Bryn Inc 8-K, filed Feb 16, 2021
Bryn Inc. (MDTK)
About this 8-K
Bryn Inc filed this 8-K on February 16, 2021.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.01: Completed an acquisition or sale of assets
- Item 3.02: Unregistered sale of equity
- Item 5.01: Change in control
- Item 5.02: Director or officer change, or executive pay
- Item 5.06: Change in shell company status
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 16, 2021
Born, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 333-143630 | 20-4682058 | ||
| (State
or other jurisdiction of incorporation) |
(Commission File Number) | (IRS
Employer Identification No.) |
50 West Liberty Street, Suite 880
Reno, Nevada 89501
(Address of principal executive offices (zip code))
(646) 768-8417
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a - 12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13d-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
N/A |
||||
JUMPSTART OUR BUSINESS STARTUPS ACT
The Company qualifies as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (the “JOBS Act”) as we do not have more than $1,070,000,000 in annual gross revenue and did not have such amount as of December 31, 2019 our last fiscal year. We are electing to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.
We may lose our status as an emerging growth company on the last day of our fiscal year during which (i) our annual gross revenue exceeds $2,000,000,000 or (ii) we issue more than $2,000,000,000 in non-convertible debt in a three-year period. We will lose our status as an emerging growth company if at any time we are deemed to be a large accelerated filer. We will lose our status as an emerging growth company on the last day of our fiscal year following the fifth anniversary of the date of the first sale of common equity securities pursuant to an effective registration statement.
As an emerging growth company, we are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”) and Section 14A(a) and (b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such sections are provided below:
Section 404(b) of the Sarbanes-Oxley Act requires a public company’s auditor to attest to, and report on, management’s assessment of its internal controls.
Sections 14A(a) and (b) of the Exchange Act, implemented by Section 951 of the Dodd-Frank Act, require companies to hold shareholder advisory votes on executive compensation and golden parachute compensation.
As long as we qualify as an emerging growth company, we will not be required to comply with the requirements of Section 404(b) of the Sarbanes-Oxley Act and Section 14A(a) and (b) of the Exchange Act.
1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K or Form 8-K and other reports filed by us from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, our management as well as estimates and assumptions made by our management. When used in the filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms and similar expressions as they relate to us or our management identify forward looking statements. Such statements reflect the current view of our management with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including the risks contained in the section of this report entitled “Risk Factors”) as they relate to our industry, our operations and results of operations, and any businesses that we may acquire. Should one or more of the events described in these risk factors materialize, or should our underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the U.S. federal securities laws, we do not intend to update any of the forward-looking statements to conform them to actual results. The following discussion should be read in conjunction with our pro forma financial statements and the related notes that will be filed herein.
Item 1.01 Entry into Material Definitive Agreement
On February 16, 2021, Born, Inc. (the “Company”) entered into a share exchange agreement (the “Share Exchange Agreement”) with Alkeon Creators, Inc. (“Alkeon”), a United Kingdom corporation. Under the Share Exchange Agreement, One Hundred Percent (100%) of the ownership interest of Alkeon was exchanged for 406,646,919 shares of common stock of the Company. The former stockholders of Alkeon acquired a majority of the issued and outstanding common stock as a result of the share exchange transaction. The transaction has been accounted for as a recapitalization of the Company, whereby Alkeon is the accounting acquirer.
Immediately after completion of such share exchange on February 16, 2021, the Company had a total of 409,353,807 issued and outstanding shares, with authorized share capital for common share of 500,000,000.
Consequently, the Company has ceased to fall under the definition of shell company as define in Rule 12b-2 under the Exchange Act of 1934, as amended (the “Exchange Act”) and Alkeon is now a wholly-owned subsidiary.
On November 24, 2020, the Company amended its articles of incorporation to change its name from Quture International, Inc. to Born Inc. (the “Name Change”). The change was made in anticipation of entering into a new line of business operations.
Also on November 24, 2020, the Company amended its articles of incorporation to reverse split its common stock at a rate of 1 for 1,000 (the “Reverse”). Additionally, the number of common shares authorized was reduced from 2,500,000,000 to 500,000,000. On December 1, 2020, FINRA declared the Name Change and the Reverse effective.
On February 2, 2021, the Company changed its fiscal year end to December 31.
On February 16, 2021, Mr. Wieland Kreuder stepped down as the sole officer and director of the Company and Mr. Jean Christophe Chopin was appointed as the sole officer and director.
Item 2.01 Completion of Acquisition or Disposition of Assets
As described in Item 1.01 above, on February 16, 2021, we acquired all the issued and outstanding shares of Alkeon pursuant to the Share Exchange Agreement and Alkeon became our wholly owned subsidiary. The acquisition was accounted for as a recapitalization effected by a share exchange, wherein Alkeon is considered the acquirer for accounting and financial reporting purposes.
As a result of the acquisition of all the issued and outstanding shares of Alkeon, we have now assumed Alkeon’s business operations as our own.
2
FORM 10 DISCLOSURE
As mentioned in Item 1.01, on February 16, 2021, the Company effectively acquired Alkeon in a Reverse Merger business combination transaction and of which the Company was a shell company prior to such acquisition is now entering into a business combination, other than a business combination with a shell company, as those terms are defined in Rule 12b-2 under the Exchange Act, according to Item 2.01(f) of Form 8-K, the registrant is required to disclose the information that would be required if the registrant were filing a general form for registration of securities under the Exchange Act on Form 10.
We hereby provide below information that would be included in a Form 10 registration statement.
Description of Business
Corporate History
Born, Inc. f/k/a “Quture International, Inc. (“Born”, or the “Company”), is a Nevada corporation, was formed in April 2011 to become an emerging healthcare knowledge solution company created to transform health and healthcare by developing the standard in measuring clinical performance and outcomes. The Company developed medical software with tools and analytics intended to reduce costs while improving clinical performance, outcomes, predictive insight, and evidence-based best clinical processes.
On August 10, 2011, holders of a majority of the Registrant’s outstanding Common Stock voted to amend the Registrant’s Articles of Incorporation to increase the number of its authorized shares of capital stock from 900,000,000 shares to 2,510,000,000 par value $0.001 shares (the “Amendment”) of which (a) 2,500,000,000 shares were designated as Common Stock and (b) 10,000,000 shares were designated as blank check preferred stock.
During the period from March 22, 2013, through December 26, 2019, the Company was dormant.
On December 27, 2019, Custodian Ventures, LLC, an entity controlled by David Lazar, was appointed by the Nevada Court as the custodian of Quture. On December 31, 2019, Mr. Lazar became the only Director and Officer of the Company also acting as its President, Treasurer, and Secretary.
On April 5, 2020, the Company granted Mr. Lazar 10,000,000 preferred shares with super-voting rights of 21,000,000,000 common shares.
On September 10, 2020, the Company filed a Certificate of Designation with the State of Nevada changing the conversion and voting rights of the Company’s Series A preferred stock, $.001 par value per share to 250 for each one (1) share of Series A preferred stock.
On September 23, 2020, as a result of a private transaction, 10,000,000 shares of Series A Convertible Preferred Stock, $0.001 par value per share (the “Shares”) of the Company were transferred from Custodian Ventures, LLC (the “Seller”) to FiveT Capital Holding AG (the “Purchaser”). As a result, the Purchaser became an approximately 50.2% holder of the voting rights of the issued and outstanding share capital of the Company on a fully-diluted basis of the Company and became the controlling shareholder. In connection with the transaction, David Lazar released the Company from all debts owed to him and/or the Seller.
On September 23, 2020, the existing director and officer resigned immediately. Accordingly, David Lazar, serving as a director and an officer, ceased to be the Company’s Chief Executive Officer, Chief Financial Officer, President, Treasurer, Secretary, and Director. At the effective date of the transfer, Mr. Wieland Kreuder consented to act as the new President, CEO, CFO, Treasurer, Secretary, and Chairman of the Board of Directors of the Company.
On November 24, 2020, Quture International, Inc. amended its articles of incorporation to change its name to Born Inc. (the “Name Change”). The change was made in anticipation of entering into a new line of business operations.
Also on November 24, 2020, the Company amended its articles of incorporation to reverse split its common stock at a rate of 1 for 1,000 (the “Reverse”). Additionally, the number of common shares authorized was reduced from 2,500,000,000 to 500,000,000. On December 1, 2020, FINRA declared the Name Change and the Reverse effective.
3
Business Overview
Born, Inc. (“Born” or the “Company”) is a US holding company incorporated in Nevada in April 2011, which operates through the Company’s wholly owned subsidiary Alkeon Creators Inc. (“Alkeon”), a Delaware corporation incorporated in February 2019.
Born is a holding company that specializes in digital, data-led solutions to digitize retail supply chains and reimagine discovery and transactions online. Born owns Alkeon, a suite of B2B solutions and software products that digitize tradeshows and showrooms, as well as Born.com, a platform connecting numerous luxury design-led brands with premium retailers.
B2B subsidiary Alkeon Intelligence is the world’s first global SaaS market-network combining content, community, and commerce to connect buyers and sellers through a best-in-class platform, powered by machine learning it is dedicated to reimagining the discovery, transaction and connection of the B2B and B2C communities.
Alkeon Intelligence is a technology company that allows brands to create an always on commercial model, digitally optimize their existing infrastructure, capture detailed audience insights and more. Starting with the immediate needs of the $35M global trade show market (Statista), Alkeon has represented numerous buyers and products in the past year. Alkeon Intelligence as a company dedicated to supporting the needs of companies who are adapting to the current and future landscapes and need the right partner to support them through the process.
The Company is a global SaaS market network that connects curated brands with selected buyer.
Born owns a prestigious program in the design community, which serves as a prime acquisition channel for top brands and buyers It showcases creative journeys in design-led lifestyle with a focus on desirability, functionality, and integrity.
| ● | 6 categories: Technology, Interiors, Fashion, Beauty, Sports & Outdoor, Retail Experience. |
| ● | 8 regions: America, UK, Italy, France, Spain, Africa, China and Rest of World |
| ● | 192 selected brands and buyers that will be promoted all year on partners channels |
The Company’s revenue is subscription based. Such subscriptions range from $1,200 to $15,000 per year for designer brands, and is free for buyers.
General
The Company’s website and mobile app allow users to:
| ● | Digitalize their business (tradeshow, showrooms, agents, PR) |
| ● | Extend online the existing offline experience all year |
| ● | Create new revenues opportunities |
| ● | Improve the return on investment for Brands and Buyers |
| ● | Optimize and organize Buyers connection and avoid travel disruptions |
| ● | Save about $2-4m in product development and 2-3 years |
The main terms of the subscriptions are:
| ● | Duration: 3-5 years |
| ● | Branding: powered by BORN Alkeon |
| ● | Subscription fees sold by partners: split 50/50 |
| ● | Licensing fees: up to $100k / year / partner |
| ● | Configuration fees: up to $50k / year |
| ● | Onboarding fees: $300 per brand / $50 per buyer |
Employees
We currently have 15 employees, one of whom is the officer and director. We anticipate hiring additional employees in the next twelve months. We anticipate hiring necessary personnel based on an as needed basis only on a per contract basis to be compensated directly from revenues. The Company has an employment contract with Jean Christophe Chopin. It is attached hereto as an Exhibit.
Intellectual Property
The Company has trademarked 38 names in a number of countries. It has an assumed value of approximately $475,874.
Reports to Security Holders
You may read and copy any materials the Company files with the Commission in the Commission’s Public Reference Section, Room 1580, 100 F Street N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Section by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov.
4
Risk Factors
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information contained in this report before deciding to invest in our common stock.
Risks Related to our Business
We have a limited operating history
We have had limited recent operating history. We will, in all likelihood, sustain operating expenses without corresponding revenues, at least for the foreseeable future. We can make no assurances that we will be able to effectuate our strategies or otherwise to generate sufficient revenue to continue operations.
During year ended December 31, 2019, the Company’s net revenue was $482,766.
Our estimates of capital, personnel, equipment, and facilities required for our proposed operations are based on certain other existing businesses operating under projected business conditions and plans. We believe that our estimates are reasonable, but it is not possible to determine the accuracy of such estimates at this point. In formulating our business plan, we have relied on the judgment of our officers and directors and their experience in developing businesses. We can make no assurances that we will be able to obtain sufficient financing or implement successfully the business plan we have devised. Further, even with sufficient financing, there can be no assurance that we will be able to operate our business on a profitable basis. We can make no assurances that our projected business plan will be realized or that any of our assumptions will prove to be correct.
We are subject to a variety of possible risks that could adversely impact our revenues, results of operations or financial condition. Some of these risks relate to general economic and financial conditions, while others are more specific to us and the industry in which we operate. The following factors set out potential risks we have identified that could adversely affect us. The risks described below may not be the only risks we face. Additional risks that we do not yet know of, or that we currently think are immaterial, could also have a negative impact on our business operations or financial condition. See also Statement Regarding Forward-Looking Disclosure.
We operate in a highly competitive industry.
The advertising and marketing communications business is highly competitive and constantly changing. Our agencies and media services compete with other agencies and other providers of creative, marketing or media services to maintain existing client relationships and to win new business. Our competitors include not only other large multinational advertising and marketing communications companies, but also smaller entities that operate in local or regional markets as well as new forms of market participants.
Competitive challenges also arise from rapidly-evolving and new technologies in the marketing and advertising space, creating opportunities for new and existing competitors and a need for continued significant investment in tools, technologies and process improvements. As data-driven marketing solutions become increasingly core to the success of our brands, any failure to keep up with rapidly changing technologies and standards in this space could harm our competitive position.
The client’s perception of the quality of our agencies’ creative work, its confidence in our ability to protect the confidentiality of their and their customers’ data and its relationships with key personnel at the Company or our agencies are important factors that affect our competitive position. An agency’s ability to serve clients, particularly large international clients, on a broad geographic basis and across a range of services and technologies may also be an important competitive consideration. On the other hand, because an agency’s principal asset is its people and freedom of entry into the industry is almost unlimited, our relationships with clients can be affected by the departure of key personnel and a small agency is, on occasion, able to take all or some portion of a client’s account from a much larger competitor.
Clients may terminate or reduce their relationships with us on short notice.
Many companies put their advertising and marketing communications business up for competitive review from time to time, and we have won and lost client accounts in the past as a result of such periodic competitions. Our clients may choose to terminate their contracts, or reduce their relationships with us, on a relatively short time frame and for any reason. A relatively small number of clients contribute a significant portion of our revenue.
Our ability to attract new clients and to retain existing clients may also, in some cases, be limited by clients’ policies or perceptions about conflicts of interest, or our own exclusivity arrangements with certain clients. These policies can, in some cases, prevent one agency, or even different agencies under our ownership, from performing similar services for competing products or companies.
5
Our results of operations are highly susceptible to unfavorable economic conditions.
We are exposed to risks associated with weak or uncertain regional or global economic conditions and disruption in the financial markets. The global economy continues to be challenging in some markets. Uncertainty about the continued strength of the global economy generally, or economic conditions in certain regions or market sectors, and a degree of caution on the part of some marketers, can have an effect on the demand for advertising and marketing communication services. In addition, market conditions can be adversely affected by natural and human disruptions, such as natural disasters, severe weather events, military conflict or public health crises. Our industry can be affected more severely than other sectors by an economic downturn and can recover more slowly than the economy in general. In the past, some clients have responded to weak economic and financial conditions by reducing their marketing budgets, which include discretionary components that are easier to reduce in the short term than other operating expenses. This pattern may recur in the future. Furthermore, unexpected revenue shortfalls can result in misalignments of costs and revenues, resulting in a negative impact to our operating margins. If our business is significantly adversely affected by unfavorable economic conditions or other market disruptions that adversely affect client spending, the negative impact on our revenue could pose a challenge to our operating income and cash generation from operations.
We may lose or fail to attract and retain key employees and management personnel.
Our employees, including engineers, creative, digital, research, media and account specialists, and their skills and relationships with clients, are among our most valuable assets. An important aspect of our competitiveness is our ability to identify and develop the appropriate talent and to attract and retain key employees and management personnel. Our ability to do so is influenced by a variety of factors, including the compensation we award and factors which may be beyond our control. Changes to immigration policies or travel restrictions imposed as a result of public health, political or security concerns, that restrain the flow of professional talent may inhibit our ability to staff our offices or projects. In addition, the advertising and marketing services industry is characterized by a high degree of employee mobility and significant use of third-party or temporary workers to staff new, growing or temporary assignments. If we were to fail to attract key personnel or lose them to competitors or clients, or fail to manage our workforce effectively, our business and results of operations could be adversely affected.
If our clients experience financial distress, or seek to change or delay payment terms, it could negatively affect our own financial position and results.
At any given time, one or more of our clients may experience financial difficulty, file for bankruptcy protection or go out of business. Unfavorable economic and financial conditions could result in an increase in client financial difficulties that affect us. The direct impact on us could include reduced revenues and write-offs of accounts receivable and expenditures billable to clients, and if these effects were severe, the indirect impact could include impairments of intangible assets, credit facility covenant violations and reduced liquidity.
International business risks could adversely affect our operations.
We are a global business. Operations outside the United States represent a significant portion of our net revenues. These operations are exposed to risks that include local legislation, currency variation, exchange control restrictions, local labor and employment laws that hinder workforce flexibility, large-scale local or regional public health crises, and other difficult social, political or economic conditions. We also must comply with applicable U.S., local and other international anti-corruption laws, including the FCPA and the U.K. Anti-Bribery Act (2010), which can be comprehensive, complex and stringent, in all jurisdictions where we operate, certain of which present heightened compliance challenges. Export controls and economic sanctions, such as those maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, can impose limitations on our ability to operate in certain geographic regions or to seek or service certain potential clients. These restrictions can place us at a competitive disadvantage with respect to those competitors who may not be subject to comparable restrictions. Failure to comply or to implement business practices that sufficiently prevent corruption or violation of sanctions laws could result in significant remediation expense and expose us to significant civil and criminal penalties and reputational harm.
Given our substantial operations in the United Kingdom and Continental Europe, we face continued uncertainty surrounding the implementation and consequences of the U.K.’s June 2016 referendum in which voters approved the United Kingdom’s exit from the European Union, commonly referred to as “Brexit.” Under the withdrawal agreement negotiated between the U.K. and the E.U., the U.K. as of January 31, 2020, is no longer a member of the European Union, and a transitional period will occur through December 31, 2020, during which the parties intend to negotiate the terms of their future economic and trade relationship. During and following this transitional period, it is possible that Brexit and changes resulting from Brexit will cause increased regulatory and legal complexities, large exchange rate fluctuations and negative economic impacts. These impacts and any increased restrictions on the free movement of labor, capital, goods and services between the United Kingdom and the remaining members of the European Union, could create uncertainty surrounding our business, including our relationships with existing and future clients, suppliers and employees, and have an adverse effect on our business, financial results and operations.
6
In developing countries or regions, we may face further risks, such as slower receipt of payments, nationalization, social and economic instability, currency repatriation restrictions and undeveloped or inconsistently enforced commercial laws. These risks may limit our ability to grow our business and effectively manage our operations in those countries.
In addition, because a significant portion of our business is denominated in currencies other than the U.S. Dollar, such as the Australian Dollar, Brazilian Real, British Pound Sterling, Canadian Dollar, Chinese Yuan Renminbi, Euro and Indian Rupee, fluctuations in exchange rates between the U.S. Dollar and such currencies, including the persistent strength of the U.S. Dollar in recent periods, may adversely affect our financial results.
We are subject to industry regulations and other legal or reputational risks that could restrict our activities or negatively impact our performance or financial condition.
Our industry is subject to government regulation and other governmental action, both domestic and foreign. Advertisers and consumer groups may challenge advertising through legislation, regulation, judicial actions or otherwise, for example on the grounds that the advertising is false and deceptive or injurious to public welfare. Our business is also subject to specific rules, prohibitions, media restrictions, labelling disclosures and warning requirements applicable to advertising for certain products. Existing and proposed laws and regulations, in particular in the European Union and the United States, concerning user privacy, use of personal information and on-line tracking technologies could affect the efficacy and profitability of internet-based, digital and targeted marketing. We are also subject to laws and regulations that govern whether and how we can transfer, process or receive certain data that we use in our operations. The costs of compliance with these laws may increase in the future as a result of the implementation of new laws or regulations, such as the GDPR and the CCPA, or changes in interpretations of current ones, such as the interpretation of existing consumer protection laws as imposing restrictions on the online collection, storage and use of personal data. The imposition of restrictions on certain technologies by private market participants in response to privacy concerns could also have a negative impact on our digital business. If we are unable to transfer data between countries and regions in which we operate, or if we are prohibited from sharing data among our products and services, it could affect the manner in which we provide our services or adversely affect our financial results. Any failure on our part to comply with these legal requirements, or their application in an unanticipated manner, could harm our business and result in penalties or significant legal liability. Legislators, agencies and other governmental units may also continue to initiate proposals to ban the advertising of specific products, such as alcohol, tobacco or marijuana products, and to impose taxes on or deny deductions for advertising, which, if successful, may hinder our ability to accomplish our clients’ goals and have an adverse effect on advertising expenditures and, consequently, on our revenues. Governmental action, including judicial rulings, on the relative responsibilities of clients and their marketing agencies for the content of their marketing can also impact our operations. Furthermore, we could suffer reputational risk as a result of governmental or legal action or from undertaking work that may be challenged by consumer groups or considered controversial.
We rely extensively on information technology systems and could face cybersecurity risks.
We rely extensively and increasingly on information technologies and infrastructure to manage our business, including digital storage of marketing strategies and client information, develop new business opportunities and digital products, and process business transactions. The incidence of malicious technology-related events, such as cyberattacks, computer hacking, computer viruses, worms or other destructive or disruptive software, phishing attacks and other attempts to gain access to confidential or personal data, denial of service attacks or other malicious activities is on the rise worldwide and highlights the need for continual and effective cybersecurity awareness and education. Our business, which increasingly involves the collection, use and transmission of customer data, may make us and our agencies attractive targets for malicious third-party attempts to access this data. Power outages, equipment failure, natural disasters (including extreme weather), terrorist activities or human error may also affect our systems and result in disruption of our services or loss or improper disclosure of personal data, business information, including intellectual property, or other confidential information. We operate in many respects on a decentralized basis, with a large number of agencies and legal entities, and the resulting size, diversity and disparity of our technology systems and complications in implementing standardized technologies and procedures could increase our potential vulnerability to such breakdowns, malicious intrusions or attacks.
Likewise, data privacy breaches, as well as improper use of social media, by employees and others may pose a risk that sensitive data, such as personally identifiable information, strategic plans and trade secrets, could be exposed to third parties or to the general public. We operate worldwide, and the legal rules governing data transfers are often complex, conflicting, unclear or ever-changing. We also utilize third parties, including third-party “cloud” computing services, to store, transfer or process data, and system failures or network disruptions or breaches in the systems of such third parties could adversely affect our reputation or business.
Any such breaches or breakdowns could expose us to legal liability, be expensive to remedy, result in a loss of our or our clients’ or vendors’ proprietary information and damage our reputation. Efforts to develop, implement and maintain security measures are costly, may not be successful in preventing these events from occurring and require ongoing monitoring and updating as technologies and cyberattack techniques change frequently, or are not recognized until successful and efforts to overcome security measures become more sophisticated.
7
Our earnings would be adversely affected if we were required to recognize asset impairment charges
We evaluate all of our long-lived assets (including goodwill, other intangible assets and fixed assets), for possible impairment or realizability annually or whenever there is an indication that they are impaired or not realizable. If certain criteria are met, we are required to record an impairment charge or valuation allowance.
As of December 31, 2020, we have substantial amounts of indefinite-lived intangible assets on our Consolidated Balance Sheet. Future events, including our financial performance, market valuation of us or market multiples of comparable companies, loss of a significant client’s business or strategic decisions, could cause us to conclude that impairment indicators exist and that the asset values associated with these assets may have become impaired. Any significant impairment loss would have an adverse impact on our reported earnings in the period in which the charge is recognized. For further discussion of goodwill and other intangible assets, as well as our sensitivity analysis of our valuation of these assets, see Critical Accounting Estimates in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.
We may not be able to meet our performance targets and milestones.
From time to time, we communicate to the public certain targets and milestones for our financial and operating performance that are intended to provide metrics against which to evaluate our performance. They should not be understood as predictions or guidance about our expected performance. Our ability to meet any target or milestone is subject to inherent risks and uncertainties, and we caution investors against placing undue reliance on them. See Statement Regarding Forward-Looking Disclosure.
The costs of compliance with sustainability or other social responsibility laws, regulations or policies, including client-driven policies and standards, could adversely affect our business.
As a non–location–specific, non–manufacturing service business we have to date been sheltered from or able to mitigate many direct impacts from climate change and related laws and regulations. We are, however, increasingly impacted by the effects of climate change and laws and regulations related to other sustainability concerns, and we could incur related costs indirectly through our clients. Increasingly our clients request that we comply with their own social responsibility, sustainability or other business policies or standards, which may be more restrictive than current laws and regulations, before they commence, or continue, doing business with us, and sustainability and governance issues are increasingly a focus of the investor community. Our compliance with these policies and related certification requirements could be costly, and our failure to comply could adversely affect our business relationships or reputation. If large shareholders were to reduce their ownership stakes in our Company as a result of dissatisfaction with our policies or efforts in this area, there could be negative impact on our stock price, and we could also suffer reputational harm. Further, if clients’ costs are adversely affected by climate change or related laws and regulations, this could negatively impact their spending on our advertising and marketing services. We could also face increased prices from our own suppliers that face climate change-related costs and seek to pass on their increased costs to their customers.
We have limited personal liability.
Our Certificate of Incorporation and Bylaws generally provide that the liability of our officers and directors will be eliminated to the fullest extent allowed under law for their acts on behalf of our Company.
There are uncertain government regulations.
Our business will be subject to extensive regulation. There has been an active debate over the appropriate extent of regulation and oversight. In addition, we may be adversely affected as a result of new or revised legislation or regulations imposed by the Commission or other United States governmental regulatory authorities or self-regulatory organizations that supervise the markets. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations.
There is major competition.
A number of our existing or potential competitors may have substantially greater financial, technical, and marketing resources, larger investor bases, greater name recognition, and more established relationships with their investors, and more established sources of deal flow and investment opportunities than we do. This may enable our competitors to: develop and expand their services and develop infrastructure more quickly and achieve greater scale and cost efficiencies; adapt more quickly to new or emerging markets and opportunities, strategies, techniques, technologies, and changing investor needs; take advantage of acquisitions and other market opportunities more readily; establish operations in new markets more rapidly; devote greater resources to the marketing and sale of their products and services; adopt more aggressive pricing policies; and provide clients with additional benefits at lower overall costs in order to gain market share. If our competitive advantages are not compelling or sustainable and we are not able to effectively compete with larger competitors, then we may not be able to increase or sustain cash flow.
8
Our financial performance is dependent on the conditions of the fashion industries.
The results of our business is influenced by a number of external factors including fluctuations in material costs, labor costs, foreign currency exchange rates, customer attrition, raw material and energy costs, global credit market conditions, and other global and political factors, including trade policies. A slowdown in building and remodeling activity can adversely affect the financial performance of our company.
There are implications of being an emerging growth company.
As a company with less than $2.0 billion in revenue during its last fiscal year, we qualify as an “emerging growth company” as defined in the JOBS Act. For as long as a company is deemed to be an emerging growth company, it may take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable to other public companies. These provisions include:
| - | a requirement to have only two years of audited financial statements and only two years of related Management’s Discussion and Analysis included in an initial public offering registration statement; | |
| - | an exemption to provide less than five years of selected financial data in an initial public offering registration statement; | |
| - | an exemption from the auditor attestation requirement in the assessment of our internal controls over financial reporting; | |
| - | an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies; | |
| - | an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; and | |
| - | reduced disclosure about our executive compensation arrangements. |
An emerging growth company is also exempt from Section 404(b) of the Sarbanes Oxley Act, which requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. Similarly, as a Smaller Reporting Company we are exempt from Section 404(b) of the Sarbanes-Oxley Act and our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until such time as we cease being a Smaller Reporting Company.
As an emerging growth company, we are exempt from Section 14A (a) and (b) of the Exchange Act which require stockholder approval of executive compensation and golden parachutes.
Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We would cease to be an emerging growth company upon the earliest of:
| - | the first fiscal year following the fifth anniversary of the filing of this Form 10; | |
| - | the first fiscal year after our annual gross revenues are $2 billion or more; | |
| - | the date on which we have, during the previous three-year period, issued more than $2 billion in non-convertible debt securities; or | |
| - | as of the end of any fiscal year in which the market value of our Common Stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. |
Our results of operations may be negatively impacted by the coronavirus outbreak.
In December 2019, the 2019 novel coronavirus surfaced in Wuhan, China. The World Health Organization declared a global emergency on January 30, 2020, with respect to the outbreak and several countries, including the United States, Japan , Europe and Australia have initiated travel restrictions to and from China. The impacts of the outbreak are unknown and rapidly evolving.
This outbreak has resulted in the extended shutdown of certain businesses around the globe, which may in turn result in slowing overall industry growth. Even though our business has been an enabler, the future outcome of COVID-19 is unknown and could continue to have a negative impact on the global economy.
On March 11, 2020, the World Health Organization (“WHO”) declared the Covid-19 outbreak to be a global pandemic. In addition to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions and volatility in the global financial markets. Most US states and many countries have issued policies intended to stop or slow the further spread of the disease.
9
Covid-19 and the U.S’s response to the pandemic are significantly affecting the economy. There are no comparable events that provide guidance as to the effect the Covid-19 pandemic may have, and, as a result, the ultimate effect of the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the effects on the economy, the markets we serve, our business, or our operations.
Risks Related to the Market for our Stock
The OTC and share value
Our Common Stock trades over the counter, which may deprive stockholders of the full value of their shares. Our stock is quoted via the Over-The-Counter (“OTC”) Pink Sheets under the ticker symbol “BRRN”. Therefore, our Common Stock is expected to have fewer market makers, lower trading volumes, and larger spreads between bid and asked prices than securities listed on an exchange such as the New York Stock Exchange or the NASDAQ Stock Market. These factors may result in higher price volatility and less market liquidity for our Common Stock.
Low market price
A low market price would severely limit the potential market for our Common Stock. Our Common Stock is expected to trade at a price substantially below $5.00 per share, subjecting trading in the stock to certain Commission rules requiring additional disclosures by broker-dealers. These rules generally apply to any non-NASDAQ equity security that has a market price share of less than $5.00 per share, subject to certain exceptions (a “penny stock”). Such rules require the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and institutional or wealthy investors. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to the sale. The broker-dealer also must disclose the commissions payable to the broker-dealer, current bid and offer quotations for the penny stock and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Such information must be provided to the customer orally or in writing before or with the written confirmation of trade sent to the customer. Monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. The additional burdens imposed upon broker-dealers by such requirements could discourage broker-dealers from effecting transactions in our Common Stock.
Lack of market and state blue sky laws
Investors may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws. The holders of our shares of Common Stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the shares available for trading on the OTC, investors should consider any secondary market for our securities to be a limited one. We intend to seek coverage and publication of information regarding our Company in an accepted publication which permits a “manual exemption.” This manual exemption permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer’s balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. We may not be able to secure a listing containing all of this information. Furthermore, the manual exemption is a non-issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard and Poor’s, Moody’s Investor Service, Fitch’s Investment Service, and Best’s Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont, and Wisconsin.
Accordingly, our shares of Common Stock should be considered totally illiquid, which inhibits investors’ ability to resell their shares.
10
Penny stock regulations
We will be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our Common Stock. The Commission has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. We anticipate that our Common Stock will become a “penny stock”, and we will become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers. For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.
For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the Commission relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
We do not anticipate that our Common Stock will qualify for exemption from the Penny Stock Rule. In any event, even if our Common Stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the Commission the authority to restrict any person from participating in a distribution of penny stock, if the Commission finds that such a restriction would be in the public interest.
Rule 144 Risks
Sales of our Common Stock under Rule 144 could reduce the price of our stock. There are 351,206,422 issued and outstanding shares of our Common Stock held by affiliates that Rule 144 of the Securities Act defines as restricted securities.
These shares will be subject to the resale restrictions of Rule 144, should we hereinafter cease being deemed a “shell company”. In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least nine months, may not sell more than 1.0% of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price. The availability for sale of substantial amounts of Common Stock under Rule 144 could reduce prevailing market prices for our securities.
No audit or compensation committee
Because we do not have an audit or compensation committee, stockholders will have to rely on our entire Board of Directors, none of which are independent, to perform these functions. We do not have an audit or compensation committee comprised of independent directors. Indeed, we do not have any audit or compensation committee. These functions are performed by our Board of Directors as a whole. No members of our Board of Directors are independent directors. Thus, there is a potential conflict in that Board members who are also part of management will participate in discussions concerning management compensation and audit issues that may affect management decisions.
Security laws exposure
We are subject to compliance with securities laws, which exposes us to potential liabilities, including potential rescission rights. We may offer to sell our shares of our Common Stock to investors pursuant to certain exemptions from the registration requirements of the Securities Act, as well as those of various state securities laws. The basis for relying on such exemptions is factual; that is, the applicability of such exemptions depends upon our conduct and that of those persons contacting prospective investors and making the offering. We may not seek any legal opinion to the effect that any such offering would be exempt from registration under any federal or state law. Instead, we may elect to relay upon the operative facts as the basis for such exemption, including information provided by investor themselves.
If any such offering did not qualify for such exemption, an investor would have the right to rescind its purchase of the securities if it so desired. It is possible that if an investor should seek rescission, such investor would succeed. A similar situation prevails under state law in those states where the securities may be offered without registration in reliance on the partial pre-emption from the registration or qualification provisions of such state statutes under the National Securities Markets Improvement Act of 1996. If investors were successful in seeking rescission, we would face severe financial demands that could adversely affect our business and operations. Additionally, if we did not in fact qualify for the exemptions upon which we have relied, we may become subject to significant fines and penalties imposed by the Commission and state securities agencies.
No cash dividends
Because we do not intend to pay any cash dividends on our Common Stock, our stockholders will not be able to receive a return on their shares unless they sell them. We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on shares of our Common Stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. There is no assurance that stockholders will be able to sell shares of our Common Stock when desired.
11
Delayed adoption of accounting standards
We have delayed the adoption of certain accounting standards through an opt-in right for emerging growth companies. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, which allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
Any failure by our subsidiaries or their equity holders to perform their obligations under the contractual arrangements would have a material adverse effect on our business, financial condition and results of operations.
If our subsidiaries or their equity holders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. Although we have entered into call option agreements in relation to each variable interest entity, which provide that we may exercise an option to acquire, or nominate a person to acquire, ownership of the equity in that entity or, in some cases, its assets, to the extent permitted by applicable PRC laws, rules and regulations, the exercise of these call options is subject to the review and approval of the relevant PRC governmental authorities. We have also entered into equity pledge agreements with respect to each variable interest entity to secure certain obligations of such variable interest entity or its equity holders to us under the contractual arrangements. However, the enforcement of such agreements through arbitral or judicial agencies may be costly and time-consuming and will be subject to uncertainties in the PRC legal system. Moreover, our remedies under the equity pledge agreements are primarily intended to help us collect debts owed to us by the subsidiaries or the variable interest entity equity holders under the contractual arrangements and may not help us in acquiring the assets or equity of the subsidiaries.
In addition, although the terms of the contractual arrangements provide that they will be binding on the successors of the variable interest entity equity holders, as those successors are not a party to the agreements, it is uncertain whether the successors in case of the death, bankruptcy or divorce of a variable interest entity equity holder will be subject to or will be willing to honor the obligations of such variable interest entity equity holder under the contractual arrangements. If the relevant variable interest entity or its equity holder (or its successor), as applicable, fails to transfer the shares of the variable interest entity according to the respective call option agreement or equity pledge agreement, we would need to enforce our rights under the call option agreement or equity pledge agreement, which may be costly and time-consuming and may not be successful.
The contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration or court proceedings in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. Moreover, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a variable interest entity should be interpreted or enforced under PRC law, and as a result it may be difficult to predict how an arbitration panel or court would view such contractual arrangements. As a result, uncertainties in the PRC legal system could limit our ability to enforce the contractual arrangements. Under PRC law, if the losing parties fail to carry out the arbitration awards or court judgments within a prescribed time limit, the prevailing parties may only enforce the arbitration awards or court judgments in PRC courts, which would require additional expense and delay. If we cannot enforce the contractual arrangements, we may not be able to exert effective control over the subsidiaries, and our ability to conduct our business, as well as our financial condition and results of operations, may be materially and adversely affected.
12
Management’s discussion and analysis of financial condition and results of operation
The following discussion and analysis should be read in conjunction with our financial statements and related notes thereto.
Forward Looking Statements
The following information specifies certain forward-looking statements of the management of our Company. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as may, shall, could, expect, estimate, anticipate, predict, probable, possible, should, continue, or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information statement have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements. Such forward-looking statements include statements regarding our anticipated financial and operating results, our liquidity, goals, and plans.
All forward-looking statements in this Form 10 are based on information available to us as of the date of this report, and we assume no obligation to update any forward-looking statements.
Overview
Born, Inc. f/k/a “Quture International, Inc. (“Born”, or the “Company”), is a Nevada corporation, was formed in April 2011 to become an emerging healthcare knowledge solution company created to transform health and healthcare by developing the standard in measuring clinical performance and outcomes. The Company developed medical software with tools and analytics intended to reduce costs while improving clinical performance, outcomes, predictive insight, and evidence-based best clinical processes.
On August 10, 2011, holders of a majority of the Registrant’s outstanding Common Stock voted to amend the Registrant’s Articles of Incorporation to increase the number of its authorized shares of capital stock from 900,000,000 shares to 2,510,000,000 par value $0.001 shares (the “Amendment”) of which (a) 2,500,000,000 shares were designated as Common Stock and (b) 10,000,000 shares were designated as blank check preferred stock.
During the period from March 22, 2013, through December 26, 2019, the Company was dormant.
On December 27, 2019, Custodian Ventures, LLC, an entity controlled by David Lazar, was appointed by the Nevada Court as the custodian of Quture. On December 31, 2019, Mr. Lazar became the only Director and Officer of the Company also acting as its President, Treasurer, and Secretary.
On April 5, 2020, the Company granted Mr. Lazar 10,000,000 preferred shares with super-voting rights of 21,000,000,000 common shares.
On September 10, 2020, the Company filed a Certificate of Designation with the State of Nevada changing the conversion and voting rights of the Company’s Series A preferred stock, $.001 par value per share to 250 for each one (1) share of Series A preferred stock.
On September 23, 2020, as a result of a private transaction, 10,000,000 shares of Series A Convertible Preferred Stock, $0.001 par value per share (the “Shares”) of the Company were transferred from Custodian Ventures, LLC (the “Seller”) to FiveT Capital Holding AG (the “Purchaser”). As a result, the Purchaser became an approximately 50.2% holder of the voting rights of the issued and outstanding share capital of the Company on a fully-diluted basis of the Company and became the controlling shareholder. In connection with the transaction, David Lazar released the Company from all debts owed to him and/or the Seller.
On September 23, 2020, the existing director and officer resigned immediately. Accordingly, David Lazar, serving as a director and an officer, ceased to be the Company’s Chief Executive Officer, Chief Financial Officer, President, Treasurer, Secretary, and Director. At the effective date of the transfer, Mr. Wieland Kreuder consented to act as the new President, CEO, CFO, Treasurer, Secretary, and Chairman of the Board of Directors of the Company.
On November 24, 2020, Quture International, Inc. amended its articles of incorporation to change its name to Born Inc. (the “Name Change”). The change was made in anticipation of entering into a new line of business operations.
Also on November 24, 2020, the Company amended its articles of incorporation to reverse split its common stock at a rate of 1 for 1,000 (the “Reverse”). Additionally, the number of common shares authorized was reduced from 2,500,000,000 to 500,000,000. On December 1, 2020, FINRA declared the Name Change and the Reverse effective.
13
BORN, INC. (“Born”, the “Company”) is a global software-as-a- service (“SaaS”) market-network connecting curated brands and selected buyers primarily via the Internet. This is accomplished through the Company’s proprietary artificial intelligence platforms and its enterprise solutions.
BORN was incorporated in the United Kingdom in 2016 with goal of connecting world class designers and products with buyers and getting their products launched. It operates as a curated virtual trade fair and marketplace. In BORN.COM, brands have their showcase profile similar to what they would have in a booth in a trade fair. Buyers/retailers have also their profiles and they can visit/contact and connect with brands. Brands pay an annual subscription fee for having their showcase page. Until March 2020, the Company strategy was to sell to brands individually and invite retailers to set up the marketplace. With Covid-19 pandemic, the company pivoted to a new business revenue line and most of the cost focus was shifted to this. BORN initially competed with trade fairs. With Covid-19 limitations, trade fairs could not take place in 2020 and most are canceled for 2021 as well.
With the virtual trade fair infrastructure that BORN has and has been investing in since 2016, the Company started the product ALKEON Intelligence, which provides technological software for trade fairs. The trade fairs would introduce the number of brands and buyers to the Company.
The Company currently operates its business through a parent company and the four wholly-owned subsidiaries:
| ● | Alkeon Creators Inc. (“Alkeon”) was incorporated in February 2019 in Delaware. It is the parent company of Born Creative Holdings Limited (“BCHL”) and its three subsidiaries. BCHL was incorporated in the United Kingdom (“UK”) in November 2016. |
| ● | Prior to the formation of Alkeon in 2019, BCHL was the parent company of three wholly owned subsidiaries, all of which UK based. |
| Ø | Born Creators Limited (“BCL”) was incorporated in June 2014 in the UK and is based in London. |
| Ø | Born Awards Limited (“BAL”) was incorporated in November 2016 and is based in London |
| Ø | Born Brands Limited (“BBL”) was incorporated in November 2016 and is based in London |
On February 2, 2020, the Company’s Board of Directors changed the fiscal year end from April 30 to December 31.
COVID-19
On March 11, 2020, the World Health Organization (“WHO”) declared the Covid-19 outbreak to be a global pandemic. In addition to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions and volatility in the global financial markets. Most US states and many countries have issued policies intended to stop or slow the further spread of the disease.
Covid-19 and the U.S’s response to the pandemic are significantly affecting the economy. There are no comparable events that provide guidance as to the effect the Covid-19 pandemic may have, and, as a result, the ultimate effect of the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the effects on the economy, the markets we serve, our business, or our operations.
Liquidity and Capital Resources
On December 31, 2019 we had $42,683 in current assets compared to $266,650 at December 31, 2018. Current liabilities at December 31, 2019 totaled $5,596,484 compared to $4,739,383 at December 31, 2018.
At September 30, 2020, we had $3,704,084 in current assets compared to $42,683 at December 31, 2019. Current liabilities at September 30, 2020 totaled $6,129, 414 compared to $5,596,484 at December 31, 2019.
We will have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company. Our management will have to spend additional time on policies and procedures to make sure our Company is compliant with various regulatory requirements, especially that of Section 404 of the Sarbanes-Oxley Act. This additional corporate governance time required of management could limit the amount of time management has to implement our business plan and may impede the speed of our operations.
Results of Operations
We generated revenue of $482,766 and $1,180,834 for the years ended December 31, 2019 and 2018 respectively. For the year ended December 31, 2019 our cost of goods sold was $3,037 compared to $1,420 for the year ended December 31, 2018. For the year ended December 31, 2019 our expenses were $1,480,171 compared to $2,690,315 for the year ended December 31, 2018. As a result, we have net loss of $1,026,750 for the year ended December 31, 2019 and $1,586,435 for the year ended December 31, 2018.
We generated revenue of $709,040 for the nine months ended September 30, 2020 compared to 528,620 in revenue during the same period ended September 30, 2019. For the nine months ended September 30, 2020 our cost of goods sold was $770 compared to $-0- for the nine months ended September 30, 2019 .For the nine months ended September 30, 2020 our expenses were $1,723,684 compared to $1,018,485 for the nine months ended September 30, 2019. As a result, we have reported net loss of $1,119,947 for the nine months ended September 30, 2020 and $489,409 for the nine months ended September 30, 2019.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.
14
Critical Accounting Policies and Estimates
The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the Company’s financial condition and results of operations and which require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies that are significant to understanding our results. For additional information, see Note 1 - Summary of Significant Accounting Policies.
The following are deemed to be the most significant accounting policies affecting the Company.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been consistently applied.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company balances and transactions are eliminated on consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ from those estimates. Significant items subject to such estimates and assumptions include valuation of inventory, and recoverability of carrying amount and the estimated useful lives of long-lived assets.
Accounts Receivable
Accounts receivable are customer obligations due under normal trade terms which are recorded at net realizable value. The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of trade receivables. A considerable amount of judgment is required in assessing the amount of the allowance. The Company makes judgments about the creditworthiness of each customer based on ongoing credit evaluations and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the customers were to deteriorate, resulting in their inability to make payments, a specific allowance will be required.
Recovery of bad debt amounts previously written off is recorded as a reduction of bad debt expense in the period the payment is collected. If the Company’s actual collection experience changes, revisions to its allowance may be required. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. The Company had no allowance for bad debts as of December 31, 2019 and December 31, 2018.
Inventories
Based on our business plan, the Company does not hold any inventory
Research and development expenditures
The Company does not conduct research and development
Property, plant and equipment, net
The Company has minimal office equipment. The majority of its assets are in its trademark
Long-Lived Assets
Certain assets such as property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets that are held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount exceeds the fair value of the asset. No impairment was recognized for the years ended December 31, 2019 and 2018.
15
Revenue Recognition
The Company adopted ASC Topic 606, “Revenue from Contracts with Customers”, applying the modified retrospective method.
In accordance with ASC Topic 606, revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. In determining when and how much revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; (5) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company’s contract with customers do not include significant financing component and any variable consideration.
The Company does not believe that significant management judgements are involved in revenue recognition, but the amount and timing of the Company’s revenues could be different for any period if management made different judgments or utilized different estimates. Generally, the Company recognizes revenue under ASC Topic 606 for its performance obligation.
Fair Value Measurements
The Company’s financial instruments are accounted for at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of the fair value hierarchy are described below:
| ● | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. |
| ● | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. |
There were no transfers between level 1, level 2 or level 3 measurements for the years ended December 31, 2019 and 2018.
As of December 31, 2019 and 2018, none of the Company’s nonfinancial assets or liabilities was measured at fair value on a nonrecurring basis.
The carrying values of the Company’s financial assets and liabilities, including cash and cash equivalents, accounts receivables, salary payable and accounts payable, are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available.
Loss Per Common Share
Basic net loss per share is calculated by dividing the net loss by the weighted – average number of common shares outstanding for the period, without consideration for Common Stock equivalents.
Employees
We currently have 15 employees, one of whom is the officer and director. We anticipate hiring additional employees in the next twelve months. We anticipate hiring necessary personnel based on an as needed basis only on a per contract basis to be compensated directly from revenues. The Company has an employment contract with Jean Christophe Chopin. It is attached hereto as an Exhibit.
Off-Balance Sheet Arrangements
During the years ended December 31, 2019 and December 31. 2018 we did not engage in any off-balance sheet arrangements as defined in item 303(a)(4) of the Commission’s Regulation S-K.
16
Properties
Our mailing address is 717 N Highland Avenue, Los Angeles, CA 90038.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information with respect to the beneficial ownership of our voting securities following the completion of the Reverse Merger described in Items 1.01 of this report by (i) any person or group owning more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer and (iv) all executive officers and directors as a group as of February 16, 2020.
Name | Number
of | Percentage | ||||||
| Jean Christophe Chopin(1) | 237,530,023 | 58 | % | |||||
| All executives officers, directors, and beneficial ownership thereof as a group (1 person) | 237,530,023 | 58 | % | |||||
| Lioncap Global Management | 41,729,311 | 10 | % | |||||
| Cosmos Sicav PLC-Open Capital Fund | 71,947,088 | 17.6 | % | |||||
There are no other officer or director 5 % shareholders.
| (1) | 224,886,042 of the shares are held trough Creators Guild Ltd. Mr. Chopin is the president of Creators Guild Ltd. Mr. Chopin was appointed as sole officer and director on February 16, 2021. |
Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the stockholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 409,353,807 shares of common stock outstanding as of February 16, 2021.
The mailing address of the stockholders referenced in the chart above is 717 N Highland Avenue, Los Angeles, CA 90038.
Directors and Executive Officers, Promoters and Control Persons
Mr. Jean Christophe Chopin was appointed Chairman of the Board and the sole officer and director on February 16, 2021. Mr. Wieland Kreuder resigned as the sole officer and director on February 16, 2021.
| Name | Age | Position(s) | ||
| Jean Christophe Chopin | 56 | CEO, CFO, Secretary, Treasurer, Director | ||
| Wieland Kreuder | 46 | Former CEO, CFO, Secretary, Treasurer, Director |
Jean Christophe Chopin, Chairman of the Board, CEO
Jean Christophe Chopin, Age 62, Jean Christophe Chopin is a serial entrepreneur and pioneer of the design led lifestyle. Jean Christophe Chopin founded BORN in 2016 to bring together his many years of experience and investment in the world of premium brands and digital. As one of the pioneers in digital commerce, he created his first company at the age of 17. After several years spent in the US he returned to Europe at the age of 26 and began successfully distributing financial and insurance products, first through Minitel and later internationally through the Internet. In 1996, Mr. Chopin completed a merger with E*Trade and expanded E*Trade into six European countries. In 1999, he sold his 75% stake of this E*Trade venture to the E*Trade Group Inc. In 2004, he did the same with Verisign Inc. and built a Joint Venture for Verisign Europe for online payments.
Wieland Kreuder, Age 46, former sole officer and director.
Mr. Wieland Kreuder, age 46, has worked at FiveT Capital Holding AG, Zurich, for thirteen years. He was an Executive Vice President from October 2007 to April 2014, and a Director from May 2014 to the present. Mr. Kreuder was an equity specialist trader at Baader Bank AG, Munich, from April 2004 to September 2007. He has a Master Degree in Economics from the University of Hohenheim.
17
Term of Office
Our director holds his position until the next annual meeting of shareholders and until his successor is elected and qualified by our shareholders, or until earlier death, retirement, resignation or removal.
Family Relationships
There are no family relationships between the Company and any of our current and proposed directors or executive officers.
Legal Proceedings Involving Directors and Executive Officers
During the past ten years no current or incoming director, executive officer, promoter or control person of the Company has been involved in the following:
(1) A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
(2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) ;
(3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii. Engaging in any type of business practice; or
iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
(4) Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
(5) Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
(6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
(7) Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i. Any Federal or State securities or commodities law or regulation; Or
ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease and desist order, or removal or prohibition order; Or
iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; Or
18
(8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Executive Compensation
The table below sets forth the positions and compensations for the sole officer and director of Born, Inc. for the years ended December 31, 2019 and 2018.
| Position | Name of Directors | Year | Salary before tax | Bonus | All other compensation | Total | ||||||||||||||||
| Chief Executive | Jean Christophe Chopin | 2019 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
| Officer and Chairman | 2018 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
| Former Chief Executive | Wieland Kreuder | 2019 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
| Officer and Chairman | 2018 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
We do not have an audit or compensation committee comprised of independent directors as our Company qualifies for an exemption from these requirements. Indeed, we do not have any audit or compensation committee. These functions are performed by our Board of Directors as a whole.
All directors serve 1 yr. terms.
Transactions with related persons, promoters and certain control persons
Related Party Transactions
As of December 31, 2019 and 2018, The Company had $5,100,323 and $4,273,511 in non-interest bearing related party notes to its CEO and founder who has funded the Company since inception. Additionally we recorded related party rent expense for a residence occupied by our CEO that also served as our corporate headquarters in the United States. Our CEO has not taken a salary since the inception of the Company.
During the years ended December 31, 2019 and 2018 we recorded related party consulting expenses of $12,783 and $223,762, respectively. The consulting expenses incurred were for a Director who also served as a Business Development Executive in the Company.
As of December 31, 2019 and 2018 we had accounts payable due to related parties of $70,719 and $85,526.
Corporate Governance
Director Independence
None of our directors qualified as an “independent director” under the rules of NASDAQ, Marketplace Rule 4200(a).
Nominating Committee
We do not presently have a nominating committee. Our Board of Directors currently acts as our nominating committee.
Audit Committee
We do not presently have an audit committee. Our Board of Directors currently acts as our nominating committee.
19
Legal Proceeding
None.
Market Price of and dividends on the registrant’s common equity and related shareholder matters
Market Information
Born, Inc. is currently listed under OTCQB tier of OTC markets, ticker symbol “BRRN.” The quotation of our common share does not assure a meaningful, consistent and liquid trading market currently exist. We cannot predict whether a more active market for our common share will develop in the future. In absence of an active trading market,
| (1) | Investor may have difficulty buying or selling or obtaining market quotation, | |
| (2) | Market visibility of our common share may be limited which may have a depressive effect on the market price for our common share. |
Our common stock is currently quoted on the OTC market “Pink Sheets” under the symbol BRRN. For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. The below prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.
| Price Range | ||||||||
| Period | High | Low | ||||||
| Year ended December 31, 2019 | ||||||||
| Second Quarter | $ | .50 | .30 | |||||
| Third Quarter | $ | .70 | .50 | |||||
| Fourth Quarter | $ | .130 | .30 | |||||
| Year Ended December 31, 2020: | ||||||||
| First Quarter | $ | 1.30 | .40 | |||||
| Second Quarter | $ | 1.10 | .50 | |||||
| Third Quarter | $ | 13.95 | .90 | |||||
| Fourth Quarter | $ | 14.00 | 3.00 | |||||
| Year ended December 31, 2021 | ||||||||
| First Quarter | $ | 6.24 | 3.00 | |||||
The closing market price of our common stock on February 5, 2021 was $3.35.
As mentioned in Item 101, an additional 406,646,919 restricted common shares were issued to the shareholders of Alkeon upon reverse acquisition activity. All additional issued common shares of Born Inc. is restricted from disposal for the lesser of 2 years from issuance, or one-year from the date of filing hereof. No options or warrants to purchase, or securities convertible into, common equity of the registrant. None of above mentioned additional issuance of restricted common share are issued to qualified institutional buyer as defined under § 230.144A
VStock Transfer LLC, 18 Lafayette Place, Woodmere, NY 11598, 212-828-8436, is the registrar and transfer agent of our common share.
20
Holders
As of February 16, 2021, we had 48 shareholders of our common shares, including the shares held in street name by brokerage firm. The holders of common share are entitle to one vote for each share held for record on all matters submitted to a vote of shareholders. Holders of the common share have no pre-emptive rights and no right to convert their common share into any other securities. There are no redemption or sinking fund provisions applicable to the common share.
There were also 10,000,000 shares of Series A Preferred Stock issued and outstanding at the time of the reverse merger activity on February 16, 2021. However, all 10,000,000 shares were exchanged, converted or retired as of the merger. The effect of the transaction is indicated under share issuance column.
| Name | Shares | |||
| Creators Guild Ltd | 224,886,042 | |||
| Lioncap Global Management | 41,729,311 | |||
| Cosmos Sicav Plc - Open Capital Fund | 71,947,088 | |||
| MTS 2001 GTR Holdings, LLC | 10,278,155 | |||
| DAMVIX EQUITIES LLC | 6,166,893 | |||
| FiveT Capital Holding AG | 20,556,311 | |||
| Jean-Christophe Chopin | 12,643,981 | |||
| Brendan Wypich | 8,429,320 | |||
| Pierre Sapin | 8,429,320 | |||
| Vanessa Montes | 1,580,497 | |||
21
Dividends
We have not issued any dividends, and have no plans of paying cash dividends in the future.
Securities authorized for issuance under equity compensation plan
As of February 8, 2021, the Company has no securities authorized either previously approved or disapproved for issuance under equity compensation plan.
Penny Stock Regulations
Our shares of common stock are subject to the “penny stock” rules of the Securities Exchange Act of 1934 and various rules under this Act. In general terms, “penny stock” is defined as any equity security that has a market price less than $5.00 per share, subject to certain exceptions. The rules provide that any equity security is considered to be a penny stock unless that security is registered and traded on a national securities exchange meeting specified criteria set by the SEC, issued by a registered investment company, and excluded from the definition on the basis of price (at least $5.00 per share), or based on the issuer’s net tangible assets or revenues. In the last case, the issuer’s net tangible assets must exceed $3,000,000 if in continuous operation for at least three years or $5,000,000 if in operation for less than three years, or the issuer’s average revenues for each of the past three years must exceed $6,000,000.
Recent Sales of Unregistered Securities
On February 16, 2021, we consummated the Share Exchange Agreement with Alkeon Creators, Inc., a United Kingdom company, and all the shareholders of Alkeon to acquire all the issued and outstanding capital stock of Alkeon and return all of the Company’s Preferred Stock to treasury, in exchange for the issuance to the Shareholders an aggregate of 406,646,919 restricted shares of our common stock, which were issued on February 16, 2021.
Description of securities
The following is a summary description of our capital stock and certain provisions under the laws of the State of Nevada where the Company was incorporated. The following discussion is qualified in its entirety by reference to such exhibits.
General
We have authorized 500,000,000 shares of common stock with par value $0.001 per share. As at February 16, 2021, the Company has issued and outstanding 409,353,807 shares of common stock. We have authorized 10,000,000 Series A preferred stock with par value $0.001 per share. As at February 16, 2021, the Company has issued and outstanding 0 shares of preferred stock.
Common Stock
The holders of our common stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voting for the election of directors can elect all of the directors then up for election. The holders of our common stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available therefor. In the event of liquidation, dissolution or winding up of our company, the holders of common stock are entitled to share rateably in all assets remaining which are available for distribution to them after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the common stock. Holders of shares of our common stock, as such, have no conversion, pre-emptive or other subscription rights, and there are no redemption provisions applicable to the common stock.
Preferred Stock
The holders of our Series A preferred stock are entitled to 250 votes for each share held of record on all matters to be voted on by stockholders. The Series A preferred stock also convert into common stock at a rate of 250 for one. The holders of our preferred stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available, therefore. In the event of liquidation, dissolution or winding up of our company, the holders of preferred stock are entitled to share rateably in all assets remaining which are available for distribution to them after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the Series A preferred stock.
22
Indemnification of Directors and Officers
Section 78.138 of the NRS provides that a director or officer will not be individually liable unless it is proven that (i) the director’s or officer’s acts or omissions constituted a breach of his or her fiduciary duties, and (ii) such breach involved intentional misconduct, fraud or a knowing violation of the law.
Section 78.7502 of NRS permits a company to indemnify its directors and officers against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with a threatened, pending or completed action, suit or proceeding if the officer or director (i) is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner the officer or director reasonably believed to be in or not opposed to the best interests of the corporation and, if a criminal action or proceeding, had no reasonable cause to believe the conduct of the officer or director was unlawful.
Section 78.751 of NRS permits a Nevada company to indemnify its officers and directors against expenses incurred by them in defending a civil or criminal action, suit or proceeding as they are incurred and in advance of final disposition thereof, upon receipt of an undertaking by or on behalf of the officer or director to repay the amount if it is ultimately determined by a court of competent jurisdiction that such officer or director is not entitled to be indemnified by the company. Section 78.751 of NRS further permits the company to grant its directors and officers additional rights of indemnification under its articles of incorporation or bylaws or otherwise.
Section 78.752 of NRS provides that a Nevada company may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the company has the authority to indemnify him against such liability and expenses. Our Bylaws provide that we may indemnify and advance litigation expenses to our directors, officers, employees and agents to the extent permitted by law, our Articles of Incorporation or our Bylaws, and shall indemnify and advance litigation expenses to our directors, officers, employees and agents to the extent required by law, our Articles of Incorporation or Bylaws. Our obligations of indemnification, if any, shall be conditioned on receiving prompt notice of the claim and the opportunity to settle and defend the claim. We may, to the extent permitted by law, purchase and maintain insurance on behalf of an individual who is or was our director, officer, employee or agent.
Indemnification against Public Policy
Insofar as indemnification by us for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling the company pursuant to provisions of our Articles of Incorporation and Bylaws, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification by such director, officer or controlling person of us in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The effect of indemnification may be to limit the rights of the Company and the shareholders (through shareholders’ derivative suits on behalf of the Company) to recover monetary damages and expenses against a director for breach of fiduciary duty.
Item 3.02 Unregistered Sales of Equity Securities.
Reference is made to the disclosure made under Item 1.01 which is incorporated herein by reference.
Item 5.01 Changes in Control of Registrant.
On September 23, 2020, as a result of a private transaction, 10,000,000 shares of Series A Convertible Preferred Stock, $0.001 par value per share (the “Shares”) of the Company, were transferred from Custodian Ventures, LLC (the “Seller”) to FiveT Capital Holding AG (the “Purchaser”). As a result, the Purchaser became an approximately 50.2% holder of the voting rights of the issued and outstanding share capital of the Company on a fully-diluted basis of the Company, and became the controlling shareholder. The consideration paid for the Shares was $265,000. The source of the cash consideration for the Shares was personal funds of the Purchaser. In connection with the transaction, David Lazar released the Company from all debts owed to him and/or the Seller.
23
On February 8, 2021, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Alkeon Creators, Inc. (“Alkeon”), a United Kingdom corporation. Under the Share Exchange Agreement, One Hundred Percent (100%) of the ownership interest of Alkeon was exchanged for 406,646,919 shares of common stock of the Company. The former stockholders of Alkeon acquired a majority of the issued and outstanding common stock as a result of the share exchange transaction. As a result of the Share Exchange Agreement Jean Christophe Chopin became a 53.5% holder of the voting rights of the Company, and became the controlling shareholder.
Other than as described below, there are no arrangements or understandings among both the former and new control persons and their associates with respect to the election of directors of the Company or other matters. The information set forth in Item 5.02 of this Form 8-K is incorporated by reference into this Item 5.01.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On September 23, 2020, the existing director and officer resigned immediately. Accordingly, David Lazar, serving as a director and an officer, ceased to be the Company’s Chief Executive Officer, Chief Financial Officer, President, Treasurer, Secretary and a Director. At the effective date of the transfer, Mr. Wieland Kreuder consented to act as the new President, CEO, CFO, Treasurer, Secretary and Chairman of the Board of Directors of the Company.
Mr. Wieland Kreuder, age 46, has worked at FiveT Capital Holding AG, Zurich, for thirteen years. He was an Executive Vice President from October 2007 to April 2014, and a Director from May 2014 to the present. Mr. Kreuder was an equity specialist trader at Baader Bank AG, Munich, from April 2004 to September 2007. He has a Master Degree in Economics from the University of Hohenheim.
On February 16, 2021, in conjunction with the Share Exchange Agreement, Wieland Kreuder resigned from all of his positions and appointed Jean Christophe Chopin as the sole officer and director.
Jean Christophe Chopin - President, Chief Executive Officer and Director
Jean Christophe Chopin, age 56 is a serial entrepreneur and pioneer of the design led lifestyle. Jean Christophe Chopin founded BORN in 2016 to bring together his many years of experience and investment in the world of premium brands and digital. As one of the pioneers in digital commerce, he created his first company at the age of 17. After several years spent in the US he returned to Europe at the age of 26 and began successfully distributing financial and insurance products, first through Minitel and later internationally through the Internet. In 1996, Mr. Chopin completed a merger with E*Trade and expanded E*Trade into six European countries. In 1999, he sold his 75% stake of this E*Trade venture to the E*Trade Group Inc.. In 2004, he did the same with Verisign Inc. and built a Joint Venture for Verisign Europe for online payments.
Item 5.06 Change in Shell Company Status
Prior to the Share Exchange, we were a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act). As a result of the Share Exchange, we have ceased to be a shell company. The information contained in this Report constitutes the current “Form 10 information” necessary to satisfy the conditions contained in Rule 144(i)(2) under the Securities Act.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statement of Business Acquired
The audited financial statements of Alkeon as of December 31, 2019 and 2018 and unaudited financial statements of Alkeon as for the nine months ended September 30, 2020 are appended to this report beginning on page 29.
Item 9.01 (b) Pro forma financial information .. The pro forma financial information required by this Item 9.01(b) is below.
24
Pro Forma Combined Financial Statements
The following pro forma balance sheet has been derived from the balance sheet of Born Inc. at September 30, 2020, and adjusts such information to give the effect of the acquisition of Alkeon Creators Inc., a United Kingdom corporation, as if the acquisition had occurred at January 1, 2019. The following pro forma EPS statement has been derived from the income statement of Alkeon Creators Inc. and adjusts such information to give the effect that the acquisition by Born Inc. at January 1, 2019 and September 30, 2020, respectively. The pro forma balance sheet and EPS statement is presented for informational purposes only and does not purport to be indicative of the financial condition that would have resulted if the acquisition had been consummated at September 30, 2020 or January 1, 2019.
25
BORN INC. AND ALKEON CREATORS, INC
UNAUDITED PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
| Born Inc. | ||||||||||||||||
| f/k/a | ||||||||||||||||
| Quture | Alkeon | |||||||||||||||
| International | Creators, Inc. | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2020(a) | 2020(a) | Adjustments (b) | Consolidated | |||||||||||||
| Revenue | $ | - | $ | 709,040 | $ | 709,040 | ||||||||||
| Cost of goods sold | 770 | 770 | ||||||||||||||
| Gross profit | - | 708,270 | 708,270 | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| Administraive expense -related party | 21,013,932 | 21,013,932 | ||||||||||||||
| Selling, general & administrative | 77,686 | 77,686 | ||||||||||||||
| Depreciation | 1,689 | 1,689 | ||||||||||||||
| Travel and entertainment | (1,883 | ) | (1,883 | ) | ||||||||||||
| Professional fees | 13,008 | 13,008 | ||||||||||||||
| Consulting fees | 1,588,184 | 1,588,184 | ||||||||||||||
| Related party rent expense | 21,013,932 | 45,000 | 21,058,932 | |||||||||||||
| Total operating expenses | (21,013,932 | ) | 1,723,684 | (19,290,248 | ) | |||||||||||
| Income (loss) from operations | (21,013,932 | ) | (1,015,414 | ) | (22,029,346 | ) | ||||||||||
| Other income (expense) | ||||||||||||||||
| Interest (expense) | (104,533 | ) | (104,533 | ) | ||||||||||||
| Gain from the extinguishment of debt | 2,450,605 | - | 2,450,605 | |||||||||||||
| Other income (expense) net | 2,450,605 | (104,533 | ) | 2,346,072 | ||||||||||||
| Income (loss) before provision for income taxes | (18,563,327 | ) | (1,119,947 | ) | (19,683,274 | ) | ||||||||||
| Provision (credit) for income tax | - | - | - | |||||||||||||
| Net income (loss) | $ | (18,563,327 | ) | $ | (1,119,947 | ) | $ | (19,683,274 | ) | |||||||
| Basic and diluted earnings(loss) per common share | $ | (7.47 | ) | $ | (0.24 | ) | $ | (7.92 | ) | |||||||
| Weighted average number of shares outstanding | 2,486,076 | 4,600,000 | (4,600,000 | ) | 2,486,076 | |||||||||||
| - | ||||||||||||||||
| Comprehensive loss: | - | |||||||||||||||
| Net income (loss) | $ | (18,563,327 | ) | $ | (1,119,947 | ) | $ | (19,683,274 | ) | |||||||
| Foreign currency translation adjustment | - | 134,552 | 134,552 | |||||||||||||
| Comprehensive income (loss) | $ | (18,563,327 | ) | $ | (985,395 | ) | $ | (19,548,722 | ) | |||||||
26
BORN INC. AND ALKEON CREATORS, INC
UNAUDITED PROFORMA CONSOLIDATED BALANCE SHEETS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
| Born Inc. | ||||||||||||||||
| f/k/a | ||||||||||||||||
| Quture | Alkeon | |||||||||||||||
| International | Creators, Inc. | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2020(a) | 2020(a) | Adjustments (b) | Consolidated | |||||||||||||
| ASSETS | ||||||||||||||||
| Current assets | ||||||||||||||||
| Cash and cash equivalents | $ | - | $ | 3,688,024 | $ | 3,688,024 | ||||||||||
| Accounts receivable | 5,544 | 5,544 | ||||||||||||||
| Other receivable | 10,515 | 10,515 | ||||||||||||||
| Total current assets | 3,704,083 | 3,704,083 | ||||||||||||||
| Trademark | 460,289 | 460,289 | ||||||||||||||
| Office equipment | 4,068 | 4,068 | ||||||||||||||
| Total Assets | $ | 4,168,441 | 4,168,441 | |||||||||||||
| LIABILITIES & STOCKHOLDERS’ DEFICIT | ||||||||||||||||
| Current liabilities | ||||||||||||||||
| Accounts payable | $ | - | $ | 325,997 | 325,997 | |||||||||||
| Accrued expenses | 123,875 | 123,875 | ||||||||||||||
| Accounts payable related parties | 68,403 | 68,403 | ||||||||||||||
| Convertible notes | 200,000 | 200,000 | ||||||||||||||
| Notes payable related party | 5,411,138 | 5,411,138 | ||||||||||||||
| Total current liabilities | - | 6,129,414 | 6,129,414 | |||||||||||||
| Total Liabilities | - | 6,129,414 | 6,129,414 | |||||||||||||
| Commitments and contingencies | - | - | ||||||||||||||
| Stockholders’ Equity | ||||||||||||||||
| Preferred stock, $0.0001 par value, 000 shares authorized, 000 shares issued and outstanding as of December 31, 2018 and December 31, 2018, respectively | 10,000 | - | 10,000 | |||||||||||||
| Common stock, $0.0001 par value; 500,000,000 shares authorized, 2,486,076 issued and outstanding as of September 30, 2020 | 2,486 | 460 | (460 | ) | 2,486 | |||||||||||
| Additional paid in capital | 26,513,076 | 4,237,468 | 460 | 30,751,004 | ||||||||||||
| Retained earnings (deficit) | (26,525,561 | ) | (6,338,291 | ) | (32,863,852 | ) | ||||||||||
| Accumulated other comprehensive income (loss) | - | 139,390 | 139,390 | |||||||||||||
| Total Stockholders’ Equity (Deficit) | - | (1,960,973 | ) | (1,960,973 | ) | |||||||||||
| Total Liabilities and Stockholders’ (Equity) | $ | - | $ | 4,168,441 | 4,168,441 | |||||||||||
27
BORN INC. AND ALKEON CREATORS, INC
UNAUDITED PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2019
| Born Inc. | ||||||||||||||||
| f/k/a | ||||||||||||||||
| Quture | Alkeon | |||||||||||||||
| International | Creators, Inc. | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2019 (a) | 2019 (a) | Adjustments (b) | Consolidated | |||||||||||||
| Revenue | $ | - | $ | 482,766 | $ | 482,766 | ||||||||||
| COGS | - | 3,037 | 3,037 | |||||||||||||
| Gross profit | - | 479,729 | 479,729 | |||||||||||||
| - | ||||||||||||||||
| Operating Expenses: | - | |||||||||||||||
| Selling, general & administrative | 42,560 | 603,339 | 645,899 | |||||||||||||
| Amortization | - | - | ||||||||||||||
| Depreciation | 2,577 | 2,577 | ||||||||||||||
| Travel and entertainment | 38,796 | 38,796 | ||||||||||||||
| Professional fees | 14,825 | 14,825 | ||||||||||||||
| Consulting fees | 737,351 | 737,351 | ||||||||||||||
| Related party rent expense | 70,500 | 70,500 | ||||||||||||||
| Related party consulting expense | 12,783 | 12,783 | ||||||||||||||
| Total operating expenses | 42,560 | 1,480,171 | 1,522,731 | |||||||||||||
| Income (loss) from operations | (42,560 | ) | (1,000,443 | ) | (1,043,003 | ) | ||||||||||
| Other income (expense) | ||||||||||||||||
| Interest (expense) | - | (308 | ) | (308 | ) | |||||||||||
| Finance charges | - | (25,999 | ) | (25,999 | ) | |||||||||||
| Other income | - | - | - | |||||||||||||
| Other income (expense) net | - | (26,308 | ) | (26,308 | ) | |||||||||||
| Income (loss) before provision for income taxes | (42,560 | ) | (1,026,750 | ) | (1,069,310 | ) | ||||||||||
| Provision (credit) for income tax | - | - | - | |||||||||||||
| Net income (loss) | (42,560 | ) | (1,026,750 | ) | (1,069,310 | ) | ||||||||||
| - | ||||||||||||||||
| Basic and diluted earnings(loss) per common share | $ | (0.02 | ) | $ | (0.22 | ) | $ | (0.24 | ) | |||||||
| Weighted average number of shares outstanding | 2,486,076 | 4,600,000 | $ | (4,600,000 | ) | 2,486,076 | ||||||||||
| - | ||||||||||||||||
| Comprehensive loss: | - | |||||||||||||||
| Net income (loss) | $ | (42,560 | ) | $ | (1,026,750 | ) | $ | (1,069,310 | ) | |||||||
| Foreign currency translation adjustment | - | (173,210 | ) | (173,210 | ) | |||||||||||
| Comprehensive income (loss) | $ | (42,560 | ) | $ | (1,199,960 | ) | $ | (1,242,520 | ) | |||||||
| (a) | Born Inc. and Alkeon Creators, Inc. were under the common control of the CEO and one shareholder before and after the date of transfer. As a result the Company adopted the guidance in ASC 805-50-05-5 for the transfer of net assets between entities under common control to apply a method similar to the pooling-of-interests-method. Under the method the financial statements of the Company shall report results of operations for the period in which the transfer occurs as though the transfer of the net assets had occurred at the beginning of the period. Results of operations for the period will thus comprise both those of the previously separate entities combined from the beginning of the period to the date the transfer is completed and those of the combined operations from that date to the end of the period. Similarly, the Company shall present the statements of financial position and other financial information presented as of the beginning of the period as though the assets and liabilities had been transferred at that date. Financial statements and financial information presented for prior years also shall be retrospectively adjusted to furnish comparative information |
| (b) | To reclass equity accounts and share accounts to those of Born, Inc. |
28
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Alkeon Creators, Inc. (doing business as Born, Inc.)
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Alkeon Creators, Inc. as of December 31, 2019 and 2018, the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
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 audit 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 audits 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 provides a reasonable basis for our opinion.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/S/ BF Borgers CPA PC
BF Borgers CPA PC
We have served as the Company's auditor since 2020
Lakewood, CO
February 16, 2021
29
ALKEON CREATORS, INC.
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 3,260 | $ | 12,203 | ||||
| Accounts receivable | 38,706 | 211,041 | ||||||
| Other receivable | 716 | 8,675 | ||||||
| VAT receivable | - | 34,730 | ||||||
| Total current assets | 42,683 | 266,650 | ||||||
| Trademark | 475,874 | 457,681 | ||||||
| Office equipment | 2,350 | 3,507 | ||||||
| Total Assets | $ | 520,907 | $ | 727,838 | ||||
| LIABILITIES & STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 273,583 | $ | 267,961 | ||||
| Accounts payable related party | 70,719 | 85,526 | ||||||
| Due to factor | 29,189 | 95,702 | ||||||
| Accrued expenses | 84,110 | 12,804 | ||||||
| Deferred Income | 38,561 | 3,879 | ||||||
| Notes payable related party | 5,100,323 | 4,273,511 | ||||||
| Total current liabilities | 5,596,484 | 4,739,383 | ||||||
| Total Liabilities | 5,596,484 | 4,739,383 | ||||||
| Stockholders’ Equity | ||||||||
| Common stock, $0.0001 par value; 500,000,000 shares authorized, 4,600,000 shares issued and outstanding as of December 31, 2019; and 2,000 shares par value $1.00; 2000 shares authorized, issued and outstanding as of December 31, 2018 | 460 | 2,000 | ||||||
| Additional paid in capital | 137,468 | - | ||||||
| Retained earnings (deficit) | (5,218,343 | ) | (4,191,593 | ) | ||||
| Accumulated other comprehensive income (loss) | 4,838 | 178,048 | ||||||
| Total Stockholders’ Equity (Deficit) | (5,075,577 | ) | (4,011,545 | ) | ||||
| Total Liabilities and Stockholders’ (Equity) | $ | 520,907 | $ | 727,838 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
30
ALKEON CREATORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Year ended | ||||||||
| December 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| Revenue | $ | 482,766 | $ | 1,180,834 | ||||
| COGS | 3,037 | 1,420 | ||||||
| Gross profit | $ | 479,729 | $ | 1,179,414 | ||||
| Operating Expenses: | ||||||||
| Selling, general & administrative | 603,339 | 984,710 | ||||||
| Depreciation | 2,577 | 4,112 | ||||||
| Travel and entertainment | 38,796 | 105,199 | ||||||
| Professional fees | 14,825 | 10,046 | ||||||
| Consulting fees | 737,351 | 241,255 | ||||||
| Related party rent expense | 70,500 | - | ||||||
| Related party consulting expense | 12,783 | 223,762 | ||||||
| Impairment of goodwill | - | 1,121,233 | ||||||
| Total operating expenses | 1,480,171 | 2,690,315 | ||||||
| Income (loss) from operations | (1,000,443 | ) | (1,510,902 | ) | ||||
| Other income (expense) | ||||||||
| Interest (expense) | (308 | ) | - | |||||
| Finance charges | (25,999 | ) | (75,533 | ) | ||||
| Other income | - | - | ||||||
| Other income (expense) net | (26,308 | ) | (75,533 | ) | ||||
| Income (loss) before provision for income taxes | (1,026,750 | ) | (1,586,435 | ) | ||||
| Provision (credit) for income tax | - | - | ||||||
| Net income (loss) | (1,026,750 | ) | $ | (1,586,435 | ) | |||
| Basic and diluted earnings(loss) per common share | $ | (0.22 | ) | $ | (793.22 | ) | ||
| Weighted average number of shares outstanding | 4,600,000 | 2,000 | ||||||
| Comprehensive loss: | ||||||||
| Net income (loss) | $ | (1,026,750 | ) | $ | (1,586,435 | ) | ||
| Foreign currency translation adjustment | (173,210 | ) | 214,668 | |||||
| Comprehensive income (loss) | $ | (1,199,960 | ) | $ | (1,371,767 | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
31
ALKEON CREATORS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| Accumulated | ||||||||||||||||||||||||
| Common Stock | Additional paid in | Retained earnings | other comprehensive | Equity/ | ||||||||||||||||||||
| Shares | Value | capital | (Deficit) | income (loss) | Deficit | |||||||||||||||||||
| Balances at December 31, 2017 | 3,100 | $ | 3,100 | $ | - | $ | (2,605,158 | ) | $ | 36,620 | $ | (2,638,678 | ) | |||||||||||
| Recapitalization | (1,100 | ) | $ | (1,100 | ) | (1,100 | ) | |||||||||||||||||
| Net loss | (1,586,435 | ) | (1,586,435 | ) | ||||||||||||||||||||
| Accumulated other comprehensive income (loss) | $ | 214,668 | 214,668 | |||||||||||||||||||||
| Balance at December 31, 2018 | 2,000 | $ | 2,000 | $ | - | $ | (4,191,593 | ) | $ | 178,048 | $ | (4,011,545 | ) | |||||||||||
| Balance at December 31, 2018 | 2,000 | $ | 2,000 | $ | - | $ | (4,191,593 | ) | $ | 178,048 | $ | (4,011,545 | ) | |||||||||||
| Recapitalization | (2,000 | ) | (2,000 | ) | (2,000 | ) | ||||||||||||||||||
| Donated Capital/Paid in capital | 137,468 | 137,468 | ||||||||||||||||||||||
| Issuance of Founders shares to officer | 4,500,000 | 450 | 450 | |||||||||||||||||||||
| Issuance of Founders shares to employees | 100,000 | 10 | 10 | |||||||||||||||||||||
| Net loss | (1,026,750 | ) | (1,026,750 | ) | ||||||||||||||||||||
| Accumulated other comprehensive income (loss) | (173,210 | ) | (173,210 | ) | ||||||||||||||||||||
| Balance at December 31, 2019 | 4,600,000 | $ | 460 | $ | 137,468 | $ | (5,218,343 | ) | $ | 4,838 | $ | (5,075,577 | ) | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
32
ALKEON CREATORS, INC.
STATEMENTS OF CONSOLIDATED CASH FLOWS
| Year ended | ||||||||
| December 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net income (loss) | $ | (1,026,750 | ) | $ | (1,586,435 | ) | ||
| Adjustments to reconcile net income to net cash provided by (used for) operating activities | ||||||||
| Amortization of intangible assets | - | - | ||||||
| Depreciation | 2,577 | 4,112 | ||||||
| Impairment of goodwill | - | 1,121,233 | ||||||
| Write down of assets | - | 186,310 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | 181,930 | (189,688 | ) | |||||
| VAT receivable (payable) | 34,755 | (36,330 | ) | |||||
| Accounts payable | 36,842 | (73,884 | ) | |||||
| Accounts payable related party | 17,523 | 89,465 | ||||||
| Net cash provided by (used for) operating activities | (753,124 | ) | (485,217 | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Purchase of fixed assets | (1,329 | ) | - | |||||
| Write down of assets | - | - | ||||||
| Net cash provided by (used for) investing activities | (1,329 | ) | - | |||||
| Cash Flows From Financing Activities: | ||||||||
| Donated Capital | 137,468 | - | ||||||
| Notes payable related party | 607,977 | 479,857 | ||||||
| Net cash provided by (used for) financing activities | 745,445 | 479,857 | ||||||
| Effect of exchange rates on cash and cash equivalents | 65 | (773 | ) | |||||
| Net Increase (Decrease) In Cash | (8,943 | ) | (6,133 | ) | ||||
| Cash At The Beginning Of The Period | 12,203 | 18,335 | ||||||
| Cash At The End Of The Period | $ | 3,260 | $ | 12,203 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
The accompanying notes are an integral part of these consolidated financial statements.
33
ALKEON CREATORS, INC.
Notes to Consolidated Financial Statements
December 31, 2019 and 2018
| 1. | NATURE OF OPERATIONS |
Alkeon Creators, Inc (“Alkeon”, the “Company”) is a global software-as-a- service (“SaaS”) market-network connecting curated brands and selected buyers primarily via the Internet. This is accomplished through the Company’s proprietary artificial intelligence platforms and its enterprise solutions.
The Company currently operates its business through a parent company and the four wholly-owned subsidiaries:
| ● | Alkeon Creators Inc. (“Alkeon”) was incorporated in February 2019 in Delaware. It is the parent company of Born Creative Holdings Limited (“BCHL”) and its three subsidiaries. BCHL was incorporated in the United Kingdom (“UK”) in November 2016. |
| ● | Prior to the formation of Alkeon in 2019, BCHL was the parent company of three wholly owned subsidiaries, all of which UK based. |
| Ø | Born Creators Limited (“BCL”) was incorporated in June 2014 in the UK and is based in London. |
| Ø | Born Awards Limited (“BAL”) was incorporated in November 2016 and is based in London |
| Ø | Born Brands Limited (“BBL”) was incorporated in November 2016 and is based in London |
BCHL was incorporated in the United Kingdom in 2016 with goal of connecting world class designers and products with buyers and getting their products launched. It operates as a curated virtual trade fair and marketplace. In BORN.COM, brands have their showcase profile similar to what they would have in a booth in a trade fair. Buyers/retailers have also their profiles and they can visit/contact and connect with brands. Brands pay an annual subscription fee for having their showcase page. Until March 2020, the Company strategy was to sell to brands individually and invite retailers to set up the marketplace. With Covid-19 pandemic, the company pivoted to a new business revenue line and most of the cost focus was shifted to this. BORN initially competed with trade fairs. With Covid-19 limitations, trade fairs could not take place in 2020 and most are canceled for 2021 as well.
With the virtual trade fair infrastructure that BORN has and has been investing in since 2016, the Company started the product ALKEON Intelligence, which provides technological software for trade fairs. The trade fairs would introduce the number of brands and buyers to the Company.
The Company’s accounting year is December 31.
COVID-19
On March 11, 2020, the World Health Organization declared the Covid-19 outbreak to be a global pandemic. In addition to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions and volatility in the global financial markets. The UK and many countries have issued policies intended to stop or slow the further spread of the disease.
Covid-19 and the UK’s response to the pandemic are significantly affecting the economy. There are no comparable events that provide guidance as to the effect the Covid-19 pandemic may have, and, as a result, the ultimate effect of the pandemic is highly uncertain and subject to change.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements. On a consolidated basis, the Company has incurred significant operating losses since inception.
Because the Company does not expect that existing operational cash flow will be sufficient to fund presently anticipated operations, this raises substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company will need to raise additional funds and is currently exploring alternative sources of financing. Historically, the Company has received all of its funding from its founder and CEO Jean-Christophe Chopin. During 2020, the Company raised approximately $5.3 million in proceeds from the private placement of common shares to four accredited investors. These shares were provided from the personal shares of the Company’s Founder and CEO and the proceeds significantly improved the Company’s liquidity in 2020.
34
Basis of Presentation
The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and are expressed in United States dollars. For the years ended December 31, 2019 and 2018, the consolidated financial statements include the accounts of Alkeon and its wholly-owned subsidiaries, BCHL,BCL,BAL and BBL. All intercompany accounts and transactions are eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of 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 reporting period. The most significant estimates relate to revenue recognition, purchase price allocation of acquired businesses, impairment of goodwill, valuation of financial instruments, income taxes, and contingencies. The Company bases its estimates on historical experience, known or expected trends and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.
Revenue Recognition
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance provided in Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”) requires entities to use a five-step model to recognize revenue by allocating the consideration from contracts to performance obligations on a relative standalone selling price basis. Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. The standard also requires new disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASC 606 also includes Subtopic 340-40, Other Assets and Deferred Costs – Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. This new guidance was initially effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016 and early adoption was not permitted. However, in July 2015, the FASB voted to defer the effective date of this ASU by one year for reporting periods beginning after December 15, 2017, with early adoption permitted as of the original effective date. As a result, the effective date for the Company is January 1, 2018.
Entities have the option of using either a full retrospective or a modified approach to adopt the guidance. The Company adopted this ASU in accordance with the modified retrospective method, effective January 1, 2018 for all contracts not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606.
35
The Company identifies a contract under ASC 606 once (i) it is approved by all parties, (ii) the rights of the parties are identified, (iii) the payment terms are identified, (iv) the contract has commercial substance, and (v) collectability of consideration is probable.
The Company evaluates the services promised in each contract at inception to determine whether the contract should be accounted for as having one or more performance obligations. The services in the Company’s contracts are distinct from one another as the referring parties typically can direct all, limited, or single portions of the various preproduction and production activities required to create and design and entire episode to us and we therefore have a history of developing standalone selling prices for all of these distinct components. Accordingly, our contracts are typically accounted for as containing multiple performance obligations.
The Company determines the transaction price for each contract based on the consideration it expects to receive for the distinct services being provided under the contract.
The Company recognizes revenue as performance obligations are satisfied and the customer obtains control of the services. In determining when performance obligations are satisfied, the Company considers factors such as contract terms, payment terms and whether there is an alternative future use of the product or service. Substantially all of the Company’s revenue is recognized over time as it performs under the contract due to the contractual terms present in each contract which irrevocably transfer control of the work product to the customer as the services are performed.
Fair Value Measurements
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2: Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable. |
| ● | Level 3: Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. |
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2019 and 2018. The Company uses the market approach to measure fair value for its Level 1 financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The respective carrying value of certain balance sheet financial instruments approximates its fair value. These financial instruments include cash, trade receivables, related party payables, accounts payable, accrued liabilities and short-term borrowings. Fair values were estimated to approximate carrying values for these financial instruments since they are short term in nature, and they are receivable or payable on demand.
The estimated fair value of assets and liabilities acquired in business combinations and reporting units and long-lived assets used in the related asset impairment tests utilize inputs classified as Level 3 in the fair value hierarchy.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds, the fair value of which approximates cost. As of December 31, 2020 and 2019 the Company had $3,260 and $12,203, respectively in cash on hand.
Accounts Receivable
Accounts receivable are customer obligations due under normal trade terms which are recorded at net realizable value. The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of trade receivables. A considerable amount of judgment is required in assessing the amount of the allowance. The Company makes judgments about the creditworthiness of each customer based on ongoing credit evaluations and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the customers were to deteriorate, resulting in their inability to make payments, a specific allowance will be required.
Recovery of bad debt amounts previously written off is recorded as a reduction of bad debt expense in the period the payment is collected. If the Company’s actual collection experience changes, revisions to its allowance may be required. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. The Company had no allowance for bad debts as of December 31, 2019 and December 31, 2018.
36
Property and Equipment
Property and equipment are stated at cost or fair value if acquired as part of a business combination. Depreciation is computed by the straight-line method and is charged to operations over the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred. The carrying amount and accumulated depreciation of assets sold or retired are removed from the accounts in the year of disposal and any resulting gain or loss is included in results of operations.
Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated life.
The only fixed assets in the Company is computer equipment which is depreciated over a four year period.
Goodwill and Intangible Assets
Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from our acquisitions is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. Our amortizable intangible assets consist of indefinite-lived trade names which are amortized.
Goodwill and indefinite-lived assets are not amortized but are subject to annual impairment testing unless circumstances dictate more frequent assessments. We perform an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, we determine fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, we rely on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, our risk relative to the overall market, our size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess.
Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans, and future market conditions, among others. There can be no assurance that our estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause us to perform an impairment test prior to scheduled annual impairment tests.
We performed our annual fair value assessment on December 31, 2019 and 2018 on our subsidiaries with goodwill and intangible asset amounts on their respective balance sheets and determined that no impairment existed for trademarks. However, during the period ended December 31, 2018 we determined that our goodwill of $1,121,233 was fully impaired and recorded an impairment of goodwill charge of the same amount on our Consolidated Statements of Operations for the year ended December 31, 2018.
Income Taxes
The Company accounts for income taxes under ASC 740 “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as at December 31, 2019 and 2018.
37
Factoring
The Company accounts for the transfer of our accounts receivable to a third party under a factoring agreement in accordance with ASC 860-10-40-5 “Transfers and Servicing”. ASC 860-10 requires that several conditions be met in order to present the transfer of accounts receivable as a sale. Even though we have isolated the transferred (sold) assets and we have the legal right to transfer our assets (accounts receivable) we do not meet the third test of effective control since our accounts receivable sales agreement with the factor requires us to be liable in the event of default by one of our customers. Because we do not meet all three conditions, we do not qualify for sale treatment and our debt incurred with respect to the sale of our accounts receivable is presented as a secured loan liability, due to factors, in “accrued liabilities” on our consolidated balance sheet. As of December 31, 2019, and 2018, the amounts due to factors were $29,189 and $95,702 respectively.
Foreign Currency Translation
With the exception of Alkeon, the functional and reporting currency of all Born UK entities is the British pound (“GBP”). Management has adopted FASB ASC 830, Foreign Currency Matters for transactions that occur in foreign currencies. Monetary assets denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Average monthly rates are used to translate revenues and expenses.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.
Assets and liabilities of the Company’s operations are translated into the reporting currency, United States dollars, at the exchange rate in effect at the balance sheet dates. Revenue and expenses are translated at average rates in effect during the reporting periods. Equity transactions are recorded at the historical rate when the transaction occurred. The resulting translation adjustment is reflected as accumulated other comprehensive income, a separate component of stockholders’ equity in the statement of stockholders’ equity.
Differences may arise in the amount of bad debt expense, depreciation expense and amortization expense reported in the Company’s operating results as compared to the corresponding change in the allowance for doubtful accounts, accumulated depreciation, and accumulated amortization, respectively, due to foreign currency translation. These translation adjustments are reflected in accumulated other comprehensive income, a separate component of the Company’s stockholders’ equity.
Comprehensive Gain or Loss
FASB ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive income and its components in the financial statements. As of December 31, 2019, and 2018, the Company determined that it had items that represented components of comprehensive income (loss) and, therefore, has included a statement of comprehensive income (loss) in the financial statements.
Advertising Expenses
Advertising costs are expensed as incurred and included in selling and marketing expenses.
Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with FASB ASC 260, Earnings per Share which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. There were no dilutive equivalents as of December 31, 2019 and December 31, 2018.
Recent Accounting Pronouncements
Under the Jumpstart Our Business Startups Act, or the JOBS Act, we meet the definition of an “emerging growth company.” We have irrevocably elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. As a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non- emerging growth companies.
On January 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605. As of and for the years ended December 31, 2018 and December 31, 2019, our consolidated financial statements were not materially impacted as a result of the application of Topic 606 compared to Topic 605.
38
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In March 2019, the FASB issued ASU 2019-01, Codification Improvements, which clarifies certain aspects of the new lease standard. The FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases in July 2018. Also in 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard.
On November 15, 2019, the FASB has issued ASU 2019-10, which amends the effective dates for three major accounting standards. The ASU defers the effective dates for the credit losses, derivatives and leases standards (ASC 842) for certain companies. Since we are classified as a “small reporting company” and we have a calendar-year end we are eligible for deferring the adoption of ASC 842 to January 1, 2021.
Leases
As noted above the Company intends to adopt ASC 842 on January 1, 2021. However, the adoption of the standard is not expected to have any impact on the Company’s financial statements since all Company leases are currently are month to month, or short-term rentals and are expensed as incurred.
| 3. | ACCOUNTS RECEIVABLE AND CONCENTRATIONS |
The following table sets forth the components of the Company’s accounts receivable on December 31, 2019 and 2018:
December 31, 2019 | December 31, 2018 | |||||||
| Accounts receivable | $ | 38,706 | 211,041 | |||||
| Total accounts receivable | $ | 38,706 | 211,041 | |||||
As of December 31, 2019 and December 31, 2018 the Company evaluated its outstanding trade receivables and established there was no provision for doubtful accounts.
During the year ended December 31, 2019, the Company had one customer that accounted for 80% of revenues and the same customer that accounted for 76% of accounts receivable. During the year ended December 31, 2018, the Company had two customers that accounted for approximately 95% of revenues and one customer that accounted for 89% of accounts receivable.
| 4. | PROPERTY AND EQUIPMENT |
The following table sets forth the components of the Company’s property and equipment on December 31, 2019 and 2018:
| December 31, 2019 | December 31, 2018 | |||||||||||||||||||||||
| Cost | Accumulated Depreciation | Net Book Value | Cost | Accumulated Depreciation | Net Book Value | |||||||||||||||||||
| Capital assets subject to depreciation: | ||||||||||||||||||||||||
| Computers, software and office equipment | 17,150 | (14,800 | ) | 2,350 | 15,821 | (12,314 | ) | 3,507 | ||||||||||||||||
| Total fixed assets | $ | 17,150 | ($ | 14,800 | ) | $ | 2,350 | $ | 15,821 | ($ | 12,314 | ) | $ | 3,507 | ||||||||||
For the years ended December 31, 2019 and 2018, the Company recorded depreciation expense of $2,577 and $4,112 respectively.
39
| 5. | TRADEMARKS |
The Company’s trademarks have an average remaining legal life of six years on average but are renewal in 7 years at a minimal cost. The Company intends to continuously renew these trademarks and the Company has the resources to do so. Therefore the Company considers these trademarks-indefinite lived intangible assets not subject to amortization.
The following table sets forth the changes in the carrying amount of the Company’s trademarks on December 31, 2019 and 2018:
| Balance, January 1, 2018 | $ | 457,681 | ||
| Additions | - | |||
| Balance, December 31, 2018 | 457,681 | |||
| Additions | 18,193 | |||
| Balance, December 31, 2019 | $ | 475,874 |
| 6. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
Trade payables are recognized initially at the transaction price and subsequently measured at the undiscounted amount of cash or other consideration expected to be paid. Accrued expenses are recognized based on the expected amount required to settle the obligation or liability.
The following table sets forth the components of the Company’s accounts payable and accrued liabilities on December 31, 2019 and 2018.
December 31, 2019 | December 31, 2018 | |||||||
| Accounts payable | 273,583 | 267,961 | ||||||
| Due to factor | 29.189 | 95,702 | ||||||
| Accrued expenses | 84,110 | 12,804 | ||||||
| Deferred income | 38,561 | 3,879 | ||||||
| Total accounts payable and accrued liabilities | $ | 425,443 | $ | 380,346 | ||||
|
7. |
RELATED PARTY NOTES AND ACTIVITY |
Liabilities Due to Executive and Other Officers
As of December 31, 2019 and 2018, The Company had $5,100,323 and $4,273,511 in non-interest bearing related party notes to its CEO and founder who has funded the Company since inception. Additionally we recorded related party rent expense for a residence occupied by our CEO that also served as our corporate headquarters in the United States. Our CEO has not taken a salary since the inception of the Company.
During the years ended December 31, 2019 and 2018 we recorded related party consulting expenses of $12,783 and $223,762, respectively. The consulting expenses incurred were for a Director who also served as a Business Development Executive in the Company.
As of December 31, 2019 and 2018 we had accounts payable due to related parties of $70,719 and $85,526.
40
| 8. | INCOME TAXES |
The Company has not made provision for income taxes for the year end December 31, 2019 and 2018, since the Company has the benefit of net operating losses in these periods.
| Income tax expense | 2019 | 2018 | ||||||
| Current income tax expense | ||||||||
| Federal | $ | - | $ | - | ||||
| State | - | - | ||||||
| Foreign | - | - | ||||||
| Total current income tax expense | $ | - | $ | - | ||||
| Deferred income tax expense | ||||||||
| Federal | $ | - | $ | - | ||||
| State | - | - | ||||||
| Foreign | - | - | ||||||
| Total deferred income tax expense | $ | - | $ | - | ||||
| Rate reconciliation | 2019 | 2018 | ||||||||||||||
| Pretax Book Income | $ | (1,026,750 | ) | $ | (1,586,434 | ) | ||||||||||
| Provision at Statutory Rate | (215,617 | ) | 21.00 | % | (333,151 | ) | 21.00 | % | ||||||||
| Permanent Differences | 4,520 | -0.44 | % | 4,790 | -0.30 | % | ||||||||||
| Change in Valuation Allowance | 196,472 | -19.14 | % | 321,977 | -20.30 | % | ||||||||||
| Foregin tax rate difference | 6,283 | -0.61 | % | 31,272 | -1.97 | % | ||||||||||
| Other Adjustment | 8,342 | -0.81 | % | (24,888 | ) | 1.57 | % | |||||||||
| Total Tax Expense (benefits) | $ | - | 0.00 | % | $ | - | 0.00 | % | ||||||||
Due to uncertainties surrounding the Company’s ability to generate future taxable income to realize deferred income tax assets arising as a result of net operating losses carried forward, the Company has not recorded any deferred income tax asset as at December 31, 2019 and 2018. The Company has net operating loss carryforward of $3,576,247 and $2,827,737 as at December 31, 2019 and 2018. The Company’s net operating loss carry forwards may be subject to annual limitations, which could eliminate, reduce or defer the utilization of the losses as determined by respective tax regulating authorities. The Company’s federal tax returns remain subject to examination by the respective tax authorities.
For the years ended December 31, 2019 and 2018, the Company’s tax rates were 21% in the U.S. and 19% in the U.K.
Net deferred tax assets consist of the following:
| Deferred tax assets | 12/31/2019 | 12/31/2018 | ||||||
| Deferred tax assets by jurisdiction | ||||||||
| Federal | $ | 144,354 | $ | - | ||||
| State | - | - | ||||||
| Foreign | 823,031 | 740,258 | ||||||
| Valuation Allowance | (967,385 | ) | (740,258 | ) | ||||
| Net deferred tax assets | $ | - | $ | - | ||||
| Deferred tax assets by components | ||||||||
| Fixed assets | 211,303 | 202,988 | ||||||
| Start-up cost | 69,463 | - | ||||||
| Net operation loss | 686,620 | 537,270 | ||||||
| Valuation Allowance | (967,385 | ) | (740,258 | ) | ||||
| Net deferred tax assets | $ | - | $ | - | ||||
41
| 9. | STOCKHOLDERS’ EQUITY |
Common stock
During 2019 the Company was redomiciled from the United Kingdom to the United States. As of December 31, 2019 the Company was authorized to issue 10,000,000 shares of common stock, par value of $0.001 per share and had 4,600,000 of common stock issued and outstanding as of December 31, 2019. The 4,600,000 shares were comprised of 4,500,000 shares held by the Company’s founder and CEO, and 100,000 shares were held by other founders. These shares were valued at par of $460.
Prior to 2019 the Company’s capitalization was comprised of 2,000 shares, par value $1.00 held by the Company’s founder.
| 10. | COMMITMENTS AND CONTINGENCIES |
In the U.K. the Company leases temporary desk sharing space at the rate of $207 per month pursuant to a 1-year lease which expires in Dec. 2021. The office staff works remotely due to the onset of Covid-19. Additionally the Company’s lease in Los Angeles, California at rate of $11,000 per month expired on June 30, 2020 and was not renewed.
| 11. | SUBSEQUENT EVENTS |
In accordance with ASC 855-10 management has performed an evaluation of subsequent events from December 31, 2019, through the date the financial statements were available to be issued and noted there were no subsequent events requiring disclosure.
In July, 2020 the Company received Covid-19 relief program loan from Barclays Bank in UK for £50,000.
On July, 30 2020 the Company entered into a one-year maturity, 15% convertible note agreement with a private investor for $200,000. The Company began making payments on this debt in the amount of $2,500 monthly commencing in October, 2020. In February, 2021 this Note was converted to 67,980 common shares donated by the Company’s Founder and CEO from his personal shares owned and did not increase the Company’s issued and outstanding shares.
During the period from April 15, 2020 through October 19, 2020 the Company raised $5,000,000 from the private placement of 906,404 of its common shares to three accredited investors. These shares were donated by the Company’s Founder and CEO from his personal shares owned and did not increase the Company’s issued and outstanding shares.
42
ALKEON CREATORS, INC.
CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2020 | 2019 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 3,688,024 | $ | 3,260 | ||||
| Accounts receivable | 5,544 | 38,706 | ||||||
| Other receivable | 10,515 | 717 | ||||||
| Total current assets | 3,704,084 | 42,683 | ||||||
| Trademark | 460,289 | 475,874 | ||||||
| Office equipment | 4,068 | 2,350 | ||||||
| Total Assets | $ | 4,168,441 | $ | 520,907 | ||||
| LIABILITIES & STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 325,997 | $ | 273,582 | ||||
| Accounts payable related party | 68,403 | 70,719 | ||||||
| Due to factor | - | 29,189 | ||||||
| Accrued expenses | 123,875 | 84,110 | ||||||
| Deferred Income | - | 38,561 | ||||||
| Convertible notes payable | 200,000 | |||||||
| Notes payable related party | 5,411,139 | 5,100,323 | ||||||
| Total current liabilities | 6,129,414 | 5,596,484 | ||||||
| Total Liabilities | 6,129,414 | 5,596,484 | ||||||
| Stockholders’ Equity | ||||||||
| Common stock, $0.0001 par value; 10,000,000 shares authorized, 4,600,000 shares issued and outstanding as of September 30, 2020 and December 31, 2019 | 460 | 460 | ||||||
| Additional paid in capital | 4,237,468 | 137,468 | ||||||
| Retained earnings (deficit) | (6,338,291 | ) | (5,218,343 | ) | ||||
| Accumulated other comprehensive income (loss) | 139,390 | 4,838 | ||||||
| Total Stockholders’ Equity (Deficit) | (1,960,973 | ) | (5,075,577 | ) | ||||
| Total Liabilities and Stockholders’ (Equity) | $ | 4,168,441 | $ | 520,907 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
43
ALKEON CREATORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Month Period ended | Nine Month Period ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenue | $ | 10,438 | $ | 145,439 | $ | 709,040 | $ | 528,620 | ||||||||
| COGS | - | - | 770 | - | ||||||||||||
| Gross profit | 10,438 | 145,439 | 708,270 | 528,620 | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| Selling, general & administrative | 52,227 | 154,554 | 77,686 | 339,730 | ||||||||||||
| Depreciation | 563 | 642 | 1,689 | 1,926 | ||||||||||||
| Travel and entertainment | - | 4,888 | (1,883 | ) | 21,078 | |||||||||||
| Professional fees | - | - | 13,008 | 24,919 | ||||||||||||
| Consulting fees | 395,161 | 307,763 | 1,588,184 | 632,758 | ||||||||||||
| Related party rent expense | - | - | 45,000 | - | ||||||||||||
| Total operating expenses | 447,951 | 491,847 | 1,723,684 | 1,018,485 | ||||||||||||
| Income (loss) from operations | (437,514 | ) | (346,408 | ) | (1,015,414 | ) | (489,865 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest (expense) | (100,000 | ) | - | (104,533 | ) | - | ||||||||||
| Finance charges | - | - | - | 456 | ||||||||||||
| Other income (expense) net | (100,000 | ) | - | (104,533 | ) | 456 | ||||||||||
| Income (loss) before provision for income taxes | (537,514 | ) | (346,408 | ) | (1,119,947 | ) | (489,409 | ) | ||||||||
| Provision (credit) for income tax | - | - | - | - | ||||||||||||
| Net income (loss) | (537,514 | ) | $ | (346,408 | ) | (1,119,947 | ) | $ | (489,409 | ) | ||||||
| Basic and diluted earnings(loss) per common share | $ | (0.12 | ) | $ | (0.08 | ) | $ | (0.24 | ) | $ | (0.11 | ) | ||||
| Weighted average number of shares outstanding | 4,600,000 | 4,600,000 | 4,600,000 | 4,600,000 | ||||||||||||
| Comprehensive loss: | ||||||||||||||||
| Net income (loss) | $ | (537,514 | ) | $ | (346,408 | ) | $ | (1,119,947 | ) | $ | (489,409 | ) | ||||
| Foreign currency translation adjustment | 139,902 | 4,887 | 134,552 | (173,210 | ) | |||||||||||
| Comprehensive income (loss) | $ | (397,612 | ) | $ | (341,522 | ) | $ | (985,395 | ) | $ | (662,619 | ) | ||||
The accompanying notes are an integral part of these consolidated financial statements.
44
ALKEON CREATORS, INC.
STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
| Period ended | ||||||||
| September 30, | September 30, | |||||||
| 2020 | 2019 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net income (loss) | $ | (1,119,947 | ) | $ | (489,409 | ) | ||
| Adjustments to reconcile net income to net cash provided by (used for) operating activities | ||||||||
| Depreciation | 1,689 | - | ||||||
| Amortization of note discount | 100,000 | |||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | 21,865 | 124,300 | ||||||
| VAT receivable (payable) | (30,034 | ) | (4,022 | ) | ||||
| Accounts payable | 50,393 | 336,063 | ||||||
| Accounts payable related party | - | 30,891 | ||||||
| Net cash provided by (used for) operating activities | (976,034 | ) | (2,178 | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Purchase of fixed assets | (3,500 | ) | - | |||||
| Net cash provided by (used for) investing activities | (3,500 | ) | - | |||||
| Cash Flows From Financing Activities: | ||||||||
| Convertible notes | 200,000 | |||||||
| Proceeds from the sale of common stock | 4,000,000 | - | ||||||
| Notes payable related party | 464,156 | - | ||||||
| Net cash provided by (used for) financing activities | 4,664,156 | - | ||||||
| Effect of exchange rates on cash and cash equivalents | 142 | (372 | ) | |||||
| Net Increase (Decrease) In Cash | 3,684,764 | (2,550 | ) | |||||
| Cash At The Beginning Of The Period | 3,260 | 12,203 | ||||||
| Cash At The End Of The Period | $ | 3,688,024 | $ | 9,653 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
The accompanying notes are an integral part of these consolidated financial statements.
45
ALKEON CREATORS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
| Additional | Retained | Accumulated other | ||||||||||||||||||||||
| Common Stock | paid in | earnings | comprehensive | Equity/ | ||||||||||||||||||||
| Shares | Value | capital | (Deficit) | income (loss) | Deficit | |||||||||||||||||||
| Balances at December 31, 2018 | 2,000 | $ | 2,000 | $ | - | $ | (4,191,593 | ) | $ | 178,048 | $ | (4,011,545 | ) | |||||||||||
| Recapitalization | (2,000 | ) | $ | (2,000 | ) | (2,000 | ) | |||||||||||||||||
| Donated Capital/Paid in capital | 137,468 | 137,468 | ||||||||||||||||||||||
| Issuance of Founders shares to officer | 4,500,000 | 450 | 450 | |||||||||||||||||||||
| Issuance of Founders shares to employees | 100,000 | 10 | 10 | |||||||||||||||||||||
| Net loss | (489,409 | ) | (489,409 | ) | ||||||||||||||||||||
| Accumulated other comprehensive income (loss) | (173,210 | ) | (173,210 | ) | ||||||||||||||||||||
| September 30, 2019 | 4,600,000 | $ | 460 | $ | 137,468 | $ | (4,681,002 | ) | $ | 4,838 | $ | (4,538,236 | ) | |||||||||||
| Balance at December 31, 2019 | 4,600,000 | $ | 460 | $ | 137,468 | $ | (5,218,343 | ) | $ | 4,838 | $ | (5,075,577 | ) | |||||||||||
| 906,404 shares donated by the Company’s CEO sold to investors | 4,000,000 | 4,000,000 | ||||||||||||||||||||||
| Beneficial conversion feature of convertible dent | 100,000 | 100,000 | ||||||||||||||||||||||
| Net loss | (1,119,947 | ) | (1,119,947 | ) | ||||||||||||||||||||
| Accumulated other comprehensive income (loss) | 134,552 | 134,552 | ||||||||||||||||||||||
| September 30, 2020 | 4,600,000 | $ | 460 | $ | 4,237,468 | $ | (6,338,290 | ) | $ | 139,390 | $ | (1,960,973 | ) | |||||||||||
46
ALKEON CREATORS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
| 1. | NATURE OF OPERATIONS |
Alkeon Creators, Inc (“Alkeon”, the “Company”) is a global software-as-a- service (“SaaS”) market-network connecting curated brands and selected buyers primarily via the Internet. This is accomplished through the Company’s proprietary artificial intelligence platforms and its enterprise solutions.
The Company currently operates its business through a parent company and the four wholly-owned subsidiaries:
| ● | Alkeon Creators Inc. (“Alkeon”) was incorporated in February 2019 in Delaware. It is the parent company of Born Creative Holdings Limited (“BCHL”) and its three subsidiaries. BCHL was incorporated in the United Kingdom (“UK”) in November 2016. |
| ● | Prior to the formation of Alkeon in 2019, BCHL was the parent company of three wholly owned subsidiaries, all of which UK based. |
| Ø | Born Creators Limited (“BCL”) was incorporated in June 2014 in the UK and is based in London. |
| Ø | Born Awards Limited (“BAL”) was incorporated in November 2016 and is based in London |
| Ø | Born Brands Limited (“BBL”) was incorporated in November 2016 and is based in London |
BCHL was incorporated in the United Kingdom in 2016 with goal of connecting world class designers and products with buyers and getting their products launched. It operates as a curated virtual trade fair and marketplace. In BORN.COM, brands have their showcase profile similar to what they would have in a booth in a trade fair. Buyers/retailers have also their profiles and they can visit/contact and connect with brands. Brands pay an annual subscription fee for having their showcase page. Until March 2020, the Company strategy was to sell to brands individually and invite retailers to set up the marketplace. With Covid-19 pandemic, the company pivoted to a new business revenue line and most of the cost focus was shifted to this. BORN initially competed with trade fairs. With Covid-19 limitations, trade fairs could not take place in 2020 and most are canceled for 2021 as well.
With the virtual trade fair infrastructure that BORN has and has been investing in since 2016, the Company started the product ALKEON Intelligence, which provides technological software for trade fairs. The trade fairs would introduce the number of brands and buyers to the Company.
The Company’s accounting year is December 31.
COVID-19
On March 11, 2020, the World Health Organization declared the Covid-19 outbreak to be a global pandemic. In addition to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions and volatility in the global financial markets. The UK and many countries have issued policies intended to stop or slow the further spread of the disease.
Covid-19 and the UK’s response to the pandemic are significantly affecting the economy. There are no comparable events that provide guidance as to the effect the Covid-19 pandemic may have, and, as a result, the ultimate effect of the pandemic is highly uncertain and subject to change.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements. On a consolidated basis, the Company has incurred significant operating losses since inception.
Because the Company does not expect that existing operational cash flow will be sufficient to fund presently anticipated operations, this raises substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company will need to raise additional funds and is currently exploring alternative sources of financing. Historically, the Company has received all of its funding from its founder and CEO Jean-Christophe Chopin. During 2020, the Company raised approximately $5.3 million in proceeds from the private placement of common shares to four accredited investors. These shares were provided from the personal shares of the Company’s Founder and CEO and the proceeds significantly improved the Company’s liquidity in 2020.
47
Basis of Presentation
The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and are expressed in United States dollars. For the periods ended September 30, 2020 and December 30, 2019, the consolidated financial statements include the accounts of Alkeon and its wholly-owned subsidiaries, BCHL,BCL,BAL and BBL. All intercompany accounts and transactions are eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of 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 reporting period. The most significant estimates relate to revenue recognition, purchase price allocation of acquired businesses, impairment of goodwill, valuation of financial instruments, income taxes, and contingencies. The Company bases its estimates on historical experience, known or expected trends and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.
Revenue Recognition
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance provided in Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”) requires entities to use a five-step model to recognize revenue by allocating the consideration from contracts to performance obligations on a relative standalone selling price basis. Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. The standard also requires new disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASC 606 also includes Subtopic 340-40, Other Assets and Deferred Costs – Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. This new guidance was initially effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016 and early adoption was not permitted. However, in July 2015, the FASB voted to defer the effective date of this ASU by one year for reporting periods beginning after December 15, 2017, with early adoption permitted as of the original effective date. As a result, the effective date for the Company is January 1, 2018.
Entities have the option of using either a full retrospective or a modified approach to adopt the guidance. The Company adopted this ASU in accordance with the modified retrospective method, effective January 1, 2018 for all contracts not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606.
48
The Company identifies a contract under ASC 606 once (i) it is approved by all parties, (ii) the rights of the parties are identified, (iii) the payment terms are identified, (iv) the contract has commercial substance, and (v) collectability of consideration is probable.
The Company evaluates the services promised in each contract at inception to determine whether the contract should be accounted for as having one or more performance obligations. The services in the Company’s contracts are distinct from one another as the referring parties typically can direct all, limited, or single portions of the various preproduction and production activities required to create and design and entire episode to us and we therefore have a history of developing standalone selling prices for all of these distinct components. Accordingly, our contracts are typically accounted for as containing multiple performance obligations.
The Company determines the transaction price for each contract based on the consideration it expects to receive for the distinct services being provided under the contract.
The Company recognizes revenue as performance obligations are satisfied and the customer obtains control of the services. In determining when performance obligations are satisfied, the Company considers factors such as contract terms, payment terms and whether there is an alternative future use of the product or service. Substantially all of the Company’s revenue is recognized over time as it performs under the contract due to the contractual terms present in each contract which irrevocably transfer control of the work product to the customer as the services are performed.
Fair Value Measurements
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2: Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable. |
| ● | Level 3: Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. |
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2020 and December 31, 2019. The Company uses the market approach to measure fair value for its Level 1 financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The respective carrying value of certain balance sheet financial instruments approximates its fair value. These financial instruments include cash, trade receivables, related party payables, accounts payable, accrued liabilities and short-term borrowings. Fair values were estimated to approximate carrying values for these financial instruments since they are short term in nature, and they are receivable or payable on demand.
The estimated fair value of assets and liabilities acquired in business combinations and reporting units and long-lived assets used in the related asset impairment tests utilize inputs classified as Level 3 in the fair value hierarchy.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds, the fair value of which approximates cost. As of September 30, 2020 and December 31, 2019 the Company had $3,688,024 and $3,260 respectively in cash on hand.
Accounts Receivable
Accounts receivable are customer obligations due under normal trade terms which are recorded at net realizable value. The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of trade receivables. A considerable amount of judgment is required in assessing the amount of the allowance. The Company makes judgments about the creditworthiness of each customer based on ongoing credit evaluations and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the customers were to deteriorate, resulting in their inability to make payments, a specific allowance will be required.
Recovery of bad debt amounts previously written off is recorded as a reduction of bad debt expense in the period the payment is collected. If the Company’s actual collection experience changes, revisions to its allowance may be required. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. The Company had no allowance for bad debts as of September 30, 2020 and December 31, 2019.
49
Property and Equipment
Property and equipment are stated at cost or fair value if acquired as part of a business combination. Depreciation is computed by the straight-line method and is charged to operations over the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred. The carrying amount and accumulated depreciation of assets sold or retired are removed from the accounts in the year of disposal and any resulting gain or loss is included in results of operations.
Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated life.
The only fixed assets in the Company is computer equipment which is depreciated over a four year period. As of September 31, 2020 and December 31, 2019, the Company had $4,068 and $2,350 in computer equipment net of depreciation, respectively.
Goodwill and Intangible Assets
Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from our acquisitions is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. Our amortizable intangible assets consist of indefinite-lived trade names which are amortized.
Goodwill and indefinite-lived assets are not amortized but are subject to annual impairment testing unless circumstances dictate more frequent assessments. We perform an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, we determine fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, we rely on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, our risk relative to the overall market, our size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess.
Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans, and future market conditions, among others. There can be no assurance that our estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause us to perform an impairment test prior to scheduled annual impairment tests.
We performed our annual fair value assessment on September 30, 2020 and December 31, 2019 on our subsidiaries with goodwill and intangible asset amounts on their respective balance and determined that no impairment existed for trademarks.
Income Taxes
The Company accounts for income taxes under ASC 740 “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as at September 30, 2020 and December 31, 2019.
50
Factoring
The Company accounts for the transfer of our accounts receivable to a third party under a factoring agreement in accordance with ASC 860-10-40-5 “Transfers and Servicing”. ASC 860-10 requires that several conditions be met in order to present the transfer of accounts receivable as a sale. Even though we have isolated the transferred (sold) assets and we have the legal right to transfer our assets (accounts receivable) we do not meet the third test of effective control since our accounts receivable sales agreement with the factor requires us to be liable in the event of default by one of our customers. Because we do not meet all three conditions, we do not qualify for sale treatment and our debt incurred with respect to the sale of our accounts receivable is presented as a secured loan liability, due to factors, in “accrued liabilities” on our consolidated balance sheet. As of September 30, 2020, and December 31, 2019, the amounts due to factors were $0 and $29,189, respectively.
Foreign Currency Translation
With the exception of Alkeon, the functional and reporting currency of all Born UK entities is the British pound (“GBP”). Management has adopted FASB ASC 830, Foreign Currency Matters for transactions that occur in foreign currencies. Monetary assets denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Average monthly rates are used to translate revenues and expenses.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.
Assets and liabilities of the Company’s operations are translated into the reporting currency, United States dollars, at the exchange rate in effect at the balance sheet dates. Revenue and expenses are translated at average rates in effect during the reporting periods. Equity transactions are recorded at the historical rate when the transaction occurred. The resulting translation adjustment is reflected as accumulated other comprehensive income, a separate component of stockholders’ equity in the statement of stockholders’ equity.
Differences may arise in the amount of bad debt expense, depreciation expense and amortization expense reported in the Company’s operating results as compared to the corresponding change in the allowance for doubtful accounts, accumulated depreciation, and accumulated amortization, respectively, due to foreign currency translation. These translation adjustments are reflected in accumulated other comprehensive income, a separate component of the Company’s stockholders’ equity.
Comprehensive Gain or Loss
FASB ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive income and its components in the financial statements. As of September 30, 2020, and December 31, 2019, the Company determined that it had items that represented components of comprehensive income (loss) and, therefore, has included a statement of comprehensive income (loss) in the financial statements.
Advertising Expenses
Advertising costs are expensed as incurred and included in selling and marketing expenses.
Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with FASB ASC 260, Earnings per Share which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. There were no dilutive equivalents as of September 30, 2020 and December 31, 2019.
Recent Accounting Pronouncements
Under the Jumpstart Our Business Startups Act, or the JOBS Act, we meet the definition of an “emerging growth company.” We have irrevocably elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. As a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non- emerging growth companies.
On January 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605. As of and for the years ended September 30, 2020 and December 31, 2019, our consolidated financial statements were not materially impacted as a result of the application of Topic 606 compared to Topic 605.
51
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In March 2019, the FASB issued ASU 2019-01, Codification Improvements, which clarifies certain aspects of the new lease standard. The FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases in July 2018. Also in 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard.
On November 15, 2019, the FASB has issued ASU 2019-10, which amends the effective dates for three major accounting standards. The ASU defers the effective dates for the credit losses, derivatives and leases standards (ASC 842) for certain companies. Since we are classified as a “small reporting company” and we have a calendar-year end we are eligible for deferring the adoption of ASC 842 to January 1, 2021.
Leases
As noted above the Company intends to adopt ASC 842 on January 1, 2021. However, the adoption of the standard is not expected to have any impact on the Company’s financial statements since all Company leases are currently are month to month, or short-term rentals and are expensed as incurred.
| 3. | ACCOUNTS RECEIVABLE AND CONCENTRATIONS |
The following table sets forth the components of the Company’s accounts receivable on September 30, 2020 and December 31, 2019:
September 30, 2020 | December 31, 2019 | |||||||
| Accounts receivable | $ | 5,544 | 38,706 | |||||
| Total accounts receivable | $ | 5,544 | 38,706 | |||||
As of September 30, 2020 and December 31, 2019 the Company evaluated its outstanding trade receivables and established there was no provision for doubtful accounts.
During the nine months ended September 30, 2020, the Company had 2 customer that accounted for 91% of revenues and the same customer that accounted for 0% of accounts receivable. During the year ended December 31, 2019 the Company had one customer that accounted for approximately 80% of revenues and one customer that accounted for 76% of accounts receivable.
52
| 4. | TRADEMARKS |
The Company’s trademarks have an average remaining legal life of six years on average but are renewal in 7 years at a minimal cost. The Company intends to continuously renew these trademarks and the Company has the resources to do so. Therefore the Company considers these trademarks-indefinite lived intangible assets not subject to amortization.
The following table sets forth the changes in the carrying amount of the Company’s trademarks on September 30, 2020 and December 31, 2019:
| Balance, January 1, 2018 | $ | 457,681 | ||
| Additions | - | |||
| Balance, December 31, 2019 | 457,681 | |||
| Additions | 18,193 | |||
| Balance, December 31, 2019 | $ | 475,874 | ||
| Less : | (15,585 | ) | ||
| Balance, September 30, 2020 | $ | 460,289 |
| 5. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
Trade payables are recognized initially at the transaction price and subsequently measured at the undiscounted amount of cash or other consideration expected to be paid. Accrued expenses are recognized based on the expected amount required to settle the obligation or liability.
The following table sets forth the components of the Company’s accounts payable and accrued liabilities on September 30, 2020 and December 31, 2019.
| September 30, 2020 |
December 31, 2019 |
|||||||
| Accounts payable | $ | 325,997 | $ | 273,583 | ||||
| Due to factor | - | 29,189 | ||||||
| Accrued expenses | 123,875 | 84,110 | ||||||
| Deferred income | - | 38,561 | ||||||
| Total accounts payable and accrued liabilities | $ | 449,872 | $ | 425,443 | ||||
| 6. | RELATED PARTY NOTES AND ACTIVITY |
Liabilities Due to Executive and Other Officers
As of September 30, 2020 and December 31, 2019, The Company had $5,411,139 and $5,100,323 in non-interest bearing related party notes to its CEO and founder who has funded the Company since inception. Additionally we recorded related party rent expense for a residence occupied by our CEO that also served as our corporate headquarters in the United States. Our CEO has not taken a salary since the inception of the Company.
As of September 30, 2030 and December 31, 2019 we had accounts payable due to related parties of $68,403 and $70,719, respectively.
53
| 7. | CONVERTIBLE NOTES |
On July 30, 2020, the Company entered into a $200,000 unsecured convertible note agreement bearing interest at 15% with an accredited investor. Additionally, the noteholder had the option to convert his note at a 15% of the face value of the Note into equity in the event the Company raised additional capital. The Company recorded $100,000 in interest expense for this beneficial conversion feature during the nine months ended September 30, 2020. As of September 30, 2020 and December 31, 2019, the balance of convertible notes outstanding was $200,000 and $-0-, respectively.
| 8. | STOCKHOLDERS’ EQUITY |
Common stock
During 2019 the Company was redomiciled from the United Kingdom to the United States. As of September 30, 2019, the Company was authorized to issue 10,000,000 shares of common stock, par value of $0.0001 per share and had 4,600,000 of common stock issued and outstanding as of September 30, 2020 and December 31, 2019. During the nine months ended September 30, 2020 the Company’s founder and CEO donated 906,404 of his personal shareholdings to the Company who sold those shares to three accredited investors and raised $4,000,000 in proceeds for the Company. These shares issued to the accredited investor did not increase the company’s issued am outstanding shares
Prior to 2019 the Company’s capitalization was comprised of 2,000 shares, par value $1.00 held by the Company’s founder.
| 9. | COMMITMENTS AND CONTINGENCIES |
In the U.K. the Company leases temporary desk sharing space at the rate of $207 per month pursuant to a 1-year lease which expires in Dec. 2021. The office staff works remotely due to the onset of Covid-19. Additionally, the Company’s lease in Los Angeles, California at rate of $11,000 per month expired on June 30, 2020 and was not renewed.
| 10. | SUBSEQUENT EVENTS |
In accordance with ASC 855-10 management has performed an evaluation of subsequent events from September 30, 2020, through the date the financial statements were available to be issued and noted there were no subsequent events requiring disclosure.
In October 2020, the Company raised $1,000,000 from the private placement of 226,601 of its shares to an accredited investor. These shares were provided by the Company’s Founder and CEO from his personal shares owned and did not increase the Company’s issued and outstanding shares.
In February, 2021 a convertible noteholder converted his $200,000 convertible note to 67,980 common shares donated by the Company’s Founder and CEO from his personal shares owned and did not increase the Company’s issued and outstanding shares.
54
(d) Exhibit
| * | Incorporated by reference to the Registration Statement on Form SB-2, filed on June 8, 2007. |
| # | Incorporated by reference to the Annual Report on Form 10-K, filed on July 21, 2020. |
| + | Incorporated by reference to the Current Report on Form 8-K, filed on December 1, 2020. |
55
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: February 16, 2021 | BORN, INC. | |
| /s/ Jean Christophe Chopin | ||
| By: | Jean Christophe Chopin, Chief Executive Officer | |
56
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
of
Born, Inc.
(the “Corporation”)
ARTICLE I: MEETINGS OF SHAREHOLDERS
Section 1 - Annual Meetings
The annual meeting of the shareholders of the Corporation shall be held at the time fixed, from time to time, by the Board of Directors.
Section 2 - Special Meetings
Special meetings of the shareholders may be called by the Board of Directors or such person or persons authorized by the Board of Directors.
Section 3 - Place of Meetings
Meetings of shareholders shall be held at the registered office of the Corporation, or at such other places, within or without the State of Nevada as the Board of Directors may from time to time fix.
Section 4 - Notice of Meetings
A notice convening an annual or special meeting which specifies the place, day, and hour of the meeting, and the general nature of the business of the meeting, must be faxed, personally delivered or mailed postage prepaid to each shareholder of the Corporation entitled to vote at the meeting at the address of the shareholder as it appears on the stock transfer ledger of the Corporation, at least ten (10) days prior to the meeting. Accidental omission to give notice of a meeting to, or the non-receipt of notice of a meeting by, a shareholder will not invalidate the proceedings at that meeting.
Section 5 - Action Without a Meeting
Unless otherwise provided by law, any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting, without prior notice and without a vote if written consents are signed by shareholders representing a majority of the shares entitled to vote at such a meeting, except however, if a different proportion of voting power is required by law, the Articles of Incorporation or these Bylaws, than that proportion of written consents is required. Such written consents must be filed with the minutes of the proceedings of the shareholders of the Corporation.
Section 6 - Quorum
a) No business, other than the election of the chairman or the adjournment of the meeting, will be transacted at an annual or special meeting unless a quorum of shareholders, entitled to attend and vote, is present at the commencement of the meeting, but the quorum need not be present throughout the meeting.
b) Except as otherwise provided in these Bylaws, a quorum is two persons present and being, or representing by proxy, shareholders of the Corporation.
c) If within half an hour from the time appointed for an annual or special meeting a quorum is not present, the meeting shall stand adjourned to a day, time and place as determined by the chairman of the meeting.
Section 7 - Voting
Subject to a special voting rights or restrictions attached to a class of shares, each shareholder shall be entitled to one vote for each share of stock in his or her own name on the books of the corporation, whether represented in person or by proxy.
Section 8 - Motions
No motion proposed at an annual or special meeting need be seconded.
Section 9 - Equality of Votes
In the case of an equality of votes, the chairman of the meeting at which the vote takes place is not entitled to have a casting vote in addition to the vote or votes to which he may be entitled as a shareholder of proxyholder.
Section 10 - Dispute as to Entitlement to Vote
In a dispute as to the admission or rejection of a vote at an annual or special meeting, the decision of the chairman made in good faith is conclusive.
Section 11 - Proxy
a) Each shareholder entitled to vote at an annual or special meeting may do so either in person or by proxy. A form of proxy must be in writing under the hand of the appointor or of his or her attorney duly authorized in writing, or, if the appointor is a corporation, either under the seal of the corporation or under the hand of a duly authorized officer or attorney. A proxyholder need not be a shareholder of the Corporation.
b) A form of proxy and the power of attorney or other authority, if any, under which it is signed or a facsimiled copy thereof must be deposited at the registered office of the Corporation or at such other place as is specified for that purpose in the notice convening the meeting. In addition to any other method of depositing proxies provided for in these Bylaws, the Directors may from time to time by resolution make regulations relating to the depositing of proxies at a place or places and fixing the time or times for depositing the proxies not exceeding 48 hours (excluding Saturdays, Sundays and holidays) preceding the meeting or adjourned meeting specified in the notice calling a meeting of shareholders.
ARTICLE II: BOARD OF DIRECTORS
Section 1 - Number, Term, Election and Qualifications
a) The first Board of Directors of the Corporation, and all subsequent Boards of the Corporation, shall consist of not less than one (1) and not more than nine (9) directors. The number of Directors may be fixed and changed from time to time by ordinary resolution of the shareholders of the Corporation.
b) The first Board of Directors shall hold office until the first annual meeting of shareholders and until their successors have been duly elected and qualified or until there is a decrease in the number of directors. Thereinafter, Directors will be elected at the annual meeting of shareholders and shall hold office until the annual meeting of the shareholders next succeeding his or her election, or until his or her prior death, resignation or removal. Any Director may resign at any time upon written notice of such resignation to the Corporation.
c) A casual vacancy occurring in the Board may be filled by the remaining Directors.
2
d) Between successive annual meetings, the Directors have the power to appoint one or more additional Directors but not more than 1/2 of the number of Directors fixed at the last shareholder meeting at which Directors were elected. A Director so appointed holds office only until the next following annual meeting of the Corporation, but is eligible for election at that meeting. So long as he or she is an additional Director, the number of Directors will be increased accordingly.
e) A Director is not required to hold a share in the capital of the Corporation as qualification for his or her office.
Section 2 - Duties, Powers and Remuneration
a) The Board of Directors shall be responsible for the control and management of the business and affairs, property and interests of the Corporation, and may exercise all powers of the Corporation, except for those powers conferred upon or reserved for the shareholders or any other persons as required under Nevada state law, the Corporation’s Articles of Incorporation or by these Bylaws.
b) The remuneration of the Directors may from time to time be determined by the Directors or, if the Directors decide, by the shareholders.
Section 3 - Meetings of Directors
a) The President of the Corporation shall preside as chairman at every meeting of the Directors, or if the President is not present or is willing to act as chairman, the Directors present shall choose one of their number to be chairman of the meeting.
b) The Directors may meet together for the dispatch of business, and adjourn and otherwise regulate their meetings as they think fit. Questions arising at a meeting must be decided by a majority of votes. In case of an equality of votes the chairman does not have a second or casting vote. Meetings of the Board held at regular intervals may be held at the place and time upon the notice (if any) as the Board may by resolution from time to time determine.
c) A Director may participate in a meeting of the Board or of a committee of the Directors using conference telephones or other communications facilities by which all Directors participating in the meeting can hear each other and provided that all such Directors agree to such participation. A Director participating in a meeting in accordance with this Bylaw is deemed to be present at the meeting and to have so agreed. Such Director will be counted in the quorum and entitled to speak and vote at the meeting.
d) A Director may, and the Secretary on request of a Director shall, call a meeting of the Board. Reasonable notice of the meeting specifying the place, day and hour of the meeting must be given by mail, postage prepaid, addressed to each of the Directors and alternate Directors at his or her address as it appears on the books of the Corporation or by leaving it at his or her usual business or residential address or by telephone, facsimile or other method of transmitting legibly recorded messages. It is not necessary to give notice of a meeting of Directors to a Director immediately following a shareholder meeting at which the Director has been elected, or is the meeting of Directors at which the Director is appointed.
e) A Director of the Corporation may file with the Secretary a document executed by him waiving notice of a past, present or future meeting or meetings of the Directors being, or required to have been, sent to him and may at any time withdraw the waiver with respect to meetings held thereafter. After filing such waiver with respect to future meetings and until the waiver is withdrawn no notice of a meeting of Directors need be given to the Director. All meetings of the Directors so held will be deemed not to be improperly called or constituted by reason of notice not having been given to the Director.
f) The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors and if not so fixed is a majority of the Directors or, if the number of Directors is fixed at one, is one Director.
3
g) The continuing Directors may act notwithstanding a vacancy in their body but, if and so long as their number is reduced below the number fixed pursuant to these Bylaws as the necessary quorum of Directors, the continuing Directors may act for the purpose of increasing the number of Directors to that number, or of summoning a shareholder meeting of the Corporation, but for no other purpose.
h) All acts done by a meeting of the Directors, a committee of Directors, or a person acting as a Director, will, notwithstanding that it be afterwards discovered that there was some defect in the qualification, election or appointment of the Directors, shareholders of the committee or person acting as a Director, or that any of them were disqualified, be as valid as if the person had been duly elected or appointed and was qualified to be a Director.
i) A resolution consented to in writing, whether by facsimile or other method of transmitting legibly recorded messages, by all of the Directors is as valid as if it had been passed at a meeting of the Directors duly called and held. A resolution may be in two or more counterparts which together are deemed to constitute one resolution in writing. A resolution must be filed with the minutes of the proceedings of the directors and is effective on the date stated on it or on the latest date stated on a counterpart.
j) All Directors of the Corporation shall have equal voting power.
Section 4 - Removal
One or more or all the Directors of the Corporation may be removed with or without cause at any time by a vote of two-thirds of the shareholders entitled to vote thereon, at a special meeting of the shareholders called for that purpose.
Section 5 - Committees
a) The Directors may from time to time by resolution designate from among its members one or more committees, and alternate members thereof, as they deem desirable, each consisting of one or more members, with such powers and authority (to the extent permitted by law and these Bylaws) as may be provided in such resolution. Each such committee shall serve at the pleasure of the Board of Directors and unless otherwise stated by law, the Certificate of Incorporation of the Corporation or these Bylaws, shall be governed by the rules and regulations stated herein regarding the Board of Directors.
b) Each Committee shall keep regular minutes of its transactions, shall cause them to be recorded in the books kept for that purpose, and shall report them to the Board at such times as the Board may from time to time require. The Board has the power at any time to revoke or override the authority given to or acts done by any Committee.
ARTICLE III: OFFICERS
Section 1 - Number, Qualification, Election and Term of Office
a) The Corporation’s officers shall have such titles and duties as shall be stated in these Bylaws or in a resolution of the Board of Directors which is not inconsistent with these Bylaws. The officers of the Corporation shall consist of a president, secretary, treasurer, and also may have one or more vice presidents, assistant secretaries and assistant treasurers and such other officers as the Board of Directors may from time to time deem advisable. Any officer may hold two or more offices in the Corporation, and may or may not also act as a Director.
b) The officers of the Corporation shall be elected by the Board of Directors at the regular annual meeting of the Board following the annual meeting of shareholders.
4
c) Each officer shall hold office until the annual meeting of the Board of Directors next succeeding his or her election, and until his or her successor shall have been duly elected and qualified, subject to earlier termination by his or her death, resignation or removal.
Section 2 - Resignation
Any officer may resign at any time by giving written notice of such resignation to the Corporation.
Section 3 - Removal
Any officer appointed by the Board of Directors may be removed by a majority vote of the Board, either with or without cause, and a successor appointed by the Board at any time, and any officer or assistant officer, if appointed by another officer, may likewise be removed by such officer.
Section 4 - Remuneration
The remuneration of the Officers of the Corporation may from time to time be determined by the Directors or, if the Directors decide, by the shareholders.
Section 5 - Conflict of Interest
Each officer of the Corporation who holds another office or possesses property whereby, whether directly or indirectly, duties or interests might be created in conflict with his or her duties or interests as an officer of the Corporation shall, in writing, disclose to the President the fact and the nature, character and extent of the conflict and abstain from voting with respect to any resolution in which the officer has a personal interest.
ARTICLE IV: SHARES OF STOCK
Section 1 - Certificate of Stock
a) The shares of the Corporation shall be represented by certificates or shall be uncertificated shares.
b) Certificated shares of the Corporation shall be signed, either manually or by facsimile, by officers or agents designated by the Corporation for such purposes, and shall certify the number of shares owned by the shareholder in the Corporation. Whenever any certificate is countersigned or otherwise authenticated by a transfer agent or transfer clerk, and by a registrar, then a facsimile of the signatures of the officers or agents, the transfer agent or transfer clerk or the registrar of the Corporation may be printed or lithographed upon the certificate in lieu of the actual signatures. If the Corporation uses facsimile signatures of its officers and agents on its stock certificates, it cannot act as registrar of its own stock, but its transfer agent and registrar may be identical if the institution acting in those dual capacities countersigns or otherwise authenticates any stock certificates in both capacities. If any officer who has signed or whose facsimile signature has been placed upon such certificate, shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue.
c) If the Corporation issued uncertificated shares as provided for in these Bylaws, within a reasonable time after the issuance or transfer of such uncertificated shares, and at least annually thereafter, the Corporation shall send the shareholder a written statement certifying the number of shares owned by such shareholder in the Corporation.
d) Except as otherwise provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series shall be identical.
5
e) If a share certificate:
(i) is worn out or defaced, the Directors shall, upon production to them of the certificate and upon such other terms, if any, as they may think fit, order the certificate to be cancelled and issue a new certificate;
(ii) is lost, stolen or destroyed, then upon proof being given to the satisfaction of the Directors and upon and indemnity, if any being given, as the Directors think adequate, the Directors shall issue a new certificate; or
(iii) represents more than one share and the registered owner surrenders it to the Corporation with a written request that the Corporation issue in his or her name two or more certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the certificate so surrendered, the Corporation shall cancel the certificate so surrendered and issue new certificates in accordance with such request.
Section 2 - Transfers of Shares
a) Transfers or registration of transfers of shares of the Corporation shall be made on the stock transfer books of the Corporation by the registered holder thereof, or by his or her attorney duly authorized by a written power of attorney; and in the case of shares represented by certificates, only after the surrender to the Corporation of the certificates representing such shares with such shares properly endorsed, with such evidence of the authenticity of such endorsement, transfer, authorization and other matters as the Corporation may reasonably require, and the payment of all stock transfer taxes due thereon.
b) The Corporation shall be entitled to treat the holder of record of any share or shares as the absolute owner thereof for all purposes and, accordingly, shall not be bound to recognize any legal, equitable or other claim to, or interest in, such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law.
Section 3 - Record Date
a)
The Directors may fix in advance a date, which must not be more than 60 days permitted by the preceding the date of a meeting of shareholders or a class of shareholders, or of the payment of a dividend or of the proposed taking of any other proper action requiring the determination of shareholders as the record date for the determination of the shareholders entitled to notice of, or to attend and vote at, a meeting and an adjournment of the meeting, or entitled to receive payment of a dividend or for any other proper purpose and, in such case, notwithstanding anything in these Bylaws, only shareholders of records on the date so fixed will be deemed to be the shareholders for the purposes of this Bylaw.
b) Where no record date is so fixed for the determination of shareholders as provided in the preceding Bylaw, the date on which the notice is mailed or on which the resolution declaring the dividend is adopted, as the case may be, is the record date for such determination.
Section 4 - Fractional Shares
Notwithstanding anything else in these Bylaws, the Corporation, if the Directors so resolve, will not be required to issue fractional shares in connection with an amalgamation, consolidation, exchange or conversion. At the discretion of the Directors, fractional interests in shares may be rounded to the nearest whole number, with fractions of 1/2 being rounded to the next highest whole number, or may be purchased for cancellation by the Corporation for such consideration as the Directors determine. The Directors may determine the manner in which fractional interests in shares are to be transferred and delivered to the Corporation in exchange for consideration and a determination so made is binding upon all shareholders of the Corporation. In case shareholders having fractional interests in shares fail to deliver them to the Corporation in accordance with a determination made by the Directors, the Corporation may deposit with the Corporation’s Registrar and Transfer Agent a sum sufficient to pay the consideration payable by the Corporation for the fractional interests in shares, such deposit to be set aside in trust for such shareholders. Such setting aside is deemed to be payment to such shareholders for the fractional interests in shares not so delivered which will thereupon not be considered as outstanding and such shareholders will not be considered to be shareholders of the Corporation with respect thereto and will have no right except to receive payment of the money so set aside and deposited upon delivery of the certificates for the shares held prior to the amalgamation, consolidation, exchange or conversion which result in fractional interests in shares.
6
ARTICLE V: DIVIDENDS
a) Dividends may be declared and paid out of any funds available therefor, as often, in such amounts, and at such time or times as the Board of Directors may determine and shares may be issued pro rata and without consideration to the Corporation’s shareholders or to the shareholders of one or more classes or series.
b) Shares of one class or series may not be issued as a share dividend to shareholders of another class or series unless such issuance is in accordance with the Articles of Incorporation and:
(i) a majority of the current shareholders of the class or series to be issued approve the issue; or
(ii) there are no outstanding shares of the class or series of shares that are authorized to be issued as a dividend.
ARTICLE VI: BORROWING POWERS
a) The Directors may from time to time on behalf of the Corporation:
(i) borrow money in such manner and amount, on such security, from such sources and upon such terms and conditions as they think fit,
(ii) issue bonds, debentures and other debt obligations either outright or as security for liability or obligation of the Corporation or another person, and
(iii) mortgage, charge, whether by way of specific or floating charge, and give other security on the undertaking, or on the whole or a part of the property and assets of the Corporation (both present and future).
b) A bond, debenture or other debt obligation of the Corporation may be issued at a discount, premium or otherwise, and with a special privilege as to redemption, surrender, drawing, allotment of or conversion into or exchange for shares or other securities, attending and voting at shareholder meetings of the Corporation, appointment of Directors or otherwise, and may by its terms be assignable free from equities between the Corporation and the person to whom it was issued or a subsequent holder thereof, all as the Directors may determine.
ARTICLE VII: FISCAL YEAR
The fiscal year end of the Corporation shall be fixed, and shall be subject to change, by the Board of Directors from time to time, subject to applicable law.
ARTICLE VIII: CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be prescribed and altered, from time to time, by the Board of Directors. The use of a seal or stamp by the Corporation on corporate documents is not necessary and the lack thereof shall not in any way affect the legality of a corporate document.
ARTICLE IX: AMENDMENTS
Section 1 - By Shareholders
All Bylaws of the Corporation shall be subject to alteration or repeal, and new Bylaws may be made by a majority vote of the shareholders at any annual meeting or special meeting called for that purpose.
Section 2 - By Directors
The Board of Directors shall have the power to make, adopt, alter, amend and repeal, from time to time, Bylaws of the Corporation.
7
ARTICLE X: DISCLOSURE OF INTEREST OF DIRECTORS
a) A Director who is, in any way, directly or indirectly interested in an existing or proposed contract or transaction with the Corporation or who holds an office or possesses property whereby, directly or indirectly, a duty or interest might be created to conflict with his or her duty or interest as a Director, shall declare the nature and extent of his or her interest in such contract or transaction or of the conflict with his or her duty and interest as a Director, as the case may be.
b) A Director shall not vote in respect of a contract or transaction with the Corporation in which he is interested and if he does so his or her vote will not be counted, but he will be counted in the quorum present at the meeting at which the vote is taken. The foregoing prohibitions do not apply to:
(i) a contract or transaction relating to a loan to the Corporation, which a Director or a specified corporation or a specified firm in which he has an interest has guaranteed or joined in guaranteeing the repayment of the loan or part of the loan;
(ii) a contract or transaction made or to be made with or for the benefit of a holding corporation or a subsidiary corporation of which a Director is a director or officer;
(iii) a contract by a Director to subscribe for or underwrite shares or debentures to be issued by the Corporation or a subsidiary of the Corporation, or a contract, arrangement or transaction in which a Director is directly or indirectly interested if all the other Directors are also directly or indirectly interested in the contract, arrangement or transaction;
(iv) determining the remuneration of the Directors;
(v) purchasing and maintaining insurance to cover Directors against liability incurred by them as Directors; or
(vi) the indemnification of a Director by the Corporation.
c) A Director may hold an office or place of profit with the Corporation (other than the office of Auditor of the Corporation) in conjunction with his or her office of Director for the period and on the terms (as to remuneration or otherwise) as the Directors may determine. No Director or intended Director will be disqualified by his or her office from contracting with the Corporation either with regard to the tenure of any such other office or place of profit, or as vendor, purchaser or otherwise, and, no contract or transaction entered into by or on behalf of the Corporation in which a Director is interested is liable to be voided by reason thereof.
d) A Director or his or her firm may act in a professional capacity for the Corporation (except as Auditor of the Corporation), and he or his or her firm is entitled to remuneration for professional services as if he were not a Director.
e) A Director may be or become a director or other officer or employee of, or otherwise interested in, a corporation or firm in which the Corporation may be interested as a shareholder or otherwise, and the Director is not accountable to the Corporation for remuneration or other benefits received by him as director, officer or employee of, or from his or her interest in, the other corporation or firm, unless the shareholders otherwise direct.
8
ARTICLE XI: ANNUAL LIST OF OFFICERS, DIRECTORS AND REGISTERED AGENT
The Corporation shall, within sixty days after the filing of its Articles of Incorporation with the Secretary of State, and annually thereafter on or before the last day of the month in which the anniversary date of incorporation occurs each year, file with the Secretary of State a list of its president, secretary and treasurer and all of its Directors, along with the post office box or street address, either residence or business, and a designation of its resident agent in the state of Nevada. Such list shall be certified by an officer of the Corporation.
ARTICLE XII: INDEMNITY OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
a) The Directors shall cause the Corporation to indemnify a Director or former Director of the Corporation and the Directors may cause the Corporation to indemnify a director or former director of a corporation of which the Corporation is or was a shareholder and the heirs and personal representatives of any such person against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him or them including an amount paid to settle an action or satisfy a judgment inactive criminal or administrative action or proceeding to which he is or they are made a party by reason of his or her being or having been a Director of the Corporation or a director of such corporation, including an action brought by the Corporation or corporation. Each Director of the Corporation on being elected or appointed is deemed to have contracted with the Corporation on the terms of the foregoing indemnity.
b) The Directors may cause the Corporation to indemnify an officer, employee or agent of the Corporation or of a corporation of which the Corporation is or was a shareholder (notwithstanding that he is also a Director), and his or her heirs and personal representatives against all costs, charges and expenses incurred by him or them and resulting from his or her acting as an officer, employee or agent of the Corporation or corporation. In addition the Corporation shall indemnify the Secretary or an Assistance Secretary of the Corporation (if he is not a full time employee of the Corporation and notwithstanding that he is also a Director), and his or her respective heirs and legal representatives against all costs, charges and expenses incurred by him or them and arising out of the functions assigned to the Secretary by the Corporation Act or these Articles and each such Secretary and Assistant Secretary, on being appointed is deemed to have contracted with the Corporation on the terms of the foregoing indemnity.
c) The Directors may cause the Corporation to purchase and maintain insurance for the benefit of a person who is or was serving as a Director, officer, employee or agent of the Corporation or as a director, officer, employee or agent of a corporation of which the Corporation is or was a shareholder and his or her heirs or personal representatives against a liability incurred by him as a Director, officer, employee or agent.
| CERTIFIED TO BE THE BYLAWS OF: | |
| Born, Inc. | |
| per: | |
| /s/ Jean Christophe Chopin | |
| Jean Christophe Chopin, Director |
9
Exhibit 3.5
Exhibit 3.6
Exhibit 3.7
Exhibit 3.8
Exhibit 3.9
Exhibit 10.1
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement (“Agreement”), dated as of February 16, 2021, is among Alkeon Creators, Inc. (“Alkeon”), a Delaware corporation, the shareholders of Alkeon (collectively, the “Shareholders”), FiveT Capital Holding AG (“FiveT”), Jean-Christophe Chopin (“Chopin”), the Chief Executive Officer of Alkeon, Born, Inc., a Nevada corporation (“BRRN”), with a registered address of 50 West Liberty Street, Suite 880, Reno, Nevada 89501, and Wieland Kreuder, the President of BRRN (“Kreuder”). Collectively, the Shareholders, Alkeon, BRRN, Chopin, and Kreuder are the “Parties.”
The parties hereby enter into this Agreement, following which,
| 1. | BRRN will own all of the equity of Alkeon, equaling 4,600,000 shares of Alkeon’s stock, and representing all of its issued and outstanding shares; |
| 2. | The shareholders named on Exhibit A attached hereto (the “New Equity Holders”), will own 406,646,919 shares of common stock of BRRN (the “Common Stock”), representing 99.3% of BRRN’s outstanding shares of Common Stock (the “Share Exchange”), calculated post-issuance; |
| 3. | FiveT shall hold zero shares of Series A Preferred; |
| 4. | Alkeon will hold no common shares of BRRN, as the wholly-owned subsidiary of BRRN; and |
| 5. | Chopin shall be the sole officer and director of BRRN. |
As a result of this Agreement, BRRN may announce this reverse merger. The first consolidated post-acquisition period will be the quarter ended March 31, 2021.
RECITALS
WHEREAS, the Shareholders currently hold all of the equity of Alkeon and are desirous of relinquishing all of their Alkeon shares so that the New Equity Holders would be issued 406,646,919 shares of BRRN Common Stock, of the 420,000,000 shares of BRRN Common Stock to be outstanding; this additional ownership would represent approximately 99.3% of BRRN’s issued and outstanding shares of Common Stock; and that Alkeon would be a wholly-owned subsidiary of BRRN.
WHEREAS, Kreuder, Chopin, and the Board of Directors of BRRN and Alkeaon are desirous of Alkeon becoming a wholly-owned subsidiary of BRRN.
WHEREAS, BRRN and Alkeon are desirous of BRRN acquiring 100% of the outstanding shares of Alkeon, and issuing 406,646,919 shares of BRRN Common in the process, making Alkeon a wholly-owned subsidiary of BRRN.
WHEREAS, BRRN and Kreuder are desirous of BRRN acquiring 100% of the outstanding shares of Alkeon.
WHEREAS, FiveT is desirous of converting and exchanging its 10,000,000 shares of Series A Preferred Stock (the “Preferred Shares”) of the Company for the BRRN Common Stock to be issued to it, as per Exhibit A, following which FiveT shall hold zero Preferred Shares.
WHEREAS, Kreuder is desirous of resigning as sole officer and director of BRRN and appointing Chopin as sole officer and director of BRRN, and Chopin is desirous of being appointed as sole officer and director of BRRN, as per the resignation and appointment attached hereto as Exhibit B (the “Resolutions”).
WHEREAS, the Board of Directors and Shareholders of BRRN and Alkeon, respectively, have each agreed to exchange and issue shares, as necessary to cause the forgoing results, upon the terms, and subject to the conditions, set forth in this Agreement.
WHEREAS, it is intended that, for federal income tax purposes, the Share Exchange shall qualify as a reorganization under the provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the “Code”), and the rules and regulations promulgated thereunder, and be tax-free pursuant to Section 351(a) of the Code.
WHEREAS, the Parties desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual promises herein made, and in consideration of the representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the Parties agree as follows:
INCORPORATION OF RECITALS BY REFERENCE. The Recitals are hereby incorporated herein by this reference, as if fully restated herein.
ARTICLE I
DEFINITIONS
I.1 Certain Definitions. The following terms shall, when used in this Agreement, have the following meanings:
“Acquisition” means the acquisition of any businesses, assets or property other than in the ordinary course, whether by way of the purchase of assets or stock, by BRRN acquiring all of the outstanding shares of Alkeon pursuant to this Share Exchange Agreement and the Shareholders relinquishing and exchanging its shares of Alkeon to BRRN and BRRN issuing the BRRN Common Shares to the New Equity Holders.
“Affiliate” means, with respect to any Person: (i) any Person directly or indirectly owning, controlling or holding with power to vote ten percent (10%) or more of the outstanding voting securities of such other Person (other than passive or institutional investors); (ii) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; and (iv) any officer, director or partner of such other Person. “Control” for the foregoing purposes shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or voting interests, by contract or otherwise.
2
“BRRN Business” means the business conducted by BRRN.
“BRRN Common Stock” means the common shares of BRRN.
“Business Day” means any day other than Saturday, Sunday or a day on which banking institutions in New York, New York, are required or authorized to be closed.
“Code” means the United States Internal Revenue Code of 1986, as amended.
“Collateral Documents” mean the Exhibits and any other documents, instruments and certificates to be executed and delivered by the Parties hereunder or there under.
“Commission” means the Securities and Exchange Commission or any Regulatory Authority that succeeds to its functions.
“Exchange Shares” means (i) the 4,600,000 issued and outstanding common shares of Alkeon (the “Alkeon Shares”), and (ii) the Preferred Shares, exchanged or converted by the Shareholders to BRRN, for 406,646,919 newly issued Common Stock of BRRN (the “BRRN Shares”).
“Effective Time” means, the moment in time when the shares of the BRRN are exchanged for the shares of BRRN.
“Encumbrance” means any material mortgage, pledge, lien, encumbrance, charge, security interest, security agreement, conditional sale or other title retention agreement, limitation, option, assessment, restrictive agreement, restriction, adverse interest, restriction on transfer or exception to or material defect in title or other ownership interest (including restrictive covenants, leases and licenses).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations there under.
“GAAP” means United States generally accepted accounting principles as in effect from time to time.
“Legal Requirement” means any statute, ordinance, law, rule, regulation, code, injunction, judgment, order, decree, ruling, or other requirement enacted, adopted or applied by any Regulatory Authority, including judicial decisions applying common law or interpreting any other Legal Requirement.
“Losses” shall mean all damages, awards, judgments, assessments, fines, sanctions, penalties, charges, costs, expenses, payments, diminutions in value and other losses, however suffered or characterized, all interest thereon, all costs and expenses of investigating any claim, lawsuit or arbitration and any appeal there from, all actual attorneys’, accountants’ investment bankers’ and expert witness’ fees incurred in connection therewith, whether or not such claim, lawsuit or arbitration is ultimately defeated and, subject to Section 9.4, all amounts paid incident to any compromise or settlement of any such claim, lawsuit or arbitration.
3
“Liability” means any liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.
“Material Adverse Effect” means a material adverse effect on (i) the assets, Liabilities, properties or business of the Parties, (ii) the validity, binding effect or enforceability of this Agreement or the Collateral Documents or (iii) the ability of any Party to perform its obligations under this Agreement and the Collateral Documents; provided, however, that none of the following shall constitute a Material Adverse Effect on BRRN: (i) the filing, initiation and subsequent prosecution, by or on behalf of Shareholders of any Party, of litigation that challenges or otherwise seeks damages with respect to the Share Exchange, this Agreement and/or transactions contemplated thereby or hereby, (ii) occurrences due to a disruption of a Party’s business as a result of the announcement of the execution of this Agreement or changes caused by the taking of action required by this Agreement, (iii) general economic conditions, or (iv) any changes generally affecting the industries in which a Party operates.
“Permit” means any license, permit, consent, approval, registration, authorization, qualification or similar right granted by a Regulatory Authority.
“Permitted Liens” means (i) liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings; (ii) rights reserved to any Regulatory Authority to regulate the affected property; (iii) statutory liens of banks and rights of set off; (iv) as to leased assets, interests of the lessors and sub-lessors thereof and liens affecting the interests of the lessors and sub-lessors thereof; (v) inchoate material men’s, mechanics’, workmen’s, repairmen’s or other like liens arising in the ordinary course of business; (vi) liens incurred or deposits made in the ordinary course in connection with workers’ compensation and other types of social security; (vii) licenses of trademarks or other intellectual property rights granted by BRRN, in the ordinary course and not interfering in any material respect with the ordinary course of the business of BRRN; and (viii) as to real property, any encumbrance, adverse interest, constructive or other trust, claim, attachment, exception to or defect in title or other ownership interest (including, but not limited to, reservations, rights of entry, rights of first refusal, possibilities of reversion, encroachments, easement, rights of way, restrictive covenants, leases, and licenses) of any kind, which otherwise constitutes an interest in or claim against property, whether arising pursuant to any Legal Requirement, under any contract or otherwise, that do not, individually or in the aggregate, materially and adversely affect or impair the value or use thereof as it is currently being used in the ordinary course.
“Person” means any natural person, corporation, partnership, trust, unincorporated organization, association, Limited Liability Company, Regulatory Authority or other entity.
“Regulatory Authority” means: (i) the United States of America; (ii) any state, commonwealth, territory or possession of the United States of America and any political subdivision thereof (including counties, municipalities and the like); (iii) Canada and any other foreign (as to the United States of America) sovereign entity and any political subdivision thereof; or (iv) any agency, authority or instrumentality of any of the foregoing, including any court, tribunal, department, bureau, commission or board.
4
“Representative” means any director, officer, employee, agent, consultant, advisor or other representative of a Person, including legal counsel, accountants and financial advisors.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations there under.
“Subsidiary” of a specified Person means (a) any Person if securities having ordinary voting power (at the time in question and without regard to the happening of any contingency) to elect a majority of the directors, trustees, managers or other governing body of such Person are held or controlled by the specified Person or a Subsidiary of the specified Person; (b) any Person in which the specified Person and its subsidiaries collectively hold a fifty percent (50%) or greater equity interest; (c) any partnership or similar organization in which the specified Person or subsidiary of the specified Person is a general partner; or (d) any Person the management of which is directly or indirectly controlled by the specified Person and its Subsidiaries through the exercise of voting power, by contract or otherwise.
“Tax” means any U.S. or non U.S. federal, state, provincial, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, intangible property, recording, occupancy, sales, use, transfer, registration, value added minimum, estimated or other tax of any kind whatsoever, including any interest, additions to tax, penalties, fees, deficiencies, assessments, additions or other charges of any nature with respect thereto, whether disputed or not.
“Tax Return” means any return, declaration, report, claim for refund or credit or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Treasury Regulations” means regulations promulgated by the U.S. Treasury Department under the Code.
ARTICLE II
THE SHARE EXCHANGE
II.1 Share Exchange. In accordance with and subject to the provisions of this Agreement and the Nevada Business Corporations Act, at the Effective Time, Alkeon shall become a wholly-owned subsidiary of BRRN, and BRRN shall be its only shareholder and shall continue in its existence with one owner, BRRN, until a merger, if any. Pursuant to the Share Exchange, (A) the Shareholders are relinquishing all 4,600,000 of their Alkeon common shares, constituting all issued and outstanding shares of Alkeon (the “Alkeon Shares”), (B) the New Equity Holders are acquiring the BRRN Shares, representing 99.3% of the outstanding Common Stock of BRRN, and (C) FiveT is converting and/or exchanging all of the Preferred Shares for the BRRN Common Stock described in Exhibit A.
5
II.2 Stock Transfer Books. Effective immediately after the Share Exchange, the stock transfer books of Alkeon shall be closed, and there shall be no further issuance or registration of transfers of shares hereafter on the records of Alkeon.
II.3 Restriction on Transfer. The Exchange Shares may not be sold, transferred, or otherwise disposed of without registration under the Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Exchange Shares or any available exemption from registration under the Act, the Exchange Shares must be held indefinitely. The Parties are aware that the Exchange Shares may not be sold pursuant to Rule 144 promulgated under the Act unless all of the conditions of that Rule are met. Among the conditions for use of Rule 144 may be the availability of current information to the public about the Surviving Company.
II.4 Restrictive Legend. All certificates representing the Exchange Shares shall contain an appropriate restrictive legend.
II.5 Closing. The closing of the transactions contemplated by this Agreement and the Collateral Documents (the “Closing”) shall take place via conference call at the offices of McMurdo Law Group, LLC, 1185 Avenue of the Americas, 3rd Floor, NY 10036, or at such other location as the parties may agree at 10:00 AM, EST Time on the agreed date, which, shall be concurrent with the signing hereof (the “Closing Date”).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BRRN AND KREUDER
BRRN and Kreuder represent and warrant to the Shareholders that the statements contained in this ARTICLE III are correct and complete as of the date of this Agreement and, except as provided in Section 7.1, will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this ARTICLE III, except in the case of representations and warranties stated to be made as of the date of this Agreement or as of another date and except for changes contemplated or permitted by this Agreement).
III.1 Organization and Qualification. BRRN is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization. BRRN has all requisite power and authority to own, lease and use its assets as they are currently owned, leased and used and to conduct its business as it is currently conducted. BRRN is duly qualified or licensed to do business in and is in good standing in each jurisdiction in which the character of the properties owned, leased or used by it or the nature of the activities conducted by it make such qualification necessary, except any such jurisdiction where the failure to be so qualified or licensed would not have a Material Adverse Effect on BRRN or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of BRRN to perform its obligations under this Agreement or any of the Collateral Documents.
III.2 Capitalization.
(a) The authorized capital stock and other ownership interests of BRRN, a Nevada corporation, consists of 500,000,000 common shares of Common Stock, of which 2,706,888 are issued and outstanding as of February 2, 2021. BRRN has 10,000,000 shares of Series A Preferred Stock authorized, with 10,000,000 is issued and outstanding, and held by FiveT. All of the outstanding BRRN Common Stock and Preferred Stock have been duly authorized and are validly issued, fully paid and non-assessable.
6
(b) Other than what has been described herein or in BRRN’s filings with the Securities and Exchange Commission, there are no outstanding or authorized options, warrants, purchase rights, preemptive rights or other contracts or commitments that could require BRRN to issue, sell, or otherwise cause to become outstanding any of its capital stock or other ownership interests (collectively “Options”).
(c) All of the issued and outstanding shares of BRRN Common Stock have been duly authorized and are validly issued and outstanding, fully paid and non-assessable and have been issued in compliance with applicable securities laws and other applicable Legal Requirements or transfer restrictions under applicable securities laws.
III.3 Authority and Validity. BRRN has all requisite corporate power to execute and deliver, to perform its obligations under, and to consummate the transactions contemplated by, this Agreement (subject to the approval of BRRN Shareholders as contemplated herein and subject to the receipt of any necessary consents, approvals, authorizations or other matters referred to herein). The execution and delivery by BRRN of, the performance by BRRN of its obligations under, and the consummation by BRRN of the transactions contemplated by, this Agreement have been duly authorized by all requisite action of BRRN (subject to the approval of BRRN Shareholders as contemplated herein). This Agreement has been duly executed and delivered by BRRN and (assuming due execution and delivery by the Shareholders and approval by BRRN Shareholders) is the legal, valid and binding obligation of BRRN, enforceable against it in accordance with its terms, except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles. Upon the execution and delivery of the Collateral Documents by each Person (other than by the Shareholders) that is required by this Agreement to execute, or that does execute, this Agreement or any of the Collateral Documents, and assuming due execution and delivery thereof by the Shareholders, the Collateral Documents will be the legal, valid and binding obligations of BRRN, enforceable against BRRN in accordance with their respective terms, except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles.
III.4 No Breach or Violation. Subject to obtaining the consents, approvals, authorizations, and orders of and making the registrations or filings with or giving notices to Regulatory Authorities and Persons identified herein, the execution, delivery and performance by BRRN of this Agreement and the Collateral Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby in accordance with the terms and conditions hereof and thereof, do not and will not conflict with, constitute a violation or breach of, constitute a default or give rise to any right of termination or acceleration of any right or obligation of BRRN under, or result in the creation or imposition of any Encumbrance upon BRRN, BRRN Assets, BRRN Business or BRRN Common Stock by reason of the terms of (i) the articles of incorporation, by laws or other charter or organizational document of BRRN or any Subsidiary of BRRN, (ii) any material contract, agreement, lease, indenture or other instrument to which BRRN is a party or by or to which BRRN, or the Assets may be bound or subject and a violation of which would result in a Material Adverse Effect on BRRN, (iii) any order, judgment, injunction, award or decree of any arbitrator or Regulatory Authority or any statute, law, rule or regulation applicable to BRRN or (iv) any Permit of BRRN, which in the case of (ii), (iii) or (iv) above would have a Material Adverse Effect on BRRN or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of BRRN to perform its obligations under this Agreement or any of the Collateral Documents.
7
III.5 Consents and Approvals. No consent, approval, authorization or order of, registration or filing with, or notice to, any Regulatory Authority or any other Person is necessary to be obtained, made or given by BRRN in connection with the execution, delivery and performance by BRRN of this Agreement or any Collateral Document or for the consummation by BRRN of the transactions contemplated hereby or thereby, except to the extent the failure to obtain any such consent, approval, authorization or order or to make any such registration or filing would not have a Material Adverse Effect on BRRN or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of BRRN to perform its obligations under this Agreement or any of the Collateral Documents.
III.6 Intellectual Property. BRRN warrants that it has good title to or the right to use all material company intellectual property rights and all material inventions, processes, designs, formulae, trade secrets and know how necessary for the operation of BRRN Business without the payment of any royalty or similar payment.
III.7 Compliance with Legal Requirements. BRRN has operated its business in compliance with all Legal Requirements applicable to BRRN except to the extent the failure to operate in compliance with all material Legal Requirements would not have a Material Adverse Effect on BRRN or Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.
III.8 Litigation. There are no outstanding judgments or orders against or otherwise affecting or related to BRRN, BRRN Business or BRRN Assets and there is no action, suit, complaint, proceeding or investigation, judicial, administrative or otherwise, that is pending or, to BRRN’s knowledge, threatened that, if adversely determined, would have a Material Adverse Effect on BRRN or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents, except as noted in the audited Company Financial Statements or documented by BRRN to the Shareholders.
III.9 Taxes. BRRN has duly and timely filed in proper form all Tax Returns for all Taxes required to be filed with the appropriate Regulatory Authority, and has paid all taxes required to be paid in respect thereof except where such failure would not have a Material Adverse Effect on BRRN, except where, if not filed or paid, the exception(s) have been documented by BRRN to the Shareholders.
III.10 Books and Records. The books and records of BRRN accurately and fairly represent BRRN Business and its results of operations in all material respects.
III.11 Brokers or Finders. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by BRRN and/or its Affiliates/Representatives in connection with the transactions contemplated by this Agreement, neither BRRN, nor any of its Affiliates/Representatives have incurred any obligation to pay any brokerage or finder’s fee or other commission in connection with the transaction contemplated by this Agreement.
8
III.12 Disclosure. No representation or warranty of BRRN in this Agreement or in the Collateral Documents and no statement in any certificate furnished or to be furnished by BRRN pursuant to this Agreement contained, contains or will contain on the date such agreement or certificate was or is delivered, or on the Closing Date, any untrue statement of a material fact, or omitted, omits or will omit on such date to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
III.13 No Undisclosed Liabilities. To the knowledge of Kreuder, BRRN is not subject to any material liability (including unasserted claims), absolute or contingent, other than liabilities of the same nature as those set forth in BRRN’ financial statements and reasonably incurred in the ordinary course of its business.
III.14 Disclosed Liabilities. All Liabilities disclosed by BRRN shall be paid from BRRN’s accounts receivable when and as is due, and BRRN shall have no Liabilities upon the reverse merger. Any Liabilities, disclosed or undisclosed, shall be the sole obligation of BRRN.
III.15 Absence of Certain Changes. Since October 31, 2020, BRRN has not: (a) suffered any material adverse change in its financial condition, assets, liabilities or business; (b) contracted for or paid any capital expenditures; (c) incurred any indebtedness or borrowed money, issued or sold any debt or equity securities, declared any dividends or discharged or incurred any liabilities or obligations except in the ordinary course of business as heretofore conducted; (d) mortgaged, pledged or subjected to any lien, lease, security interest or other charge or encumbrance any of its properties or assets; (e) paid any material amount on any indebtedness prior to the due date, forgiven or cancelled any material amount on any indebtedness prior to the due date, forgiven or cancelled any material debts or claims or released or waived any material rights or claims; (f) suffered any damage or destruction to or loss of any assets (whether or not covered by insurance); (g) acquired or disposed of any assets or incurred any liabilities or obligations; (h) made any payments to its affiliates or associates or loaned any money to any person or entity; (i) formed or acquired or disposed of any interest in any corporation, partnership, limited liability company, joint venture or other entity; (j) entered into any employment, compensation, consulting or collective bargaining agreement or any other agreement of any kind or nature with any person. Or group, or modified or amended in any respect the terms of any such existing agreement; (k) entered into any other commitment or transaction or experience any other event that relates to or affect in any way this Agreement or to the transactions contemplated hereby, or that has affected, or may adversely affect BRRN Business, operations, assets, liabilities or financial condition; or (1) amended its Articles of Incorporation or By-laws, except as otherwise contemplated herein.
III.16 Contracts. A true and complete list of all contracts, agreements, leases, commitments or other understandings or arrangements, written or oral, express or implied, to which BRRN is a party or by which it or any of its property is bound or affected requiring payments to or from, or incurring of liabilities by, BRRN in excess of $10,000 (the “Contracts”). BRRN has complied with and performed, in all material respects, all of its obligations required to be performed under and is not in default with respect to any of the Contracts, as of the date hereof, nor has any event occurred which has not been cured which, with or without the giving of notice, lapse of time, or both, would constitute a default in any respect there under. To the best knowledge of BRRN, no other party has failed to comply with or perform, in all material respects, any of its obligations required to be performed under or is in material default with respect to any such Contracts, as of the date hereof, nor has any event occurred which, with or without the giving of notice, lapse of time or both, would constitute a material default in any respect by such party there under. BRRN knows of and has no reason to believe that there are any facts or circumstances which would make a material default by any party to any contract or obligation likely to occur subsequent to the date hereof.
9
III.17 Permits and Licenses. BRRN has all certificates of occupancy, rights, permits, certificates, licenses, franchises, approvals and other authorizations as are reasonably necessary to conduct its business and to own, lease, use, operate and occupy its assets, at the places and in the manner now conducted and operated, except those the absence of which would not materially adversely affect its business. BRRN has not received any written or oral notice or claim pertaining to the failure to obtain any material permit, certificate, license, approval or other authorization required by any federal, state or local agency or other regulatory body, the failure of which to obtain would materially and adversely affect its business.
III.18 Assets Necessary to Business. BRRN owns or leases all properties and assets, real, personal, and mixed, tangible and intangible, and is a party to all licenses, permits and other agreements necessary to permit it to carry on its business as presently conducted.
III.19 Labor Agreements and Labor Relations. BRRN has no collective bargaining or union contracts or agreements. BRRN is in compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and is not engaged in any unfair labor practices; there are no charges of discrimination or unfair labor practice charges” or complaints against BRRN pending or threatened before any governmental or regulatory agency or authority; and, there is no labor strike, dispute, slowdown or stoppage actually pending or threatened against or affecting BRRN.
III.20 Employment Arrangements. BRRN has no employment or consulting agreements or arrangements, written or oral, which are not terminable at the will of BRRN, or any pension, profit-sharing, option, other incentive plan, or any other type of employment benefit plan as defined in ERISA or otherwise, or any obligation to or customary arrangement with employees for bonuses, incentive compensation, vacations, severance pay, insurance or other benefits. No employee of BRRN is in violation of any employment agreement or restrictive covenant.
III.21 Filings. BRRN is subject to filings required by the Securities Act of 1933, as amended, and the Exchange Act of 1934, as amended, and is current in such filing requirements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ALKEON, CHOPIN AND THE SHAREHOLDERS
Alkeon and Chopin, and the Shareholders, where applicable, represent and warrant to BRRN that the statements contained in this ARTICLE IV are correct and complete as of the date of this Agreement and, except as provided in Section 8.1, will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this ARTICLE IV, except in the case of representations and warranties stated to be made as of the date of this Agreement or as of another date and except for changes contemplated or permitted by the Agreement).
10
IV.1 Organization and Qualification. Alkeon has all requisite power and authority to own, lease and use Alkeon’s assets as they are currently owned, leased and used and to conduct its business as it is currently conducted. Alkeon is duly qualified or licensed to do business in and is in good standing in each jurisdiction in which the character of the properties owned, leased or used by it or the nature of the activities conducted by it makes such qualification necessary, except any such jurisdiction where the failure to be so qualified or licensed and in good standing would not have a Material Adverse Effect on the Shareholders or a Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of Alkeon, Chopin, or the Shareholders to perform their or its obligations under this Agreement or any of the Collateral Documents.
IV.2 Capitalization.
(a) The authorized capital stock of Alkeon is 10,000,000 shares of common stock. All outstanding shares of Alkeon Common Stock are owned by the Shareholders, consisting of 4,600,000 shares. Alkeon has no shares of preferred stock authorized. The shares of Alkeon Common Stock are duly issued and outstanding, and has been duly authorized, validly issued and outstanding and fully paid and non-assessable, which shares is exchanged hereby, as above provided.
(b) There no outstanding or authorized options, warrants, purchase rights, preemptive rights or other contracts or commitments that could require Alkeon or any of its Subsidiaries to issue, sell, or otherwise cause to become outstanding any of its capital stock or other ownership interests.
(c) All of the issued and outstanding shares of the Alkeon common stock have been duly authorized and are validly issued and outstanding, fully paid and non-assessable (with respect to Subsidiaries that are corporations) and have been issued in compliance with applicable securities laws and other applicable Legal Requirements.
IV.3 Authority and Validity. Alkeon, Chopin and the Shareholders have all requisite power to execute and deliver to perform his obligations under, and to consummate the transactions contemplated by, this Agreement and the Collateral Documents. The execution and delivery by the Alkeon, Chopin and the Shareholders and the performance by Alkeon, Chopin and the Shareholders of their obligations under, and the consummation by Alkeon, Chopin and the Shareholders of the transactions contemplated by, this Agreement and the Collateral Documents have been duly authorized by all requisite action of Alkeon, Chopin and the Shareholders. This Agreement has been duly executed and delivered (assuming due execution and delivery by the Shareholders) is the legal, valid and binding obligation of Alkeon, Chopin and the Shareholders, enforceable in accordance with its terms except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles. Upon the execution and delivery by Alkeon, Chopin and the Shareholders of the Collateral Documents to which it is a party, and assuming due execution and delivery thereof by the other parties thereto, the Collateral Documents will be the legal, valid and binding obligations, enforceable in accordance with their respective terms except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles.
11
IV.4 No Breach or Violation. Subject to obtaining the consents, approvals, authorizations, and orders of and making the registrations or filings with or giving notices to Regulatory Authorities and Persons identified herein, the execution, delivery and performance by Alkeon, Chopin and the Shareholders of this Agreement and the Collateral Documents to which they are a party and the consummation of the transactions contemplated hereby and thereby in accordance with the terms and conditions hereof and thereof, do not and will not conflict with, constitute a violation or breach of, constitute a default or give rise to any right of termination or acceleration of any right or obligation of Alkeon, Chopin and the Shareholders under, or result in the creation or imposition of any Encumbrance upon the property of the Shareholders by reason of the terms of (i) the articles of incorporation, by laws or other charter or organizational document of Alkeon, (ii) any contract, agreement, lease, indenture or other instrument to which any of Chopin, the Shareholders or Alkeon are a party or by or to which Chopin, the Shareholders or Alkeon or their property may be bound or subject and a violation of which would result in a Material Adverse Effect on Chopin, the Shareholders or Alkeon taken as a whole, (iii) any order, judgment, injunction, award or decree of any arbitrator or Regulatory Authority or any statute, law, rule or regulation applicable to Chopin, the Shareholders or Alkeon or (iv) any Permit of Alkeon or any of its Subsidiaries, which in the case of (ii), (iii) or (iv) above would have a Material Adverse Effect on Alkeon or any of its Subsidiaries or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of Alkeon, Chopin or the Shareholders to perform their obligations hereunder or there under.
IV.5 Consents and Approvals. Except for requirements under applicable United States or state securities laws, no consent, approval, authorization or order of, registration or filing with, or notice to, any Regulatory Authority or any other Person is necessary to be obtained, made or given by Alkeon, Chopin and the Shareholders in connection with the execution, delivery and performance by them of this Agreement or any Collateral Documents or for the consummation by them of the transactions contemplated hereby or thereby, except to the extent the failure to obtain such consent, approval, authorization or order or to make such registration or filings or to give such notice would not have a Material Adverse Effect on the Shareholders, in the aggregate, or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of Alkeon, Chopin and the Shareholders to perform their obligations under this Agreement or any of the Collateral Documents.
IV.6 Compliance with Legal Requirements. Alkeon’s businesses have operated in compliance with all material Legal Requirements including, without limitation, the Securities Act applicable to Alkeon or any of its Subsidiaries, except to the extent the failure to operate in compliance with all material Legal Requirements, would not have a Material Adverse Effect on Alkeon or any of its Subsidiaries or a Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.
12
IV.7 Litigation. There are no outstanding judgments or orders against or otherwise affecting or related to Alkeon or any of its Subsidiaries, or the business or assets of Alkeon or any of its Subsidiaries; and there is no action, suit, complaint, proceeding or investigation, judicial, administrative or otherwise, that is pending or, to the best knowledge of the Shareholders, threatened that, that has not been disclosed and if adversely determined, would have a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.
IV.8 Ordinary Course. There has not been any occurrence, event, incident, action, failure to act or transaction involving Alkeon or any of its Subsidiaries, which is reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on Alkeon or any of its Subsidiaries.
IV.9 Assets and Liabilities. As of the date of this Agreement, neither Alkeon nor any of its Subsidiaries has any Assets or Liability, except for the Liabilities disclosed in the balance sheet disclosed to BRRN through the date hereof.
IV.10 Taxes. Alkeon, and any Subsidiaries, has duly and timely filed in proper form all Tax Returns for all Taxes required to be filed with the appropriate Governmental Authority, except where such failure to file would not have a Material Adverse Effect on Alkeon or any of its Subsidiaries.
IV.11 Books and Records. The books and records of Alkeon and any Subsidiaries, if any, accurately and fairly represent the Alkeon business and its results of operations in all material respects. All accounts receivable and inventory of the Alkeon business are reflected properly on such books and records in all material respects.
IV.12 Financial and Other Information. To the knowledge of Chopin, Alkeon’s financial statements do not contain (directly or by incorporation by reference) any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein (or incorporated therein by reference), in light of the circumstances under which they were or will be made, not misleading.
IV.13 Brokers or Finders. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Chopin, Alkeon and/or their Affiliates/Representatives in connection with the transactions contemplated by this Agreement, neither Chopin, Alkeon, nor any of their Affiliates/Representatives have incurred any obligation to pay any brokerage or finder’s fee or other commission in connection with the transaction contemplated by this Agreement.
IV.14 Disclosure. No representation or warranty of Alkeon, Chopin and the Shareholders in this Agreement or in the Collateral Documents and no statement in any certificate furnished or to be furnished by Alkeon, Chopin and the Shareholders pursuant to this Agreement contained, contains or will contain on the date such agreement or certificate was or is delivered, or on the Closing Date, any untrue statement of a material fact, or omitted, omits or will omit on such date to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
13
IV.15 Filings. Alkeon is not subject to filings required by the Securities Act of 1933, as amended, and the Exchange Act of 1934, as amended. Chopin will cause BRRN to file all filings required to be made and no such filing will contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, not misleading.
IV.16 Conduct of Business. Prior to the Closing Date, Alkeon and its Subsidiaries shall conduct their business in the normal course, and shall not sell, pledge, or assign any assets, without the prior written approval of BRRN, except in the regular course of business. Except as otherwise provided herein, Alkeon shall not amend its Articles of Incorporation or By-Laws, declare dividends, redeem or sell stock or other securities, acquire or dispose of fixed assets, change employment terms, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any material balance sheet receivable for less than its stated amount, pay more on any liability than its stated amount or enter into any other transaction other than in the regular course of business.
ARTICLE V
COVENANTS OF BRRN
Between the date of this Agreement and the Closing Date:
V.1 Additional Information. BRRN shall provide to Alkeon, Chopin and the Shareholders and their Representatives such financial, operating and other documents, data and information relating to BRRN, BRRN Business and BRRN’ assets and liabilities, as Alkeon, Chopin and the Shareholders or their Representatives may reasonably request. In addition, BRRN shall take all actions necessary to enable Alkeon, Chopin and the Shareholders and their Representatives to review, inspect and review BRRN Assets, BRRN Business and Liabilities of BRRN and discuss them with BRRN’s officers, employees, independent accountants, customers, licensees, and counsel. Notwithstanding any investigation that Alkeon, Chopin and the Shareholders may conduct of BRRN, BRRN Business, BRRN Assets and the Liabilities of BRRN, Alkeon, Chopin and the Shareholders may fully rely on BRRN’s warranties, covenants and indemnities set forth in this Agreement.
V.2 Consents and Approvals. As soon as practicable after execution of this Agreement, BRRN shall use commercially reasonable efforts to obtain any necessary consent, approval, authorization or order of, make any registration or filing with or give any notice to, any Regulatory Authority or Person as is required to be obtained, made or given by BRRN to consummate the transactions contemplated by this Agreement and the Collateral Documents.
V.3 Non-circumvention. It is understood that in connection with the transactions contemplated hereby, Alkeon has been and will be seeking to find investors willing to provide loans and/or capital investments to finance business plans. In connection therewith, BRRN will not, and it will cause its directors, officers, employees, agents and representatives not to attempt, directly or indirectly, (i) to contact any party introduced to it by the Shareholders, or (ii) deal with, or otherwise become involved in any transaction with any party which has been introduced to it by the Shareholders, without the express written permission of the introducing party and without having entered into a commission agreement with the introducing party. Any violation of the covenant shall be deemed an attempt to circumvent the Shareholders, and the party so violating this covenant shall be liable for damages in favor of the circumvented party.
14
V.4 No Solicitations. From and after the date of this Agreement until the Effective Time or termination of this Agreement pursuant to ARTICLE X, BRRN will not nor will it authorize or permit any of its officers, directors, affiliates or employees or any investment banker, attorney or other advisor or representative retained by it, directly or indirectly, (i) solicit or initiate the making, submission or announcement of any other acquisition proposal, (ii) participate in any discussions or negotiations regarding, or furnish to any person any nonpublic information with respect to any other acquisition proposal, (iii) engage in discussions with any Person with respect to any other acquisition proposal, except as to the existence of these provisions, (iv) approve, endorse or recommend any other acquisition proposal or (v) enter into any letter of intent or similar document or any contract agreement or commitment contemplating or otherwise relating to any other acquisition proposal.
V.5 Notification of Adverse change. BRRN shall promptly notify the Shareholders of any material adverse change in the condition (financial or otherwise) of BRRN.
V.6 Notification of Certain Matters. BRRN shall promptly notify the Shareholders of any fact, event, circumstance or action known to it that is reasonably likely to cause BRRN to be unable to perform any of its covenants contained herein or any condition precedent in ARTICLE VII not to be satisfied, or that, if known on the date of this Agreement, would have been required to be disclosed to the Shareholders pursuant to this Agreement or the existence or occurrence of which would cause any of BRRN’s representations or warranties under this Agreement not to be correct and/or complete. BRRN shall give prompt written notice to the Shareholders of any adverse development causing a breach of any of the representations and warranties in ARTICLE III as of the date made.
V.7 BRRN Disclosure Schedule. For purposes of determining the satisfaction of any of the conditions to the obligations of Alkeon, Chopin and the Shareholders in ARTICLE VII, BRRN disclosures shall be deemed to include only (a) the information contained therein on the date of this Agreement and (b) information provided by written supplements delivered prior to Closing by BRRN that (i) are accepted in writing by Alkeon, Chopin and the Shareholders, or (ii) reflect actions taken or events occurring after the date hereof prior to Closing.
V.8 State Statutes. BRRN and its Board of Directors shall, if any state takeover statute or similar law is or becomes applicable to the Share Exchange, this Agreement or any of the transactions contemplated by this Agreement, use all reasonable efforts to ensure that the Share Exchange and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such statute or regulation on the Share Exchange, this Agreement and the transactions contemplated hereby.
V.9 Conduct of Business. Prior to the Closing Date, BRRN shall conduct its business in the normal course, and shall not sell, pledge, or assign any assets, without the prior written approval of Alkeon, Chopin and the Shareholders, except in the regular course of business. Except as otherwise provided herein, BRRN shall not amend its Articles of Incorporation or Bylaws, declare dividends, redeem or sell stock or other securities, acquire or dispose of fixed assets, change employment terms, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any material balance sheet receivable for less than its stated amount, pay more on any liability than its stated amount, or enter into any other transaction other than in the regular course of business.
15
V.10 Filings. Until closing, BRRN will timely file all reports and other documents relating to the operation of BRRN required to be filed, which reports and other documents do not and will not contain any misstatement of a material fact, and do not and will not omit any material fact necessary to make the statements therein not misleading.
ARTICLE VI
COVENANTS OF ALKEON, CHOPIN AND THE SHAREHOLDERS
Between the date of this Agreement and the Closing Date,
VI.1 Additional Information. Alkeon, Chopin and the Shareholders shall provide to BRRN and its Representatives such financial, operating and other documents, data and information relating to Alkeon or any of its Subsidiaries, the Alkeon business and the Alkeon assets and the liabilities of Alkeon, as BRRN or its Representatives may reasonably request. In addition, Alkeon, Chopin and the Shareholders shall take all action necessary to enable BRRN and its Representatives to review and inspect the Alkeon assets, the Alkeon business and the liabilities of Alkeon and discuss them with BRRN’s officers, employees, independent accountants and counsel. Notwithstanding any investigation that BRRN may conduct of Alkeon or any of its Subsidiaries, the Alkeon business, the Alkeon assets and the liabilities of Alkeon, BRRN may fully rely on the Shareholders’ warranties, covenants and indemnities set forth in this Agreement.
VI.2 No Solicitations. From and after the date of this Agreement until the Effective Time or termination of this Agreement pursuant to ARTICLE X, Alkeon, Chopin and the Shareholders will not nor will they authorize or permit any of Alkeon’ officers, directors, affiliates or employees or any investment banker, attorney or other advisor or representative retained by it, directly or indirectly, (i) solicit or initiate the making, submission or announcement of any other acquisition proposal, (ii) participate in any discussions or negotiations regarding, or furnish to any person any non-public information with respect to any other acquisition proposal, (iii) engage in discussions with any Person with respect to any other acquisition proposal, except as to the existence of these provisions, (iv) approve, endorse or recommend any other acquisition proposal or (v) enter into any letter of intent or similar document or any contract agreement or commitment contemplating or otherwise relating to any other acquisition proposal.
VI.3 Notification of Adverse change. Alkeon and Chopin shall promptly notify BRRN of any material adverse change in the condition (financial or otherwise) of Alkeon or any of its Subsidiaries.
VI.4 Consents and Approvals. As soon as practicable after execution of this Agreement, Alkeon and Chopin shall use his commercially reasonable efforts to obtain any necessary consent, approval, authorization or order of, make any registration or filing with or give notice to, any Regulatory Authority or Person as is required to be obtained, made or given by Alkeon, Chopin, or the Shareholders to consummate the transactions contemplated by this Agreement and the Collateral Documents.
VI.5 Notification of Certain Matters. Alkeon and Chopin shall promptly notify BRRN of any fact, event, circumstance or action known to him that is reasonably likely to cause Alkeon or any of its Subsidiaries to be unable to perform any of its covenants contained herein or any condition precedent if not to be satisfied, or that, if known on the date of this Agreement, would have been required to be disclosed to BRRN pursuant to this Agreement or the existence or occurrence of which would cause Alkeon’s, Chopin’s, or the Shareholders’ representations or warranties under this Agreement not to be correct and/or complete. Alkeon and Chopin shall give prompt written notice to BRRN of any adverse development causing a breach of any of the representations and warranties in ARTICLE IV.
16
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF ALKEON, CHOPIN, AND THE SHAREHOLDERS
All obligations of Alkeon and Chopin and the Shareholders under this Agreement shall be subject to the fulfillment at or prior to Closing of each of the following conditions, it being understood that the Parties may, in their sole discretion, to the extent permitted by applicable Legal Requirements, waive any or all of such conditions in whole or in part.
VII.1 Accuracy of Representations. All representations and warranties of BRRN contained in this Agreement, the Collateral Documents and any certificate delivered by any of BRRN at or prior to Closing shall be, if specifically qualified by materiality, true in all respects and, if not so qualified, shall be true in all material respects, in each case on and as of the Closing Date with the same effect as if made on and as of the Closing Date, except for representations and warranties expressly stated to be made as of the date of this Agreement or as of another date other than the Closing Date and except for changes contemplated or permitted by this Agreement. BRRN shall have delivered to the Shareholders a certificate dated the Closing Date to the foregoing effect.
VII.2 Covenants. BRRN shall, in all material respects, have performed and complied with each of the covenants, obligations and agreements contained in this Agreement and the Collateral Documents that are to be performed or complied with by them at or prior to Closing.
VII.3 Consents and Approvals. All consents, approvals, permits, authorizations and orders required to be obtained from, and all registrations, filings and notices required to be made with or given to, any Regulatory Authority or Person as provided herein.
VII.4 Delivery of Documents. BRRN shall have delivered, or caused to be delivered, to the Shareholders the following documents:
(i) Copies of BRRN articles of incorporation and bylaws and certified resolutions of the board of directors of BRRN authorizing the execution of this Agreement and the Collateral Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby.
(ii) Such other documents and instruments as Alkeon, Chopin, or the Shareholders may reasonably request: (A) to evidence the accuracy of BRRN’s representations and warranties under this Agreement, the Collateral Documents and any documents, instruments or certificates required to be delivered hereunder; (B) to evidence the performance by BRRN of, or the compliance by BRRN with, any covenant, obligation, condition and agreement to be performed or complied with by BRRN under this Agreement and the Collateral Documents; or (C) to otherwise facilitate the consummation or performance of any of the transactions contemplated by this Agreement and the Collateral Documents.
17
VII.5 No Material Adverse change. Since the date hereof, there shall have been no material adverse change in BRRN’ assets, BRRN Business or the financial condition or operations of BRRN, taken as a whole.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF KREUDER AND BRRN
All obligations of Kreuder and BRRN under this Agreement shall be subject to the fulfillment at or prior to Closing of the following conditions, it being understood that BRRN may, in its sole discretion, to the extent permitted by applicable Legal Requirements, waive any or all of such conditions in whole or in part.
VIII.1 Accuracy of Representations. All representations and warranties of Alkeon, Chopin, or the Shareholders contained in this Agreement and the Collateral Documents and any other document, instrument or certificate delivered by Alkeon, Chopin, or the Shareholders at or prior to the Closing shall be, if specifically qualified by materiality, true and correct in all respects and, if not so qualified, shall be true and correct in all material respects, in each case on and as of the Closing Date with the same effect as if made on and as of the Closing Date, except for representations and warranties expressly stated to be made as of the date of this Agreement or as of another date other than the Closing Date and except for changes contemplated or permitted by this Agreement.
VIII.2 Covenants. Alkeon, Chopin, or the Shareholders shall, in all material respects, have performed and complied with each obligation, agreement, covenant and condition contained in this Agreement and the Collateral Documents and required by this Agreement and the Collateral Documents to be performed or complied with by Alkeon, Chopin, or the Shareholders at or prior to Closing.
VIII.3 Consents and Approvals. All consents, approvals, authorizations and orders required to be obtained from, and all registrations, filings and notices required to be made with or given to, any Regulatory Authority or Person as provided herein.
VIII.4 Delivery of Documents. Alkeon, Chopin, and/or the Shareholders shall have executed and delivered, or caused to be executed and delivered, to BRRN the following documents:
Documents and instruments as BRRN may reasonably request: (A) to evidence the accuracy of the representations and warranties of Alkeon, Chopin, and the Shareholders under this Agreement and the Collateral Documents and any documents, instruments or certificates required to be delivered hereunder; (B) to evidence the performance by Alkeon, Chopin, and the Shareholders of, or the compliance by Alkeon, Chopin, and the Shareholders with, any covenant, obligation, condition and agreement to be performed or complied with by the Shareholders under this Agreement and the Collateral Documents; or (C) to otherwise facilitate the consummation or performance of any of the transactions contemplated by this Agreement and the Collateral Documents.
VIII.5 No Material Adverse Change. There shall have been no material adverse change in the business, financial condition or operations of Alkeon and its Subsidiaries taken as a whole.
18
VIII.6 No Litigation. No action, suit or proceeding shall be pending or threatened by or before any Regulatory Authority and no Legal Requirement shall have been enacted, promulgated or issued or deemed applicable to any of the transactions contemplated by this Agreement and the Collateral Documents that would: (i) prevent consummation of any of the transactions contemplated by this Agreement and the Collateral Documents; (ii) cause any of the transactions contemplated by this Agreement and the Collateral Documents to be rescinded following consummation; or (iii) have a Material Adverse Effect on Alkeon or any of its Subsidiaries.
ARTICLE IX
INDEMNIFICATION
IX.1 Indemnification by BRRN. BRRN shall indemnify, defend and hold harmless (i) Alkeon, Chopin, and the Shareholders, (ii) any of Alkeon’s, Chopin’s, and the Shareholders’ assigns and successors in interest to BRRN Shares, and (iii) each of Alkeon, Chopin, and the Shareholders, members, partners, directors, officers, managers, employees, agents, attorneys and representatives, from and against any and all Losses which may be incurred or suffered by any such party and which may arise out of or result from any breach of any material representation, warranty, covenant or agreement of BRRN contained in this Agreement. All claims to be assorted hereunder must be made for the first anniversary of the Closing.
IX.2 Indemnification by the Shareholders. Alkeon, Chopin, and/or the Shareholders shall indemnify, defend and hold harmless BRRN from and against any and all Losses which may be incurred or suffered by any such party hereto and which may arise out of or result from any breach of any material representation, warranty, covenant or agreement of Alkeon, Chopin, and/or the Shareholders contained in this Agreement, as applicable. All claims to be assorted hereunder must be made for the first anniversary of the Closing.
IX.3 Notice to Indemnifying Party. If any party (the “Indemnified Party”) receives notice of any claim or other commencement of any action or proceeding with respect to which any other party (or parties) (the “Indemnifying Party”) is obligated to provide indemnification pursuant to Sections 9.1 or 9.2, the Indemnified Party shall promptly give the Indemnifying Party written notice thereof, which notice shall specify in reasonable detail, if known, the amount or an estimate of the amount of the liability arising here from and the basis of the claim. Such notice shall be a condition precedent to any liability of the Indemnifying Party for indemnification hereunder, but the failure of the Indemnified Party to give prompt notice of a claim shall not adversely affect the Indemnified Party’s right to indemnification hereunder unless the defense of that claim is materially prejudiced by such failure. The Indemnified Party shall not settle or compromise any claim by a third party for which it is entitled to indemnification hereunder without the prior written consent of the Indemnifying Party (which shall not be unreasonably withheld or delayed) unless suit shall have been instituted against it and the Indemnifying Party shall not have taken control of such suit after notification thereof as provided in Section 9.4.
IX.4 Defense by Indemnifying Party. In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a Person who is not a party to this Agreement, the Indemnifying Party at its sole cost and expense may, upon written notice to the Indemnified Party, assume the defense of any such claim or legal proceeding (i) if it acknowledges to the Indemnified Party in writing its obligations to indemnify the Indemnified Party with respect to all elements of such claim (subject to any limitations on such liability contained in this Agreement) and (ii) if it provides assurances, reasonably satisfactory to the Indemnified Party, that it will be financially able to satisfy such claims in full if the same are decided adversely. If the Indemnifying Party assumes the defense of any such claim or legal proceeding, it may use counsel of its choice to prosecute such defense, subject to the approval of such counsel by the Indemnified Party, which approval shall not be unreasonably withheld or delayed. The Indemnified Party shall be entitled to participate in (but not control) the defense of any such action, with its counsel and at its own expense; provided, however, that if the Indemnified Party, in its sole discretion, determines that there exists a conflict of interest between the Indemnifying Party (or any constituent party thereof) and the Indemnified Party, the Indemnified Party (or any constituent party thereof) shall have the right to engage separate counsel, the reasonable costs and expenses of which shall be paid by the Indemnified Party. If the Indemnifying Party assumes the defense of any such claim or legal proceeding, the Indemnifying Party shall take all steps necessary to pursue the resolution thereof in a prompt and diligent manner. The Indemnifying Party shall be entitled to consent to a settlement of, or the stipulation of any judgment arising from, any such claim or legal proceeding, with the consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed; provided, however, that no such consent shall be required from the Indemnified Party if (i) the Indemnifying Party pays or causes to be paid all Losses arising out of such settlement or judgment concurrently with the effectiveness thereof (as well as all other Losses theretofore incurred by the Indemnified Party which then remain unpaid or unreimbursed), (ii) in the case of a settlement, the settlement is conditioned upon a complete release by the claimant of the Indemnified Party and (iii) such settlement or judgment does not require the encumbrance of any asset of the Indemnified Party or impose any restriction upon its conduct of business.
19
ARTICLE X
TERMINATION
X.1 Termination. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned, at any time prior to it being fully executed, or thereafter:
| (a) | by mutual written agreement of Alkeon and BRRN hereto duly authorized by action taken by or on behalf of the respective Boards of Directors; or |
| (b) | by either BRRN, Alkeon, Chopin, or the Shareholders upon notification to the non-terminating party by the terminating party: |
(i) if the terminating party is not in material breach of its obligations under this Agreement and there has been a material breach of any representation, warranty, covenant or agreement on the part of the non-terminating party set forth in this Agreement such that the conditions will not be satisfied; provided, however, that if such breach is curable by the non-terminating party and such cure is reasonably likely to be completed prior to the Closing Date; or
(ii) if any court of competent jurisdiction or other competent Governmental or Regulatory Authority shall have issued an order making illegal or otherwise permanently restricting, preventing or otherwise prohibiting the Share Exchange and such order shall have become final.
(c) Effect of Termination. If this Agreement is validly terminated by either BRRN Alkeon, Chopin, or the Shareholders pursuant to Section 10.1, this Agreement will forthwith become null and void and there will be no liability or obligation on the part of the parties hereto, except that nothing contained herein shall relieve any party hereto from liability for willful breach of its representations, warranties, covenants or agreements contained in this Agreement.
ARTICLE XI
MISCELLANEOUS
XI.1 Parties Obligated and Benefited. This Agreement shall be binding upon the Parties and their respective successors by operation of law and shall inure solely to the benefit of the Parties and their respective successors by operation of law, and no other Person shall be entitled to any of the benefits conferred by this Agreement. Without the prior written consent of the other Party, no Party may assign this Agreement or the Collateral Documents or any of its rights or interests or delegate any of its duties under this Agreement or the Collateral Documents.
XI.2 Publicity. All press release shall be joint press releases between BRRN and Alkeon and each shall consult with each other prior to issuing any press releases or otherwise making public announcements with respect to the Share Exchange and the other transactions contemplated by this Agreement and prior to making any filings with any third party and/or any Regulatory Authorities (including any national securities inter dealer quotation service) with respect thereto, except as may be required by law or by obligations pursuant to any listing agreement with or rules of any national securities inter dealer quotation service.
XI.3 Notices. Any notices and other communications required or permitted hereunder shall be in writing and shall be effective upon delivery by hand or upon receipt if sent by certified or registered mail (postage prepaid and return receipt requested) or by a nationally recognized overnight courier service (appropriately marked for overnight delivery) or upon transmission if sent by telex or facsimile (with request for immediate confirmation of receipt in a manner customary for communications of such respective type and with physical delivery of the communication being made by one or the other means specified in this Section as promptly as practicable thereafter). Notices shall be addressed as follows:
|
If to Chopin, the Shareholders or Alkeon: |
Alkeon Creators Inc. |
| If to BRRN or Kreuder: |
Born, Inc. 50 West Liberty Street, Suite 880 Reno, Nevada 89501 |
20
XI.4 Addresses. Any Party may change the address to which notices are required to be sent by giving notice of such change in the manner provided in this Section.
XI.5 Attorneys’ Fees. In the event of any action or suit based upon or arising out of any alleged breach by any Party of any representation, warranty, covenant or agreement contained in this Agreement or the Collateral Documents, the prevailing Party shall be entitled to recover reasonable attorneys’ fees and other costs of such action or suit from the other Party.
XI.6 Headings. The Article and Section headings of this Agreement are for convenience only and shall not constitute a part of this Agreement or in any way affect the meaning or interpretation thereof.
XI.7 Choice of Law. This Agreement and the rights of the Parties under it shall be governed by and construed in all respects in accordance with the laws of the State of Nevada, without giving effect to any choice of law provision or rule.
XI.8 Rights Cumulative. All rights and remedies of each of the Parties under this Agreement shall be cumulative, and the exercise of one or more rights or remedies shall not preclude the exercise of any other right or remedy available under this Agreement or applicable law.
XI.9 Further Actions. The Parties shall execute and deliver to each other, from time to time at or after Closing, for no additional consideration and at no additional cost to the requesting party, such further assignments, certificates, instruments, records, or other documents, assurances or things as may be reasonably necessary to give full effect to this Agreement and to allow each party fully to enjoy and exercise the rights accorded and acquired by it under this Agreement.
XI.10 Time of the Essence. Time is of the essence under this Agreement. If the last day permitted for the giving of any notice or the performance of any act required or permitted under this Agreement falls on a day which is not a Business Day, the time for the giving of such notice or the performance of such act shall be extended to the next succeeding Business Day.
XI.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
XI.12 Entire Agreement. This Agreement (including the Exhibits and any other documents, instruments and certificates referred to herein, which are incorporated in and constitute a part of this Agreement) contains the entire agreement of the Parties.
XI.13 Survival of Representations and Covenants. Notwithstanding any right of Alkeon, Chopin, and the Shareholders to fully investigate the affairs of BRRN and notwithstanding any knowledge of facts determined or determinable by Alkeon, Chopin, and the Shareholders pursuant to such investigation or right of investigation, Alkeon, Chopin, and the Shareholders shall have the right to rely fully upon the representations, warranties, covenants and agreements of BRRN contained in this Agreement. Each representation, warranty, covenant and agreement of BRRN contained herein shall survive the execution and delivery of this Agreement and the Closing and shall thereafter terminate and expire on the first anniversary of the Closing Date unless, prior to such date, Alkeon, Chopin, or the Shareholders has delivered to BRRN a written notice of a claim with respect to such representation, warranty, covenant or agreement.
21
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the day and year first above written.
Dated: February 16, 2021
| BORN, INC. | ||
| By: | /s/ Wieland Kreuder | |
| Name: | Wieland Kreuder | |
| Title: | Chief Executive Officer | |
| KREUDER | ||
| /s/ Wieland Kreuder | ||
| Wieland Kreuder | ||
| ALKEON CREATORS INC. | ||
| By: | /s/ Jean-Christophe Chopin | |
| Name: | Jean-Christophe Chopin | |
| Title: | President | |
| SHAREHOLDERS | ||
| Creators Guild Ltd. | ||
| By: | /s/ Jean-Christophe Chopin | |
| Name: | Jean-Christophe Chopin | |
| Its: | Director | |
| Lioncap Global Management | ||
| By: | /s/ Marlon Muller | |
| Name: | Marlon Muller | |
| Its: | Director | |
| Cosmos Sicav Plc - Open Capital Fund | ||
| By: | /s/ Riccardo Teodori | |
| Name: | Riccardo Teodori | |
| Its: | Director | |
| MTS 2001 GTR Holdings, LLC | ||
| By: | /s/ Robert D. Svendson | |
| Name: | Robert D. Svendson | |
| Its: | Manager | |
| DAMVIX Equities LLC | ||
| By: | /s/ Maxime Rambaud | |
| Name: | Maxime Rambaud | |
| Its: | Manager | |
22
| FiveT Capital Holding AG | ||
| By: | /s/ Wieland Kreuder | |
| Name: | Wieland Kreuder | |
| Its: | Director | |
| /s/ Jean-Christophe Chopin | ||
| Jean-Christophe Chopin | ||
| /s/ Brendan Wypich | ||
| Brendan Wypich | ||
| /s/ Pierre Sapin | ||
| Pierre Sapin | ||
| /s/ Vanessa Montes | ||
| Vanessa Montes | ||
| CHOPIN | ||
| Jean-Christophe Chopin | ||
| Jean-Christophe Chopin | ||
23
EXHIBIT A
| Name | Shares | |||
| Creators Guild Ltd | 224,886,042 | |||
| Lioncap Global Management | 41,729,311 | |||
| Cosmos Sicav Plc - Open Capital Fund | 71,947,088 | |||
| MTS 2001 GTR Holdings, LLC | 10,278,155 | |||
| DAMVIX EQUITIES LLC | 6,166,893 | |||
| FiveT Capital Holding AG | 20,556,311 | |||
| Jean-Christophe Chopin | 12,643,981 | |||
| Brendan Wypich | 8,429,320 | |||
| Pierre Sapin | 8,429,320 | |||
| Vanessa Montes | 1,580,497 | |||
EXHIBIT B
DIRECTORS RESOLUTIONS
OF
BORN, INC.
(the “Company”)
WHEREAS:
| A. | Wieland Kreuder has consented to step down as Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and as a Member of the Board of Directors of the Company. |
| B. | Jean-Christophe Chopin has consented to act as the new President, CEO, CFO, Treasurer, Secretary, and Chairman of the Board of Directors of the Company. |
BE IT RESOLVED THAT:
| C. | Wieland Kreuder stepped down as Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and as a Member of the Board of Directors of the Company. |
| D. | Jean-Christophe Chopin shall act as the new President, CEO, CFO, Treasurer, Secretary, and Chairman of the Board of Directors of the Company. |
Effective date: February 16, 2021
| Wieland Kreuder | |
| Jean-Christophe Chopin |
Exhibit 10.2
November 20th, 2020
Jean Christophe Chopin
Route Suisse 251296 Coppet, Switzerland
Re: Appointment to CEO, Alkeon Creators Inc.
Dear Jean Christophe,
Alkeon Creators is pleased to offer you the position Chief Executive Officer (CEO) for Alkeon Creators Inc. based of Los Angeles California effective November 20th, 2020. In this Role you will report to the board of directors.
The Board has also approved your appointment to CEO, effective November 20th, 2020 with final compensation and other terms to approved by our Board before January 1, 2021.
We believe your experience, track record at Alkeon Creators Inc., your alignment with the Alkeon Creators Business, along with your natural leadership style will enable the execution of our strategy and shareholder value creation, in your new role.
The terms of your employment to CEO are as follows:
Compensation:
1. On the first raise of 5 M, based on a 20 M post money valuation. Having defined the new strategy, new end of 2021 budgets, sold to key partners, defined new BtoB and BtoC offers, BORN to CREATE evolution, hired new key talents :
- no salary, in order to protect the funds raised and budget in 2020
- no shares in order to protect new shareholders low and very attractive valuation despite favorable market conditions.
2. On the second raise of 10-20 M convert, and merger to make Alkeon a listed company on the OTC market in NY. After selecting the advisors and having completed the due diligence with NY expert law firm and internal teams.
- salary: 300 k USD year
- shares: 5% upon signature of 20 M raise convert on a 60 M valuation. 5% at the end of 2021 if 80% to 100% of the revenue plan is achieved.
| Jean-Christophe Chopin | |
| CEO | |
| /s/ Jean-Christophe Chopin | |
| Marlon Muller | |
| /s/ Marlon Muller | |
| Cansu Kucuk | |
| /s/ Cansu Kucuk |
Exhibit 21.1
Entity: Alkeon Creators, Inc.
A summary of the Company’s history including a description of name changes, change of shareholders, reorganization, merger and acquisitions, and other material events.
| ● | Alkeon Creators Inc was incorporated in 2019 in the state of Delaware, United States. |
| ● | It did not go through any name changes. |
| ● | Upon incorporation, Alkeon rewarded 50,000 Shares of Common Stock to company consultants Brendan Wypich and Pierre Sapin each. |
| ● | In May 2020, in order to facilitate the Alkeon attracting and retaining investors in the Company, Stockholders (Brendan Wypich and Pierre Sapin) has agreed to contribute all 50,000 shares of Common Stock of Alkeon, in exchange for no cash consideration. |
| ● | Alkeon Creators Inc. as of 31/12/2019, was %98, owned by Creators Guild (UK entity), which is owned by Jean-Christophe Chopin and the Chopin family. |
| ● | Alkeon is based in the United States. |
| ● | Functional currency used is USD. |
| - | Date of incorporation |
Entity: BORN Creative Holdings Limited
A summary of the Company’s history including a description of name changes, change of shareholders, reorganization, merger and acquisitions, and other material events.
| ● | BORN Creative Holdings Limited (“BCHL”) was incorporated on 2016, November. |
| ● | BCHL was owned by Creative Design Holdings Limited– UK Entity- (owned wholly by Jean-Christophe Chopin and the Chopin family) until July 2020. |
| ● | In July 2020, it was sold from Creative Design Holdings Limited to Alkeon Creators Inc., which is owned by Creators Guild Limited. |
| ● | BCHL did not undergo any name changes. |
| ● | BCHL is 100% owned by Alkeon Creators Inc. |
| ● | Jean-Christophe Chopin and Vitali Kivmann serve as the directors on Companies House. |
| ● | BCHL is based in London, United Kingdom. |
| ● | Functional currency used is GBP. |
| ● | Date of incorporation |
2
Entity: BORN Creators Limited
A summary of the Company’s history including a description of name changes, change of shareholders, reorganization, merger and acquisitions, and other material events.
| ● | BORN Creators Limited was incorporated on 2014, June. |
| ● | Company traded until the name BORNCOM LIMITED from June 2014 to June 2014. |
| ● | Company traded until the name BORNCOM UK LIMITED from June 2014 to February 2017. |
| ● | Name was changed to its current on February 2017. |
| ● | Jean-Christophe Chopin and Vitali Kivmann serves as directors on Companies House. |
| ● | BORN Creators Limited is wholly owned by BORN Creative Holdings Limited |
| ● | BCL is based in London, United Kingdom. |
| ● | Functional currency used is GBP. |
| ● | Date of incorporation |
Entity: BORN Awards Limited
A summary of the Company’s history including a description of name changes, change of shareholders, reorganization, merger and acquisitions, and other material events.
| ● | BORN Awards Limited was incorporated on 2016, November. |
| ● | It did not go through any name changes. |
| ● | It is wholly owned by BORN Creative Holdings Limited. |
| ● | Jean-Christophe Chopin and Vitali Kivmann serve as directors on Companies House. |
| ● | BORN Awards Limited held several contracts that deals with BORN Awards and BORN to Create activities. |
| ● | It does not hold any contracts now. |
| ● | BAL is based in London, United Kingdom. |
| - | Functional currency used is GBP. |
| - | Date of incorporation |
Entity: BORN Brands Limited
A summary of the Company’s history including a description of name changes, change of shareholders, reorganization, merger and acquisitions, and other material events.
| ● | BORN Brands Limited was incorporated on 2016, November. |
| ● | It did not go through any name changes. |
| ● | It is wholly owned by BORN Creative Holdings Limited. |
| ● | Jean-Christophe Chopin and Vitali Kivmann serve as directors on Companies House. |
| ● | BORN Brands Limited holds the IP for BORN. |
| ● | It is a dormant company. |
| ● | BBL is based in London, United Kingdom. |
| ● | Functional currency used is GBP. |
3
Exhibit 99.1
DIRECTORS RESOLUTIONS
OF
BORN, INC.
(the “Company”)
WHEREAS:
| A. | Wieland Kreuder has consented to step down as Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and as a Member of the Board of Directors of the Company. |
| B. | Jean-Christophe Chopin has consented to act as the new President, CEO, CFO, Treasurer, Secretary, and Chairman of the Board of Directors of the Company. |
BE IT RESOLVED THAT:
| C. | Wieland Kreuder stepped down as Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and as a Member of the Board of Directors of the Company. |
| D. | Jean-Christophe Chopin shall act as the new President, CEO, CFO, Treasurer, Secretary, and Chairman of the Board of Directors of the Company. |
| Effective date: February 16, 2021 | |
| /s/ Wieland Kreuder | |
| Wieland Kreuder | |
| /s/ Jean-Christophe Chopin | |
| Jean-Christophe Chopin |