My City Builders, Inc 8-K, filed Jul 7, 2022
My City Builders, Inc. (MYCB)
About this 8-K
My City Builders, Inc filed this 8-K on July 7, 2022, reporting on events of July 1, 2022.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.02: Financial results
- Item 3.02: Unregistered sale of equity
- Item 3.03: Change to shareholders' rights
- Item 5.01: Change in control
- Item 5.03: Charter or bylaw amendment, or fiscal year change
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of Registrant as specified in its charter) |
(State or other Jurisdiction of Incorporation or organization) | (Commission File Number) | (IRS Employer I.D. No.) |
Phone: (
(Address, including zip code, and telephone number, including area code, of
registrant’s principal executive offices)
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 l4a- l2 under the Exchange Act (17 CFR 240. l4a- l2) | |
| Pre-commencement communications pursuant to Rule l4d-2(b) under the Exchange Act (17 CFR 240. l4d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. l3e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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. ☐
Item 1.01 Entry into a Material Definitive Agreement & Amendments
On July 1, 2022, iMine Corporation (“iMine” or the “Company”) entered into an Agreement and Plan of Reorganization dated June 30, 2022 (the “Agreement”) with RAC Real Estate Acquisition Corp., a Wyoming Corporation (“RAC”), and the Shareholders of RAC, namely Frank Gillen, Francis Pittilloni, and Yolanda Goodell (“Shareholders”), whereby the Company issued to the Shareholders a combined 100,000 shares of Series A Preferred Stock, par value of $0.001 per share in consideration for a combined 1,000 shares of RAC common stock, par value $0.001, held by Shareholders, which represents 100% of the issued and outstanding capital stock of RAC. As a result, RAC became a wholly owned subsidiary of the Company.
RAC was incorporated on May 11, 2022, and has had no business operations since inception. The sole asset of RAC consists of $500,000 in cash.
Under the terms of the Agreement the Company issued 33,334 Series A Preferred Stock to Mr. Gillen in exchange for his 334 shares of RAC common stock, 33,333 Series A Preferred Stock to Mr. Pittilloni in exchange for his 333 shares of RAC common stock, and 33,333 Series A Preferred Stock to Ms. Goodell in exchange for her 333 shares of RAC common stock. In 2002 Mr. Gillen was censured and fined by the NASD in connection with the alleged sale of unregistered shares. Mr. Gillen consented to censure without admitting nor denying and was fined by the NASD $25,000. In August 2003, his registration with NASD was revoked for failure to pay fines. The revocation was subsequently rescinded in November 2003. In 2006 Mr. Gillen entered into a stipulated resolution with the Utah Securities Division to allegations of making false statements and failing to disclose material information in regard to sales occurring in 2004 and 2005.
Item 2.01 Completion of Acquisition or disposition of Assets
The disclosure in Item 1.01 of this Form 8-K is incorporated into this Item 2.01 by reference. The closing of the Agreement was effective upon its execution on July 1, 2022. As a result, the Company acquired all of the outstanding shares of RAC which were valued at $500,000 based upon the net cash position of RAC, a newly formed entity, at the closing date. The closing resulted in the acquisition of a significant amount of assets since the book value of such assets exceeded 10 percent of the total assets of the Company.
The $500,000 in funds held by RAC was generated through the sale of shares of its common stock as follows: 334 shares to Mr. Gillen for gross proceeds of $166,668; 333 shares to Mr. Pittilloni for gross proceeds of $166,666; and 333 shares to Ms. Goodell for gross proceeds of $166,666. Mr. Pittilloni is a director of the Company and Ms. Goodell is a director and serves as Vice President of the Company.
Item 3.02 Unregistered Sale of Equity Securities
The disclosure in Items 1.01 and 2.01 of this Form 8-K is incorporated into this Item 3.02 by reference. The 100,000 Series A Preferred Stock were issued without registration under the Securities Act by reason of the exemption from registration afforded by the provision of Section 4(a)(2) thereof as a transaction by an issuer not involving any public offering. At the time of the issuance of the Series A Preferred Shares to Messrs. Gillen and Pittilloni and Ms. Goodell, they were accredited investors as defined in Regulation D.
Item 3.03 Material Modification to Rights of Security Holders
On July 1, 2022, the Board of Directors of iMine, by unanimous consent, approved and authorized the Certificate of Designation for 100,000 shares of its Series A Preferred Stock, par value $0.001, (“Certificate of Designation”) to be executed by proper officer of the Company and filed with the State of Nevada thereafter, in accordance with the provisions of NRS §78.195 and pursuant to the authority conferred upon it by the Amended and Restated Articles of Incorporation of the Company.
2 |
On July 1, 2022, the Certificate of Designation was properly executed by the Vice President of the Company and thereafter filed with the State of Nevada on July 5, 2022, the next succeeding business day.
Each Series A Preferred Stock Share entitles the holder thereof to vote with the holders of shares of the Company’s Common Stock. With respect to any such vote, each Series A Preferred Share held on the record date for voting entitles the holder thereof to cast 10 votes.
Item 5.01 Changes in Control
The disclosure in Items 1.01 and 2.01 of this Form 8-K is incorporated into this Item 5.01 by reference. As a result of the issuance of the Series A Preferred Shares, Messrs. Gillen, Pittilloni and Ms. Goodell hold sufficient shares on a combined basis to control the election of directors and approval of actions by majority shareholder vote. Nevertheless, these parties have not entered into any formal voting agreement or arrangement to vote their shares.
The Company currently has outstanding 595,986 shares of Common Stock. The outstanding shares of Series A Preferred Stock represent 1,000,000 votes or approximately 63% of the voting control of the Company.
Item 5.03 Amendment to Articles of Incorporation or Bylaws
On July 1, 2022, the Board of Directors approved and authorized 100,000 shares of Series A Preferred Stock. The Certificate of Designation provides the following rights and preferences of the Series A Preferred Stock:
· | The Series A Preferred Shares share in any dividends pari passu with the holders of common stock; |
· | The Series A Preferred Shares have a liquidation preference equal to $10.00 per share; |
· | Each share of Series A Preferred Stock entitles the holder to 10 votes on any matter presented to the holders of the Common Stock; |
· | The Series A Preferred Shares have the right to convert into shares of Common Stock at a 25% discount to the next financing of $1,000,000 or more, subject to adjustment for stock splits or combinations, dividends and distributions of Common Shares, reorganizations, mergers or consolidations, or for issuance of shares of common stock below the conversion price; |
· | The Company has no right to redeem the shares; and |
· | The Certificate of Designation and Articles of Incorporation may not be amended such that the rights of the Series A Preferred Shares would be adversely affected. |
On July 1, 2022, the Board of Directors issued all 100,000 shares of the Series A Preferred Stock.
Item 9.01 Financial Statements and Exhibits
(a) The following financial statements of RAC are filed with this report:
3 |
INDEX TO FINANCIAL STATEMENTS |
| Page |
| |
RAC Real Estate Acquisition Corp. |
|
|
|
| F-2 |
| |
Financial Statements: |
|
|
|
| F-3 |
| |
Statement of Operations from May 11, 2022 (inception) to May 31, 2022 |
| F-4 |
|
Statement of Changes in Stockholders’ Equity from May 11, 2022 (inception) to May 31, 2022 |
| F-5 |
|
Statement of Cash Flows from May 11, 2022 (inception) to May 31, 2022 |
| F-6 |
|
| F-7 |
|
| F-1 |
| Table of Contents |
| Audit • Tax • Consulting • Financial Advisory Registered with Public Company Accounting Oversight Board (PCAOB) |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
RAC Real Estate Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of RAC Real Estate Acquisition Corp. (the “Company”) as of May 31, 2022, the related statement of operations, changes in stockholders’ equity, and cash flows for the period from May 11, 2022 (inception) to May 31, 2022, 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 at May 31, 2022 and the results of its operations and its cash flows for the period from May 11, 2022 (inception) to May 31, 2022, in conformity with the generally accepted accounting principles in the United States of America.
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 audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our 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 audits 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 audits 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 audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ KCCW Accountancy Corp.
We have served as the Company’s auditor since 2022.
Diamond Bar, California
June 30, 2022
| F-2 |
| Table of Contents |
RAC Real Estate Acquisition Corp.
Balance Sheet
|
| May 31, |
| |
|
| 2022 |
| |
Assets |
|
|
| |
Current Assets |
|
|
| |
Cash |
| $ | 500,000 |
|
Total Current Assets |
|
| 500,000 |
|
|
|
|
|
|
TOTAL ASSETS |
| $ | 500,000 |
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
|
Preferred stock, $0.001 par value; 1,000,000 shares authorized, No shares issued and outstanding |
| $ | - |
|
Common stock, $0.001 par value; 9,000,000 shares authorized, 1,000 shares issued and outstanding |
|
| 1 |
|
Additional paid in capital |
|
| 499,999 |
|
Retained earnings |
|
| - |
|
Total Stockholders' Equity |
|
| 500,000 |
|
TOTAL STOCKHOLDERS’ EQUITY |
| $ | 500,000 |
|
The accompanying notes are an integral part of these financial statements.
| F-3 |
| Table of Contents |
RAC Real Estate Acquisition Corp.
Statement of Operations
|
| May 11, 2022 |
| |
|
| (Inception) to |
| |
|
| May 31, |
| |
|
| 2022 |
| |
|
|
|
| |
Revenue |
| $ | - |
|
|
|
|
|
|
Operating income |
|
| - |
|
|
|
|
|
|
Loss before income taxes |
|
| - |
|
Provision for income taxes |
|
| - |
|
Net income |
| $ | - |
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
Basic and diluted earnings per share |
| $ | - |
|
Basic and diluted weighted average number of common shares outstanding |
|
| 619 |
|
The accompanying notes are an integral part of these financial statements.
| F-4 |
| Table of Contents |
RAC Real Estate Acquisition Corp.
Statement of Changes in Stockholders’ Equity
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
| Total |
| ||||||||||||
|
| Preferred Stock |
|
| Common Stock |
|
| Paid in |
|
| Retained |
|
| Stockholders' |
| |||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Earnings |
|
| Equity |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Inception - May 11, 2022 |
|
| - |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued to founders |
|
| - |
|
|
| - |
|
|
| 1,000 |
|
|
| 1 |
|
|
| 499,999 |
|
|
| - |
|
|
| 500,000 |
|
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Balance - May 31, 2022 |
|
| - |
|
| $ | - |
|
|
| 1,000 |
|
| $ | 1 |
|
| $ | 499,999 |
|
| $ | - |
|
| $ | 500,000 |
|
The accompanying notes are an integral part of these financial statements.
| F-5 |
| Table of Contents |
RAC Real Estate Acquisition Corp.
Statement of Cash Flows
|
| May 11, 2022 |
| |
|
| (Inception) to |
| |
|
| May 31, |
| |
|
| 2022 |
| |
|
|
|
| |
Cash flows from operating activities: |
|
|
| |
Net income |
| $ | - |
|
Net cash provided by operating activities |
|
| - |
|
|
|
|
|
|
Cash flows from investing activities |
|
| - |
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
Proceeds from issuance of common stock |
|
| 500,000 |
|
Net cash provided by financing activities |
|
| 500,000 |
|
|
|
|
|
|
Net change in cash |
|
| 500,000 |
|
Cash, beginning of period |
|
| - |
|
Cash, end of period |
| $ | 500,000 |
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
Cash paid for interest |
| $ | - |
|
Cash paid for income taxes |
| $ | - |
|
The accompanying notes are an integral part of these financial statements.
| F-6 |
| Table of Contents |
RAC Real Estate Acquisition Corp.
Notes to Financial Statements
NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS
RAC Real Estate Acquisition Corp. (the “Company”) is a Wyoming corporation incorporated on May 11, 2022. The business plan of the Company is to bid on HECM pools of homes made available by the government and, through third-party contractors, to refurbish the homes and, through a third-party asset management company, to manage the assets as rental properties.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States. The Company uses the accrual basis of accounting and has adopted a May 31 fiscal year end.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s periodic filings with the SEC include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company.
Cash and Cash Equivalents
For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. The Company had no cash equivalents at May 31, 2022.
Periodically, the Company may carry cash balances at financial institutions more than the federally insured limit of $250,000 per institution. The Company has not experienced losses on account balances and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.
Fair Value Measurements
The Company measures the fair value of financial assets and liabilities based on US GAAP guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
| F-7 |
| Table of Contents |
FASB ASC 820, “Fair Value Measurements” defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. It requires that an entity measure its financial instruments to base fair value on exit price, maximize the use of observable units and minimize the use of unobservable inputs to determine the exit price. It establishes a hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy increases the consistency and comparability of fair value measurements and related disclosures by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the assets or liabilities based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy prioritizes the inputs into three broad levels based on the reliability of the inputs as follows:
| · | Level 1 - Inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Valuation of these instruments does not require a high degree of judgment as the valuations are based on quoted prices in active markets that are readily and regularly available. |
|
|
|
| · | Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable as of the measurement date, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
|
|
|
| · | Level 3 - Valuations based on inputs that are unobservable and not corroborated by market data. The fair value for such assets and liabilities is generally determined using pricing models, discounted cash flow methodologies, or similar techniques that incorporate the assumptions a market participant would use in pricing the asset or liability. |
The carrying amounts shown of the Company’s financial instruments including cash approximate fair value due to the short-term maturities of these instruments.
Revenue Recognition
The Company recognizes revenue in accordance with Topic 606, which requires the Company to recognize revenues when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods or services. The Company recognizes revenue based on the five criteria for revenue recognition established under Topic 606: 1) identify the contract, 2) identify separate performance obligations, 3) determine the transaction price, 4) allocate the transaction price among the performance obligations, and 5) recognize revenue as the performance obligations are satisfied. The Company has not realized any revenues from operations and is not currently engaged in any active business.
Income Taxes
The Company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.
ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and related party payables it will likely incur in the near future. The Company places its cash with financial institutions of high credit worthiness. At times, its cash balance with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Earnings per Share of Common Stock
The Company calculates earnings per share in accordance with ASC Topic 260, “Earnings per Share.” Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted earnings per share of common stock are computed by dividing net earnings by the weighted average number of shares and potential shares outstanding during the period. As of May 31, 2022, there were no potential dilutive shares of common stock.
| F-8 |
| Table of Contents |
Commitments and Contingencies
The Company follows ASC 450-20, “Loss Contingencies”, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
Recent Accounting Pronouncements
The Company has implemented all new pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial statements or results of operations.
NOTE 3 - COMMON STOCK
Preferred Stock
The Company has authorized 1,000,000 shares of preferred stock at par value of $0.001 per share.
There were no shares of preferred stock issued and outstanding as of May 31, 2022.
Common Stock
The Company has authorized 9,000,000 shares of common stock at par value of $0.001 per share. Each share of common stock entitles the holder to one vote on any matter on which action of the stockholders of the corporation is sought.
From inception to the period ended May 31, 2022, 1,000 shares of common stock were issued to the Company’s founders for $500,000.
There were 1,000 shares of common stock issued and outstanding as of May 31, 2022.
As of May 31, 2022, the Company had no options or warrants outstanding.
NOTE 4 - SUBSEQUENT EVENTS
Management has evaluated subsequent events through June 30, 2022, the date on which the financial statements are available to be issued. All subsequent events requiring recognition as of May 31, 2022, have been incorporated into these financial statements and there are no additional subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”
| F-9 |
| Table of Contents |
(b) The unaudited pro forma financial information required by this item is filed herewith.
IMINE CORPORATION
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give effect to the acquisition of RAC Real Estate Acquisition Corp (“RAC”) by iMine Corporation (the “Company”) pursuant to an Agreement and Plan of Reorganization (“Agreement”) dated effective June 30, 2022. Pursuant to the Agreement the Company will acquire all of the outstanding shares of common stock of RAC from its shareholders in exchange for 100,000 shares of Series A Preferred Stock the Company issued pro rata to the RAC’s shareholders.
|
| Page |
|
Unaudited Pro Forma Consolidated Balance Sheet as of April 30,2022 |
| 2 |
|
Unaudited Pro Forma Consolidated Statement of Operations for the Nine Months Ended April 30, 2022 |
| 3 |
|
| Table of Contents |
IMINE CORPORATION
Unaudited Pro Forma Condensed Combined Balance Sheet
As of May 31,2022
|
|
|
|
| RAC Real Estate |
|
|
|
|
|
|
|
|
|
| |||||
|
| iMine Corporation |
|
| Acquisition Corp |
|
|
|
|
|
|
|
|
|
| |||||
|
| April 30, |
|
| May 31, |
|
| Proforma |
|
|
|
|
| Proforma |
| |||||
|
| 2022 |
|
| 2022 |
|
| Adjustments |
|
| Notes |
|
| As Adjusted |
| |||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash |
| $ | 395 |
|
| $ | 500,000 |
|
| $ | - |
|
|
|
|
| $ | 500,395 |
| |
Prepaid expenses |
|
| 52 |
|
|
| - |
|
|
| - |
|
|
|
|
|
| 52 |
| |
Total Current assets |
|
| 447 |
|
|
| 500,000 |
|
|
| - |
|
|
|
|
|
| 500,447 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Total Assets |
| $ | 447 |
|
| $ | 500,000 |
|
| $ | - |
|
|
|
|
| $ | 500,447 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Liabilities and Shareholders' Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Accounts payable and accrued liabilities |
| $ | 9,305 |
|
| $ | - |
|
| $ | - |
|
|
|
|
| $ | 9,305 |
| |
Due to related parties |
|
| 150,366 |
|
|
| - |
|
|
| - |
|
|
|
|
|
| 150,366 |
| |
Total Current Liabilities |
|
| 159,671 |
|
|
| - |
|
|
| - |
|
|
|
|
|
| 159,671 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Total Liabilities |
|
| 159,671 |
|
|
| - |
|
|
| - |
|
|
|
|
|
| 159,671 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Shareholders’ Equity (Deficit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Series A preferred stock: 100,000 authorized; $0.001 par value 0 shares issued and outstanding and 100,000 shares issued and outstanding as adjusted |
|
| - |
|
|
| - |
|
|
| 100 |
|
|
| 4 | (b) |
|
| 100 |
|
Common stock: 300,000,000 authorized; $0.001 par value 74,498,053 shares issued and outstanding 595,984 shares issued and outstanding as adjusted |
|
| 74,498 |
|
|
| - |
|
|
| (73,902 | ) |
|
| 4 | (a),4(b) |
|
| 596 |
|
Common stock, $0.001 par value; 9,000,000 shares authorized, 1,000 shares issued and outstanding |
|
| - |
|
|
| 1 |
|
|
| (1 | ) |
|
| 4 | (b) |
|
| - |
|
Additional paid in capital |
|
| 12,594,045 |
|
|
| 499,999 |
|
|
| (12,753,964 | ) |
|
|
|
|
|
| 340,080 |
|
Accumulated deficit |
|
| (12,827,767 | ) |
|
| - |
|
|
| 12,827,767 |
|
|
|
|
|
|
| - |
|
Total Shareholder’s Equity (Deficit) |
|
| (159,224 | ) |
|
| 500,000 |
|
|
| - |
|
|
|
|
|
|
| 340,776 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders' Equity (Deficit) |
| $ | 447 |
|
| $ | 500,000 |
|
| $ | - |
|
|
|
|
|
| $ | 500,447 |
|
See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.
2 |
| Table of Contents |
IMINE CORPORATION
Unaudited Pro Forma Condensed Combined Statement of Operations
Nine months ended April 30, 2022
|
|
|
|
| RAC Real Estate |
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
| Acquisition Corp |
|
|
|
|
|
|
|
|
|
| |||||
|
| iMine Corporation |
|
| May 11, 2022 |
|
|
|
|
|
|
|
|
|
| |||||
|
| Nine months ended |
|
| (Inception) to |
|
| Proforma |
|
|
|
|
| Proforma |
| |||||
|
| April 30, 2022 |
|
| May 31, 2022 |
|
| Adjustments |
|
| Notes |
|
| As Adjusted |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Revenue |
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
|
|
| $ | - |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
General and administrative |
|
| 11,163 |
|
|
| - |
|
|
| - |
|
|
|
|
|
| 11,163 |
| |
Professional fees |
|
| 53,605 |
|
|
| - |
|
|
| - |
|
|
|
|
|
| 53,605 |
| |
Total operating expenses |
|
| 64,768 |
|
|
| - |
|
|
| - |
|
|
|
|
|
| 64,768 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Loss from operations |
|
| (64,768 | ) |
|
| - |
|
|
| - |
|
|
|
|
|
| (64,768 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Other income |
|
| 69,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 69,000 |
| |
Interest expense |
|
| (15,123 | ) |
|
| - |
|
|
| - |
|
|
|
|
|
| (15,123 | ) | |
Total other expense |
|
| 53,877 |
|
|
| - |
|
|
| - |
|
|
|
|
|
| 53,877 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net loss before provision for income taxes |
|
| (10,891 | ) |
|
| - |
|
|
| - |
|
|
|
|
|
| (10,891 | ) | |
Income taxes |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
| |
Net loss |
| $ | (10,891 | ) |
| $ | - |
|
| $ | - |
|
|
|
|
| $ | (10,891 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic and dilutive loss per common share |
| $ | (0.00 | ) |
| $ | - |
|
|
|
|
|
|
|
|
| $ | (0.02 | ) | |
Weighted average number of common shares outstanding |
|
| 66,298,796 |
|
|
| 619 |
|
|
| (65,769,025 | ) |
|
| 4 | (a)4(b) |
|
| 530,390 |
|
See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.
3 |
| Table of Contents |
IMINE CORPORATION
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
On July 1, 2022, iMine Corporation (the “Company”) entered into an Agreement and Plan of Reorganization dated effective June 30, 2022 (the “Agreement”) with RAC Real Estate Acquisition Corp, a Wyoming Corporation (“RAC”), pursuant to which the Company will acquire all of the outstanding shares of common stock of RAC from its shareholders in exchange for 100,000 shares of Series A Preferred stock the Company issued pro rata to the RAC’s shareholders.
NOTE 1. BASIS OF PRO FORMA PRESENTATION
The unaudited pro forma condensed combined financial statements are based on the Company’s and RAC’s historical consolidated financial statements as adjusted to give effect to the acquisition of RAC and the shares issued as part of the acquisition. The unaudited pro forma combined statements of operations for the nine months ended April 30, 2022 give effect to the RAC’ acquisition as if it had occurred on April 30, 2022. The unaudited proforma combined balance sheet as of April 30, 2022 gives effect to the RAC acquisition as if it had occurred on April 30, 2022.
Historical financial information has been adjusted in the pro forma balance sheet to pro forma events that are: (1) directly attributable to the Acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the Company’s results of operations. The pro forma adjustments presented in the pro forma combined balance sheet and statement of operations are described in Note 4— Pro Forma Adjustments.
The unaudited pro forma condensed combined financial information is for illustrative purposes only. These companies may have performed differently had they actually been combined for the periods presented. You should not rely on the pro forma combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined companies will experience after the acquisition.
NOTE 2. ACCOUNTING PERIODS PRESENTED
Certain pro forma adjustments were made to conform RAC accounting policies to the Company’s accounting policies as noted below.
The unaudited pro forma condensed combined balance sheet as of April 30, 2022 is presented as if the acquisition had occurred on April 30, 2022 and combines the historical balance sheet of the Company at April 30, 2022 and the historical balance sheet of the RAC at May 31, 2022.
The unaudited pro forma condensed combined statement of operations for the nine months ended April 30, 2022 has been prepared by combining the Company’s historical consolidated statement of operations for the period ended April 30, 2022, with the historical statement of operations of RAC for the inception to the period ended May 31, 2022.
NOTE 3. PRELIMINARY PURCHASE PRICE ALLOCATION
Effective June 30, 2022, the Company acquired RAC for total consideration of 100,000 shares of Company’s Series A preferred stock. The unaudited pro forma condensed combined financial statements include various assumptions, including those related to the preliminary purchase price allocation of the assets acquired of RAC based on carrying values.
Accordingly, pro forma adjustments are preliminary and have been made solely for illustrative purposes.
NOTE 4. PRO FORMA ADJUSTMENTS
The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial information:
| a. | To adjust common stock of the Company due to a reverse stock split (1 for 125) effective on June 14, 2022 |
|
|
|
| b. | To issue 100,000 shares of Series A Preferred Stock in exchange for 1,000 shares of common stock of RAC |
4 |
| Table of Contents |
(d) The exhibits listed in the following Exhibit Index are filed as part of this report:
Exhibit No. |
| Description |
| ||
| Certificate of Designation filed July 5, 2022, for the Series A Preferred Stock |
17 |
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
iMine Corporation |
|
|
|
|
|
/s/Jose Maria Eduardo Gonzales Romero | July 7, 2022 |
|
By: Jose Maria Eduardo Gonzalez Romero | Date |
|
Its: Chief Executive Officer |
|
|
18 |
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the “Agreement”), dated effective June 30, 2022, is by and between iMine Corporation, a Nevada corporation (hereinafter the “Purchaser”), RAC Real Estate Acquisition Corp., a Wyoming Corporation (hereinafter the “Target Company”), and the shareholders of the Target Company who are listed on Exhibit A hereto (the “Shareholders”). Purchaser, Target Company and Shareholders are sometimes referred to herein each as a “Party” and collectively as the “Parties”.
RECITALS:
WHEREAS, the Purchaser wishes to acquire, and the Shareholders are willing to sell, all of the outstanding shares of the Target Company in exchange solely for voting convertible preferred stock of the Purchaser whereby Purchase will acquire control of the Target Company and Shareholders will be permitted to vote with the holders of the Common Stock; and
WHEREAS, the Parties intend for the transactions described herein to qualify as a tax-free reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the “Code”).
NOW, THEREFORE, based upon the stated premises, which are incorporated herein by reference, and for and in consideration of the mutual covenants and agreements set forth herein, the mutual benefits to the parties to be derived herefrom, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto approve and adopt this Agreement and Plan of Reorganization and mutually covenant and agree with each other as follows:
1. SHARE EXCHANGE
1.1. Terms of the Share Exchange.
1.1.1. Upon the terms and subject to the conditions of this Agreement, Target Company and Shareholders do hereby transfer, assign and deliver to Purchaser, as of the Effective Time, and Purchaser does hereby accept from Target Company, 1,000 shares of common stock owned by the Shareholders (the “RAC Shares”), which constitutes all of the issued and outstanding capital stock of Target Company in exchange for the issuance and delivery to Shareholders of 100,000 shares of Series A Preferred Stock (the “Preferred Shares”) as set forth in Exhibit A (the “Share Exchange”).
1.1.2. Each of the Shareholders, as of the Effective Time, hereby conveys to Purchaser good, valid and marketable title to the RAC Shares free and clear of any and all liens, encumbrances, liabilities, obligations, restrictions (other than applicable securities laws restrictions) or rights of others of any character whatsoever. On the date specified in Section 1.2 below, each Shareholder shall deliver to Purchaser written notice transferring the uncertificated RAC Shares to Purchaser.
1.1.3. Purchaser, as of the Effective time, does hereby convey to each Shareholder good, valid and marketable title to the Preferred Shares free and clear of any and all liens, encumbrances, liabilities, obligations, restrictions (other than applicable securities laws restrictions) or rights of others of any character whatsoever. On the date specified in Section 1.2 below, Purchaser shall deliver, or shall cause its transfer agent to deliver, to each Shareholder written notice evidencing the uncertificated Preferred Shares in the denominations set forth in Exhibit A.
| 1 |
1.2. Effective Time; Time and Place of Closing. The Share Exchange shall become effective at 11:59 P.M. (EDT) on the day this Agreement is fully executed by the Parties (the “Effective Time”). The delivery of the notices to transfer the RAC Shares and to issue the Preferred Shares contemplated by this Agreement will take place remotely by email on the next business day immediately following the Effective Time or as soon thereafter as reasonably practicable.
2. REPRESENTATIONS AND WARRANTIES OF THE TARGET COMPANY AND SHAREHOLDERS. The Target Company and the Shareholders, jointly and severally, represent and warrant to the Purchaser as set forth below. These representations and warranties are made as an inducement for the Purchaser to enter into this Agreement and, but for the making of such representations and warranties and their accuracy, the Purchaser would not be a party hereto.
2.1. Organization and Authority. The Target Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Wyoming with full power and authority to enter into and perform the transactions contemplated by this Agreement. The Target Company does not have any subsidiaries or own any interest in any other entity.
2.2. Capitalization. As of the date hereof, the only class of equity securities in the Target Company are shares of common stock, of which only the 1,000 RAC Shares are issued and outstanding. There are no other equity interests, or any rights to purchase any equity interest, in Target Company which are outstanding.
2.3. Directors and Officers. Shareholders are the only directors of Target Company, and the only officers are the following: Frank Gillen as CEO and President; Francis Pittilloni as Chief Operating Officer; and Yolanda Goodell as Vice-President, Chief Marketing Officer, Secretary, and Treasurer.
2.4. Authorization; Enforcement; Compliance with Other Instruments. (i) The Target Company has the requisite power and authority to enter into and perform all actions required under this Agreement; (ii) the execution and delivery of this Agreement by the Target Company and the consummation by it of the transactions contemplated hereby have been duly and validly authorized by the Target Company’s Board of Directors and Shareholders, and no further consent or authorization is required by the Target Company, its Board of Directors, or its Shareholders; (iii) this Agreement has been duly and validly executed and delivered by the Target Company; and (iv) this Agreement constitutes the valid and binding obligations of the Target Company enforceable against the Target Company in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies.
| 2 |
2.5. No Conflicts. The execution, delivery and performance of this Agreement by the Target Company and the consummation by the Target Company of the transactions contemplated hereby will not (i) result in a violation of its Articles of Incorporation (the “Articles of Incorporation”) or Bylaws, or (ii) conflict with, or constitute a material default (or an event which with notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, contract, indenture mortgage, indebtedness or instrument to which the Target Company is a party, or result in a violation of any law, rule, regulation, order, judgment or decree (including United States federal and state securities laws and regulations) applicable to the Target Company or by which any property or asset of the Target Company is bound or affected. The Target Company is not in violation of any term of, or in default under, the Articles of Incorporation, Bylaws, or any contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Target Company, except for possible conflicts, defaults, terminations, amendments, accelerations, cancellations and violations that would not individually or in the aggregate have a material adverse effect on the Target Company. The business of the Target Company is not being conducted, and shall not be conducted, in violation of any law, statute, ordinance, rule, order or regulation of any governmental authority or agency, regulatory or self-regulatory agency, or court, except for possible violations the sanctions for which either individually or in the aggregate would not have a material adverse effect on the Target Company. Except as specifically contemplated by this Agreement, and as required under the Securities Act of 1933, as amended (the “1933 Act”), the Target Company is not required to obtain any consent, authorization, permit or order of, or make any filing or registration (except the filing of a registration statement) with, any court, governmental authority or agency, regulatory or self-regulatory agency or other third party in order for it to execute, deliver or perform any of its obligations under, or contemplated by, this Agreement in accordance with the terms hereof.
2.6. Financial Statements. True copies of the unaudited financial statements of the Target Company consisting of the balance sheet as of May 31, 2022, and statements of income, stockholder equity, and cash flow for each of the period from inception (May 11, 2022) through May 31, 2022 (the “Target Company Financial Statements”), have been delivered to Purchaser. Said financial statements are true and correct in all material respects and present an accurate and complete disclosure of the financial condition of the Target Company as of May 31, 2022, and the earnings for the periods covered, in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Target Company as of the date thereof and the results of its operations, stockholder equity, and cash flows for the period then ended (subject to normal year-end audit adjustments).
2.7. Liabilities. Except as set forth in Schedule 2.7, if any, there are no material liabilities of the Target Company, whether accrued, absolute, contingent or otherwise, which arose or relate to any transaction of the Target Company, its agents or servants occurring prior to the period covered by the Target Company Financial Statements which are not disclosed by or reflected in the Target Company Financial Statements. As of the date hereof, there are no known circumstances, conditions, happenings, events or arrangements, contractual or otherwise, which may hereafter give rise to liabilities, except in the normal course of business of the Target Company.
| 3 |
2.8. Absence of Certain Changes or Events. Except as set forth in this Agreement, since the period covered by the Target Company Financial Statements there has not been (i) any material adverse change in the business, operations, properties, level of inventory, assets, or condition of the Target Company, or (ii) any damage, destruction, or loss to the Target Company (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets, or conditions of the Target Company. The Target Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does the Target Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings.
2.9. Litigation. To the best knowledge and reasonable belief of the Target Company, there are no legal, administrative or other proceedings, investigations or inquiries, product liability or other claims, judgments, injunctions or restrictions, either threatened, pending, or outstanding against or involving the Target Company or its subsidiaries, if any, or their assets, properties, or business, nor does the Target Company or its subsidiaries know, or have reasonable grounds to know, of any basis for any such proceedings, investigations or inquiries, product liability or other claims, judgments, injunctions or restrictions. In addition, there are no material proceedings existing, pending or reasonably contemplated to which any manager or affiliate of the Target Company or as to which any of the Shareholders is a party adverse to the Target Company or any of its subsidiaries or has a material interest adverse to the Target Company or any of its subsidiaries.
2.10. Accredited Investor. Each of the Shareholders is an accredited investor as defined under Rule 501(a) of Regulation D promulgated by the SEC under the 1933 Act.
2.11. “Bad Actor” Disqualification. Neither the Shareholder, the Target Company, nor any person covered by Rule 506(d) is subject to disqualification thereunder.
2.12. Restricted Securities. Each Shareholder understands that the Preferred Shares have not been registered pursuant to the 1933 Act, or any state securities act, and thus are “restricted securities” as defined in Rule 144 promulgated by the SEC. Therefore, under current interpretations and applicable rules, they will be required to retain the Acquisition Shares for a specified of up to two years from the date of Closing and at the expiration of such period their sales may be confined to brokerage transactions of limited amounts requiring certain notification filings with the SEC and such disposition may be available only if the Purchaser is current in its filings with the SEC under the Exchange Act, or other public disclosure requirements, and meets the requirements of Rule 144(i) as a former shell company. Accordingly, each Shareholder is prepared to hold the Shares for an indefinite period.
2.13. Investment Purpose. Each Shareholder acknowledges that the Preferred Shares are being acquired for their own account, for investment, and not with the present view towards the distribution, assignment, or resale to others or fractionalization in whole or in part. Each Shareholder further acknowledges that no other person has or will have a direct or indirect beneficial or pecuniary interest in the Preferred Shares.
| 4 |
2.14. Limitations on Resale; Restrictive Legend. Each Shareholder acknowledges that they will not sell, assign, hypothecate, or otherwise transfer any rights to, or any interest in, the Preferred Shares except (i) pursuant to an effective registration statement under the 1933 Act, or (ii) in any other transaction which, in the opinion of counsel acceptable to the Purchaser, is exempt from registration under the 1933 Act, or the rules and regulations of the SEC thereunder. Each Shareholder also acknowledges that an appropriate legend will be placed upon each of the certificates or book entries representing the Preferred Shares stating that they have not been registered under the 1933 Act and setting forth or referring to the restrictions on transferability and sale thereof.
2.15. Knowledge and Experience in Business and Financial Matters. Each Shareholder, either individually or together with their purchaser representative, has such knowledge and experience in business and financial matters that they are capable of evaluating the risks of the Share Exchange transaction, and that the financial capacity of such party is of such proportion that the total cost of such person’s commitment in the Preferred Shares would not be material when compared with such person’s total financial capacity.
2.16. Accuracy of All Statements Made by the Target Company. No representation or warranty by the Target Company in this Agreement, nor any statement, certificate, schedule, or exhibit hereto furnished or to be furnished by or on behalf of the Target Company pursuant to this Agreement, nor any document or certificate delivered to the Purchaser by the Target Company pursuant to this Agreement or in connection with actions contemplated hereby, contains or shall contain any untrue statement of material fact or omits or shall omit a material fact necessary to make the statements contained therein not misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser represents and warrants to the Target Company and the Shareholders as set forth below. These representations and warranties are made as an inducement for the Target Company and the Shareholders to enter into this Agreement and, but for the making of such representations and warranties and their accuracy, the Target Company and the Shareholders would not be parties hereto.
3.1. Organization and Good Standing. The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada with full power and authority to enter into and perform the transactions contemplated by this Agreement. The Purchaser does not have any subsidiaries or own any interest in any other entity.
| 5 |
3.2. Capitalization. As of the date hereof, the authorized capital stock of the Purchaser consists of (i) 300,000,000 shares of Common Stock, par value $0.001 per share, of which as of the date hereof, 595,986 shares are legally and validly issued and outstanding, and 10,000,000 shares of Preferred Stock, par value of $0.001 per share, of which as of the date hereof, 100,000 are classified as Series A Preferred Shares, which are to be issued at the Effective Time. All of such shares have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Except as set forth in this Agreement, no shares of the Purchaser’s capital stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Purchaser; (ii) there are no outstanding debt securities; (iii) there are no outstanding shares of capital stock, options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Purchaser, or contracts, commitments, understandings or arrangements by which the Purchaser is or may become bound to issue additional shares of capital stock of the Purchaser or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Purchaser; (iv) there are no agreements or arrangements under which the Purchaser is obligated to register the sale of any of its securities under the 1933 Act; (v) there are no outstanding securities of the Purchaser which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Purchaser is or may become bound to redeem a security of the Purchaser; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the shares as described in this Agreement; (vii) the Purchaser does not have any stock appreciation rights plans or agreements or any similar plan or agreement; and (viii) there is no dispute as to the class of any shares of the Purchaser’s capital stock.
3.3. Authorization; Enforcement; Compliance with Other Instruments. (i) The Purchaser has the requisite corporate power and authority to enter into and perform all actions required under this Agreement; (ii) the execution and delivery of this Agreement by the Purchaser and the consummation by it of the transactions contemplated hereby have been duly and validly authorized by the Purchaser’s Board of Directors and no further consent or authorization is required by the Purchaser, its Board of Directors, or its shareholders; (iii) this Agreement has been duly and validly executed and delivered by the Purchaser; and (iv) this Agreement constitutes the valid and binding obligations of the Purchaser enforceable against the Purchaser in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies.
3.4. Financial Statements. Prior to Closing, true copies of the unaudited financial statements of the Purchaser consisting of the balance sheets as of the fiscal year ended July 31, 2021, and the nine-month period ended April 30, 2022, and statements of income, stockholders’ equity, and cash flow for each of the periods then ended (the “Purchaser Financial Statements”), have been delivered to the Target Company. Said financial statements are true and correct in all material respects and present an accurate and complete disclosure of the financial condition of the Purchaser as of April 30, 2022, and the earnings for the periods covered, in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Target Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject to normal year-end audit adjustments).
| 6 |
3.5. No Conflicts. The execution, delivery and performance of this Agreement by the Purchaser and the consummation by the Purchaser of the transactions contemplated hereby will not (i) result in a violation of the Articles of Incorporation, any certificate of designations, preferences and rights of any outstanding series of preferred stock of the Purchaser or the Bylaws, or (ii) conflict with, or constitute a material default (or an event which with notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, contract, indenture mortgage, indebtedness or instrument to which the Purchaser is a party, or result in a violation of any law, rule, regulation, order, judgment or decree (including United States federal and state securities laws and regulations) applicable to the Purchaser or by which any property or asset of the Purchaser is bound or affected. The Purchaser is not in violation of any term of, or in default under, the Articles of Incorporation, any certificate of designations, preferences and rights of any outstanding series of preferred stock of the Company or the Bylaws or its organizational charter or Bylaws, or any contract, agreement, mortgage, indebtedness, indenture, Articles of Incorporation, judgment, decree or order or any statute, rule or regulation applicable to the Purchaser, except for possible conflicts, defaults, terminations, amendments, accelerations, cancellations and violations that would not individually or in the aggregate have a material adverse effect on the Purchaser. The business of the Purchaser is not being conducted, and shall not be conducted, in violation of any law, statute, ordinance, rule, order or regulation of any governmental authority or agency, regulatory or self-regulatory agency, or court, except for possible violations the sanctions for which either individually or in the aggregate would not have a material adverse effect on the Purchaser. Except as specifically contemplated by this Agreement, and as required under the 1933 Act, the Purchaser is not required to obtain any consent, authorization, permit or order of, or make any filing or registration (except the filing of a registration statement) with, any court, governmental authority or agency, regulatory or self-regulatory agency or other third party in order for it to execute, deliver or perform any of its obligations under, or contemplated by, this Agreement in accordance with the terms hereof.
3.6. Absence of Certain Changes. Except as disclosed in Purchaser Financial Statements, there has been no change or development in the business, properties, assets, operations, financial condition, results of operations or prospects of the Purchaser which has had or reasonably could have a material adverse effect on the Purchaser. The Purchaser has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does the Purchaser have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings.
3.7. Litigation. To the best knowledge and reasonable belief of the Purchaser, there are no legal, administrative or other proceedings, investigations or inquiries, product liability or other claims, judgments, injunctions or restrictions, either threatened, pending, or outstanding against or involving the Purchaser or its subsidiaries, if any, or their assets, properties, or business, nor does the Purchaser or its subsidiaries know, or have reasonable grounds to know, of any basis for any such proceedings, investigations or inquiries, product liability or other claims, judgments, injunctions or restrictions. In addition, there are no material proceedings existing, pending or reasonably contemplated to which any officer, director, or affiliate of the Purchaser is a party adverse to the Purchaser or any of its subsidiaries or has a material interest adverse to the Purchaser or any of its subsidiaries.
| 7 |
3.8. Taxes. All federal, state, foreign, county, and local income, withholding, profits, franchise, occupation, property, sales, use, gross receipts and other taxes (including any interest or penalties relating thereto) and assessments which are due and payable have been duly reported, fully paid and discharged as reported by the Purchaser, and there are no unpaid taxes which are, or could become a lien on the properties and assets of the Purchaser, except as provided for in the financial statements of the Purchaser, or have been incurred in the normal course of business of the Purchaser since that date. All tax returns of any kind required to be filed have been filed and the taxes paid. There are no disputes as to taxes of any nature payable by the Purchaser.
3.9. Environmental Laws. The Purchaser (i) is in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”); (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct its business; and (iii) is in compliance with all terms and conditions of any such permit, license or approval where, in each of the three foregoing cases, the failure to so comply would have, individually or in the aggregate, a material adverse effect on the Purchaser.
3.10. Legality of Shares to be Issued. The Preferred Shares to be issued by the Purchaser pursuant to this Agreement, when so issued and delivered, will have been duly and validly authorized and issued by the Purchaser and will be fully paid and nonassessable.
3.11. Accuracy of All Statements Made by the Purchaser. No representation or warranty by the Purchaser in this Agreement, nor any statement, certificate, schedule, or exhibit hereto furnished or to be furnished by the Purchaser pursuant to this Agreement, nor any document or certificate delivered to the Target Company or any Shareholder pursuant to this Agreement or in connection with actions contemplated hereby, contains or shall contain any untrue statement of material fact or omits to state or shall omit to state a material fact necessary to make the statements contained therein not misleading.
4. COVENANTS OF THE PARTIES.
4.1. No Covenant as to Tax or Accounting Consequences. It is expressly understood and agreed that neither the Purchaser nor its officers or agents has made any warranty or agreement, expressed or implied, as to the tax or accounting consequences of the transactions contemplated by this Agreement or the tax or accounting consequences of any action pursuant to or growing out of this Agreement.
4.2. Indemnification. Each Shareholder, severally and not jointly, shall indemnify Purchaser, its officers, directors, attorneys and accountants (each an “Indemnified Party”) for any loss, cost, expense, or other damage (including, without limitation, attorneys’ fees and expenses) suffered by the Indemnified Party resulting from, arising out of, or incurred with respect to the falsity or the breach of any representation, warranty, or covenant made by the Target Company herein, and any claims arising from the operations of the Target Company prior to the Closing Date. The indemnity agreement contained herein shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any party and shall survive the consummation of the transactions contemplated by this Agreement.
| 8 |
4.3. Expenses. Except as otherwise expressly provided herein, each party to this Agreement shall bear its own respective expenses incurred in connection with the negotiation and preparation of this Agreement, in the consummation of the transactions contemplated hereby, and in connection with all duties and obligations required to be performed by each of them under this Agreement.
4.4. Brokerage. Each of the parties hereto represents that it has had no dealings in connection with this transaction with any finder or broker who will demand payment of any fee or commission from the other party.
4.5. United States Income Tax Treatment. For all United States income tax purposes, the Parties intend for the Share Exchange to qualify as a tax-free reorganization under Section 368(a)(1)(B) of the Code. The Parties shall report the Share Exchange for all United States income tax purposes consistent therewith and shall not take any position inconsistent with this Section 4.9 in the course of any tax audit, tax review or tax litigation matter relating hereto.
4.6. Further Actions. Each of the parties hereto shall take all such further action, and execute and deliver such further documents, as may be necessary to carry out the transactions contemplated by this Agreement.
5. MISCELLANEOUS
5.1. Notices. Any notice, demand, request, waiver or other communication required or permitted to be given pursuant to this Agreement must be in writing (including electronic format) and will be deemed by the parties to have been received (i) upon delivery in person (including by reputable express courier service) at the address set forth below; (ii) upon delivery by electronic mail (as verified by a document reasonably confirming satisfactory transmission) at the electronic mail address set forth below (if sent on a business day during normal business hours where such notice is to be received and if not, at 9:00 am local time on the first business day following such delivery where such notice is to be received); or (iii) upon five business days after mailing with the United States Postal Service if mailed from and to a location within the continental United States by registered or certified mail, return receipt requested, addressed to the address set forth below. Any party hereto may from time to time change their physical or electronic address for notices by giving notice of such changed address or number to the other party in accordance with this section.
|
| If to Purchaser at: | iMine Corporation | |
|
| 488 NE 18th Street, #2307 | ||
|
| Miami, FL 33132 | ||
|
| Attn: Jose Maria Eduardo Gonzalez Romero, CEO | ||
|
| Email Address: gonzalezromero.jm@me.com |
| 9 |
|
| With a copy (which will not constitute notice) to: |
Ronald N. Vance, Esq. | |
|
| Pearson Butler, LLC | ||
|
| 1802 W. South Jordan Parkway, Suite 200 | ||
|
| South Jordan, UT 84095 | ||
|
| Email Address: ron@pearsonbutler.com | ||
|
| |||
|
| If to Target Company or Shareholders at: | RAC Real Estate Acquisition Corp. | |
|
| 848 Brickell Avenue, Penthouse 5 | ||
|
| Miami, FL 33131 | ||
|
| Attention: Frank Gillen, CEO | ||
|
| Email Address: mktmaven11@yahoo.com | ||
|
| |||
|
| With a copy (which will not constitute notice) to: | ||
|
| |||
|
| Email Address: angie@fly2cabo.com |
5.2. Expenses. Each of the parties hereto shall bear their respective expenses, costs and fees (including attorneys’, auditors’ and financing commitment fees) in connection with the transactions contemplated hereby, including the preparation, execution and delivery of this Agreement and compliance herewith, whether or not the transactions contemplated hereby shall be consummated.
5.3. Severability. If any provision of this Agreement, including any phrase, sentence, clause, Section or subsection is inoperative or unenforceable for any reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to any extent whatsoever.
5.4. Headings. The headings contained in this Agreement are for purposes of convenience only and shall not affect the meaning or interpretation of this Agreement.
5.5. Entire Agreement. This Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.
5.6. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall together constitute one and the same instrument.
| 10 |
5.7. Governing Law, etc. This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of Nevada, without giving effect to the conflict of laws rules thereof to the extent that the application of the law of another jurisdiction would be required thereby. Purchaser and Target Company hereby irrevocably submit to the exclusive jurisdiction of the courts of the State of Nevada and the federal courts of the United States of America located in Clark County, Nevada, solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any of such documents may not be enforced in or by said courts, and the parties hereto irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in such a Nevada State or federal court. Purchaser and Target Company hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of any such dispute.
5.8. Attorneys’ Fees. If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, or otherwise arising under this Agreement, the successful or prevailing party or parties will be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled.
5.9. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns.
5.10. Assignment. This Agreement shall not be assignable or otherwise transferable by any party hereto without the prior written consent of the other party hereto.
5.11. No Third-Party Beneficiaries. Except as provided in Section 4.2 with respect to indemnification of Indemnified Parties hereunder, nothing in this Agreement shall confer any rights upon any person or entity other than the parties hereto and their respective heirs, successors and permitted assigns.
5.12. Amendment; Waivers, etc. No amendment, modification or discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by the party against whom enforcement of the amendment, modification, discharge or waiver is sought. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the party granting such waiver in any other respect or at any other time. Neither the waiver by any of the parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure by any of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any party may otherwise have at law or in equity.
5.13. Further Action. The parties hereto agree to execute and deliver such additional documents and to take such other and further action as may be required to carry out fully the transactions contemplated herein.
| 11 |
5.14. Exhibits. Each of the exhibits, schedules, or other attachments referenced in this Agreement is annexed hereto and is incorporated herein by this reference and expressly made a part hereof.
5.15. Full Knowledge. By their signatures, the parties acknowledge that they have carefully read and fully understand the terms and conditions of this Agreement, that each party has had the benefit of counsel, or has been advised to obtain counsel, and that each party has freely agreed to be bound by the terms and conditions of this Agreement. Target Company understands and acknowledges that legal counsel for Purchaser has not and does not represent Target Company, its officers or directors, its Shareholders, or any other party.
SIGNATURE PAGE FOLLOWS
| 12 |
SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties hereto has executed the foregoing Agreement and Plan of Reorganization as of the respective day and year set forth below.
| PURCHASER: | iMine Corporation |
| |
|
|
|
|
|
| Date: | By |
|
|
|
|
| Jose Maria Eduardo Gonzalez Romero, CEO |
|
|
|
|
|
|
| TARGET COMPANY: | RAC Real Estate Acquisition Corp. |
| |
|
|
|
|
|
| Date: | By |
|
|
|
|
| Frank Gillen, CEO |
|
|
|
|
|
|
| SHAREHOLDERS: |
|
|
|
|
|
|
|
|
| Date: |
|
| |
|
| Frank Gillen |
| |
|
|
|
|
|
| Date: |
|
| |
|
| Francis Pittilloni |
| |
|
|
|
|
|
| Date: |
|
| |
|
| Yolanda Goodell |
| |
| 13 |
EXHIBIT A
TO THE
SECURITIES PURCHASE AGREEMENT
| Name of Shareholder | No. of Shares of Target Company to be Transferred | No. of Preferred Shares of Purchaser to be Issued |
| Frank Gillen | 334 | 33,334 |
| Francis Pittilloni | 333 | 33,333 |
| Yolanda Goodell | 333 | 33,333 |
| TOTAL | 1,000 | 100,000 |
| 14 |
EXHIBIT 3.1
CERTIFICATE OF DESIGNATION
ESTABLISHING THE DESIGNATION, POWERS, PREFERENCES,
LIMITATIONS, RESTRICTIONS, AND RELATIVE RIGHTS OF
SERIES A PREFERRED STOCK
OF
IMine Corporation
The undersigned, being the duly authorized and acting Vice President of iMine Corporation, a Nevada corporation (the “Corporation”) does hereby certify that:
The Board of Directors of the Corporation has duly adopted resolutions providing for the issuance of a series of Preferred Stock in accordance with the provisions of NRS 78.195. The resolutions adopted by the Board of Directors of the Corporation are as follows:
RESOLVED, that the Board of Directors of the Corporation, pursuant to the authority conferred upon it by the Amended and Restated Articles of Incorporation of the Corporation (the “Articles of Incorporation”), does hereby create and provide for the issue of a series of the Preferred Stock, par value $0.001 per share, of the Corporation and does hereby fix and herein state the designation preferences and relative and other special rights of such series, the qualifications, limitations and restrictions thereof, as follows:
1. Designation and Number of Shares. The series will be known as the Series A Preferred Stock (the “Series A Preferred Stock”), and will be a series consisting of 100,000 shares of the authorized but unissued Preferred Stock of the Corporation, having a par value of $0.001 per share. Such number of shares of Series A Preferred Stock (each a “Series A Preferred Share” and, collectively, the “Series A Preferred Shares”) may be increased or decreased by the Board of Directors of the Corporation from time to time, provided that the number of Series A Preferred Shares shall not be decreased below the number of series A Preferred Shares then issued and outstanding, plus the number of Series A Preferred Shares of such series reserved for issuance upon exercise of outstanding rights, options or warrants or upon the conversion or exchange of outstanding securities issued by the Corporation, nor increased above the amount authorized in the Articles of Incorporation of the Corporation.
2. Dividends. The Series A Preferred Stockholders shall be entitled to participate with the holders of Common Stock pari passu in any dividends paid or set aside for payment so that Series A Preferred Stockholders shall receive with respect to each Series A Preferred Share an amount equal to (x) the dividend payable with respect to each share of Common Stock multiplied by (y) the number of shares (and fraction of a share, if any) of Common Stock into which such Series A Preferred Share is convertible as of the record date for such dividend.
| 1 |
3. Liquidation Preference.
a. Distribution. In the event of the liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the Holders of Series A Preferred Shares then outstanding shall be entitled to receive, out of the assets of the Corporation available for distribution to its stockholders, before any payment shall be made or any assets distributed to the holders of the Common Stock or any other class or series of Preferred Stock that is junior to the Series A Preferred Stock (“Junior Stock”), an amount (the “Liquidation Preference Amount”) per Series A Preferred Share equal to (i) $10.00 (subject to adjustment for stock splits, stock dividends, recapitalizations and the like) plus (ii) any accrued but unpaid dividends to which the Series A Preferred Stockholders are then entitled. If the assets of the Corporation are not sufficient to pay in full the Liquidation Preference Amount payable to the Holders of outstanding shares of the Series A Preferred Stock and any other series of Preferred Stock or any other class of stock ranking pari passu, as to rights on liquidation, dissolution or winding up, with the Series A Preferred Stock, and that was created and issued in accordance with the provisions of this Certificate of Designation, then all of said assets will be distributed among the Holders of the Series A Preferred Stock and the other classes of stock ranking pari passu with the Series A Preferred Stock ratably in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. The liquidation payment with respect to each outstanding fractional Series A Preferred Share shall be equal to a ratably proportionate amount of the full liquidation payment with respect to each outstanding Series A Preferred Share. All payments for which this Section 3(a) provides shall be in cash, property (valued at its fair market value as determined by an independent appraiser reasonably acceptable to the Holders of a majority of the Series A Preferred Stock) or a combination thereof; provided, however, that no cash shall be paid to holders of Junior Stock unless each Holder of the outstanding Series A Preferred Shares has been paid in cash the full Liquidation Preference Amount to which such Holder is entitled as provided herein. After payment of the full amount of the liquidating distribution to which they are entitled, the Series A Preferred Stockholders will be entitled to share in any further liquidation on a pro-rata basis with any other Preferred Stock or Common Stock.
b. Certain Events Deemed a Liquidation; Election as to Consideration. Upon the consent of the Board of Directors, a consolidation or merger of the Corporation with or into any other corporation or corporations, or a sale or other disposition of all or substantially all of the assets of the Corporation, or the effectuation by the Corporation of a transaction or series of related transactions in which, following such transaction(s), the holders of the outstanding voting power of the Corporation prior to the transaction(s) cease to hold, directly or indirectly, a majority of the outstanding voting power of the surviving entity, shall be deemed to be a liquidation, dissolution, or winding up within the meaning of this Section 3. Notwithstanding anything to the contrary herein, including Section 3(a), in the event of the occurrence of the transaction(s) in the foregoing sentence, each Series A Preferred Stockholder shall have the option to receive (i) an amount equal to the Liquidation Preference Amount or (ii) the amount that such Holder would have received if it had converted its Series A Preferred Stock into Common Stock immediately prior to the closing of such transaction (without giving effect to the liquidation preference of, or any dividends payable on, any other capital stock of the Corporation).
c. Notice. Written notice of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation within the meaning of this Section 3, stating a payment date and the place where the distributable amounts shall be payable, shall be given by mail, postage prepaid, no less than 30 days prior to the payment date stated therein, or 20 days prior to the stockholder meeting to approve the relevant transaction, whichever is earlier, to the Holders of record of the Series A Preferred Stock at their respective addresses as the same shall appear on the books of the Corporation.
d. Payment. On the effective date of any liquidation, dissolution or winding up within the meaning of this Section 3, the Corporation shall pay cash and/or such other consideration to which the Series A Preferred Stockholders shall be entitled under this Section 3.
| 2 |
4. Voting Rights.
a. Preferred Stock Voting Rights. Each Series A Preferred Share shall entitle the Holder thereof to vote with the holders of Common Stock, voting together as a single class, with respect to any and all matters presented to the holders of Common Stock for their action, consideration or consent, whether at any special or annual meeting of stockholders, by written action of stockholders in lieu of a meeting (to the extent permitted by the Articles of Incorporation and the Nevada Revised Statutes), or otherwise. With respect to any such vote, each Series A Preferred Share held on the record date for determining the stockholders of the Corporation eligible to participate in such vote shall entitle the Holder thereof to cast 10 votes, subject to adjustment pursuant to subsection (c) of this Section 4 (such number of votes, the “Preferred Stock Voting Ratio”).
b. Limitations on Amendments to the Certificate of Designation. For so long as any Series A Preferred Shares remain outstanding, the Corporation shall not, without the written consent or affirmative vote at a meeting called for such purpose, given in person or by proxy, by Holders holding, in the aggregate, at least a majority of the outstanding Series A Preferred Shares (excluding any Series A Preferred Shares held of record in the name of the Corporation or any of its subsidiaries), voting as a separate class, amend, alter or repeal (including by means of a merger, consolidation or otherwise) any provision of the Articles of Incorporation or this Certificate of Designation that would alter or change the rights, preferences or privileges of the Series A Preferred Stock in a manner adverse to the Series A Preferred Stockholders. In any case in which the Series A Preferred Stockholders shall be entitled to vote as a separate class pursuant to this Certificate of Designation, the Articles of Incorporation or Nevada Revised Statutes, each Holder shall be entitled to one vote for each Series A Preferred Share held on the record date for determining the preferred stockholders of the Corporation eligible to vote thereon.
c. Stock Splits, Subdivisions, Reclassifications or Combinations. In the event that the Corporation, at any time from and after the date of this Certificate of Designation, (i) pays any dividends or distributions with respect to the Common Stock, in the form of additional shares of Common Stock, or (ii) subdivides (by stock split, recapitalization, or otherwise) the outstanding shares of Common Stock into a greater number of shares, the Preferred Stock Voting Ratio in effect immediately prior to any such event, shall be proportionally increased. In the event that the Corporation, at any time from and after the date of this Certificate of Designation, combines (by reverse stock split, recapitalization, or otherwise) the outstanding Common Stock into a smaller number of shares, the Preferred Stock Voting Ratio in effect immediately prior to any such event shall be proportionally decreased. Any adjustment under this subsection (c) of this Section 4 shall become effective at the close of business on the date the dividend, subdivision, or combination becomes effective, and successive adjustments shall be made, without duplication, whenever any such dividend, subdivision or combination shall occur.
d. Statement Regarding Adjustments. Promptly following any adjustment to the Preferred Stock Voting Ratio as provided in subsection (c) of this Section 4, the Corporation shall (i) file, at the principal office of the Corporation, a statement showing in reasonable detail the facts requiring such adjustment, and, as applicable, the Preferred Stock Voting Ratio that shall be in effect after such adjustment, and (ii) deliver a copy of such statement to each Holder.
| 3 |
5. Conversion Rights. The Series A Preferred Stockholders shall have the following conversion rights (the “Conversion Rights”):
a. Right to Convert. At any time on or after the completion date of the next round of equity funding by the Corporation of at least $1,000,000 (the “Qualified Financing”), the holder of any Series A Preferred Shares may, at such Holder’s option, elect to convert (a “Voluntary Conversion”) all or any portion of the Series A Preferred Shares held by such person into fully paid and nonassessable shares of Common Stock. Each Series A Preferred Share to be converted shall convert into a number of shares of Common Stock equal to the quotient of (i) $5.00 (subject to adjustment for stock splits, stock dividends, recapitalizations and the like) plus the amount of accrued but unpaid dividends, divided by (ii) the Conversion Price (as defined in Section 5(c) below) then in effect as of the date of the delivery by such Holder of its notice of election to convert (the “Conversion Rate”).
b. Mechanics of Voluntary Conversion. The Voluntary Conversion of Series A Preferred Stock shall be conducted in the following manner:
(i) Holder’s Delivery Requirements. To convert Series A Preferred Stock into full shares of Common Stock on any date (the “Voluntary Conversion Date”), the Holder thereof shall transmit for receipt by the Corporation on or prior to 5:00 p.m., Eastern Time, on such date, a copy of a fully-executed notice of conversion in the form attached hereto as Exhibit A (the “Conversion Notice”).
(ii) Corporation’s Response. Upon receipt by the Corporation of a copy of a Conversion Notice, the Corporation shall promptly provide confirmation of receipt of such Conversion Notice to such Holder. Upon receipt by the Corporation of a copy of the fully-executed Conversion Notice, the Corporation shall issue and deliver or cause its designated Transfer Agent to issue and deliver, as applicable, within three business days following the date of receipt by the Corporation of the fully-executed Conversion Notice (such third business day being the “Delivery Date”), to the Holder notice of electronic issuance of the shares of Common Stock as specified in the Conversion Notice, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If the number of shares of Preferred Stock represented by the Preferred Stock Certificate(s) submitted for conversion is greater than the number of Series A Preferred Shares being converted, then the Corporation shall, as soon as practicable and in no event later than three business days after receipt of the Conversion Notice, deliver to the Holder notice of the book entry of the number of Series A Preferred Shares not converted.
(iii) Record Holder. The person or persons entitled to receive the shares of Common Stock issuable upon a conversion of the Series A Preferred Stock shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of the close of the stock register for the Common Stock on the Conversion Date.
c. Conversion Price. The term “Conversion Price” shall mean 75% of the per share value of the common equity shares sold or issuable in the Qualified Financing, subject to adjustment under Section 5(d) hereof.
d. Adjustments of Conversion Price.
(i) Adjustments for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Issuance Date, effect a stock split of the outstanding Common Stock, the Conversion Price shall be proportionately decreased. If the Corporation shall at any time or from time to time after the Issuance Date, combine the outstanding shares of Common Stock, the Conversion Price shall be proportionately increased. Any adjustments under this Section 5(d)(i) shall be effective at the close of business on the date the stock split or combination becomes effective.
| 4 |
(ii) Adjustments for Dividends and Distributions in Shares of Common Stock. If the Corporation shall at any time or from time to time after the Issuance Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in shares of Common Stock, then, and in each event, the Conversion Price shall be decreased as of the time of such issuance or, in the event such record date shall have been fixed, as of the close of business on such record date, by multiplying the Conversion Price then in effect by a fraction:
(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date; and
(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions; and provided further, however, that no such adjustment shall be made if the Series A Preferred Stockholders simultaneously receive (i) a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding Series A Preferred Shares had been converted into Common Stock on the date of such event or (ii) a dividend or other distribution of Series A Preferred Shares which are convertible, as of the date of such event, into such number of shares of Common Stock as is equal to the number of additional shares of Common Stock being issued with respect to each share of Common Stock in such dividend or distribution.
(iii) Adjustment for Other Dividends and Distributions. If the Corporation shall at any time or from time to time after the Issuance Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in assets (other than cash dividends payable out of earnings or surplus in the ordinary course of business) or equity or debt securities of the Corporation other than shares of Common Stock, then, and in each event, an appropriate revision to the applicable Conversion Price shall be made and provision shall be made (by adjustments of the Conversion Price or otherwise) so that the Series A Preferred Stockholders shall receive upon conversions thereof, in addition to the number of shares of Common Stock receivable thereon, the amount of assets and/or the number of securities of the Corporation which they would have received had their Series A Preferred Stock been converted into Common Stock immediately prior to such event and had thereafter, during the period from the date of such event to and including the Conversion Date, retained such assets and/or securities (together with any distributions payable thereon during such period), giving application to all adjustments called for during such period under this Section 5(d)(iii) with respect to the rights of the Series A Preferred Stockholders; provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions; and provided further, however, that no such adjustment shall be made if the Series A Preferred Stockholders simultaneously receive a dividend or other distribution of assets and/or the number of securities that they would have received if all outstanding Series A Preferred Shares had been converted into Common Stock immediately prior to such event.
(iv) Adjustments for Reclassification, Exchange or Substitution. If the Common Stock issuable upon conversion of the Series A Preferred Stock at any time or from time to time after the Issuance Date shall be changed to the same or different number of shares of any class or classes of stock, whether by reclassification, exchange, substitution or otherwise (other than by way of a stock split or combination of shares or stock dividends provided for in Sections 5(d)(i), (ii) and (iii), or a reorganization, merger, consolidation, or sale of assets provided for in Section 5(d)(v)), then, and in each event, an appropriate revision to the Conversion Price shall be made and provisions shall be made (by adjustments of the Conversion Price or otherwise) so that the holder of each Series A Preferred Share shall have the right thereafter to convert such Series A Preferred Share into the kind and amount of shares of stock and/or other securities that such holder would have received had it converted the Series A Preferred Shares held by it into Common Stock immediately prior to such reclassification, exchange, substitution or other change, all subject to further adjustment as provided herein.
(v) Adjustments for Reorganization, Merger, Consolidation or Sales of Assets. Subject to Section 3 above, if at any time or from time to time after the Issuance Date there shall be a capital reorganization of the Corporation (other than by way of a stock split or combination of shares or stock dividends or distributions provided for in Section 5(d)(i), (ii) and (iii), or a reclassification, exchange or substitution of shares provided for in Section 5(d)(iv)), or a merger or consolidation of the Corporation with or into another corporation or other entity, or the conveyance of all or substantially all of the assets of the Corporation to another corporation or other entity, immediately after such reorganization, merger, consolidation, or conveyance (an “Organic Change”), then as a part of such Organic Change an appropriate revision to the Conversion Price shall be made if necessary or appropriate and provision shall be made if necessary or appropriate (by adjustments of the Conversion Price or otherwise) so that the holder of each Series A Preferred Share shall have the right thereafter to convert such Series A Preferred Share into the kind and amount of shares of stock and other securities or property of the Corporation or any successor corporation resulting from Organic Change. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 5(d)(v) with respect to the rights of the Series A Preferred Stockholders after the Organic Change to the end that the provisions of this Section 5(d)(v) (including any adjustment in the Conversion Price then in effect and the number of shares of stock or other securities deliverable upon conversion of the Series A Preferred Stock) shall be applied after that event in as nearly an equivalent manner as may be practicable.
(vi) Adjustments for Issuance of Additional Shares of Common Stock. In the event the Corporation shall issue or sell any additional shares of Common Stock (otherwise than as provided in the foregoing subsections (i) through (v) of this Section 5(d), pursuant to Common Stock Equivalents (hereafter defined) granted or issued prior to the Issuance Date, or in accordance with Section 5(d)(ix) below) (the “Additional Shares of Common Stock”), at a price per share less than the Conversion Price, or without consideration, the Conversion Price then in effect upon each such issuance shall be adjusted to that price (rounded to the nearest cent) determined by multiplying the Conversion Price by a fraction:
(1) the numerator of which shall be equal to the sum of (A) the number of shares of Common Stock outstanding (including, for purposes of such calculation, shares of Common Stock issuable upon conversion of the outstanding Series A Preferred Shares) immediately prior to the issuance of such Additional Shares of Common Stock plus (B) the number of shares of Common Stock (rounded to the nearest whole share) which the aggregate consideration for the total number of such Additional Shares of Common Stock so issued would purchase at a price per share equal to the then Conversion Price, and
| 5 |
(2) the denominator of which shall be equal to the number of shares of Common Stock outstanding (including, for purposes of such calculation, shares of Common Stock issuable upon conversion of the outstanding Series A Preferred Shares) immediately after the issuance of such Additional Shares of Common Stock;
No adjustment of the number of shares of Common Stock shall be made under Section 5(d)(vi) upon the issuance of any Additional Shares of Common Stock that are issued pursuant to the exercise of any warrants or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any Common Stock Equivalents (as defined below), if any such adjustment shall previously have been made upon the issuance of such warrants or other rights or upon the issuance of such Common Stock Equivalents (or upon the issuance of any warrant or other rights therefore) pursuant to Section 5(d)(vii).
(vii) Issuance of Common Stock Equivalents. The provisions of this Section 5(d)(vii) shall apply if (a) the Corporation, at any time after the Issuance Date, shall issue any securities convertible into or exchangeable for, directly or indirectly, Common Stock (“Convertible Securities”), other than the Series A Preferred Stock, or (b) any rights, warrants or options to purchase any such Common Stock or Convertible Securities (collectively, the “Common Stock Equivalents”) shall be issued or sold. If the price per share for which Additional Shares of Common Stock may be issuable pursuant to any such Convertible Securities or Common Stock Equivalents shall be less than the applicable Conversion Price then in effect, or if, after any such issuance of Convertible Securities or Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the applicable Conversion Price in effect at the time of such amendment or adjustment, then the applicable Conversion Price upon each issuance of Convertible Securities or Common Stock Equivalents or amendment thereof shall be adjusted as provided in subsection (vi) of this Section 5(d). No adjustment shall be made to the Conversion Price upon the issuance of Common Stock pursuant to the exercise, conversion or exchange of any Convertible Securities or Common Stock Equivalents where an adjustment to the Conversion Price was previously made as a result of the issuance or purchase of any Convertible Securities or Common Stock Equivalents.
(viii) -Consideration for Stock. In case any shares of Common Stock or Convertible Securities, or any Common Stock Equivalents, shall be issued or sold:
(1) in connection with any merger or consolidation in which the Corporation is the surviving corporation (other than any consolidation or merger in which the previously outstanding shares of Common Stock of the Corporation shall be changed to or exchanged for the stock or other securities of another corporation and except as provided in Section 5(d)(ix) below), the amount of consideration therefore shall be deemed to be the fair value, as determined reasonably and in good faith by the Board of Directors of the Corporation, of such portion of the assets and business of the nonsurviving corporation as such Board may determine to be attributable to such shares of Common Stock, Convertible Securities or Common Stock Equivalents, as the case may be; or
| 6 |
(2) in the event of any consolidation or merger of the Corporation in which the Corporation is not the surviving corporation or in which the previously outstanding shares of Common Stock of the Corporation shall be changed into or exchanged for the stock or other securities of another corporation, or in the event of any sale of all or substantially all of the assets of the Corporation for stock or other securities of any corporation, the Corporation shall be deemed to have issued a number of shares of its Common Stock for stock or securities or other property of the other corporation computed on the basis of the actual exchange ratio on which the transaction was predicated, and for a consideration equal to the fair market value on the date of such transaction of all such stock or securities or other property of the other corporation. If any such calculation results in adjustment of the applicable Conversion Price, or the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock, the determination of the applicable Conversion Price or the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock immediately prior to such merger, consolidation or sale, shall be made after giving effect to such adjustment of the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock. In the event any consideration received by the Corporation for any securities consists of property other than cash, the fair market value thereof at the time of issuance or as otherwise applicable shall be as determined in good faith by the Board of Directors of the Corporation. In the event Common Stock is issued with other shares or securities or other assets of the Corporation for consideration which covers both, the consideration computed as provided in this Section (5)(e)(viii) shall be allocated among such securities and assets as determined in good faith by the Board of Directors of the Corporation.
(ix) Certain Issuances Excepted. Anything herein to the contrary notwithstanding, the Corporation shall not be required to make any adjustment to the Conversion Price upon the authorization or issuance of (i) securities issued in connection with the acquisition of a Target Corporation (hereinafter defined) approved by the Board of Directors through merger, stock-for-stock exchange, or similar transaction with the Corporation and/or one of its subsidiaries and securities issued to retain the personnel of the Target Corporation; (ii) securities issued pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the Issuance Date (so long as the conversion or exercise price in such securities are not amended to lower such price and/or adversely affect the holders); and (iii) securities issued or granted pursuant to the Corporation’s 2022 Stock Incentive Plan or any subsequent equity compensation plans approved by the Corporation’s Board of Directors. The term “Target Corporation” shall mean an entity which at the time of the acquisition was engaged in the same or similar business of the Corporation.
e. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by facsimile or e-mail or three business days following being mailed by certified or registered mail, postage prepaid, return-receipt requested, addressed to the Holder at their address appearing on the books of the Corporation. The Corporation will give written notice to each Holder at least 20 days prior to the date on which the Corporation closes its books or takes a record (a) with respect to any dividend or distribution upon the Common Stock, (b) with respect to any pro rata subscription offer to holders of Common Stock, or (c) for determining rights to vote with respect to any Organic Change, dissolution, liquidation or winding-up and in no event shall such notice be provided to such holder prior to such information being made known to the public. The Corporation will also give written notice to each Series A Preferred Stockholder at least 20 days prior to the date on which any Organic Change, dissolution, liquidation or winding-up will take place; provided, however, that in no event shall such notice be provided to such Holder prior to such information being made known to the public.
| 7 |
f. Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series A Preferred Stock. In lieu of any fractional shares to which the Holder would otherwise be entitled, the Corporation shall round the number of shares to be issued upon conversion up to the nearest whole number of shares.
g. Reservation of Common Stock. The Corporation shall, so long as any Series A Preferred Shares are outstanding, reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Series A Preferred Stock, such number of shares of Common Stock equal to the aggregate number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all of the Series A Preferred Stock then outstanding. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding Series A Preferred Shares, the Corporation shall promptly take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number as shall be sufficient for such purpose, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Certificate. The initial number of shares of Common Stock reserved for conversions of the Series A Preferred Stock and any increase in the number of shares so reserved shall be allocated pro rata among the holders of the Series A Preferred Stock based on the number of Series A Preferred Shares held by each Holder of record at the time of issuance of the Series A Preferred Stock or increase in the number of reserved shares, as the case may be. In the event a Holder shall sell or otherwise transfer any of such Holder’s Series A Preferred Shares, each transferee shall be allocated a pro rata portion of the number of reserved shares of Common Stock reserved for such transferor. Any shares of Common Stock reserved and which remain allocated to any person or entity that does not hold any Series A Preferred Shares shall be allocated to the remaining Series A Preferred Stockholders, pro rata based on the number of Series A Preferred Shares then held by such holder.
6. Redemption by the Corporation. The Corporation shall not have the right to redeem outstanding Series A Preferred Shares.
7. No Implied Limitations. Except as otherwise provided by express provisions of this Certificate of Designation, nothing herein shall limit, by influence or otherwise, the discretionary right of the Board of Directors to classify and reclassify and issue any shares of Preferred Stock and to fix or alter any terms thereof to the full extent provided in the Articles of Incorporation.
8. Protective Provisions. In addition to any other rights provided by law, without first obtaining the affirmative vote or written consent of the Holders of a majority of the then-outstanding Series A Preferred Shares, the Corporation shall not (i) authorize or issue any equity securities with rights equal or senior to the rights of the Series A Preferred Stockholders, or (ii) amend or repeal any provision of, or add any provision to, this Certificate of Designation, if such action would adversely alter or change the preferences, rights, privileges, or powers of, or restrictions provided for the benefit of, the Series A Preferred Stock.
9. Definitions. As used in this Certificate of Designation, the following terms shall have the following meanings:
“Common Stock” means the common stock, par value $0.001 per share, of the Corporation.
| 8 |
“Holder” or “Series A Preferred Stockholder” means a holder of record of one or more Series A Preferred Shares, as reflected in the stock records of the Corporation or the Transfer Agent, which may be treated by the Corporation and the Transfer Agent as the absolute owner of the Shares for all purposes.
“Issuance Date” means the date on which the Series A Preferred Shares are issued by the Board of Directors and fully paid by the recipient.
“Transfer Agent” means the transfer agent that may be appointed from time to time by the Corporation to maintain a register and record transfers of record ownership of the Series A Preferred Shares.
In Witness Whereof, the undersigned has executed this Certificate of Designation on behalf of iMine Corporation the day and year set forth below.
| Date: Juley 1l, 2022 |
| /s/ Yolanda Goodell |
|
|
|
| Yolanda Goodell, Vice President |
|
| 9 |
EXHIBIT A
IMINE CORPORATION
CONVERSION NOTICE
Reference is made to the Certificate of Designations, Preferences and Rights of Series A Preferred Stock of iMine Corporation (the “Certificate of Designation”). In accordance with and pursuant to the Certificate of Designation, the undersigned hereby elects to convert the number of shares of Series A Preferred Stock, par value $.001 per share (the “Preferred Stock”), of iMine Corporation, a Nevada corporation (the “Corporation”), indicated below into shares of Common Stock, par value $.001 per share (the “Common Stock”), of the Corporation, by tendering the share(s) of Preferred Stock specified below as of the date specified below.
Date of Conversion: ___________________________________________________________________________________________________________________
Number of shares of Preferred Stock to be converted: __________________________________________________________________________________________
Stock certificate no(s). of Preferred Stock to be converted: ______________________________________________________________________________________
Please confirm the following information:
Conversion Price: ____________________________________________________________________________________________________________________
Number of shares of Common Stock to be issued: ____________________________________________________________________________________________
Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the Date of Conversion: _______________________________________
Please issue the Common Stock into which the shares of Preferred Stock are being converted in the following name and to the following address:
|
| Issue to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Email Address: |
|
|
|
|
|
|
|
|
|
|
| Authorization: |
|
|
|
|
|
|
|
|
|
|
|
| By: |
|
|
|
|
|
|
|
|
|
|
| Title: |
|
|
|
|
|
|
|
|
|
|
| Dated: |
|
|
| 10 |