security within 60 days through any means, including the exercise of any option, warrant or right or the conversion of a security. Any shares that are not outstanding that a person has the right to acquire are deemed to be outstanding for the purpose of calculating the percentage of beneficial ownership of such person, but are not deemed to be outstanding for the purpose of calculating the percentage of beneficial ownership of any other person.
After the acquisition of Karbon-X Project, the following table represents a list of the principal stockholders:
Title of Class |
| Name of Beneficial Owner |
| Amount of Beneficial Ownership |
| Percentage of Stock |
|
|
|
|
|
|
|
Common Stock |
| Chad Clovis, Chief Executive Officer, President and Director (1) |
| 17,000,000 |
| 26.20% |
|
|
|
|
|
|
|
Common Stock |
| Marita Dautel, Vice President and Director |
| 2,000,000 |
| 3.0% |
Common Stock |
| All officers and directors (2 persons) |
| 19,000,00 | 0 | 29.3% |
(1) Consists of 17,000,000 shares held directly by Mr. Clovis and 2,000,000 shares held by Jennifer Clovis, who is the spouse of Mr. Clovis.
6. Directors and Executive Officers
The table below reflects the Company’s executive officers and directors. There is no agreement or understanding between the Company and each current or proposed director or executive officer pursuant to which he was selected as an officer or director. The address for each such officer and director is 312 Doherty Drive, Quesnel, British Columbia, Canada V2J 1B5.
Name |
| Intended Positions and Offices |
|
|
|
Chad Clovis Marita Dautel |
| Chief Executive Officer, President and Director Vice President and Director |
The Directors and Officers named above will serve until the next annual meeting of the stockholders or until their respective resignation or removal from office. Thereafter, Directors are anticipated to be elected for one-year terms at the annual stockholders’ meeting. Officers will hold their positions at the pleasure of the Board of Directors.
| 19 |
| Table of Contents |
Chad Clovis, Chief Executive Officer, President and Director
Chad Clovis is the Chief Executive Officer of Karbon-X Corp. which he founded in 2022. Mr.Clovis has been the CEO of Chenn Holdings since 2013 performing business development and business expansion services for multiple businesses in the dirt works and oilfield transportation space. In 2014 he was the founder and Operations Manager of CCV Ltd a full-service oilfield trucking company which was successfully sold to Petrogas Logistics in 2016 where Mr.Clovis became the Manager of Northern Operations. After founding Karbon-X in early 2022 Mr.Clovis completed a reverse take over of Cocoluv, Inc., an OTC listed company, and raised substantial funds to operate the business through its growth period.
Chad Clovis is a professional operator with more then 80,000 hours operating various pieces of oilfield equipment including high pressure chemical pumpers, sour sealed tank units, high pressure water blast units and hydro vac units of various configurations. Mr. Clovis attended BCIT in 2011 to obtain the National Safety Officer designation, Leadership in Business Excellence designation and Janus Mentor Training designation which he graduated with honors.
Marita Dautel, Vice President and Director
Ms. Marita Dauel has worked in the financial and transportation industries as well as the provincial and municipal government since her graduation from business school in 2012. Ms. Dautel is a graduate of Krannert School of Management from Purdue University (MBA, 2012); and the European School of Business, Reutlingen University (B.Sc. International Business, Germany, 2011). While at Reutlingen, Ms. Dautel was a Model United Nations delegate in New York City, USA (2011) representing Cameroon. After completion of business school, Ms. Dautel joined Scotiabank as a Financial Advisor obtaining her Mutual Fund Dealers Association (MFDA) license to sell mutual funds in late 2013. She started working as an independent representative with Primerica Financial Services Ltd in fall of 2014 and obtained her license to sell Life Insurance in Canada which she was active in until May of 2021. She worked for a transportation company in Fort St. John for 2.5 years as the manager of finance until moving to Southern BC in early 2017 to work at Selkirk College in the finance department. In late 2017 she started working at City of Castlegar where she held various positions in both the finance as well as civic works departments. She is currently the Vice President of Karbon-X Project Inc, a position which she has been in since April 1st of 2022.
Involvement in Certain Legal Proceedings
No director, executive officer, promoter or control person of Karbon-X has, during the last ten years: (i) been convicted in or is currently subject to a pending a criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law, nor (iii) any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto.
| 20 |
| Table of Contents |
7. Executive Compensation.
Compensation Discussion and Analysis
Executive Officer and Director Compensation of the Company
Summary Compensation Table
The following table sets forth the total compensation paid to, or accrued by, the Named Executive Officers and any other employees earning over $100,000 per year from February 1, 2022 (date of inception) through February 28, 2022. No restricted stock awards, long-term incentive plan payout or other types of compensation were paid to these executive officers during that period. [to be completed from payroll records]
Name |
| Year |
| Fees Earned or paid in cash ($) |
|
| Stock awards ($) |
|
| Option Awards ($) |
|
| Non-equity incentive plan compensation ($) |
|
| Change in pension value and nonqualified deferred compensation earnings |
|
| All other compensation ($) |
|
| Total ($) |
| |||||||
Chad Clovis |
| 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Marita Dautel |
| 2022 |
| $ |
|
| $ | - |
|
| $ | - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| $ |
| ||
Employment Agreements
On February 17, 2022 the Company entered into an employment contract with Chad Clovis as President of Karbon-X Project. Pursuant to the contract Mr. Clovis is paid an annual salary of $66,000.
On April 1, 2022, the Company entered into an employment contract with Marita Dautel as Vice President of Karbon-X Project. Pursuant to the contract Ms. Dautel is paid an annual salary of $66,000.
Equity Compensation Plans
The Board may grant incentive bonuses to our executive officers and/or future executive officers in its sole discretion. Bonuses will be granted if the Board believes such bonuses are in the Company’s best interest, after analyzing our current business objectives and growth, if any, and the amount of revenue we are able to generate each month, which revenue is a direct result of the actions and ability of such executives. Other than our bonus plan we have no current equity compensation plans.
All compensation and stock option plans for executives and employees will be governed by the Compensation and Governance Committee.
Expense Reimbursement
We will reimburse our officers and directors for reasonable expenses incurred during the course of their performance.
| 21 |
| Table of Contents |
Retirement Plans and Benefits.
None.
Director Compensation
We do not have a standard compensation arrangement for directors. The Company intends to form a Compensation and Governance Committee to make such determinations, with approval by both the Board of Directors and the Audit Committee.
8. Certain Relationships and Related Transactions, and Director Independence.
None
Director Independence
The Company is not listed on any national exchange, or quoted on any inter-dealer quotation service, that imposes independence requirements on any committee of the Company’s directors, such as an audit, nominating or compensation committee. The Company currently does not have any independent directors on its Board.
9. Legal Proceedings.
The Company is currently not in legal proceedings and knows of none that are pending or threatened.
10. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.
Market Information
Our common stock is quoted in United States markets by OTC Markets Group, Inc., a privately owned company headquartered in New York City, under the symbol “CCLV.” There is no assurance that the common stock will continue to be traded on the OTC Markets or that any liquidity exists for our shareholders.
Market Price
As the reorganization closed on March 21, 2022 and does not reflect the current operations of the Company, historical market price information is not material to the operations of the Company.
As of February 28, 2022, the Company had 200,000,000 shares of common stock authorized with 64,900,000 shares issued and outstanding.
Penny Stock Regulations
Our common stock is quoted in United States markets by OTC Markets Group, Inc., a privately owned company headquartered in New York City, under the symbol “CCLV.” The sale price of our common stock has been less than $5.00 per share. As such, the Company’s common stock may be subject to provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), commonly referred to as the “penny stock rule.”
| 22 |
| Table of Contents |
Section 15(g) sets forth certain requirements for transactions in penny stocks, and Rule 15g-9(d) incorporates the definition of “penny stock” that is found in Rule 3a51-1 of the Exchange Act. The SEC generally defines “penny stock” to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. As long as the Company’s common stock is deemed to be a penny stock, trading in the shares will be subject to additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors.
Dividends
The Company has not issued any dividends on the common stock to date, and does not intend to issue any dividends on the common stock in the near future. We currently intend to use all profits to further the growth and development of the Company.
11. Recent Sales of Unregistered Securities
Subsequent to March 31, 2022 and through June 1, 2022, Karbon-X Corp. completed a private placement pursuant to Rule 506(c) of the Securities Exchange Act of 1934, as amended. In that private placement the company sold 3,820,000 units at $0.25 per unit for total gross proceeds of $955,000. Each unit consisted of one share of common stock and one warrant to purchase a share of common stock for $0.75 per share for a period of two years.
12. Description of Registrant’s Securities.
Common Stock
Our certificate of incorporation authorizes the issuance of up to 200,000,000 shares of common stock. As of February 28, 2022, there were 64,900,000 shares of our common stock outstanding. The holders of our common stock are entitled to one vote per share. Our certificate of incorporation does not provide for cumulative voting. The holders of our common stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors out of legally available funds. However, the current policy of our board of directors is to retain earnings, if any, for our operation and expansion. Upon our liquidation, dissolution or winding-up, the holders of our common stock are entitled to share ratably in all of our assets which are legally available for distribution, after payment of or provision for all liabilities and the preferences of any then outstanding shares of preferred stock. The holders of our common stock have no preemptive, subscription, redemption or conversion rights. All issued and outstanding shares of our common stock are fully-paid and non-assessable.
Item 9.01. Financial Statements and Exhibits.
Financial Statements and Schedules.
The financial statements of Karbon-X Corp. are included herein above.
23 |
| Table of Contents |
Exhibits
The following Exhibits are included herein:
Exhibit No. |
| Description |
| 10.1 |
| |
| 10.2 |
| Employment Agreement dated February 17, 2022 between the Company and Chad Clovis |
| 10.3 |
| Employment Agreement dated February 17, 2022 between the Company and Marita Dautel |
| 10.4 |
| Commercial Lease Agreement dated May 6, 2022 between the Company and 459063 Ltd. |
104 |
| Cover Page Interactive Data File (embedded within the Inline XBRL Document). |
| 24 |
| Table of Contents |
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.
Karbon-X Corp. | |||
(Registrant) | |||
| Dated: June 30, 2022 | By: | /s/ Chad Clovis | |
Chief Executive Officer | |||
| 25 |
EXHIBIT 10.1
REORGANIZATION AND STOCK PURCHASE AGREEMENT
This REORGANIZATION AND STOCK PURCHASE AGREEMENT dated as of February 21, 2022 (this "Agreement") is by and among Cocoluv, Inc., a Nevada corporation (“Cocoluv”), Reymund Guillermo (the “Cocoluv Shareholder”), and Karbon-X Project Inc., a British Columbia corporation ("Acquiror") and shareholders of Acquiror (“Acquiror Shareholders”).
RECITALS
WHEREAS, Acquiror Shareholders or assigns will acquire directly or indirectly an interest in the equity of Cocoluv through the acquisition of 20,000,000 shares of Cocoluv common stock from the Cocoluv Shareholder (the “Cocoluv Shares”); and
NOW, THEREFORE, the Board of Directors of Cocoluv and the Board of Directors of Acquiror deem it advisable and in the best interests of their corporations and the respective equity holders that Acquiror Shareholders acquire the Cocoluv Shares, in accordance with the terms and conditions of this Reorganization and Stock Purchase Agreement.
|
| 1. | Pre-Closing Actions of Cocoluv. Immediately upon execution of this Agreement and prior to any Closing as set forth herein, Cocoluv shall undertake the following actions: |
|
| (a) | The Board of Directors of Cocoluv shall unanimously approve and deliver to Cutler Law Group (the "Escrow Agent") in escrow (the "Escrow"), pursuant to the terms of the Escrow Agreement attached hereto as Exhibit A, notarized board and shareholder resolutions (as required) with respect to (a) approving all of the transactions set forth herein; (b) directing the size of the Board of Directors to be three to five members; and (c) electing two designees of Acquiror to the board of directors of Cocoluv (the “Resolutions”). |
|
|
|
|
|
| (b) | The Cocoluv Shareholder shall deliver to Escrow the Cocoluv Shares. |
|
|
|
|
|
| (c) | Cocoluv shall deliver to Escrow notarized resignations as officers and directors of all prior officers and directors. |
|
|
|
|
|
| (d) | Cocoluv shall use its reasonable best efforts to prepare and complete the documents necessary to be filed with local, state and federal authorities to consummate the transactions contemplated hereby. |
|
| 2. | Pre-Closing Actions of Acquiror. Acquiror or parties on behalf of Acquiror shall undertake the following actions: |
|
| (a) | Acquiror Shareholders shall deliver to Escrow the common stock shares, preferred stock shares, or other securities that represent 100% of the equity of Acquiror such that at Closing, Acquiror shall become a wholly-owned subsidiary of Cocoluv (the “Acquiror Escrowed Shares”). |
| 1 |
|
| 3. | Conditions to Closing |
The parties' obligation to close the proposed Acquisition will be subject to specified conditions precedent including, but not limited to, the following:
|
| (a) | the representations and warranties of Cocoluv as set forth in Section 6 herein shall remain true and correct as of the Closing Date and no material adverse change to the financial condition of Cocoluv shall have occurred; |
|
|
|
|
|
| (b) | the representations and warranties of Acquiror and Acquiror Shareholders as set forth in Section 7 herein shall remain true and correct as of the Closing Date and no material adverse change in the business or financial condition of Acquiror shall have occurred; |
|
|
|
|
|
| (c) | all the documents necessary to be filed with local, state and federal authorities are prepared, and to the extent applicable, filed. |
|
|
|
|
|
| (d) | Acquiror shall have provided the Acquiror Board Resolutions and any other documents or approval required to complete the transactions contemplated hereby and in the Acquiror Board Resolutions; |
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|
|
|
| (e) | Acquiror shall retain its good standing as a publicly traded company under the Securities Exchange Act of 1934, trading on OTC Pink Market maintained by OTC Markets Group under the symbol "CMOV"; |
|
| 4. | At the Closing. |
|
| (a) | At the Closing, Cutler Law Group shall release from escrow to Acquiror the Cocoluv Board and Shareholder Resolutions and the Resignations from Cocoluv. |
|
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|
|
| (b) | At the Closing, Cutler Law Group shall release the Escrowed Cocoluv Shares to Acquiror Shareholders or assigns. |
|
|
|
|
|
| (c) | At the Closing, Cutler Law Group shall release the Escrowed Acquiror Shares to Cocoluv. |
|
| 5. | Timing of Closing. The closing of the transactions contemplated by this Agreement ((the " Closing") shall occur upon the satisfaction of the conditions set forth in this Agreement and upon instructions from the parties hereto to the Escrow Agent. The closing (“Closing”) date shall occur on or before February 28, 2022 in the event such conditions are met, which would be extended to not later than March 31, 2022 upon agreement of the parties. Unless otherwise advised in writing by the parties, in the event the Closing does not occur on or before March 31, 2022, (i) the Escrow Agent shall return the Escrowed Cocoluv Shares, the Resignations, and the Cocoluv Board Resolutions to Cocoluv; and (ii) the Escrow Agent shall return the Acquiror Escrowed Shares to Acquiror. |
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|
| 6. | Representations of Cocoluv. Cocoluv represents and warrants as follows: |
|
| (a) | Ownership of Shares. As of the Closing Date, the Acquiror Shareholders or assigns will become the owner of the Escrowed Cocoluv Shares. The Escrowed Cocoluv Shares will be free from claims, liens or other encumbrances, except as provided under applicable federal and state securities laws; |
|
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|
|
| (b) | Fully paid and Nonassessable. The Escrowed Cocoluv Shares constitute duly and validly issued securities of Cocoluv, and are fully paid and nonassessable, and Cocoluv further represents that it has the power and the authority to execute this Agreement and to perform the obligations contemplated hereby; |
| 2 |
|
| (c) | Organization of Cocoluv; Authorization. Cocoluv is a corporation duly organized, validly existing and in good standing under the laws of Nevada with full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action of Cocoluv and this Agreement constitutes a valid and binding obligation of Cocoluv enforceable against it in accordance with its terms. Cocoluv has no subsidiaries. |
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|
| (d) | Capitalization. The authorized capital stock of Cocoluv consists of 200,000,000 shares of common stock, par value $0.001 per share, and no shares of Preferred Stock. As of the Closing Date, Cocoluv will have a total of no more than 64,900,000 shares of common stock issued and outstanding. No other securities are issued or outstanding. As of the Closing Date, all of the issued and outstanding shares of common stock of Cocoluv are validly issued, fully paid and non-assessable. There is not and as of the Closing Date, there will not be outstanding any warrants, options or other agreements on the part of Cocoluv obligating Cocoluv to issue any additional shares of common or preferred stock or any of its securities of any kind. Cocoluv will not issue any shares of capital stock from the date of this Agreement through the Closing Date. The Common Stock of Cocoluv is presently trading on Pink Market maintained by OTC Markets Group under the symbol "CCLV". The Common Stock of Cocoluv is not subject to any restriction on deposit, transfer or any other services pursuant to a “chill” by the Depository Trust Company. |
|
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|
|
|
| (e) | Ownership of Cocoluv Shares. The delivery by Escrow at Closing of certificates or other evidence of ownership provided herein for the Escrowed Cocoluv Shares will result in the immediate acquisition of record and beneficial ownership of the Escrowed Cocoluv Shares, free and clear of all encumbrances. |
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|
| (e) | No Conflict as to Cocoluv. Neither the execution and delivery of this Agreement nor the consummation of the exchange of the Cocoluv Shares will (a) violate any provision of the certificate of incorporation or by-laws (or other governing instrument) of Cocoluv or (b) violate, or be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or excuse performance by any Person of any of its obligations under, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any encumbrance upon any property or assets of Cocoluv under, any material agreement or commitment to which Cocoluv is a party or by which its property or assets is bound, or to which any of the property or assets of Cocoluv is subject, or (c) violate any statute or law or any judgment, decree, order, regulation or rule of Governmental Body applicable to Cocoluv except, in the case of violations, conflicts, defaults, terminations, accelerations or encumbrances described in clause (b) of this Section for such matters which are not likely to have a material adverse effect on the business or financial condition of Cocoluv. The term "Governmental Body" shall mean any government, municipality or political subdivision thereof, whether federal, state, local or foreign, or any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, or any court, arbitrator, administrative tribunal or public utility. |
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|
|
| (g) | Consents and Approvals of Governmental Authorities. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body or quasi-governmental body is required to be made or obtained by Cocoluv in connection with the execution, delivery and performance of this Agreement by Cocoluv or the consummation of the sale of the Escrowed Cocoluv Securities. |
| 3 |
|
| (h) | Other Consents. No consent of any Person is required to be obtained by Cocoluv to the execution, delivery and performance of this Agreement or the consummation of the sale of the Escrowed Cocoluv Securities, including, but not limited to, consents from parties to leases or other agreements or commitments. |
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| (i) | Litigation. There is no action, suit, inquiry, proceeding or investigation by or before any Governmental body pending or threatened in writing against or involving Cocoluv, any of its officers or directors, or which questions or challenges the validity of this Agreement. There are no pending or threatened disputes with any prior officer or director of Cocoluv. Cocoluv is not subject to any judgment, order or decree that is likely to have a material adverse effect on the business or financial condition of Cocoluv. |
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|
| (j) | Absence of Certain Changes. From December 31, 2019, to the date hereof, Cocoluv has not: |
|
| 1. | suffered damage or destruction of any of its properties or assets (whether or not covered by insurance) which is materially adverse to the financial condition of Cocoluv, or made any disposition of any of its material properties or assets other than in the ordinary course of business; |
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| 2. | made any change or amendment in its certificate of incorporation or by-laws, or other governing instruments, except as contemplated hereby or required to effect the transactions set forth herein; |
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| 3. | organized any new subsidiary or acquired any securities of any Person or any equity or ownership interest in any business; |
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| 4. | borrowed any funds or incurred, or assumed or become subject to, whether directly or by way of guarantee or otherwise, any obligation or liability with respect to any such indebtedness for borrowed money; |
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| 5. | paid, discharged or satisfied any material claim, liability or obligation (absolute, accrued, contingent or otherwise); |
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| 6. | prepaid any material obligation having a maturity of more than 90 days from the date such obligation was issued or incurred; |
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| 7. | cancelled any material debts or waived any material claims or rights; |
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| 8. | written off or been required to write off any notes or accounts receivable; |
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| 9. | with the exception of the liability of Cocoluv’s transfer agent (which does not exceed $3,000), incurred any liability (in excess of $3,000.00) or other obligation. |
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| (k) | Contracts and Commitments. Cocoluv is not a party to any: |
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| 1. | Contract or agreement (except for this Agreement) involving any liability, obligation or covenant on the part of Cocoluv except with respect to its transfer agent. |
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| 2. | Lease of personal property; |
| 4 |
|
| 3. | Employee bonus, stock option or stock purchase, performance unit, profit-sharing, pension, savings, retirement, health, deferred or incentive compensation, insurance or other material employee benefit plan (as defined in Section 2(3) of ERISA) or program for any of the employees, former employees or retired employees of Cocoluv; |
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| 4. | Commitment, contract or agreement that is currently expected by the management of Cocoluv to result in any material loss upon completion or performance thereof; |
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| 5. | Contract, agreement or commitment with any officer, employee, agent, consultant, advisor, salesman, sales representative, value added reseller, distributor or dealer; or |
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| 6. | Employment agreement or other similar agreement. |
|
| (l) | Compliance with Law. The operations of Cocoluv have been conducted in accordance with all applicable laws and regulations of all Governmental Bodies having jurisdiction over them, except for violations thereof which are not likely to have a material adverse effect on the business or financial condition of Cocoluv. Cocoluv has not received any notification of any asserted present or past failure by it to comply with any such applicable laws or regulations. Cocoluv has all material licenses, permits, orders or approvals from the Governmental Bodies required for the conduct of its business, issued or in process, and is not in material violation of any such licenses, permits, orders and approvals. All such licenses, permits, orders and approvals are in full force and effect, and no suspension or cancellation of any thereof has been threatened. |
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| (m) | Tax Matters. |
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| 1. | Cocoluv (1) has filed or shall file prior to Closing all nonconsolidated and noncombined Tax Returns and all consolidated or combined Tax Returns of Cocoluv (for the purposes of this Section, such tax Returns shall be considered nonconsolidated and noncombined Tax Returns) required to be filed through the date hereof and has paid any Tax due through December 31, 2020 with respect to the time periods covered by such nonconsolidated and noncombined Tax Returns and shall timely pay any such Taxes required to be paid by it after the date hereof with respect to such Tax Returns and (2) shall prepare and timely file all such nonconsolidated and noncombined Tax Returns required to be filed after the date hereof and through the Closing Date and pay all Taxes required to be paid by it with respect to the periods covered by such Tax Returns; (B) all such Tax Returns filed pursuant to clause (A) after the date hereof shall, in each case, be prepared and filed in a manner consistent in all material respects (including elections and accounting methods and conventions) with such Tax Return most recently filed in the relevant jurisdiction prior to the date hereof, except as otherwise required by law or regulation. Any such Tax Return filed or required to be filed after the date hereof shall not reflect any new elections or the adoption of any new accounting methods or conventions or other similar items, except to the extent such particular reflection or adoption is required to comply with any law or regulation. "Affiliate" of any person means any other person directly or indirectly through one or more intermediary persons, controlling, controlled by or under common control with such person. "Tax" (including, with correlative meaning, the terms "Taxes" and "Taxable") shall mean: (i)(A) any net income, gross income, gross receipts, sales, use, ad valorem, transfer, transfer gains, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, rent, recording, occupation, premium, real or personal property, intangibles, environmental or windfall profits tax, alternative or add-on minimum tax, customs duty or other tax, fee, duty, levy, impost, assessment or charge of any kind whatsoever (including but not limited to taxes assessed to real property and water and sewer rents relating thereto), together with; (B) any interest and any penalty, addition to tax or additional amount imposed by any Governmental Body (domestic or foreign) (a "Tax Authority") responsible for the imposition of any such tax and interest on such penalties, additions to tax, fines or additional amounts, in each case, with respect to any party hereto, its business or assets (or the transfer thereof); (ii) any liability for the payment of any amount of the type described in the immediately preceding clause (i) as a result of a party hereto being a member of an affiliated or combined group with any other person at any time on or prior to the date of Closing; and (iii) any liability of a party hereto for the payment of any amounts of the type described in the immediately preceding clause (i) as a result of a contractual obligation to indemnify any other person. "Tax Return" shall mean any return or report (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to any Tax Authority. |
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| 2. | Cocoluv represents that prior to Closing, all consolidated or combined Tax Returns (except those described in subparagraph (1) above) required to be filed by any person through December 31, 2020 that are required or permitted to include the income, or reflect the activities, operations and transactions, of Cocoluv for any taxable period shall have been timely filed, and the income, activities, operations and transactions of Cocoluv shall have been properly included and reflected thereon. Cocoluv shall prepare and file, or cause to be prepared and filed, all such consolidated or combined Tax Returns that are required or permitted to include the income, or reflect the activities, operations and transactions, of Cocoluv, with respect to any taxable year or the portion thereof ending on or prior to the Closing Date, including, without limitation, Cocoluv’s consolidated federal income tax return for such taxable years. All Tax Returns filed pursuant to this subparagraph (2) after the date hereof shall, in each case, to the extent that such Tax Returns specifically relate to Cocoluv and do not generally relate to matters affecting other members of Cocoluv’s consolidated group, be prepared and filed in a manner consistent in all material respects (including elections and accounting methods and conventions) with the Tax Return most recently filed in the relevant jurisdictions prior to the date hereof, except as otherwise required by law or regulation. Cocoluv has paid or will pay all Taxes that may now or hereafter be due with respect to the taxable periods covered by such consolidated or combined Tax Returns. |
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| 3. | There is no (nor has there been any request for an) agreement, waiver or consent providing for an extension of time with respect to the assessment of any Taxes attributable to Cocoluv, or its assets or operations and no power of attorney granted by Cocoluv with respect to any Tax matter is currently in force. |
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| 4. | There is no action, suit, proceeding, investigation, audit, claim, demand, deficiency or additional assessment in progress, pending or threatened against or with respect to any Tax attributable to Cocoluv or its assets or operations. |
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| 5. | All amounts required to be withheld as of the Closing Date for Taxes or otherwise have been withheld and paid when due to the appropriate agency or authority. |
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| (n) | Borrowing and Guarantees. Except for not more than $5,000 in current accounts payable, at the Closing, that will be paid by Cocoluv at closing, Cocoluv (a) will not have any indebtedness for borrowed money, (b) are not lending or committed to lend any money (except for advances to employees in the ordinary course of business), and (c) are not guarantors or sureties with respect to the obligations of any Person. |
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| (o) | Environmental Matters. |
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| 1. | At all times prior to the date hereof, Cocoluv has complied in all material respects with applicable environmental laws, orders, regulations, rules and ordinances, the violation of which would have a material adverse effect on the business or financial condition of Cocoluv, or which would require a payment by Cocoluv in excess of $2,000 in the aggregate, and which have been duly adopted, imposed or promulgated by any legislative, executive, administrative or judicial body or officer of any Governmental Body. |
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| 2. | The environmental licenses, permits and authorizations that are material to the operations of Cocoluv and its Subsidiary, taken as a whole, are in full force and effect. |
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| (p) | Disclosure. Neither this Agreement, the Schedules hereto nor any of the Transaction Documents contain any untrue statement of a material fact with respect to Cocoluv or the Cocoluv Shareholder, or omit to state a material fact necessary in order to make the statements contained herein or therein with respect to Cocoluv, or the Cocoluv Shareholder, not misleading. Neither Cocoluv nor the Cocoluv Shareholder has any knowledge of any events, transactions or other facts which, either individually or in the aggregate, may give rise to circumstances or conditions which would have a material adverse effect on the general affairs or the condition of business of Cocoluv. “Transaction Documents” shall mean, collectively, this Agreement, and each of the other agreements and instruments to be executed and delivered by all or some of the parties hereto in connection with the consummation of the transactions contemplated hereby. |
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| (q) | Financial Statements. The financial statements of Cocoluv as filed with the US Securities and Exchange Commission, were prepared in accordance with generally accepted accounting principles, consistently applied, and represent fairly the financial condition, assets and revenues of Acquiror as of the date thereof. |
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| 7. | Representations of Acquiror and Acquiror Shareholders. Acquiror and Acquiror Shareholders represent and warrant as follows: |
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| (a) | Ownership of Shares. As of the Closing Date, Cocoluv will become the owner of the Escrowed Acquiror Shares. The Escrowed Acquiror Shares will be free from claims, liens or other encumbrances, except as provided under applicable federal and state securities laws; |
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| (b) | Fully paid and Nonassessable. The Escrowed Acquiror Shares constitute duly and validly issued securities of Acquiror, and are fully paid and nonassessable, and Acquiror further represents that it has the power and the authority to execute this Agreement and to perform the obligations contemplated hereby; |
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| (c) | Organization of Acquiror; Authorization. Acquiror is a corporation duly organized, validly existing and in good standing under the laws of British Columbia with full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action of Acquiror and this Agreement constitutes a valid and binding obligation of Acquiror enforceable against it in accordance with its terms. Acquiror has no subsidiaries. |
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| (d) | Capitalization. The authorized capital stock of Acquiror consists of no maximum Class A Common Voting Shares and no maximum Class B Common Non-Voting Shares. As of the Closing Date, Acquiror will have a total of 1,000 Class A Common Voting shares issued and outstanding. No other securities are issued or outstanding. As of the Closing Date, all of the issued and outstanding shares of common stock of Acquiror are validly issued, fully paid and non-assessable. There is not and as of the Closing Date, there will not be outstanding any warrants, options or other agreements on the part of Acquiror obligating Acquiror to issue any additional shares of common or preferred stock or any of its securities of any kind. Acquiror will not issue any shares of capital stock from the date of this Agreement through the Closing Date. |
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| (e) | Ownership of Acquiror Shares. The delivery by Escrow at Closing of certificates or other evidence of ownership provided herein for the Escrowed Acquiror Shares will result in the immediate acquisition of record and beneficial ownership of the Escrowed Acquiror Shares, free and clear of all encumbrances. |
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| (e) | No Conflict as to Acquiror. Neither the execution and delivery of this Agreement nor the consummation of the exchange of the Acquiror Shares will (a) violate any provision of the certificate of incorporation or by-laws (or other governing instrument) of Acquiror or (b) violate, or be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or excuse performance by any Person of any of its obligations under, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any encumbrance upon any property or assets of Acquiror under, any material agreement or commitment to which Acquiror is a party or by which its property or assets is bound, or to which any of the property or assets of Acquiror is subject, or (c) violate any statute or law or any judgment, decree, order, regulation or rule of Governmental Body applicable to Acquiror except, in the case of violations, conflicts, defaults, terminations, accelerations or encumbrances described in clause (b) of this Section for such matters which are not likely to have a material adverse effect on the business or financial condition of Acquiror. The term "Governmental Body" shall mean any government, municipality or political subdivision thereof, whether federal, state, local or foreign, or any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, or any court, arbitrator, administrative tribunal or public utility. |
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| (g) | Consents and Approvals of Governmental Authorities. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body or quasi-governmental body is required to be made or obtained by Acquiror in connection with the execution, delivery and performance of this Agreement by Acquiror or the consummation of the sale of the Escrowed Acquiror Securities. |
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| (h) | Other Consents. No consent of any Person is required to be obtained by Acquiror to the execution, delivery and performance of this Agreement or the consummation of the sale of the Escrowed Acquiror Securities, including, but not limited to, consents from parties to leases or other agreements or commitments. |
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| (i) | Litigation. There is no action, suit, inquiry, proceeding or investigation by or before any Governmental body pending or threatened in writing against or involving Acquiror, any of its officers or directors, or which questions or challenges the validity of this Agreement. There are no pending or threatened disputes with any prior officer or director of Acquiror. Acquiror is not subject to any judgment, order or decree that is likely to have a material adverse effect on the business or financial condition of Acquiror. |
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| (j) | Absence of Certain Changes. From March 31, 2019, to the date hereof, Acquiror has not: |
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| 1. | suffered damage or destruction of any of its properties or assets (whether or not covered by insurance) which is materially adverse to the financial condition of Acquiror, or made any disposition of any of its material properties or assets other than in the ordinary course of business; |
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| 2. | except for an amendment to its Certificate of Incorporation to change its name to Acquiror Corp. and to increase the authorized capital stock of the corporation, made any change or amendment in its certificate of incorporation or by-laws, or other governing instruments, except as contemplated hereby or required to effect the transactions set forth herein; |
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| 3. | organized any new subsidiary or acquired any securities of any Person or any equity or ownership interest in any business; |
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| 4. | borrowed any funds or incurred, or assumed or become subject to, whether directly or by way of guarantee or otherwise, any obligation or liability with respect to any such indebtedness for borrowed money; |
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| 5. | paid, discharged or satisfied any material claim, liability or obligation (absolute, accrued, contingent or otherwise); |
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| 6. | prepaid any material obligation having a maturity of more than 90 days from the date such obligation was issued or incurred; |
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| 7. | cancelled any material debts or waived any material claims or rights; |
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| 8. | written off or been required to write off any notes or accounts receivable; |
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| 9. | incurred any liability (in excess of $3,000.00) or other obligation. |
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| (k) | Contracts and Commitments. Acquiror is not a party to any: |
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| 1. | Contract or agreement (except for this Agreement) involving any liability, obligation or covenant on the part of Acquiror except with respect to its transfer agent. |
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| 2. | Lease of personal property; |
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| 3. | Employee bonus, stock option or stock purchase, performance unit, profit-sharing, pension, savings, retirement, health, deferred or incentive compensation, insurance or other material employee benefit plan (as defined in Section 2(3) of ERISA) or program for any of the employees, former employees or retired employees of Acquiror; |
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| 4. | Commitment, contract or agreement that is currently expected by the management of Acquiror to result in any material loss upon completion or performance thereof; |
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| 5. | Contract, agreement or commitment with any officer, employee, agent, consultant, advisor, salesman, sales representative, value added reseller, distributor or dealer; or |
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| 6. | Employment agreement or other similar agreement. |
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| (l) | Compliance with Law. The operations of Acquiror have been conducted in accordance with all applicable laws and regulations of all Governmental Bodies having jurisdiction over them, except for violations thereof which are not likely to have a material adverse effect on the business or financial condition of Acquiror. Acquiror has not received any notification of any asserted present or past failure by it to comply with any such applicable laws or regulations. Acquiror has all material licenses, permits, orders or approvals from the Governmental Bodies required for the conduct of its business, issued or in process, and is not in material violation of any such licenses, permits, orders and approvals. All such licenses, permits, orders and approvals are in full force and effect, and no suspension or cancellation of any thereof has been threatened. |
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| (m) | Tax Matters. |
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| 1. | Acquiror (1) has filed or shall file prior to Closing all nonconsolidated and noncombined Tax Returns and all consolidated or combined Tax Returns of Acquiror (for the purposes of this Section, such tax Returns shall be considered nonconsolidated and noncombined Tax Returns) required to be filed through the date hereof and has paid any Tax due through December 31, 2020 with respect to the time periods covered by such nonconsolidated and noncombined Tax Returns and shall timely pay any such Taxes required to be paid by it after the date hereof with respect to such Tax Returns and (2) shall prepare and timely file all such nonconsolidated and noncombined Tax Returns required to be filed after the date hereof and through the Closing Date and pay all Taxes required to be paid by it with respect to the periods covered by such Tax Returns; (B) all such Tax Returns filed pursuant to clause (A) after the date hereof shall, in each case, be prepared and filed in a manner consistent in all material respects (including elections and accounting methods and conventions) with such Tax Return most recently filed in the relevant jurisdiction prior to the date hereof, except as otherwise required by law or regulation. Any such Tax Return filed or required to be filed after the date hereof shall not reflect any new elections or the adoption of any new accounting methods or conventions or other similar items, except to the extent such particular reflection or adoption is required to comply with any law or regulation. "Affiliate" of any person means any other person directly or indirectly through one or more intermediary persons, controlling, controlled by or under common control with such person. "Tax" (including, with correlative meaning, the terms "Taxes" and "Taxable") shall mean: (i)(A) any net income, gross income, gross receipts, sales, use, ad valorem, transfer, transfer gains, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, rent, recording, occupation, premium, real or personal property, intangibles, environmental or windfall profits tax, alternative or add-on minimum tax, customs duty or other tax, fee, duty, levy, impost, assessment or charge of any kind whatsoever (including but not limited to taxes assessed to real property and water and sewer rents relating thereto), together with; (B) any interest and any penalty, addition to tax or additional amount imposed by any Governmental Body (domestic or foreign) (a "Tax Authority") responsible for the imposition of any such tax and interest on such penalties, additions to tax, fines or additional amounts, in each case, with respect to any party hereto, its business or assets (or the transfer thereof); (ii) any liability for the payment of any amount of the type described in the immediately preceding clause (i) as a result of a party hereto being a member of an affiliated or combined group with any other person at any time on or prior to the date of Closing; and (iii) any liability of a party hereto for the payment of any amounts of the type described in the immediately preceding clause (i) as a result of a contractual obligation to indemnify any other person. "Tax Return" shall mean any return or report (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to any Tax Authority. |
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| 2. | Acquiror represents that prior to Closing, all consolidated or combined Tax Returns (except those described in subparagraph (1) above) required to be filed by any person through December 31, 2020 that are required or permitted to include the income, or reflect the activities, operations and transactions, of Acquiror for any taxable period shall have been timely filed, and the income, activities, operations and transactions of Acquiror shall have been properly included and reflected thereon. Acquiror shall prepare and file, or cause to be prepared and filed, all such consolidated or combined Tax Returns that are required or permitted to include the income, or reflect the activities, operations and transactions, of Acquiror, with respect to any taxable year or the portion thereof ending on or prior to the Closing Date, including, without limitation, Acquiror’s consolidated federal income tax return for such taxable years. All Tax Returns filed pursuant to this subparagraph (2) after the date hereof shall, in each case, to the extent that such Tax Returns specifically relate to Acquiror and do not generally relate to matters affecting other members of Acquiror’s consolidated group, be prepared and filed in a manner consistent in all material respects (including elections and accounting methods and conventions) with the Tax Return most recently filed in the relevant jurisdictions prior to the date hereof, except as otherwise required by law or regulation. Acquiror has paid or will pay all Taxes that may now or hereafter be due with respect to the taxable periods covered by such consolidated or combined Tax Returns. |
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| 3. | There is no (nor has there been any request for an) agreement, waiver or consent providing for an extension of time with respect to the assessment of any Taxes attributable to Acquiror, or its assets or operations and no power of attorney granted by Acquiror with respect to any Tax matter is currently in force. |
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| 4. | There is no action, suit, proceeding, investigation, audit, claim, demand, deficiency or additional assessment in progress, pending or threatened against or with respect to any Tax attributable to Acquiror or its assets or operations. |
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| 5. | All amounts required to be withheld as of the Closing Date for Taxes or otherwise have been withheld and paid when due to the appropriate agency or authority. |
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| (n) | Borrowing and Guarantees. Acquiror (a) does not have any indebtedness for borrowed money, (b) is not lending or committed to lend any money (except for advances to employees in the ordinary course of business), and (c) is not guarantors or sureties with respect to the obligations of any Person. |
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| (o) | Environmental Matters. |
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| 1. | At all times prior to the date hereof, Acquiror has complied in all material respects with applicable environmental laws, orders, regulations, rules and ordinances, the violation of which would have a material adverse effect on the business or financial condition of Acquiror, or which would require a payment by Acquiror in excess of $2,000 in the aggregate, and which have been duly adopted, imposed or promulgated by any legislative, executive, administrative or judicial body or officer of any Governmental Body. |
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| 2. | The environmental licenses, permits and authorizations that are material to the operations of Acquiror and its Subsidiary, taken as a whole, are in full force and effect. |
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| (p) | Disclosure. Neither this Agreement, the Schedules hereto nor any of the Transaction Documents contain any untrue statement of a material fact with respect to Acquiror or the Acquiror Shareholder, or omit to state a material fact necessary in order to make the statements contained herein or therein with respect to Acquiror, or the Acquiror Shareholder, not misleading. Neither Acquiror nor its Subsidiary nor the Acquiror Shareholder has any knowledge of any events, transactions or other facts which, either individually or in the aggregate, may give rise to circumstances or conditions which would have a material adverse effect on the general affairs or the condition of business of Acquiror. “Transaction Documents” shall mean, collectively, this Agreement, and each of the other agreements and instruments to be executed and delivered by all or some of the parties hereto in connection with the consummation of the transactions contemplated hereby. |
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| (q) | Financial Statements. The financial statements of Acquiror attached hereto as Exhibit A, were prepared in accordance with generally accepted accounting principles, consistently applied, and represent fairly the financial condition, assets and revenues of Acquiror as of the date thereof. |
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| 8. | Indemnification. |
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| (a) | Survival of Cocoluv Representations, Warranties and Covenants. Notwithstanding any right of Acquiror fully to investigate the affairs of Cocoluv, and notwithstanding any knowledge of facts determined or determinable by Acquiror pursuant to such investigation or right of investigation, Acquiror has the right to rely fully upon the representations, warranties, covenants and agreements of Cocoluv contained in this Agreement, or listed or disclosed on any Schedule hereto or in any instrument delivered in connection with or pursuant to any of the foregoing. All such representations, warranties, covenants and agreements shall survive the execution and delivery of this Agreement and the Closing hereunder. |
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| (b) | Survival of Acquiror Representations, Warranties and Covenants. Notwithstanding any right of Cocoluv fully to investigate the affairs of Acquiror, and notwithstanding any knowledge of facts determined or determinable by Cocoluv pursuant to such investigation or right of investigation, Cocoluv has the right to rely fully upon the representations, warranties, covenants and agreements of Acquiror contained in this Agreement, or listed or disclosed on any Schedule hereto or in any instrument delivered in connection with or pursuant to any of the foregoing. All such representations, warranties, covenants and agreements shall survive the execution and delivery of this Agreement and the Closing hereunder. |
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| 9. | Notices. |
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Any notice which any of the parties hereto may desire to serve upon any of the other parties hereto shall be in writing and shall be conclusively deemed to have been received by the party at its address, if mailed, postage prepaid, United States mail, registered, return receipt requested, to the following addresses:
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| If to Cocoluv |
| Cocoluv Corp. 1390 Main Street
Suite 200 San Francisco, CA 97204 Attn: Reymond Guillermo |
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| If to Acquiror |
| Karbon-X Project, Inc. 312 Dohert Dr Quesnel, BC Canada V2J 1B5 Attn: Chad Clovis |
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| 10. | Successors. |
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| This Agreement shall be binding upon and inure to the benefit of the heirs, personal representatives and successors and assigns of the parties. |
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| 11. | Choice of Law. |
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| This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada, and the parties submit to the exclusive jurisdiction of the courts of Nevada in respect of all disputes arising hereunder. |
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| 12. | Counterparts. |
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| This Agreement may be signed in one or more counterparts, all of which taken together shall constitute an entire agreement. |
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| 13. | Public Announcement. |
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| The parties shall make no public announcement concerning this agreement, their discussions or any other letters, memos or agreements between the parties relating to this agreement except upon mutual written consent. Either of the parties, but only after reasonable consultation with the other, may make disclosure if required under applicable law. |
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| 14. | Entire Agreement. |
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| This Agreement sets forth the entire agreement and understanding of the Parties hereto with respect to the transactions contemplated hereby, and supersedes all prior agreements, arrangements and understandings related to the subject matter hereof. No understanding, promise, inducement, statement of intention, representation, warranty, covenant or condition, written or oral, express or implied, whether by statute or otherwise, has been made by any Party hereto which is not embodied in this Agreement or the written statements, certificates, or other documents delivered pursuant hereto or in connection with the transactions contemplated hereby, and no party hereto shall be bound by or liable for any alleged understanding, promise, inducement, statement, representation, warranty, covenant or condition not so set forth.15. |
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| Except as otherwise specifically set forth herein, each party will bear its own attorneys, brokers, investment bankers, agents, and finders employed by, such party. The parties will indemnify each other against any claims, costs, losses, expenses or liabilities arising from any claim for commissions, finder's fees or other compensation in connection with the transactions contemplated herein which may be asserted by any person based on any agreement or arrangement for payment by the other party. |
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| 15. | Attorney’s Fees. |
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| Should any action be commenced between the parties to this Agreement concerning the matters set forth in this Agreement or the right and duties of either in relation thereto, the prevailing party in such Action shall be entitled, in addition to such other relief as may be granted, to a reasonable sum as and for its Attorney’s Fees and Costs. |
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| 16. | Finders. |
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| Cocoluv represents and warrants that there are no finders or other parties which have represented Cocoluv in connection with this transaction which have not been previously provided with appropriate compensation. In the event any such finders make a claim for any fee, share issuance of other compensation in connection with the transactions contemplated hereby, they shall be the sole responsibility of Cocoluv. Acquiror represents and warrants that there are no finders or other parties which have represented Acquiror in connection with this transaction. In the event any such finders make a claim for any fee, share issuance of other compensation in connection with the transactions contemplated hereby, they shall be the sole responsibility of Acquiror. |
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
| For and on behalf of: | Cocoluv Corp., a Nevada corporation |
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| By: |
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| Reymond Guillermo |
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| Chief Executive Officer |
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| For and on behalf of: | Karbon-X Project Inc. |
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| By: |
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| Chad Clovis |
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EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.4
